r 
 
UNIVERSITY OF ILLINOIS 
 LIBRARY 
 
 Class 
 
 Book Volume 
 
 Ja 09-20M 
 
THE COMMERCIAL' PARADOX/ ' 
 
 T ~ \ l ^ u o 
 
 A PAPER DISCUSSING CERTAIN IMPORTANT PROBLEMS IN TRANS- 
 PORTATION READ BEFORE THE MANUFACTURERS’ 
 
 CLUB, OF PHILADELPHIA, AT THE CLUB 
 ' MEETING, FEBRUARY I 3 TH, 1 888 . 
 
 By Professor Lewis M. Haupt, C. E., 
 
 Of the University of Pennsylvania. 
 
 In 1882 the manufactured products of this great city were 
 estimated to be worth $481,226,309, employing 242,483 persons, 
 and comprising over 12,000 establishments. To-day the aggre- 
 gate is even greater. It is, therefore, a question of no small 
 magnitude to find a market for this large output at such a price 
 as to leave a margin of profit for the manufacturer as well as 
 for the transporter and broker. 
 
 In considering the methods by which this very, desirable 
 result may be obtained, it will become necessary to analyze 
 rather minutely the various elements which make up the market 
 price of an article, and to determine how they may be modified 
 so as to increase the profits, as well as to extend the sales. 
 
 The market price is composed of two principal elements,, 
 viz. : cost of production and cost of delivery. The former in- 
 cludes the cost and transportation of raw materials, cost of 
 handling, import duties, insurance, interest on plant, deprecia- 
 tion, wages and contingencies. The latter, cost of transporta- 
 tion, terminal charges, insurance, storage, porterage, commissions, 
 and other items. From this statement it will be sefen that the 
 expense incident to transportation may form a large percentage 
 of the commercial value. If the raw material, whether it be 
 ores, cereals, fuels, textiles or other substances, be carried any 
 considerable distance to the mills or factories, the cost of trans- 
 portation will enter as a factor in both directions in the cost of 
 the product. Hence it is that the selection of the site for the 
 
 1 Reprinted from The M anufacturer of March, 1888. Vol. 1, No. 4, Philadelphia. 
 
 19335 
 
 p 
 
 • ■ 
 
H s- 
 
 plant forms so.iipjDortant ^an element in the success of a large 
 establishment, ^n^jt'Tf djie to the proximity of fuel and 
 
 ores that Philadelphia ’ oweS* fts* great development in manufac- 
 turing industjfie^ •*:* : \ • 
 
 For a given *glarft*^ith v fixe’d* ra<es of wages and good man- 
 agement, there* *isj jSut?\li{i}3* V 6oJn for increased economy in the 
 cost of manufactur'd, Whereas The rates charged for transpor- 
 tation are often very variable and are readily affected by a large 
 number of influences. It is manifest that for a stated market 
 price, whatever reduces the cost of delivery should increase the 
 margin of profit or extend the range of the market for any 
 article. It is with reference, therefore, to the relation of cost 
 of transportation to that of manufacture and the best methods 
 of increasing the range of the market that I desire to direct 
 your attention this evening. 
 
 First, let us consider the case of the raw material. If it 
 can be delivered to our factories from over the sea (having been 
 carried as ballast for a nominal rate), at a less price than the 
 same quantity of domestic product will bring, then one class of 
 economists will say, buy from the foreign markets, and give us 
 a cheaper product, whilst the other class will require that a tariff 
 be assessed which will debar the foreign and enable the home 
 product to be worked to advantage. I do not propose to discuss 
 the merits of this important question, but will merely state 
 that if the American must compete with the European labor, 
 the first effect will be manifested in a reduction of his wages, 
 and consequently in his purchasing capacity that the equilibrium 
 may be maintained ; and the subsequent effect may be no wages 
 at all. Moreover, the great range in latitude and altitude of 
 this Republic is such as to yield almost every variety of crude 
 product desired, whether animal, vegetable or mineral. The 
 vital questions, therefore, of reducing the cost of the neces- 
 saries of life and of retaining the margin of profit on manufac- 
 tures without affecting wages, appears to me to resolve itself 
 into a consideration of the methods for cheapening the cost of 
 transportation and delivery, or else, where possible, of so chang- 
 ing the form and value of the product as to enable it to bear a 
 higher rate or a longer haul to the market or the mill. 
 
 For example, will it pay the farmer best to ship his products 
 in the form of grain and hay ; or to concentrate them into live 
 
3 
 
 stock or dressed meats, or to convert them into fleece or dairy 
 products ? The answer to the query is a local one, and involves 
 too many uncertain elements to permit of a discussion at this 
 time. 
 
 To illustrate the general principles upon which the solution 
 •of the transportation problem depends, I submit a few commer- 
 cial maxims for your consideration. 
 
 The first is : That the reduction of the rates of transporta- 
 tion increases the circle of patronage , or market range. 
 
 The second proposition is : That low rates create traffic. 
 
 The third : That competition p 7 'oduces low rates , and hence 
 creates traffic. 
 
