FOMC Minutes

Meeting of Federal Open Market Committee

September 12, 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.,

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

on Tuesday, September 12, 1967, at 9:30 a.m.

Martin, Chairman

Hayes, Vice Chairman

Brimmer

Daane

Francis

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Swan

Wayne

Messrs. Ellis, Patterson, 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.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Holland, Secretary

Sherman, Assistant Secretary

Kenyon, Assistant Secretary

Broida, Assistant Secretary

Molony, Assistant Secretary

Hexter, Assistant General Counsel

Brill, Economist

Messrs. Baughman, Craven, Garvy, Jones, Koch,

Partee, Ratchford, and Solomon, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

9/12/67

Mr. Williams, Adviser, Division of Research

and Statistics, Board of Governors

Mr. Reynolds, Adviser, Division of International

Finance, Board of Governors

Mr. Axilrod, Associate Adviser, 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

Mr. MacDonald, First Vice President, Federal

Reserve Bank of Cleveland

Messrs. Eisenmenger, Eastburn, Mann, Brandt,

Tow, and Green, Vice Presidents of the

Federal Reserve Banks of Boston, Philadelphia,

Cleveland, Atlanta, Kansas City, and Dallas,

respectively

Mr. Meek, Assistant Vice President, Federal

Reserve Bank of New York

Mr. Kareken, Consultant, Federal Reserve Bank

of Minneapolis

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

ing of the Federal Open Market Committee held on August 15, 1967,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on August 15, 1967, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period August 15 through September 11,

1967, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period August 15 through September 11, 1967, were approved, ratified,

and confirmed.

9/12/67

With Messrs. Hayes, Francis, and Scanlon dissenting, 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

strengthened and, despite the strike in the automobile

industry, that prospects favor more rapid growth later

in the year. Upward pressures on costs persist and

average prices of industrial commodities have turned

up following several months of stability. While there

recently have been large inflows of liquid funds from

abroad, the balance of payments continues to reflect a

substantial underlying deficit. 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 market financing and of recent and prospective

Federal financing. The President's new fiscal program

calling for a sizable increase in income taxes, which

would make a substantial contribution to balanced

economic growth, is now before Congress. In this

situation, it is the policy of the Federal Open Market

Committee to foster financial conditions, including

bank credit growth, conducive to sustainable economic

expansion, recognizing the need for reasonable price

stability for both domestic and balance of payments

purposes.

To implement this policy, System open market

operations until the next meeting of the Committee

shall be conducted with a view to maintaining about

the prevailing conditions in the money market; but

operations shall be modified as necessary to mod

erate any apparent tendency for bank credit to

expand significantly more than currently expected.

9/12/67

It was agreed that the next meeting of the Committee would

be held on Tuesday, October 3, 1967, at 9:30 a.m.

The meeting adjourned.

Secretary