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STRICtLY C?KFXPEb'fIiL i BOABD OF OF THB FIDFJU& HBSEEV! November 5 , Chairman Eoeles l*» H* P i s e r Purchase of s h o r t - t e r a s e c u r i t i e s The System Aooount has rec«ntly been purchasing a large aiaourrt o f ahort-t«ra tax-«c«Eipt • • e u r i t l e t a s v e i l as e « r t l f i e a t » s # as shown i s t h * a t tached Habl^ Z talk«d with Hr9 House t ^ i s morning concerning these purchases, s i n e * t h e y i e l d s a f t e r taxes on most o f t h e s e p a r t i a l l y tax-exempt i s s u e s are as low as t h e y i e l d s a f t e r taxes on t h e c e r t i f i c a t e s . He said that t h e e a r l i e r purchases o f both kinds of i s s u e s were made for t h e purpose o f r e l i e v i n g seme of t h e pressure an t h e b i l l market• In addition, he thought I t d e s i r a b l e t o purchase t h e s e i s s u e s , because they may be given ric-hta t o W exchange for 2 per eent bonds* The no re recent purchases were made t o r e - raove from the market a supply that dealers were finding i t impossible t o sell, I suggested t h a t by paying; present prioes he n i g h t be eneouraging investors to s e l l * He said that In one instance he had purchased guaranteeds that as investor was s e l l i n g i n order t o switch t o c e r t i f i c a t e s , and he s a i d further t h a t perhaps he had gone t o o far i n supporting t h e p r i c e s o f the partially tax-«xe«pt securities. # 5* Sf SIG1LT j ended - o t t . 87 I©ir. 3 HOY. 10 Certificates* December X February X April X •3,900 •1*7*100 •Hl^-SOO •MH **y x August X October X Total certificates •^3.200 MM* •3,ooo •85#000 +10,200 •1,000 •X9,700 •19.600 •^0f^(K) -U2.J00 Treasury riotesj Sept* I9hk MM* Treasury bondsi •1,900 •750 ^ FFMCi •X,000 6 •7^> EDLCi •TOO partially •9. •3O00
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