 The fourth : That increased facilities create traffic. 
 
 The fifth : That transportation by zvater is cheaper than by 
 
 rail. 
 
 The sixth : That the improvement of the water-ways is bene- 
 ficial to the railway , and the consequence is that the water-ways 
 are the best possible competitors and regulators of rates, and 
 their improvements isbeneficial not only to the railroads, but to 
 every individual requiring food, clothing, shelter and other neces- 
 saries, as well as the luxuries of life. 
 
 Some of these maxims are almost axioms, yet to impress 
 their meaning and importance more forcibly, I have collated a 
 few statistics to verify them more fully. 
 
 Thus with reference to the first proposition, let us see how 
 far an article may be carried by the various means of transpor- 
 tation before its market value is entirely absorbed by the cost of 
 movement. This distance I will call the market range. For 
 this purpose I take the values in 1874, as given in the Windom 
 Report on “Transportation Routes to the Seaboard,” 1 for a ton 
 of wheat quoted at $49.50 2 and with rates by canal at one-half 
 cent per ton per mile ; railway, one and one-half cent ; and com- 
 mon roads, fifteen cents. “ The table does not purport to show 
 how far grain may be carried by river or lake, but unquestion- 
 ably that distance is not less than twice the distance it can be 
 carried by canal.” This statement is confirmed by the latest 
 report of statistician J. R. Dodge, as to the relative rates from 
 Chicago to Buffalo via lake, and thence to New York via canal, 3 
 
 1 Appendix, page 127, letter from Breese J. Stevens, March 2d, 1874. 
 
 2 $1.50 per bushel. 
 
 * Page 613, Report, Number 46, Department of Agriculture, November, 1887, 
 
4 
 
 so that the comparative lake or river rate would be one-quarter 
 cent per ton per mile. Dividing the market value by these rates 
 there result the following radii for the circle of distribution. 
 
 Radii 
 
 Cts. miles. Tributary areas. 
 
 For carriage by common road 15 330 341,946 square miles. 
 
 “ “ “ railway @ 1.5 3300 34,194,600 “ 
 
 “ “ “ canal @ 0.5 9900 307,751,400 “ 
 
 “ “ “ river @ 0.25 19800 1,231,005,600 
 
 In other words, if the cost of movement by river be taken 
 as the unit, the relative rates in 1874 were as 
 
 River. Canal. R. R. C. R 
 1 : 2 : 6 : 60 
 
 the distance carried, as 
 
 River. Canal. R. R. C. R. 
 
 60 : 30 : 10 : 1 
 
 and the areas affected, as the squares of these distances, or as 
 
 River. Canal. R. R. C. R. 
 
 3600 : 900 : 100 : 1 
 
 At these relative fates, therefore, and under the given con- 
 ditions, water carriage, by river or lake as affecting areas, is 
 theoretically 36 times more beneficial than by rail, and 3,600 
 times more than by wagon. It is hardly necessary to add that 
 these theoretical limits can only be roughly approached in prac- 
 tice, and that practically the other items of cost consume a large 
 percentage of the market value. Thus, if it costs 50 cents per 
 bushel, or $16.50 per ton to produce wheat, the radii of the above 
 circles of distribution would each be reduced 33 per cent. So 
 the other fixed charges would still further contract the range ; 
 which will depend chiefly upon the margin between cost of pro- 
 duction and market price. Each article will have its particular 
 range, depending upon its character and utility, but all will be 
 correspondingly affected by the relative rates of transportation. 
 The market range, however, is found to be extended by a reduc- 
 tion of rate , which is the first point to be established. 
 
 2. That low I'ates create traffic will be accepted as a fact 
 without proof. This law was fully appreciated by your worthy 
 secretary in his able argument against reduction of duties by 
 enlargement of the free list. He says “that mere reduction of 
 duties, unless that reduction be carried almost to the zero point, 
 
5 
 
 will assuredly increase the revenues from customs rather than re- 
 duce them. The certain effect of such reduction will be to en- 
 large importations in almost every case, with the result that the 
 desired deficiency will be more than made good. This is a fact 
 so well known and so generally admitted that no argument in 
 support of it need be presented.” Yet the evidence may be so 
 clearly and briefly stated, and is so conclusive, that I trust I 
 may be excused for introducing a few illustrations in the form of 
 diagrams. 1 The first will show graphically (a) the rates from 
 Chicago to New York by “all rail,” by lake and rail, and by lake 
 and canal in 1870 and 1871 ; and (b) the volume of the shipments 
 of a single article (wheat) during the same time. Although the 
 water route is longer, it takes the volume of traffic because it is 
 cheaper. It is merely a question of rates. This diagram (a) 
 also confirms the first proposition. 
 
