THE  PRESENT

29

The  certificates  so  acquired  were  paid  for  by  the
creation  of  government  deposits  in  the  form  of
credit  accounts,  and  were  held  by  the  Federal  Reserve ­
  Banks  as  investments  until  maturity. 7  In
this  respect  the  emission  differed  from  all  succeeding ­
  issues.  It  was  neither  distributed  among  the
member  banks  nor  made  available  for  the  remittance
of  Liberty  Loan  subscriptions  nor  for  the  payment
of  public  dues,  but  figured  as  an  extraordinary
short-term  loan  made  by  the  Treasury  of  its  fiscal
agents  at  a  favorable  rate  in  anticipation  of  established ­
  revenue.  The  Secretary  of  the  Treasury
could  with  propriety  speak  of  the  completed  operation ­
  as  affording  “  an  additional  demonstration  of
the  usefulness  of  the  new  Reserve  System  to  the
country.”  8
(B)  In  announcing  the  over-subscription  of
the  certificate  issue  of  March  31,  1917,  the  Secretary ­
  of  the  Treasury  intimated  that  an  additional
$50,000,000  of  “  these  temporary  certificates  of  indebtedness ­
  ”  might  be  issued  before  the  end  of  the
fiscal  year  —  adding  significantly  that  no  statement ­
  could  “  be  made  about  possible  issues  of  Government ­
  bonds  until  further  developments  in  the  in-7
  There  was  some  criticism  that  the  low  interest  yield  of  the
certificates  prevented  the  Federal  Revenue  Banks  from  disposing ­
  of  the  certificates  to  investors  and  thus  impaired  the  liquid
quality  of  the  Banks’  resources  (Commercial  and  Financial
Chronicle,  March  31,  1917,  p.  1210)  ;  but  there  is  no  evidence
that  the  Federal  Reserve  Banks  had  at  this  time  any  such  intention ­
  (see  also  Secretary  of  the  Treasury’s  statement  of
April  2o,  1917,  in  Federal  Reserve  Bulletin,  May,  1917,  pp.  341-2)
  •
8  Federal  Reserve  Bulletin,  April,  1917,  p,  240.