May 2, 1967 FOMC Minutes

FOMC minutes

could be explored, although he had some reservations as to whether the effort would be successful. Mr. Maisel remarked that he saw no reason for even exploring the possibility of getting an Executive Order if a 90-day time lag in publishing the directives appeared defensible. In his judgment, publication with such a time lag would not pose problems. Mr. Brimmer noted that he had mentioned the possibility of getting an Executive Order in the Committee's earlier discussion, and Mr. Hackley had indicated some reluctance to pursue that possibility at that time. He (Mr. Brimmer) still felt that the Committee needed some indication of the probability that it could obtain a general exemption, within which it could work out appropriate procedures for release of materials. As to timing, he thought it if important issues were left to be resolved would be unfortunate that the Committee try to reach the until June 20, and he proposed necessary decisions at its May 23 meeting. Treiber remarked that he also would favor an exploration Mr. Executive Order covering all of the of the possibility of getting an Committee's operations. that if it was agreeable to the Mr. Hackley then said a letter addressed to the Legal Division would prepare Committee an Executive Order of the broadest the Justice Department requesting from publication in the Federal Register possible scope, exempting

not only the foreign currency instruments but also the domestic directives. Mr. Daane suggested that the letter indicate that the Committee was reviewing its general policies on publication. Mr. Brimmer agreed, and added that it should be made clear that if the Order was issued the Committee would still try to work out the best possible procedures with respect to releasing informa tion. Chairman Martin then proposed that in view of the lateness of the hour the Committee defer the planned discussion of its policy on publication of information on drawings under the swap network and on other System foreign currency operations, and no objections were heard. Chairman Martin then reported that the trilateral negotiations the United States, and Germany with respect among the United Kingdom, maintaining troops in Germany had finally come to to the cost of would be announcing today. One product a conclusion which Mr. McCloy of the negotiations was a letter that had been addressed to him Blessing of the German Federal Bank, (Chairman Martin) by President to convert any of its dollar that Bank did not intend stating that time being. That letter probably would be holdings to gold for the released today.

Mr. Daane asked whether the letter did not simply reaffirm a policy the Germans had been following, and the Chairman replied affirmatively. It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, May 23, 1967, at 9:30 a.m. Thereupon the meeting adjourned. Secretary

ATTACHMENT A CONFIDENTIAL (FR) May 1, 1967 Draft of Current Economic Policy Directive for Consideration by the Federal Open Market Committee at its Meeting on May 2, 1967 The economic and financial developments reviewed at this meeting suggest that prospects for renewed economic expansion have improved. The adjustment of excessive inventories is proceeding, with consumer buying strengthened and industrial output reduced moderately. Average wholesale prices have declined recently, re flecting reductions in farm and food prices and stability in prices of industrial commodities; but unit labor costs in manufacturing have risen further. Bank credit expansion has moderated in recent weeks from its earlier rapid rate. Long-term interest rates have risen considerably under the influence of heavy securities market financing and more optimistic market appraisals of the business outlook, but yields have declined further following the recent reduction short-term Reserve Bank discount rates. Interest rates abroad have continued in and some further reductions have been made in foreign to decline central bank discount rates. The balance of payments deficit has substantial despite some improvement in the foreign trade remained it is the Federal Open Market Committee's surplus. In this situation, and credit conditions, including bank credit policy to foster money to renewed economic expansion, while recognizing growth, conducive toward reasonable equilibrium in the country's the need for progress balance of payments. while taking account of the current To implement this policy, operations until the next financing, System open market Treasury be conducted with a view to maintaining meeting of the Committee shall the money market, and to attaining prevailing conditions in the conditions, insofar as the Treasury financing permits, somewhat easier significantly less than credit appears to be expanding if bank currently anticipated.