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The meeting of the executive committee of the Federal Open Market Committee was reconvened in the offices of the Board of Governors of the Federal Reserve System in Washington on Tuesday, May 3, 1949, at 12:50 p.m. PRESENT: Mr. Sproul, Vice Chairman Mr. Mr. Mr. Mr. Eccles Leach Vardaman Draper (alternate for Chairman McCabe) Mr. Mr. Mr. Mr. Morrill, Secretary Carpenter, Assistant Secretary Vest, General Counsel Rouse, Manager of the System Open Market Account Mr. Thurston, Assistant to the Board of Governors Mr. Riefler, Assistant to the Chairman, Board of Governors Mr. Sherman, Assistant Secretary, Board of Governors Mr. T. L. Smith, Economist, Government Finance Section, Division of Re search and Statistics, Board of Governors Mr. Arthur Willis, Special Assistant, Securities Department, Federal Re serve Bank of New York In a discussion of the instructions to be issued to the Fed eral Reserve Bank of New York to effect transactions in the System open market account Mr. Rouse suggested that, in view of the prospec tive low level of Treasury balances before another meeting of the executive committee, the limitation in the second paragraph of the direction on purchases of special short-term certificates of indebted ness direct from the Treasury be increased from $750 million to $1 billion. Thereupon, upon motion duly made and seconded, the executive committee voted unanimously to direct the Fed eral Reserve Bank of New York, until otherwise directed by the executive committee: (1) To make such purchases, sales, or exchanges (includ ing replacement of maturing securities and allowing maturities to run off without replacement) for the System account, either in the open market or directly from, to, or with the Treasury, as may be necessary, in the light of changing economic condi tions and the general credit situation of the country, for the practical administration of the account, for the maintenance of stable and orderly conditions in the Government security market, and for the purpose of relating the supply of funds in the market to the needs of commerce and business; provided that the total amount of securities in the account at the close of this date shall not be increased or decreased by more than $1,000,000,000 exclusive of special short-term certificates of indebtedness purchased for the temporary accommodation of the Treasury pur suant to paragraph (2) of this direction; (2) To purchase direct from the Treasury for the System open market account such amounts of special short-term certificates of indebtedness as may be necessary from time to time for the temporary accommodation of the Treasury; provided that the total held in the account at any one time amount of such certificates shall not exceed $1,000,000,000. In taking this action it was under stood that the limitation contained in the direction included commitments for purchases and sales of securities for the System account. Thereupon, the meeting adjourned. Secretary. Approved: Chairman.
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