 The converse of this proposition, than an increase of traffic 
 reduces rates , is not necessarily true, for the rule with transpor- 
 tation companies used to be to charge “ what the traffic will 
 bear,” and unless there was competition no amount of argument 
 would prevail in lowering the schedule. Strange as it may seem, 
 rates which were practically prohibitory were frequently main- 
 tained when a lower rate would have put in motion a larger 
 amount of traffic, which could have been profitably handled. 
 The business maxim of “small profits and quick sales,” or lower 
 rates and larger volume, is the best for transportation companies 
 as well as for the general public ; but it is a difficult problem to 
 determine to what extent it should be carried. Yet every mer- 
 chant and manufacturer is trying to solve it in such a way as to 
 give a maximum of profit on his aggregate sales. 
 
 The third aphorism, that competition creates traffic , is so uni- 
 versally accepted that manufacturing and business centres have 
 become almost synonymous with railroad centres, but when it is 
 remembered that “where combination is possible, competition 
 is impossible,” it will be seen that the benefits to be derived 
 from railroad competition may be extinguished by pooling, pur- 
 chase, or otherwise. Combination is more difficult when the 
 ways of communication are of such a character that they cannot 
 be bought, and are free to anyone desiring to traverse them. 
 
 1 The diagrams are omitted from this published statement, as being unnecessary to a 
 full comprehension of the subject. 
 
6 
 
 This condition is found to exist most nearly when waterways are 
 brought into competition with railways, as is seen in New 
 York, Chicago, St. Louis, and other places. Philadelphia can- 
 not be considered a competitive point in this sense since she has 
 no direct water communication with the great west. Pittsburg 
 might be included, if the Ohio River were made navigable at all 
 stages during the season. 
 
 Commissioner. Fink says that “the Erie Canal influences 
 the rates of transportation from Chicago, St. Louis, Cincinnati, 
 etc., to the interior of the Gulf States, and all the rail rates are 
 kept in check by water transportation.” It is this water compe- 
 tition that has built up the metropolitan cities at the terminal 
 points of the lake and canal systems. Astonishing as it may 
 seem to one not familiar with the magnitude of our domestic 
 commerce, it is stated, as a fact, that the entrances and clear- 
 ances at the port of Chicago, and the tonnage as well, exceed 
 that of New York and Philadelphia combined, and are more than 
 four times as great as that of the latter place. The vessel ton- 
 nage of the lakes exceed that of our entire coastwise marine . 1 
 
 The memorial of the Philadelphia Board of Trade to the 
 last Congress, recites “ That the rates on through traffic are 
 largely fixed over the entire country by the competition of water 
 routes, and as the railroads, in order to get any portion of the 
 through traffic are compelled to approximate their rates to those 
 charged by the water routes, they are necessarily obliged to 
 accept on this through traffic a compensation but little in excess 
 of the cost of carrying the same. That, in the judgment of your 
 memorialists, no injury results from this course on the part of 
 the railroad company ; but on the contrary, it not only furnishes 
 cheap flour and other provisions to the laboring classes of our 
 country, but also enables an enormous volume of provisions, 
 cereals, and other staples to reach the seaboard, and thence 
 by ocean transportation the markets of other countries, and 
 there meet on favorable terms the products of other parts of the 
 world, thus placing the balance of trade in favor of the United 
 States, and making it a creditor of other nations rather than 
 debtor.” 
 
 The effect of water competition is also shown by the fact 
 that the rail rates to the east of Chicago are less than those to 
 
 i 
 
 
 
 1 Total entrances and clearances for 1886, 22,372 vessels; tonnage, 7,877,080. 
 
 1 
 
 I 
 
 I 
 
7 
 
 the west thereof, but I need not multiply the evidence in sup- 
 port of a proposition so universally accepted. It is thought by 
 many that the delivery by rail is more rapid and certain than 
 that by water. On this point the Windom Report states. 1 “ It 
 is also true practically, however it may be theoretically, that the 
 rate (velocity) of movement by rail is but little, if any, greater 
 than by water.” 2 
 
 Fourth, that increased facilities beget traffic was formerly re- 
 garded as a fallacy ; but so convincing are the facts that the 
 reading and observant public are becoming converts. As a rule, 
 mere arguments are of little avail in changing public sentiment 
 unless supported by an exhibit of actual results. The most con- 
 vincing proofs of this proposition are to be found in the intra- 
 mural travel of large cities as affected by increasing the capacity 
 for traffic. 
 
 Thus, in London the omnibus traffic was increased by the 
 addition of the underground metropolitan system ; both of these 
 were benefited by the establishment of the district railway. The 
 traffic of these three was still further augmented by the addition 
 of the tramways, and the rate of increase is greater on each sys- 
 tem to-day than it was on any one before the existence of the 
 others. The same conditions obtain in reference to the passen- 
 ger traffic in New York. The greater the velocity and capacity 
 of the lines be made, the larger is the volume of business, and 
 the more rapidly the cities’ growth. 
 
 The fifth proposition , that transportation by water is cheaper 
 than by rail , may be readily established by reference to the 
 scheduled rates ? between two points connected by rail and by 
 water. Thus, between Chicago and New York the rates in 1887 
 were, for grain (wheat), via Lake Shore and Michigan Southern 
 Railway, 981 miles, 25 cents per hundredweight, or 15 cents per 
 bushel ; $5.00 per ton, or .509 cents per ton per mile. 
 
