﻿THE TREASURY

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which certificates may be used in loan payment
obviously stands in relation not only to the aggre-
gate amount of the payment but also to the volume
of outstanding certificates. The facts here were
favorable to a larger use of certificates in Novem-
ber than in June. At the time of the First Liberty
Loan there were outstanding $868,205,000 certifi-
cates or 43 per cent, of the loan principal; at the
time of the Second Liberty Loan there were out-
standing $2,320,493,000 or 61 per cent, of the loan
principal. Moreover, if we make the reasonable
assumption that the investment absorption of cer-
tificates does not proceed at equal pace with the
volume emitted, but that the larger the amount
outstanding the larger will be the amount of certifi-
cates taken by the banks on their own account, it
would follow that a larger proportion of certificates
should have been tendered by subscribing banks in
connection with the Second than in connection with
the First Liberty Loan.

As a matter of fact, assuming that the entire issue
of $300,000,000 certificates maturing on November
15, 19x7, were among the certificates tendered on
that date on account of the Loan installment, there
would have been only $169,000,000 of later ma-
turities likewise tendered, as compared with a
further outstanding amount of $1,851,000,000 that
might have been but were actually not so used. To
this extent the flotation again resulted in a plethora
of available funds at the expense of an unliquidated
floating debt.

The Treasury thus emerged from the Loan flo-
tation with an embarrassing surplus and a large