8o

WAR  BORROWING

among  the  certificates  tendered  in  payment  of  the
first  installment  was  the  entire  issue  maturing  June
30,  1917,  there  would  have  remained  outstanding
some  $300,000,000  certificates  retained  by  the  banks
or  their  customers  as  investments  instead  of  being
tendered  in  payment  of  bond  subscriptions.  To
this  extent  the  over-payment  resulted  in  swelling
the  Treasury  balance  at  the  expense  of  leaving  a  corresponding ­
  amount  of  the  certificates  of  indebtedness ­
  unliquidated.  The  significance  of  payment  by
credit,  as  distinct  from  cash  or  certificate  payment,
has  to  do  with  the  general  question  of  credit  expansion ­
  consequent  upon  the  certificate  issues  and
will  be  examined  in  another  connection. 3
The  fiscal  results  of  the  Loan  flotation  appeared
in  an  abrupt  increase  of  the  Treasury  balance  from
$299,830,457  on  June  29  to  $1,064,086,250  on  June
30.  Of  this  latter  amount  $305,743,526  was  in  the
form  of  government  deposits  with  the  Federal
Reserve  Banks,  and  $714,841,218  with  member
banks  qualified  as  special  depositaries  —  this  in  turn
being  distinguished  as  $560,662,218  on  account  of
Loan  proceeds  and  $154,179,000  on  account  of  certificates. ­
  Moreover  the  flotation  had  made  possible
by  redemption  at  maturity  and  by  acceptance  in  payment ­
  of  the  Loan  installment  the  discharge  of  $626,-196,844
  certificates  of  indebtedness,  reducing  the
amount  then  outstanding  to  some  $260,000,000.
The  issue  of  the  “  daily  statement  ”  of  the  Treasury ­
  was  suspended  on  June  29,  1917,  and  not  again
renewed  until  July  23,  1917,  on  which  date  the
statement  for  June  30,  1917,  was  first  made  public.
3  Page  129,  below.