Examines the February 1961 decision of the FOMC to undertake purchases of intermediate- and long-term notes and bonds with the intent of keeping reserves readily available and perhaps lowering longer-term interest rates – thus marking the end of “bills preferably” – even while putting a floor under bill rates.

Describes studies undertaken by the Federal Reserve Bank of New York and the FOMC to assess the problems associated with wartime and postwar monetary policy and how the System should proceed now that ceilings on interest rates had been removed. Places particular emphasis on the scope of System support for primary market sales of Treasury debt and System relations with primary dealers.

Sets the stage, previewing how the Accord of March 3, 1951, produced a sharp break in the conduct of open market and Treasury debt management operations and how institutional practices like “bills preferably,” the active use of repurchase agreements in open market operations, the extension of open market operations to coupon-bearing debt, and the advent of regular and predictable auction sales of coupon-bearing debt came about during the next quarter century.

Examines two disastrous Treasury offerings in the summer of 1958, including the near-failure of a large offering of one-year certificates of indebtedness, the decision of the Federal Reserve to intervene to prevent a failed offering, and the reaction of government officials, members of Congress, and others.