FOMC Minutes

Meeting of Federal Open Market Committee

August 12, 1969

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 12, 1969, at

9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Martin, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Coldwell

Daane

Maisel

Mitchell

Robertson

Scanlon

Sherrill

Swan, Alternate for Mr. Clay

Messrs. Francis, Heflin, and Hickman,

Alternate Members of the Federal

Open Market Committee

Messrs. Morris, Kimbrel, and Galusha,

Presidents of the Federal Reserve

Banks of Boston, Atlanta, and

Minneapolis, respectively

Mr. Holland, Secretary

Messrs. Kenyon and Molony, Assistant

Secretaries

Mr. Hexter, Assistant General Counsel

Mr. Partee, Economist

Messrs. Gramley, Green, Hersey, Link,

Reynolds, Solomon, and Tow,

Associate Economists

Mr. Coombs, Special Manager, System

Open Market Account

8/12/69

Mr. Cardon, Assistant to the Board

of Governors

Messrs. Coyne and Nichols, Special

Assistants to the Board of

Governors

Messrs. Keir and Wernick, Associate

Advisers, Division of Research

and Statistics, Board of Governors

Mr. Weiner, Assistant Adviser, Divi

sion of Research and Statistics,

Board of Governors

Mr. Bernard, Special Assistant,

Office of the Secretary, Board of

Governors

Mr. Baker, Economist, Government

Finance Section, Division of

Research and Statistics, Board

of Governors

Miss Eaton, Open Market Secretariat

Assistant, Office of the Secretary,

Board of Governors

Mr. Fossum, First Vice President,

Federal Reserve Bank of Atlanta

Messrs. Eisenmenger, Parthemos, Taylor,

and Craven, Senior Vice Presidents

of the Federal Reserve Banks of

Boston, Richmond, Atlanta, and San

Francisco, respectively

Messrs. Sternlight and Hocter, Vice

Presidents of the Federal Reserve

Banks of New York and Cleveland,

respectively

Messrs. Gustus and Kareken, Economic

Advisers, Federal Reserve Banks of

Philadelphia and Minneapolis,

respectively

Messrs. Scheld and Jordan, Assistant

Vice Presidents of the Federal

Reserve Banks of Chicago and

St. Louis, respectively

Mr. Cooper, Manager, Securities and

Acceptance Departments, Federal

Reserve Bank of New York

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8/12/69

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee held on July 15, 1969,

were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on July 15, 1969, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period July 15 through August 11,

1969, were approved, ratified, and confirmed.

By unanimous vote, renewal for a further period of three

months, if requested, of the swap drawing by the Bank of England

maturing on September 9, 1969, was authorized.

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances during

the period July 15 through August 11, 1969, were approved, ratified,

and confirmed.

With Messrs. Maisel and Mitchell dissenting, the Federal

Reserve Bank of New York was authorized and directed, until other

wise 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 expansion in real economic activity

slowed somewhat in the first half of 1969 and some

further moderation is projected. Substantial

upward pressures on prices and costs are persisting.

8/12/69

Most market interest rates recently have receded

slightly from their earlier highs. In July the

money supply expanded as U. S. Government deposits

decreased further; bank credit declined on average,

after adjusting for an increase in assets sold to

affiliates and to customers with bank guarantees.

The run-off of large-denomination CD's which began

in mid-December continued without abatement in

July, and there apparently were net outflows from

consumer-type time and savings accounts at banks

and nonbank thrift institutions combined. The

over-all balance of payments deficit on the liquidity

basis remained very large in July; the balance on

the official settlements basis was still in surplus

in the first half of the month but subsequently

shifted toward deficit as U. S. banks' borrowings

of Euro-dollars leveled off. Foreign exchange

markets appear initially to be adjusting in an

orderly fashion to the announced devaluation of

the French franc. In light of the foregoing

developments, it is the policy of the Federal Open

Market Committee to foster financial conditions

conducive to the reduction of inflationary pressures,

with a view to encouraging sustainable economic

growth and attaining reasonable equilibrium in

the country's balance of payments.

To implement this policy, System open market

operations until the next meeting of the Committee

shall be conducted with a view to maintaining the

prevailing firm conditions in money and short-term

credit markets; provided, however, that operations

shall be modified if bank credit appears to be

deviating significantly from current projections

or if pressures arise in connection with foreign

exchange developments or with bank regulatory changes.

It was agreed that the next meeting of the Committee would

be held on Tuesday, September 9, 1969, at 9:30 a.m.

The meeting was adjourned.

Secretary