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 Tuesday, November 12, 1957, at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Hayes, Vice Chairman
Allen
Balderston
Mr.
Mr.
Mr.
Mr.
Bryan
Leedy
Robertson
Shepardson
Mr. Szymczak
Mr. Williams
Messrs. Fulton, Irons, Leach, and Mangels,
Alternate Members of the Federal Open
Market Committee
Messrs. Erickson, Johns, and Deming, Presi
dents of the Federal Reserve Banks of
Boston, St. Louis, and Minneapolis,
respectively
Mr. Riefler, Secretary
Mr. Thurston, Assistant Secretary
Mr. Sherman, Assistant Secretary
Mr. Solomon, Assistant General Counsel
Mr. Thomas, Economist
Messrs. Atkinson, Bopp, Roelse, Tow and
Young, Associate Economists
Mr. Rouse, Manager, System Open Market
Account
Mr. Carpenter, Secretary, Board of Governors
Mr. Koch, Assistant Director, Division of Re
search and Statistics, Board of Governors
Mr. Gaines, Manager, Securities Department,
Federal Reserve Bank of New York
Messrs. Hostetler, Storrs, and Wheeler, Vice
Presidents of the Federal Reserve Banks
of Cleveland, Richmond, and San Francisco,
respectively; Mr. Holland, Assistant Vice
President, Federal Reserve Bank of Chicago;
Mr. Parsons, Director of Research, Federal
11/12/57
-2
Reserve Bank of Minneapolis; Messrs.
Willis and Walker, Economic Advisers,
Federal Reserve Banks of Boston and
Dallas, respectively; and Mr. Hastings,
Financial Economist, Federal Reserve
Bank of St. Louis
Upon motion duly made and seconded,
and by unanimous vote, the minutes of the
meeting of the Federal Open Market Com
mittee held on October 22, 1957 were ap
proved.
Before this meeting there had been distributed to the members
of the Committee a report prepared at the Federal Reserve Bank of New
York covering open market operations during the period October 22
through November 4,
1957, and a supplementary report covering commit
ments executed November 5 through November 8, 1957.
reports have been placed in
Copies of both
the files of the Federal Open Market Com
mittee.
Mr. Rouse reported that open market operations had supplied
reserves during the three weeks since the last meeting.
reliance was placed on repurchase agreements in
Principal
view of projections
showing net borrowed reserves falling to levels in the neighborhood
of $100 to $200 million in the weeks of November 20 and November 27.
By using repurchase agreements, Mr. Rouse said it was hoped that the
run-off of these arrangements at the middle of the month would make
it
possible to avoid outright selling from the System Account while
the Treasury was in the market.
It was anticipated that the Treasury
financing would be announced the latter part of this week and that
11/12/57
-3
the books would be open early next week.
Mr. Rouse went on to say
that there were problems and uncertainties in the period ahead.
The
increase in required reserves resulting from the Treasury cash financ
ing, in
combination with the usual float decline and other seasonal
influences,
would call for about $500 million of reserves in the week
ending December 4 and an additional $300 million would be needed in
the week of December 11.
It was difficult to draw detailed plans as
to how these funds would be supplied in view of the Treasury's cash
problem and the prospect that the Treasury in
draw down its
early December might
Stabilization Fund balance and its
operating balance
with the Reserve Banks, and, in addition, might sell some of the free
gold.
To the extent that any of these actions supplied reserves, the
need for System purchases of Treasury bills would be reduced.
Reviewing current market conditions,
Mr. Rouse pointed out that
expectations with respect to the business situation were an important
influence in the Government securities market,
Prices of Treasury
bonds had been improving, and there was some feeling in the market
that the Treasury could select almost any maturities it
ished in
financing this month, with excellent prospects of success.
its
The im
proved tone in the Government securities market had not extended to
the corporate and municipal markets,
however, where the large volume
of new issues had tended to keep the market under pressure.
The Desk
was successful in buying large amounts of Treasury bills for foreign
and international accounts two weeks ago, at a time when bills came
11/12/57
easily.
-4
More recently, large buying by industrial corporations and
the reinvestment of the proceeds of a recent utility financing had
sharply reduced the market's supply of short-term issues and driven
rates lower.
The Treasury bills sold on Friday vent at an average
rate of 3.47 per cent, and it
rate would move still
was not unlikely that the Treasury bill
further away from the discount rate on the down
side.
and
the
the
ber
and
Thereupon, upon motion duly made
seconded, and by unanimous vote,
open market transactions during
period October 22 through Novem
8, 1957, were approved, ratified,
confirmed.
Mr. Hayes referred to the visit to the Federal Reserve Bank of
New York in October of members of the staff of Congressman Wright Patman,
and he read the following letter that he had received from Mr. Patman
under date of October 25:
"Thank you for your October 18th letter.
"Both Mr. William Johnson and Dr. Clifford Clark have
reported to me on their visit to observe open market opera
tions, and they commented especially on how helpful and
gracious you and your staff were.
"I deeply appreciate your courtesies to them and hope
that I shall have opportunity to visit with you too when I
am in New York."
Mr. Hayes also stated that, as arranged by Chairman Martin,
Senator Wallace Bennett visited the New York Bank on October 23, 1957
for the purpose of observing operations and asking questions concern
ing transactions for the System open market account, and he read a
11/12/57
-5
letter dated November 6 that he had received from the Senator
"I want to acknowledge gratefully the receipt of the
material which you sent me including the chart of the
organization of the New York Bank and a number of speeches
you and Mr. Sproul have made.
"I have been in Utah since I was in New York and have
just come back to my desk in Washington. I haven't had
time yet to read the material but I will do so at the
earliest opportunity.
"Mr. Golembe and I enjoyed our visit to New York very
much.
We got about all we could absorb that one day but
both of us hope we can come back again."
A memorandum from the staff on "Recent Economic and Financial
Developments in the United States and Abroad" had been sent to each
member of the Committee on November 8, 1957.
That memorandum, a copy
of which has been placed in the Committee's files, stated that the
economic climate domestically was in process of change, that expansive
forces had eased, and that contractive forces had become more prominent.
Industrial production declined further in October as did employment and
department store sales, and unemployment claims had been running sharply
above a year earlier.
These changes followed significant weakening in
business sentiment as evidenced by sharp declines in stock market prices,
in prices of sensitive commodities,
and in new orders.
There also had
been a sizable number of professional forecasts of business decline.
The spreading view that business outlays for fixed capital are heading
downward had been given recent support by the McGraw-Hill survey of
plans for capital spending in 1958.
The staff memorandum also pointed
out that private demands for bank credit eased considerably in October,
-6while demands for long-term funds continued strong.
Yields on
Government securities had declined steadily although moderately in
recent weeks.
Stock prices had fluctuated within a fairly narrow
range around a level about a sixth below the July peak.
Despite the
appearance of these recent signs of slackening, the memorandum called
attention to the fact that the domestic economy still was operating
at very high levels.
Chairman Martin now requested that Mr. Young point up the
current economic data, and Mr. Young made a statement as follows:
In our presentation at the last meeting of the Com
mittee, we reported that, more than at any time in recent
months, the pattern of economic indicators pointed to
possible decline in over-all economic activity, and we
intimated further that actual decline might be in process.
The most recently available data confirm that moderate
downward adjustment has, in fact, been occurring. Indeed,
the composite showing that cyclical downturn has now set
in is fairly impressive:
After five months of little
change, output at
factories and mines is expected to show a
drop of as much as 2 index points from
September to October. Declines in activity
were widespread, although most conspicuous
in durable goods lines.
Both freight car loadings and electric power
generation in October were off moderately
further.
The decline in car loadings ex
tends a decline that began in April, and
that for power generation a decline that
commenced in August.
While total new construction holds at a high
level, industrial construction continued
the decline which set in in May.
Business inventory accumulation has slowed
markedly in recent months. In manufacturing,
with declines occurring in new orders and
sales, the inventory-sales ratio in Septem
ber was at levels considerably above the
average of the past two years.
11/12/57
Business capital spending plans for the year ahead
are off significantly, with a decline in expendi
tures of a tenth or more from current levels in
dicated over the next four quarters.
Nonfarm employment receded further in October from
the August peak.
Reductions in both manufactur
ing and nonmanufacturing lines, though small,
were widespread.
Only State and local govern
ment employment registered an increase, although
service and trade employment held about even.
Unemployment in October, after allowance for sea
sonal factors, rose to 4.6 per cent of the labor
force, after holding at 4.2 per cent for three
months, and initial
claims for unemployment in
surance averaged 5 per cent higher than in
October of last year. The average length of the
work week in manufacturing, after stability over
recent months, declined half an hour to 39.5
hours; reductions in hours, though accentuated by
the flu epidemic, were widespread, and operated
to reduce weekly earnings, the average for which
fell one dollar.
Total retail sales, which declined nearly 1 per cent
in September, fell further in October, possibly by
Personal income was apparently also
2 per cent.
for the second consecutive month,
October
down in
with the decline concentrated in wages and salaries.
U. S. exports fell sharply in September to about 10
per cent under the average of the preceding three
months.
Prices of sensitive or basic industrial materials
declined somewhat further in recent weeks and are
now not much above the 1954 recession low.
Since July, business loans at city banks have been
stable, compared with substantial growth in all
other recent years except 1954. The decline in
such loans during October, which was sizable, was
October decline of the postwar period.
the first
In Canada, recession tendencies have become fairly
clear. In Europe, industrial activity by late
spring had ceased expanding and through September
had tapered off moderately. With the exchange
position of many inflationary development economies
tight, world trade impulses stemming from these
economies seem more likely to be contractive than
sustaining or expansive.
