FOMC Minutes

Meeting of Federal Open Market Committee

November 17, 1970

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 17, 1970, at

9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Brimmer

Daane

Francis

Heflin

Hickman

Maisel

Mitchell

Robertson

Sherrill

Swan

Messrs. Galusha, Mayo, and Morris, Alternate

Members of the Federal Open Market Committee

Messrs. Eastburn, Clay, and Coldwell, Presidents

of the Federal Reserve Banks of Philadelphia,

Kansas City, and Dallas, respectively

Mr. Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Kenyon and Molony, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. Partee, Economist

Messrs. Axilrod, Craven, Gramley, Hersey,

Hocter, Parthemos, Reynolds, and

Solomon, Associate Economists

Mr. Holmes, Manager, System Open Market

Account

Mr. Coombs, Special Manager, System Open

Market Account

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11/17/70

Messrs. Bernard and Leonard, Assistant

Secretaries, Office of the Secretary,

Board of Governors

Mr. Coyne, Special Assistant to the Board

of Governors

Messrs. Wernick and Williams, Advisers,

Division of Research and Statistics,

Board of Governors

Mr. Keir, Associate Adviser, Division of

Research and Statistics, Board of

Governors

Mr. Wendel, Chief, Government Finance Section,

Division of Research and Statistics,

Board of Governors

Miss Ormsby, Special Assistant, Office of the

Secretary, Board of Governors

Miss Eaton, Open Market Secretariat Assistant,

Office of the Secretary, Board of Governors

Miss Orr, Secretary, Office of the Secretary,

Board of Governors

Mr. Fossum, First Vice President, Federal

Reserve Bank of Atlanta

Messrs. Link, Taylor, and Tow, Senior Vice

Presidents, Federal Reserve Banks of New York,

Atlanta, and Kansas City, respectively

Messrs. Scheld and Andersen, Vice Presidents,

Federal Reserve Banks of Chicago and St.

Louis, respectively

Messrs. Gustus and Kareken, Economic Advisers,

Federal Reserve Banks of Philadelphia and

Minneapolis, respectively

Mr. Friedman, Consultant, Federal Reserve Bank

of Boston

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 20,

1970, were approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee held on October 20, 1970, was accepted.

11/17/70

By unanimous vote, the System open market transactions in

foreign currencies during the period October 20 through November 16,

1970, were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of one year

of the following swap arrangements, having the indicated amounts

and maturity dates, was approved:

Foreign bank

Amount of

arrangement

(millions of

dollars)

Austrian National Bank

National Bank of Denmark

Bank of England

Bank of Japan

Bank of Mexico

Bank of Norway

Bank of Sweden

Swiss National Bank

Bank for International

Settlements:

Dollars against Swiss francs

Dollars against authorized

European currencies other

than Swiss francs

Maturity

of latest

authorized

renewal

200

200

2,000

1,000

130

200

250

600

December

December

December

December

December

December

December

December

2,

2,

2,

2,

2,

2,

2,

2,

1970

1970

1970

1970

1970

1970

1970

1970

600

December

2, 1970

1,000

December

2, 1970

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period October 20 through November 16, 1970, were

approved, ratified, and confirmed.

With Mr. Maisel dissenting, the Federal Reserve Bank of

New York was authorized and directed, until otherwise directed by

11/17/70

the Committee, to execute transactions in the System Account in

accordance with the following current economic policy directive:

The information reviewed at this meeting suggests

that real output of goods and services is changing

little in the current quarter and that unemployment has

increased. Part but not all of the weakness in over

all activity is attributable to the strike in the auto

mobile industry which apparently is now coming to an

end. Wage rates generally are continuing to rise at a

rapid pace, but gains in productivity appear to be slow

ing the increase in unit labor costs.

Recent movements

in major price measures have been erratic but the

general pace of advance in these measures has tended to

slow. Most interest rates declined considerably in the

past few weeks, and Federal Reserve discount rates were

reduced by one-quarter of a percentage point in the

week of November 9. Demands for funds in capital mar

kets have continued heavy, but business loan demands

The money supply changed little

at banks have weakened.

on average in October for the second consecutive month;

bank credit also was about unchanged, following a slow

The balance of payments

ing of growth in September.

deficit on the liquidity basis was at a lower rate in

the third quarter and in October than the very high

second-quarter rate, but the deficit on the official

settlements basis remained high as banks repaid Euro

In light of the foregoing devel

dollar liabilities.

of the Federal Open Market

is

the

policy

opments, it

Committee to foster financial conditions conducive to

orderly reduction in the rate of inflation, while

encouraging the resumption of sustainable economic

growth and the attainment of reasonable equilibrium in

the country's balance of payments.

To implement this policy, the Committee seeks to

promote some easing of conditions in credit markets

and moderate growth in money and attendant bank credit

expansion over the months ahead, with allowance for

temporary shifts in money and credit demands related

to the auto strike. System open market operations

until the next meeting of the Committee shall he

conducted with a view to maintaining bank reserves and

money market conditions consistent with those objectives.

11/17/70

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It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, December 15,

at 9:30 a.m.

The meeting adjourned.

Secretary

1970,