﻿THE MONEY MARKET

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should not in any case “ exceed the amount with-
drawn from any such bank or trust company and
invested in such bonds or certificates of indebted-
ness plus the amount so invested by such bank or
trust company.” 18 Only moderate use was made
of this privilege in connection with the four cer-
tificate issues in anticipation of the First Liberty
Loan, 134 national and 100 state banks and trust
companies in six Federal Reserve Districts making
application and being duly designated as deposi-
taries for such funds. 17

The number of banks qualifying as government
depositaries increased rapidly with the adoption of
payment by credit in conjunction with the flotation
of the First Liberty Loan. On May 14, 1917, the
Secretary of the Treasury invited subscriptions to
the First Liberty Loan.18 Two weeks later an-
nouncement 19 was made in outline of the payment
by credit plan — the introduction of which has
heretofore been discussed and the immediate antici-
pation of which may be sought in the mode of pay-
ment used by the Federal Reserve Banks for the
ante-bellum issue of certificates of indebtedness of
March 31, 1917. In order “to avoid, even tem-
porarily, a derangement of the money situation,”
the Secretary of the Treasury “ earnestly requested ”
all incorporated banks and trust companies which
had or expected to have payments to make for them-
selves or for others on account of subscriptions to

16	Section 7.

17	“Report of the Secretary of the Treasury, 1917,” P- 25.

18	Treasury Department Circular No. 78, of May 14, 1917.

19	Treasury Department Circular No. 81, of May 29, 1917.