B _  I  nn  WelUvirtschaft  <“>  q
el  oU  Kiel  ^
THE  MONEY  MARKET  113
Treasury  balance  and  the  extension  of  payment
by  credit  from  bond  to  certificate  purchases  —  the
money  market  argument  came  into  greater  prominence ­
  as  a  necessary  reinforcement  of  the  fiscal  purpose. ­
  In  conjunction  with  the  certificate  issue  of
August  28,  1917,  and  the  proposed  redeposit  of  proceeds ­
  with  subscribing  banks  —  the  Treasury  announced ­
  that  “  it  is  expected  that  certificates  of  indebtedness ­
  will  be  issued  from  time  to  time  somewhat ­
  in  advance  of  the  immediate  requirements  of
the  United  States,”  and  added  an  explicit  statement
in  explanation: 4
“  The  primary  object  of  this  is  to  avoid  the  financial
stress  which  would  result  from  the  concentration  of  the
payments  for  a  great  bond  issue  upon  a  single  day  (which
cannot  be  avoided  wholly  by  provision  for  payment  by
installments  as  a  great  proportion  of  subscribers  prefer
to  make  payment  in  full  on  one  day  as  a  matter  of  convenience). ­
  Those  who  acquire  certificates  of  indebtedness, ­
  in  advance  of  the  bond  issue,  gradually,  without  disturbing ­
  the  money  position,  purchase  exchange  payable
where  the  bond  subscriptions  must  be  paid  (that  is,  at  the
Federal  Reserve  Banks),  in  advance  of  the  date  when  the
payment  is  to  be  made,  and  meanwhile  secure  a  substantial
return  upon  their  money.”
This  statement  as  to  “  the  primary  object  ”  reappeared ­
  in  the  announcement  of  the  certificate  issue
of  September  17,  1917,  and  in  substance  repeatedly
thereafter,  and  may  be  regarded  as  fairly  representative ­
  of  the  Treasury’s  subsequent  emphasis  upon
the  stabilizing  effect  of  certificate  borrowing. 5  The
same  note  was  struck  in  connection  with  the  cer-4
  Federal  Reserve  Bulletin,  September,  1917,  p.  664.
5  Federal  Reserve  Bulletin,  November,  1917,  p.  830.