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By Root 1409 0

world bank and the accounts opened by it for the settlement of money claims of all kinds, there would no longer be any need to settle the national balances of payments by transportation of money. The actual transference of money could be superseded by the transference of the notes issued by the world bank or of checks giving disposal over the issuer's account with the world bank, or even by simple entries in the books of the world bank. The balances of the international "clearinghouse," which already exists today although it is not concentrated in any one locality and has not the rigid organization of the national clearinghouses, would then be paid off in the same way as those of the national clearinghouses are at present.

Proposals have been made again and again for the creation of international fiduciary media through the establishment of an interstate bank. It is true that this must not be taken to include every project for extending the international giro system in the sense in which this word is commonly used. Nevertheless, in certain writings which demand the foundation of a world bank, or at least of an interstate banking organization, there gleams the idea of an international fiduciary medium. [14] The problems of organization raised by the establishment of such an international institution could be solved in various ways. The establishment of the world bank as a special form of organization and as an independent legal body would probably be the simplest form for the new creation. It would, however, also be possible, apart from this, to establish a special central authority for administering and investing the sums of money paid in to open the accounts, and for issuing the money substitutes. An attempt could be made to avoid the obstructions which the susceptibilities of national vanity would probably oppose to the local concentration of the business of the bank by leaving the reserves of the world giro authority and the world issuing authority in the keeping of the separate national banks. In the reserves of every central bank a distinction would then have to be made between two sums: one, which would have to serve as a basis for the world organization of the system of payments, and over which only the authorities of the latter would have power of disposal; and a second, which would continue to be at the service of the national monetary system. It would even be possible to go still further and leave the issue of international notes and other money substitutes to the individual banks, which would only be required in doing this to follow the instructions given by the authorities of the world organization. It is not our task to investigate which of the various possibilities is the most practical; it is its nature alone that interests us, not the actual form it might take.

Special reference must nevertheless be made to one point. If the balances in the books of the world bank are to be acquired only by cash payment of the full sum in money, or by transfer from some other account that has been acquired by cash payment of the full sum in money, and if the world bank is to issue notes only in exchange for money, then its establishment may certainly render unnecessary the transportation of quantities of money (which still plays a large part nowadays in the international payments system), but it would not have the effect of economizing money payments. It is true that it would be able to reduce the demand for money, because transferences would perhaps be completed more quickly and with less friction. But, as before, the payments that were made through the bank would involve the actual use of money. Of course, the money would remain in the vaults of the world bank and only the right to demand its surrender would be transferred. But the amount of the payments would be arithmetically limited by the amount of the money deposits in the bank. The possibility of trans ferring sums of money would be bound up with the existence of these sums of money in actual monetary shape. In order to free the international monetary system from