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