FOMC Minutes

Meeting of Federal Open Market Committee

August 15,

1967

MINUTES OF ACTIONS

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, D. C., on Tuesday, August 15, 1967, at 9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Robertson, presiding

Brimmer

Daane

Maisel

Mitchell

Scanlon

Sherrill

Swan

Ellis, Alternate for Mr. Wayne

Patterson, Alternate for Mr. Francis

Treiber, Alternate for Mr. Hayes

Messrs. Hickman and Galusha, Alternate Members of

the Federal Open Market Committee

Messrs. Bopp, Clay, and Irons, Presidents of the

Federal Reserve Banks of Philadelphia, Kansas

City, and Dallas, respectively

Mr. Sherman, Assistant Secretary

Mr. Kenyon, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hackley, General Counsel

Mr. Brill, Economist

Messrs. Jones, Partee, and Solomon,

Associate Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

Mr. Fauver, Assistant to the Board of Governors

Mr. Reynolds, Adviser, Division of International

Finance, Board of Governors

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8/15/67

Mr. Axilrod, Associate Adviser, Division of

Research and Statistics, Board of Governors

Mr. Weiner, Assistant to the Director,

Division of Research and Statistics,

Board of Governors

Mr. Bernard, Economist, Government Finance

Section, Division of Research and

Statistics, Board of Governors

Miss Eaton, General Assistant, Office of the

Secretary, Board of Governors

Miss McWhirter, Analyst, Office of the Secretary,

Board of Governors

Messrs. Heflin and Lewis, First Vice Presidents

of the Federal Reserve Banks of Richmond

and St. Louis, respectively

Messrs. Eisenmenger, Link, Mann, Parthemos,

Taylor, Moffatt, Tow, and Green, Vice

Presidents of the Federal Reserve Banks

of Boston, New York, Cleveland, Richmond,

Atlanta, Chicago, Kansas City, and Dallas,

respectively

Mr. Lynn, Director of Research, Federal Reserve

Bank of San Francisco

Mr. Geng, Manager, Securities Department,

Federal Reserve Bank of New York

Mr. Gustus, Research Officer and Economist,

Federal Reserve Bank of Philadelphia

Mr. Kareken, Consultant, Federal Reserve Bank

of Minneapolis

By unanimous vote, Mr. Robertson was elected to serve as

Acting Chairman for the meeting.

By unanimous vote, the minutes of actions taken at the meet

ing of the Federal Open Market Committee held on July 18, 1967, were

approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on July 18, 1967, was accepted.

8/15/67

By unanimous vote, the action of members of the Federal

Open Market Committee on August 4, 1967, approving renewal of the

$400 million swap arrangement with the German Federal Bank from

August 9 to December 15,

1967, was ratified.

By unanimous vote, the System open market transactions in

foreign currencies during the period July 18 through August 14,

1967, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in

Government securities, agency obligations, and bankers' acceptances

during the period July 18 through August 14, 1967, were approved,

ratified, and confirmed.

By unanimous vote, the Federal Reserve Bank of New York

was authorized and directed, until otherwise directed by the

Committee,

to execute transactions in the System Account in

accordance with the following current economic policy directive:

The economic and financial developments reviewed

at this meeting indicate that economic activity has

been expanding more rapidly in recent weeks. With

strengthening of private demands for final products

and further curtailment of inventory investment, a

better balance between inventories and sales is

emerging. Upward pressures on costs persist and the

over-all indexes of both wholesale and consumer prices

have risen further. The balance of payments deficit

has remained substantial and is a serious national

problem. Bank credit expansion has continued large,

while most short- and long-term interest rates have

fluctuated close to their highs of the year, under

the combined pressure of heavy private security

8/15/67

market financing and of current and prospective Federal

financing.

A new fiscal program has been proposed by

the President, including a sizable increase in income

taxes, which would make a substantial contribution to

balanced economic growth. In this situation, it is the

policy of the Federal Open Market Committee to foster

financial conditions, including bank credit growth,

conducive to continuing economic expansion, while rec

ognizing the need for reasonable price stability for

both domestic and balance of payments purposes.

To implement this policy, while taking account of

expected Treasury financing activity, System open market

operations until the next meeting of the Committee shall

be conducted with a view to maintaining about the prevail

ing conditions in the money market; but operations shall

be modified, insofar as Treasury financing permits, to

moderate any apparent tendency for bank credit to expand

more than currently expected.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, September 12, 1967, at

9:30 a.m.

The meeting adjourned.

Secretary

Assistant