FOMC Minutes

A meeting of the Federal Open Market Committee was held Monday,

September 26, 1955, at 3:30 p.m.

This was a telephone conference meeting

and the location of each individual is indicated in parenthesis after his

name in the following list of those in attendance:

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Sproul, Vice Chairman (New York)

Balderston (Chicago)

Earhart (Chicago)

Fulton (Chicago)

Irons (Chicago)

Leach (Chicago)

Mills (Washington)

Robertson (Washington)

Shepardson (Chicago)

Szymczak (Washington)

Mr. Vardaman (Washington)

Messrs. C. S. Young and Powell, Alternate Members

of the Federal Open Market Committee (Chicago)

Mr. Treiber, Alternate Member of the Federal Open

Market Committee (New York)

Mr. Williams, President, Federal Reserve Bank of

Philadelphia, and Mr. Leedy, President,

Federal Reserve Bank of Kansas City (Chicago)

Mr. Riefler, Secretary (Washington)

Mr. Vest, General Counsel (Washington)

Mr. Thomas, Economist (Washington)

Mr. Ralph A. Young, Associate Economist (Washington)

Mr. Rouse, Manager, System Open Market Account

(Chicago)

Mr, Sherman, Assistant Secretary, Board of

Governors (Washington)

Mr. Miller, Chief, Government Finance Section,

Division of Research and Statistics, Board

of Governors (Washington)

Mr.

Roosa, Assistant Vice President, Federal

Reserve Bank of New York (New York)

9/26/55

2.

Arrangements for this meeting were made for the purpose of discuss

ing the potential economic effects of the President's illness over the past

week end and what, if

policy.

any, change should be made at this time in credit

Expressions of views were exchanged by individual members of the

Committee as to policy that should be pursued in the light of developments

in

the market today.

It was agreed unanimously that no

change be made in the existing general

program of restraint, excepting the elim

ination from it of the special instruction

given at the meeting on September 14, 1955,

that, in conducting operations in pursuit

of such policy, allowance for errors be on

the side of greater restraint.

The meeting adjourned at 4:10 p.m.

Secretary's note: A copy of notes

used during the telephone meeting by

Mr. Sproul in reporting to the Committee,

as its agent, has been placed in the files

of the Federal Open Market Committee,

Sub

sequent to the meeting, the Secretary re

ceived from Mr. Sproul the following tele

gram, copies of which were furnished to

the members of the Committee and other

Presidents who participated in the meeting:

"Figures I used in today's telephone conference were illus

trative of what maintaining degree of pressure existing before

last week's temporary easing might mean during period of

Treasury financing. Did not intend to suggest that we should

try to bring up average free reserves to minus $250 million for

statement week ending Wednesday, September 28th, since estima

ted average negative free reserves for four days of statement

Important

week already elapsed may be around $400 million.

thing from psychological standpoint, however, is probably to

show some outright purchases to market tomorrow and in the

This would

later published figures for this statement week,

be in accord with general consensus of telephone meeting that

9/26/55

-3

since there has been no change in fundamental economic situa

tion we should aim at maintaining about same degree of credit

pressure as existed before last week's temporary easing but

giving management of account sufficient leeway to counter

adverse psychological developments and removing from its

instructions the admonition to try to make errors on the side

of restraint."

Secretary