314 INTERNATIONAL TRADE 
I 
But there was this important modification : the American Govern- 
ment now undertook to do the borrowing and to secure the funds 
from American investors. The Allies of the United States (as 
they had now become) had strained their credit almost to the 
breaking point. With all the resort to collateral security, they 
could float no more loans. At the critical moment the United 
States stepped in, issued to the American public its own securities, 
and then put the proceeds at the disposal of its Allies by way of 
loan. It cannot be doubted that for the first year of the American 
participation in the war this was the one substantial contribution, 
over and above that of moral support and psychological effect, 
which the United States made to the Allied cause. 
The procedure was simple. The Treasury issued the successive 
series of Liberty bonds and was able to dispose of them to the 
public; of this more presently. The Allied governments con- 
tinued their purchases of goods in the United States and the goods 
were exported as before. When payments for goods became due, 
this or that government would notify our Treasury of the sums 
for which it had need. Thereupon the Treasury would instruct 
the Federal Reserve Bank of New York to hold to the credit of 
the government a stated sum; and the sum would be withdrawn 
by the borrower, deposited with its bank or banker, and used for 
payment of the American sellers of the goods. All that the 
Treasury had to show for its vast disbursements was a certificate 
of indebtedness of a quite informal sort. Extraordinary amounts, 
hundreds of millions in a single transaction, were handled in this 
way. In minor cases involving much smaller sums, the procedure 
was somewhat different. For certain governments, sums speci- 
fied in advance were put at their disposal in the Treasury, and 
against these they drew as they saw fit. And to some extent 
also the advances were not used for the purchase of American 
goods, but for remittance abroad to be used in any kind of 
expenditure which the borrower desired. But the characteristic 
operations, and those which involved incomparably the largest 
sums, were of the first kind. The advances were still made from 
time to time after purchases of American goods had been