THE  PRICE  LEVEL

183

17  Compare  the  course  of  the  daily  “  net  balance  ”  of  the
Treasury  during  the  period  under  review  (frontispiece).

for  advances  to  the  Allies. 17  From  our  entry  into
the  war  through  April,  May  and  early  June  the  volume ­
  of  such  deposits  rose  moderately  as  certificate
borrowing  progressed  until  the  extraordinary  increase ­
  in  late  June  due  to  income  tax  receipts  and  the
Liberty  Loan  overpayment.  This  plethora  diminished ­
  in  July  and  early  August,  up  to  the  resumption
of  certificate  borrowing  in  mid-August.  Thereafter, ­
  the  volume  of  government  deposits  followed
closely  the  course  of  such  borrowing,  rising  with
each  issue  and  declining  in  the  intervals  but  mounting ­
  with  the  heavier  issues  of  late  October  up  to  the
flotation  of  the  Second  Liberty  Loan.  The  enormous ­
  overpayment  of  November  20  dominated  the
situation  until  the  end  of  the  calendar  year,  after
which  the  systematized  certificate  borrowing  in  anticipation ­
  of  the  Third  Liberty  Loan  more  than  kept
pace  with  heavier  expenditure.  The  Treasury’s  deposits ­
  rose  from  late  January  through  February.
March  and  April  until  the  Third  Liberty  Loan  flotation. ­
  The  large  overpayment  of  the  May  28
Loan  installment  again  resulted  in  distention,  and
this  had  not  entirely  passed  away  before  the  Treasury’s ­
  continuing  policy  of  a  mounting  balance  induced ­
  recourse  to  certificate  borrowing.  From  June
25  to  October  1,  1918,  the  Government’s  deposit  account ­
  exhibited  the  usual  crest  and  hollow  form  incident ­
  to  certificate  borrowing,  modified  to  some  extent ­
  in  mid-August  by  an  apparently  deliberate  reduction ­
  of  the  Treasury  balance  to  a  lower  level.
The  movement  of  bank  credits  in  relation  to  cer-