-8-
11/12/57
It should be emphasized that downward adjustment in the
domestic economy thus far has been very moderate and that
average wholesale and consumer prices have held relatively
stable.
But with industrial and other capacity substantially
enlarged and with aggregate demand no longer expanding, the
price structure would appear to confront supply pressure.
At a time like the present, perspective is highly impor
tant. A good deal of adjustment in the economy has taken
place during the past two years, first,
in autos and housing,
second, in materials-producing industries, and, most recently,
in selected defense industries, especially military aircraft.
It is possible that auto and housing markets, reflecting in
creased credit availability as that develops with demands
slackening elsewhere, will show special strength, and that
resumption of military ordering will soon set in--indeed, as
an aftermath of Sputnik, will increase.
These developments,
should they occur, could have a considerable effect on an
economic
situation that has already absorbed various important
rolling adjustments, particularly in turning around the
general business climate. On the other hand, turn abouts in
the economic climate do take time, and the most likely prospect
for the immediate future would seem to be for further moderate
downdrift of activity.
Chairman Martin next called upon Mr. Thomas, who made a statement
regarding recent financial developments substantially as follows:
Recent financial developments have reflected the indica
tions of slackening in economic activity discussed by Mr.
They help to corroborate the likelihood of abatement
Young.
The details of these developments
in inflationary pressures.
have been described in the memorandum prepared for the Com
Significant aspects have been the sharp decline in
mittee.
business loans by banks, the recent firming of the market for
Treasury securities, the reduced level of share prices, and
the less than seasonal growth in the money supply this fall.
At the same time, new securities issued by corporations and
by State and local governments continue in large volume, and
Treasury borrowing has been larger than in other recent years.
The continued growth in time deposits at commercial banks has
provided banks with funds for credit expansion. This raises
questions as to the interpretation to be placed on the
slackening in the money supply growth.
The decline in commercial loans at banks in leading
cities during the five weeks ending October 30, amounting
decline shown for that
to over $600 million, was the first
11/12/57
month in the postwar period. Although $400 million of the
decrease represents repayments by finance companies, which
is usual in that month, the remaining decline of over $200
million compares with increases of about $500 million, after
excluding finance companies, in each of the two preceding
Octobers.
For the period since the end of July, eliminating from
consideration the decline in July after the large tax borrow
ing in June, there have been declines or less than seasonal
increases in loans to nearly all groups of borrowers.
In
recent years business loans have generally increased con
siderably during November and December, particularly in the
latter month.
Some increase should occur this year, espe
cially since corporate tax payments in December will be
larger than in the two previous years.
Corporate borrowing in capital markets has continued
at the same high level that has been maintained for the past
12 months but is showing no further increase.
No doubt some
of these receipts have recently been used to reduce bank
loans.
In view of the reduced borrowing from banks and the
indicated curtailment in business capital expanditures some
reduction in corporate offerings of new securities might be
State and local government
expected during the months ahead.
borrowing, however, is likely to continue in large volume.
Treasury borrowing in the market, including that by
Government agencies to raise cash for the Treasury, has been
larger since mid-year than in the same period of other recent
years.
Much of this borrowing has been effected initially
through the banks, and bank holdings of such securities have
increased moderately in contrast to declines in the same
Yet a substantial amount of
period of other recent years.
Government securities has been absorbed by nonbank holders.
Home mortgage credit has continued to increase at a rate
of over 8 per cent a year for the total outstanding--a rate
which, though less than in previous years, can hardly be
It appears that demands for housing are such
called small.
that mortgages might increase even faster if funds were avail
able at rates at which FHA loans could be marketed. Consumer
instalment credit has also increased this year at a pace
which may be above rather than below that which could be
indefinitely sustainable, although the increase in September
was somewhat slower.
Total loans and investments of commercial banks have shown
change since midsummer, as the increase in holdings of
little
securities has approximately offset the unseasonal loan decline.
In the aggregate, bank credit has been supplied since midsummer
in a somewhat smaller amount than in the same period of other
recent years.
11/12/57
-10-
Demands for bank reserves have been notably lighter
this fall than in the same period of the two previous years.
To a small extent this has reflected reserves made available
by gold and foreign transactions and by advance payments by
the Reserve Banks to the Treasury, but principally it has
been due to less than seasonal increases in currencyand in
required reserves.
Until the past week there has been no easing in
the
money market from this development, because a reduction in
Federal Reserve holdings of securities at a time when in
creases are usual kept member bank borrowing at a fairly
high level.
Until two or three weeks ago net borrowed re
serves averaged close to $500 million.
This, together with
the higher discount rate, the generally low liquidity position
of banks, and the frequent Treasury borrowing operations,
served to keep the money market under pressure.
System policy has thus been quite restrictive in
a period
when credit demands have been slackening. To a degree slacken
ing in credit growth was the aim of the restrictive policy.
System operations, however, have absorbed not only additional
reserves
but they
demands,
discount
made
also
thus
rate
available by the so-called operating factors,
have offset the effect of reduced monetary
keeping banks heavily in debt at the higher
established in August.
Estimates based on the projected seasonal pattern for
the remainder of this year, shown in the chart, indicate
that after the next two weeks, during which reserves will
be made available by the mid-month float increase, reserve
needs will mount rapidly.
Approximately $700 million of
additional reserve funds would be needed to keep net borrowed
reserves around the current level of about $350 million. To
the extent that the Treasury makes use of its free gold, the
need for System purchases would be reduced.
It will be recalled that in November and December of
last year and also in December 1955 reserves were made freely
available and net borrowed reserves were negligible. Even so
interest rates rose sharply, reflecting the pressures of
In fact the weakness in the Govern
strong credit demands.
ment securities markets, together with international tensions,
Be
provided the basis for relaxing restraint on reserves.
cause of large temporary liquidity requirements of business
and banks in December, rates on Treasury bills generally rise
Funds
in that month even in periods of relatively easy money.
are needed at the time to meet urgent temporary needs.
The current decline in yields on Government securities,
both short and long, notwithstanding the higher level of net
borrowed reserves than a year ago, probably reflect the
11/12/57
-11-
slackening of credit demands in contrast to the vigorous
demands of last year. The pressure of usual seasonal needs,
however, together with Treasury borrowing demands, may soon
reverse the current decline, at least temporarily, unless
reserves are made readily available.
The Treasury will need to borrow at least $1.5 billion
of cash in December, in addition to a refunding operation,
and some more in January.
The timing of this borrowing is
complicated by debt-limit considerations.
The nature of
these immediate borrowing operations, and of other debt
management in the near future, will need to take into con
sideration the current change in the tone of the Government
securities market and also the possibility of increased
Government expenditures later. Prompt advantage should be
taken of any opportunity to issue long-term securities.
Evidences of abatement of inflationary pressures present
an occasion for a reconsideration of the general direction of
System policy. To some degree the slackening may reflect the
intended and desirable consequences of the restrictive credit
policy in limiting the use of bank credit to meet investment
demands not covered by savings. To a large extent, however,
the slowing down may be viewed as an inevitable reaction to
unsustainable elements in the previous expansion. For example,
one of the main reasons for the prospective decline in business
capital expenditures is that productive capacity in so many
lines is now in excess of sales. In addition, consumer resist
ance to higher prices may be an influence in retarding expan
sion of sales.
Monetary policy could have prevented these developments
only by exerting more restraint on expansion. An easier policy
would have stimulated overexpansion, speculation, and rising
prices, and thus made the inevitable reaction more severe than
it might otherwise be.
Monetary policies need not be changed with a view to
bolstering those sectors that are reacting from overexpansion
or in an attempt to validate the higher prices which consumers
are resisting. Nevertheless, if these corrective forces have
reduced the pressure of demands for excessive bank credit
expansion, there is less need for restraint on bank credit.
When there appears to be a slackening in over-all demands for
bank credit, the long-run objective of fostering sustainable
economic growth does not call for forcing contraction by
keeping member banks heavily in debt at a relatively high
discount rate.
It is possible that demand pressure from accelerated
expansion in State and local government borrowing, in home
11/12/57
-12
mortgages, in consumer credit, and even in Federal Govern
ment expenditures, might more than offset lessened borrow
ing by business. Because of the continuing strong demands
in many sectors, the situation evidently does not call for
flooding the banks with excess reserves or removing the
need for all borrowing. Yet, if sustainable growth is to
be fostered, any slackening in total credit demands should
be permitted to bring about some relaxation of credit
restraints.
Chairman Martin said that the vacation from which he returned
last week had been better than any he had had in
felt his perspective had been refreshed.
five years and that he
He had picked a good time to
be away, he added, stating that he had not seen the article that ap
peared in the New York Times on October 24 by Edward Dale until after
he returned.
He could see how this article justifiably had caused
concern to members of the Committee.
Chairman Martin went on to say
that he did not think the Committee could let newspaper articles and
newspaper irritations, which were going to be with us always, blunt
the Committee's perspective in either direction.
the one that appeared in
An article such as
the New York Times calls attention to the
great responsibility of each of us with respect to what goes on in
open market meetings, he said, and this applies to the members of the
staff as well as to the members of the Board and the Reserve Bank
Presidents.
In reading the Dale article, it was not difficult to think
that someone may have said something that gave an inkling of what
transpired in
one of these meetings.
Articles of this type could not
be prevented, and it would be most unfortunate if the Committee per
mitted this clearing house for System policy discussions in any
way
11/12/57
-13
to be lessened in scope and purpose.
It was necessary to get all the
views and thoughts possible, the Chairman said, and this was the only
clearing house in a large System that provided an opportunity for such
exchanges.
