Historical Echoes: FOMC … “Minutes” by Minutes

Kathleen
McKiernan

Although
the Federal Reserve was founded in 1913, the Federal Open
Market Committee,  or FOMC,
wasn’t created until passage of the Banking Act of
1933.
Congress established the name and legal structure of the FOMC as a formal
committee of the twelve Reserve Banks. In 1935, a System reorganization added
the seven-member Board of Governors to the twelve Reserve Bank presidents—uniting
the centralized and decentralized components of the Fed. In the Banking Act of 1935,
Congress mandated that only five of the twelve Reserve Bank presidents would
vote at any one time, along with the seven governors. The first FOMC meeting
convened a year later, in March 1936.

     Thanks to a multi-year transparency
initiative, numerous FOMC documents—including the minutes of the first meeting,
held on March 18 and March 19—are
now available on the Board’s website. The
minutes of that meeting indicate how private the Committee intended to be:

“The proceedings, deliberations, discussions, and actions of the Committee,
except as required by law and except as authorized by the Committee, shall be
strictly confidential, and no information shall be released except as
authorized by the Committee and in the annual report required to be made to
Congress by Section 10 of the Federal Reserve Act as amended. Except as herein
provided, no reports on the meeting of the Committee shall be made to any
person or persons whatsoever.”

     Allan H. Meltzer, in A History of the Federal Reserve, Volume 2, Book 1, 1951-1969, recounts that Wright Patman (Chairman of the Committee on Banking and Currency,
1963-75), while serving as Chairman of the Joint Economic Committee, requested
and received copies of the 1960 FOMC minutes. Prior to this action, it was
unprecedented for the Federal Reserve to release a full year of minutes. In a July
21, 1961, letter to
Chairman Patman, Federal Reserve Chairman William McChesney Martin indicated
the Fed’s willingness to supply the minutes, but requested that they be kept
confidential. The FOMC minutes remained confidential until 1964, when the Committee
began
releasing them with an approximate five-year lag. The records were deposited in
the National Archives for use by scholars and others interested in monetary
policy.

     In February 1993, the FOMC minutes first
appeared in their present form. From that time until December 2004, they were
published approximately three days after each FOMC’s subsequent meeting. In
December 2004, the Committee decided to expedite the release. Since then, the
minutes have been made public three weeks after the date of the current
meeting’s policy decision, thus shortening the release lag by an average of
about three weeks.

Disclaimer
The views expressed in this post are those of the author and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author.

 

Kathleen McKiernan is a research librarian in the Federal Reserve Bank of New York’s Research and Statistics Group.