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THE LIBRARY

OF

THE UNIVERSITY

OF CALIFORNIA
LOS ANGELES



!i



Jlriie (Economic ©ssaps



THE CAUSE AND EXTENT OF THE RECENT INDUS-
TRIAL PROGRESS OF GERMANY. By Earl D. Howard.

THE CAUSES OF THE PANIC OF 1893. By William J.
Lauck.

INDUSTRIAL EDUCATION. By Harlow Stafford Person,
Ph.D.

FEDERAL REGULATION OF RAILWAY RATES. By Al-
bert N. Merritt, Ph.D.

SHIP SUBSIDIES. An Economic Study of the Policy of Sub-
sidizing Merchant Marines. By Walter T. Dunmore.

SOCIALISM: A CRITICAL ANALYSIS. By O. D. Skelton.

INDUSTRIAL ACCIDENTS ANDTHEIR COMPENSATION.
By Gilbert L. Campbell, B. S.

THE STANDARD OF LIVING AMONG THE INDUSTRIAL
PEOPLE OF AMERICA. By Frank H. Streightoff.

THE NAVIGABLE RHINE. By Edwin J. Clapp.

HISTORY AND ORGANIZATION OF CRIMINAL STATIS-
TICS IN THE UNITED STATES. By Louis Newton
Robinson.

SOCIAL VALUE. By B. M. Anderson, Jr.

FREIGHT CLASSIFICATION. By J. F. Strombeck.

WATERV/AYS VERSUS RAILVI/AYS. By Harold Glenn
Moulton.

THE VALUE OF ORGANIZED SPECULATION. By Harri-
son H. Brace.

INDUSTRIAL EDUCATION: ITS PROBLEMS, METHODS
AND DANGERS. By Albert H. Leake.

THE UNITED STATES INTERNAL TAX HISTORY FROM
I 86 I TO I 87 I . By Harry Edwin Smith-

WELFARE AS AN ECONOMIC QUANTITY. By G. P. Wat-
kins.

CONCILIATION AND ARBITRATION IN THE COAL IN-
DUSTRY IN THE UNITED STATES. By Arthur E. Suf-
fern.

THE CANADIAN IRON AND STEEL INDUSTRY. By W. J.
A. Donald.

THE TIN PLATE INDUSTRY. By D. E. Dunbar.

THE MEANS AND METHODS OF AGRICULTURAL EDU-
CATION. By Albert H. Leake.

THE TAXATION OF LAND VALUE. By Yetta Scheftel.

RAILROAD VALUATION. By Homer Bews Vanderblue.

RAILWAY RATES AND THE CANADIAN RAILWAY COM-
MISSION. By D. A. MacGibbon.

THE CHICAGO PRODUCE MARKET. By Edwin Griswold
Nourse.

THE ARBITRAL DETERMINATION OF RAILWAY WAGES.
By J. Noble Stockett.

THE RESULTS OF MUNICIPAL ELECTRIC LIGHTING
IN MASSACHUSETTS. By Edmond Earle Lincoln.

FAIR VALUE. The Meaning and Application of the Term
"Fair Valuation" as used by Utility Commissions. By
Harleigh H. Hartman.

A HISTORY OF THE ATLANTIC COAST LINE RAIL-
ROAD. By Harold Douglas Dozier.



^axt, ^c^affnetr & (YUatx ^xxT^t ^b&(Xi&



XIII

WATERWAYS VERSUS RAILWAYS



WATERWAYS VERSUS
RAILWAYS



BY



HAROLD G. MOULTON

INSTRUCTOR IN POLITICAL ECONOMY IN
THE UNIVERSITY OP CHICAGO




BOSTON AND NEW YORK

HOUGHTON MIFFLIN COMPANY

^ftc IMttxiitit pcc^^ CambriUgt



COPYRIGHT, 1912, BY HART, SCHAFFNER & MARX
ALL RIGHTS RESERVED

Published June igi2



10 m

m



:. w



TO
MY MOTHER



1491078



PREFACE

This series of books owes its existence to the generosity of
Messrs. Hart, Schaffner & Marx, of Chicago, who have
shown a special interest in trying to draw the attention of
American youth to the study of economic and commercial
subjects. For this purpose they have delegated to the un-
dersigned committee the task of selecting or approving of
topics, making announcements, and awarding prizes annu-
ally for those who wish to compete.

For the year ending June 1, 1911, there were offered: —
In Class A, which included any American without re-
striction, a first prize of $1000, and a second prize of $500.
In Class B, which included any who were at the time
undergraduates of an American college, a first prize of
$300, and a second prize of $200.

Any essay submitted in Class B, if deemed of suflScient
merit, could receive a prize in Class A.

The present volume, submitted in Class A, was awarded
the first prize in that class.

