86

WAR  BORROWING

volume  of  outstanding  short-term  obligations.  On
November  15,  1917,  the  Treasury  balance  stood  at
$801,983,785.  A  fortnight  later 6  with  the  progress ­
  of  the  Loan  flotation  it  had  attained  the  height
of  $1,968,484,725,  and  on  November  30,  1917,  it
was  still  at  $1,837,419,886  —  despite  the  redemption ­
  of  the  October  18,  1917,  issue  of  certificates
($385,197,000)  maturing  November  22,  1917,  and
the  August  28,  1917,  issue  ($250,000,000)  maturing ­
  November  30,  1917.  On  the  other  hand  the
certificate  issues  of  September  17,  September  26,
and  October  24,  1917,  of  a  nominal  aggregate  of
$1,385,296,000  were  due  on  December  15,  1917.
Two  courses  were  now  open  to  the  Treasury  in
meeting  this  combined  problem  of  surplus  funds  and
of  maturing  short-term  obligations.  The  one  was
to  conserve  the  Treasury  balance  for  current  disbursements ­
  and  to  rely  on  further  borrowings  to
meet  the  maturing  certificate  issues.  The  other  was
to  use  surplus  funds  to  redeem  outstanding  certificate ­
  issues  before  maturity,  and  to  provide  for
future  expenditures  by  new  short-term  borrowings.
The  procedure  followed  was  in  the  main  the  second
course:  two  issues  of  certificates  were  called  for
redemption  before  maturity,  and  provision  was
made  for  further  issues  of  certificates.
The  reason  assigned  for  earlier  redemption  was
the  danger  of  disturbance  in  the  money  market  by
the  heavy  withdrawal  of  funds  that  must  otherwise
have  occurred  on  December  15,  1917.  Certainly,  a
further  advantage  was  the  reduction  of  the  swollen
Treasury  balance.  On  November  22,  1917,  the  Sec-6
  November  23,  1917.