Full text of Minutes and Recommendations of the Federal Advisory Council : Meeting documents, September 16-17, 1963, Box 6, Volume 1961-1965

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MINUTES OF THE MEETING OF THE F E D E R A L ADVISORY COUNCIL
S e p t e m b e r 16 , 19 63

T he th ird

s tatu tory

m e e tin g of the

Federal

A d v i s o r y C o u n c i l fo r 1 9 6 3 w a s c o n v e n e d

in R o o m 9 3 2 o f t h e M a y f l o w e r H o t e l , W a s h i n g t o n , D . C . o n S e p t e m b e r 1 6 , 1 9 6 3 , a t 9 : 3 0 a . m .
P re sen t:

L a w r e n c e H . M a rtin

D is tric t No.

G eorge A . M urphy

D is tric t N o.

How ard C . P e t e r s e n

1
2

D is tr ic t N o.

L . A . S tone r

D is tric t No.

Robert B . H o b b s

D is tr ic t N o.

5

J . F in le y M c R a e

D is tric t No.

6

K enneth V . Z w ie n e r

D is tric t N o.

S id n e y M a e s tre

D is tric t N o.

John A . M oorhead

7

8

D is tric t N o.

M a u r ic e L . B r e i d e n t h a l

3

4

9

D i s t r i c t N o . 10

J a m e s W. A s t o n

D i s t r i c t N o . 11

E llio tt M c A llis te r

D i s t r i c t N o . 12

Herbert V . P r o c h n o w

Secretary

W illia m J . K o r s v ik

A s s i s t a n t Secretary

On m o tio n d u ly m a d e

and

seconded,

th e m i m e o g r a p h e d n o t e s o f th e m e e t in g h e ld on

May 2 0 - 2 1 , 1 9 6 3 , c o p i e s o f w h i c h h a d b e e n s e n t p r e v i o u s l y t o t h e m e m b e r s o f t h e C o u n c i l ,
w e re a p p r o v e d .

A c o m p l e t e l i s t o f t h e i t e m s o n t h e a g e n d a for th e m e e t i n g a n d th e c o n c l u s i o n s o f the
C o u n c il

are

to

be

fo und

in

th e

C o n f i d e n t i a l M e m o r a n d u m t o t h e B o a r d o f G o v e r n o r s f r om t he

F e d e r a l A d v i s o r y C o u n c i l , w h i c h f o l l o w s o n p a g e s 2 4 , 25 a n d 26 o f th e s e m in u t e s .
T he m e e tin g a d jo u r n e d at 1 2 :2 5 P .M .




HERBERT

V. PRO CH N O W
Secretary

W IL L IA M J. K O R S V IK
A s s is t a n t Secretary

21

MINUTES OF THE MEETING OF T H E F E D E R A L ADVISORY C O U N C I L
S e p te m b e r 16, 1963

At

2:30

p.m .,

th e

Federal

A d v is o ry

C o u n c il

convened

in

th e

B oard

Room

of

th e

Federal Reserve B u ild in g , W a s h in g to n , D . C .

P re sen t:
P etersen, L .
M aestre,

Mr. G e o r g e A . M u r p h y , P r e s i d e n t ;
A . S to n e r, R o b e r t B .

John

A.

M oorhead,

Hobbs, J.

M a u ric e

L.

M essrs.

F in le y

Law rence

M cRae,

B r e id e n th a l,

H.

K enneth

Jam es

M a rtin ,
V.

W.

H ow ard C .

Z w ie n e r ,

A sto n ,

and

S id n e y
E llio tt

M c A llis te r.

Dr. R a lp h A . Y o u n g , D ir e c to r , an d m e m b e rs o f th e s t a f f o f th e D i v i s i o n
F in a n c e , d is c u s s e d

The

B ro o k in g s

R epo rt.

A

resum e

o f th e

d is c u s s io n

of In te rn a tio n a l
was

sent

to th e

m e m b e rs o f th e C o u n c i l .




H ERB ER T

V. P R O C H N O W
Secretary

W IL L IA M

J.

K O R S V IK

A s s is t a n t S ecretary

22

MINUTES O F T H E M E E T I N G O F T H E F E D E R A L ADVISORY C O U N C I L
S e p te m b e r 16, 1963

At 8:3 0 P .M ., the F e d e r a l A d v is o r y C o u n c i l r e c o n v e n e d in R o o m

9 3 2 o f th e M a y flo w e r

H o te l, W a s h in g t o n , D . C .

P re sen t:

M r. G e o r g e

Petersen, L .

A.

M aestre, J o h n

S tone r,

A.

A.

M urphy,

Robert

M oorhead,

B.

P re s id e n t;

Hobbs,

M a u r ic e

L.

J.

B r e id e n th a l,

H erbert V . P r o c h n o w , S e c r e t a r y , a n d W i l l i a m

The C o u n c il re v ie w e d
the

o ffic e

of th e

its

Secretary

c o n c lu s io n s

of the

M essrs.

F in le y

B oard

Law rence

M cRae,
Jam es

H.

M a rtin ,

K enneth

V.

W. A s t o n ,

lis tin g

th e

agenda

ite m s

w ith

the

C.

E llio tt

M c A llis te r,

J . K o r s v ik , A s s is ta n t S ecretary.

r e g a r d in g th e it e m s
of

G overnors

the

on th e a g e n d a a n d

c o n c lu s io n s

s e n t to

C o n fid ential Memorandum

Board of G overnors from the F e d e r a l A d v i s o r y C o u n c i l , w h ic h fo llo w s on p a g e s
26,

H ow ard

Z w ie n e r , S id n e y

reached

by

the

24,

to the

25,

C o u n c il.

and
The

Memorandum w a s d e liv e r e d to th e F e d e r a l R e s e r v e B u i l d i n g at 1 0 :3 0 P .M . on S e p te m b e r 16,
1963.

The m e e tin g a d jo u r n e d at 9 :1 5 P .M .




H ERBERT

V. PROCHNOW
Secretary

W IL L IA M

J . K O R S V IK
A s s is ta n t Secretary

23

CO NFIDENTIAL
MEMORANDUM

TO THE

BOARD

FROM
FED ERA L
R E L A T IV E

W hat are

th e

o f e c o n o m ic

TO THE A G EN D A

v ie w s

o f the

a c tiv ity

e a rly part of 1964?

in

GOVERNORS

THE

A D V IS O R Y

C O U N C IL

FOR

ON S E P T E M B E R

1.

