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 Wash

ington on Saturday, February 28, 1942, at 10:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Eccles, Chairan

Sproul, Vice Chairman

Szymczak

McKee

Ransom

Draper

Leach

Davis

Peyton

Alfred H. Williams (alternate for Mr. Fleming)

Mr. Morrill, Secretary

Mr. Carpenter, Assistant Secretary

Mr. Wyatt, General Counsel

Mr. Goldenweiser, Economist

Mr. John H. Williams, Associate Economist

Mr. Rouse, Manager of the System Open

Market Account

Mr. Piser, Chief, Government Securities

Section, Division of Research and

Statistics of the Board of Governors

Mr. Clayton, Assistant to Chairman Eccles

Mr. Thurston, Special Assistant to Chairman

Eccles

Mr. Berntson, Clerk in the Office of the

Secretary of the Board of Governors

Messrs. Gilbert, C. S. Young, and Leedy, alter

nate members of the Federal Open Market Com

mittee

Messrs. McLarin and Day, Presidents of the

Federal Reserve Banks of Atlanta and San

Francisco, respectively

Messrs. Paddock and Zurlinden, First Vice Presi

dents of the Federal Reserve Banks of Boston

and Cleveland, respectively

Mr. Sienkiewicz, Secretary of the Presidents'

Conference

2/28/42

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Upon motion duly made and seconded,

and by unanimous vote, the minutes of the

meeting of the Federal Open Market Commit

tee held on December 12, 1941, were ap

proved.

Upon motion duly made and seconded,

and by unanimous vote, the actions of the

executive committee of the Federal Open

Market Committee as set forth in the min

utes of the meeting of the executive com

mittee on December 12, 1941, were approved,

ratified, and confirmed.

Mr. Rouse read a report prepared at the Federal Reserve Bank of

New York covering operations in

the System open market account during

the period from December 12, 1941, to February 25, 1942, both dates in

clusive, and discussed the important features of the report.

He also

referred to the transactions in the System account on February 27, as

reported by him at the meeting of the executive committee just prior

to this meeting.

Upon motion duly made and seconded,

and by unanimous vote, the transactions

in the System account during the period

from December 12, 1941, to February 27,

1942, both dates inclusive, were approved,

ratified, and confirmed.

On January 14, 1942, the Board's Examiner in Charge submitted

to the Secretary of the Federal Open Market Committee a copy of the re

port of examination of the System account made at the close of business

on October 25, 1941, by the examiners of the Board of Governors as part

of the regular examination of the Federal Reserve Bank of New York, and

copies of this report were sent to the members of the Federal Open Market

2/28/42

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Committee under date of January 20, 1942.

It was stated that there was nothing

in the report that required action by the

Federal Open Market Committee at this time,

and, upon motion duly made and seconded and

by unanimous vote, the report was received

and ordered filed.

Statements were then made by Messrs. John H. Williams and Golden

weiser in which they discussed questions arising out of the problem of

war financing.

At the request of the members of the Committee, Mr. Wil

liams agreed to prepare a comprehensive memorandum covering the matters

referred to in

his statement with the understanding that when completed

the memorandum would be sent to Mr. Morrill who would forward, copies to

the members of the Board and the Presidents of the Federal Reserve Banks.

A summary of Mr. Goldenweiser's comments has been placed in

the files of

the Federal Open Market Committee.

A discussion ensued of questions raised by Messrs. Goldenweiser

and Williams in

their statements, of the place the Federal Reserve Sys

tem should occupy in the war and post-war periods, and of the part the

System should play in

the war financing program.

At the request of Chairman Eccles,

there were distributed to the

Presidents copies of (1) the statement of a suggested program of Treas

ury financing which was sent to the Secretary of the Treasury under date

of January 28, 1942, with the comment that the statement expressed the

unanimous view of the members of the Board and Messrs. Sproul, Leach,

Alfred H. Williams,

Goldenweiser, John H. Williams, Rouse,

and Piser,

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and (2) a memorandum prepared by Mr.

Piser under date of February 23,

1942, summarizing discussions relating to a war financing program at a

meeting of members of the executive committee of the Federal Open Market

Committee with representatives of the Treasury on February 20.

Chairman

Eccles suggested that the members of the Board and the Presidents read

the two memoranda over the week end as a preliminary to a discussion of

Treasury financing at the meeting of the Federal Open Market Committee

on Monday, March 2, 1942,

and that because of the confidential character

of the memoranda the copies handed to the Presidents be returned at that

meeting.

Mr. Rouse reported that, although the market had shown a firmer

tone this morning, the 2 per cent bonds of 51-55 were in

supply and it

was necessary to purchase an additional $600,000 of this issue.

Upon motion duly made and seconded,

and by unanimous vote, this purchase was

approved, ratified, and confirmed. Earlier

in this meeting the Federal Open Market

Committee ratified all transactions in the

System account through February 27, so that,

with ratification of the purchase today,

all transactions in the System account were

approved by the Committee.

Thereupon the meeting adjourned.

Secretary.

Approved:

Chairman.