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The meeting of the executive committee of the Federal Open MaR ket Committee was reconvened in the offices of the Board of Governors of the Federal Reserve System in Washington on Thursday, October 3, 1946, at 4:45 p.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Sproul, Vice Chairman Draper Evans Leach Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Vest, General Counsel Mr. Rouse, Manager of the System Open Market Account Mr. Kennedy, Special Assistant to the Chairman of the Board of Governors Mr. Musgrave, Chief of the Government Finance Section of the Division of Research and Statistics of the Board of Governors During the meeting of the Federal Open Market Committee immedi ately preceding this meeting it was agreed that no changes should be made in the existing direction to the executive committee with respect to the transactions for the System account. It was the view of the members of the executive committee that the direction of the executive committee to the Federal Reserve Bank of New York for the execution of transactions for the System account should be renewed in the form in which it was issued at the meeting of the committee on June 10, 1946. 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 executive committee, 10/3/46 (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 practical administration of the account or for the purpose of maintaining an orderly market in Treasury securities and a general level of prices and yields of Government securities which will support the Treasury issu ing rates of 7/8 per cent for one-year certificates and 2-1/2 per cent for 27-year bonds restricted as to ownership; provided (a) that the total amount of securities in the account at the close of this date shall not be increased or decreased by more than $750,000,000 [exclusive of bills purchased outright in the market on a discount basis at the rate of 3/8 per cent per annum and bills redeemed at maturity, and special short-term certificates of indebtedness purchased for the temporary accommodation of the Treasury pursuant to paragraph (2) of this direction] and (b) that this paragraph shall not limit the amount of Treasury bills purchased pursuant to the direction of the Federal Open Market Committee issued under date of March 1, 1945, or the redemption of such bills; (2) To purchase direct from the Treasury for the System open market account such amounts of special short-term certif icates of indebtedness as may be necessary from time to time for the temporary accommodation of the Treasury; provided that the total amount of such certificates held in the account at any one time shall not exceed $750,000,000; and Upon approval by a majority of the members of the ex (3) ecutive committee, which may be obtained by telephone, tele graph, or mail, to make such other purchases, sales or exchanges 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 Committee. In taking this action, it was under stood that the limitations contained in the direction included commitments for purchases or sales of securities for the System account. Thereupon the meeting adjourned. Secretary Approved: Chairman
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