OF

m em bers

the U n ite d

T H E JO IN T

of

th e

C o u n c il

S ta te s d u rin g

In d i s c u s s i n g

M E E T IN G

17, 1963

th is

as

to

the

p ro b a b le

course

th e r e m a in d e r o f 1963 a n d the

g e n e r a l q u e s t io n , th e C o u n c il m ay w is h

to c o m m e n t o n th e f o l l o w i n g it e m s :

(a)

D o re c e n t le v e ls o f r e s id e n t ia l b u il d in g a c t i v it y a p p e a r to be firm ly b a s e d ,
a n d is fu rth er e x p a n s io n a n t i c i p a t e d ?

(b)

Does

th e

liq u id a tio n

p e a r to h a v e

(c)

Has

any

of

a b o u t run

ste e l
its

im p o rta n t c h a n g e

in v e n to rie s

course,

been

or is

a c q u ire d
furth er

observed

e a rlie r

th is

liq u id a tio n

re c e n tly

in

year ap­

in

prospect?

prosp ects

for p l a n t

and e q u ip m e n t e x p e n d itu r e s ?

(d)

Does

th e

C o u n c il

c o n tin u e

of

the

o p in io n

m e e tin g w ith the B o a r d , th a t c o m p e titiv e
d o m e s tic

The
d u rin g

m o d e ra te ly .

m em bers

th e
The

at

c a p a c i t y , a s w e l l a s from m a n u f a c t u r e r s a b r o a d ,

s u ffic ie n t

S tate s

expressed

to

of

d is c o u ra g e

th e

broad

C o u n c il

re m ain d e r o f 1963

a n tic ip a te

and

p e r s is t e n t d e f ic it in

p ric e

the

e a rly

our b a la n c e

r is e s

th at

its

p re v io u s

p r e s s u r e s r e s u l t i n g from u n u s e d

in

th e

e c o n o m ic

part of

a c tiv ity

1964 w ill

of paym ents,

w i l l te n d to be

re la tiv e ly

n e a r futu re?

in

c o n tin u e

th e

re a c tio n

the

U nite d

to in c re a s e
w h ic h m ig h t

o c cu r if a tax c u t d id n o t m a t e r ia liz e a n d th e fa c t th a t th e c u rre n t p e rio d of e x p a n s io n
a lre a d y

run

over

2- 1 /2

years

(a)

are

som e

u n c e rta in tie s

W h ile c e r ta in

ty p e s

in

the

current

e c o n o m ic

o f r e s id e n tia l c o n s tru c tio n

in

has

s itu a tio n .

p a rtic u la r a re as

co u n try h a v e b ee n o v e r b u ilt, m o s t m e m b e rs o f the C o u n c il b e lie v e th a t the re c e n t b u ild in g
of s in g le fa m ily ho m e s h a s b ee n r e la tiv e ly

One
been
in

th e

som e

abundance
s p e c u la tiv e

the c o u n try
la tio n

of th e

there is

groups.

In

facts

in v o lv e d

o f lo ng - term
b u ild in g
a dem and

g e n e ra l,

in

fun d s

firm ly

the

e x p a n s io n

in v e s tm e n t.

u n its .

On

th e

for a p a r t m e n t s , p a r t i c u l a r l y

re s id e n tia l

c o n s tru c tio n

m o v e m e n t w ith no p ro no u n c e d u p w ard tre nd .




stro n g

s e e k in g

of m u lti- fa m ily

based.

24

w ill

in
T h is

apa rtm e n t

has

p r o b a b ly h a s r e s u lte d

o th e r h a n d ,

in

m any

by the y o u n g e r and
p ro b a b ly

b u ild in g

e x p e r ie n c e

areas of

o ld e r p o p u ­
a

s id e w a y s

o f th e

(b)

The

m em bers

o f th e

C o u n c il

are

of the

o p in io n

th a t th e

liq u id a tio n

of

s t e e l i n v e n t o r i e s a c q u i r e d e a r l i e r t h i s y e a r h a s a b o u t r un i t s c o u r s e .
(c)
w ith the

T he e x p e c ta tio n s

B oard

in

M ay.

T h is

of b u s in e s s m e n

change

in

have

s e n tim e n t

im p r o v e d

in c re a s e s

s in c e

the

the l a s t m e e tin g

prospects

fo r a n e x ­

p a n s io n in p l a n t a n d e q u i p m e n t e x p e n d i t u r e s in the m o n th s a h e a d .
(d)

The

in th e r e l a t i v e l y
duces
w h ic h

som ew hat
have

C o u n c il

near future.
the

c o n tin u e s

to

How ever,

th e

c o m p e titiv e

d is c o u ra g e d

p ric e

b e lie v e

pressures

advances

th at

broad

p ric e

s u b s t a n t i a l r is e in

in

re s u ltin g
the

fr o m

p ast.

unused

Recent

ris e s

p ro d u c tio n

are

u n lik e ly

sin c e

d o m e stic

in c re a s e s

in

M ay re­
c a p a c ity

p ro d u c tiv ity

t e n d to c o n t r i b u t e t o p r i c e s t a b i l i t y .

2.

Does

the C o u n c il d e t e c t a n y

s u b s t a n t i a l s l a c k e n i n g i n b a n k e f f o r t s to a t t r a c t

ti m e a n d s a v i n g s d e p o s i t s ? A n y c h a n g e i n t h e p a t t e r n o f b a n k i n v e s t m e n t o f t h e s e s a v i n g s
in flo w s ?
The

m em bers

o f the

C o u n c il

b e lie v e

th at

banks

are

m a k in g a s o m ew h at le ss

in t e n s iv e effort to a t t r a c t tim e a n d s a v i n g s d e p o s i t s . H o w e v e r , t h is h a s n o t b ee n refle c te d
in an e a s i n g o f r a t e s p a i d f o r s u c h f u n d s .
T he c h a n g e s in R e g u l a t io n

Q w e re in t e r p r e t e d by m a n y c o m m e r c ia l b a nk ers as

an i n d i c a t i o n t h a t t h e m o n e t a r y a u t h o r i t i e s w o u l d
th e

money

m ark e ts.

w o uld th ere fo re

be

Those
le ss

t h e i r n e e d fo r l i q u i d i t y

fun d s

s e n s itiv e

a p t to m o v e
had

been

o u t o f th e

le s s e n e d

p o lic ie s by a d d i n g s u b s t a n t i a l l y

p e r m i t t h e m t o p a y c o m p e t i t i v e r a t e s in

to

changes
b a n k in g

in

som ew hat, and

to t h e ir h o l d i n g s

y ie ld s

system .

in

th e

money m arket

M a n y b a n k e r s fe lt that

they c h a n g e d

th eir in v e s tm e n t

of m u n ic ip a l s e c u ritie s

and m ortgages.

