198 
WAR BORROWING 
avoid the necessity of such renewal or reissue and 
to provide for the liquidation of the certificates by 
the flotation of long-term loans. But this is a sequel 
to, rather than a condition of certificate borrowing, 
comparable to a deliberately contemplated funding 
loan with regard to which demand notes are issued 
and out of which they are eventually extinguished. 
Heretofore, the Treasury has floated bond issues 
enough in volume and frequency to discharge the 
intervening certificate issues, without appreciable 
recourse to renewal and without undue reliance upon 
bank absorption and credit payment. It is likely 
that the maintenance of this policy has operated to 
restrain the issue of certificates however easy the 
process of emission, precisely as the definite contem 
plation of a refunding operation would check the 
issue of demand notes. But subject to such 
restraint, certificate borrowing like fiat money con 
stitutes an almost effortless mode of supplying the 
Treasury with resources in the amounts and at the 
times needed for public expenditure. 2 
The objection to demand notes as a fiscal ex 
pedient lies in the fact that their proper use calls 
for a degree of wisdom and reserve, if not super 
human, at least beyond that self-control which any 
modern state has been able to muster to the service 
of its exchequer. Were a state to issue inconvertible 
2 It is impossible, however, to neglect the significance of the 
lengthening “ overlap,” that is, the extent to which the ma 
turities of the certificates of one cycle extend into the issue 
period of the succeeding cycle. Taken in conjunction with 
the heavy over-payment of the first installments on account of 
loan subscriptions, and the small use of certificates as com 
pared with payment by credit, such procedure verges close 
upon certificate refunding.