220 MODERN MONETARY SYSTEMS 
Our only remaining task is to consider the practical 
steps necessary in order to carry out this policy in each of 
the countries concerned. Most of these countries, like 
France, could probably return to a system of notes con- 
vertible abroad with the help of their own gold reserves if 
the question of their political debts were settled, and if they 
could substitute a long-term external loan for those specu- 
lative credits which are at present keeping up their 
exchanges but at the risk of allowing them to fall back. 
But if we wish to examine the whole problem of a world- 
wide monetary reconstruction we shall have to set up a 
much more general plan. We reproduce here, with some 
additions, the plan which we have already sketched out in 
a previous work.! 
In order to set up some system which on the whole will 
resemble the one which was in force before the war it would 
seem necessary to redistribute the stock of gold and supply 
each country with a volume of international currency 
corresponding to the volume of its foreign transactions, sub- 
ject only to the following condition. Gold, which has be- 
come rather scarce owing to the rise in commodity prices 
even when expressed in gold, and to the fact that the 
tendency to a true balance of trade has diminished since 
the war, should not be in circulation at home; it would be 
destined exclusively for guaranteeing that the national 
fiduciary currency should be convertible abroad. But as 
it is hardly to be supposed that countries which have a 
fiscal effort which it presupposes will be likely to prevent the import of 
superfluous luxuries to a certain extent, while it will also perhaps diminish 
the capacity to save, to produce and to export. In any case there is no 
direct and physical relation between Budget equilibrium and a stable 
exchange which justifies one in considering that the balancing of a Budget 
is a specific and sufficient remedy for an unstable exchange. Moreover, we 
have demonstrated that on careful analysis of the factors in a return to 
stable exchanges we discover in the last analysis—as in Austria and in 
Czechoslovakia—that unofficial or official action has been taken which has 
had the result of creating a supply and demand for bills at an approximately 
fixed rate. 
1 «Réparations, Dettes Interalliées et Restauration monétaire,” Presses 
Universitaires, Paris, 1922.