THE  TREASURY

85

which  certificates  may  be  used  in  loan  payment
obviously  stands  in  relation  not  only  to  the  aggregate ­
  amount  of  the  payment  but  also  to  the  volume
of  outstanding  certificates.  The  facts  here  were
favorable  to  a  larger  use  of  certificates  in  November ­
  than  in  June.  At  the  time  of  the  First  Liberty
Loan  there  were  outstanding  $868,205,000  certificates ­
  or  43  per  cent,  of  the  loan  principal;  at  the
time  of  the  Second  Liberty  Loan  there  were  outstanding ­
  $2,320,493,000  or  61  per  cent,  of  the  loan
principal.  Moreover,  if  we  make  the  reasonable
assumption  that  the  investment  absorption  of  certificates ­
  does  not  proceed  at  equal  pace  with  the
volume  emitted,  but  that  the  larger  the  amount
outstanding  the  larger  will  be  the  amount  of  certificates ­
  taken  by  the  banks  on  their  own  account,  it
would  follow  that  a  larger  proportion  of  certificates
should  have  been  tendered  by  subscribing  banks  in
connection  with  the  Second  than  in  connection  with
the  First  Liberty  Loan.
As  a  matter  of  fact,  assuming  that  the  entire  issue
of  $300,000,000  certificates  maturing  on  November
15,  19x7,  were  among  the  certificates  tendered  on
that  date  on  account  of  the  Loan  installment,  there
would  have  been  only  $169,000,000  of  later  maturities ­
  likewise  tendered,  as  compared  with  a
further  outstanding  amount  of  $1,851,000,000  that
might  have  been  but  were  actually  not  so  used.  To
this  extent  the  flotation  again  resulted  in  a  plethora
of  available  funds  at  the  expense  of  an  unliquidated
floating  debt.
The  Treasury  thus  emerged  from  the  Loan  flotation ­
  with  an  embarrassing  surplus  and  a  large