196 
WAR BORROWING 
by loans. For the fiscal year ending June 30, 1919, 
the Secretary of the Treasury had asked that pro 
vision be made for an expenditure of $24,000,000,- 
000, of which $16,000,000,000 should be secured by 
loans. The deficiency appropriation bill of October 
1918 added some $6,300,000,000 to the amounts be 
fore estimated as necessary to the conduct of the 
government during 1918-19. With a little less 
than $7,000,000,000 available in nominal aggregate 
from the Fourth Liberty Loan, and with $9,000,- 
000,000 as the assumed yield of the new war revenue 
bill, there would have remained to be provided be 
fore July 1, 1919 — had the original program of 
expenditure been carried out — approximately $15,- 
000,000,000. 1 
In so far as the earlier termination of the war 
has permitted scaling down of budgetary estimates it 
is likely that substantial reduction will be made in 
taxation as well as in borrowing. Definite an 
nouncement has already been made of a Fifth Lib 
erty Loan exceeding in nominal amount any one of 
the first three Loans, and it is not unlikely that the 
future may require even further commitments of 
this kind. 
How are these huge sums to be provided? Shall 
the Treasury continue as its chief reliance the same 
borrowing procedure used in the first phase of the 
war — short-term loans from the banks by the is 
sue of certificates of indebtedness fundable into or 
liquidated out of the proceeds of long-term bond 
issues absorbed by popular subscription? Or shall 
some alternative device be employed which will en- 
1 Federal Reserve Bulletin, November, 1918, p. 1045.