A lth o u g h th e m e m b e r s o f th e C o u n c i l b e l i e v e t h a t t i m e a n d s a v i n g s d e p o s i t s in the future
w i l l a c c o u n t fo r a n i n c r e a s i n g p e r c e n t a g e
be a s

sharp as

in

the

past

tw o

years.

of to tal d e p o s its ,
As

a

the rate of in c r e a s e w ill not

consequence,

changes

in b a n k in v e s t m e n t

p o rtfo lio s w i l l te n d to be l e s s m a r k e d .

3.

As
th e
th is

a

re s u lt

flo w

of h ig h

le v e ls

of in te r n a lly

year,

d e c lin e d .

w h ile
Do

dependence

th e

m em bers

f i n a n c i n g to c o n t i n u e

and

la rg e ,

are

on
of

and

of chan g es

b u s in e s s

funds

bank

m arket

the

and

C o u n c il

has

in

b u s in e ss

in c r e a s e d

fina n c ing

tax la w s ,

s u b s ta n tia lly

appears

e x p e c t b u s in e s s

needs

to h a v e
fo r

bank

m o d e r a t e o v e r th e b a l a n c e o f th e y e a r or are th ere s ig n s

of s ig n ific a n t in c r e a s e
by

of a c tiv ity

generated

in b u s i n e s s

s u ffic ie n tly

lo a n s ?

liq u id

to

D o e s th e C o u n c i l fe e l t h a t b a n k s ,
meet

a

m o d erate

upsurge

in

c re d it

d e m a n d s w ith o u t s u b s t a n t ia l p o r tfo lio rearrange m ent?
The
in c re a s e
system

m em bers

s e a s o n a lly
has

d e c lin e d ,

over
th e

of

the

th e

C o u n c il

b a la n c e

C o u n c il

of

expect
the

b e lie v e s

b u s in e s s

year.

that

W h ile

needs
the

th e c o m m e r c i a l

fo r

bank

liq u id ity
banks

fin a n c in g

to

of the b a n k in g

are in

a p o s itio n

to m e e t a m o d e r a t e u p s u r g e i n c r e d i t d e m a n d s w i t h o u t s u b s t a n t i a l p o r t f o l i o r e a r r a n g e m e n t .




25

4.

W hat are th e C o u n c i l ' s o b s e r v a t i o n s r e g a r d i n g c u r r e n t a t t i t u d e s in th e b u s i n e s s
and f in a n c ia l c o m m u n ity tow ard
does

th e

C o u n c il

a p p ra ise

U . S. b a la n c e o f p a y m e n ts d e v e lo p m e n t s ?

the

general

re c e p tio n

of

th e

recent

How

a c tio n s

and

p r o p o s a l s d e s i g n e d to d e a l w i t h t h i s p r o b l e m ?
A lth ou gh

the

p e rsis te n t

g o ld are s o m e w h a t r e m o te
the C o u n c i l b e l i e v e s

d e fic it

in

from th e e v e r y d a y

our

in te r n a tio n a l

a ffa ir s

and

th a t there is h e ig h t e n e d c o n c e r n

pay m ents

a c tiv itie s

in

and

of m ost

th e b u s in e s s

and

th e

lo s s

of

b u s in e s s m e n ,
fin a n c ia l com ­

m u n ity r e g a r d in g U . S. b a la n c e o f p a y m e n t s d e v e l o p m e n t s .

T he a c t io n s o f the F e d e r a l R e s e r v e S y s te m d e s i g n e d to d e a l w ith
have

been

fa v o ra b ly

re c e iv e d ,

som e d o u b t, h o w e ve r,

e s p e c ia lly

a b o u t th e

the

m e rit o f th e

a lth o u g h m a n y p e r s o n s w ere e n c o u r a g e d

in c r e a s e

in

e q u a liz a tio n

the
tax

d is c o u n t
proposed

by th e fa c t th a t s p e c if i c

a c tio n

th is

p ro ble m

rate.
by

There

the

was

is

T reasury,

b e in g taken

in a n e ffo r t to c o p e w i t h o u r p a y m e n t s d i f f i c u l t i e s .

As
m ents

th e C o u n c i l h a s

p ro ble m

in v o lv e s

fisc a l

observed
p o lic y ,

in

th e

p a st,

overseas

the

s o lu tio n

defe nse

o u tla y s w h ic h do not f a ll w ith in the r e s p o n s ib il it y

N e v e rth e le s s ,

the C o u n c i l

and

b e lie v e s

som e

of pay­

fo re ig n

of the m o n e ta ry a u th o r it ie s .

p o lic y a lo n e c a n th ere fore n o t be e x p e c t e d to m e e t th e p r o b le m
n a tio n a l paym ents.

to o u r b a l a n c e

e x p e n d itu r e s

a id

M onetary

o f th e d e f i c i t in o ur in t e r ­
furth er t ig h te n in g

of m one­

ta ry p o l i c y m i g h t be d e s i r a b l e .

5.

How

does

the

C o u n c il

e v a lu a te

th e

im p a c t

of

current

m o n e tary

and

c re d it

p o lic y ?

A s s u g g e s te d in Ite m IV , th e C o u n c i l b e l i e v e s th a t c u r r e n t m o n e ta r y a n d c r e d it
p o lic y h a s had a fa v o r a b le im p a c t on th e f i n a n c i a l a n d b u s i n e s s c o m m u n it y .

The

B oard

w o u ld

e x p re s s on th e l e g i s l a t i o n
w h ic h

c re d it

can

be

a lso

lik e

to

have

any

v ie w s

th at

the

C o u n c il

may

care

to

th a t h a s b e e n r e c o m m e n d e d to b r o a d e n th e k i n d s o f s e c u r i t y on

advanced

by

th e

Federal

Reserve

banks.

T hese

re c o m m e n d a tio n s

w ere in c l u d e d in th e B o a r d ’ s le t t e r o f A u g u s t 21 to th e C h a i r m e n o f th e S e n a t e a n d H o u s e
B a n k in g and C u rre n c y C o m m itte e s .

The

m em bers

o f th e

C o u n c il

b e lie v e

th at c o m m e rc ia l b a n k e rs

g e n e ra lly

w o u ld

s tro n g ly favor e n a c t m e n t o f l e g i s l a t i o n d e s i g n e d to b r o a d e n th e k i n d s o f s e c u r i t y on w h ic h
c re d it c a n be a d v a n c e d by th e F e d e r a l R e s e r v e b a n k s .




26

MINUTES OF JOINT C O N F E R E N C E OF THE F E D E R A L ADVISORY COUNCIL
AND THE B O A R D O F G O V E R N O R S CF THE F E D E R A L RESERVE SYSTEM
S e p t e m b e r 17 , 19 63

A t 1 0 :3 0 A . M . , a j o i n t c o n f e r e n c e
Governors

of

th e

Federal

Reserve

o f the

S y stem

F e d e r a l A d v is o r y C o u n c i l a n d the B o a rd of

was

h e ld

in

th e

Board

Room

o f the F e d e r a l

Reserve B u i ld i n g , W a s h in g t o n , D . C .

