﻿THE FUTURE

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in cost, less regard would have been had, in accord-
ance with the rule of “ easy come, easy go,” for
economy and restraint in public expenditure under
a regime of certificate borrowing than under one of
direct funding. All that may be ventured is that
here again the fortunate issue of events has saved
us from the test.

On the other hand, the economies of certificate
borrowing have been less in actual experience than
theoretical analysis would suggest. As to interest
cost, the rates borne by the issues in anticipation of
the First and Second Liberty Loans were in the
main the same as the rates of the respective Loans,
while the issues in anticipation of the Third and
Fourth Liberty Loans actually bore a higher rate
than that of the Loans themselves. More impor-
tant, the conspicuous economy of short-term borrow-
ing — avoidance of treasury plethora — was in con-
siderable part lost by the early adoption and con-
tinued use of the policy of a mounting Treasury
balance.

All in all, it would appear that although the fiscal
advantages of certificate borrowing may have been
less than the maximum suggested by hypothetical
analysis, they have nevertheless been great — per-
haps enough to justify continued use of the expedi-
ent, were direct fiscal effectiveness the sole con-
sideration.

But the interest of the Treasury, although the
paramount, is not the exclusive purpose of a fiscal
device even in war times. The effects upon the
business life of the nation and upon the economic
well-being of its citizens enter so largely into ac-