﻿THE PRESENT

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The certificates so acquired were paid for by the
creation of government deposits in the form of
credit accounts, and were held by the Federal Re-
serve Banks as investments until maturity.7 In
this respect the emission differed from all succeed-
ing issues. It was neither distributed among the
member banks nor made available for the remittance
of Liberty Loan subscriptions nor for the payment
of public dues, but figured as an extraordinary
short-term loan made by the Treasury of its fiscal
agents at a favorable rate in anticipation of estab-
lished revenue. The Secretary of the Treasury
could with propriety speak of the completed opera-
tion as affording “ an additional demonstration of
the usefulness of the new Reserve System to the
country.” 8

(B)	In announcing the over-subscription of
the certificate issue of March 31, 1917, the Secre-
tary of the Treasury intimated that an additional
$50,000,000 of “ these temporary certificates of in-
debtedness ” might be issued before the end of the
fiscal year — adding significantly that no state-
ment could “ be made about possible issues of Gov-
ernment bonds until further developments in the in-

7	There was some criticism that the low interest yield of the
certificates prevented the Federal Revenue Banks from dispos-
ing of the certificates to investors and thus impaired the liquid
quality of the Banks’ resources (Commercial and Financial
Chronicle, March 31, 1917, p. 1210) ; but there is no evidence
that the Federal Reserve Banks had at this time any such in-
tention (see also Secretary of the Treasury’s statement of
April 2o, 1917, in Federal Reserve Bulletin, May, 1917, pp. 341-
2) •

8	Federal Reserve Bulletin, April, 1917, p, 240.