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A meeting of the executive committee of the Federal Open Market Committee was held in the offices of the Board of Governors of the Federal Reserve System in 13, 1939, Washington on Wednesday, December at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Harrison, Vice Chairman McKee Draper Leach Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary of the Federal Open Market Committee Wyatt, General Counsel Goldenweiser, Economist Dreibelbis, Assistant General Counsel Sproul, Manager of the System Open Market Account Mr. Thurston, Special Assistant to the Chairman of the Board of Governors Mr. Mr. Mr. Mr. Messrs. Szymczak, Ransom, Davis, Fleming, Martin and Hamilton, Members of the Federal Open Market Committee Messrs. Young, Sinclair, Parker, Schaller, Peyton, Gilbert and Day, Presidents of the Federal Reserve Banks of Boston, Philadelphia, Atlanta, Chicago, Minne apolis, Dallas and San Francisco, re spectively Upon motion duly made and seconded, and by unanimous vote, the minutes of the meeting of the executive committee of the Federal Open Market Committee held on November 6, 1939, were approved. Before the meeting there had been distributed to the members of the Federal Open Market Committee copies of a report prepared at the Federal Reserve Bank of New York covering open market operations dur ing the period from September 18 to December 10, 1939, inclusive, -2 12/13/39 and Mr. Sproul discussed the important points in the report. It was stated that there had been no transactions in the System account since the period covered by the report. Mr. McKee raised the question whether the present procedure of showing profits from the sale of securities in the System account as additions to current net earnings should be continued or whether, instead, such profits should be used to reduce the carrying values of the unsold securities, end said that, while he had reached no con clusion on the question, he thought it desirable to have it considered. Various phases of the question were discussed but no action was taken. During this discussion Mr. Smead, Chief of the Division of Bank Operations of the Board of Governors, drew at its entered the room and with conclusion. Upon motion duly made and seconded, and by unanimous vote, the transactions in the System open market account for the period since that covered by similar ac tion at the meeting of the executive com mittee on November 6, 1939, to and includ ing December 12, 1939, were approved, ratified and confirmed. The meeting then recessed and reconvened following the ad journment of the meeting of the Federal Open Market Committee at 1:00 p.m. with the same attendance as at the earlier session of the execu tive committee. In accordance with the discussion at the meeting of the Federal Open Market Com mittee, it was voted unanimously to direct the Federal Peserve Bank of New York to exchange the $161,705,000 of March 15, 1940, Treasury notes held in the System account 12/13/39 for $100,000,000 of the 2-1/4%bonds and $61,705,000 of the 1% notes being offered by the Treasury in exchange for the March 15 notes. It was agreed that there was no reason at this time for changing the existing instructions to the Federal Reserve Bank of New York with respect to purchases, sales, and shifts of securities in the System account. Thereupon, upon motion duly made and seconded, and by unanimous vote, the executive committee directed the Federal Reserve Bank of New York until otherwise directed by the executive committee, (1) To make such shifts of securities in the account (which may be accomplished when desirable through replacement of ma turing securities) as may be necessary in the practical administration of the account, up to an aggregate of $200,000,000 of pur chases and a like amount of sales or re demptions, provided that in making such shifts the total amount of bonds held in the account be not increased or decreased by more than $100,000,000; (2) To make such outright purchases or sales for the System account as may be necessary for the purpose of exercising an influence toward maintaining orderly market conditions, provided that the total amount of securities in the account be not increased or decreased through operations under this paragraph by more than $100,000,000; and (3) Upon approval by a majority of the members of the executive committee, which may be obtained by telephone, telegraph, or mail, to make such other shifts or such purchases or sales (which would include authority to allow maturities to run off without replacement) for the account as 12/13/39 may be found to be desirable within the limits of the authority granted to the ex ecutive committee by the Federal Open Market Committee. Thereupon the meeting adjourned. Secretary. Approved: Chairman.
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