WAR  BORROWING

(F)  No  recourse  was  had  to  certificates  of
indebtedness  from  the  Civil  War  to  the  revenue
legislation  of  the  Spanish-American  War.  The
war  revenue  act  of  June  13,  1898,  empowered  the
Secretary  of  the  Treasury  to  issue  certificates  of  indebtedness ­
  in  denominations  of  $50  and  multiples,
bearing  not  more  than  three  per  cent,  interest  nor
of  more  than  one  year  maturity  and  limited  to  a
total  outstanding  volume  not  exceeding  $100,000,-000.
  The  obvious  intention  was  that  such  shortterm ­
  borrowing  should  meet  the  Treasury’s  extraordinary ­
  needs  until  the  proceeds  of  war  taxes  and
loans  became  available.  As  a  matter  of  fact,  the
prompt  issue  and  immediate  success  20  of  the  war
loan  made  it  unnecessary  to  issue  any  of  the  certificates. ­
  The  enabling  act  itself  however  remained
upon  the  statute  books  conferring  permissive  authority ­
  upon  the  Secretary  of  the  Treasury,  and  became ­
  eventually  the  nucleus  of  later  authorization
of  short-term  borrowing.
The  panic  of  1907  was  the  occasion  of  the  final
issue  of  certificates  of  indebtedness  prior  to  the
present  war. 21  To  relieve  the  acute  monetary
stringency,  the  Treasury  transferred  to  the  banks
as  public  deposits  all  available  funds,  so  that  by  the
middle  of  November  the  available  working  balance
had  been  reduced  to  approximately  $5,000,000,
making  impossible  further  relief  from  this  quarter.
Efforts  were  now  directed  to  induce  the  banks  —
“  hampered  by  the  scarcity  of  bonds  and  the  rapid
20  Commercial  and  Financial  Chronicle,  July  16,  1898.
21  Report  of  Secretary  of  Treasury,  1908,  p.  21;  Report  of
Treasurer  of  United  States,  1908,  p.  154.