20 
WAR BORROWING 
sufficient amount to meet pressing requirements in 
periods of impending war or acute monetary dis 
turbance unrelieved by adequate banking facilities. 
Whatever effectiveness such expedients possessed 
was largely a consequence of their use not as formal 
borrowing devices, but — after the manner of the 
continental bills of credit — as fiat emissions for 
direct payment of public accounts. Whether the 
fiscal exigency was in each case desperate enough 
to justify such a policy with its reasonably certain 
accompaniments, if sufficiently pursued, of inflation 
and depreciation is a problem which at this late day, 
with scanty statistical evidence, practically defies 
solution. So utilized, the short-term obligation be 
came an insecure make-shift, inviting return of the 
very consequences which the framers of the con 
stitution in the fullness of experience had sought to 
avert by discountenancing the emission of bills of 
credit. At best, it served as a last resort of a 
strained treasury unsupported by adequate credit 
agencies. 
The short-term issues of the Civil War were 
largely a result of Secretary Chase’s opposition to 
long-term bonds, heightened by his reluctance to 
adjust the interest yield of funded loans to the pre 
vailing rate of the money market. In fiscal effect 
the use of such “ temporary obligations falling due 
in the midst of civil conflict ” has been fairly de 
scribed as “ a source of double vexation to the 
treasury department, which was obliged to conduct 
a series of refunding operations, and at the same 
time to go into the money market to borrow ever 
increasing sums for a war which apparently would