﻿THE FUTURE

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sure the advantages and avoid the disadvantages of
certificate borrowing with the result of net gain
to the Treasury, the business world and the general
public?

The direct advantages of certificate borrowing as
a fiscal expedient lie in its ease and its economy.
When coupled, as it has been during the past year,
with permissive payment by credit, with exemption
of government deposits from reserve requirements
and with ample rediscount facilities, a mechanism is
provided whereby the Treasury may supply itself
with practically unlimited funds without difficulty,
unpopularity or delay. Certificate issues in this way
offer all the administrative convenience of fiat
money. Indeed certificate borrowing so conducted
might be described as fiat credit. In the one case
demand notes passing by tender, in the other case
government deposits disbursable by check are created
by legislative mandate or administrative order and
made available for public expenditure, subject only
to the wisdom of the Treasury and the cooperation
of the subscribing banks.

It is true that demand notes do not require con-
current action by the banks and that they are free
from a definite terra of maturity. But these differ-
ences are more apparent than real. A banking com-
munity aligned for patriotic service under the lead-
ership of the Federal Reserve Banks may be ex-
pected to work in the fullest accord with the Treas-
ury program, and the ease with which a maturing
issue of certificates may be renewed or reissued re-
moves the old-time inconvenience of short-term bor-
rowing. It has been the policy of the Treasury to