148 
WAR BORROWING 
conclusion arrived at by the most competent student 
of the subject has been that “ while the policy of 
rationing is effective and probably has a more 
universal and effective influence than the mere 
raising of rates of discount, it is probable that a 
more rapid advance in rates conservatively handled 
would have exerted a desirable effect.” 34 
Here again, however, it seems necessary in the 
present connection to' confine our attention to the 
task immediately at hand and, waiving the problem 
of wider consequence, to recognize that the direct 
and immediate effect of the discount policy of the 
Federal Reserve Board has been to reduce, if not to 
avert, the monetary strain, normally incident to cer 
tificate borrowing. 
The operations outlined above have been reflected 
in the course of the discount operations of the 
Federal Reserve Banks and more specifically in the 
course of such Banks’ holdings of member and non 
member banks, collateral notes secured by Liberty 
bonds or Treasury certificates of indebtedness, 
and of rediscounted customers’ paper likewise 
secured. 
In the first stage — certificate buying — the gen 
eral use of payment by credit made it possible for de 
positary banks to acquire certificates without strain 
upon their ordinary resources for their own account 
and for their customers, as well as for non-member 
banks. To the extent that interior banks made pay 
ment by drafts on the reserve city banks, or to 
the extent that depositary or other banks or indi- 
34 Prof. H. Parker Willis, “ Memorandum.”