II

INFLATION AND DEFLATION

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to-day more than 60 to 70 per cent of its originalcost of construction, and not infrequently muchless. This is an immense aggravation of theproblem, where it has occurred, both because ofthe very large sums involved and because suchproperty is ordinarily regarded as relatively freefrom risk.

Finally, there are the loans and advanceswhich banks have made to their customers forthe purposes of their customers’ business.These are, in many cases, in the worst conditionof all. The security in these cases is primarilythe profit, actual and prospective, of the businesswhich is being financed; and in present circum-stances for many classes of producers of rawmaterials, of farmers and of manufacturers,there are no profits and every prospect of in-solvencies, if matters do not soon take a turn forthe better.

To sum up, there is scarcely any class ofproperty, except real estate, however useful andimportant to the welfare of the community, thecurrent money value of which has not sufferedan enormous and scarcely precedented decline.This has happened in a community which is soorganised that a veil of money is, as I have said,interposed over a wide field between the actualasset and the wealth owner. The ostensibleproprietor of the actual asset has financed itby borrowing money from the actual owner ofwealth. Furthermore, it is largely through thebanking system that all this has been arranged.That is to say, the banks have, for a consideration,