 By lake to Buffalo, 1000 miles, 4.7 cents, or 1.567 mills per 
 ton per mile. 
 
 By canal to New York, 504 miles, 4.6 cents, or 3.04 mills 
 per ton per mile. 
 
 1 In 1884 the through rates, by lake, from Chicago to Buffalo were two and two-tenths 
 cents, and from Buffalo to New York, via Erie Canal, five cents. 
 
 2 Page 126, Appendix. 
 
 3 See Report of Department of Agriculture, No. 46, November, 1887 ; Rates for October. 
 
8 
 
 By lake and canal to New York, 1504 miles, 9.3 cents, or 
 2.00 mills per ton per mile. 
 
 Rates via Chicago and Atlantic Railroad, 986 miles, are the 
 same as those via Lake Shore and Michigan Southern Railway, 
 whilst those by water are 5.7 cents per bushel less, yet the dis- 
 tance is over 50 per cent, greater. 
 
 By ocean to England, 3080 miles, 7.0 cents, or 0.77 mills per 
 ton per mile. 
 
 Taking the ocean rate as the unit, the relative rates are as 
 follows : By ocean, 1 ; by lake, 2 ; by canal, 4, and by railroads, 
 6.7 ; or comparing the present rates with those previously given 
 in 1874, there results : Ocean, ; lake or river, 1 ; canal 2, and 
 railroad, 3^. Thus, while the actual rates by river and canal 
 have each fallen 40 per cent., the railroad rates have been re- 
 duced about 56^ per cent., all of which reductions are due to 
 the increased capacity and improvements brought about by com- 
 petition, and the large volume of traffic developed by the rapid 
 growth of facilities for inter-communication. 
 
 This brings us to our last proposition, which is the commer- 
 cial paradox, namely, that the improvement of the waterways is 
 beneficial to the railways. I say it is paradoxical, since I believe 
 the impression to be general that whatever freight or passenger 
 traffic is carried by water is just that much abstracted from the rail- 
 ways (when they exist in competition), and not only is there a 
 reduction in the volume but also in the rate of tariff, so that the 
 railroad must suffer in consequence. Certainly this is a natural 
 deduction, and that it is a prevalent one is shown by the open 
 opposition made by the railroad interests to the general improve- 
 ment of our navigable rivers, whenever such proposed improve- 
 ments parallel the railroad lines. 
 
 I have made an analysis of the testimony relating to this 
 point taken before the Cullom Committee, and find that of ninety- 
 one persons, 73, or 80 per cent, were in favor, 15, or 17 per cent, 
 were opposed, and 3 per cent, undecided. Of the fifteen opposed, 
 ten were railroad officials, three farmers, one merchant, and one 
 a machinist. Eight railroad commissioners were in favor of im- 
 proving the waterways. 
 
 If the impression is fallacious, it must be in consequence of 
 the existence of other elements not generally recognized, yet 
 which are potent factors in determining the result. And what 
 
9 
 
 are they ? They are the chain of propositions which we have 
 already briefly considered, whereby the railroads are benefited ; 
 for the revenue of a railroad is dependent above all things upon 
 population, and population is a function of cheap, certain, and 
 uniform rates of transportation, as well as cheap power for manu- 
 factures. These in turn are assured by competition, and there 
 is no competition so reliable as that furnished by navigable 
 waters. Hence it is that the more rapidly the streams are im- 
 proved, the more dense will the population become and the 
 greater the volume of business not only for the river, but also 
 for the railroad. 
 
 Concerning this point, Mr. Stevens wrote to the Windom 
 Committee on Transportation Routes d “ The creative power 
 of water transportation is not restricted to the increase of exist- 
 ing values, but extends to the creation of values where otherwise 
 none would exist. Certain articles of commerce, such as stone, 
 brick, gravel, firewood, earth, etc., become articles of commerce 
 almost exclusively from this operation. It is by some asserted 
 that its benefits in the creation of new values are greater and in 
 every way more important than its benefits in the enhancement 
 of existing values.” 
 
 This proposition is further confirmed by Col. William P. 
 Craighill, in his report to the Chief of Engineers for 1885, on 
 the improvement of the Great Kanawha, wherein he says : “As 
 the improvement of the river (Great Kanawha) has progressed, 
 the commerce on it, notably the shipment of coal, has greatly 
 increased. This has not been to the disadvantage of the Chesa- 
 peake and Ohio Railroad, as some supposed would be the case, 
 for the statistics show an increase in the coal business of that 
 highway of trade and travel. 1 2 
 
 Certainly, if the existence of a navigable channel be inju- 
 rious to a line of railways, I know of no better practical instance 
 to prove it than that of the New York Central and Hudson 
 River. 
 
