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WAR BORROWING

sufficient amount to meet pressing requirements in
periods of impending war or acute monetary dis-
turbance unrelieved by adequate banking facilities.
Whatever effectiveness such expedients possessed
was largely a consequence of their use not as formal
borrowing devices, but — after the manner of the
continental bills of credit — as fiat emissions for
direct payment of public accounts. Whether the
fiscal exigency was in each case desperate enough
to justify such a policy with its reasonably certain
accompaniments, if sufficiently pursued, of inflation
and depreciation is a problem which at this late day,
with scanty statistical evidence, practically defies
solution. So utilized, the short-term obligation be-
came an insecure make-shift, inviting return of the
very consequences which the framers of the con-
stitution in the fullness of experience had sought to
avert by discountenancing the emission of bills of
credit. At best, it served as a last resort of a
strained treasury unsupported by adequate credit
agencies.

The short-term issues of the Civil War were
largely a result of Secretary Chase’s opposition to
long-term bonds, heightened by his reluctance to
adjust the interest yield of funded loans to the pre-
vailing rate of the money market. In fiscal effect
the use of such “ temporary obligations falling due
in the midst of civil conflict ” has been fairly de-
scribed as “ a source of double vexation to the
treasury department, which was obliged to conduct
a series of refunding operations, and at the same
time to go into the money market to borrow ever
increasing sums for a war which apparently would