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The attached set of minutes of the meeting of the Board of Governors of the Federal Reserve System on November 13, 1957, vilich you have previously initialed, has been amended on page one to include your suggested change and on page 31 at the request of Governor Robertson, to include an expression of his views. If you approve these minutes as amended, please initial belay. Chairman Martin Minutes forUovember 1, 1957 To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard it will be appreciated if you will minutes, the to advise the Secretary's Office. Otherwise, if you were prebent at the meeting, please initial in column A, below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chm. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson 1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. Minutes of actions taken by the Board of Governors of the Federal Reserve System on Wednesday, November 13, 1957. The Board met in the Board Room at 2:30 p.m. PRESENT: Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Robertson Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Young, Director, Division of Research and Statistics Chairman Martin stated that following the meeting of the Federal °Pen Market Committee on November 12, in accordance with his usual custom, he informed the Secretary of the Treasury Anderson of the actions taken by the Committee. This morning, Under Secretary Baird who had been Informed by Secretary Anderson came over and stated that the Secretary aM he were very much concerned about the action of the Committee because Of the pending Treasury financing which it was planned to announce this afternoon. The difficulty as stated by Mr. Baird, Chairman Martin said, 145'5 that the System had taken an action to moderate the pressure on member bank reserves which the public did not know about, so that the Treasury vas faced with the problem of announcing an offering at rates Ighich could be lover if the public knew of the System's action. Mr. Baird auggested that if the System could make some public announcement of the action everyone would know about it and no one could derive any advantage because of it. Chairman Martin said his response to Mr. Baird 14a8 that it was not possible, for reasons which he outlined, to make a Plablic announcement of the action of the Open Market Committee. 11/13/57 -2- Chairman Martin also added that looking backward it probably "would have been better for the Open Market Committee to continue the then existing open market policy so as to "maintain an even keel" during the financing with the understanding that another meeting of the Committee would be held immediately thereafter. Nov that the action had been taken and is in effect, the Chairman thought that perhaps the best way for the System to take an overt action vhich would apprise the public Of the actual situation, would be to lover the discount rate of at least some of the Federal Reserve Banks and make announcement of that action before the announcement by the Treasury of its financing. The Treasury, he said, could delay its announcement until Friday or maybe Monday of text week, but because of its need for funds and the limitations imposed by the debt limit on what the Treasury can do, the announcement could not go beyond that. He had talked about the matter with President RaYes of the Federal Reserve Bank of New York just before this meeting and the latter's suggestion, after talking with his staff, was a reduction in reserve requirements of central reserve city banks. The problem presented by Chairman Martin was discussed in the light of what the situation would be if the System took no action and 4180 if it took an action such as lowering the discount rate at one or more Federal Reserve Banks which would be announced immediately. Consideration was also given to whether, since it appeared that the tiaancial markets were anticipating an easier money market, any action by the System was called for. -3- 11/13/57 Various view were expressed by the members of the Board present and Governor Robertson stated that he was opposed to any overt act designed solely to facilitate Treasury financing, and he did not look favorably upon a reduction of the discount rate by any Federal Reserve Bank at this time. At the conclusion of the discussion it was understood that Chairman Martin would call the absent members of the Board and the Presidents of the Federal Reserve Banks and inform them of the situation that had developed so that the Boards of Directors of the Federal Reserve Banks that meet tomorrow might have an opportunity to consider action to reduce the discount rate. It was also understood that the Chairman vould inform the Treasury of what was being done. Thereupon the meeting adjourned.
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