FOMC Minutes

Meeting of Federal Open Market Committee

November 14, 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:

on Tuesday, November 14, 1967, at 9:30 a.m.

Mr. Martin, Chairman

Mr. Hayes, Vice Chairman

Mr. Brimmer

Mr. Daane

Mr. Francis

Mr. Maisel

Mr. Mitchell

Mr. Robertson

Mr. Scanlon

Mr. Sherrill

Mr. Swan

Mr. Wayne

Messrs. Ellis and Hickman, 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.

Mr.

Mr.

Mr.

Holland, Secretary

Sherman, Assistant Secretary

Kenyon, Assistant Secretary

Broida, Assistant Secretary

Molony, Assistant Secretary

Hackley, General Counsel

Brill, Economist

Hersey, Associate Economist

Holmes, Manager, System Open Market Account

Coombs, Special Manager, System Open Market

Account

Mr. Sammons, Associate Director, Division of

International Finance, Board of Governors

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Messrs. Kimbrel and Strothman, First Vice

Presidents of the Federal Reserve Banks

of Atlanta and Minneapolis, respectively

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on October 24,

1967, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on October 24, 1967, was accepted.

By unanimous vote, and subject to a determination by

Chairman Martin that such actions were in accordance with the

position of the U.S. Government in the current international nego

tiations concerning sterling, the Committee (a) approved an increase

from $200 million to $300 million equivalent in the limit on System

Account holdings of sterling purchased on a covered or guaranteed

basis in terms of the dollar under agreement with the Bank of England;

(b) approved an increase from $200 million to $350 million equivalent

in the limit on outstanding System Account forward commitments to

deliver foreign currencies to the Stabilization Fund, and thereby

also effectively increased by a maximum of $150 million equivalent

the amount of foreign currencies that could be held spot or purchased

forward for the purpose of fulfilling outstanding System Account

forward commitments;

and (c) authorized forward commitments by the

System Account to deliver to the Stabilization Fund foreign

currencies in which the U.S. Treasury did not have outstanding

indebtedness.

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In consequence of the foregoing action, and effective as

of the date of the determination by Chairman Martin specified

therein, the necessary amendments to paragraphs 1B(3) and 1C(1)

of the authorization for System foreign currency operations

were approved unanimously.

With these amendments, on such a

determination the affected paragraphs would read as follows:

1B(3).

Sterling purchased on a covered or guaranteed

basis in terms of the dollar, under agreement with the

Bank of England, up to $300 million equivalent.

*

1C(1).

*

Commitments to deliver foreign currencies to

the Stabilization Fund, up to $350 million equivalent.

Secretary's Note: The amendments to

paragraphs 1B(3) and 1C(1) of the

authorization described above became

effective on November 21, 1967, and

November 22, 1967, respectively, upon

determinations by Chairman Martin that

such actions were in accordance with

the position of the U.S. Government.

By unanimous vote, the System open market transactions

in foreign currencies during the period October 24 through

November 13, 1967, were approved, ratified, and confirmed.

By unanimous vote, renewal for a period of twelve

months of the $100 million basic swap arrangement and the $50

million supplementary arrangement with the National Bank of

Belgium, both maturing December 22, 1967, and the consolidation

of the two into a single arrangement, were approved.

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By unanimous vote, renewal for a period of twelve months

of the $400 million swap arrangement with the German Federal

Bank, maturing December 15, 1967, was approved.

By unanimous vote, renegotiation of the System's swap

arrangements with the Bank for International Settlements and the

central banks of Austria, Canada, Denmark, England, Japan, Mexico,

Norway, Sweden, and Switzerland, to arrange for lines having

twelve-month periods and December maturities, with no change in

the size of the lines, was approved.

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 information reviewed at this meeting indi

cates that, while the direct and indirect effects of

strikes have been retarding activity in some areas of

the economy, prospects still favor more rapid economic

growth in the months ahead. Although prices of farm

products and foods have declined recently, upward

pressures persist on industrial prices and costs.

While there recently have been further inflows of

liquid funds from abroad through foreign branches of

U.S. banks, the balance of payments continues to

reflect a substantial underlying deficit. Bank credit

expansion has continued large.

The volume of new

private security issues has expanded further and

interest rates remain under upward pressure,reflect

ing in part increased doubts in financial markets

concerning enactment of the President's fiscal

program. In this situation, it is the policy of the

Federal Open Market Committee to foster financial

11/14/67

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 opera

tions shall be modified as necessary to moderate any

apparent tendency for bank credit to expand significantly

more than currently expected.

The following members of the staff entered the meeting:

Messrs. Baughman, Craven, Jones, and Koch, Associate

Economists

Mr. Fauver, Assistant to the 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

Messrs. Eisenmenger, Link, Eastburn, Mann, Taylor, Tow,

and Green, Vice Presidents of the Federal Reserve

Banks of Boston, New York, Philadelphia, Cleveland,

Atlanta, Kansas City, and Dallas, respectively

Mr. Monhollon, Assistant Vice President, Federal Reserve

Bank of Richmond

Mr. Geng, Manager, Securities Department, Federal Reserve

Bank of New York

Mr. Kareken, Consultant, Federal Reserve Bank of Minneapolis

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period October 24 through November 13, 1967, were approved, ratified,

and confirmed.

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It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday,

December 12,

at 9:30 a.m.

The meeting adjourned.

Secretary

1967,