 Here we find a grand navigable river, linked to a magnifi- 
 cent chain of inland seas by a canal having a capacity of 
 16,000,000 tons, and paralleled by a trunk line of railroad of less 
 length than the canal and river. There is also a shorter line of 
 
 1 Appendix, page 127. 
 
 2 P. 1846, Rep. of C. of Eng., 1885, Vol. III. 
 
10 
 
 all-rail communication which is not parallel to a water route 
 between the termini, hence if the water line is not beneficial but 
 injurious, the New York Central should suffer in comparison 
 with its competitor, the New York, Lake Erie and Western. 
 
 Please note the facts : The distance from Buffalo to New 
 York, via the Central, is 441^ miles; via Erie Canal it is 502 
 miles, or 60 miles further, and by the Erie Railroad it is 423 
 miles, or 18^ less ; therefore, the latter should have the advan- 
 tage, at least in through traffic. 
 
 The Erie Canal was opened in 1825, and enlarged in 1862 
 from a capacity of 5 to 16 millions of tons, the boats being in- 
 creased from 76 to 240 tons. 
 
 The New York Central Railroad was organized August, 
 1853, by the consolidation of nine links, the first of which (the 
 Albany and Schenectady), was opened September 12th, 1831. 
 Nearly all of these lines were parallel to the canal, and may be 
 said to have been created by the business developed by it. The 
 Hudson River Railroad was opened October 3d, 1851, as an out- 
 let to the other system. The Erie was opened to Dunkirk, 
 April 22d, 1851, so that the two roads may be said to be of the 
 same age. Let us now compare their balance sheets for 1886, 
 and examine the results : 
 
 New York Central and Hudson River Railroad. 
 
 
 Passenger. 
 
 Freight. 
 
 f 
 
 Total. 
 
 Percentage 
 
 of 
 
 operating 
 
 expenses. 
 
 Gross earnings 
 
 Gross expenses 
 
 $10,341,850.12 
 
 5,700,678.23 
 
 $17,699,785.47 
 
 11,753,281.98 
 
 $28,041,636.59 
 
 17 , 453 , 900.21 
 
 62 
 
 Net receipts 
 
 $4,641,171.89 
 
 $ 5 , 946,50349 
 
 $10,587,676 38 
 
 
 New York , Lake Erie and Western Railroad. 
 
 Gross earnings 
 
 $4,193,820.85 
 
 $14,116,674.30 | 
 
 $18,310,495 15 
 
 66 
 
 Gross expenses 
 
 2,969,786.39 
 
 9,040,286 41 ! 
 
 12, 010, 072. 80 
 
 Net receipts 
 
 $1,224,034.46 
 
 $5,076,387.89 J 
 
 $ 6 , 300 , 422.35 
 
 
 This exhibit shows conclusively that the balance is in favor 
 of the longer line bordering the water route, by nearly 68 per 
 
I 
 
 cent. Doubtless most of this difference will be found to result 
 from the local passenger traffic due to greater density of popu- 
 lation. Referring to the report of the Railroad Commissioners 
 for 1886, I find these statements : 
 
 New York Central and Hudson River Traffic and Mileage 
 
 Statistics. 
 
 
 Through. 
 
 Local. 
 
 Total. 
 
 Per Cent, 
 of Local 
 Total. 
 
 Passengers carried 
 
 619,278 
 
 127 , 547 , 6 2 3 
 8,665,852 
 1,900,550,963 
 
 14,042,840 
 
 348,581,106 
 
 3,870,583 
 
 196,909,070 
 
 14,662,118 
 
 476,128,729 
 
 12,636,435 
 
 2,397,460,023 
 
 96 
 
 73 
 
 36 
 
 21 
 
 “ one mile 
 
 Tons of freight 
 
 “ “ carried one mile . . 
 
 Thus it appears that 96 per cent., or nearly all of the pas- 
 senger business, is local. Of the total passenger mileage 73 per 
 cent., and of the freight mileage but 21 per cent., are local. 
 
 As the freight business is relatively small, it might be sup- 
 posed that it is taken by the canal or the shorter railroad line, 
 but a glance at the freight column shows that the Central still 
 carries much more through freight than either the Erie Canal 
 or Railroad. 
 
 The statement for the New York, Lake Erie and Western 
 River Railroad gives : 
 
 Erie. 
 
 
 Through. 
 
 Local. 
 
 Total. 
 
 Per Cent. 
 
 Passengers carried 
 
 507,987 
 
 5 , 753 , I 3 I 
 
 6,261,118 
 
 92 
 
 “ “ one mile 
 
 49,914,259 
 
 133,290,200 
 
 183,204,462 
 
 75 
 
 Tons of freight 
 
 3,162,876 
 
 9,644,042 
 
 12,806,918 
 
 75 
 
 “ carried one mile .. . 
 
 912,898,126 
 
 1,145,495,896 
 
 2,058,394,022 
 
 57 
 
 New York Canals. 
 
 Tons of freight (1886) 
 
 5 , 293,982 
 
 The local freight of the Erie is about three times the 
 through tonnage. This is because 62% per cent, of the total 
 tonnage is coal and coke; flour and grain being but 9.21 per 
 
cent., and manufactures and merchandise only 5.34 per cent. ; 
 whilst on the Central only 23 per cent, is coal and^coke ; 20 per 
 cent, is flour and grain, and 28 percent, manufactures and mer- 
 chandise. 
 
