Coulee City dispatch. [volume] (Coulee City, Wash.) 19??-19??, 1935-07-25
SEES INITIATION
A SLOW PROCESS
A Real Danger for the Future, Col.
Ayres Tells Banking
Groups.

prospects do not indicate that imitation
severe enough to cause further dollar
devaluation will come soon in this
country, but as an ultimate develop
ment 1t seems to be very real dan.
ger, Leonard P. Ayres, Vice President
Cleveland Trust Company. said here
tonight in an address before the Grad.
uate School of Banking. He believed
this statement to be true unless the
government enters frankly upon pol
icy of issuing fat 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 Of
Banking s Section Of the American
Bankers Association and Rutgers Uni.
versity to offer advanced studies for
bank officers.
I'VE have SO enormously increased
the capacity of our banking system for
credit expansion that 1t Is difficult to
see how we could have a vigorous
business revival without having 1t de-
velop into a credit imitation" Colonel
Ayres declared.
Imitation q Slow Process
II imitation does come 1t will be
slow process, he said, pointing out that
in Germany. France. Belgium and Italy
1t took about FIVE years to develop from
the time when the governments en-
tered 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 fear that 1t would still further dc.
preciate in purchasing power.
IF we are to go through such .
period here 1t would seem likely that
1t might last rather longer than the
corresponding periods did abroad" he
said. "Its beginning would date from
the spring of 1888 when we left the
old gold basis for our money and en-
tered upon the policy of financing large
governmental deficits by the sale 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 for in all those countries in.
Guiding Germany. the increasing issues
of money that caused the mutations
were not mere printing press issues
of fat currency. but were secured by
government bonds and notes discount.
ed at the banks. Nevertheless, the
process is inherently slow one"
Among the c1earest lessons taught
by the European experience, Colonel
Ayres asserted, is that there are mo
good hedges against imitation" He
added: !
Did Not Tighten Debt Burdens y
Zone Of the strange facts about these
mutations is that while they destroyed
the values OF most existing debts, they
did not succeed in tightening the debt
burdens OF either the people az Q
whole, or Of the corporations. 4
Imitation destroys the value OF bonds
and mortgages and so confscates the
property Of these holders Of obligae
tons and hands 1t over to the share
holders and the equity owners. How.
ever, 1t introduces so many new eco.
nomic difficulties that these share and
equity holders are at once forced to
incur new indebtedness SO that when
sterilization comes the problems OF
debt are about as troublesome az they
were before, or even more so."
The Ave requisites Of imitation were
listed BY Colonel Ayres as first, a Pc
riod Of sustained active business; sec.
ond. rising stock market; third, real
credit expansion; fourth, greater out.
how OF gold than We can tolerate
which would force US to cut our cur
rencys& entirely free from gold; and
hfth, continued large budget deficits in
government operation.
A DpnDuEHv i