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/ * % « * * " OO^/ TEl0 DE WTE 468 H ” / * i - **\ n >*"Tv m V 5 P FROM .JOE CALIFANO T ° _ XHE PRESHJENT CIli- .oo323 // U N C L A S / / » ^<5 A ^ Received: 12:0U P.M. Monday 29 November 196% _ T H E R E F O L L O W S THE T E X T " O F 7 AN URGENT MEM O R A N D U M T O YOU FROM G A RD NER A C K L E Y CONCE RN ING INCREASE IN INTEREST R A T ES BY F E DE RAL R E S E R V E BOARD. QUOTE NOVEMBER 29, 1965 M E M O R A N D U M FOR THE P RES IDENT SUBJECT: AVOID ING A D I S C O U N T RATE R ISE A• AS JOE FO’ -JLER HAS INFORMED YOU, THE F E DE RAL OPEN MARKET COM MITTEE AT ITS MEETIN G LA S T WE E K MADE NO CHANGE IN M O N E T A R Y POLICY. HOWEVER, C H A I R M A N MARTIAN E X P RES SED HIS INTENTION T O VO T E T O APPROVE AN INCREASE IN THE DISCO UNT RAT E IF IT IS P R OPO SED BY A NY R E G I O N A L FEDER AL R E S ERV E BANK. I - THREE OF THE REGI ONA L BANK BOARDS ARE S C H EDU LED T O MEET ON T H UR SDA Y OF THI S WEEK. AT LEAST ONE — IF NOT ALL THREE — WILL PROPOSE A D I S CO UNT RATE HIKE. BEF ORE IT CAN BECOME EFFECTIVE, A N Y SUCH INCREASE MUST BE APPROVED BY THE BOARD OF GOVERNORS. IF THE BOARD APPR OVE S ONE B A N K ’S PROPOSAL, THIS IS AL W A Y S F O LL OWE D AT ONCE BY THE OTHER BANKS, W I T H APPR OVA L T A K E N FOR GRANTED. 3. in ADDITION TO CHAIRMAN MARTIN, TW O OTHER MEMBE RS WILL SU RE L Y VOTE TO APPROVE A DI S C O U N T RATE INCREASE; THR EE WILL S UR E L Y BE OPPOSED. THE KEY VOTE WILL BE CAST BY GOVE RNO R DEW E Y DAANE. /ft A. G O VE RNO R HAISEL BELIEVES THAT DAANE* S VOTE AGAINST A DISCOUNT RAT," INCREASE CAN BE OBTAINED, A L T H O U G H HE NOW PROBA BLY LEANS IN FAVOR OF IT. DA ANE R E PR ESE NTS THE A DMI NIS T R A T I O N IN A NUMBER OF INTERNATIONAL FORUMS, INCLUDING THE GR OUP OF TEN. S EC R E T A R Y FOWLER COULD POINT CUT TO DAANE THAT IT W O U LD BE I NAPPROPRIATE FOR HIM T O CO N T I N U E TO REPRESENT THE ADM INI ST R A T I O N IF HE VOTES AG AINST A CLEAR A DM I N I S T R A T I O N POLICY POSITION. IF THI S FAILS, MAISEL BELIEVES THAT A CLEAR C O M MUN ICA TIO N OF YOUR V I E W S T O DAANE -- P E R SO NALL Y OR T H R O U G H AN I N T E R ME DIA RY (E.G., D-UG DILLON, WH O RE COM M E N D E D DAANE*S APP OIN TME NT AS GOVERNOR) — COULD PERSUADE HIM TO WAIT UNTIL THE S I TU ATI ON CLARIF IES IN JANUARY. 5. THE BOARD WO ULD N O R M A L L Y C-NSIDER A T H U R S D A Y R E C O M M E N D A T I O N AT ITS MEETING ON F R I D A Y OR MONDAY. IF YOU SHOULD DECI DE xO MEE* W I T H I HE QUADR IAD ON FRIDAY, YOU wIGHT BE ABLE T O PERSUADE C H A I R M A N M A R T I N TO VOTE AGAINST A DISC OUNT RA T E INCREASE AT THI S TIME. HOWEVER, B E C A U S E HE IS A L REA DY ON R E C O R D W I T H HIS C O L L E A G U E S AS PREPAR ED T O VO T E IN FAVOR, I BELIEVE T HAT IT IS PRUDENT T o TAKE OUT INSUR ANC E BY WORKING ON GOVER NOR DAANE. ijfcftttisg ft y SIGNED jCfiftfltoail imi&B GARDNER AC KLE Y UN QUO TE DTGs 2 9 / 1 727Z NOV 6^ '