J. Laurence Laughlin, Chairman,

University of Chicago.
J. B. Clark,

Columbia University.
Henry C. Adams,

University of Michigan,
Horace White,

New York City.
Edwin F. Gay,

Harvard University.



AUTHOR'S PREFACE

When this investigation was undertaken the writer shared
in the common belief that traffic of certain kinds can be
carried at substantially less cost by water than by rail.
He inclined to the view, however, that in the case of many
of the waterway projects before the country the traffic
available was not sufficient to warrant the contemplated
expenditures, and it was thought that the chief contribu-
tion to be made would lie in an investigation of the traffic
possibilities of certain proposed water routes.

A reading of the literature of the subject, however, soon
made it evident that no adequate analysis of the cost of
transportation by water had ever been made; that it was
merely tacitly assumed that water transportation is cheaper
than that by rail; and that the rate comparisons some-
times presented in support of this assumption were virtu-
ally meaningless. This discovery led to a shifting of em-
phasis to the cost aspect of the problem, the question of
traffic assuming a secondary place.

The constant reference by writers on the subject to the
apparently successful experience of European countries in
maintaining harmony and mutual cooperation between
waterways and railways made an investigation of Euro-
pean transportation conditions imperative to a compre-
hensive treatment of the subject. When the author went
to Europe he shared, again, in the general belief that water
transportation on the Continent was of undoubted eco-
nomic advantage, and it was believed that the chief con-
tribution to be made from a study of foreign transporta-
tion would lie in contrasting the geographical, industrial,
and governmental conditions of Europe and the United



AUTHOR'S PREFACE

When this investigation was undertaken the writer shared
in the common belief that traflSc of certain kinds can be
carried at substantially less cost by water than by rail.
He inclined to the view, however, that in the case of many
of the waterway projects before the country the traffic
available was not sufficient to warrant the contemplated
expenditures, and it was thought that the chief contribu-
tion to be made would lie in an investigation of the traffic
possibilities of certain proposed water routes.

A reading of the literature of the subject, however, soon
made it evident that no adequate analysis of the cost of
transportation by water had ever been made; that it was
merely tacitly assumed that water transportation is cheaper
than that by rail; and that the rate comparisons some-
times presented in support of this assumption were virtu-
ally meaningless. This discovery led to a shifting of em-
phasis to the cost aspect of the problem, the question of
traffic assuming a secondary place.

The constant reference by writers on the subject to the
apparently successful experience of European countries in
maintaining harmony and mutual cooperation between
waterways and railways made an investigation of Euro-
pean transportation conditions imperative to a compre-
hensive treatment of the subject. When the author went
to Europe he shared, again, in the general belief that water
transportation on the Continent was of undoubted eco-
nomic advantage, and it was believed that the chief con-
tribution to be made from a study of foreign transporta-
tion would lie in contrasting the geographical, industrial,
and governmental conditions of Europe and the United



X PREFACE

States. It was doubted, in other words, if conditions aV ""^
were sufficiently similar to those in this country to
the conclusions commonly drawn from European oxpt- lence.
But to the surprise of the author it soon became apparent
that in Europe, as in the United States, Httle considera-
tion had ever been given to the inclusive cost of transpor-
tation by water, as compared with that by rail, and that
the rate comparisons usually made proved nothing what-
soever. Consequently, here again, the question of cost as-
sumed the foremost place; and the comparison of condi-
tions became incidental.

Because the writer's own views were thus constantly
undergoing revision in the course of the investigation, and
because of a growing consciousness that he was becoming
more and more at outright loggerheads with the advocates
of waterway development, the arrangement of the subject-
matter, the method of attack, and even the style is not all
that he could wish. It has seemed preferable, on the whole,
however, to leave it in its present form rather than to un-
dertake a thoroughgoing revision. It may be, indeed, that
the conclusions will be more readily accepted if the reader
goes through the same stages of evolution that the writer
passed through.

The waterway question is closely related to the whole
movement for the conservation of natural resources; and it
is foreseen that this work will probably be attacked by con-
servationists on the ground that it has not given sufficient
attention to, or made adequate allowance for, allied bene-
fits of waterway development, such as the prevention of
floods, the reclamation of riparian lands, the development
of water power, etc. It is true that the main emphasis has
been placed upon the transportation aspect of the case,
and the author recognizes that he has not adequately
treated the other phases of the subject. He would point
out here, however, that so far as canal transportation is
concerned these allied benefits do not figure largely in the



PREFACE xi

case'^. And it is believed, moreover, that as regards river
impc;. 7 ment the burden of proof has been placed upon the
conse-ivat.wists. It has been generally assumed that, since
the cost of river improvement will be more than paid for
by transportation advantages alone, the allied benefits will
constitute a net gain to society. But if the conclusions
reached in this volume be sound, it becomes necessary (in
most cases) to establish the value of river improvement on
these incidental grounds alone. If this can be done, well
and good. There is no objection to conservation, provided
the thing conserved is worth what it costs to conserve it.
It should be observed further, however, that river im-
provement for the sole purposes of reclaiming flooded lands,
developing water power, etc., may well take an altogether
different form than when transportation is a primary con-
sideration. Independent investigations of these aspects of
the waterway question are badly needed.