P re sen t:

M e m b e r s o f th e B o a r d o f G o v e r n o r s o f the F e d e r a l R e s e r v e S y s te m :

C h airm an

Wm.

McC.

M a r tin ,

Jr.;

V ic e

J. L . R o be rtson , C h a s . N . S h e p a rd s o n , and
Secretary,

and

P resent:

Mr.

Hobbs,

J.

M a u r ic e L .

A.

Kenyon,

C.

Canby

B ald e rsto n ;

Governors

A s s is ta n t

Secretary

o f th e

Board

of G overnors.

M e m bers o f th e F e d e r a l A d v is o r y C o u n c il:

Mr. G e o r g e A .
B.

K enneth

C h airm a n

G e o r g e W . M i t c h e l l ; a l s o Mr. M e r r it t S h e r m a n ,

M urphy,

F in le y

P re s id e n t;

M cRae,

B r e id e n th a l,

M essrs.

K enneth

Jam es

W.

V.

L a w r e n c e H . M a rtin , L .

Z w ie n e r ,

A sto n ,

E llio tt

S id n e y

M aestre,

M c A llis te r,

A . S toner, R o be rt

John

H erbert V .

A.

M oorhead,

P rochnow , Sec­

r e tary, a n d W i l l i a m J . K o r s v i k , A s s i s t a n t S e c r e t a r y .

A bsent:

M r. H o w a r d C . P e t e r s e n

P r e s id e n t M u rp h y r e a d t h e f i r s t i t e m o n th e A g e n d a , a n d th e c o n c l u s i o n s o f the C o u n c i l
as give n in

the

C o n f i d e n t i a l M e m o r a n d u m to th e B o a r d o f G o v e r n o r s from the F e d e r a l A d v i s o r y

Cou nc il as p rin ted on p a g e s
th en c o m m e n t e d

on

The P r e s id e n t

th e

th en

e n s u in g d i s c u s s i o n , in
many c o m m e r c i a l

24, 25 and 26 o f th ese m in u te s .

b u s in e s s

read

th e

w h ic h

banks

are

As a c o n s e q u e n c e o f th e

s itu a tio n

second

m ost

ite m

m em bers

c o n tin u in g

g ro w th

and

the

and
of

th e

in

th eir

resp e ctiv e d is tric ts .

the c o n c lu s io n s
C o u n c il

to a g g r e s s i v e l y

of such

T h e m e m b e rs of the C o u n c i l

o u tlo o k

seek

o f th e C o u n c i l .

p a r tic ip a te d , d is c lo s e d
tim e

and

s a v in g s

The
th at

b a la n c e s .

fu n d s , a m a rk e d ly le s s e r degree of liq u id ity had

been a c c e p t e d b y t h e b a n k s .

In

response

in d ic a te d

that

in

to

a

q u e s tio n

th e ir

from

ju d g m e n t

G overnor

bankers

M itc h e ll,

g e n e ra lly

several

w o u ld

not

m em bers

favor

o f th e C o u n c i l

p e rm ittin g

the c o r p ­

o ra te u s e o f s a v i n g s a c c o u n t s .

The

P re s id e n t

read

th e

th ird

ite m

and

th e

c o n c lu s io n

of the

C o u n c il.

A b rief d is ­

c u s s io n f o llo w e d in w h i c h m o s t m e m b e r s o f th e C o u n c i l p a r t i c i p a t e d .

The fo urth a n d
P re s id e n t.

fifth

ite m s

and

th e c o n c lu s io n s

o f th e C o u n c i l w e re th e n r e a d by th e

In t h e d i s c u s s i o n w h i c h f o l l o w e d b o t h i t e m s w e r e c o n s i d e r e d .




27

G overnor M itc h e ll s ta te d th a t m a n y fo re ig n o b s e r v e r s a d v o c a t e d a m ore fle x ib le fis c a l
p o lic y i n c lu d i n g a tax c u t, a la rg e r d e f i c i t , i n c r e a s e d

governm ent

s p e n d in g ,

to g e t h e r w ith

a more r e s t r ic t iv e m o n e ta ry p o l i c y a n d h ig h e r in t e r e s t r a t e s .

C h airm a n

M a rtin

s tate d

th a t the p r o b le m

ho w m u c h the S y s te m c o u l d c o n t r i b u t e

of real concern

to a s o l u t i o n

H e o b s e rv e d th a t the C o u n c i l s e e m e d to e n d o r s e
W h ile there w ere s o m e i n d i c a t i o n s
th e r a te , h o w m u c h , i f a n y t h i n g ,

to

d is c u s s io n .

The

rates

w o u ld in d u c e

C h airm a n

s h o u ld

be

as

th e

added

lo w

th e

to

as

S y s te m 's
th at

he

p o s s ib le

Federal

rece nt in c r e a s e

a c tio n

had

th e

had

had

take n

p ro d u c in g
The

in

was

th e d is c o u n t rate.

reacte d

a c c o m p lis h e d

c o n s is te n tly

w ith o u t

the la r g e s t a m o u n t o f c a p i t a l f o r m a t io n .

Reserve

th e b a l a n c e o f p a y m e n t s p ro b le m .

th at the E u r o - d o lla r m a rk e t

in

in te re s t

of

to th e c h a n g e
r e m a in e d open

th e

p o s itio n

that

in fla tio n

because

that

b a la n c e

of pay m ents

pro ble m ,

how ever, w a s a c o m p lic a tin g facto r.

P re s id e n t

M urphy

th e n

read

the

C o u n c il's

response

B oard o f G o v e rn o rs to the C h a irm e n o f the S e n a te
m itte e s on th e
be

advanced

proposed le g is la tio n

by

the

Federal

to b r o a d e n

Reserve

banks.

the

and

k in d s

P re s id e n t

fe lt th a t the le g is la t iv e p r o p o s a l w a s very c o n s t r u c t i v e .

T he m e e tin g a d jo u r n e d a t 1 2 :4 0 P .M .