As he had commented before, no one should feel bound by
the views he initially expressed in
open market meetings,
recognize that these were a step in
the process of policy decision.
and we should
Chairman Martin went on to say that he thought it
perfectly
obvious that there had been a major change in psychology.
He could
see it clearly while he was away; he did not see it quite as clearly
now that he had gotten back.
Last Friday the members of the Board had
had an economic go-around which made it clear that there was no longer
a question of forecasting a change in the economy; it
of recognizing what was on us.
mittee would be blind if
it
was a question
In the Chairman's opinion, the Com
ignored these developments.
There were a
number of ways in which the Committee could recognize the changed
could put in reserves through the open market.
The
discount rates of the Federal Reserve Banks could be changed.
The
situation.
It
Committee's directive could be modified.
One of the advantages of
the System was that it had a top staff that should express views
freely, whether the Committee agreed or disagreed with those views.
As a prelude to this meeting,
Chairman Martin said he would ask Mr.
Riefler who worked with him closely on these matters and who also had
just returned from vacation to give his thoughts on the situation.
This would be done as a means of getting all the cards on the table.
11/12/57
-14
The final conclusions of the Committee would, of course, result from
decisions made after members of the staff and members of the Committee
and other Reserve Bank Presidents had expressed their thoughts.
Mr. Riefler said that he was quite surprised when he came back
from vacation to find how definitely the psychology had changed.
It
seemed to him that this presented for the System a problem of posture
and policy.
This had been a long capital boom with strong inflationary
tendencies going on all over the world.
It had gradually and finally
built up excess capacity to a point where that was now taking over.
Mr. Riefler did not know how long that sort of thing would go on, but
his own feeling was that the tendencies the other way had a very good
chance of being persistent since it
capacity.
This time, however,
tion growth to help.
would take time
to absorb over
there was the great ace of rapid popula
On the other hand, the expansion in
capacity had
been world wide.
At this time the correct policy seemed obscure, Mr. Riefler
said.
For example, there was the suggestion of Business Week for
reducing reserve requirements of central reserve city banks.
it
That,
seemed to him, in the climate of the bond market would have the
effect of shoving banks into speculation in bonds.
There was con
siderable expectation that when the Federal Reserve shifted policy
there would be a boom market in bonds and, even though there
something to that view, he felt
was
there was a speculative danger.
Personally, Mr. Riefler did not feel much inclined toward a decrease
ll/12/57
-15
in reserve requirements or for a policy of flooding banks with re
serves at this time.
He did not think this a period at all like
1953 when there was a genuine knot and when putting excess reserves
into the market in
quantity had delayed effects in
relieving the knot.
On the other hand, the System had the problem of posture.
to take a correct posture in
It
terms of the changed outlook if
needed
it
hoped
to retain the understanding and support of the people.
The present posture of the System, Mr. Riefler said, is
one of
having gone up a full one-half per cent in discount rates in August at
a time when the business situation was level and at a time when the
System's policy was under quite heavy criticism in Congress,
a posture that made it
clear to the world without any doubt that the
Federal Reserve was not going to finance inflation.
done its
job.
before it
That was
Usually, the System feels its
way in
The action had
the open market
moves on the discount rate, Mr. Riefler noted.
It would seem
to him in this particular situation, however, that the most appropriate
thing to do would be to reduce the discount rate to 3 per cent very
shortly.
That would be an unmistakable sign to everybody of a changed
posture and of a recognition of a generally changed situation.
Ac
companying that move, Mr. Riefler said, he would go towards somewhat
easier bank reserves but he certainly would not flood the market with
reserves and would not go into any reserve requirements reduction at
this time.
He felt the investment market should work out of its
situation in an orderly manner.
-16-
11/12/57
The most serious financial problem looming up was in the
area of the structure of the Federal debt, Mr. Riefler suggested.
It seemed to him as though the debt ceiling was gone in any event,
with the existing public attitude toward Sputnik and the strong
demand that money must be spent for defense purposes.
Thus, the
debt ceiling was gone on two counts: (1) a decline in revenues, and
(2) a prospective increase in expenditures for defense.
So far as
the availability of resources was concerned, this defense spending
program would come on at a time when there was a decline in spending
from private capital sources.
This was manageable, Mr. Riefler said.
In fact, he could not think of a better time for diversion of resources
to defense than on a declining picture.
the prospect looked somewhat disastrous.
However, on the financial aide,
At present the structure of
the large floating Federal debt was as unbalanced as it
ever had been.
An increase in total debt under the circumstances could present an
appalling problem.
On the other hand, there was, of course, a rather
general expectation in the market that there would be a boom market
in bonds.
Advantage should be taken of this.
On the financial front,
he felt that the best procedure would be to use the next four months
for as rapid a program of reducing the floating debt as was practicable,
Perhaps there should be an exchange of unmaturing issues for longer
debt instruments.
Mr. Hayes then presented his views on business activity and
credit policy, his comments being substantially as follows:
11/12/57
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There is no longer much doubt that at least a mild down
turn in business activity is under way, and there is widespread
belief that it will probably continue well into 1958. Evidence
pointing in this direction is available in many segments of the
economy and in virtually all sections of the country.
I have
in mind particularly the further decline in industrial production
and retail sales in October; the significant rise in unemployment
to nearly 5 per cent of the labor force; the prospect of some
reduction in inventories which, at the manufacturers' level,
have become rather high in relation to sales and new orders; the
development of excess capacity in a growing number of industries;
the confirmation of somewhat reduced capital spending plans for
1958 as compared with this year; the depressing effect of recent
Defense Department economy moves on business activity and senti
ment; and the probable reduced demand of foreign countries for
American goods. On the favorable side, residential building
seems to have stabilized and has shown some signs of renewed
strength, while public construction continues to expand. With
respect to unemployment, it seems likely that further increases
will occur in coming months even if the level of output should
remain unchanged, both because the labor force is growing and
because of the prospect of more pronounced gains in productivity
than in the last year.
Price developments in the last few weeks have been in keep
ing with the general slowing down in the economy already out
lined. The decline in wholesale prices noted in September appears
While the October
to have carried somewhat further in October.
consumer price index is not yet available, there is some hope that
if any gain over September and that seasonal
it will show little
declines in food prices may hold the index pretty steady for the
rest of the year.
Although the sharp deterioration in business sentiment of
recent weeks may be viewed as in part a psychological phenomenon,
receiving considerable stimulus from the persistent weakness of
the stock market, it is now clear that it rests in part on a
definite weakening of underlying business statistics. The major
question now seems to be not whether a further business decline
The views of
will occur, but for how long and in what degree.
projections
involving
are
reassuring,
most business economists
in
dollar terms,
product,
national
with
gross
of a mild downturn,
slight ad
though
a
continued
with
and
unchanged
remaining about
production
in
drop
a
moderate
with
but
vance in consumer prices,
other
the
On
unemployment.
in
increase
and some significant
for a
"ripe"
is
economy
the
that
argue
economists
hand, a few
In
possible.
believe
observers
most
than
jolt
severe
more
much
this view, attention is centered on the extended loan position
of the banks, reduced corporate liquidity and high consumer
11/12/57
-18-
indebtedness, and also on the possibility that recent surveys
of business capital spending, while correctly indicating the
direction of future outlays, may seriously understate the
magnitude of the declines involved. Such understatement could
result from future modifications in spending plans in the light
of the recent deterioration in business psychology or because
of further downward revisions in expectations as to consumer
spending.
I am inclined to take the more optimistic of these two
views, first
because many of the capital spending program
covered in recent surveys seem reasonably firm, and second
because news with respect to defense spending will on balance
probably have a stimulating effect on business sentiment in
coming months.
The already announced relaxation in previous
military expenditure ceilings, together with public pressure
for quick action to intensify missile development, may soon
lead to markedly higher rates of orders, even though actual
defense outlays may not expand materially for some time to
come.
Statistics on bank credit changes in the past four weeks
clearly confirm a pronounced slackening in pressure as compared
with 1956.
This is true of business loans, and particularly of
short-term seasonal borrowings.
It is also true of total loans,
and of loans and investments.
We have made very rough estimates
suggesting that the money supply at the end of 1957 may be about
1 per cent lower than a year earlier.
The tendency toward re
duced pressure is scarcely visible as yet in the corporate bond
heavy calendar of new offeringsmarkets, because of a still
but the recent action of the Government security market points
clearly to widespread expectations of diminished pressure in
coming months, even though the Treasury will be faced with
sizable refunding and cash-financing problems. We must, of
course, take account of the prospect that the Treasury will
probably be borrowing something like $1.5 billion for payment
partly in late November and partly in early December, in
addition to the substantial December 1 refunding.
Coming to the question of credit policy, I feel that it
is not necessary for us to attempt to judge at this point
whether the prospective business decline will be mild or severe,
The important point is that the
and of short or long duration.
evidence now available clearly suggests that we can safely go
further than we have in relaxing credit restraint without adding
significantly to the threat of inflation. Prompt action in this
direction seems desirable in view of the possibility, however
remote, that the business adjustment may be more than a mild dip.
But I see no reason why we cannot move gradually and cautiously
11/12/57
-19-
in the first
instance, being prepared to reverse our actions
if the business news improves substantially, or to adopt a
more aggressive program if the outlook deteriorates further.
