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A meeting of the executive committee of the Federal Open Mar
ket Committee was held in the offices of the Board of Governors of
the Federal Reserve System in Washington on Tuesday, March 7, 1939,
at 11:25 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Harrison, Vice Chairman
McKee
Draper
Leach

Messrs. Fleming, Martin and Hamilton,
Members of the Federal Open Market
Committee
Mr. Carpenter, Assistant Secretary of the
Federal Open Market Committee
Mr. Wyatt, General Counsel
Mr. Goldenweiser, Economist
Mr. Williams, Associate Economist
Mr. Dreibelbis, Assistant General Counsel
Mr. Sproul, Manager of the System Open
Market Account
Upon motion duly made and seconded, and by
unanimous vote, Mr. Harrison was elected Vice
Chairman of the executive committee of the Fed
eral Open Market Committee to serve until the
election of his successor at the first meeting
of the executive committee after March 1, 1940.
Upon motion duly made and
unanimous vote, the minutes of
the executive committee of the
ket Committee held on December
approved.

seconded, and by
the meeting of
Federal Open Mar
30, 1938, were

Upon motion duly made and seconded, and by
unanimous vote, the transactions in the System
open market account for the period from December
30, 1938, to March 6, 1939, inclusive, were ap
proved, ratified and confirmed.
It

was agreed that the existing authority of the New York bank

to execute transactions for the System account should be renewed.

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 execu
tive committee,
(1) To replace maturing Treasury bills in
the System open market account by purchases of
like amounts of Treasury bills or Treasury notes
with the understanding that the total amount of
securities in the account maturing within two
years shall not be reduced below $1,000,000,000;
or, from time to time, to allow such bills to ma
ture without replacement or pending subsequent
replacement (a) when market conditions are such
as to make it impossible to procure other bills
or notes without paying a premium over a no-yield
basis, or (b) when such notes are not obtainable
without undue disturbance to the market, provided
that if Treasury bills in the account are allowed
to mature without replacement the total amount
of securities in the account be not decreased by
more than $100,000,000;
(2) To make such other shifts of securities
in the account (which may be accomplished when
desirable through replacement of maturing securi
ties) as may be necessary in the practical admin
istration of the account, up to an aggregate of
$200,000,000 of purchases and a like amount of
sales or redemptions, provided that the total
amount of securities in the account maturing
within two years be not reduced below $1,000,000,00
and that the total amount of bonds held in the
account be not reduced below $700,000,000 and
that the total amount of bonds in the account
having maturities over five years be not in
creased above $850,000,000;
(3) To increase or decrease temporarily the
amount of securities in the account between weekly
statement dates by not more than $50,000,000 when
necessary in making replacements or shifts pursuant
to the above provisions of this resolution, provided
that the amount of securities in the account as of
any weekly statement date shall not be changed from
that of the preceding weekly statement date except
pursuant to the other provisions of this resolution;
and

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3/7/39

(4) 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 replace
ment) for the account as may be found to be

desirable within the limits of the authority
granted to the executive committee by the Fed
eral Open Market Comittee.
At this point Mr. Piser, Senior Economist in the Division of
Research and Statistics of the Board of Governors,
Chairman Eccles stated that in

joined the meeting.

connection with the March 15

Treasury financing, the Treasury Department was offering to exchange
for the outstanding June 15, 1939,

Treasury notes, 1 1/8%Treasury notes

of December 1943, 2 1/2% bonds of 1950-52,

and 2 3/4% bonds of 1960-65

and he suggested that the executive committee consider what amounts of
these three issues should be accepted in
of the June 15 notes held in

exchange for the $85,197,000

the System account.

Piser discussed points to be considered in

Messrs.

Sproul and

determining the question pre

sented by Chairman Eccles.

After discussion, upon motion duly made
and seconded, and by unanimous vote, the execu
tive committee directed the Federal Reserve Bank
of New York to exchange the System's holdings
of the June 15, 1939, Treasury notes for
$15,000,000 of the 1 1/8% notes, $30,000,000
of the 2 1/2% bonds and $40,197,000 of the
2 3/4% bonds.
In taking this action it was understood
that the authority granted to the New York bank

to effect these exchanges was in addition to the
authority contained in the resolution set forth
above.

-4

3/7/39

Inquiry was made as to what securities, in

addition to govern
should

ments, might be purchased for the System account in the event it
be found desirable to include other securities in

the account.

It

was

understood that the Assistant Secretary would send to all members of
the Federal Open Market Committee for their information in
with the consideration of this matter, a list

connection

prepared by Mr. Wyatt of

the securities that under existing law may be taken into the account.
Thereupon the meeting adjourned.

Assistant Secretary.

Approved:
Chairman.