28

WAR  BORROWING

passed  the  revenue  act  of  March  3,  1917,  empowered ­
  the  Secretary  of  the  Treasury  to  borrow
from  time  to  time  “  such  sum  or  sums  as,  in  his
judgment,  may  be  necessary  to  meet  public  expenditures, ­
  and  to  issue  therefor  certificates  of  indebtedness ­
  in  such  form  and  in  such  denominations
as  he  may  prescribe.”  The  rate  of  interest  to  be
paid  might  not  exceed  three  per  cent.;  the  period
of  maturity,  one  year;  and  the  sum  at  any  time  outstanding, ­
  $300,000,000.  The  provision  limiting
the  denomination  of  the  certificates  to  a  minimum
of  $50  present  in  the  older  acts  of  1898  and  1909  —
a  curious  reminder  of  the  lapse  of  the  certificate  of
indebtedness  into  a  circulating  bill  of  credit  in  times
past  —  was  omitted;  but  there  seems  no  reason  to
suppose  that  this  omission,  fraught  with  hypothetical ­
  possibilities,  had  in  view  any  other  purpose  than
the  wider  discretion  of  the  Secretary  of  the
Treasury.
Under  this  authority,  “  in  anticipation  of  the  corporation ­
  and  individual  income  taxes  due  in  June,
1917,”  the  Treasury  on  March  27,  1917,  borrowed
$50,000,000  from  the  twelve  Federal  Reserve  Banks
by  an  issue  of  two  per  cent.,  ninety  days  certificates
of  indebtedness.  The  operation  was  carried  out  by
direct  purchase  on  the  part  of  the  Banks  as  fiscal
agents  of  the  Government  summoned  to  invest  in
short-term  obligations  issued  in  anticipation  of
revenue.  The  total  amount  subscribed  was  $66,-650,000,
  of  which  $50,000,000  was  actually  allotted. ­
 6
0  See  Commercial  and  Financial  Chronicle,  March  31,  1917,
p.  1209,  for  text  of  offering.