I agree with Mr. Thomas' view as expressed in his recent
memorandum that we should allow the lessened demand for bank
credit to be reflected in an easier tone in the money market;
and to my mind, this easier tone might well produce a some
what lower level of market interest rates. While I like to
think of our instructions to the Manager as being expressed
in rather general terms, i.e., to pursue a somewhat easier
policy than that of recent weeks, if we are to use some kind
of benchmark in terms of net borrowed reserves, I would pro
pose a figure of roughly a quarter of a billion dollars,
perhaps with fluctuations of plus or minus 100 million dollars,
around that figure--all subject to the usual proviso that the
Manager should have ample leeway to adjust for the "feel of
the market" and to the further proviso that doubts should be
resolved on the side of ease, especially in view of the
Some sales
Treasury financing expected in the next few weeks.
might be required in the coming week; but I would hesitate to
be very definite on this score, preferring to leave the Manager
ample leeway. Incidentally, it would seem appropriate to in
crease the System's holdings of bankers' acceptances in con
junction with any open market purchases of Government securities
required in the next few weeks.
I think the Board of Governors might appropriately continue
to give serious consideration to a reduction in reserve require
This would be one way
ments at the central reserve city banks.
of meeting the seasonal reserve needs of the banking system.
Perhaps the economic statistics do not yet support the need for
this action, which probably would be interpreted as an overt
move toward easier credit policy, but new evidence during the
next few weeks might provide appropriate occasion for the action.
week in December might
If such a move is to be made, the first
be a suitable time, when reserves so released would obviate the
need for open market purchases which will otherwise probably be
The Board may also wish to review within the next
required.
few weeks the matter of a possible reduction in margin require
ments under Regulations T and U.
The time has not come, in my opinion, to reduce discount
The directors of the New York Bank concur in this view,
rates.
although they are at the same time emphatically of the opinion
that we should be making a start at this time toward diminished
It may well be that
restraint, through open market operations.
the lessened demand for bank credit--and the easier tone in the
money market that should be allowed to develop as a result--
11/12/57
-20
might lead to somewhat lower interest rates on Treasury
bills and other short-term instruments.
This in turn
might provide the setting for a subsequent reduction in
discount rates.
The directive should be amended, if the Committee
agrees that some such policy as that outlined above should
be adopted. To the extent that policy in the period ahead
will be guided by a willingness to provide for prospective
seasonal credit expansion, the directive might well reflect
this intention.
I would suggest the following wording for
clause (b) in the directives
"to foster sustainable economic growth by
supplying reserves to provide for prospec
tive seasonal needs while remaining alert
to continued though lessened inflationary
pressures.
Mr. Erickson said that conditions in the First District followed
pretty much the national picture.
Business sentiment appeared to be
weaker and this weakness appeared to be outrunning the weakness in busi
ness performance.
minuses.
As in the national picture, there were plusses and
Employment was still good, especially in the service produc
ing industries, but manufacturing employment was continuing its
down
ward trend.
Shoe production for the country as a whole may match the
1956 total.
For the first nine months last year New England had 3
cent of that production.
formance was still
inventories.
This year it was 33 per cent.
very disappointing.
up.
Readjustment in
continuing, due to increased productive capacity.
industry presented a mixed picture.
Textile per
Mill margins were down as were
Some mill managers believe there is
industry can go and that is
per
only one way the
paper industries was
The electronics
TV inventories were in better
position and prospects were good for some types of computors.
The
-21.
11/12/57
Government contract picture was said to be very confused.
tool orders continued a downward trend.
Machine
Ordinarily at this time of
year the machine tool people would be getting orders in connection
with the 1959 cars.
No orders have appeared as yet, and they are of
the opinion that there will be no radical changes in the 1959 auto
mobile.
Electric power distribution was showing a declining rate of
expansion.
Construction contract awards for the first nine months of
this year were 5 per cent better than last year and residential build
ing was up 4 per cent.
Department store sales for the first nine and
a half months were one per cent behind last year.
Mr. Erickson then reported on a follow-up survey of capital ex
penditures of some 150 companies made last month.
Those companies now
estimate that in 1957 they will spend almost 4 per cent more than they
did last year.
This, however, would not be as high as estimated
earlier in the year.
These companies also were asked what their ex
pectations for 1958 expenditures might be.
they would spend less than in 1957,
Only 95 replied,
48 stating
while 27 planned to spend more and
20 no change.
As to credit policy, Mr. Erickson said he thought a change
should be made in the directive.
He would make no change in
the dis
count rate at this time, preferring to wait until the next meeting or
next month.
As far as open market operations were concerned, he felt
that the restraint should be lessened to the extent that net borrowed
11/12/57
-22
reserves might fluctuate between $200 and $300 million, and if
errors
were made they should be on the lower side.
Mr.
Irons said that the economic factors in
were turning moderately downward.
On the whole,
the national picture
the weakening had been
quite slight with the possibility of offsetting factors coming into the
picture.
In the Eleventh District, there had not been much change in
recent weeks.
The confidence quotient was one of caution, recognizing
that there had been less than seasonal growth in some areas and some
actual declines.
The petroleum industry had not changed much since
the preceding meeting and Mr. Irons thought that it would take some
time for correction of the situation in that industry.
The aircraft
industry had been affected by defense moves and there had been some
layoffs of workers.
There had been a little
damage to the cotton
crop in the last couple of weeks because of an early frost.
Evidences
of strength in
total
the Eeventh District included an increase in
employment, construction contract awards running a little above last
year, and recently quite strong demand for bank loans in contrast with
the decline in the country as a whole.
Some leading bankers reported
a shift of borrowings by national corporations out of New York and
Chicago to Dallas, perhaps a temporary move.
felt
On balance, Mr.
Irons
that activity in the Eleventh District was at a high level.
On credit policy, thinking only in
period, Mr.
terms of a three-week
Irons thought the Committee must take into consideration
the developing deflationary forces that were beginning to appear in
11/12/57
-23
the past month or two.
However, he would not shift as much toward
ease as he understood Messrs. Hayes and Erickson to have suggested,
but would attempt to maintain approximately the degree of restraint
achieved during the past few weeks.
With respect to basic policy, Mr. Irons did not think this
was the time to change discount rates or reserve requirements, or to
take away other basic steps of that nature, although he recognised
it
was certainly not a time for further restraint.
Assuming that
discount rates were not to be reduced, he would hope that market rates,
including the bill
rate.
rate, would conform fairly closely to the discount
He doubted that policy should contribute to an easing that
would bring about a reduction in
rates at this time.
Member bank
borrowing might be in the $600-$700 million range during this period
and, while he did not have much regard for the net borrowed reserve
figure as a guide, something in the neighborhood of $300-$400 million
would be sufficient.
Pressure during the past four weeks had been
appropriate in Mr. Irons'
opinion and he did not think the System had
accentuated the slight declining tendency that had appeared.
In
another three to six weeks the desirability of a more definite step
might become apparent, Mr.
Irons said,
adding that he was not ignoring
recent factors but he did not think that a need for change was yet
crystal clear.
The System should not act to maintain a preconceived
level of net borrowed reserves but should meet requirements as they
develop, while giving consideration to the movement of market rates
11/12/57
-24
relative to the discount rate.
The Committee's directive might be changed, Mr.
but he would hesitate to put into it
suggested in
what he understood Mr. Hayes
the way of a statement that the Committee intended to
supply seasonal needs.
meet seasonal needs.
Mr.
Irons said,
The Committee would always be expected to
If the directive were lacking anything--and
Irons did not think the present wording was bad--it might be
lacking the thought of a mixture of factors,
some developing deflationary factors.
the first
If
some inflationary and
a change in
clause (b) of
paragraph of the directive were to be made, Mr.
Irons would
think of something along lines that would call for "sustainable
economic growth under conditions characterized by both inflationary
and deflationary forces".
Mr.
Mangels said that not much new statistical material had
become available on Twelfth District conditions since the preceding
meeting but such figures as had been reported confirmed the recent
pessimism in
business sentiment.
down and employment in
utilities,
The production trend was slightly
manufacturing, mining, transportation, public
and Government had dropped.
In the aircraft industry
employment in September declined 2 per cent for the second month and
related defense industries were being affected by cutbacks.
unemployment was 63 per cent higher than a year ago,
crease appearing in
situation.
Insured
the largest in
the Pacific Northwest because of thenumber
All types of construction--residential,
nonresidential,
11/12/57
-25
public works, utilities--declined 18 per cent in September from a
year ago but for the first
more than in 1956.
nine months of 1957 totalled slightly
Department store sales during the last four
weeks were down 2 per cent but for the first
ten months of this
year shoved a 1 per cent increase over a year ago,
September auto
mobile registrations in California were 8 per cent above August and
30 per cent ahead of September last year.
Bank loans during the past
three weeks shoved a decline compared with a year ago.
were about the same as a year ago.
Demand deposits
Twelfth District banks recently had
become net buyers of Federal funds and in the week ending November 6
a larger number of banks were borrowing at the Federal Reserve than in
the recent past although the aggregate amount of borrowings remained
nominal.
On the over-all picture, Mr. Mangels said that it
though plant and equipment expansion had reached a crest.
looked as
With the
completion of many projects, expanded capacity could produce suf
ficiently to put consumer goods on a competitive basis.
There had
been enough restraint to hold back further upward pressures.
Mr.
Mangels did not think the System should put on so much restraint as
to force activity down too far too fast.
He noted that September
wholesale prices had declined slightly and that a further alight
decline in
October might be expected.
Bank loans were down although
public issues of corporate and other securities were still
high.
The Treasury would require new cash and the System should consider
11/12/57
-26
those needs seriously.
Mr. Mangels thought that perhaps serious
inflation was no longer a threat and that the economy may have
reached a turning point with greater weight beginning to shift to
the deflationary side, although when this would occur was uncertain.
