The evil involved in the forced sales of property caused by inflation is the readjustment of prices through which it is accomplished, and the depression and, sometimes, panic which follow. When the prices of many kinds of property must be greatly depressed in order to induce their transfer to other hands, the machinery of commerce and industry is thrown out of adjustment and is sometimes rendered temporarily useless. This result is due to the fact that the relations between costs of production and the returns from the sale of finished products are so changed that profits are reduced or annihilated, and many persons are financially ruined. Readjustments of the prices of raw products, labor, and finished goods, and the transfer of plants to new hands, are, therefore, necessary before industry, commerce, and agriculture can again operate in a normal way, and during the period of readjustment some enterprises must entirely stop operations, and all must slow down. At such times many laborers are thrown out of employment, many more work part time only, the wages of nearly all are lowered, and most other classes of income are cut down. Depression and, in extreme cases, panic are the result, and these have serious consequences other than financial. The means employed for the protection of the public against inflation are crude and inadequate. They may be grouped under the heads: regulations regarding investments, reserves, and note issues. Under the first head belong in the banking legislation of this country limitations on real estate investments and on the amount that may be loaned to a single firm or individual. Our national banking act and most of our state banking acts prohibit banks from holding real estate except for their own accommodation, and as a means of reimbursing themselves for defaulted loans, and our national banking act prohibits the taking of real estate security for loans, and many of our state banking acts limit the amount of such security that may be held. Our national banking act limits the amount that may be loaned to a single firm or individual to one-tenth of the bank's capital and surplus, and similar regulations are common in state banking legislation. The purpose of these regulations is to confine the investments of banks to what are called liquid securities, but they fail to evince a proper conception on the part of their authors of what really makes a security liquid. Apparently legislators and their advisers have felt that if the securities held by the banks mature in short periods, or are listed on a stock exchange, they are liquid; but such is not necessarily the case.