Strictly  speaking,  the  financing  of  the  War  divided
itself  into  two  phases — first,  the  Liberty  Loan  cam-
paigns, which  were  undertaken  during  the  actual  prog-
ress of  the  War,  and  the  Victory  Loan  campaign,  which
was  carried  through  in  1919,  after  the  close  of  the  War,
and  served  as  a  sort  of  clean-up  fund.  The  Liberty
Loans  were  four  in  number — starting  with  $2,000,000,-
000  in  June,  1917  and  followed  by  $3,800,000,000  in
November  of  the  same  year,  $4,200,000  in  May,  1918
and  $6,000,000,000  in  October,  1918.  The  Victory
Loan  amounted  to  $4,500,000,000  and  was  floated  five
months  after  the  War  ended.  All  the  issues  were  heavily
over-subscribed.  Pending  actual  flotation  of  the  loans,
the  Treasury  issued  "Certificates  of  Indebtedness",


AMERICA  GOES  TO  WAR  111

short  term  notes  bearing  interest  at  the  rate  of  3%  to
3^2  %,  which  were  promptly  absorbed  by  the  banks  and
provided  interim  funds  to  cover  expenditures.  The  first
war  loan  of  1917  carried  interest  at  the  rate  of  3j^  %,
somewhat  less  than  the  going  rate  for  money,  and  was
exempt  from  Federal,  State  and  City  taxes.  The  second
war  loan  bore  an  interest  rate  of  4% ,  but  immunity  from
taxation  was  limited  to  the  basic  income  tax  and  did  not
apply  to  sur-taxes  or  war-profits  and  excess  profits  taxes.
The  third  and  fourth  loans  carried  a  4*4  %  rate  and
were  subject  to  the  same  exemption  as  the  second  loan.
