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WAR BORROWING

trative cost incident to the certificate issues. The
Treasury balance would be kept more uniform or
at least be saved, barring extraordinary occurrence,
from that alternate plethora and depletion which
the certificate method has not been able entirely to
avoid. The interest charge would be no greater —
less indeed by the extent to which a lower rate
might continue to be used for the bonds than for
the certificates.

As to the money market, there need be no more
strain or disturbance incident to an installment loan
than to certificate borrowing. The stabilizing
quality, we have seen, resides in the credit mechan-
ism offered by the Federal Reserve Banks and not
in any peculiar virtue of the borrowing device.
If the installment quotas should correspond in vol-
ume and interval with the certificate issues, there
would in the first instance be like requisition upon
the capital supply. The pace of public expenditure
would be the same under the two systems, and
there would be like redeposit of borrowed funds in
subscribing banks qualified as depositaries. Be-
yond this, should the occasion arise, the stabilizing
measures provided by the Federal Reserve System
in connection with certificate borrowing — discount
and rediscount facilities — would likewise be
available under the alternative system. The need
might be less, but the remedy would be as ready.

With respect to general well-being, the chief
merit of the installment bond, as compared with
the certificate of indebtedness, lies in the possibility
it offers of effecting our war borrowing without
the creation of the huge volume of additional bank