﻿THE MONEY MARKET

in

keep the Treasury in funds until the administrative
delays reasonably incident to a loan flotation were
overcome. In an accompanying statement of the
Secretary of the Treasury of April 20, 1917, this
purpose was first clearly set forth in a form con-
veniently described as the money market argument; 1

“ The Secretary appreciates the desirability of avoiding
any derangement of the money market, and in the financial
operations in which the Government is about to engage it
will be his purpose to adjust receipts and disbursements in
such a way that as far as possible money paid in will be
promptly returned to the market. The contemplated sale
of Treasury certificates is in line with this policy. Should
the banks during the next few weeks absorb several hun-
dred million dollars of these certificates, the proceeds being
paid out in the course of business, the banks will possess
ready means with which to meet withdrawals made later
by depositors in paying for bond subscriptions. The re-
sult of this method will be a gradual anticipation of pay-
ment on account of bonds with a steady and continuous
return to the banks of the moneys paid in.”

The same consideration appeared in the assurance
given at this time by the Federal Reserve Board to
the member banks: 2

“ The Federal Reserve Banks may be counted upon by
offering liberal terms of rediscounting to do their utmost
in counteracting any effect of temporary dislocation of
banking funds.”

The plan recommended by the Treasury on May
16, 1917, for the payment of subscriptions to the
First Liberty Loan by the use of credit and the ten-
der of certificates of indebtedness was designed “ to

1	Federal Reserve Bulletin, May, 1917, p. 342.

2	Federal Reserve Bulletin, May, 1917, p. 342.