m

82

WAR  BORROWING

with  $410,432,295  in  May,  then  recovering  from
an  enforced  restraint  of  $277,500,000  in  June,  to
$452,500,000  in  July,  and  to  $478,000,000  in
August.  Our  own  expenditures,  including  interest
on  public  debt,  were  less  in  outright  amount  but  far
more  ominous  in  swift  progression  —  $114,102,-809
  in  May,  $134,304,040  in  June,  $208,299,031  in
July,  $277,438,000  in  August. 4  The  last  of  the
outstanding  certificates  had  matured  on  July  30,  and
the  Treasury  was  for  the  first  time  since  the  out'
break  of  the  war  entirely  free  from  short-term
obligations.  But  on  the  other  hand  the  Treasury
balance  dropped  below  $309,000,000  early  in
August  and  substantial  reinforcement  became  imperative, ­
  confirming  the  unwisdom  of  the  Treasury’s ­
  rejection  of  the  entire  over-subscribed  part
of  the  First  Liberty  Loan.
II
The  second  cycle  of  our  war  financing  began  on
August  9,  1917.  With  a  reduced  Treasury  balance
at  the  outset,  with  the  receipts  from  the  First
Liberty  Loan  exhausted,  with  a  relatively  inconsiderable ­
  revenue  from  war  taxation,  with  Allies’
requirements  of  undiminished  magnitude,  with  our
own  expenditures  for  the  national  defense  mounting
progressively,  with  a  second  funded  loan  in  contemplation ­
  and  with  no  outstanding  short-term
obligations  —  the  Treasury  in  pursuance  of  the
policy  now  definitely  established  undertook  to  meet
4  “  Monthly  Summary  of  Foreign  Commerce  of  the  United
States,”  February,  1918,  p.  93.