November 14, 1961 FOMC Minutes

FOMC minutes

the staff document dealing with the legal aspects of the matter had to be stretched pretty far to be accepted. Nevertheless, he believed the question was marginal enough that the System could undertake these operations legally. However, he also had the three reservations that Mr. Swan had mentioned. Like Mr. Swan, he was somewhat concerned about the thought of going into foreign currency operations in order to deal with cyclical swings in international payments and for other purposes that raised similar questions. This point, and the others raised by Mr. Swan, should be given careful thought and study. Mr. Irons went on to say that he was impressed by the had been distributed. He felt that there was an documents that Reserve in this area, and he appropriate place for the Federal would be inclined to pursue the matter with the Treasury to work details, with the possibility of moving in the direction out the There was, of course, the problem suggested by the staff papers. that whereas one group in the Treasury might be ideal to work with, with another group might give rise to various problems. working not know how to get around that; by the nature of things, He did with than other groups over a groups would be easier to work some not considrthat potential problem as period of time. He would to prevent moving in the direction suggested by being so grave as the staff documents.

Chairman Martin noted that an important subject was under discussion. Accordingly, he inquired whether it was felt that it would be desirable to set up a special meeting in connection with the next regular Committee meeting on December 5 in order that full attention might be devoted to this question and the Committee could try to reach some conclusions. An alternative would be just to include the item on the agenda for the December 5 meeting. In this connection, Chairman Martin noted that he would have in mind that succeeding meetings of the Committee would be held on December 19 and on January 9, 1962. After some discussion of various possibilities, Chairman Martin suggested that the subject be placed on the agenda for the December 5 meeting to see how much could be accomplished at that time. He noted that Mr. Young expected to be out of the country on that date. There was general agreement with the procedure suggested by the Chairman. In this connection, Mr. Hayes raised the question whether it might not be desirable for Vice President Coombs of the New York Bank to be present when the subject was discussed further, and Chairman Martin replied that he thought this would be desirable. The Chairman next called for a report by the Secretary on suggestions received thus far, in light of the procedure agreed upon meeting on September 12, 1961, with respect to the Committee's at the operating procedures,

Mr. Young commented that a number of letters had been received, some only recently. In consideration of the range of views and suggestions, he felt that the Committee might want to request the secretariat to prepare a paper that would pull together those views and suggestions in some systematic way. Chairman Martin then made the comment that perhaps the Committee would have to schedule a special meeting on this subject at some point. He noted that the matter should be resolved not later than early in the new year. Asked for his thinking on the scheduling of meetings, the Chairman said it was his view that the Committee should meet on December 19, or two weeks from the December 5 meeting. In his opinion, the present situation called for keeping in close touch with developments. If a meeting were held on December 19, the ensuing meeting would be held on January 9. A suggestion had been made to him that Committee meetings might be held at monthly intervals, but at this particular time he felt that it would be better for the Committee to tighten its schedule somewhat rather than the reverse. to a question concerning the prospective meeting In reply 9, the Chairman said he had in mind that the schedule after January annual organization meeting would be held on March 6, 1962. This that at some point prior to that date the Committee would would mean meet on a two-week basis. In view of the problems currently confronting the Committee, he felt that the Committee probably should follow such a schedule.

Mr. Hayes indicated that although he did not disagree, he would be inclined to favor, at some point further in the future, meetings at four-week intervals under certain conditions. It was then understood that further staff work in connection with the study of the Committee's operating procedures would proceed in the manner that had been suggested by Mr. Young. It was agreed that the next meeting of the Open Market Committee would be held on Tuesday, December 5, 1961. The meeting then adjourned. Secretary