102

WAR  BORROWING

terval  of  new  certificate  issues,  the  Treasury  might
at  any  and  all  times  have  prevented  or  at  least
quickly  corrected  an  over-full  balance.  We  may
assume  a  certain  reluctance  on  the  part  of  depositary
banks  to  suffer  a  net  reduction  of  government  deposits, ­
  when  in  the  course  of  public  expenditure  such
deposits  were  drawn  upon.  But  with  the  rediscount ­
  facilities  of  the  Federal  Reserve  System  making ­
  it  possible  for  the  depositary  banks  to  increase
their  available  funds  under  such  circumstances  with
little  effort  and  at  moderate  cost,  it  seems  unlikely
that  the  Treasury  would  have  given  consideration  to
pressure  from  this  quarter  whether  presented  in  the
interest  of  monetary  ease  or  of  some  related  reason.
Until  such  time,  however,  as  the  purpose  of  the
Treasury  shall  have  been  fully  set  forth,  it  seems
idle  to  speculate  as  to  motive.  The  essential  fact  is
that  to  the  extent  that  the  working  balance  was  built
up  or  maintained  at  a  higher  level  than  safe  financing ­
  necessitated,  the  maximum  economy  of  certificate ­
  borrowing  was  unrealized.
There  remain  to  be  considered  the  advantages  of
certificate  borrowing  as  a  continuing  mode  of  war
financing.  Over  and  above  its  effectiveness  or
otherwise  in  meeting  immediate  fiscal  necessities,  in
how  far  may  a  policy  of  anticipatory  borrowing  be
regarded  as  rendering  easier  or  more  difficult  the
prospective  financial  requirement?  Having  to  do
with  a  war  of  highly  uncertain  duration  and  of
rapidly  progressive  cost,  it  is  quite  conceivable  that
a  present  fiscal  advantage  may  be  gained  only  at  excessive ­
  cost  with  respect  to  future  needs.
Theoretical  analysis  suggests  that  there  are  two