32 
WAR BORROWING 
i° Federal Reserve Bulletin, May, 1917, p. 342. 
“ As soon as the war loan bill becomes a law he intends 
to sell such amounts of Treasury certificates of indebted 
ness as may be necessary to meet the requirements of the 
Treasury and the war situation pending the sale of 
Government bonds ”— [for which] “ about 60 days ” 
[would probably be required]. 10 
The First Liberty Loan act of April 24, 1917, 
authorized the issue of certificates of indebtedness 
so foreshadowed upon a scale commensurate with 
the titanic financing then inaugurated. The Secre 
tary of the Treasury was empowered “ to borrow 
from time to time, on the credit of the United 
States, for the purpose of this act and to meet public 
expenditures authorized by law such sum or sums 
as, in his judgment may be necessary ” by the issue 
of certificates of indebtedness bearing not more 
than three and a half per cent, interest nor of more 
than one year maturity — up to an amount of $2,- 
000.000,000 at any one time outstanding. Such 
certificates were not to bear the circulation privilege 
but were exempt from all taxation other than estate 
or inheritance taxes. The provisions of the act as 
to the custody of the funds so borrowed were all- 
important; (a) the Secretary of the Treasury was 
authorized to deposit in banks and trust companies 
duly qualified as government depositaries the pro 
ceeds arising from the sale of certificates and bonds 
to amounts not exceeding, in the case of each de 
positary, the sum invested by it or withdrawn from 
it for investment in certificates and bonds; and 
(b) the reserve requirements as to demand deposits 
imposed by the Federal Reserve Act were waived as