Until there was more positive evidence in the form of more serious
unemployment, for example, or more serious price declines, Mr. Mangels
thought that policy should continue a moderate degree of restraint.
He had in mind net borrowed reserves in the $200-$400 million range,
perhaps more in the lower area.
The Manager of the System Account
should have full leeway in operations.
Mr. Mangels did not think
the discount rate should be changed now although this might be neces
sary in the near future.
At a meeting of the directors of the San
Francisco Bank tomorrow this question would undoubtedly be discussed,
some directors having indicated their feeling that the rate might well
be reduced.
As to the directive, Mr. Mangels thought that clause (b)
might well be changed to shift the emphasis along the lines suggested
by Mr. Balderston at the preceding meeting so that the clause would
read "to fostering sustainable economic growth, restraining infla
tionary developments, recognizing uncertainties in the business out
look, the financial markets, and in the international situation."
Mr. Deming said that in the Ninth District the situation
seemed to be a little stronger than in the nation as a whole, although
there were signs of less strength or more weakness than had been
anticipated.
The more favorable situation in the district reflected
11/12/57
-27.
the position of farmers and some strength in residential building.
Employment was still higher than last year although unemployment had
crept up.
Taking out Montana, there had not been much change in the
district as a whole in recent weeks. Hours worked had declined slightly.
For what it
was worth, Mr. Deming stated that forecasts by the unemploy
ment agency for Minnesota indicated that the number of unemployed by
next Friday would be about 4,000 higher than last February in the State
of Minnesota,
reflecting the situation in mining.
Deming stated, business sentiment in
over the past three weeks.
Without question, Mr.
the Ninth District had deteriorated
Even such developments as would ordinarily
be regarded favorably were being looked upon unfavorably in
some quarters.
For example, the clean-up of 1957 model automobiles which had been very
good was now being interpreted by some dealers as borrowing sales from
1958.
As to policy, Mr. Deming said he would associate himself pretty
much with the views expressed by Mr. Hayes excepting his feeling on
reserve requirements.
Mr. Deming thought this was not the time for any
dramatic move to signal a change in Federal Reserve policy.
He would
go along with some easing that would be reflected in net borrowed
reserves around the $250 million level.
Mr.
Allen referred to two meetings of Seventh District business
economists that had been held during the past ten days,
the first
stating that for
time in four years a considerable majority of opinion now
pointed to a continuing decline in business activity.
The Ann Arbor
11/12/57
-28
business outlook conference held on November 4 and 5 reflected
similar sentiments.
representing firms in
With about 100 economists in
attendance
finance and industry in the East and Midwest,
most expected the industrial production index to be lower next year.
The majority opinion was that price inflation had ended or at least
had slowed markedly.
The expected drop in
capital expenditures of
business was emphasized at both these meetings,
of the economists in
Mr.
Allen said.
Many
the Seventh District area believed that the de
cline in capital outlays in 1958 would be 10 per cent rather than the
7 per cent indicated by the McGraw-Hill survey of business plans.
This would be especially important in
the Seventh District, Mr.
Allen
noted, since that district accounts for approximately one-third the
nation's production of machinery of all
output and sales,
office equipment,
On the other hand,
capital goods industries look to improvement
some of the district's
in
types.
namely farm equipment,
road building equipment,
and electric generating apparatus.
Mr. Allen said
that as far as he was concerned the prospective decline in
expenditures was a welcome event.
After all,
it
would be a decline
from an excessive level and the lower level would still
historical standards.
capital
be large by
He referred to a report that had appeared in
a Chicago paper that next year over-all construction would exceed
this year's total by about 5 per cent,
and that increased home and
public building would more than offset the estimated 7 per cent
decline in
capital expenditures reported by the
McGraw-Hill survey.
11/12/57
-29
The strong trend in retail trade noted earlier this fall had
not been maintained, Mr. Allen said.
General merchandise stores were
operating at about the same level as a year ago despite price increases.
Sales of these stores were considered disappointing in each of the past
two years but the Christmas upturn made the fourth quarter appear
favorable.
Mr. Allen then commented on the automobile industry, stating
that the report in last Friday's Wall Street Journal covered the situa
tion well although there was an error in the figure for unsold new cars
in dealers' hands on November 1, that is, the Journal reported a
500,000 figure whereas the correct figure was 560,000 of which 250,000
were 1957 models.
The industry seemed to be well satisfied with the
clean-up of those models.
As usual, production was expected to con
tinue at a high rate until early 1958 when dealers' show rooms should
be stocked and sales would become a factor bearing on production.
In
Detroit it was felt that wage contract negotiations in the coming spring
would influence manufacturers to push for high production and sizable
inventories in the intervening months, whereas labor stoppages would
be a counteracting influence in the opposite direction.
The labor
difficulties have already begun, Mr. Allen noted, referring to a strike
in
a General Motors transmission plant.
As for monetary policy, Mr. Allen said that he thought the
statements by the Chairman and the Vice Chairman of the Board of
Governors in their speeches last week were very good.
The changes
11/12/57
-30
in the business situation, such as they are, seemed to him necessary
adjustments.
He referred to the expression Mr.
Thomas had used
describing the effects of monetary policy thus far as "intended and
desirable" results of what the Committee had been trying to bring
about.
Mr. Allen felt his views were closer to those expressed by
Mr. Irons than others who had spoken thus far.
If
the Committee were
concerned about the situation and felt that there should be some
easing, he doubted that the level of net borrowed reserves would
matter very much, and he would keep this figure around $350 million,
about where it
now is.
Riefler's comments,
Mr. Allen said he was interested in
Mr.
and when the Committee felt that the time for a
change was desirable his view was that the discount rate would be the
place where a move should be made.
now.
Mr.
He was not ready to make that move
Hayes had commented that the directors of the New York Bank
were unanimously against a move in discount rate right now, Mr. Allen
noted, and he expressed the view that some of the directors of the
Chicago Bank would be opposed to a change, although he believed they
would favor a change in the discount rate as the first move when
action in that direction was taken. On the directive, Mr. Allen said
that Mr. Hayes' suggestion seemed satisfactory although he would leave
out the words "though lessened" in referring to inflationary pressures,
believing that with the wage settlements coming up next year the time
had not yet come to recognize lessened inflationary pressures.
Mr. Leedy said that views expressed at a meeting o
the di
rectors of the Kansas City Bank last week, with respect both to conditions
11/12/57
in
-31
the Tenth District and to sentiment generally, were anything but
bearish.
Member bank borrowings had increased sharply since the
meeting three weeks ago, apparently a result of a lower level of
interbank balances at city correspondents and of lower Treasury
balances.
In addition, the annual tax assessment made in
Oklahoma,
under which intangibles held as of November 30 were taxable, was
causing some shifting of bank balances out of the district temporarily.
It
seemed to Mr. Leedy that the signs were so clear with re
spect to the decline in economic activity that the Committee could not
fail to heed them and do something about them.
However, any precipitate
action might contribute to further deterioration in market and business
sentiment.
His view was that such action was not yet required, Mr.
Leedy said, but for the immediate future he thought the Committee
should be operating with a considerably lower level of net borrowed
reserves,
perhaps in
the $100$250
million area.
On the discount rate,
the latest move in August had been to bring that rate into conformity
with the level of market rates.
He did not think a downward adjustment
in the rate could be made on that basis.
He felt that a lower level of
Perhaps the discount
net borrowed reserves should first
be signaled.
rate should then lead the market.
Mr. Leedy would make no change in
reserve requirements of central reserve city banks for much the same
reasons that he did not think a precipitate move in
should be taken at this time.
the discount rate
He would favor some change in wording
of clause (b) of the Committee's directive to the effect that policy
11/12/57
-32
should be with the view to "maintaining restraint on the expansion of
credit in
the interest of sustainable growth, while taking account of
contractive elements in
the economy,"
with respect to uncertainties now in
and continuing the phraseology
the directive.
He felt it
im
portant that the directive set out that the Committee was taking
account of contractive elements.
Mr. Leach said there was evidence that the areas of weakness
in the Fifth District economy had spread somewhat during the past few
weeks.
However,
tion in
the slide-off in
there were no indications of an appreciable accelera
the principal industries.
small decrease in hours worked in
There had been a
the textile industry, and a number
of the larger cotton mills were planning longer-than-usual shutdowns
at Thanksgiving and Christmas.
Declining sales recently had been
reported by department stores, furniture stores, and household ap
pliance stores, and by a majority of reporting automobile dealers.
The increase in
was less than is
aggregate nonagricultural employment in
September
usually experienced.
With respect to policy, Mr.
Leach said he thought the Com
mittee should attempt to maintain enough tightness to prevent the
resurgence of inflationary pressures but not enough tightness to
accelerate the over-all downturn in
the economy.
This would pre
sumably permit adjustments now under way to continue.
the downward trend in
In view of
virtually all economic indicators, including
the contraseasonal movement of business loans, he thought the degree
11/12/57
-33-
of restraint maintained in recent weeks could be modified without
running much risk as to the resurgence of inflationary pressures.
He was not thinking of a shift so substantial as to be interpreted
as a shift from restraint to ease, or one that would require abrupt
action if renewed evidences of inflation should appear.
In terms
of net borrowed reserves perhaps $200 million would be a suitable
benchmark.
Mr. Leach added the comment that the discussion this
morning made him feel more strongly than before that the net
borrowed reserves figure had some use as a benchmark but not as a
goal.
That is, the figures do serve as indicators of the degree
of tightness, and if the Committee were going to make any change
in the degree of tightness these figures would have to get down
around $150 or $200 million in order to indicate a change from the
present.
