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WAR BORROWING

m

with $410,432,295 in May, then recovering from
an enforced restraint of $277,500,000 in June, to
$452,500,000 in July, and to $478,000,000 in
August. Our own expenditures, including interest
on public debt, were less in outright amount but far
more ominous in swift progression — $114,102,-
809 in May, $134,304,040 in June, $208,299,031 in
July, $277,438,000 in August.4 The last of the
outstanding certificates had matured on July 30, and
the Treasury was for the first time since the out'
break of the war entirely free from short-term
obligations. But on the other hand the Treasury
balance dropped below $309,000,000 early in
August and substantial reinforcement became im-
perative, confirming the unwisdom of the Treas-
ury’s rejection of the entire over-subscribed part
of the First Liberty Loan.

II

The second cycle of our war financing began on
August 9, 1917. With a reduced Treasury balance
at the outset, with the receipts from the First
Liberty Loan exhausted, with a relatively incon-
siderable revenue from war taxation, with Allies’
requirements of undiminished magnitude, with our
own expenditures for the national defense mounting
progressively, with a second funded loan in con-
templation and with no outstanding short-term
obligations — the Treasury in pursuance of the
policy now definitely established undertook to meet

4	“ Monthly Summary of Foreign Commerce of the United
States,” February, 1918, p. 93.