28

to

House

th e

r e c o m m e n d a tio n s

B a n k in g

of s e c u rity
M urphy

and
on

added

o f the

C urrency Com ­

w h ic h
that

c re d it can

the

C o u n c il

NOTE:
T h i s t r a n s c r i p t o f t h e S e c r e t a r y ! s n o t e s is n o t to
b e r e g a r d e d as c o m p l e t e o r n e c e s s a r i l y e n t i r e l y a c c u r a t e *
T h e t r a n s c r i p t is f o r t h e s o l e u s e of t h e m e m b e r s of the
Federal Advisory Council.
The concise official minutes
f o r t h e e n t i r e y e a r sire p r i n t e d a n d d i s t r i b u t e d l a t e r *
H.V*P.
W. J#K.
T h e S e c r e t a r y !s n o t e s o f t h e m e e t i n g of t h e F e d e r a l A d v i s o r y
C o u n c i l o n S e p t e m b e r 16, 1 9 6 3 at 9 : 3 0 s u m * in R o o m 9 3 2 of
t h e M a y f l o w e r H o t e l , W a s h i n g t o n , D* C*
A l l m e m b e r s of the
Federal A d v i s o r y C ouncil were present*
The C o u n c i l a p p r o v e d t h e S e c r e t a r y 1 s n o t e s f o r t h e m e e t i n g of
May 20-21, 1 9 6 3 .
ITEM I
W H A T A R E THE. V I E W S O F T H E M E M B E R S O F
PROBABLE C O U R S E OF E C O N O M I C A C T I V I T Y
D U R I N G T H E R E M A I N D E R O F 1 9 6 3 AND. T H E
IN D I S C U S S I N G T H I S G E N E R A L . Q U E S T I O N ,
COMMENT ON T H E F O L L O W I N G ITEMS:

T H E C O U N C I L AS TO T H E
IN TH E UNITED STATES
E A R L Y P A R T OF 1964?
T H E C O U N C I L M A Y W I S H TO

(a)

DO. R E C E N T L E V E L S O F R E S I D E N T I A L B U I L D I N G A C T I V I T Y A P P E A R
T O BE, F I R M L Y BASED., AND. I S F U R T H E R E X P A N S I O N A N T I C I P A T E D ?

(b)

D O E S T H E L I Q U I D A T I O N O F STEE L , I N V E N T O R I E S A C Q U I R E D
E A R L I E R T H I S Y E A R A P P E A R T O H A V E A B O U T R U N ITS COURSE,
OR IS F U R T H E R L I Q U I D A T I O N IN P R O S P E C T ?

(c)

HAS A N Y I M P O R T A N T C H A N G E B E E N O B S E R V E D R E C E N T L Y IN
PROSPECTS. F O R P L A N T A N D E Q U I P M E N T EXPENDITURES?

(d)

D O E S T H E .COUNCIL. C O N T I N U E . Q E T H E O P I N I O N , E X P R E S S E D A T
I T S P R E V I O U S M E E T I N G W I T H THE. BOARD., T H A T C O M P E T I T I V E
P R E S S U R E S R E S U L T I N G F R O M U N U S E D D O M E S T I C C A P A C I T Y , AS
W E L L A S F R O M M A N U F A C T U R E R S . ABROAD.., W I L L T E N D T O B E
S U F F I C I E N T T O D I S C O U R A G E BROAD. P R I C E R I S E S IN T H E
_________ R E L A T I V E L Y N E A R F U T U R E ?
______________
__________
P r e s i d e n t M u r p h y r e a d I t e m I a n d i n v i t e d the m e m b e r s
Council to c o m m e n t .
An extended discussion followed*

of t h e

T h e r e w a s g e n e r a l a g r e e m e n t t h a t e c o n o m i c a c t i v i t y in t h e U n i t e d
^ a t e s d u r i n g t h e r e m a i n d e r o f 1 9 6 3 a n d e a r l y p a r t of 1961]. w i l l c o n ­
tinue to i n c r e a s e m o d e r a t e l y .
S e v e r a l m e m b e r s m e n t i o n e d that they
relieve t h e c u r r e n t o p t i m i s m i n t h e b u s i n e s s c o m m u n i t y w a s b a s e d in
part on t h e a n t i c i p a t i o n o f a t a x c u t .
T h e f a i l u r e , t h e r e f o r e , of a
tax cut to m a t e r i a l i z e w a s o n e o f t h e u n c e r t a i n t i e s in t h e c u r r e n t
economic s i t u a t i o n *
The persistent
d e f i c i t i n o u r b a l a n c e of p a y ­
ments w a s c i t e d a s a n o t h e r *



