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Meeting of Federal Open Market Committee September 12, 1967 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., PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. on Tuesday, September 12, 1967, at 9:30 a.m. Martin, Chairman Hayes, Vice Chairman Brimmer Daane Francis Maisel Mitchell Robertson Scanlon Sherrill Swan Wayne Messrs. Ellis, Patterson, and Galusha, Alternate Members of the Federal Open Market Committee Messrs. Bopp, Clay, and Irons, Presidents of the Federal Reserve Banks of Philadelphia, Kansas City, and Dallas, respectively Mr. Mr. Mr. Mr. Mr. Mr. Mr. Holland, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Broida, Assistant Secretary Molony, Assistant Secretary Hexter, Assistant General Counsel Brill, Economist Messrs. Baughman, Craven, Garvy, Jones, Koch, Partee, Ratchford, and Solomon, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account 9/12/67 Mr. Williams, Adviser, Division of Research and Statistics, Board of Governors Mr. Reynolds, Adviser, Division of International Finance, Board of Governors Mr. Axilrod, Associate Adviser, Division of Research and Statistics, Board of Governors Miss Eaton, General Assistant, Office of the Secretary, Board of Governors Miss McWhirter, Analyst, Office of the Secretary, Board of Governors Mr. MacDonald, First Vice President, Federal Reserve Bank of Cleveland Messrs. Eisenmenger, Eastburn, Mann, Brandt, Tow, and Green, Vice Presidents of the Federal Reserve Banks of Boston, Philadelphia, Cleveland, Atlanta, Kansas City, and Dallas, respectively Mr. Meek, Assistant Vice President, Federal Reserve Bank of New York Mr. Kareken, Consultant, Federal Reserve Bank of Minneapolis By unanimous vote, the minutes of actions taken at the meet ing of the Federal Open Market Committee held on August 15, 1967, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee held on August 15, 1967, was accepted. By unanimous vote, the System open market transactions in foreign currencies during the period August 15 through September 11, 1967, were approved, ratified, and confirmed. By unanimous vote, the open market transactions in Government securities, agency obligations, and bankers' acceptances during the period August 15 through September 11, 1967, were approved, ratified, and confirmed. 9/12/67 With Messrs. Hayes, Francis, and Scanlon 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 economic and financial developments reviewed at this meeting indicate that economic activity has strengthened and, despite the strike in the automobile industry, that prospects favor more rapid growth later in the year. Upward pressures on costs persist and average prices of industrial commodities have turned up following several months of stability. While there recently have been large inflows of liquid funds from abroad, the balance of payments continues to reflect a substantial underlying deficit. Bank credit expansion has continued large, while most short- and long-term interest rates have fluctuated close to their highs of the year, under the combined pressure of heavy private security market financing and of recent and prospective Federal financing. The President's new fiscal program calling for a sizable increase in income taxes, which would make a substantial contribution to balanced economic growth, is now before Congress. In this situation, it is the policy of the Federal Open Market Committee to foster financial conditions, including bank credit growth, conducive to sustainable economic expansion, recognizing the need for reasonable price stability for both domestic and balance of payments purposes. 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 the money market; but operations shall be modified as necessary to mod erate any apparent tendency for bank credit to expand significantly more than currently expected. 9/12/67 It was agreed that the next meeting of the Committee would be held on Tuesday, October 3, 1967, at 9:30 a.m. The meeting adjourned. Secretary
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