January 10, 1961 FOMC Minutes

FOMC minutes

After referring to the volume of suggestions currently being made for various courses of action that might be taken in dealing with economic problems, the Chairman said it was still a fact that the economy was doing surprisingly well and that there was surprisingly little real suffering. This was not to say that there was no suffering among the unemployed, but the situation was not one of panic or disaster and the strong points in the economy should not be ignored. At this point Chairman Martin referred to the suggestion of Mr. Balderston that the Open Market Committee meet again in two weeks. With a new Administration shortly to take office, and in view of the fact that was experiencing a continuing gold outflow and a good many the country ideas about economic problems were being passed around, he felt that it would be the part of wisdom for the Open Market Committee to plan to meet and then again after another two-week period. This would in two weeks afford an opportunity for the Committee to be brought up to date on transition between Administrations, to keep abreast of develop problems of to have discussions such as had taken place this morning. ments, and Chairman Martin then commented that no specific change in the proposed at this meeting. He again stated that he directive had been the consensus was to hold close to the status quo. thought Robertson whether he would like to The Chairman inquired of Mr. replied by expressing agreement as dissenting, and the latter be recorded stated by the Chairman reflected the majority view. that the consensus

No further comments being heard, Chairman Martin stated that, as usual, each person's views would be recorded fully in the minutes. Thereupon, upon motion duly made and seconded, it was voted unanimously to direct the Federal Reserve Bank of New York until otherwise directed by the Committee: (1) To make such purchases, sales, or exchanges (including replacement of maturing securities, and allowing maturities to run off without replacement) for the System Open Market Account in the open market or, in the case of maturing securities, by direct exchange with the Treasury, as may be necessary in the light of current and prospective economic conditions and the general credit situation of the country, with a view (a) to relating the supply of funds in the market to the needs of commerce and business, (b) to encouraging monetary expansion for the purpose of fostering sustainable growth in economic activity and employment, while taking into consideration current international developments, and (c) to the practical adminis tration of the Account; provided that the aggregate amount of securities held in the System Account (including commitments for the purchase or sale of securities for the Account) at the close of this date, other than special short-term certificates of indebtedness purchased from time to time for the temporary accommodation of the Treasury, shall not be increased or decreased by more than $1 billion; (2) To purchase direct from the Treasury for the account of the Federal Reserve Bank of New York (with discretion, in cases where it seems desirable, to issue participations to one or more Federal Reserve Banks) such amounts of special short-term certifi cates of indebtedness as may be necessary from time to time for accommodation of the Treasury; provided that the the temporary total amount of such certificates held at any one time by the Federal Reserve Banks shall not exceed in the aggregate $500 million. to Chairman Martin's suggestion, it was agreed that Pursuant of the Federal Open Market Committee would be held the next meeting in Washington on Tuesday, January 24, 1961, and that the succeeding meeting would be tentatively scheduled for Tuesday, February 7, 1961.

Mr. Johns commented that plans were in process for a meeting of the Conference of Presidents of Federal Reserve Banks on Monday, March 6, 1961, with thought that a meeting of the Board and the Presi dents would be held the following day. After a brief discussion, it was understood that this schedule would be continued to be used as a basis for planning. At this point all of those present withdrew from the meeting except the members and alternate members of the Committee, the Reserve Bank Presidents who are not currently members of the Committee, and Messrs. Young and Rouse. During the course of a discussion, Chairman Martin suggested that the Ad Hoc Subcommittee that had been authorized at the meeting on report under date of November 12, 17, 1951, and which submitted its May certain aspects of open for the purpose of studying 1952, be reactivated market operations, with the membership of the Committee increased to Chairman of the Federal Open Market Committee and the include the Vice of Governors. With this adjustment the Vice Chairman of the Board Committee would include, in addition to membership of the reactivated Messrs. Balderston, Bryan, Hayes, and Mills. The Chairman Martin, Young and Rouse be designated to Chairman also suggested that Messrs. serve as technical advisers to the Committee.

This suggestion was approved unanimously, with the understanding that Chairman Martin would initiate studies by the Committee at such time as he decided was appropriate. Thereupon the meeting adjourned. Secretary