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CONTENTS 
CHAPTER 10 
Two CoUNTRIES COMPETING IN A THIRD 
Various combinations of barter possible when two countries or 
more compete in a third, 97. An increase in demand in one of 
the countries for any one of the commodities affects the barter 
terms of trade of all countries, 98. Two ways in which a country 
obtains its commodities cheaper thru foreign trade, 101. Ex- 
amples of more complicated variants of barter among three 
countries, 102. The same variants considered in terms of money 
prices and money incomes, 104. 
CHAPTER 11 
NoN-MERCHANDISE TRANSACTIONS. TRIBUTES, INDEMNITIES, 
Tourist EXPENSES : 
PAGES 
97-107 
108-122 
Increasing importance of international payments arising out of 
non-merchandise transactions, 108. Illustration of the change 
in barter terms of trade brought about by foreign payments for 
which no quid pro quo is obtained, 109. The terms “favorable” 
and “unfavorable” balance of trade, 111. Payment of a tribute 
or indemnity is costly in two ways: a country parts with a 
quantity of goods, and it obtains its imports on less favorable 
terms, 112. Distinction between the gross barter terms of trade 
and the net barter terms of trade, 113. Illustration of the effect 
on both gross and net barter terms of a change in elasticity of 
demand for one of the imported commodities. ‘‘Invisible” items 
in the balance of payments not alike in their effects on the barter 
terms of trade, 114. Effect of indemnities and of tourist ex- 
penditures contrasted, 117. Gifts and charitable remittances, 
121. 
CHAPTER 12 
NoN-MERCHANDISE TRANSACTIONS, FURTHER CONSIDERED. LOANS 
AND INTEREST PAYMENTS; FREIGHT CHARGES ; ; 
123-140 
Foreign loans by individuals cause a flow of specie from the lend- 
ing country, 123. Qualification of this statement if foreign loans 
are linked directly with commodity exports, 124. The borrowing 
country secures a double gain from the capital movement: an 
additional supply of imported goods, and the procurement of all 
imports on barter terms more favorable than before, 127. Inter- 
est payments, as they accumulate, tend to reduce the gain. 
When annual interest payments finally exceed annual borrowings, 
the double gain shifts from borrowers to lenders, 128. The 
changes operate thru flow of specie and modification of money