 Thus it will be seen that the Erie business is derived largely 
 from its adjacent mining territory, and that it can scarcely be 
 considered a competitor even for the through traffic from the 
 lakes, although it taps them at two points, Dunkirk and Buffalo, 
 while the Central, notwithstanding the free canal and its own 
 great length of line, is far more profitable than its rival. 
 
 Other instances might be cited in support of this sixth 
 proposition, but I believe these will be sufficient, and time con- 
 strains me to sum up the consequences . 
 
 If the foregoing propositions be accepted as true, it must 
 follow that the “general welfare” of this country would be pro- 
 moted by opening up our much-neglected natural highways of 
 trade, and so make such an investment of our natural surplus as 
 would return to the people a manifold interest on their taxes. 
 
 In my opinion spending public money in constructing per- 
 manent fortifications is equivalent to burying it in a sinking 
 fund, from which it can never be recovered, as such defenses 
 would be useless against modern methods of attack. We need 
 speed and mobility in our batteries, or if they must be on land 
 and stationary, then sand or earth are better than stone. 
 
 Money spent on public buildings is used for the convenience 
 of the public service, and may or may not be an economical in- 
 vestment. It gives temporary employment, however, to a 
 limited class of artisans ; but money spent in the improvement 
 of our rivers and harbors is an investment which stimulates 
 every possible kind of industry, lowers the rates of transporta- 
 tion, extends the range of the market, increases the purchasing 
 power of wages, lowers the price of food and other products, re- 
 duces rates of insurance, prevents disasters from floods, reclaims 
 valuable property from inundations, and, confers many other 
 benefits upon the country at large. Need there be any question, 
 therefore, as to how it is best to dispose of a portion of the sur- 
 plus ? 
 
 That these conclusions are not mere generalities, I will sub- 
 mit only a brief statistical statement showing a comparative 
 
13 
 
 exhibit of the market range of wheat and the relative benefits con- 
 ferred by the various ways of communication at present rates. 
 
 Based upon October Prices from Chicago to Liverpool, 1 877. 
 
 
 Rate per 
 Ton, per 
 Mile. 
 
 Theoretical 
 Market Range 
 at 33 Vi per 
 Ton, or $i per 
 Bushel. 
 
 Relative 
 
 Distances. 
 
 Relative 
 
 Tributary 
 
 Areas. 
 
 Relative 
 
 Benefits. 
 
 
 Cents. 
 
 Miles. 
 
 
 
 
 Railroad 
 
 .508 
 
 6,666 
 
 3 
 
 9 
 
 1 
 
 Canal 
 
 •304 
 
 11, hi 
 
 5 
 
 25 
 
 2.8 
 
 Lake or River 
 
 • 157 
 
 22,222 
 
 10 
 
 100 
 
 11. 1 
 
 Lake and Canal 
 
 .200 
 
 16,666 
 
 
 
 
 Ocean 
 
 .077 
 
 43,290 
 
 20 
 
 400 
 
 44-4 
 
 From this table it appears that at canal rates the area bene- 
 fited would be 2.8 times that at rail rates ; at lake or river rates 
 it would be 1 1 times, and at ocean rates 44 times greater, show- 
 ing the superiority of movement in bulk with a minimum of 
 fixed expenses and low ratio of terminal charges. 
 
 It has been proved by careful experiment on the Elbe that 
 as the tonnage is doubled from 150 to 300 tons the cost of ton- 
 nage is lowered from .55 to .44 of a cent per ton, or about 20 per 
 cent., and a further increase in bulk still further reduced the 
 cost. 
 
 On the English waterways, which are chiefly artificial, the 
 actual cost of movement is 0.50 cents per ton per mile, and the 
 terminal charges are 0.25 cents. 
 
 The tendency, therefore, is towards larger vessels in the in- 
 terest of economy ; but this is limited by the amount of water 
 available over the bars at the harbor entrances and in our navi- 
 gable rivers. 
 
 It may not be generally known that there are not more than 
 six or seven 1 alluvial harbors on the Atlantic and Gulf coasts 
 where the depths over the bar exceed sixteen feet, and there are 
 many of our so-called navigable rivers where the depth in sum- 
 mer may not exceed two feet. The draught of the largest ocean 
 steamer is twenty-six feet and over : and it is no common occur- 
 rence for them to have to wait for the tide to cross even the 
 New York bar. 
 
 1 New York, Philadelphia, Norfolk, Port Royal, the mouth of the Savannah River 
 and New Orleans. 
 
The possibilities of our development in this direction can 
 only be realized by looking at the figures giving the extent of 
 the coast line of the United States. 
 
