Gras Predicts America Will Return to Higher Prosperity Level Than Before

"Undoubtedly we shall return to a greater prosperity than ever before. First we shall have 'inflation' and we shall find it good," said N. S. B. Gras, Isidor Straus Professor of Business History, in an interview with a CRIMSON reporter yesterday. Gras declared that this prosperity when regained would be the first stage in a period of physical and mental advances which will lead to a higher level of civilization.

"The program of inflation has already begun with the issue of the new Federal Reserve bank notes. The chief danger with these is that they may be left out too long. Clearing house scrip, on the other hand, would have been withdrawn as quickly as possible. I believe, however, that these are preferable since they insure unity of currency throughout the land.

Balance Budget Within Year

"The second necessity for prosperity is not the immediate balance of the budget, but a plan by which it can be balanced before next year. Such a plan would support the credit of the United States at home and abroad: it would induce foreign investors to reinvest their money in United States enterprises.

"The third thing which we must do is to get industry moving by furnishing direct and indirect employment on government work such as the development of Muscle Shoals and of other great power projects. We need above all things, to break the vicious circle of inaction. It is true that these developments by furnishing more power more easily, or, in the case of irrigation projects, by furnishing more land to provide food for an already overstocked market, seem, ultimately, to defeat their ends, but this is not necessarily so. If more power reduces the number of laborers necessary in one field, at the same time it develops new fields for them to enter. If too much land is reclaimed, some must be used for reforestation. We must assume economic mobility, the power of business men and of laborers to move from one work to another, or we are damned from the beginning. It is the basis upon which all our civilization, from now on, will depend.

"The fourth, and perhaps the most important of the remedies will be the banking reform. To this there will be three aspects: the increase in the number of banks in the Federal Reserve System, the separation of security companies from commercial banks, and the more nearly complete control of banking policy by the federal government. Such changes might have taken twenty years to be accomplished in other circumstances, and one merit at least, in the present situation, is that it has brought them about quickly.

"A fifth point which I would strongly recommend in any program for recovery is the immediate recognition of Russia and the establishment of trade with her. Russia is a great potential market, and we need all the markets we can get. It it true that a modernized, self-supporting Russia would compete with us in many fields, but it is also true that she would furnish us with a greater market in more fields. The United States must assume henceforth that her well-being is based upon that of her neighbors. Further, the more American trained workers we send to Russia, the more quickly Russia's Communism will be broken down, for the Russians will be shown the advantages of capitalism. As for the fear of Communism in this country, I think it's insane. Every American worker hopes to be a capitalist, and there can be no Communism where there is hope.

Revival of Business in Spring

"I look for a revival of business in the Spring, partly because of seasonal demands, partly because of the strong hand in Washington, and partly because of the renewed confidence which will be shown in the reformed banking system. There are, indeed, certain dangers. If some banks open before others, those which open later may have to suffer runs. Of the three classes of banks, the solvent, the semi-solvent, and the bankrupt, it is the second class which is now threatened and which may be hard put to it by a series of runs on reopening. Such difficulties, however, I believe, will be overcome. We are now on the eve of a period of progress that will be greater than any which has occurred for a long time. The only danger is that we may go too fast, the only difficulty is to get started. The difficulty, I believe, will be avoided by such a program of recovery as that I have just outlined; the danger avoided by careful federal control of credit.

"There is almost infinite work to be done in improving the world, and we have the ability to do it, the brains to plan, and the power to carry out, all the physical necessities. Moreover in this year we have come to a better stand emotionally and intellectually, than we have had at any time before this. Previously we rushed ahead madly. Now we hesitate and evaluate. This means balancing and salvation."