6

WAR  BORROWING

level,  and  the  efforts  of  the  Treasury  in  harmony
with  the  Federal  Reserve  Board  have  been  expended
in  guiding  and  shaping  this  influence.
The  use  of  short-term  negotiable  obligations  is
no  new  device  in  the  financial  experience  of  the
United  States.  Temporary  loans  evidenced  by
certificates  of  indebtedness  have  served  from  time
to  time  throughout  our  national  history  to  tide  over
budget  deficits  or  to  anticipate  future  revenues.
Morris,  Gallatin,  Chase  and  the  nearer  figures  of
our  own  decades  are  associated  with  their  emission.
Recourse  has  been  had  to  such  measures  in  the
monetary  disorder  of  peace  times  as  in  the  financial
stress  of  war.  Sometimes  intended  only  for  bank
absorption,  sometimes  planned  for  general  investment, ­
  the  issues  have  differed  widely  in  the  technique ­
  of  amount,  denomination,  maturity,  interest
yield,  convertibility  and  redemption  as  well  as  in
the  more  important  elements  of  circulation  and
privilege.
The  extraordinary  use  of  certificates  of  indebtedness ­
  in  our  present  war  financing  may  not  be  safely
projected  against  this  background  of  past  experience. ­
  The  financial  requirements  we  face  and  the
dislocations  to  which  our  markets  are  exposed  present ­
  a  group  of  conditions  so  unparalleled  in  degree
as  to  be  virtually  new  in  kind.  Moreover,  the
service  which  the  certificate  is  now  designed  to
render  is  very  different  from  its  older  function.
Instead  of  a  temporary  expedient  to  put  the  Treasury ­
  in  funds  for  an  interim  period  until  established
revenues  from  funded  loans  or  extraordinary  taxes
become  available  or  until  the  credit  market  recovers