This opportunity is taken to express appreciation of the
kindness shown the writer by the various consulates of
Europe in giving him access to all their data on the subject,
and to the Department of Public Works of Germany, who
extended every courtesy, even to the use of the department
library. Especial acknowledgment of thanks is also due
to M. Colson, Director of Roads and Bridges, and Minis-
ter of State of France. Mr. A. C. Goodrich rendered valu-
able assistance in the preparation of maps and charts. I
am under great obligation to Messrs. Hart, Schaffner &
Marx, whose financial assistance made the European in-
vestigation possible. Above all, I am deeply grateful to
Professor J. Laurence Laughlin, who inspired the work,
and who gave his searching criticism at every stage of the
writing.

Harold G. Moulton.
Chicago, February, 1912.



CONTENTS

CHAPTER I

Introduction: the Revival of the Agitation for
Waterways

1. Growth of the waterways movement. — 2. Projects before

the country 1-9

CHAPTER II

Causes of the Revival

1. Our natural resources should be conserved and used. — 2. By-
effects of waterway development: a. Industrial and sani-
tary benefits; b. Development of water power; c. Prevention
of floods and reclamation of land. — 3. Water transportation
cheaper than rail. — 4. Railways should be subjected to
competition. — 5. Waterways should serve as auxiliaries to
railways. — 6. Example of foreign waterways. — 7. Influ-
ence of former success of American waterways. — 8. Political
and special interests 10-17

CHAPTER in

Analysis of Current Arguments

1. Introductory. — 2. The break-down of the railway service.
— 3. Explanation of the attitude of railway men. — 4. Com-
petitive regulation of railway rates. — 5. Canals as aids [to
railways. — 6. The contention that traflSc moves more
rapidly by water than by rail. — 7. The greater cheapness of
water-borne traflSc. — 8. Benefits to farmers, laborers, etc. —
9. Reasoning from foreign example. — 10. Conclusion . . 18-44

CHAPTER IV

A Nation- Wide System of Waterways

1. Introduction. — 2. Effects of geographic conditions upon
industrial development. — 3. Water transportation confined
to natural valleys. — 4. Territorial expanse as affecting



xiv CONTENTS

water transport. — 5. River currents, floods, and droughts.
— 6. Interruptions to navigation on account of ice. — 7. The
distribution of traffic in relation to natural water routes.
The question of transshipment. — 8. Density of traffic. —
9. Extent of railway development. — 10. The influence of
sectionalism. — 11. Conclusions 45-66



CHAPTER V

Brief History of Water Transportation in the United

States

1. Expenditures upon canals and rivers of the United States. —
2. Movement of traffic on An.erican waterways. — 3. Char-
acter of water-borne freight. — 4. Causes of the decline of
water traffic: a. Inadequate development of water routes;

b. Railway advantages in the carriage of high grade freight;

c. Cutting of rates on competitive traffic by the railways;

d. Refusal of railways to cooperate with water lines; e. Rail-
way control of terminal and transfer facilities; /. Railway
control of waterways; g. The shifting of routes of trade and
the development of new regions; h. Efficient organization of
the railway service; i. Special advantages offered by the rail-
ways for certain kinds of bulky freight; j. Exhaustion of
supply of waterway commodities; k. The heavy cost of trans-
shipment. — 5. Conclusion 67-97

CHAPTER VI

The Barge Canals of Great Britain

1. Introduction : England offers an unusually favorable field of
study. — 2. Early canal history in England. — 3. Decline of
water traffic since 1850. — 4. The waterways revival. —
6. The Royal Commission on Canals and Inland Navigations.
— 6. Present status of English waterways. — 7. Decline of
water traffic in general. — 8. Waterways ill adapted to the
needs of coal shippers. — 9. Building-materials often more
conveniently shipped by rail. — 10. Raw cotton more satis-
factorily distributed to inland cities by rail. — 11. Railways
serve the needs of farmers better than canals. — 12. Surviv-
ing traffic due to special conditions, to inertia, and to the
peculiar character of the labor employed. — 13. The strug-
gle for supremacy between canals and railways. — 14. Spe-
cific improvements recommended by the commission. —
15. Cost of carrying out the improvements. — 16. Amount of
traffic necessary to yield a direct return on the outlay. —
17. Possibilities of increased traffic. — 18. Criticism of cost