S e v e r a l m e m b e r s w e r e of t h e o p i n i o n t h a t c e r t a i n t y p e s of
r e s i d e n t i a l c o n s t r u c t i o n h a d b e e n o v e r - b u i l t in t h e i r a r e a s *
How­
ever, m o s t m e m b e r s of t h e C o u n c i l b e l i e v e t h a t the r e c e n t b u i l d i n g
of s i n g l e f a m i l y h o m e s h a s b e e n r e l a t i v e l y f i r m l y b a s e d .
There
was g e n e r a l a g r e e m e n t t h a t the a b u n d a n c e of l o n g - t e r m funds seeking
i n v est m e n t h a d c o n t r i b u t e d i m p o r t a n t l y to t h e s t r o n g e x p a n s i o n in
apartment b u i l d i n g .
S e v e r a l m e m b e r s f e l t t h i s r e s u l t e d in som e
speculative b u i l d i n g of m u l t i - f a m i l y u n i t s ^
In contrast, a number
of m e m b e r s r e p o r t e d a r a t h e r f i r m d e m a n d f o r a p a r t m e n t s , p a r t i c u l a r l y
by the y o u n g e r a n d o l d e r p o p u l a t i o n g r o u p s .
In general, residential
c o n s t r u c t i o n p r o b a b l y w i l l e x p e r i e n c e a s i d e w a y s m o v e m e n t in the
period a h e a d w i t h n o p r o n o u n c e d u p w a r d t r e n d .
A d i s c u s s i o n d i s c l o s e d t h a t t h e m e m b e r s of t h e C o u n c i l are of
the o p i n i o n t h a t t h e l i q u i d a t i o n of t h e s t e e l i n v e n t o r i e s a c q u i r e d
earlier t h i s y e a r h a a a b o u t r u n i t s c o u r s e .
T h e r e w a s w i d e a g r e e m e n t t h a t t h e e x p e c t a t i o n s of b u s i n e s s m e n
have i m p r o v e d s i n c e t h e l a s t m e e t i n g w i t h t h e B o a r d .
This, t o ­
gether w i t h t h e i n c r e a s e i n c o r p o r a t e c a s h f l o w s , the g a i n in
corporate p r o f i t s , a n d t h e p r e s s u r e to m o d e r n i z e f o r c o m p e t i t i v e
cost r e a s o n s , e n h a n c e s t h e p r o s p e c t s f o r an e x p a n s i o n in p l a n t a n d
equipment e x p e n d i t u r e s i n t h e m o n t h s a h e a d .
The m e m b e r s o f t h e C o u n c i l c o n t i n u e to b e l i e v e t h a t b r o a d
price r i s e s a r e u n l i k e l y i n t h e r e l a t i v e l y n e a r f u t u r e .
However,
because of t h e e x p a n s i o n i n p r o d u c t i o n i n r e c e n t m o n t h s , o u r i n d u s ­
trial p l a n t is b e i n g m o r e f u l l y u t i l i z e d .
A s a c o n s e q u e n c e , the
competitive p r e s s u r e s f r o m u n u s e d d o m e s t i c c a p a c i t y w h i c h have dis­
couraged p r i c e a d v a n c e s i n t h e p a s t , h a v e b e e n r e d u c e d s o m e w h a t .
Recent i n c r e a s e s i n p r o d u c t i v i t y , o n t h e o t h e r h a n d , t e n d to c o n t r i ­
bute to p r i c e s t a b i l i t y .
I T E M II
DOES. .THE. C.QUNGIL...DETECT. A N Y S U B S T A N T I A L S L A C K E N I N G I W feANK E F F O R T S
TO A T T R A C T T I M E A N D S A V I N G S D E P O S I T S ?
A N Y C H A N G E IN T H E P A T T E R N
OF B A N K I N V E S T M E N T O F T H E S E S A V I N G S I N F L O W S ? ____________________________
M u r p h y r e a d I t e m II.
I t w a s r e p o r t e d t h a t b a n k s are a l l o c a t i n g
~ess of t h e i r a d v e r t i s i n g b u d g e t s to s a v i n g s d e p a r t m e n t s , s u g g e s t i n g
a s o m e w h a t l e s s i n t e n s i v e e f f o r t to a t t r a c t s u c h f u n d s .
O n the o t h e r
-"and, m o s t m e m b e r s o f t h e C o u n c i l r e p o r t e d t h a t t h e y c o u l d s e e no
slackening of e f f o r t i n t h e i r d i s t r i c t s .
Aside from a few isolated
instances, t h e r e w a s n o g e n e r a l e a s i n g o f r a t e s p a i d f o r s u c h f u n d s .
A brief d i s c u s s i o n on b a n k investment followed.
As b a n k s h a v e
reduced
S . g o v e r n m e n t p o r t f o l i o s a n d a d d e d s u b s t a n t i a l l y to t h e i r
foldings o f m u n i c i p a l s e c u r i t i e s a n d m o r t g a g e s , b a n k l i q u i d i t y h a s
essened.
S e v e r a l m e m b e r s o f t h e C o u n c i l f e l t , h o w e v e r , t h a t this
"rend h a d g o n e a b o u t as f a r a s it c o u l d .
C o n s e q u e n t l y , c h a n g e s in
tank i n v e s t m e n t p o r t f o l i o s in t h e p e r i o d a h e a d w i l l t e n d to b e l e s s
barked d e s p i t e t h e f a c t t h a t t i m e a n d s a v i n g s d e p o s i t s w i l l c o n t i n u e
"o a c c o u n t f o r a g r o w i n g p r o p o r t i o n o f t o t a l d e p o s i t s *



3.

I T E M III
AS A R E S U L T O P H I G H L E V E L S OF A C T I V I T Y A N D O F C H A N G E S IN B U S I N E S S
T A X L A W S , T H E F L O W O F I N T E R N A L L Y G E N E R A T E D B U S I N E S S F U N D S HAS
I N C R E A S E D S U B S T A N T I A L L Y T H I S Y E A R , W H I L E D E P E N D E N C E ON B A N K A N D
M A R K E T F I N A N C I N G A P P E A R S T O H A V E DECLINED.*
D.O. T H E M E M B E R S OF T H E
COUNCIL E X P E C T B U S I N E S S N E E D S F O R B A N K F I N A N C I N G TO C O N T I N U E
M O D E R A T E O V E R T H E B A L A N C E O F T H E Y E A R O R A R E T H E R E S I G N S OF S I G ­
NIFICANT I N C R E A S E IN B U S I N E S S LOANS?
DOES T H E COUNCIL FEEL THAT
BANKS, B Y A N D L A R G E , A R E S U F F I C I E N T L Y L I Q U I D T O M E E T A M O D E R A T E
UPSURGE IN C R E D I T D E M A N D S W I T H O U T S U B S T A N T I A L PORTFOLIO REAR R A N G E ­
MENT?____________________________________
P r esi dent M u r p h y r e a d It e m III*
In the d i s c u s s i o n w h i c h followed,
the m e m b e r s o f t h e C o u n c i l i n d i c a t e d t h a t t h e y e x p e c t b u s i n e s s n e e d s
for b a n k f i n a n c i n g t o i n c r e a s e s e a s o n a l l y o v e r t h e b a l a n c e o f t h e
year* D e s p i t e t h e d e c l i n e i n l i q u i d i t y of the b a n k i n g s y s t e m , t h e
Council b e l i e v e s t h e c o m m e r c i a l b a n k s are in a p o s i t i o n to m e e t a
moderate u p s u r g e i n c r e d i t d e m a n d ' . w i t h o u t . s u b s t a n t i a l l $ a r t f
re«
p g erne n t «
ITEM IV
WHAT A R E T H E C O U N C I L ' S O B S E R V A T I O N S R E G A R D I N G CURRENT ATTITUDES
IE. T H E B U S I N E S S A N D F I N A N C I A L C O M M U N I T Y T O W A R D U* S. B A L A N C E OF
PAYMENTS D E V E L O P M E N T S ?
H O W DOES THE COUNCIL APPRAISE THE
GENERAL R E C E P T I O N OF T H E R E C E N T ACTIONS A N D PROPOSALS DESIGNED
TO D E A L W I T H T H I S P R O B L E M ?
P r e s i d e n t M u r p h y r e a d ^ t e m IV*
I n the d i s c u s s i o n w h i c h f o l l o w e d ,
it was g e n e r a l l y a g r e e d t h a t t h e r e is a h e i g h t e n e d c o n c e r n in t h e
business a n d f i n a n c i a l c o m m u n i t y r e g a r d i n g U. S.* b a l a n c e of p a y m e n t s
developments.
I t w a s r e p o r t e d t h a t t h e r e c e n t a c t i o n s of t h e F e d e r a l
Reserve S y s t e m d e s i g n e d t o d e a l w i t h t h e p r o b l e m w e r e f a v o r a b l y r e ­
ceived, e s p e c i a l l y t h e i n c r e a s e i n t h e d i s c o u n t r a t e .
It w a s a l s o
reported t h a t t h e r e is s o m e d o u b t a b o u t t h e m e r i t of t h e e q u a l i z a t i o n
tax p r o p o s e d b y t h e T r e a s u r y , a l t h o u g h m a n y p e r s o n s w e r e e n c o u r a g e d
by the f a c t t h a t s p e c i f i c a c t i o n w a s b e i n g t a k e n i n a n e f f o r t to
cope w i t h o u r p a y m e n t s d i f f i c u l t i e s .
It w a s a g r e e d t h a t t h e C o u n c i l
should i n c l u d e i n i t s c o m m e n t s t h e o b s e r v a t i o n t h a t t h e s o l u t i o n to
our b a l a n c e o f p a y m e n t s p r o b l e m i n v o l v e s f i s c a l p o l i c y , o v e r s e a s
defense e x p e n d i t u r e s , a n d f o r e i g n a i d o u t l a y s *
A s t h e s e do n o t f a l l
within t h e r e s p o n s i b i l i t y o f t h e m o n e t a r y a u t h o r i t i e s , m o n e t a r y
policy a l o n e c a n n o t b e e x p e c t e d to m e e t t h e p r o b l e m of t h e d e f i c i t
in our i n t e r n a t i o n a l p a y m e n t s .
N e v e r t h e l e s s , the Council beli e v e s
some f u r t h e r t i g h t e n i n g o f m o n e t a r y p o l i c y m i g h t b e d e s i r a b l e .
ITEM V
HOW DOES THE C O U N C I L E V A L U A T E T H E IMPACT OF CURRENT M ON E T A R Y
AND C R EDIT P O L I C Y ?
___________________________________________
P r e s i d e n t M u r p h y r e a d I t e m V,
As m o n e t a r y p o l i c y h a d already
°9en d i s c u s s e d i n c o n n e c t i o n w i t h t h e o t h e r i t e m s o n t h e A g e n d a ,
the c o m m e n t s a t t h i s p o i n t w e r e r a t h e r b r i e f *
It w a s agg§ ed that



