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Meeting of Federal Open Market Committee September 19, 1972 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, September 19, 1972, at 9:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Burns, Chairman Hayes, Vice Chairman Brimmer Bucher Coldwell Daane Eastburn MacLaury Mitchell Robertson Sheehan Winn 1/ Messrs. Francis, Heflin, and Mayo, Alternate Members of the Federal Open Market Committee Messrs. Morris, Kimbrel, and Clay, Presidents of the Federal Reserve Banks of Boston, Atlanta, and Kansas City, respectively Mr, Holland, Secretary Mr. Broida, Deputy Secretary Messrs. Altmann and Bernard, Assistant Secretaries Mr. Hackley, General Counsel Mr. Partee, Senior Economist Mr. Axilrod, Economist (Domestic Finance) Mr. Solomon, Economist (International Finance) Messrs. Boehne, Bryant, Gramley, Green, Hersey, Hocter, Kareken, and Link, Associate Economists Mr. Holmes, Manager, System Open Market Account Mr. Coombs, Special Manager, System Open Market Account 1/ Left the meeting at the point indicated. 9/19/72 Mr. Coyne, Special Assistant to the Board of Governors Mr. Reynolds, Associate Director, Division of International Finance, Board of Governors Messrs. Keir, Pierce, Wernick, and Williams, Advisers, Division of Research and Statistics, Board of Governors Mr. Pizer, Adviser, Division of International Finance, Board of Governors Mr. Struble, Economist, Division of Research and Statistics, Board of Governors Mrs. Sherman, Secretary, Office of the Secretary, Board of Governors Mr. Merritt, First Vice President, Federal Reserve Bank of San Francisco Messrs. Eisenmenger, Parthemos, Taylor, Scheld, Andersen, Tow, and Craven, Senior Vice Presidents, Federal Reserve Banks of Boston, Richmond, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco, respectively Mr. Cooper, Assistant Vice President, Federal Reserve Bank of New York By unanimous vote, the minutes of actions taken at the meeting of the Federal Open Market Committee on July 18, 1972, were approved. The memorandum of discussion for the meeting of the Federal Open Market Committee on July 18, 1972, was accepted. By unanimous vote, the System open market transactions in foreign currencies during the period August 15 through September 18, 1972, were approved, ratified, and confirmed. By unanimous vote, renewal for further periods of 3 months of the 4 System drawings on the National Bank of Belgium maturing in the period October 3-27, 1972, was authorized. 9/19/72 By unanimous vote, the open market transactions in Govern ment securities, agency obligations, and bankers' acceptances during the period August 15 through September 18, 1972, were approved, ratified, and confirmed. Mr. Winn left the meeting prior to the following action. With Messrs. MacLaury and Robertson dissenting, and with Mr. Mayo voting as alternate for Mr. Winn, the Federal Reserve Bank of New York was authorized and directed, until otherwise directed by the Committee, to execute transactions for the System Account in accordance with the following current economic policy directive: The information reviewed at this meeting suggests a substantial increase in real output of goods and services in the current quarter, although well below the unusually large rise recorded in the second quarter. In July and August, wages and prices advanced somewhat more rapidly on balance than in the immediately pre ceding months, while the unemployment rate remained substantial. Foreign exchange market conditions have remained quiet in recent weeks and the central bank reserves of most industrial countries have continued to change little. In July, the large excess of U.S. merchandise imports over exports persisted. In August on average, growth slowed in the narrowly and broadly defined money stock and in the bank credit proxy, but in recent weeks the money stock has been expanding more strongly. Since mid-August, interest rates on Treasury bills have increased sharply, while yields on most other market securities have advanced more moderately. In light of the foregoing developments, it is the policy of the Federal Open Market Committee to foster financial conditions conducive to sustainable real economic growth and increased employment, abate ment of inflationary pressures, and attainment of reasonable equilibrium in the country's balance of payments. 9/19/72 To implement this policy, while taking special account of the effects of possible bank regulatory changes, developments in credit markets, and international developments, the Committee seeks to achieve bank reserve and money market conditions that will support more moderate growth in monetary aggregates over the months ahead. It was agreed that the next meeting of the Federal Open Market Committee would be held on Tuesday, October 17, 1972, at 9:30 a.m. Thereupon the meeting adjourned. Secretary
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