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Reproduced from the Unclassified I Declassified Holdings of the National Archives ___ d e c l a s s if ie d Authority E .6 . iBSfc MINUTES OF MEETING OF OPEN MARKET INVESTMENT COMMITTEE FOR THE FEDERAL RESERVE SYSTEM, HELD AT THE FEDERAL RESERVE BOARD. WASHINGTON. D. C .. DECEMBER 3. 1923 PRESENT: Governor Strong, Chairman Governors Harding, Faneher, McDougal and Norris Mr* W* B* Matteson, Secretary of the Committee ALSO PRESENT; Governor Crissinger, Vice Governor Platt Dr. M iller, Messrs* Hamlin, James and Cunningham Honorable Garrard B* Winston, Under Secretary of the Treasury Mr* W* L* Eddy, Secretary of the Federal Reserve Board Mr* Walter W. Stewart, Director of Research and Statistics At the request of Governor Crissinger, Governor Strong as Chairman of the Open Market Investment Committee reviewed b rie fly the situation which existed prior to the organization on May 16, 1922 of the Committee of Governors on Cen tralized Execution of Purchases and Sales of Government Securities, and the manner in which purchases and sales of Government securities were conducted; also, ‘ the manner in which such transactions had been handled since the formation of the original committee and it s successor* Governor Strong also stated b rie fly the present status of open market transactions of the System and the position of the banks at this time, with re ference to their investment holdings of various classes* He further stated that the Committee fe lt i t to be expedient at the present time that the Federal reserve. banks should consider a change in policy, leading possibly to the purchase (through the Open Market Investment Committee) of a suitable volume of Government securities of short maturities, such purchases to be made with due regard to money market con ditions, to the position of the Treasury, and to the market for Government secur it ie s , so as to be in a position to exert an influence from time to time by the purchase and sale of such securities in the open market* I t was understood that for the present such purchases should (hot) be of such volume as to cause a net increase ^ ------ ---------------------------------------------------------- W Reproduced from the Unclassified I Declassified Holdings of the National Archives d e c l a s s if ie d Authority E .6 . U35fc jl.ii the System1 s earning assets* An extended d iscu ssion follow ed , which was p a rticip a te d in by Governor C rissin g er and other members o f the Federal Reserve Board, Under Secretary of the Treasury Winston and the members of the Open Market Investment Committee. The meeting adjourned at 1:00 p . m* fo r lunchwon. The members o f the Open Market Investment Committee reconvened at 2;30 p . m*, a l l th e members of the Committee being present except Governor Norris* Governor Strong presented the fo llo w in g communication which he received from the Federal Reserve Board: HYou are advised that the Federal Reserve Board at i t s meeting to-day considered the rep ort o f your Committee and adopted the fo llo w ing re s o lu tio n s ; 1WKEHEAS, The Open Market Investment Committee of the Federal Reserve System (Governors Strong, Harding, McDougal Fancher and N orris) has reported t o the Board that i t i s expedient at the present time that the Federal reserve banks be given perm ission t o assume a p o s itio n toward the money market by the purchase of a su ita b le volume o f Government s e c u r it ie s o f short time m a tu ritie s, provided such purchases can be made without disturbing the con d ition s o f the money market or of the market fo r Government s e c u r it ie s , ’ NOW, THEREFORE, BE IT RESOLVED, That the Federal Reserve Board declares i t s e l f in favor o f the purchase of a lim ite d volume of short-term Government s e c u r it ie s at t h is tim e, i t being understood that the Board reserves the righ t t o discon tinue purchases and t o require the sa le of any of the secur i t i e s purchased in pursuance of t h is re so lu tio n at any time i t may deem expedient, and ’ BE IT FURTHER RESOLVED, That cop ies of these r e s o ltio n s be transm itted t o the Chairman o f the Open Market Investment Committee o f the Federal Reserve System and t o the Governors of a l l Federal reserve banks*1 "By d ir e c tio n of the Federal Reserve Board. R e sp e ctfu lly , (Signed) Walter L* Eddy Secretary” The Chairman was d ire cte d t o acknowledge the Board’ s le t t e r , which was done at once* The Committee a ls o d ire cte d the Chairman t o send a l e t t e r t o each reserve bank, rep ortin g the r e s u lts of the Conference and ou tlin in g the procedure Reproduced from the Unclassified / Declassified Holdings of the National Archives d e c l a s s if ie d Authority E .6 . - 3 to be followed, after f ir s t informing Under Secretary of the Treasury Winston of the proposed action. I t was understood that the Chairman would ask for the views of the Federal Reserve Board and participating reserve banks, as to further purchases a fte r a total of $100,000,000 had been acquired* The Committee agreed that only early maturing obligations of the Treasury should be purchased and that the pro cedure heretofore followed in executing orders would continue* It,was thereupon voted that the Committee should proceed with the pur chases of Government securities along the lines set forth in the Federal Reserve Board resolution, such purchases to be made as and when conditions should permit. The meeting thereupon adjourned* (Signed) W* B* MATTESON Secretary
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