96

WAR  BORROWING

risk  or  delay,  with  such  amounts  at  such  times  as  the
war  budget  requires  —  the  effectiveness  of  certificate ­
  borrowing  has  been  again  little  short  of  ideal.
The  huge  maximum  amounts  authorized,  the  always
present  power  to  re-issue  or  refund  maturing  issues,
the  mechanism  of  the  Federal  Reserve  Banks  —
payment  by  credit,  exemption  of  government  deposits ­
  from  reserve  requirements,  and  rediscount
facilities  —  have  virtually  put  it  within  the  reach  of
the  Treasury  to  obtain  for  itself  any  amount  at  any
time  that  the  national  defense  may  have  made
necessary.  This  has  been  true  of  the  vast  sums
borrowed  at  more  or  less  regular  intervals  by  formal
certificate  issues,  and  also  of  the  special  advances
made  on  occasions  to  meet  extraordinary  emergencies. ­
  A  certain  awkwardness  may  have  been  suffered ­
  from  time  to  time  before  the  borrowing  procedure ­
  had  become  perfected  and  regularized.  But
with  the  successful  placing  of  the  issues  in  anticipation ­
  of  the  Second  Liberty  Loan,  these  difficulties
may  be  said  to  have  been  left  safely  behind.  Since
then  the  task  of  the  Treasury  in  this  respect  has
been  little  more  than  to  extend  an  existing  mechanism ­
  to  meet  increasing  requirement.
War  time  borrowings  should  be  effected  not  only
readily  and  certainly  —  but  cheaply.  On  its  face
the  certificate  method  would  seem  to  be  admirably
adapted  to  economical  borrowing.  The  interest
rate  on  such  temporary  advances  is  presumably  less
than  upon  funded  loans,  and  the  readiness  with
which  funds  can  be  secured  by  certificates  —  both  as
to  occasion  and  amount  —  should  make  it  possible  •