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MINUTES OF THE MEETING OF THE FEDERAL OESN MARKET COMMITTEE
HELD AT
____________ WASHINGTONt D. 0., JUNE 36, 1954__ __________

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The meeting was called to order at 12:45 p« m«, there being present:
Governor Harrison, chairman. Governors Young, Norris,
Fancher, Seay, Schaller, Martin, Geery, Hamilton,
McKinney and Calkins, and Acting Governor Johns*
* The chairman reported that at the last meeting of the executive committee,
held, in Washington on May 23, there had been some discussion with the Secretary of
the Treasury with respect to the possible utilization of the stabilization fund for
the purchase of government securities in the open market*

At that time the

executive committee had expressed doubt as to the wisdom of such purchases, and th®
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Secretary of the Treasury had advised the committee that he would make no further
purchases of government securities out of that fund at least until after June 15*
The chairman reported that last week (June 20) the Secretary had advised him that
the Treasury Department had no present intention of using the stabilization fund
for the purchase of government securities, and that in no event would that fund be
used for that purpose in the future without first advising the Chairman of the
Federal Open Market Committee and giving him an opportunity to express the
Committee^ views on the subject*_^
The chairman then referred to discussions which have taken place from
time to time in the past about the possible sale of government securities out of
the System account to the Treasury, payment to be made out of the stabilization
fund, and stated that on June 20 he had discussed the matter more formally with
Treasury officials who expressed considerable interest in the possibility of pur­
chasing up to $500 million of the System*s longer maturities, but felt that in view
of the fact that conditions in the government security market are now most satis**
factory and in view of the Secretary1s prospective absence until August 1, further
consideration of the matter should be postponed until his return in August*




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The chairman pointed out that in view of the likelihood that we would
not have another meeting of the full committee prior to August, it might be appro­
priate to consider giving the executive committee some authority in the matter#
After discussion it m s unanimously.
VOTED that subject to the approval of Federal Reserve Board
the executive committee be authorized to sell up to §500
million of the System’s holdings of government securities
to the Treasury, if and when it seems desirable, it being
preferred that any securities so sold should bo of the
longer maturities#
In the course of the discussion of this matter it was pointed out that
in determining the amount of any securities so sold to the Treasury, the earning
position of the System should be taken into account, and that the position of
individual reserve banks might have to be protected by the usual transfers within
the System.

Any profits from the sale of securities would be allotted among the

Federal reserve banks in the usual proportions#
Governor Harrison reported that with the approval of the Federal Reserve
Board, he was planning to sail for Europe the end of June to be at Basle during a
meeting of the directors of the Bank for International Settlements at Basle on
July 9, that he would probably visit Paris and London after that meeting, and ex­
pected to be home before the end of July#




The meeting adjourned at 1:30 p. m#

George L* Harrison,
Chairman#