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Reproduced from the Unclassified I Declassified Holdings of the National Archives-




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DECEIVER 17, 1954

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The meeting was called to order at 10:30 a. m., the following being
Governors, Young, Norris, Seay, Fancher, Geery, and Martin.
Deputy Governors Burgess, Johns, and McKay
On motion Governor Young was elected chairman pro tem.
The secretary’s report of operations was distributed and after discussion
it was
VOTED that the report be accepted and placed on file
It was
VOTED to ratify the action of the executive committee in replacing
Treasury notes which matured on December 15, with other issues, this action having
previously received telegraph approval of all governors.
After discussion the following action was taken with respect to maturi­
ties in the portfolio which might have to be dealt with prior to another meeting
of the committee.
VOTED that the Executive Committee be given authority to
replace the Treasury notes maturing on March 15 and the
maturities of called 4th 4 1/4$ Liberty Bonds in System
Account either in the market or with any securities which
the Treasury may offer in exchange.
There was a brief discussion of the desirability of the System’s being
prepared to make shifts between maturities in the System portfolio, if, that should
appear desirable as an aid to maintaining stability in the government security
market, either in connection with Treasury financing operations or at other times.
It was then

VOTED that the Executive Committee be given authority to
make exchanges between maturities in the System Account
up to a total of |100,000,000.

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The members of the Federal Reserve Board were then invited to join the
meeting, and at 11 o ’clock they entered the room, the following being present in
addition to the committee:
From the Federal Reserve Board:
Governor Eccles and Messrs. Hamlin, James, Szymczak,
and Thomas
From the Federal Reserve Board staff:
Messrs. Goldenweiser, Morrill, Smead, Wyatt, Bethea,
Carpenter, and Walters
Governor Eccles discussed with those present certain aspects of the bank­
ing situation and of the function of the Federal Reserve System under present


the course of the discussion Governor Eccles raised the question

whether it would not be a mistake for the Federal Reserve System to confine its

purchases solely to short term government securities and whether it would not be
wise in the interest of public cpnfidence for the Reserve,System to exercise
leadership by some further)shifts in the portfolio from short to long time govern­
ment bonds on appropriate occasions
Governor Eccles also suggested the desirability of a broadening of the
eligibility provisions of the Federal Reserve Act which would encourage the private
banking system to support the markets for longer term credit.
In reply to questions Governor Eccles said he did not have any specific
suggestions to make at this time with respect to the relationship of the Federal
Reserve System to the government security markets, but believed that the Reserve
System should be prepared if and when necessary to support this market vigorously
and independently without waiting for a request from the Treasury*
There1was extended general discussion in the course of which Governor
Young reported to the members of the Federal Reserve Board the action which had
been taken by the Open Market Committee.

The meeting adjourned at 12:50 p> m.

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The meeting reconvened at 3:45 p. m. following a meeting of the committee
on legislative program.

Mr. Coolidge was present in addition to the members of

the committee, and Governor Eccles entered the meeting later.
There followed an informal discussion of Treasury financing including a
discussion of means of avoiding padding of subscriptions, Federal reserve policy
in purchasing long time government securities, etc.
In the course of this discussion Under Secretary Coolidge stated his
belief that the Federal Reserve System had done all that was necessary to insure
proper absorption of government bond issues, though be suggested that in the future
the Federal Reserve System might give consideration to making purchases for its own
account rather than for various Treasury accounts in easing off the market at
times of violent breaks, with the thought that readjustments of maturities might
perhaps he made later through purchases by the Treasury for its investment accounts
from the Federal reserve banks.
The meeting adjourned at 5:15 p. m.

W. Randolph Burgess,