The Theory of Money and Credit - Ludwig von Mises [134]
If the clearing system has without difficulty transcursed political boundaries and created for itself a world-embracing organization in the international bill and check system, the validity of the fiduciary media, like that of all money substitutes, is nationally limited. There are no money substitutes, and so no fiduciary media, that are recognized internationally and consequently able to take the place of money in international trade for settling the balances that remain over after the clearing process. That is often overlooked in discussions of the present position of the international system of payments and the possibilities of its future development. Here again, in fact, the confusion creeps in, that has already been criticized adversely, between the system of reciprocal cancellation and the circulation of fiduciary media. This is most clear in the usual arguments about international giro transactions. In domestic giro transactions, payments are effected by the transfer of money substitutes, which are often fiduciary media, namely, the balances of the members at the giro bank. In international transactions, the money substitute is lacking, and even the international clearing system that is recommended in various quarters is not intended to introduce one. Rather it should be pointed out that this so-called international giro system—which incidentally was done away with again by the inflation during the war—while it may have changed the external form of the traditional manner of settling international monetary claims, has not changed in nature. When banks of various countries agree to give their clients the right to undertake direct transference from their balances to the balances of the clients of foreign banks, this may quite well constitute a new and additional method of international settlement of accounts. A Viennese desirous of paying a sum of money to somebody in Berlin was previously able either to use an international money order or to go to the exchange and buy a bill on Berlin and send it to his creditor As a rule he would have made use of the intermediate services of a bank, which for its part would perform the transaction through the purchase of a foreign bill or a check. Later, if he was a member of the check system of the Austrian Post Office Savings Bank and his creditor belonged to that of the German post office, he would have been able to make the transfer more simply by sending the appropriate order on the Vienna office of the Post Office Savings Bank. This might well be more convenient and better suited to the demands of business than the only method that was once usual; but, however excellent a method, it was not a new method of international monetary intercourse. For the balances of this international giro system, if they could not be paid by bills, had to be paid by the actual transference of money. It is not true that the international giro system has decreased the international transportation of money. Even before its introduction, the Viennese who wanted to pay money to somebody in Berlin did not buy twenty-mark pieces and send them to Berlin in a parcel.
The only thing calculated to create international money substitutes and subsequently international fiduciary media would be the establishment of an international giro bank or bank-of-issue. When it became possible to use the notes issued by the