THE  PRESENT

3i

rowings,  primarily  from  the  member  banks  of  the
Federal  Reserve  System  but  to  the  extent  possible
from  investors  —  such  floating  indebtedness  being
liquidated  by  the  issue  at  intervals  of  long-term
funded  loans.  The  certificate  of  indebtedness  became ­
  thus,  not  like  the  contemplated  issue  of  the
Spanish-American  War,  an  initial  expedient  to  put
the  Treasury  in  funds  until  the  proceeds  of  newly
authorized  loans  and  taxes  became  available,  but  an
habitual  borrowing  device  analogous  to  but  not
identical  with  the  treasury  bill  of  English  finance.
Giving  way  periodically  to  a  funding  or  liquidating
loan,  the  certificate  of  indebtedness  was  resorted  to
promptly  thereafter  in  renewal  of  the  borrowing
cycle.
There  was  no  formal  statement  as  to  the  larger
purpose  which  the  certificate  of  indebtedness  was
designed  to  serve.  The  report  of  the  Ways  and
Means  Committee  accompanying  the  introduction
of  the  Liberty  Loan  bill  in  the  House  of  Representatives ­
  merely  set  forth  that:
“  In  view  of  the  fact  that  a  very  large  portion  of  the
taxes  now  levied  and  proposed  to  be  levied  at  a  future
date  will  be  payable  yearly,  and  therefore  will  not  be
capable  of  yielding  a  continual  flow  of  revenue  into  the
Treasury,  your  committee  deem  it  advisable  to  recommend ­
  the  authorization  of  the  issuance  of  $2,000,000,000
worth  of  certificates  of  indebtedness,  payable  within  one
year,  to  the  end  that  the  Treasury  may  at  all  times  have
ample  means  of  securing  funds  to  meet  the  immediate
needs  of  the  Government.”
This  intention  was  repeated  in  the  announcement
of  the  Secretary  of  the  Treasury  on  April  20,  1917,
that: