FOMC Minutes

Meeting of Federal Open Market Committee

September 19, 1972

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, September 19, 1972, at

9:30 a.m.

PRESENT:

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Mr.

Burns, Chairman

Hayes, Vice Chairman

Brimmer

Bucher

Coldwell

Daane

Eastburn

MacLaury

Mitchell

Robertson

Sheehan

Winn 1/

Messrs. Francis, Heflin, and Mayo, Alternate

Members of the Federal Open Market Committee

Messrs. Morris, Kimbrel, and Clay, Presidents

of the Federal Reserve Banks of Boston,

Atlanta, and Kansas City, respectively

Mr, Holland, Secretary

Mr. Broida, Deputy Secretary

Messrs. Altmann and Bernard, Assistant

Secretaries

Mr. Hackley, General Counsel

Mr. Partee, Senior Economist

Mr. Axilrod, Economist (Domestic Finance)

Mr. Solomon, Economist (International Finance)

Messrs. Boehne, Bryant, Gramley, Green, Hersey,

Hocter, Kareken, and Link, Associate

Economists

Mr. Holmes, Manager, System Open Market Account

Mr. Coombs, Special Manager, System Open Market

Account

1/ Left the meeting at the point indicated.

9/19/72

Mr. Coyne, Special Assistant to the Board

of Governors

Mr. Reynolds, Associate Director, Division

of International Finance, Board of

Governors

Messrs. Keir, Pierce, Wernick, and Williams,

Advisers, Division of Research and

Statistics, Board of Governors

Mr. Pizer, Adviser, Division of International

Finance, Board of Governors

Mr. Struble, Economist, Division of Research

and Statistics, Board of Governors

Mrs. Sherman, Secretary, Office of the

Secretary, Board of Governors

Mr. Merritt, First Vice President, Federal

Reserve Bank of San Francisco

Messrs. Eisenmenger, Parthemos, Taylor, Scheld,

Andersen, Tow, and Craven, Senior Vice

Presidents, Federal Reserve Banks of Boston,

Richmond, Atlanta, Chicago, St. Louis,

Kansas City, and San Francisco, respectively

Mr. Cooper, Assistant Vice President, Federal

Reserve Bank of New York

By unanimous vote, the minutes of actions taken at the

meeting of the Federal Open Market Committee on July 18, 1972, were

approved.

The memorandum of discussion for the meeting of the Federal

Open Market Committee on July 18, 1972, was accepted.

By unanimous vote, the System open market transactions in

foreign currencies during the period August 15 through September 18,

1972, were approved, ratified, and confirmed.

By unanimous vote, renewal for further periods of 3 months

of the 4 System drawings on the National Bank of Belgium maturing

in the period October 3-27, 1972, was authorized.

9/19/72

By unanimous vote, the open market transactions in Govern

ment securities, agency obligations, and bankers' acceptances

during the period August 15 through September 18, 1972, were

approved, ratified, and confirmed.

Mr. Winn left the meeting prior to the following action.

With Messrs. MacLaury and Robertson dissenting, and with

Mr. Mayo voting as alternate for Mr. Winn, the Federal Reserve

Bank of New York was authorized and directed, until otherwise

directed by the Committee, to execute transactions for the System

Account in accordance with the following current economic policy

directive:

The information reviewed at this meeting suggests

a substantial increase in real output of goods and

services in the current quarter, although well below

the unusually large rise recorded in the second quarter.

In July and August, wages and prices advanced somewhat

more rapidly on balance than in the immediately pre

ceding months, while the unemployment rate remained

substantial. Foreign exchange market conditions have

remained quiet in recent weeks and the central bank

reserves of most industrial countries have continued

to change little. In July, the large excess of U.S.

merchandise imports over exports persisted.

In August on average, growth slowed in the

narrowly and broadly defined money stock and in

the bank credit proxy, but in recent weeks the

money stock has been expanding more strongly.

Since mid-August, interest rates on Treasury bills

have increased sharply, while yields on most other

market securities have advanced more moderately.

In light of the foregoing developments, it is

the policy of the Federal Open Market Committee to

foster financial conditions conducive to sustainable

real economic growth and increased employment, abate

ment of inflationary pressures, and attainment of

reasonable equilibrium in the country's balance of

payments.

9/19/72

To implement this policy, while taking special

account of the effects of possible bank regulatory

changes, developments in credit markets, and

international developments, the Committee seeks to

achieve bank reserve and money market conditions

that will support more moderate growth in monetary

aggregates over the months ahead.

It was agreed that the next meeting of the Federal Open

Market Committee would be held on Tuesday, October 17, 1972, at

9:30 a.m.

Thereupon the meeting adjourned.

Secretary