FOMC Minutes

Meeting of Federal Open Market Committee

November 25, 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, November 25, 1969, at 9:30 a.m.

PRESENT:

Martin, Chairman

Hayes, Vice Chairman

Bopp

Brimmer

Clay

Coldwell

Daane

Mr. Mitchell

Mr. Robertson

Scanlon

Mr. Sherrill

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Messrs. Francis, Heflin, Hickman, and Swan,

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

Mr. Broida, Deputy Secretary

Messrs. Kenyon and Molony, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Baughman, Eastburn, Gramley,

Green, Hersey, Link, Reynolds, Solomon,

and Tow, Associate Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

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Mr. Cardon, Assistant to the Board of Governors

Messrs. Coyne and Nichols, Special Assistants

to the Board of Governors

Mr. O'Connell, Deputy General Counsel, Board of

Governors

Mr. Williams, Adviser, Division of Research and

Statistics, Board of Governors

Messrs. Keir and Wernick, Associate Advisers,

Division 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

Messrs. Eisenmenger, Taylor, and Craven, Senior

Vice Presidents of the Federal Reserve Banks

of Boston, Atlanta, and San Francisco,

respectively

Messrs. Hocter and Snellings, Vice Presidents of

the Federal Reserve Banks of Cleveland and

Richmond, respectively

Mr. Kareken, Economic Adviser, Federal Reserve

Bank of Minneapolis

Mr. Keran, Assistant Vice President, Federal

Reserve Bank of St. Louis

Mr. Cooper, Manager, Securities and Acceptance

Departments, Federal Reserve Bank of

New York

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

of the Federal Open Market Committee held on October 28, 1969, were

approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on October 28, 1969, was accepted.

By unanimous vote, the action of Committee members amending

paragraph 1(a) of the continuing authority directive, effective Novem

ber 14, 1969, to increase the leeway for changes in System Account

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holdings of U.S. Government securities between meetings of the

Committee from $2 billion to $3 billion, was ratified.

By unanimous vote, the System open market transactions in

foreign currencies during the period October 28 through November 24,

1969, were approved, ratified, and confirmed.

By unanimous vote, paragraph 1(a) of the continuing authority

directive was amended to reduce the leeway for changes in System

Account holdings of U.S. Government securities between meetings of

the Committee from $3 billion to $2 billion.

As amended, paragraph

1(a) read as follows:

To buy or sell U.S. Government securities in the

open market, from or to Government securities dealers

and foreign and international accounts maintained at

the Federal Reserve Bank of New York, on a cash, regular,

or deferred delivery basis, for the System Open Market

Account at market prices and, for such Account, to

exchange maturing U.S. Government securities with the

Treasury or allow them to mature without replacement;

provided that the aggregate amount of such securities

held in such Account at the close of business on the

day of a meeting of the Committee at which action is

taken with respect to a current economic policy direc

tive shall not be increased or decreased by more than

$2.0 billion during the period commencing with the

opening of business on the day following such meeting

and ending with the close of business on the day of the

next such meeting.

By unanimous vote, the open market transactions in Government

securities, agency obligations, and bankers' acceptances during the

period October 28 through November 24, 1969, 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

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execute transactions in the System Account in accordance with the

following current economic policy directive:

The information reviewed at this meeting indicates

that real economic activity has expanded only moderately

in recent quarters and that a further slowing of growth

appears to be in process. Prices and costs, however, are

continuing to rise at a rapid pace. Most market interest

rates have again been advancing in recent weeks, in many

cases reaching new highs as a result of demand pressures,

including heavy Treasury and foreign official bill sales,

and a reversal of earlier market expectations partly

stemming from growing concern about the outlook for fiscal

policy. In October bank credit declined on average and

the money supply changed little, but both appear to be

increasing relatively rapidly in November. Recently the

net contraction of outstanding large-denomination CD's

has slowed markedly, apparently reflecting mainly an

increase in foreign official time deposits. However,

flows of consumer-type time and savings funds at banks

and nonbank thrift institutions have remained weak. In

the third quarter a small surplus in U.S. foreign trade

re-emerged, but there was another very large deficit in

the over-all balance of payments on the liquidity basis

and the official settlements balance, which had been in

surplus earlier, was also in deficit. More recently, re

turn flows out of the German mark have apparently con

tributed to some short-run improvement in the U.S. payments

position. 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 sus

tainable economic growth and attaining 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 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 projec

tions or if pressures arise in connection with possible

bank regulatory changes.

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By unanimous vote, the following letter was approved:

Mr. John F. Hahn,

3700 Bagley, Apt. 305,

Los Angeles, California.

90034

Dear Mr. Hahn:

In response to your letter of September 19, 1969,

and pursuant to section 271.6 of its Rules Regarding Avail

ability of Information, the Federal Open Market Committee

has reviewed your request for access to certain Committee

records. Your letter requested such review following an

earlier exchange of correspondence between you and Charles

Molony, and was prompted by Mr. Molony's indication that

certain Committee records are not available for public

inspection.

The first two items in your appeal (questions 5

and 6 of your inquiry) involve staff memoranda, briefings,

and reports in connection with any Committee meeting in

1969 and minutes of discussion at such meetings in 1968

and 1969. With respect to these records, the Committee

has sustained the determination reported to you by Mr.

Molony. The Committee has adopted procedures intended to

inform the public of its actions as fully and as promptly

as possible without compromising the effectiveness of those

actions. To that end, an extensive summary record of policy

actions is published by the Committee, and action minutes

are also available for public inspection, with deferrals of

generally about 90 days. Disclosure of the materials which

you request would unnecessarily inhibit the free discussion

essential to a reasoned group judgment, and would also reveal

actions considered but deferred or not taken, with possible

adverse effects on both public and private interests. For

these reasons, the Committee relies upon the exemption from

public disclosure provided by 5 U.S.C. 552(b)(5), and declines

to make such material available for public inspection.

Your letter also requests a review of the denial of

access to data regarding specific securities transactions with

individual dealers. You explain that your interest is in

determining the amount of profit made by dealers on such trans

actions, and indicate that, at this time at least, you are not

interested in data with respect to any particular dealer. This

casts a somewhat different light on the issue, since it was

previously understood that you were requesting access to the

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records of transactions with individual and specified

dealers. The Committee would sustain Mr. Molony's ruling

with respect to transactions revealing the identity of

individual dealers, but information as to the prices at

which securities were purchased and sold in the conduct of

System open market operations would be provided, without

identification of individual dealers and subject to a

reasonable time lag, We should note, however, that this

information will in fact shed little light on profits

made by dealers on transactions with the Federal Reserve.

It should also be noted that this material, even

for a relatively brief time span, would be voluminous, and

its assembly would be very time-consuming for our staff

and consequently costly to you under the fees chargeable

for search time. A compilation very similar to that in

which you express an interest was prepared several years

ago in response to a Congressional inquiry.

While this

particular compilation is not current, it could be pro

vided fairly promptly and at little

cost; you might

therefore wish to inspect it as a first step and make a

judgment in that light as to whether, and to what extent,

you wish to inquire further into the matter.

Secretary's note:

The letter was transmitted over Mr. Holland's

signature later in the day.

By unanimous vote, the Committee approved the release with a

reasonable time lag to any person on request of certain documents held

at the Federal Reserve Bank of New York, described in a staff memorandum

of November 12, 1969, in supplementation of the list of such documents

that had been approved for release on June 20, 1967.

It was agreed that the next meeting of the Federal Open Market

Committee would be held on Tuesday, December 16, 1969, at 9:30 a.m.

The meeting adjourned.

Secretary