current m o n e t a r y a n d c r e d i t p o l i c y h a s h a d a f a v o r a b l e i m p a c t o n the
financial a n d b u s i n e s s c o m m u n i t y .

A b r i e f d i s c u s s i o n f o l l o w e d on the l e g i s l a t i o n r e c o m m e n d e d b y
the B o a r d to b r o a d e n t h e k i n d s o f s e c u r i t i e s on w h i c h c r e d i t c a n
be f i n a n c e d b y t h e F e d e r a l R e s e r v e b a n k s .
T h e m e m b e r s of the
Council w e r e o f t h e o p i n i o n t h a t c o m m e r c i a l b a n k e r s g e n e r a l l y
would s t r o n g l y f a v o r e n a c t m e n t of t h i s l e g i s l a t i o n .
The r e w a s some
doubt as to w h e t h e r s u c h a d v a n c e s w o u l d b e d o n e at a p e n a l t y r a t e
or at the c u s t o m a r y d i s c o u n t r a t e .
I t w a s d e c i d e d to d i s c u s s thi s
orally at t h e f o r t h c o m i n g m e e t i n g w i t h t h e B o a r d .
The m e e t i n g a d j o u r n e d a t 1 2 : 2 5 p . m .




T H E C O U N C I L C O N V E N E D I N T H E B O A R D R O O M OF T H E F E D E R A L
R E S E R V E B U I L D I N G , W A S H I N G T O N , D. C., A T 2 : 3 0 P . M . , ON
S E P T E M B E R 16, 1 963.
A L L M E M B E R S OF T H E C O U N C I L W E R E
PRESENT*
Dr. R a l p h A. Y o u n g , D i r e c t o r , a n d m e m b e r s of t h e s t a f f o f the
Division of I n t e r n a t i o n a l F i n a n c e , d i s c u s s e d T h e B r o o k i n g s R e p o r t .
A resume o f t h e d i s c u s s i o n is to b e si$nt to t h e m e m b e r s of the
Council a t a l a t e r d a t e .

T H E C O U N C I L C O N V E N E D A T 8 : 3 0 P . M . ON S E P T E M B E R 1 6 , 1 9 6 3 ,
IN R O O M 9 3 2 O F T H E M A Y F L O W E R H O T E L .
A L L M E M B E R S OF T H E
COUNCIL WERE PRESENT*
The C o u n c i l p r e p a r e d a n d a p p r o v e d t h e a t t a c h e d C o n f i d e n t i a l
M e m o r a n d u m to b e s e n t t o t h e B o a r d o f G o v e r n o r s r e l a t i v e to t h e
Agenda f o r t h e j o i n t m e e t i n g o f t h e C o u n c i l a n d t h e B o a r d on
September 17, 1 9 6 3 #
T h e M e m o r a n d u m w a s d e l i v e r e d to t h e F e d e r a l
Reserve B u i l d i n g a t 1 0 : 3 0 pt.m. o n S e p t e m b e r 16, 1 9 6 3 .
The m e e t i n g




a d j o u r n e d at

9 : 2 5 p.m.

CONFIDENTIAL

6

MEMORANDUM TO THE ECARD OF GOVERNORS
FROM THE
FEDERAL ADVISORY COUNCIL
RELATIVE TO THE AGENDA FOR THE JOINT MEETING
ON SEPTEMBER 17, 1963

1. What are the views of the members of the Council as to
the probable course of economic activity in the United
States during the remainder of 1963 and the early part
of 1964? In discussing this general question, the
Council may wish to comment on the following items:
(a)

Do recent levels of residential buiiding
activity appear to be firmly based, and
is further expansion anticipated?

(b)

Does the liquidation of steel inventories
acquired earlier this year appear to have
about run its course, or is further liqui­
dation in prospect?

(c)

Has any important change been observed re­
cently in prospects for plant and equipment
expenditures?

(d)

Does the Council continue of the opinion,
expressed at its previous meeting with the
Board, that competitive pressures resulting
from unused domestic capacity, as well as
from manufacturers abroad, will tend to be
sufficient to discourage broad price rises
in the relatively near future?

The members of the Council anticipate that economic activity in
the United States during the remainder of 1963 and the early part of 1964
will continue to increase moderately. The persistent deficit in our balance
of payments, the reaction which might occur if a tax cut did not materialize
and the fact that the current period of expansion has already run over 2-1/2
years are soma uncertainties in the current economic situation.
(a)
While certain types of residential construction in particular
areas of the country have been overbuilt, most members of the Council believe
that the recent building of single family homes has been relatively firmly
based.
One of the facts involved in the strong expansion in apartment
building has been the abundance of long-term funds seeking investment.
This probably has resulted in some speculative building of multi-family
units. On the other hand, in many areas of the country there is a demand




-2-

for apartments, particularly by the younger and older population groups. In
general, residential construction will probably experience a sideways move­
ment with no pronounced upward trend.
(b) The members of the Council are of the opinion that the liqui­
dation of steel inventories acquired earlier this year has about run its
course.
(c) The expectations of businessmen have improved since the last
meeting with the Board in May. This change in sentiment increases the
prospects for an expansion in plant and equipment expenditures in the months
ahead.
(g ) The Council continues to believe that broad price rises are
unlikely in che relatively near future. However, the substantial rise in
production since Kay reduces somewhat the competitive pressures resulting
from unused domestic capacity which have discouraged price advances in the
past. Recent increases in productivity tend to contribute to price stability.
2.

