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Meeting of Federal Open Market Committee October 8, 1968 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, October 8, 1968, at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Hayes, Vice Chairman Brimmer Daane Galusha Hickman Kimbrel Maisel Mitchell Morris Robertson Sherrill Messrs. Bopp, Clay, Coldwell, and Scanlon, Alternate Members of the Federal Open Market Committee Messrs. Heflin, Francis, and Swan, Presidents of the Federal Reserve Banks of Richmond, St. Louis, and San Francisco, respectively Mr. Holland, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Mr. Broida, Assistant Secretary Mr. Molony, Assistant Secretary Mr. Hexter, Assistant General Counsel Mr. Brill, Economist Messrs. Axilrod, Hersey, Kareken, Link, Mann, Partee, Solomon, and Taylor, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Wernick, Associate Adviser, Division of Research and Statistics, Board of Governors 10/8/68 Mr. Keir, Assistant Adviser, Division of Research and Statistics, Board of Governors Mr. Bernard, Special Assistant, Office of the Secretary, Board of Governors Miss Eaton, Open Market Secretariat Assistant, Office of the Secretary, Board of Governors Messrs. Eastburn, Baughman, Jones, Nelson, Tow, and Green, Vice Presidents of the Federal Reserve Banks of Philadelphia, Chicago, St. Louis, Minneapolis, Kansas City, and Dallas, respectively Messrs. Bodner and Snellings, Assistant Vice Presidents of the Federal Reserve Banks of New York and Richmond, respectively Mr. Cooper, Manager, Securities and Acceptance Departments, Federal Reserve Bank of New York Mr. Anderson, Financial Economist, Federal Reserve Bank of Boston Mr. Olson, Economist, Federal Reserve Bank of San Francisco By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee held on September 10, 1968, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on September 10, 1968 was accepted. By unanimous vote, the System open market transactions in foreign currencies during the period September 10 through October 7, 1968, were approved, ratified, and confirmed. Secretary's Note: On March 14, 1968, the Committee had authorized negotiations looking toward increases in a number of System swap lines, on the understanding that any such increases 10/8/68 -3 would become effective upon a determination by Chairman Martin that they were in the national interest. As a result of a determination by Chairman Martin on October 8, 1968, that an increase in the swap line with the Bank of Italy from $750 million to $1 billion equivalent was in the national interest, the table contained in paragraph 2 of the authorization for System foreign currency operations was amended, effective immediately, to read as follows: Foreign bank Austrian National Bank National Bank of Belgium Bank of Canada National Bank of Denmark Bank of England Bank of France German Federal Bank Bank of Italy Bank of Japan Bank of Mexico Netherlands Bank Bank of Norway Bank of Sweden Swiss National Bank Bank for International Settlements: System drawings in Swiss francs System drawings in authorized European currencies other than Swiss francs Amount of arrangement (millions of dollars equivalent) 100 225 1,000 100 2,000 700 1,000 1,000 1,000 130 400 100 250 600 600 1,000 Also, on September 24, 1968, under the terms of the Committee's action of July 16, 1968, Chairman Martin had determined that an increase of $650 million, to $1 billion equivalent, in the limit on outstanding System forward commitments to deliver foreign 10/8/68 currencies to the Stabilization Fund was in the national interest. Accordingly, paragraph 1C(1) of the authorization for System foreign currency operations was amended, effective September 24, 1968, to read as follows: Commitments to deliver foreign currencies to the Stabilization Fund, up to $1 billion equivalent. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period September 10 through October 7, 1968, were approved, ratified, and confirmed. With Messrs. Hayes, Hickman, and Kimbrel dissenting, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions in the System Account in accordance with the following current economic policy directive: The information reviewed at this meeting suggests that over-all economic expansion has moderated, although less than projected, from its very rapid pace earlier in the year, but upward pressures on prices and costs are persisting. Most market interest rates have changed little on balance in recent weeks. Bank credit and time and savings deposits expanded rapidly this summer, but the money supply has shown no net growth since July after rising substantially for several months. The earlier improvement in the U.S. balance of payments was not maintained in August and September, according to preliminary indications, and the foreign trade balance and underlying payments position continue to be matters of serious concern. In this situation, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to sustainable economic growth, -5 10/8/68 continued resistance to inflationary pressures, and attainment of reasonable equilibrium in the country's balance of payments. To implement this policy, System open market operations until the next meeting of the Committee shall be conducted with a view to maintaining about the prevailing conditions in money and short-term credit markets; provided, however, that operations shall be modified, to the extent permitted by the forthcoming Treasury refunding operation, if bank credit expansion appears to be significantly exceeding current projections. It was agreed that the Secretariat for the current Treasury Federal Reserve study of the U.S. Government securities market should be continued on a permanent basis, with responsibility for continuing study of the operations and functioning of the U.S. Government securities market. It was agreed that the next meeting of the Committee would be held on Tuesday, October 29, 1968, at 9:30 a.m. The meeting adjourned. Secretary
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