﻿THE TREASURY

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dangers to be here apprehended. The first has to
do with the psychological disadvantage of being
obliged to borrow to pay off an already contracted
debt rather than to provide additional available
funds. The direct success of certificate financing
depends entirely upon the certainty with which at
appropriate intervals long-term loans, into which the
certificates may be funded or out of the proceeds of
which they may be redeemed, will be absorbed by
public subscription. Patriotic ardor rather than
economic calculation determines the success of such
flotations and the knowledge that the operation, in-
volving as it does a considerable measure of econ-
omy and self-denial, is necessary to extinguish
short-term indebtedness rather than to put the
Treasury in funds for further imperative expendi-
ture, is likely to exert a chilling effect upon the public
mind.

In actual experience, it is doubtful whether this
deterrent has up to the present time figured. There
has been in the case of each Liberty Loan a sub-
stantial, although a declining margin between the
volume of anticipatory borrowing and the principal
of the funded loan. More remarkable, there has
been a singular non-comprehension on the part of the
public that the anticipated proceeds of each Loan
have in fact been largely expended prior to the
flotation, and the loan campaigns have been marked
by no general attempt to spread enlightenment on
this score. With respect to the future, neither of
these two conditions is likely to obtain to the same
extent. The volume of anticipatory certificate in-
debtedness promises to approximate more closely