Show SEES INFLATION A SLOW PROCESS A real danger for the future col ayres tells banking groups NEW N J present prospects do not indicate that inflation severe enough to cause further dollar devaluation will come soon in this country but as an ultimate development it seems to be a very real dan ger leonard P ayres vice president t cleveland trust company said here tonight in an address before the grad aate school of banking he believed this statement to be true unless the government enters frankly upon a pol icy of issuing flat money with which to meet its expenses at present that does not seem to be in sight he said the graduate school Is operated jointly by the american institute ot of banking section S a e t I 1 0 ri of the american bankers association and rutgers varsity to offer advanced studies tor for bank officers we have so enormously increased the capacity of our banking system tor for credit expansion that it la is difficult to see how we could have a vigorous bustness buil buit ness revival without having it develop into a credit inflation colonel ayres declared inflation a slow process if inflation does come it will be a slow process he said pointing out that in germany france belgium and italy it took about five years to develop from the time when the governments en an upon policies of financing large peace time deficits by bank credit up to the time when the public generally began to spend money rapidly because of tear that it would still further de pre predate clate in purchasing power if we are to go through sue such h a period here it would seem likely that it might last rather longer than the corresponding periods did abroad he said its beginning would date from the spring of 1933 when we left the old gold basis tor for our money and en an 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 in all those countries in eluding germany the increasing issues of money that caused the inflations were not mere printing press issues of flat currency but were secured by government bonds and notes discount ed ad at the banks nevertheless the process Is inherently a slow one among the clearest lessons taught by the european experience colonel ayres asserted la Is that there are no good hedges against inflation he added did not lighten debt burden burdens one ot of the strange facts about these inflations Is that while they destroyed the values of most existing debts they did not succeed in lightening the debt burdens of either the people aa as a whole or of the corporations inflation destroys the value ot of bo bonds ids and mortgages and so confiscates the property of these holders of orilga tlona and hands it over to the share holders and the equity owners how ever it introduces so many new eco difficulties that these share and equity holders are at once forced to incur new indebtedness so that when who stabilization comes the problems ot or debt are about aa as troublesome as they were before or even more so the five requisites of inflation were listed by colonel ayres as first a period of sustained active business see ond 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 cur rency reacy entirely tree free from gold and fifth continued large budget deficits in government operation the chief of police ot of Dink was also Dinky villes s surgeon an excited voice called up saying he was wanted do you want my husband in hia his capacity of chief of 91 police or as a veterinary both came back the reply we can cant t get our bull dog to open hia his mouth there s a burglar in it |