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A meeting of the Executive Committee of the Federal Open Market
Committee was held in

the offices of the Board of Governors of the Fed

eral Reserve System in Washington on Wednesday, May 27, 1956, at 12:30
p. m.


Eccles, Chairman
Broderick (as alternate for Mr. Ransom)

Mr. Hamilton (as alternate for Mr. Fleming)
Mr. Morrill, Secretary
Mr. Goldenweiser, Economist
Mr. Burgess, Manager of the System Open
Market Account

was stated that probably the new securities issued by the

Treasury Department in connection with June financing would consist at
least in part of Treasury bonds and that, as there was a substantial
amount of securities in

the System account maturing on June 15 and

August 1, in connection with which the privilege of conversion into the
new bonds would probably be given,

an opportunity would be afforded, if

market conditions justified such action, to increase the holdings of
bonds in the System account.
After a discussion during which it was pointed
out that the Federal Open Market Committee at its
meeting on May 25, 1956, had authorized the execu
tive committee to make such shifts between maturities
in the System account as may be necessary in the
proper administration of the account, provided the
amount of securities maturing within two years be

maintained at not less than $1,000,000,000 and that
the amount of bonds be not over $500,000,000, and
as the present holdings of bonds in the account total
only $244,000,000, it was decided, upon motion duly
made and seconded and by unanimous vote, to direct
the Federal Reserve Bank of New York to purchase in
the market in replacement of maturing securities


-2$50,000,000 of new bonds to be issued by the Treasury
Deartment in connection with the June financing; to
sell in the market all additional Treasury notes car
rying a conversion privilege at that time and to pur
chase in replacement thereof other Government securi
ties having maturities as near five years as market
conditions warrant. In this connection, it was under
stood that if in consummating these transactions it
becomes necessary, because of market conditions,
temporarily to acquire some bills instead of notes
for the System open market account any bills so pur
chased will be replaced as soon as practicable by an
equal amount of notes having the longer maturities.

Thereupon the meeting adjourned.