November 10, 1964 FOMC Minutes

FOMC minutes

that the value of the green book to the Comittee would be seriously impaired if it were made public. Chairman Martin remarked that Mr. Brill had made a valid point. Continuing, the Chairman said he thought today's discussion had been particularly valuable because Committee members had spoken so frankly. He did not think the Committee should let this matter drop, and he suggested further discussion at the next meeting after conclusion of the regular agenda. Mr. Swan said that today's discussion obviously had been necessary, and he was sorry it had not taken place earlier. Some members thought the Committee could not agree on language in the proposed new type of directive, and others believed that it could. He suggested that the Committee plan at its next meeting actually to go through the process of deliberating the trial directive to dis cover whether agreement was possible. Chairman Martin agreed. He made the further suggestion that each member review the trial directive chat had been prepared for today's meeting and plan on indicating his points of disagreement with it at the next meeting, along with making any comments he might have on the new trial directive that would be prepared for that meeting. Mr. Mitchell suggested that the members make such comments on today's trial directive in writing and mail them to the Secretariat

within the next week. The staff might be asked to distribute a summary of these comments before the next meeting. It also would find them valuable in drafting the next trial directive. He assumed most comments would be on elements 1 and 2, but some also might be made on elements 3 and 4. It was agreed that the next meeting of the Committee would be held on Tuesday, December 1, 1964, at 9:30 a.m. Thereupon, the meeting adjourned.

Attachment A CONFIDENTIAL (FR) November 9, 1964 Draft language for current economic policy directive for consideration by the Federal Open Market Committee at its meeting on November 10, 1964 Alternative A It is the Federal Open Market Committee's current policy to accommodate moderate growth in the reserve base,, bank credit, and the money supply for the purpose of facilitating continued expansion of the economy, while fostering improvement in the capital account of U.S. international payments, and seeking to avoid the emergence of infla tionary pressures. This policy takes into account the apparent underlying strength in current economic conditions, apart from the effects of work stoppages in the automobile industry; indications that the rate of increase in business capital spending may moderate in tne coming year; relative stability in broad commodity price averages, even though additional price increases have occurred in some materials markets; and the recent reduction in bank credit and monetary expansion from the high rates of summer. It also gives consideration to the persistence of a sizable deficit in the U.S. balance of payments. To implement this policy, and taking into account the current Treasury financing, System open market operations shall be conducted with a view to maintaining about the same conditions in the money market as have prevailed in recent weeks, while accommodating moderate expansion in aggregate bank reserves. Alternative B It is the Federal Open Market Comnittee's current policy to accommodate moderate growth in the reserve base, bank credit, and supply for the purpose of facilitating continued expansion the money of the economy without inflation, while placing somewhat greater on fostering improvement in the capital account of U.S. emphasis international payments. This policy takes into account the under in economic conditions, apart from the effects of work lying strength stoppages in the automobile industry; persistent advances in some materials prices, which have not, however, been reflected in the broad commodity price averages; and the vigorous although recently some. hat reduced rates of expansion in bank credit and the money supply. It also gives consideration to the persistence of a sizable deficit in

the U.S. balance of payments and the possibility of some adverse effects on the deficit of the recent slowing down of economic activity in Europe. To implement this policy, System cpen market operations shall be conducted with a view to achieving slightly firmer con ditions in the money market than have prevailed in recent weeks /, while_accommodating moderate expansion in aggregate bank reserves/.