Mr. Leach went on to say that he was inclined to feel that
such dramatic action as lowering of the discount rate would be a
mistake at this time, although he had a strong feeling that the
Committee's directive must be changed.
The record should not show
that the Committee failed to recognize a change in the economic outlook from what it was some months ago when the present wording of
the directive was adopted.
For some time the Committee had been
endeavoring to restrain inflationary developments,
said he thought it had succeeded.
and Mr. Leach
However, he thought the Committee
11/12/57
-34-
would not wish to continue saying in its
to restrain:
rather, it
directive that it
was trying
would now seem better to say in substance
that it wished to prevent the resurgence of inflationary developments.
A change in the directive clearly was needed, Mr. Leach said, and he
felt it should provide for less restraint but not for ease.
He would
not care particularly to put in a reference to meeting seasonal needs.
His suggested wording of clause (b) of the first paragraph of the
directive would read "to preventing the resurgence of inflationary
pressures in the interest of sustainable economic growth, while
recognizing increasing uncertainties in the business outlook, the
financial markets,
and the international situation."
gradually rather than abruptly,
at this time that it
We should proceed
he said, because we could not be sure
might not become necessary to reverse what we
were doing.
Referring again to the discount rate, Mr. Leach said he would
not be particularly happy to see a lowering of the rate now and an
increase a little
later, although he would like to use the discount
rate some time as a lead action, rather than always as a catch-up
Nevertheless, he hesitated to use the discount rate as a
action.
lead action at this time since such a change might indicate that the
Federal Reserve was anticipating more of a downturn than was actually
the case.
Mr. Robertson said that none of the statements and none of
the facts presented today left
him with a feeling of pessimism.
Public
11/12/57
-35-
psychology, which he felt should be weighed more heavily than any
other factor, was at a low point in the East but seemed to be quite
high in the western three-quarters of the country.
Consequently,
he would align himself completely with the views of Messrs. Irons
and Allen.
The Committee should not close its eyes to the fact that
there has been a downturn, but it should not be panicked by it; it
merely indicated to Mr. Robertson that the policy the Committee had
been following was actually working.
The policy should not be pressed
harder, Mr. Robertson said, but he would not change the discount rate
at the present time and would not reduce the volume of net borrowed
reserves.
He would be flexible and prepared to move whenever that
was called for.
Although he did not think a sharp move was called
for at this time, Mr. Robertson said he agreed with the suggestion
that the directive should be changed to get away from the idea that
the Committee was directing policy completely toward fighting inflation.
If the directive recognized that there were signs of developing
deflationary trends, that would be a sufficient indication of a
flexible policy, Mr. Robertson said.
If, three weeks hence, conditions
indicated a further downward trend in economic activity, it might be
time to consider a reduction in reserve requirements as well as in
discount rates.
For the present, the Committee should move sidewise,
holding its place and always remaining as flexible as possible, but
he emphasized that flexibility does not involve jumping back and
forth just for the sake of jumping.
In sum, Mr. Robertson would not
11/12/57
-36-
change the policy of restraint at the present time, would not change
the discount rate, would not change the level of net borrowed re-
serves, but would modify the directive.
Mr. Shepardson said that his feelings were much the same as
those expressed by Mr. Robertson.
All of us recognized that there
had been some changes in the situation.
Mr. Shepardson felt these
changes had been desirable and in the direction that the Committee
had been aiming for some time past in trying to bring the inflationary
forces under control.
There was still a strong possibility of a re-
surgence of upward pressures from expansion to come in defense
expenditures and other factors, and any overt move toward ease, any
positive change in direction of policy, would seem to him to be a
mistake at this time.
Under present conditions, there was an oppor-
tunity to bring about some material gains in efficiency.
If the
current restraint continued for a time, many persons might do some
pruning of inefficiencies that had come into the econonomy. This would
be all to the good.
The Committee should have in mind the possibility
of the coming wage negotiations and should maintain as far as possible
the kind of climate that would hold some restraint against wage moves
such as had been witnessed in the past.
At the same time, the Com-
mittee should recognize the slackening of inflationary pressures, and
restraint should not be increased in any way.
Mr. Shepardson's
preference would be to hold just about the degree of restraint of
the past three weeks, not taking positive steps to ease but being
11/12/57
-37-
careful not to increase pressure.
He agreed that there should be a
change in the wording of the directive and he liked the suggestion
Mr. Leach had made.
Mr. Fulton aligned himself completely with the views Mr.
Shepardson had expressed.
There are evidences of greater than ade-
quate capacity in the heavy goods industries that resulted from the
considerable expansion of plants and this added capacity is just not
being fully used.
psychological
Businessmen and consumers are going through a
reversal from conditions prevailing over the past year.
There has been a jolt because of the earth satellites launched by the
Russians.
Business does not now feel there is a chance of an upturn
this year and, after a sidewise movement, there might be a moderate
downward movement next year.
Mr. Fulton thought this would be of
benefit to industry in that some of the "fluff" would be taken out.
Inventories were believed to be in such shape that an upturn in consumer demand would come back promptly to basic manufacturers.
whole economic system could open up very rapidly.
The
Mr. Fulton com-
mented on a meeting in Cleveland a few days ago attended by 23 economists
from industry, stating that their projections of the industrial production index indicated a slight decline in the first quarter of 1958,
some further let-down in the second quarter, but a rise in the third
quarter of the year.
Their conclusions were that unemployment would
not be excessive.
Mr. Fulton said he felt the Federal Reserve should not reduce
the discount rate at this time.
This would be too sharp a change in
11/12/57
-38-
posture and in direction.
Perhaps net borrowed reserves should be
reduced to the $250-300 million area, but nothing dramatic should
be done at this time.
economy.
Any dramatic move could easily upset the
The Committee's directive might well be modified to recognise
the change that had taken place in the economy,
but nothing should be
done that would be abrupt in the direction of ease.
Mr. Williams said that in the past several months there had
been indications that sentiment on the pessimistic side had been outrunning statistics.
sentiment.
Now the statistics were beginning to confirm the
This could be observed in loans of large city banks.
In
the past six weeks loans for business purposes had fallen off persistently in the Philadelphia District.
Without exception, the lowest
point in those loans was in the latest figures.
Final figures on
capital expenditures in the Philadelphia District showed that plans
for 1958 were almost universally on the pessimistic side, with all
manufacturing showing a decline of 13 per cent, durables a decline
of 10.5 per cent, and nondurables a decline of 15.5 per cent.
The directors of the Philadelphia Reserve Bank had become
vocal on the question of the business outlook and credit policy, Mr.
Williams said, referring to a discussion on the matter at last week's
meeting of the directors at the conclusion of which the Chairman of
the Board was directed to send a letter to the Board of Governors
calling for a change in policy through open market operations.
After
11/12/57
-39-
reading the letter that the Chairman of the Philadelphia Bank had
sent to the Board of Governors,
Mr. Williams stated that he felt
the objective for net borrowed reserves should be lowered to the
$100-$250 million range.
The Committee's directive should be changed,
but Mr. Williams would turn the job of detailed wording over to someone else.
He felt it evident that we were beyond a position of un-
certainty and that the Federal Reserve could assume a posture not by
changing the discount rate, but by easing operations through the
System Open Market Account.
Mr. Bryan said that, with the possible exception of Florida,
the Sixth District was showing changes in a downward direction--not
dramatic, but a series of small changes.
He was greatly impressed
with the shift in business sentiment and statistics in recent weeks.
At the meeting of the directors of the Atlanta Bank last Friday, a
full discussion of the situation showed a remarkable shift in the
sense of ebullience and exuberance that had existed.
Mr.
Bryan felt
that the System was confronted with a difficult problem in policy.
The statistics showed deterioration in the situation, and if the
System were dealing merely with the question of a short-run deterioration, he would favor a considerable easing of monetary policy at this
time.
However,
the problem was more difficult because of a difference
between the short-run and longer-run outlook,
The longer run con-
siderations, Mr. Bryan felt, might require a fairly high rate of
interest in view of the need over the longer pull to encourage savings
11/12/57
-40-
to take care of the population growth,
and because,
as Mr. Riefler
had mentioned, the Federal debt ceiling and budget limitation were
gone as a result of missile developments.
Mr. Bryan said that he leaned a little
Under the circumstances,
more toward easing the situa-
tion, perhaps not by immediate and overt action, than he did toward
maintaining the present degree of restraint.
He had reached this
conclusion believing there was an inherent danger in the present
situation.
Just as the strength and duration of booms tends to be
underestimated, so the extent of read justments, particularly after
a long-continued boom such as we have had, tends to be underestimated.
The lack of liquidity in the economy could provide a terrific drag if
recession got underway.
At the last meeting of the Committee it
to him desirable that the bill rate
of the discount rate.
little
d
should be kept in the neighborhood
He felt now that the bill
below the discount rate.
see
rate might be moved a
If the situation eased naturally and
substantially by virtue of the failure of loans to go up, he would not
put any brakes on that easing.
He would let net borrowed reserves fall
where they will since they could be influenced by many factors, and he
doubted that the Committee should put on pressure because of a preconceived figure of net borrowed reserves.
He would buy the long bills
very freely if they had a tendency to go above the discount rate, and
if they tended to move below the discount rate, he would let them go.
In addition, the System might begin to consider re-establishment of
some moderate growth factor in the total factor of reserves.
Growth
11/12/57
-41-
had been so negligible recently as to be nonobservable and by the
end of the year may prove to have been a negative figure.