 A calculation by the coast survey in 1853, gives the total 
 shore line of the United States (including bays and inlets and 
 the great lakes, and excluding Alaska) at 25,476 miles. In the 
 river system there are in the Atlantic and Gulf States to the 
 head of tide water, 11,711 miles; in the central basin, 35,644 
 miles, and in the Pacific coast, 1710 miles, making a total shore 
 line of rivers in the United States of 49,065 miles. 1 
 
 We may say, therefore, that in round numbers we have 
 
 25.000 miles of coast line, 50,000 miles of river shore line, and 
 
 160.000 miles of railroad, but that of the first two items a very 
 small percentage is available for commerce, and yet at current 
 prices the rate charged for one mile of railroad would transport 
 the same load six and two-thirds miles on the ocean, or three and 
 one-third by river. 
 
 Although my time has about expired, I feel constrained, 
 with your indulgence, to carry this argument to its logical con- 
 clusion. 
 
 If it be asked wfyy the waterways are in this deplorable con- 
 dition, I would reply that it is because they are under the juris- 
 diction of various authorities having no direct interest in their 
 improvement. The United States, as a whole, has none ; the 
 States by themselves have none, and the riparian owners are not 
 concerned beyond their own requirements, which are generally 
 local. It is only by the concerted action of influential bodies of 
 citizens bringing a pressure to bear upon the representatives of 
 their district, that an appropriation can be obtained ; first, for 
 the survey, and then for the work, if found necessary. Thus, in 
 the absence of any well-organized department for conducting 
 these important civil works of the government, such as exists in 
 all the prominent European countries, much time and energy is 
 wasted in efforts to secure an appropriation for an important, 
 and it may be, urgent improvement, and these concessions are 
 frequently only obtained by an extended distribution of patron- 
 age. Again, when the River and Harbor Bill fails, as it has 
 done at the closing session of the last three Congresses, opera- 
 tions must be suspended, the plant depreciates, the civil corps is 
 
 1 Page 33, Report of the Commissioner of Navigation, Washington, D. C., 1886. 
 
5 
 
 almost disbanded, and the works themselves are frequently 
 washed away from the lack of funds for completion. 
 
 Certainly this is not an economical method ol administration. 
 Without detaining you to listen to a review of the numerous de- 
 fects in the present methods of administering these works, I 
 may indicate their characteristics by stating that the remedies 
 desired lie in the direction of permanency of residence for the 
 officers in charge, individual responsibility for results, adequacy, 
 and certainty of appropriations, and a system of promotions 
 based upon relative ability and not upon military succession. 
 
 These results can readily be secured by dividing the coun- 
 try into topographical basins, and assigning to each a chief engi- 
 neer, whose term of office should be for life, subject to removal 
 only for incompetency or misdemeanor. In this way only can 
 a thorough knowledge of the physical, mechanical, commercial, 
 social, legal, and administrative elements be intimately united in 
 an efficient, local, executive officer. 
 
 By some such plan there would be a possibility of expedition 
 and effective work being done upon our navigable rivers. With- 
 out it “ it may be for years ” before radical improvements are 
 effected. 
 
 Let us apply the methods of the present regime to the re- 
 quirements of this port. 
 
 We are hemmed in on every side, and out of thirty-eight 
 miles of water frontage (counting both banks of the Schuylkill) 
 there are only (omitting the Schuylkill) six miles, or about 15 
 per cent, available. As this is an exceedingly important matter 
 for the interests of Philadelphia, it will bear a moment’s investi- 
 gation : Beginning on the Delaware, at the lower limits of the 
 city, the four miles reaching to Hog Island are cut off by the 
 Maiden Island dike, just completed to create a channel over the 
 Mifflin bar. Most of the next three miles reaching to the 
 Schuylkill belong to the government reservation at Fort Mifflin 
 (where a solitary sargeant “ Holds the Fort ”) which is of no 
 possible use to the government, unless it be for storage of worn- 
 out material ; and of no service to the city as a means of defense, 
 being entirely too close. The next three and a half miles are 
 occupied by League Island and the Horseshoe shoals, thus mak- 
 ing about ten miles which are entirely occupied by the govern- 
 ment, without benefit to it, and greatly to the disadvantage of 
 
i6 
 
 this port. In the next six miles, from Greenwich to Richmond,, 
 are to be found the limited commercial facilities which it is so 
 desirable to extend. 
 
 And here the deep water navigation is terminated by the 
 Five-Mile Bar, which cuts off the remaining eight miles of deep 
 water to the city limits on the Poquessing. 
 
 Manifestly a portion of the reservations should be relin- 
 quished to the city, and the bars be reduced to a sufficient ex- 
 tent to open the upper river to deeper draft vessels, and to 
 improve the entrance to the Schuylkill where the bar requires 
 frequent attention. 
 
 The worst obstructions on the river are those within the 
 limits of the port. With them removed we should practically 
 have ocean rates of transportation to all ports that can be 
 reached by tidal waters. The complaints of lack of facilities at 
 this harbor are not due merely to the contracted western chan- 
 nel abreast of the islands, but to a neglect to appreciate and 
 develop the extended facilities for foreign commerce which na- 
 ture has so abundantly provided. The city is now obstructed 
 by six tranverse lines of railroads at grade, and to load steamers 
 of the size of those of the Cunard Line (470 feet long, 57.2 beam, 
 37.2 depth of hold) having a net registered tonnage of over 4000 
 tons, would require so large a freight movement as to still 
 further embarrass ordinary business transactions and produce 
 frequent blockades and casualties. To load every such vessel 
 would require about 250 cars of freight, if the cars were full. It 
 is not difficult to conceive of the condition of Delaware Avenue 
 if many vessels of this size were to attempt to discharge and 
 load along this frontage within a reasonable time. 
 
