FREIGHT CHARGES

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price (i.e., the price at the place of export) plus freight charges.
But this is not necessarily the amount which the people of the importing
 country have to remit to the exporting country, say Great
Britain. If the goods are carried from Great Britain in vessels of
the United States, the freight charges are paid by one set of Americans
 to another set of Americans. The freight item then is
purely domestic; no remittance to Britain must be made. The
British goods alone need to be paid for. But if the goods are
carried in British vessels, some British persons must be paid for the
further service of bringing them over. It is immaterial to the
individual Americans who happen to buy the goods whether this
additional payment goes to their own countrymen or to the
British. But it is material for the balance of international payments;
 an item arises in the latter case which must take its place
in the adjustment of that balance.
The same distinction of course must be made at the other end —
that is, as regards a country’s exports. American sellers of goods,
when they export them to Great Britain, get only the price of goods
at the place of export. The British purchasers pay as individuals
that price plus cost of ocean transportation. If the goods are
carried in American vessels, the freight charges become an additional
 item, also payable to Americans, even tho (in modern
times) presumably a different set of individuals from those that
have sold the goods. Should the goods be carried in British vessels,
the freight charges become a payment made by one set of the
British to another set, not made by the British to the Americans;
and then it does not figure in the international balance sheet.
If, now, the business is halved — if half of the carriage is done
by British vessels, half by American — the items offset each other
in the international account. As much is due one way as the other.
The total volume of international payments is greater than it would
be if the countries were contiguous, but the balance of payments
is not affected. If, however, all the carriage takes place in the
vessels of one of the countries, say Great Britain, a balance
becomes due to that country. Supposing the other transactions
between the countries to balance — imports and exports. and