THE  MONEY  MARKET

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tinued  thereafter  to  dominate  our  anticipatory  borrowing. ­

With  the  widening  use  of  payment  by  credit  in
settlement  of  bond  subscriptions  and  certificate  borrowings, ­
  the  qualification  and  designation  of  lending
banks  as  government  depositaries  took  on  a  new  significance. ­
  Instead  of  serving  in  the  traditional  way
as  the  device  whereby  funds  withdrawn  from  the
channels  of  trade  and  otherwise  impounded  could
be  immediately  returned  —  a  government  depositary ­
  came  to  mean  in  practice  a  bank  by  or  through
which  after  proper  qualification  a  short-term  loan
might  be  granted  to  the  Treasury  in  the  form  of  a
retained  deposit  account,  the  loan  being  evidenced
on  the  part  of  the  bank  by  ownership  of  certificates ­
  of  indebtedness,  and  the  deposit  being  secured
for  the  benefit  of  the  Treasury  by  the  hypothecation
of  such  certificates  or  of  other  banking  collateral. 22
The  Second  Liberty  Loan  Act  had  again  provided ­
  for  the  deposit  of  the  proceeds  accruing  from
the  sale  of  bonds,  certificates  of  indebtedness  and
war  savings  certificates  in  such  incorporated  banks
and  trust  companies  and  subject  to  such  terms  and
conditions  as  the  Secretary  of  the  Treasury  might
22  The  distinction  is  clearly  apparent  in  the  later  measures
taken  by  the  Treasury  (May  29,  1918)  to  avoid  unnecessary
dislocation  of  funds  incident  to  the  payment  of  income  and  excess ­
  profits  taxes,  due  and  payable  on  June  IS,  1918.  Unexpended ­
  cash  proceeds  arising  from  the  payment  of  such  taxes
were  to  be  deposited  through  the  Federal  Reserve  Banks  with
qualified  depositaries,  “  as  nearly,  as  may  be,  .  .  .  simultaneously ­
  with  the  payment  of  checks  drawn  upon  such  depositaries, ­
  respectively,  in  payment  of  such  taxes”  (see  p.  138,
below).  But  specific  notification  was  given  that  “payment  of
income  and  excess  profits  taxes  cannot  be  made  by  credit.”