Evening star., 1935-03-02
INITIATION EFFECT
ON REALTY VIEWED
Debtors and Renters Seen
Best Served if Value of
Money Falls.

Defining imitation as very conslo-
cradle increase in the general price
level with a corresponding decrease
in the purchasing power OF money,
Milan v. Ayres, Chicago economist,
makes a somewhat detailed analysis,
at the request of the National ASSo-
citation of Real Estate Boards, in
answer to this present active invest
ment question: If we have imitation
what will be its effects on real estate?
IF we do have imitation, it will be
the first to be produced deliberately
and Intentionally by Government ac-
ton. It will be the first to have its
beginning in time of peace. 1t will
be the first, except one, to occur IN
any country having an abundant stock
of the precious metals Mr.. Ayres
points out. IF the Government sue
ceeds in it's objective of producing a
controlled imitation. an initiation which
is successfully stopped at or about a
predetermined point, it will be the
first of that character in all history"
He adds, therefore, Many condi-
tions will be so different from those
existing in previous inflations that it
is hazardous to attempt to draw an
historical parallel"
Land Ideal Hedge"
He states these things, however, as
fairly certain:
Ownership of good land should be
one of the best hedges against inf1a-
ton, provided the owner is going to
be in a position to hold on throughout
the initiation period. The selling price
of land will not rise as fast as the
general price level during an imitation,
but ultimately it will adjust itself to
the new final value of the dollar
Therefore, land owner who can hold
on long enough will not have lost his
investment. It will be unfortunate
to have to sell while the imitation
is in process.
"Rents will not rise as fast during
imitation as the general price level
does.
Taxes won't rise so fast, either,
which will be some Offset.
Payments Easy.
Mortgages will be easy to pay off
during an imitation. and the further
the imitation has gone the easier it
will be. Thus, it will be profitable
for the owner of a piece of real es-
tate to put the largest possible mort
gage on it before the beginning of
the imitation, with the proviso that
1t would be payable at any time at
the option of the mortgagor. Then
he should pay it off when he thinks
the dollar has gone as low in value
as it is going to go.
Buildings will not be so good on
Investment as land. with the excep-
ton of a building used for your own
residence or for your own business.
That, of course, follows from what
I have already said about rents.
THE most important rule of all
for such a period is not to have
any of your wealth in money or in
bank accounts, or in bonds, or in any,
thing payable in sum of money.
On the contrary, you should invest
all the money you can lay hands
VII Ill ldIlQ VI Ill SOllllllOO4tlCo Va AL
equities.
Farmers Must Produce.
"Farm owners living on and op-
Grating their own farms, especially
if they produce most of their own
food requirements, will weather an
imitation period very WELL Some Of
them will be able to pay off heavy
mortgages very easily and will be
benefited.
Some one has asked what will
happen to interest rates. This is a
difficult question. I think they will
behave somewhat like the man who
mounted his horse and galloped off
in all directions. I think interest
rates may become erratic and variable
and dependent upon the state of mind
OF the lender and borrower"