FOMC Minutes

A meeting of the Federal Open Market Committee was held in the

offices of the Board of Governors of the Federal Reserve System in

Washington on Thursday, November 19, 1936,

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

at 4:45 p.m.

Eccles, Chairman

Harrison, Vice Chairman

Broderick

Szymczak

McKee

Ransom

Davis

Mr. Fleming

Mr. McKinney

Mr. Schaller

Mr. Hamilton

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Morrill, Secretary

Wyatt, General Counsel

Dreibelbis, Assistant General Counsel

Goldenweiser, Economist

Williams, Associate Economist

Burgess, Manager of the System Open

Market Account

Mr. Carpenter, Assistant Secretary of the

Board of Governors

Mr. Thurston, Special Assistant to the

Chairman of the Board of Governors

Reference was made to the fact that earlier in the day there had

been a meeting of members of the Board of Governors and Presidents of

Federal Reserve Banks, including all the members of the Federal Open Mar

ket Committee, during which Messrs. Goldenweiser and Williams had dis

cussed various phases of the present recovery movement as well as credit

and monetary conditions and the problems presented in

the field of credit

control by the inflow of foreign funds which resulted in

of gold.

the importation

Mr. Goldenweiser had referred to the excess reserves of member

banks and stated that the question was presented whether the time had

come when the Board of Governors should reverse its

easy money policy or,

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if not, whether it

should take further action to reduce the excess re

serves which had accumulated since August 15, 1936, when increased reserve

requirements went into effect.

had suggested that, if

In connection with the latter question he

and when action became necessary,

it

would be more

desirable to increase reserve requirements than to reduce the System

portfolio.

Following Mr. Goldenweiser's statement Mr. Williams referred to

the steps which had been taken to stimulate recovery and expressed the

opinion that further stimulation would be unnecessary; that while the

time had not come to reverse the easy money policy, care should be

taken to prevent any maladjustment of the economic structure from pos

sible over-stimulation; and that any action taken by the System should

be in the form of a further increase in reserve requirements to offset

gold imports, reserving open market operations for internal control of

credit when the necessity for such control arises.

In response to an inquiry by the Chairman,

Messrs. Goldenweiser

and Williams said that there were no additional comments that they de

sired to offer at this time.

A draft of the minutes of the meeting of the Federal Open Market

Committee held on May 25,

1936, was considered and reviewed.

After discussion, upon motion duly made

and seconded, and by unanimous vote, the minutes

were approved.

The attention of the Committee was directed to the informal

actions taken by the members of the Federal Open Market Committee in June

1936with reference to the postponements to June 25 and June 30 of the

11/19/36

,

effective date for transfers to the System Open Market Account of Govern

ment securities held in the individual accounts of the Federal reserve

banks,

and the reallocation of securities held in

reference to the adoption of "Plan No.

such account, and with

2" for such transfers and re

allocations, which were made effective June 30, 1936.

Upon motion duly made and seconded, and by

unanimous vote, these actions were approved, rati

fied and confirmed.

Upon motion duly made and seconded, and by

unanimous vote, the quarterly readjustment of the

participations of the Federal reserve banks in the

System Open Market Account as of October 1, 1936,

in accordance with the plan followed as of June 30,

1936, was approved, ratified and confirmed.

In connection with the foregoing action it

executive committee at its

was stated that the

meeting this morning had voted to recommend

to the Federal Open Market Committee that the executive committee be au

thorized to follow, as of January 1, 1937, the same plan as that followed

on October 1, 1936, in making readjustments of the participations of the

Federal reserve banks in the System Open Market Account; it

stood that before it

is

being under

actually made the proposed readjustment of par

ticipations as of January 1, 1937,

will be submitted to the Federal re

serve banks for any comments that they may desire to make.

Upon motion duly made and seconded, and by

unanimous vote, the foregoing recommendation of

the executive committee was approved.

Mr. Burgess stated that before this meeting of the Federal Open

Market Committee he had sent to the members of the Committee and its

Secretary a summary report of the open market operations since the last

meeting of the Committee on May 25, 1936, which had been reported in

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11/19/36

detail in the usual weekly reports, including the transactions covered

by the report submitted to the executive committee on September 2, 1936.

Various features of the report were reviewed briefly by Mr. Burgess.

Upon motion duly made and seconded, and by

unanimous vote, the transactions set forth in

the report as submitted by Mr. Burgess were

approved, ratified and confirmed.

Reference was made to the fact that the resignation of Mr. Morrison

as a member of the Board had resulted in a vacancy in the position held

by him as an alternate member of the executive committee of the Federal

Open Market Committee, and that this vacancy had not been filled.

Upon motion by Mr. McKee which was duly

seconded, and by unanimous vote, Mr. Davis was

appointed to succeed Mr. Morrison as an alter

nate member of the executive committee of the

Federal Open Market Committee.

Thereupon the meeting adjourned with the understanding that the

Committee would meet again at 9:30 a.m. on Friday, November 20, 1936.

Secretary.

Approved:

Chairman.