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WAR BORROWING

volume of outstanding short-term obligations. On
November 15, 1917, the Treasury balance stood at
$801,983,785. A fortnight later6 with the pro-
gress of the Loan flotation it had attained the height
of $1,968,484,725, and on November 30, 1917, it
was still at $1,837,419,886 — despite the redemp-
tion of the October 18, 1917, issue of certificates
($385,197,000) maturing November 22, 1917, and
the August 28, 1917, issue ($250,000,000) matur-
ing November 30, 1917. On the other hand the
certificate issues of September 17, September 26,
and October 24, 1917, of a nominal aggregate of
$1,385,296,000 were due on December 15, 1917.

Two courses were now open to the Treasury in
meeting this combined problem of surplus funds and
of maturing short-term obligations. The one was
to conserve the Treasury balance for current dis-
bursements and to rely on further borrowings to
meet the maturing certificate issues. The other was
to use surplus funds to redeem outstanding certifi-
cate issues before maturity, and to provide for
future expenditures by new short-term borrowings.
The procedure followed was in the main the second
course: two issues of certificates were called for
redemption before maturity, and provision was
made for further issues of certificates.

The reason assigned for earlier redemption was
the danger of disturbance in the money market by
the heavy withdrawal of funds that must otherwise
have occurred on December 15, 1917. Certainly, a
further advantage was the reduction of the swollen
Treasury balance. On November 22, 1917, the Sec-
6 November 23, 1917.