﻿3°

WAR BORROWING

ternational situation.”8 In the succeeding fort-
night history moved swiftly. On March 21, 1917,
President Wilson had called Congress in special ses-
sion two weeks earlier than originally proposed “ to
receive a communication concerning grave matters
of national policy.” On April 6, 1917, a joint reso-
lution was passed by Congress declaring that a state
of war with the Imperial German Government had
been forced upon the United States.

In these weeks the policy of the Treasury with
respect to the huge borrowings which were then im-
mediately imminent may be supposed to have
crystallized. No information is available as to the
manner in which the determination was reached,
and we are left in doubt in how far the counsels of
the Federal Reserve Board, intent upon avoiding
monetary strain, prevailed; in how far the fiscal ex-
periences of the Allies were considered; in how
far an independent program, inspired by the sheer
course of events, was formulated. Certainly the
procedure adopted can fairly be described in the
light of our own financial history as a new policy,
approximating from the outset the European and
notably the English rather than the American sys-
tem of funding and tending with the progress of
borrowing to conform more and more closely to
English practice — then still in vogue but destined
soon to be abandoned.

The characteristic feature of this new policy was
the supply of treasury funds by the systematic use
of certificates of indebtedness for short term bor-

9	Commercial and Financial Chronicle, March 31, 1918, p.
1209.