March 7, 1961 FOMC Minutes

FOMC minutes

In a memorandum dated March 3, 1961, which had been distributed to the members of the Committee and the Presidents not currently serving on the Committee, the Treasury-Federal Reserve Steering Committee for Study of the Government Securities Market requested authorization from the Committee to proceed with the publication of current statistics on the Government securities market, with a publication target date of March 30, 1961. The recommended publication program would supply information on closing price quotations, volume of transactions, dealer positions, and dealer financing, as shown in pro forma releases attached to the memorandum. The publication time lags were intended to be short enough to give the data current value, but long enough to obviate the danger of injuring individual dealers. The proposed program had been developed through a process of circulating to dealers a comprehensive outline of statistics that might be published and then cutting back somewhat in the light of criticisms and objections received. It was not known whether all dealers would accept even the more limited program without further criticism or objection, and some revisions therefore might still be required. Accordingly, the Steering Committee suggested that the staff be authorized to make such minor adjustments in the program as might seem appropriate to meet dealer comment. However, any major problem of dealer cooperation would be brought back to the Open Market Committee before publication was actually begun.

As soon as the initial publication program was agreed to by the Federal Open Market Committee and the Treasury Department, the Steering Committee suggested that Mr. Hayes forward to each of the dealers a letter signed jointly by the Secretary of the Treasury and Chairman Martin indicating the nature of the program and the starting date. The Steering Committee also suggested that if positions figures were to be included in the program it might be indicated informally to the dealers from whom objections were anticipated that new legislation on this matter was a likely alternative. If any of the dealers should refuse to continue to submit daily reports, the publication plans presumably would have to be temporarily suspended. However, if no complications developed the Steering Committee hoped that publication might begin on March 30, 1961. At the request of Chairman Martin, Mr. Young reviewed the scope of the proposed publication program, the process by which it had been developed, and the principal reservations expressed by dealers, his comments being based generally on the memorandum that had been He then discussed the possibility of lack of cooperation distributed. on the part of one or more dealers and the purpose of the proposed joint letter from the Secretary of the Treasury and Chairman Martin. of the matter, Chairman Martin expressed the view In discussion information on the Government securities market was that more public required and that it was necessary to take steps to arrange to have

such information supplied in some way. Mr. Rouse expressed the view that the proposed program represented the minimum that should be done. With reference to the portion of the memorandum that suggested giving an informal indication to any objecting dealers that legislation was a likely alternative, question was raised whether it would be advisable for the Federal Reserve to make any statement that might be regarded as in the nature of a threat. In reply, it was brought out that such advice would be a matter of supplying information for the dealers' consideration. At the same time, however, it was agreed that exercised by the Federal Reserve to avoid anything that care should be might be construed as a threat. At the conclusion of the discussion, the Steering Committee to proceed along the lines contemplated by the memorandum was authorized of March 3, 1961. Secretary's Note: Under date of March 16, 1961, a letter signed by Secretary of the Treasury Dillon and Chairman Martin was addressed to 18 Government securities dealer firms in the following form: 1960, the then Secretary of the Treasury and "In January the Chairman of the Board of Governors of the Federal Reserve wrote the Government securities dealers requesting System in initiating and carrying out an infortheir collaboration program covering the Government securities market. mation All primary dealers are cooperating in this program. "You will remember that the earlier letter contemplated during which the data would be used only by a trial period the Treasury Department and the Federal Reserve System. period, it was noted that selected composite data After this would be published regularly on a current basis with an appropriate time lag.

"The trial period has now run for almost a year. The current information on the market that has been collected has been of real use to our two agencies. "We are now ready to proceed with the publication phase of the program which is described in some detail in Mr. Hayes' accompanying letter and its attachments. The publication schedule indicated will be timely enough to give the data current value. We feel that publication should enable market participants, economists, and the general public to follow and analyze better the major trends in the market, and that it would contribute to an even better functioning market. "Our staffs will continue to be available to work with you in implementing this new publication program. We appreciate your continuing cooperation in this effort to increase the range of publicly available objective information about the market, particularly in view of the additional reporting burden it places on your organization." It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, March 28, 1961. The meeting then adjourned. Secretary