FREIGHT CHARGES 
137 
the trade of two countries only. Suppose that between these 
two the shipping trade is equally divided, the goods being carried 
half in the vessels of one of them, half in the vessels of the other. 
The charges for shipping thus cancel each other in the balance of 
international payments, and in any calculation of what may be 
due from one country to the other they may be disregarded. Sup- 
pose now that the merchandise exports and imports also balance, 
and that there is thus a settled equilibrium in the total account. 
Nevertheless, under the usual practice, each country would show 
in its official statistics an excess of imports; each would apparently 
have to make a remittance to the other in order to balance the 
international account. The shipping charges are ignored in the 
statistics of both as regards carriage one way; but as they are 
equally divided between the countries, the omissions cancel. An 
international trade account which on its face seems to be doubly 
unstable, indeed incomprehensible, is in fact stable and simple. 
Now suppose not that the shipping trade is equally divided 
between the two countries, but that all the carriage is done in 
vessels of one of them. Take for example Great Britain and 
Australia. Both keep their statistics in the usual way, but the 
carrying is all done in British vessels. The actual position of 
Australia in the international account will then be in accord with 
that shown by her trade statistics; but the actual position of 
Great Britain will not. Australia in fact has to pay Great Britain 
not only for the British goods imported, but for those goods as 
delivered in Australian ports, i.e. plus freight. She receives from 
Great Britain only the value of her own export f.0.b. (not including 
freight). If then her official statistics show an excess of imports 
(as in the case considered in the preceding paragraph), this indicates 
that in fact a balance must be paid to Great Britain, and specie 
must be sent in settlement. If, however, her exports as recorded, 
so far from being less than the imports, appear to equal them, 
there will be an established equilibrium. Only when the exports 
f.o.b. equal the imports c.i.f. will there be a settled balance of 
payments for a country which does no shipping of its own and 
keeps its official statistics on the usual plan.