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WAR BORROWING
28, 1917, contained no mention of payment by credit,
nor did the immediate succeeding comment of the
Federal Reserve Board refer thereto. 15 The plan
simply appears to have become generally operative
by the notification of the several Federal Reserve
Banks to member banks subscribing to the issue of
August 28, 1917, in much the manner employed by
the Federal Reserve Bank of Richmond that:
“ The qualified depositaries will be permitted to
make payment by credit for certificates allotted, up
to the amount for which each has qualified, when
so notified by this bank.” 16 In the succeeding issue
of September 17, 1917, this authorization was em
bodied in the Treasury’s formal announcement of
the offering:
“ In connection with the foregoing offering of the third
series of certificates of indebtedness, preparatory to the
second issue of the Liberty Loan, the Secretary of the
Treasury announces that qualified depositaries will be per
mitted to make payment by credit for certificates allotted
to them for themselves and their customers up to the
amount for which each shall have qualified when so noti
15 Federal Reserve Bulletin, September, 1917, pp. 651-2, 664.
16 Circular letter of August 22, 1917. In other Districts the
transition was more gradual. As to the Federal Reserve Bank
of New York we are told that “ arrangements were made be
ginning with the issue of April 25 to redeposit as large a por
tion as possible of the funds paid in. This, in effect, amounted
to a payment for the certificates by credit on the books of the
subscribing banks, and in later issues this was the practice
actually pursued.” (Fourth Annual Report of the Federal Re
serve Board, p. 277.) The Federal Reserve Bank of Boston,
by authorization of the Treasury Department, redeposited in
designated depositary banks the amounts subscribed by such
banks to the certificate issues of May 10 and June 8, 1917.
“These redeposits were made on the same day as payments
were made, and therefore are similar to payments by credit.”
