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FROM .JOE CALIFANO
T ° _ XHE PRESHJENT
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// U N C L A S / /

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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 ’ PROPOSAL, THIS IS AL W A Y S
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.

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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.
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SIGNED
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GARDNER AC KLE Y
UN QUO TE
DTGs 2 9 / 1 727Z NOV 6^




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