﻿THE PRICE LEVEL

183

for advances to the Allies.17 From our entry into
the war through April, May and early June the vol-
ume of such deposits rose moderately as certificate
borrowing progressed until the extraordinary in-
crease in late June due to income tax receipts and the
Liberty Loan overpayment. This plethora dimin-
ished in July and early August, up to the resumption
of certificate borrowing in mid-August. There-
after, the volume of government deposits followed
closely the course of such borrowing, rising with
each issue and declining in the intervals but mount-
ing with the heavier issues of late October up to the
flotation of the Second Liberty Loan. The enor-
mous overpayment of November 20 dominated the
situation until the end of the calendar year, after
which the systematized certificate borrowing in an-
ticipation of the Third Liberty Loan more than kept
pace with heavier expenditure. The Treasury’s de-
posits rose from late January through February.
March and April until the Third Liberty Loan flo-
tation. The large overpayment of the May 28
Loan installment again resulted in distention, and
this had not entirely passed away before the Treas-
ury’s continuing policy of a mounting balance in-
duced recourse to certificate borrowing. From June
25 to October 1, 1918, the Government’s deposit ac-
count exhibited the usual crest and hollow form in-
cident to certificate borrowing, modified to some ex-
tent in mid-August by an apparently deliberate re-
duction of the Treasury balance to a lower level.

The movement of bank credits in relation to cer-

17 Compare the course of the daily “ net balance ” of the

Treasury during the period under review (frontispiece).