﻿THE MONEY MARKET

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tificate borrowing the measure of relief is incor-
porated in the borrowing process itself; in the case
of the long-term bond it is injected by the install-
ment provision. If the proportion and interval of
the installment quotas of the long-term loan cor-
respond with the volume and succession of the cer-
tificate issues of the short-term borrowing, and if
the redeposit of borrowed funds and the pace of
public expenditure proceed alike — there would
seem to be no difference possible as to monetary dis-
turbance in the two cases. To impute any advan-
tage in this particular to certificate borrowing, it
would be necessary to assume that all or certain of
these conditions as to the long-term loan do not ob-
tain. The comparison in such case would be not
between certificate borrowing and bond borrowing
as such, but between certificates and a particular
form of bond issues.

But even though the disturbance incident to cer-
tificate borrowing were less acute than in the case
of a direct long-term loan, a very considerable de-
gree of monetary strain and dislocation might be
expected to attend certificate borrowing; whereas
the striking fact with which we have to deal is
that the money market has been singularly free
from such disturbance during the period of our war
borrowing. This seeming anomaly suggests the
presence of some stabilizing element other than the
borrowing device proper.

Our original analysis proceeded on the simple as-
sumption that, whatever be the mode of borrowing,
direct methods of distribution and absorption ob-
tain; that is, that the recurrent certificate issues