THE FUTURE 
197 
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 con 
current action by the banks and that they are free 
from a definite terra of maturity. But these differ 
ences are more apparent than real. A banking com 
munity aligned for patriotic service under the lead 
ership of the Federal Reserve Banks may be ex 
pected to work in the fullest accord with the Treas 
ury program, and the ease with which a maturing 
issue of certificates may be renewed or reissued re 
moves the old-time inconvenience of short-term bor 
rowing. It has been the policy of the Treasury to