FOMC Minutes

Meeting of Federal Open Market Committee

August 13,

1968

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 13,

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

1968, at 9:30 a.m.

Martin, Chairman

Brimmer

Daane

Galusha

Hickman

Kimbrel

Maisel

Mitchell

Robertson

Sherrill

Bopp, Alternate

Treiber, Alternate for Mr. Hayes

Messrs. Clay, Coldwell, and Scanlon, Alternate

Members of the Federal Open Market Committee

Messrs. Heflin, Francis, and Swan, Presidents of

the Federal Reserve Banks of Richmond, St.

Louis, and San Francisco, respectively

Mr. Holland, Secretary

Mr. Sherman, Assistant Secretary

Mr. Kenyon, Assistant Secretary

Mr. Broida, Assistant Secretary

Mr. Molony, Assistant Secretary

Mr. Hackley, General Counsel

Mr. Brill, Economist

Messrs. Hersey, Link, Mann, Partee, Solomon,

and Taylor, Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Cardon, Assistant to the Board of

Governors

8/13/68

Mr. Farrell, Director, Division of Federal

Reserve Bank Operations, Board of

Governors 1/

Mr. Wernick, Associate Adviser, Division of

Research and Statistics, Board of

Governors

Messrs. Keir and Weiner, Assistant Advisers,

Division of Research and Statistics,

Board of Governors

Mr. Bernard, Special Assistant, Office of

the Secretary, Board of Governors

Miss Eaton, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governors

Mr. Latham, First Vice President, Federal

Reserve Bank of Boston

Messrs. Eisenmenger, MacLaury, Baughman,

Jones, Tow, and Craven, Vice Presidents

of the Federal Reserve Banks of Boston,

New York, Chicago, St. Louis, Kansas City,

and San Francisco, respectively

Messrs. Meek and Snellings, Assistant Vice

Presidents of the Federal Reserve Banks

of New York and Richmond, respectively

Mr. Shotwell, Senior Economist, Federal

Reserve Bank of Cleveland

Mr. Stahl, Research Officer and Economist,

Federal Reserve Bank of Philadelphia

Mr. Duprey, Economist, Federal Reserve Bank

of Minneapolis

Mr. Fraser, Financial Economist, Federal

Reserve Bank of Dallas

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on July 16, 1968,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on July 16, 1968, was accepted.

1/

Entered shortly before the meeting closed.

8/13/68

By unanimous vote, the System open market transactions in

foreign currencies during the period July 16 through August 12,

1968, were approved, ratified, and confirmed.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period July 16 through August 12, 1968, 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 information reviewed at this meeting indicates

that some elements of economic activity continued to

expand vigorously in early summer. Expansion in over

all activity, however, is projected to slow considerably

in coming months as a result of the new fiscal restraint

measures and a marked reduction in inventory accumulation.

Industrial prices have been increasing less rapidly in

recent months, but consumer prices have continued to

rise substantially. Wage pressures remain strong, and

the recent wage settlement in the steel industry was

followed by announcements of steel price increases.

Both short- and long-term interest rates have declined

considerably, in large part as a result of expectations

of easier credit conditions. Bank time and savings

deposits, particularly large-denomination CD's, have

expanded sharply in early summer; growth in the money

supply has continued large as U.S. Government deposits

have been drawn down further on average; and growth in

total bank credit has been unusually rapid. Although

the U.S. balance of payments has recently shown a marked

improvement, the foreign trade balance and underlying

payments position continue to be matters of serious

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

8/13/68

Federal Open Market Committee to foster financial condi

tions conducive to sustainable economic growth, continued

resistance to inflationary pressures, and attainment of

reasonable equilibrium in the country's balance of

payments.

To implement this policy, System open market opera

tions until the next meeting of the Committee shall be

conducted with a view to maintaining, on balance, about

the prevailing conditions in money and short-term credit

markets; provided, however, that operations shall be

modified if bank credit appears to be significantly

exceeding current projections.

It was agreed that the next meeting of the Committee would

be held on Tuesday, September 10, 1968, at 9:30 a.m.

The meeting adjourned.

Secretary