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FE D E R A L .

MISC. 33.2-isoM-io-ai

pANK

O F N EW YO R R '

O F F IC E C O R R E S P O N D E N C E
Date.
To.

Mesara* Raitsft

Fr o m

AUan

May.lTg. 1954* ■

r*Tre4ba»icT:,

gprp^

Attached is the suggestion which I hare sent to Chairman Martin
(revising his earlier suggestion) for carrying out a program of organized
commonication between this hank and the Executive Committee of the Federal
Open Market Committee, proposed by Governor Robertson*
% idea is that these telephone calls will he for the discussion
of the credit situation and the situation in the government security market,
as it seems to exist, but not as a substitute for policy-making by the
Executive Coausittee of the Federal Open Market Committee, nor for executive
responsibility for carrying oat policy, which is the responsibility of this
bank and the Manager of the System Open Market Account* There will un­
doubtedly be questions and suggestions as to how policy should be executed,
these should be handled, so far as possible, as aa exchange of views and
opinions for consideration, without argument as to what action finally will
be taken at this bank by the Manager of the System Open Market Account#
In the exceptional circumstance, when both Mr. House and Mr. Boosa
are absent from the bank (except in attendance at meetings of the Federal
Open Market Ccsaraittee or its Executive Comities), the three-way telephone
conversation will be initiated by Mr. freiber, First Tice President, and ny
alternate on the Federal Open Market Committee, and Mr. Souse* s alternate in
the administration of the securities function at this bank*




5 /1 7 /5 4

ISach morning at 10:45 a . m . , beginning June 1 1954,
,
Mr. Rouse. Manager of the System Open Market Account, and
Vice President, Federal Reserve Bank of H e w York (or in his absence
Mr. Roosa, Assistant Vice President, Federal Reserve Bank of
N e w York) will telephone Mr. Williams, M e m b e r of the Executive
Committee of the Federal Open Market Committee (or his nominee
at the Federal Reserve Bank of Philadelphia, and Mr. Thomas (or
in his absence Mr. Youngdahl) at the Board of Governors, on a
three-way telephone hookup, to discuss the reserve position of the
banks, the situation in the Government security market, and the
outlook for open market operations.
By 10545 a.m., Mr. Rouse or Mr. Roosa will have 'V
available the reserve position of the central reserve city banks at
N e w York and the initial Federal fund and dealer loan rates, and
will have had early morning conversations with Government security
dealers and been able to observe the tenor of the market during its
first half hour of trading.
I would be understood, of course, that unusual or
t
unanticipated developments either earlier or later in the day than
the hour of these three-way conversations, which might have an
important bearing on open market operations, could call for similar
conversations at other times.
These three-way conversations would be in addition
to and not in lieu of present recurrent factual market reports trans­
mitted to the Government securities section at the Board of Governors
by Mr. Larkin or Mr. Cooper of the Securities Department of the
Federal Reserve Bank of Ne w York.





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102