THE  FUTURE

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sure  the  advantages  and  avoid  the  disadvantages  of
certificate  borrowing  with  the  result  of  net  gain
to  the  Treasury,  the  business  world  and  the  general
public?
The  direct  advantages  of  certificate  borrowing  as
a  fiscal  expedient  lie  in  its  ease  and  its  economy.
When  coupled,  as  it  has  been  during  the  past  year,
with  permissive  payment  by  credit,  with  exemption
of  government  deposits  from  reserve  requirements
and  with  ample  rediscount  facilities,  a  mechanism  is
provided  whereby  the  Treasury  may  supply  itself
with  practically  unlimited  funds  without  difficulty,
unpopularity  or  delay.  Certificate  issues  in  this  way
offer  all  the  administrative  convenience  of  fiat
money.  Indeed  certificate  borrowing  so  conducted
might  be  described  as  fiat  credit.  In  the  one  case
demand  notes  passing  by  tender,  in  the  other  case
government  deposits  disbursable  by  check  are  created
by  legislative  mandate  or  administrative  order  and
made  available  for  public  expenditure,  subject  only
to  the  wisdom  of  the  Treasury  and  the  cooperation
of  the  subscribing  banks.
It  is  true  that  demand  notes  do  not  require  concurrent ­
  action  by  the  banks  and  that  they  are  free
from  a  definite  terra  of  maturity.  But  these  differences ­
  are  more  apparent  than  real.  A  banking  community ­
  aligned  for  patriotic  service  under  the  leadership ­
  of  the  Federal  Reserve  Banks  may  be  expected ­
  to  work  in  the  fullest  accord  with  the  Treasury ­
  program,  and  the  ease  with  which  a  maturing
issue  of  certificates  may  be  renewed  or  reissued  removes ­
  the  old-time  inconvenience  of  short-term  borrowing. ­
  It  has  been  the  policy  of  the  Treasury  to