Does the Council detect any substantial slackening in
bank efforts to attract time and savings deposits?
Any change in the pat term of bank investment of these
savings inflows?

The members of the Council believe that banks are making a somewhat
less intensive effort to attract time and savings deposits. However, this
has not been reflected in an easing of rates paid for such funds*
The charges in Regulation Q were interpreted by many commercial
bankers as an indication that the monetary authorities would permit them
to pay competitive rates in the money markets* Those funds sensitive to
changes in yields in the money market would therefore be less apt to move
out of the banking system. Many bankers fait that their need for liquidity
had been lessened somewhat, and they changed their investment policies by
adding substantialiy to their holdings of municipal securities and mortgages.
Although the members of the Council believe that time and savings deposits
in the future will account for an increasing percentage of total deposits,
the rate of increase will not be as sharp as in the past two years. As a
consequence, changes in bank investment portfolios will tend to be less
marked.
3.

As a result of high levels of activity and of changes
in business tax laws, the flow of internally generated
business funds has increased substantially this year,
while dependence on bank and market financing appears
to have declined. Do the members of che Council ex­
pect business needs for bank financing to continue
moderate over the balance of the year or are there
signs of significant increase in business loans?




6

-3Does the C o u n c il f e e l th a t banks, by and la r g e , are
s u f f i c i e n t l y l i q u i d to meet a moderate upsurge in
c r e d it demands w ith o u t s u b s t a n t ia l p o r t f o li o r e ­
arrangem ent?

The members of the Council expect business needs for bank financing
to increase seasonally over the balance of the year. While the liquidity of
the banking system has declined, the Council believes that the commercial
banks are in a position to meet a moderate upsurge in credit demands without
substantial portfolio rearrangement.
4.

What are the Council's observations regarding current
attitudes in the business and financial community
toward U. S» balance of payments developments? How
does the Council appraise the general reception of
the recent actions and proposals designed to deal with
with this problem?

Although the persistent deficit in our international payments and
the loss of gold are somewhat remote from the ever}Tday affairs and activities
of most businessmen, the Council believes that there is heightened concern in
the business and financial community regarding U« S. balance of payments
developments •
The actions of the Federal Reserve System designed to deal with this
problem have been favorably received, especially the increase in the discount
rate. There is sone doubt, however, about the merit of the equalization tax
proposed by the Treasury, although many persons were encouraged by the fact
that specific action was being taken in an effort to cope with our payments
difficulties.
As the Council has observed in the past, the solution to our balance
of payments problem involves fiscal policy, overseas defense expenditures and
foreign aid outlays which do not fall within the responsibility of the mone­
tary authoritieso Monetary policy alone can therefore not be expected to
meet the problem of the deficit in our international payments. Nevertheless,
the Council believes some further tightening of monetary policy might be
desirable.
5.

IIow does the Council evaluate the impact of current
monetary and credit policy?

As suggested in Item IV, the Council believes that current monetary
and credit policy has had a favorable impact on the financial and business
community.




* * * * * * * * * * * *

6
-4The B o a rd w o u ld a ls o l i k e t o have any v ie w s t h a t th e
C o u n c il may c a r e t o e x p re s s on th e l e g i s l a t i o n t h a t
h a s b e e n recom m ended t o b ro a d e n th e k in d s o f s e c u r it y
on w h ic h c r e d i t c a n be a d v a n c e d by th e F e d e r a l R eserve
banks.
T hese re c o m m e n d a tio n s were in c lu d e d i n th e
B o a r d 's l e t t e r o f A u g u s t 21 t o th e C h airm en o f th e
S e n a te a n d H ouse B a n k in g and C u rre n c y C o m m itte e s.
The members o f t h e C o u n c il b e l i e v e t h a t c o m m e rcia l b an k e rs g e n e r a lly
s t r o n g l y f a v o r e n a c tm e n t o f l e g i s l a t i o n d e s ig n e d to b ro a d e n th e k in d s
0f s e c u r it y on w h ic h c r e d i t c a n be a d v a n c e d by th e F e d e r a l R eserve b a n k s.

would




ON S E P T E M B E R 17, 1 9 6 3 , AT 1 0 : 3 0 A * M * , T H E F E D E R A L A D V I S O R Y
C O U N C I L H E L D A J O I N T MEETING. W I T H T H E B O A R D OF G O V E R N O R S
OF T H E F E D E R A L R E S E R V E S Y S T E M IN T H E F E D E R A L R E S E R V E
B U I L D I N G , W A S H I N G T O N D_. C. A L L M E M B E R S OF THE C O U N C I L
W E R E P R E S E N T E X C E P T MR. H O W A R D C. P E T E R S E N W H O W A S CALLED
H O M E B E C A U S E OF A N A U T O M O B I L E A C C I D E N T I N V O L V I N G H I S SON.
T H E F O L L O W I N G M E M B E R S OF T H E B O A R D OF G O V E R N O R S W E R E
PRESENT:
C H A I R M A N M A R T I N , VICE. C H A I R M A N B A L D E R S T O N ,
G O V E R N O R S ROBER T S O N , SHEPARDSON AND MITCHELL.
MR. SHERM A N ,
S E C R E T A R Y , A N D MR. K E N Y O N , A S S I S T A N T SECRE T A R Y , OF T H E
B O A R D OF GO V E R N O R S , A L S O W ERE PRESENT.
The m i n u t e s of the j o i n t m e e t i n g are b e i n g p r e p a r e d in the office
of the S e c r e t a r y of t h e B o a r d of G o v e r n o r s of the F e d e r a l Re s e r v e
System* T h e i r c o n t e n t w i l l b e c o m p a r e d w i t h the notes of the S e c r e t a r y
of the C o u n c i l .
A s s u m i n g t h e y a r e in s u b s t a n t i a l agreement, they w i l l
be d i s t r i b u t e d to t h e m e m b e r s of t h e Council*
The m e e t i n g a d j o u r n e d at 12:ij.O p*m*

The n e x t m e e tin g




o f th e C o u n c il w i l l be November 18-19, 1963*