Show SEES INFLATION A SLOW PROCESS S A real danger for the future col ayres tells banking groups NEW BRUNSWICK N J predent prospects do not indicate that inflation severe enough to cause further dollar devaluation nil come soon in this country but as an ultimate develop ment it 11 seems to be a very real dan bor leonard P ayres vice president cleveland trust company said here bere tonight in an address before the grad aate school of banking he believed this tali statement to be true unless the government enters rankly upon a pol icy of issuing flat fial money with to meet its expenses at present that thai does not seeni seem to be in sight he said the graduate school Is operated jointly by the american institute ot of banking section or of the american bankers association and ru lutgera agers uni versify to offer advanced studies for bank officers we have so enormously increased the capacity of our ba banking liking system tor or credit expansion that it Is dial difficult cult to see how bow we could have a vigorous business revival without having baying it de celop into a credit inflation colonel ayres declared inflation a slow process it if inflation does come it will be a slow groces he be said pointing out that in germany france belgium and italy it took about live years to develop from rom the time when the governments en upon policies of 0 financing large larg peacetime peace time deficits by bank credit dp up to the time when the public generally began to spend money rapidly because of tear that it would still further depreciate preci ate in purchasing power jf if we are to go through such st ft period here it would seem likely that the it might last rather longer than the corresponding periods did abroad tie he said its beginning would date from the spring of 1933 when we left the old gold basis tor for our money and en upon the policy of financing large governmental deficits by the sale ot of federal securities mainly to banks rather than to private investors the method that we are following is the one that proved disastrous in europe tor for to in all those countries countr laa including germany the increasing issues of money that caused the lations were not mere printing press issues 0 of flat currency but were secured by government bonds and notes note discounted at the banks nevertheless the process Is 19 inherently a slow one among the clearest lessons taught by the european experience colonel ayres ayrea asserted Is that there are no good hedges against inflation ile he added did not lighten debt burdens one ot of the strange facts acts about these lations Is that while they destro destroyed the values ot of most existing debts they did not succeed to in lightening the debt burdens ot of either the people as a whole or ot of the corporations inflation destroys the value ol of bonds and mortgages and so contla cates the property of these holders of orilga eions and hands bands it over to the shareholders and the equity owners how over ever it introduces so many now new eco difficulties that these share and equity holders are at once forced to incur new indebtedness so that when stabilization comes the problems of debt are about as troublesome as they were before or even more so ao the five requisites of inflation were listed by colonel ayres as first a pe of sustained active business second a rising stock market third real credit expansion fourth greater out flow of gold than we can tolerate which would force us to cut our currency entirely tree from gold and fifth continued large budget deficits in government operation |