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THE TREASURY

Short-term borrowing is an accredited expedient
of war financing. The Treasury must be put in
ready command of large funds immediately upon
the declaration of hostilities; and for the consid-
erable time elapsing before sources of extraordi-
nary revenue — war taxes and funded loans — be-
come productive there is likely to be need of an-
ticipatory borrowing. The excesses to be avoided
are (i) undue reliance upon temporary loans in
lieu of definitive revenue, with the possibility of em-
barrassing refunding operations at perhaps critical
intervals; and (2) entry upon a policy of short-
term borrowing with insufficient banking machin-
ery, with the danger of descent to bills of credit
and fiat notes. These conclusions may fairly be de-
scribed as in conformity with accepted fiscal theory
and as realized in familiar fiscal practice.

As employed by the United States in the present
war, short-term obligations in the form of certifi-
cates of indebtedness have served a larger purpose.
They have indeed been used in the traditional way,
at the outset and to a very limited extent, to bridge
over the initial interval until war loans and war
taxes should become productive. But much beyond
this, certificates of indebtedness have been continu-

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