3 6

WAR  BORROWING

long  delayed.  Early  in  August  the  Treasury  balance ­
  had  fallen  below  $300,000,000,  with  substantial ­
  requirements  in  sight  and  no  extraordinary
revenue  available.
In  the  six  weeks  elapsing  until  the  passage  of  the
Second  Liberty  Loan  act,  the  Treasury  allotted
three  issues  of  certificates:  $300,000,000  on  August
9,  payable  November  15;  $250,000,000  on  August
28,  payable  November  30;  and  $300,000,000  on
September  17,  payable  on  December  15.  The  interest ­
  rate  of  the  new  issues  was  raised  to  three  and  a
half  per  cent.,  corresponding  to  the  yield  of  the
First  Liberty  Loan.  The  certificates  were  specifically ­
  made  acceptable  at  par  and  interest  if  tendered ­
  in  payment  of  the  first  installment  on  account
of  the  Second  Liberty  Loan,  and  each  series  was
subject  to  redemption  as  a  whole  upon  ten  days
notice  on  or  after  the  date  set  for  the  payment  of
such  first  installment.
In  mode  of  issue,  the  emission  of  August  9  was
identical  with  those  that  had  preceded.  Payments
for  certificates  allotted  were  made  by  subscribing
banks  to  the  Federal  Reserve  Banks  in  cash  or
current  exchange,  and  the  proceeds  were  thereafter ­
  redeposited  with  subscribing  banks  duly  qualified ­
  as  government  depositaries.  In  connection
with  the  flotation  of  the  First  Liberty  Loan,  the
Treasury  “  to  avoid,  even  temporarily,  a  derangement ­
  of  the  money  market  ”  had  on  May  16,  1917,
authorized  banks  and  trust  companies  having  payments ­
  to  make  on  account  of  subscriptions  for
$100,000  or  more  bonds,  and  duly  qualified  as
public  depositaries  to  make  payment  upon  such