THE  TREASURY

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dangers  to  be  here  apprehended.  The  first  has  to
do  with  the  psychological  disadvantage  of  being
obliged  to  borrow  to  pay  off  an  already  contracted
debt  rather  than  to  provide  additional  available
funds.  The  direct  success  of  certificate  financing
depends  entirely  upon  the  certainty  with  which  at
appropriate  intervals  long-term  loans,  into  which  the
certificates  may  be  funded  or  out  of  the  proceeds  of
which  they  may  be  redeemed,  will  be  absorbed  by
public  subscription.  Patriotic  ardor  rather  than
economic  calculation  determines  the  success  of  such
flotations  and  the  knowledge  that  the  operation,  involving ­
  as  it  does  a  considerable  measure  of  economy ­
  and  self-denial,  is  necessary  to  extinguish
short-term  indebtedness  rather  than  to  put  the
Treasury  in  funds  for  further  imperative  expenditure, ­
  is  likely  to  exert  a  chilling  effect  upon  the  public
mind.
In  actual  experience,  it  is  doubtful  whether  this
deterrent  has  up  to  the  present  time  figured.  There
has  been  in  the  case  of  each  Liberty  Loan  a  substantial, ­
  although  a  declining  margin  between  the
volume  of  anticipatory  borrowing  and  the  principal
of  the  funded  loan.  More  remarkable,  there  has
been  a  singular  non-comprehension  on  the  part  of  the
public  that  the  anticipated  proceeds  of  each  Loan
have  in  fact  been  largely  expended  prior  to  the
flotation,  and  the  loan  campaigns  have  been  marked
by  no  general  attempt  to  spread  enlightenment  on
this  score.  With  respect  to  the  future,  neither  of
these  two  conditions  is  likely  to  obtain  to  the  same
extent.  The  volume  of  anticipatory  certificate  indebtedness ­
  promises  to  approximate  more  closely