FREIGHT CHARGES
135
sideration. Freight charges, to repeat, constitute items in the
international account, essentially like the purchases and sales of
merchandise, and are settled as promptly as these. The mere
payment of them no more constitutes a source of loss to the pay-
ing country than does its payment for imported goods.
The possible effects of transportation charges on the barter
terms of trade was the occasion for discussions and distinctions
which held a considerable place in the older literature of the subject
and may be briefly mentioned. There is an obvious gap (as has
been noted) between the sum which the exporter receives for his
goods, and that which the importer pays for those same goods:
the gap standing for the transportation or freight charge. The
price which the importer pays, and which he then charges to the
consumer, is higher than it would be if there were no freight charge
at all. Consequently the amount which the consumer purchases
will be different from what it would have been if the price had not
been so raised. This reaction of price on quantity demanded
takes place on both sides; in our supposed case, it takes place
among the purchasers both in Great Britain and the United
States. The British buy less than they would have bought if
there were no expense of transport; the Americans likewise buy
less. But the effect on demand will not necessarily or probably
be the same on both sides. It is not likely that the elasticity of
demand for imported goods is the same in the United States for
British goods as it is in Great Britain for American goods. The
barter terms of trade, then, under the interplay of mutual demands,
will be different from what they would have been in the absence
of transportation charges — different from what they would have
been between quite contiguous countries. In this sense, and in
this sense only, it can be said that freight charges do not neces-
sarily constitute an unalloyed burden on the receiving (importing)
country, but may be borne in part by the despatching (exporting)
country; indeed, conceivably borne by this country in whole.
The price of every imported article is higher to the purchaser in
the importing country by the amount of the transportation charge ;
in this direct and obvious sense the charge is borne by the importing