The
economy was trying to grow, and unless we allowed the reserves to
get out to permit growth, the Federal Reserve would eventually be
a party to producing economic convulsions.
Mr. Bryan said that if
any overt action were to be taken, he would like to see it done at
this time by reducing reserve requirements on savings deposits.
He
also would like to see the Committee's directive changed.
Mr. Johns said that he, too, had returned from vacation, but
being under the necessity of remaining at home he had been exposed
to a variety of reading, including the Dale article in the New York
Times, and perhaps his perspective had not been improved during his
vacation.
In preparing for this meeting, he reached conclusions
agreeing with the statements that had been made by Mr. Young to the
effect that a moderate downward adjustment in the econonomyhad been
occurring, that the evidences of psychological change were fairly
impressive, and that further moderate downward drift might be likely.
The Eighth District seemed to be contributing its share at least to
that kind of performance.
Manufacturing activity was down, employment
was not strong, department store sales were down, bank loans were
behaving about as in the country generally, and bank debits in October
certainly evidenced no great strength in economic activity.
Eighth
District agriculture tracked with the nation except for the recent
11/12/57
-42-
impairment of the cotton crop both as to quality and quantity.
In
only one factor was there evidence of strength--construction--and
even that strength was because of two major public housing projects
connected with Armed Forces installations.
Mr. Johns' conclusions on
the basis of his appraisal of the situation were that (1) a reduction
of the discount rate was indicated and that should take place very
soon; (2) through open market operations restrictions upon bank reserves should be moderated; and (3)
the Committee's directive should
be changed promptly.
Mr. Johns went on to say that perhaps there had been signs
some time ago of the change that might seem to have occurred recently.
He was inclined to think that the statistics were just now catching up
with the evidences which perhaps were not clearly seen but which were
perhaps divined as early as last August when the Federal Reserve was
assuming a rather strong posture with respect to restraint of inflation.
He felt that the adjustment of the discount rate in August had greater
significance than bringing it into line with the market structure; he
was inclined to agree with Mr. Riefler that that action was a clear
indication that the Federal Reserve did not intend to finance inflation.
At this time,
Mr. Johns thought the System should acquire a new posture
as Mr. Riefler had suggested.
He doubted, however, that the System
should move too quickly to reduce the discount rate by 1/2 per cent.
We have had a very long and very well advertised period of tight
11/12/57
-43-
money, he noted, which has engendered some apprehensiveness in the
minds of reasonable people.
Possibly a clearly announced but moderate
change in policy in the direction of less restraint would have a
salutary effect on public opinion and attitude.
Assurance that the
tight money policy would not overstay its welcome might be a very
healthy thing.
Therefore, Mr. Johns would lean in the direction of
a rather prompt reduction in the discount rate of 1/4 per cent.
He
noted that the directors of the St. Louis Bank met on Thursday of
this week, adding that he would not be able to argue strongly against
such a reduction.
With respect to open market operations, Mr. Johns said that he
believed that there should be observable moderation of restriction on
bank reserves.
directive.
claim as its
Also, there should be a change in the Committee's
He did not believe the directive should continue to procentral purpose the restraint of inflationary forces.
In commenting on this point, Mr. Johns suggested the desirability of
having the directive state in more specific terms than it has in the
past what the Committee expected in the way of operations in the open
market from the Manager of the System Open Market Account.
Specifically,
at this time he thought that the directive should tell the Manager quite
clearly that he should moderate the restrictiveness through operations
to increase the availability of bank reserves.
Chairman Martin interjected the comment that the directive was
the basis for the record of open market policy actions submitted to
11/12/57
-44-
the Congress.
Account, but it
It was not written only for the Manager of the System
was a public document.
The directive had a heritage
that had been built up over a period of many years.
This heritage
and the purposes served by the directive should not be confused with
the more detailed comments given in the minutes of the meetings to
help guide operations during the intervals between meetings.
The
Chairman pointed out that the nature of the directive must be considered in thinking of the relations between the Chairman and other
members of the Committee and the Congress.
While he did not believe
there was any major disagreement between the views he was expressing
and the thoughts Mr. Johns had in mind, he thought we should bear in
mind not only the drafting problem but the nature of the directive
that had been issued by the Committee in the past and which the Com-
mittee would be dealing with in the future.
Mr. Szymczak said that the problems of monetary policy were
similar to the problems of fiscal policy in that both were very difficult.
Monetary policy was much more flexible and therefore could
meet its situations much more readily than fiscal policy.
however, it
Even there,
was not always easy to adjust monetary policy to statistics
that became available late.
Mr. Szymczak agreed with Mr. Bryan that
there was not only the present situation to consider, but there was
the likelihood of another and different situation that might develop
over the longer run and take us into deficit financing.
At the
present time, Mr. Szymczak felt that the Comittee should decrease
11/12/57
-45-
to some extent the net borrowed reserves by supplying reserves
through the open market.
A move in this direction would be indi-
cated by net borrowed reserves in the $200-$250 million area.
He
also felt that the wording of the Committee's directive should be
changed so as to recognize the reduced inflationary pressures and
the increased uncertainties in the business situation, but he would
also have something in the directive to suggest that it still might
be necessary to fight inflation.
On the discount rate, if the Com-
mittee were to supply reserves it would become necessary to reduce
the discount rate because of the effect additional reserves would
have on market rates.
His own view was that discount rates should
be reduced as soon as possible and not by 1/4 per cent, but by 1/2
per cent.
Mr. Balderston said that, as he had remarked at the preceding
meeting, the economy seemed to him to have reached and probably to
have passed the peak of the boom.
This appeared to be the case not
only in this country but in Canada and in Western Continental Europe.
In attempting to avoid confusion in his mind between the psychological
and the real situation, he was basing his conclusions on indices of
production in foreign countries and in the United States, the fact
that electrical power consumption was dropping below its trend line,
the falling off in freight car loadings, and the decline in manhours
worked per week.
The Department of Labor had been making some studies
as to probable changes next year in unemployment, he noted, that
11/12/57
-46-
indicated a doubling of unemployment in 1958.
Mr.
Balderston said he would differ from Mr. Hayes,
not as to
the diagnosis of the situation, but as to the remedy to be applied.
He would not favor a change in reserve requirements or in margin re-
quirements because he thought the interpretation that would be placed
on such moves by the country would be that the System was favoring
Wall Street and forgetting Main Street.
moves might prove premature.
Moreover,
either of these
To dissipate any impression that the
Federal Reserve System was adamant and doctrinaire, Mr. Balderston
said that he would favor an immediate reduction in the discount rate,
the sooner the better, and he would make the reduction 1/2 of 1 per
cent.
A suitable target for net borrowed reserves would be around
$250 million.
He would change the directive with a simplified state-
ment of clause (b)
that would call for operations with a view "to
fostering economic growth that is sustainable."
If some qualification
seemed necessary, this could be supplemented with a statement such as
"and continuing to watch potential inflationary threats."
Chairman Martin said that he thought we had had another
extremely good go-around.
He certainly was not gloomy.
Excellent
progress had been made both in the System's public relations and in
its policy.
In his judgment, we had not yet licked the business cycle.
Any idea that we may have had at
the picture was mistaken.
was another question.
mes that the business cycle was out
How to relate that to the present situation
Chairman Martin said that he was not trying to
11/12/57
-47-
forecast the future, but as he saw the factors shaping up, and as he
tried to recognize forces as they were developing, private capital
formation had slowed up.
had in 1953 and 1954.
This was not the inventory problem that we
At this particular stage of the cycle,
the
slowing of private capital formation could have more dangerous
repercussions over a period of time than the country faced in 1953-54.
Turning to posture of the System, the Chairman recalled that
he had repeatedly pointed out that the System did not want a recession.
There might be differences of opinion on the emphasis to be placed
on this, but when inflation gets ahead of us, the unraveling process
becomes an extremely difficult one.
We in the System cannot assume
that our policies have been sound enough for people to take the position that we in no way contributed to the inflation by our policies.
We could not say that our policies had been sound enough and accurate
All
enough so that we had been completely on top of the situation.
of us know that the Federal Reserve cannot do more than minimize the
problems that are created by distortions such as we have had.
Chairman
Martin told of an incident that he had observed recently where a child
had gotten a bad burn, and when the doctor came, he reminded the
father of the burned child that this was not the time to rebuke or be
angry with the child: the immediate need was to apply all the remedies
there were to heal the burn.
In relating this incident to the System, the Chairman stressed
his belief that at this stage of economic developments, the important
11/12/57
-48-
thing was that the Federal Reserve have the correct posture.
a period of time,
he had felt that it
Over
would have been better if
System had put the discount rate up long before it
did.
the
However,
when we came to last August, there was no alternative but to move
the discount rate up as a recognition of a technical situation.
The
System should not now go off half-cocked, but even if it became necessary to reverse itself it should try to retain flexibility.
It would
be most unfortunate if the posture of the System at this time was one
that could give any credence to the view that the System now had an
"I-told-you-so" attitude.
The System should not claim credit at this
time for the decline that has occurred.
It
should not be saying that
this was a result of our policy and that we were glad this had come
about.
The Chairman said that he did not wish the foregoing remarks
to be misunderstood.
He believed that the adjustments now taking place
would prove to be salutary, and if the inflationary movement had gone
farther, the unraveling process would have been much more difficult.
He was directing these remarks to the public posture of the System.
It was important that the Committee bear in mind the System's posture
in terms of the public psychology and the political undertones and
overtones.
Although he had felt that the discount rate should have
gone up sooner than it did, he was glad that none of us could make
these decisions alone.
All parts of the System should pull together,
11/12/57
-49-
and there should be a synthesis of the various points of view until
they gradually were welded into a System view.
