October 20, 1964 FOMC Minutes

FOMC minutes

thinking to bear on the subject, was to experiment. Accordingly, he proposed that the staff be asked to continue to draw up drafts of directives that might have been issued if the new format actually was being used, and that Committee members engage in in formal trial deliberations on these directives after adjournment of the meetings, to see whether it was possible to get majority agreement on language. They might begin by planning to devote the afternoon to this purpose on the day of the next meeting, November 10. It could be learned by this means whether a new approach was feasible, or whether the task was hopeless and the present directive format should be retained. Such a trial program obviously would be quite a burden on everyone involved, the Chairman observed, but it would be a good way to get a clear basis for a decision. To put the question of a new directive format to a vote without such experimentation would, in his judgment, be a mistake. Hopefully, by the time of the Committee's organization meeting in March 1965 enough experience would have been gained through such trial deliberations for the Committee to reach a decision on the format of the directive. In the past, Chairman Martin said, he had been a proponent of the thesis that it was best to retain the present short form of was the simpler course. But he now felt the directive because that

that the Committee had an obligation not to follow this course unless it had convinced itself that it could not do better. Mr. Hayes said that the difficulties that the Committee had experienced at this meeting and the previous one in trying to get agreement on language concerning a single substantive issue demon strated to him that it would be a serious mistake to attempt to reach agreement on a long, detailed text. It was mainly for this reason that he opposed the suggested elements 1 and 2 in the proposed new format; he thought the Committee would simply bog down in debate on language. One of the advantages of the present directive format was that there was a reasonable chance that the Committee would be able to reach agreement. Mr. Daane commented that the Chairman's proposal, as he understood it, was simply to try to reach such agreement on language in the new type of directive. If Mr. Hayes was right that the Committee would bog down in discussion--and he (Mr. Daane) sus pected that he was--this would be learned in the course of the trials. Chairman Martin said he hoped everyone would approach this trial with an open mind. He thought the Committee should try to develop a better statement on how it assessed the economic situation in arriving at its policy decision at each meeting, whether it was done in the directive or in the policy record.

Mr. Hayes said he felt the "green book" would serve this purpose, There had been several suggestions that this book be made available to the public, and he thought such a procedure, which would not involve any change in the directive, was worth exploring. Mr. Swan commented that while he thought the green book was an excellent compendium, in his judgment it did not substitute for a Committee assessment of the economic situation incorporated in the directive or in the policy record. Mr. Deming asked whether it would be possible to have the staff drafts of the "trial" directives delivered by the Friday preceding each meeting instead of late on Monday, as had been the practice so far. Mr. Brill said that an entire week's data on banking developments would be missed it the staff tried to get the drafts to Committee members by Friday. It night be possible, how ever, to mail or telegraph the drafts to the Reserve Banks during the weekend before the meeting. It was agreed that the Chairman's suggestion for experimenting with the new directive format would be followed. Mr. Robertson said he had prepared a statement on the directive proposals that he would distribute to the Committee and

staff after the meeting. (A copy of this statement has been placed in the files of the Committee.) Thereupon the meeting adjourned. S cretary Secretary