i8o 
WAR BORROWING 
flation, if liberated government deposits have gone to 
swell commercial deposits, or (b) actual contraction, 
if such liberated deposits have been used to reduce 
existing loans. On the other hand, if the funds 
with which the maturing certificates are redeemed 
are supplied by further borrowing, the inflation of 
credit will continue — to the original amount if the 
liberated deposits have been absorbed in loan repay 
ment; to a correspondingly greater amount, if they 
have been dispersed in increased commercial de 
posits. 
Let us turn now to the actual movement of credit 
and currency during the period of short-term bor 
rowing. In the following table are shown (a) the 
nominal amount of certificates of indebtedness issued 
each month; (b) the volume of government deposits 
in the Federal Reserve Banks and in the special de 
positary banks on the last day of each month; (c) 
the volume of individual deposits subject to check 
in the national banks at the “call” dates; (d) the 
volume of loans and discounts of the national banks 
at the “call” dates; (e) the amount of money in 
circulation at monthly intervals. 
The volume of certificates discloses the three 
phases in short-term borrowing, recurring in cyclical 
succession : (t) a period of increase or active issue 
in anticipation of a funded loan, (2) a period of con 
stancy or suspended issue during the flotation of the 
loan, (3) a period of reduction after the flotation of 
the loan, by funding into the bonds of the loan or by 
redemption upon or before maturity from out the 
proceeds of the loan. With the progress of our bor-