FOMC Minutes

TWENTY-FOURTH ANNUAL REPORT

OF THE

BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

COVERING

OPERATIONS

FOR THE YEAR 1937

UNITED STATES OF AMERICA

WASHINGTON: 1938

ANNUAL REPORT OF BOARD OF GOVERNORS

FEDERAL RESERVE SYSTEM

place maturing securities and to make shifts between maturities within

certain reasonable limitations. It was felt, however, that inasmuch as

the action authorizing the executive committee to increase the amount

of securities held in the account contemplated an immediate increase in

the account with a view to preserving an orderly market and facilitating

the adjustment of member banks to increased reserve requirements, it

would be advisable not to authorize the reduction of the amount of secu

rities held with maturities within two years to less than $1,000,000,000

(the amount of such securities held in the account at the time was in ex

cess of $1,100,000,000).

MEETING ON JUNE 9, 1937

MEETING ON MAY 5, 1937

Members present: Mr. Eccles, Chairman; Mr. Harrison, Vice Chair

man; Mr. Broderick, Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr.

Davis, Mr. Sinclair, Mr. McKinney, Mr. Martin, Mr. Day.

1. Authority to Replace Maturing Securities and to Make Shifts of Securities

in the System Open Market Account.

By unanimous vote, the Committee instructed the ex

ecutive committee to direct the replacement of maturing

securities in the System open market account with other

Government securities and to make such shifts between

maturities in the account as may be necessary in the proper

administration of the account, provided that the amount

of securities maturing within two years be maintained at

not less than $1,000,000,000 and that the amount of bonds

having maturities in excess of five years be not over

$850,000,000 nor less than $500,000,000.

This action continued authority previously granted to the executive

committee to enable it to replace maturing securities and to make shifts

between maturities in the System account, including authority to in

crease or decrease the holdings of bonds with maturities in excess of five

years, within the specified limits, in order to meet changing market con

ditions and to improve the distribution of maturities in the account.

2. Authority to Increase or Decrease System Account.

By unanimous vote, the Committee directed the execu

tive committee to make purchases and sales (including

authority to allow maturities to run off) of United States

Government securities for the System open market ac

count to such extent as may be necessary before the ad

journment of the next meeting of the Federal Open Market

Committee, for the purpose of preventing disorderly market

conditions, provided that the aggregate amount of securi

ties held in the account be not increased to an amount

exceeding $2,680,000,000 nor decreased to an amount less

than $2,180,000,000; the kinds and maturities of the securi

ties acquired or sold to be determined in the light of

current market developments.

This action was taken in order that the executive committee might

continue to have authority to act promptly when conditions warranted

the purchase or sale of Government securities for the System open market

account for the purpose of preventing disorderly market conditions.

217

Members present: Mr. Eccles, Chairman; Mr. Harrison, Vice Chair

man; Mr. Broderick, Mr. Szymczak, Mr. McKee, Mr. Ransom, Mr.

Davis, Mr. Sinclair, Mr. McKinney, Mr. Martin, Mr. Day.

1. Authority to Replace Maturing Securities and to Make Shifts of Securities

in the System Open Market Account.

By unanimous vote, the Committee instructed the execu

tive committee to direct the replacement of maturing securi

ties in the System open market account with other Gov

ernment securities and to make such shifts between maturi

ties in the account as may be necessary in the proper

administration of the account, provided that the amount

of securities maturing within two years be maintained at

not less than $1,000,000,000 and that the amount of bonds

having maturities in excess of five years be not over

$850,000,000 nor less than $500,000,000.

It was agreed that the reasons for the authority granted to the execu

tive committee at the meeting on May 5, 1937, to replace maturing

securities and to make shifts between maturities in the System account

still applied and that, therefore, such authority should be renewed.

2. Authority to Increase or Decrease System Account.

By unanimous vote, the Committee directed the execu

tive committee to make purchases or sales (including au

thority to allow maturities, to run off without replace

ment) of United States Government securities for the

System open market account to such extent as may be

necessary before the adjournment of the next meeting of

the Federal Open Market Committee for the purpose of

preventing disorderly market conditions, provided that the

aggregate amount of securities held in the account be not

increased or decreased from the amount now held in the

account by more than $250,000,000; the kinds and maturi

ties of securities acquired or sold to be determined in the

light of current market developments.

The reason for this action was the same as that which prompted simi

lar action by the Committee at its meeting on May 5, 1937.

MEETING ON SEPTEMBER 12, 1937

Members present: Mr. Eccles, Chairman; Mr. Harrison, Vice Chair

man; Mr. Broderick, Mr. Szymczak, Mr: McKee, Mr. Ransom, Mr.

Davis, Mr. Sinclair, Mr. McKinney, Mr. Martin, Mr. Day.

1. Authority to Increase or Decrease System Account and Recommendation

that Treasury Be Requested to Desterilize $300,000,000 of Gold.

The following resolutions were adopted by unanimous

vote:

"RESOLVED, that, until the adjournment of the next meeting of the

Committee, the executive committee is authorized to direct the pur

chase in the open market from time to time of sufficient amounts of

Treasury bills or other short-term Treasury obligations to provide

funds to meet seasonal withdrawals of currency from the banks and