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Meeting of Federal Open Market Committee
MINUTES OF ACTIONS

A meeting of the Federal Open Market Committee was held
in the offices of the Board of Governors of the Federal Reserve
System in Washington, D. C. on Tuesday, May 15, 1973, at 9:30 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Burns, Chairman
Hayes, Vice Chairman
Balles
Brimmer
Bucher
Daane
Francis
Mayo
Morris
Sheehan

Messrs. Clay, Eastburn, Kimbrel, and Winn,
Alternate Members of the Federal Open
Market Committee
Messrs. MacLaury and Coldwell, Presidents
of the Federal Reserve Banks of
Minneapolis and Dallas, respectively
Mr. Holland, Secretary
Mr. Broida, Deputy Secretary
Messrs. Altmann and Bernard, Assistant
Secretaries
Mr. Hackley, General Counsel
Mr. O'Connell, Assistant General Counsel
Mr. Partee, Senior Economist
Mr. Axilrod, Economist (Domestic Finance)
Messrs. Andersen, Bryant, Eisenmenger,
Hersey, Reynolds, Scheld, and Sims,
Associate Economists
Mr. Holmes, Manager, System Open Market
Account
Mr. Coombs, Special Manager, System Open
Market Account

5/15/73
Mr. Melnicoff, Deputy Executive Director,
Board of Governors
Mr. Coyne, Assistant to the Board of
Governors
Mr. O'Brien, Special Assistant to the Board
of Governors
Messrs. Keir, Pierce, Wernick, and Williams,
Advisers, Division of Research and
Statistics, Board of Governors
Mr. Gemmill, Adviser, Division of International
Finance, Board of Governors
Mr. Ettin, Assistant Adviser, Division of
Research and Statistics, Board of
Governors
Mr. Wendel, Chief, Government Finance Section,
Division of Research and Statistics,
Board of Governors
Mrs. Peters, Secretary, Office of the Secretary,
Board of Governors
Mrs. Stanier, Secretary, Office of the
Secretary, Board of Governors
Mr. Black, First Vice President, Federal
Reserve Bank of Richmond
Messrs. Link, Boehne, Parthemos, Taylor, and
Doll, Senior Vice Presidents, Federal
Reserve Banks of New York, Philadelphia,
Richmond, Atlanta, and Kansas City,
respectively
Messrs. Hocter and Green, Vice Presidents,
Federal Reserve Banks of Cleveland and
Dallas, respectively
Mr. Kareken, Economic Adviser, Federal
Reserve Bank of Minneapolis
Mr. Sandberg, Manager, Acceptance and
Securities Departments, Federal Reserve
Bank of New York
By unanimous vote, the minutes of actions taken at the
meetings of the Federal Open Market Committee on March 19-20 and
April 17, 1973, were approved.

5/15/73

-3
The memoranda of discussion for the meetings of the Federal

Open Market Committee on March 19-20 and April 17, 1973, were

accepted.
By unanimous vote, the System open market transactions in
foreign currencies during the period April 17 through May 14, 1973,
were approved, ratified, and confirmed.
By unanimous vote, the open market transactions in Government
securities, agency obligations, and bankers' acceptances during the
period April 17 through May 14, 1973, were approved, ratified, and
confirmed.
By unanimous vote, the Federal Reserve Bank of New York was
authorized and directed, until otherwise directed by the Committee,
to execute transactions for the System Account in accordance with
the following domestic policy directive:

The information reviewed at this meeting suggests
that growth in real output of goods and services is
likely to moderate somewhat in the current quarter from
an exceptionally rapid pace in the two preceding quar
ters. Over the first 4 months of this year, employment
rose considerably but the unemployment rate remained
about 5 per cent. Retail prices of foods continued
upward at an extraordinary pace in March, and in April

average wholesale prices of consumer foods rose further.
Increases in wholesale prices of industrial commodities
were large and widespread in April, as in the two pre
ceding months. In foreign exchange markets, which had
been relatively quiet since mid-March, speculative
pressures have developed in recent days and exchange
rates for major European currencies have appreciated

5/15/73

against the dollar. The U.S. merchandise trade balance
improved considerably in the first quarter, reflecting
in part an especially large increase in agricultural
exports.
In April growth in the narrowly defined money stock
picked up from its low first-quarter rate, and growth
in the broadly defined money stock also increased.
Growth in business loans at banks slowed, and banks
reduced the pace at which they issued large-denomination
CD's; consequently, the bank credit proxy expanded
somewhat less than in other recent months. In recent
weeks Federal Reserve Bank discount rates have been
increased in two steps of one-quarter point to 6 per
cent by May 11. Most short-term market interest rates,
which had risen sharply earlier, have advanced slightly
further. Interest rates on long-term market securities
have been relatively stable.
In light of the foregoing developments, it is the
policy of the Federal Open Market Committee to foster
financial conditions conducive to abatement of infla
tionary pressures, a more sustainable rate of advance
in economic activity, and progress toward equilibrium
in the country's balance of payments.
To implement this policy, while taking account of
international and domestic financial market developments,
the Committee seeks to achieve bank reserve and money
market conditions consistent with somewhat slower growth
in monetary aggregates over the months immediately ahead
than occurred on average in the past 6 months.
By unanimous vote, paragraphs (a) and (d) of Section 4 of
the Committee's Rules of Organization were amended, effective
June 1, 1973, to read as follows:
SEC. 4. Staff. (a) Selection of staff officers.
At its first meeting on or after March 1 of each year,
the Committee selects, from among the officers and
employees of the Board and the Federal Reserve Banks, the
following staff officers to serve until the first meeting
on or after March 1 of the next following year:
Secretary,

5/15/73

Deputy Secretary, and one or more Assistant Secretaries;
General Counsel, Deputy General Counsel, and one or more
Assistant General Counsel; and Economists, one or more
of whom may be designated as Senior or Associate Economists
or given titles reflecting their areas of particular
specialization.
*

*

*

*

*

(d) General Counsel and Deputy
and Assistant General Counsel. The General Counsel
furnishes such legal advice as the Committee may require.
In the absence of the General Counsel, the Deputy General
Counsel or an Assistant General Counsel acts as General
Counsel pro ten.
By unanimous vote, Thomas J. O'Connell, Edward G. Guy,
and John Nicoll were elected General Counsel, Deputy General Counsel,
and Assistant General Counsel, respectively, of the Federal Open
Market Committee, effective June 1, 1973, to serve until the
election of their successors at the first meeting of the Committee
after February 28, 1974, with the understanding that in the event
of the discontinuance of their official connection with the Board
of Governors or with a Federal Reserve Bank, as the case might be,
they would cease to have any official connection with the Federal
Open Market Committee.
It

was agreed that the next meeting of the Federal Open

Market Committee would be held on Monday and Tuesday, June 18-19,
1973, beginning on the afternoon of June 18.
The meeting adjourned.

Deputy Secretary
Deputy Secretary