September 13, 1960 FOMC Minutes

FOMC minutes

or not there would be any objection to the current proposal, some objection had been encountered earlier to the ground rules that were set up for the market statistics program, and this would involve going back to the dealers. In his opinion, there was a question whether it would be advisable to go back and enter into further negotiations with them at this particular time. There had been discussion of this matter at one of the luncheons with the Treasury a week or so ago, and the inclination at that time was to feel that renegotiations at this particular time would be undesirable, that it would be advisable for program to move along and to have some publications the statistical further questions. From comments that had started before raising any that there might be at least one been made at one time, it appeared dealer who would interpose an objection. in the New York memo noted that there was contained Mr. Young the current suggestion. the Treasury had approved randum a statement that Treasury did write a letter indicating approval, It was true that the taken any further position. the Treasury had he did not know whether but he had made reference luncheon to which expressed at the The position some reasons for objecting, that the Treasury saw was to the effect of their own essential in terms the reasons were did not feel that but interests. with Under the matter he had discussed commented that Mr. Rouse last week in he was in Washington Baird when of the Treasury Secretary

connection with conferences on the advance refunding and that as far as the Treasury was concerned he understood there was no objection. Mr. Shepardson noted that the Market Statistics Department had been set up for the purpose of providing a separation of functions and gathering needed information. He inquired why it would not be possible for that Department to do the job indicated in the memorandum and thereby avoid breaking down the separation of functions. Mr. Rouse replied that the Department would have no judgment at all about such a matter. It did not know the market, he said, and it was not set up for that purpose. Mr. Hayes said he thought it had been recognized by all concerned that the real knowledge of the market, when it came to deciding who were were making primary markets, resided in the people dealers and who working with the dealers in market activities. The Market Statistics Department was not doing that; it was collecting statistical figures with them otherwise. In any event the dealers, but had no contact from not have current figures on statistical the Securities Department would to the charge that the Desk as conceivably might lead positions such and that was the purpose knowledge against the dealers, could use that situation would not be affected of functions. The of the separation on past volume; that the Securities Department statistics by giving against the dealers today. enable the Desk to trade would not Market Statistics Department inquired why the Mr. Shepardson the criteria, without of people who met the Desk a list could not give

providing information on individual volume, to which Mr. Rouse replied that it was difficult to imagine how the Department could do it. He added that it was his understanding that the objections from the standpoint of the dealers had been in terms of giving information to others than the officers of the New York Bank. The objections were directed more to the Treasury and Washington generally having access to individual dealer figures. The Securities Department ought to have these figures to function effectively, and as he understood it the only objection to the Desk having figures both on volume and position was made by the Lanston firm. In that connection, he had heard that officers of that firm did not share Mr. Lanston's views. Mr. Young commented that the matter would have to be put up to them, for he did not know what views might be held. to a question as to why the Securities Department In response directly, Mr. Hayes said that this had could not collect the statistics years. The separation of functions was been the procedure for many only on the initiative of the Committee. undertaken that the matter would be taken up Chairman Martin then stated at the next meeting of the Committee. for further consideration make a further comment he would like to Mr. Hayes stated that the feeling that one had While he shared for purpose of clarification. in view of and reserve figures, the money supply be skeptical about to that in August there to point out today he wished some of the discussion

was an increase in total reserves and also in required reserves. Although total reserves in August were somewhat below August 1959, the big drop occurred between January and April. It was about the latter date that the Committee got serious about trying to loosen things seasonally adjusted, had risen from the April up, and total reserves, figure of $18,104 million to $18,450 million in August. Likewise, nonborrowed reserves had risen from $17,410 million in April to $18,230 million in August. In terms of annual rates of gain, total reserves had risen 6 per cent from April, nonborrowed reserves 14 per cent, One could look at the figures in and required reserves 7 per cent. in his view there had been progress in many different ways, but recent months. The meeting then adjourned. Secretary