 The main obstructions to navigation are the shoals near the 
 limits of the city, namely, at Maiden Island and Five-Mile Bar, 
 and these are the ones that should be deepened, to open our 
 gates to foreign or even domestic commerce, to reduce the rates 
 of transportation, and to extend the market range of our pro- 
 ducts. 
 
 There was a time when Philadelphia had independent, inter- 
 nal waterways north, south, and west ; but these have been 
 gradually absorbed and controlled by competing interests so that 
 to-day the only open door for navigation is that by the river, via 
 the capes. It has been proposed to reduce this distance by the 
 
; 
 
 construction of a canal to the Atlantic Ocean near Absecom 
 Inlet. Without stopping to discuss this project, I need only say 
 that it would not reduce the time of reaching the ocean, because 
 of the limited velocity at which vessels of large size can navigate 
 such artificial channels. And there is already a much shorter 
 artificial waterway to the ocean via the Delaware and Raritan 
 Canal, which should be purchased and enlarged by the National 
 Government at very much less expense, and made an important 
 link in an all- water route via the Erie Canal, the lakes, the 
 Hennepin, or other canal (when completed), and the Mississippi 
 to a large part of the interior of our federal domain. 
 
 Concerning the influence of this canal on the commerce of 
 Philadelphia, it was testified by an eminent authority before the 
 Windom Committee, that in 1870 more tons passed through the 
 Delaware and Raritan Canal than all the foreign tonnage to and 
 from New York for that year, and that it aggregated about 
 4,000,000 tons per annum. It exceeded by three times the entire 
 tonnage both ways of the Suez Canal. 
 
 The same authority in his testimony before the Cullom In- 
 terstate Commerce Committee, in 1885, states that this canal is 
 now owned by the railroad company between Philadelphia and 
 New York ; that the tonnage of the canal has greatly diminished ; 
 that the Erie Canal is the only one of any importance in the 
 country not under the control of the railroads, and that, conse- 
 quently, there is no use in keeping up the canals at all ; that the 
 State canals were all bought up by the railroads between 1858 
 and 1875, and in some instances tracks have been laid on the 
 tow paths, thus destroying their competition. 
 
 Another witness states that the cost of improving the water 
 routes would come back to the people, many times over, in the 
 reduced rates of freight which they would secure even if all the 
 freight went, as now, by rail, and the canals were unused. 
 
 Governor Seymour says that by reducing the tolls of the 
 Erie Canal, the balance of trade was largely thrown in favor of 
 the United States, and in summing up their evidence, the Cul- 
 lom Committee concludes, “ That natural or artificial channels 
 of communication by water when favorably located, adequately 
 improved, and properly maintained, afford the cheapest method 
 of long-distance transportation now known, and that they must 
 continue to exercise in the future, as they have invariably exer- 
 
i8 
 
 cised in the past, an absolute controlling and beneficially regu- 
 lating influence upon the charges made upon any and all other 
 means of transit.” 
 
 In 1883 Mr. Blodgett wrote that the export of manufactured 
 products to foreign countries from Philadelphia amounted to 
 about $25,000,000 annually, and that one-half of this went by 
 way of New York, in consequence of the absence of shipping 
 facilities from this port direct. Yet this is a small part of the 
 output of our home manufactories upon which the freight rates 
 to the interior, as well as to the foreign ports, might be consid- 
 erably reduced if there were greater competition by water. 
 
 To extend the benefits of the Erie Canal to Philadelphia, 
 via the Delaware and Raritan ; to open an enlarged and shorter 
 line to New York by water; to connect Philadelphia with the 
 Mississippi Basin by means of the proposed Hennepin or other 
 canal ; to develop and improve the navigable waters of the 
 United States ; to place our shipping interests upon an equality 
 with those of other nations by suitable subsidies, and to open up 
 our harbor entrances to commerce, are matters which would 
 benefit not only the manufacturer, shipper, farmer, merchant, 
 artisan, and constructor, but every individual living in this Re- 
 public, and they merit the serious attention not only of the 
 legislator, but of every public-spirited and patriotic citizen. 
 
 Congress does not take the initiative, but will receive and 
 act upon the suggestion and recommendation of an intelligent 
 constituency. These, gentlemen, are objects worthy of your 
 consideration. They will not be attained without an effort, and 
 it is for the manufacturers and business men of Philadelphia to 
 take the initiative if they would secure results so beneficial to 
 themselves and the community. It is not sufficient to think, 
 nor to talk, but, in the language of our illustrious poet, we should 
 
 “ Act — act in the living present, 
 
 Heart within, and God o’er head.”