The tendency, however,
was too much toward the status quo at times.
As to present policy, Chairman Martin said that he would not
argue whether there should be a change immediately,
but if the discount
rate were to be changed, the System must recognize that the Treasury
planned to make a financing announcement later this week.
It was also
important that within the System there not be shilly-shallying with
posture.
The Chairman thought the present situation could be dis-
tinguished from that of 1953-54, and he doubted that there would now
be a resurgence of inflationary pressures such as we got at that time.
There was a tendency for all of us to like to fight a new war in the
same way as the last one,
but in this case he thought the readjustments
now taking place in the economy were likely to go on regardless of moves
on the monetary front.
There might be some speculative movements if
certain actions were taken by the System, but in the Chairman's judgment
we would be disappointed if we expected a repetition of the 1953-54
experience.
Noting that he had been a stock market speculator most of his
life until he got out of that business, Chairman Martin said that while
he did not think the stock market was an accurate reflector of business
trends, he did believe it
reflected the vagaries of the situation.
The
confidence factor had been permitted to get out of hand on the up side
in the expectation of inflation, and the expectation that nothing would
11/12/57
-50-
be done about it
had almost carried us over the dam on that side.
problem became more difficult when dealing with pessimism.
The
Chairman
Martin said that without placing any definite timing on the action, he
hoped that within the next six weeks the Federal Reserve would take an
overt action that would recognize the situation.
on the discount rate.
He would favor action
As Mr. Johns had pointed out, the move in August
from 3 per cent to 3-1/2 per cent came at the tail end of an upward move
in business.
That increase in the discount rate marked the posture of
the Federal Reserve in terms of psychology.
been some sharp changes.
Since then, there had
Business loans had declined during a five-week
period by $650 million, the first decline in such loans during October
in the postwar period.
In each of the past two years, these loans had
increased sharply in that month.
short time and it
This was a sharp swing in a very
needed to be watched.
There had been a suggestion
that the Committee supply reserves to the market, but there was a
problem in putting reserves into the money market when reserves were
being released by a decrease in loans.
the public has changed completely,
Even though the psychology of
the System does not want a sloppy
money market at a time of Treasury financing.
It should be very
cautious about getting a sloppy condition in the flow of funds.
This morning's discussion had pointed up the System's problem
very clearly, Chairman Martin said.
He aligned himself with the comments
11/12/57
-51-
of those favoring a moderate easing of pressures on reserves through
open market operations.
He, too, hesitated to put out any specific
figure of net borrowed reserves, but the figures mentioned by Mr. Hayes,
$100-$250 million, seemed as good as any,
the market had to be considered.
remembering that the feel of
The point was that a moderate easing
seemed appropriate, and all of us should be considering other actions
and their timing as the days go on.
Chairman Martin said that the more he thought of these problems,
the clearer it
became that no one of us could be certain he was right.
He liked the way the System goes about reaching policy decisions of this
type.
Sometimes the process was a lot slower than he liked, but some-
times we find out later that we are glad that it was slow.
At this
particular time, he felt the System should not minimize the public relations problem or the psychological problem of the public.
careful not to let anyone get the idea, if
We should be
the adjustments begin to
snowball, that the System is proud of Federal Reserve policies having
brought any such development about.
Neither should we permit anyone
to get the idea that the System was not going to do everything within
its power--and we recognize its powers are limited--to "bind up and heal
our wounds."
Chairman Martin then turned to the Committee's directive to be
issued to the Federal Reserve Bank of New York, stating that it
appeared
that the majority view was that the directive should be changed along
the lines discussed.
There had been a number of suggestions for the
11/12/57
wording.
-52He reiterated his comment that the directive was a heritage
of the past, also stating that he did not care particularly about the
precise wording,
so long as it
indicated the Committee's posture and
was recognized as the basis for the record of policy actions.
There followed considerable discussion of the wording of
clause (b) of the first paragraph of the directive, in the course of
which numerous suggestions were made and considered.
discussion, Mr.
During this
Shepardson reverted to Chairman Martin's illustration
of the child with a burned hand and the need for applying all the
remedies there were to heal the burn.
mind a different analogy.
country.
Mr. Shepardson said he had in
There had been a wave of "flu" over the
In some of these serious epidemics,
the great danger was
in getting up too quickly and risking a relapse.
Shepardson felt
In this case, Mr.
that we had reduced the fever but he questioned
whether we were quite ready to let the patient get on his feet and
start running again.
Chairman Martin responded that this was a very well takem com-
ment and that this was where the element of judgment was involved.
At the conclusion of the discussion,
it was agreed (Mr.
Robertson dissenting) that clause (b) should be changed by deleting
the provision that had been carried in the directive since the meeting
on March 5, 1957, which called for open market operations with a view,
among other things,
"to restraining inflationary developments in the
interest of sustainable economic growth while recognizing uncertainties in the business outlook, the financial markets, and the
11/12/57
-53-
international situation," and that this should be replaced by a clause
which called for operations with a view, among other things, "to
fostering sustainable growth in the economy without inflation, by
moderating the pressures on bank reserves."
In response to Chairman Martin's request for comments, Mr.
Rouse stated that he thought the discussion had clearly indicated
the desires of the Committee and what was meant by the suggested new
wording of clause (b) of the directive.
Mr. Rouse also commented
briefly on the outlook for bank reserves during the next few weeks.
Thereupon, upon motion duly made and
seconded, the Committee voted to direct
the Federal Reserve Bank of New York until
otherwise directed by the Committee:
(1) To make such purchases, sales, or exchanges (including replacement of maturing securities, and allowing
maturities to run off without replacement) for the System
open market account in the open market or, in the case of
maturing securities, by direct exchange with the Treasury,
as may be necessary in the light of current and prospective
economic conditions and the general credit situation of the
country, with a view (a) to relating the supply of funds in
the market to the needs of commerce and business, (b) to
fostering sustainable growth inthe economy without inflation, by moderating the pressures on bank reserves, and
(c) to the practical administration of the account; provided that the aggregate amount of securities held in the
System account (including commitments for the purchase or
sale of securities for the account) at the close of this
date, other than special short-term certificates of indebtedness purchased from time to time for the temporary
accommodation of the Treasury, shall not be increased or
decreased by more than $1 billion;
To purchase direct from the Treasury for the
(2)
account of the Federal Reserve Bank of New York (with
seems desirable, to issue
discretion, in cases where it
participations to one or more Federal Reserve Banks) such
amounts of special short-term certificates of indebtedness
as may be necessary from time to time for the temporary
accommodation of the Treasury; provided that the total
amount of such certificates held at any one time by the
Federal Reserve Banks shall not exceed in the aggregate
$500 million;
(3) To sell direct to the Treasury from the System
account for gold certificates such amounts of Treasury
securities maturing within one year as may be necessary
from time to time for the accommodation of the Treasury;
provided that the total amount of such securities so sold
shall not exceed in the aggregate $500 million face amount,
and such sales shall be made as nearly as may be practicable
at the prices currently quoted in the open market.
Votes for this action: Messrs.
Martin, Chairman, Hayes, Vice Chairman,
Allen, Balderston, Bryan, Leedy,
Shepardson, Szymczak, and Williams.
Vote against this action: Mr.
Robertson.
Mr. Robertson dissented from the
foregoing action with regard to the in-
sertion in paragraph (1) (b) of the
clause, "by moderating the pressures on
bank reserves." His action was based
on the belief that the prevailing
condition of the economy was not such
as to call for a lessening of restraint,
that inflationary potentials were still
strong, and that continued restraint was
essential to its containment.
Mr. Johns stated that he was not clear as to what, if any consensus there had been regarding action on the discount rate.
Chairman Martin stated that he doubted there had been a con-
sensus.
His view was that whenever an announcement of a change in the
rate was made, it must be carefully thought of in relation to the
forthcoming Treasury financing.
He did not think we should be in the
11/12/57
-55-
position of having the Treasury open its books on a new offering
and, in the midst of that, having the System make a change in the
discount rate.
This was a problem that had to be worked out.
Mr. Hayes said that in suggesting consideration of a change
in reserve requirements at central reserve cities, he did not mean
to indicate that a reduction should be made immediately.
He felt
that it should, however, continue to have serious consideration.
Chairman Martin agreed that this was a subject that appropriately should be raised for consideration. He reiterated that
each of us should feel perfectly free to present suggestions or
ideas having to do with any aspect of monetary policy.
This was
not a matter of Board prerogative, or bank prerogative, or Committee
prerogative, and these meetings should be looked upon as a clearing
house for System policy discussion.
In concluding the meeting, the Chairman commented that every
person in the room should remember that he had a special responsibility
to see that what had transpired here was not permitted to get into the
press.
It was agreed that the next meeting of the Committee should be
scheduled for 10:00 a.m. on Tuesday, December 3, 1957, and attention
was called to the fact that because of the holiday season it was likely
that the following meeting of the Committee might be held on Tuesday,
December 17, with the meeting after that to be held three weeks later,
-56
11/12/57
on Tuesday, January 7, 1958.
Thereupon the meeting adjourned.
Cite this document
Federal Reserve (1957, November 11). FOMC Minutes. Fomc Minutes, Federal Reserve. https://whenthefedspeaks.com/doc/fomc_minutes_19571112
@misc{wtfs_fomc_minutes_19571112,
author = {Federal Reserve},
title = {FOMC Minutes},
year = {1957},
month = {Nov},
howpublished = {Fomc Minutes, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/fomc_minutes_19571112},
note = {Retrieved via When the Fed Speaks corpus}
}