﻿6

WAR BORROWING

level, and the efforts of the Treasury in harmony
with the Federal Reserve Board have been expended
in guiding and shaping this influence.

The use of short-term negotiable obligations is
no new device in the financial experience of the
United States. Temporary loans evidenced by
certificates of indebtedness have served from time
to time throughout our national history to tide over
budget deficits or to anticipate future revenues.
Morris, Gallatin, Chase and the nearer figures of
our own decades are associated with their emission.
Recourse has been had to such measures in the
monetary disorder of peace times as in the financial
stress of war. Sometimes intended only for bank
absorption, sometimes planned for general invest-
ment, the issues have differed widely in the tech-
nique of amount, denomination, maturity, interest
yield, convertibility and redemption as well as in
the more important elements of circulation and
privilege.

The extraordinary use of certificates of indebted-
ness in our present war financing may not be safely
projected against this background of past experi-
ence. The financial requirements we face and the
dislocations to which our markets are exposed pre-
sent a group of conditions so unparalleled in degree
as to be virtually new in kind. Moreover, the
service which the certificate is now designed to
render is very different from its older function.
Instead of a temporary expedient to put the Treas-
ury in funds for an interim period until established
revenues from funded loans or extraordinary taxes
become available or until the credit market recovers