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WAR BORROWING

risk or delay, with such amounts at such times as the
war budget requires — the effectiveness of certifi-
cate borrowing has been again little short of ideal.
The huge maximum amounts authorized, the always
present power to re-issue or refund maturing issues,
the mechanism of the Federal Reserve Banks —
payment by credit, exemption of government de-
posits from reserve requirements, and rediscount
facilities — have virtually put it within the reach of
the Treasury to obtain for itself any amount at any
time that the national defense may have made
necessary. This has been true of the vast sums
borrowed at more or less regular intervals by formal
certificate issues, and also of the special advances
made on occasions to meet extraordinary emergen-
cies. A certain awkwardness may have been suf-
fered from time to time before the borrowing pro-
cedure had become perfected and regularized. But
with the successful placing of the issues in anticipa-
tion of the Second Liberty Loan, these difficulties
may be said to have been left safely behind. Since
then the task of the Treasury in this respect has
been little more than to extend an existing mechan-
ism to meet increasing requirement.

War time borrowings should be effected not only
readily and certainly — but cheaply. On its face
the certificate method would seem to be admirably
adapted to economical borrowing. The interest
rate on such temporary advances is presumably less
than upon funded loans, and the readiness with
which funds can be secured by certificates — both as
to occasion and amount — should make it possible •