CONTENTS XV

estimates. — 19. Capacity of the proposed waterways insuf-
ficient for the traffic required. — 20. Indirect benefits to
trade. — 21. Reasons why shippers would not extensively use
improved waterways. — 22. The evident bias of the Royal
Commission. — 2.3. The proposed improvements will prob-
ably never be undertaken. — 24. Comparison of English
and American transportation conditions 98-145



CHAPTER VII

The Manchester Ship Canal

1. General description. — 2. Financial results. — 3. Reasons
for failure. — 4. Indirect benefits few. — 5. Conditions were
exceptionally favorable 146-162

CHAPTER \TII

The Forth and Clyde Ship Canal

1. Arguments for the proposed canal. — 2. Alternative routes
suggested. — 3. The canal will probably never be con-
structed. — 4. It is not commercially feasible 163-169

CHAPTER IX

The Waterways of Germany. Cost, Traffic Development,
and Financial Success

1. Brief history of waterway development in Germany. —
2. Waterway development has kept good pace with the gen-
eral growth of the country in last thirty years. — 3. Develop-
ment of traffic not uniform. — 4. The Rhine River, because
of exceptional conditions, has shown a great increase in
traffic. — 5. Traffic on the Main River developed only by
means of enormous subsidies. — 6. The Saar River has failed
to develop the resources along its banks. — 7. Traffic on the
Rhine-Marne Canal mainly coal and ores. — Development
slow. — 8. The Main-Danube Canal a complete failure. —
9. Traffic on the Danube very small, and but slowly increas-
ing. — 10. The "Mark Waterways" economically a failure.
— 11. The new Berlin-Stettin Canal to involve a heavy
economic loss. — 12. Waterways of eastern Prussia unim-
portant. — 13. The Weser River — a complete failure. —

14. The Dortmund-Ems Canal not an economic success. —

15. The Kiel Canal military in its aim. — 16. The new
Rhine- Weser Canal a probable economic failure .... 170-227



xiv CONTENTS

water transport. — 5. River currents, floods, and droughts.
— 6. Interruptions to navigation on account of ice. — 7. The
distribution of traffic in relation to natural water routes.
The question of transshipment. — 8. Density of traflBc. —
9. Extent of railway development. — 10. The influence of
sectionalism. — 11. Conclusions 45-66

CHAPTER V

Brief History of Water Transportation in the United

States

1. Expenditures upon canals and rivers of the United States. —
2. Movement of traffic on American waterways. — 3. Char-
acter of water-borne freight. — 4. Causes of the decline of
water traffic: a. Inadequate development of water routes;
6. Railway advantages in the carriage of high grade freight;

c. Cutting of rates on competitive traffic by the railways;

d. Refusal of railways to cooperate with water lines; e. Rail-
way control of terminal and transfer facilities; /. Railway
control of waterways; g. The shifting of routes of trade and
the development of new regions; h. Efficient organization of
the railway service; i. Special advantages offered by the rail-
ways for certain kinds of bulky freight; j. Exhaustion of
supply of waterway commodities; k. The heavy cost of trans-
shipment. — 5. Conclusion 67-97



CHAPTER VI

The Barge Canals of Great Britain

Introduction : England offers an unusually favorable field of
study. — 2. Early canal history in England. — 3. Decline of
water traffic since 1850. — 4. The waterways revival. —
5. The Royal Commission on Canals and Inland Navigations.
— 6. Present status of English waterways. — 7. Decline of
water traffic in general. — 8. Waterways ill adapted to the
needs of coal shippers. — 9. Building-materials often more
conveniently shipped by rail. — 10. Raw cotton more satis-
factorily distributed to inland cities by rail. — 11. Railways
serve the needs of farmers better than canals. — 12. Surviv-
ing traffic due to special conditions, to inertia, and to the
peculiar character of the labor employed. — 13. The strug-
gle for supremacy between canals and railways. — 14. Spe-
cific improvements recommended by the commission. —
15. Cost of carrying out the improvements. — 16. Amount of
traffic necessary to yield a direct return on the outlay. —
17. Possibilities of increased traffic. — 18. Criticism of cost



CONTENTS



XV



estimates. — 19. Capacity of the proposed waterways insuf-
ficient for the traffic required. — 20. Indirect benefits to
trade. — 21. Reasons why shippers would not extensively use
improved waterways. — 22. The evident bias of the Royal
Commission. — 23. The proposed improvements will prob-
ably never be undertaken. — 24. Comparison of English
and American transportation conditions 98-145

CHAPTER VII

The Manchester Ship Canal

1. General description. — 2. Financial results. — 3. Reasons
for failure. — 4. Indirect benefits few. — 5. Conditions were
exceptionally favorable 146-162

CHAPTER VIII

The Forth and Clyde Ship Canal

1. Arguments for the proposed canal. — 2. Alternative routes
suggested. — 3. The canal will probably never be con-
structed. — 4. It is not commercially feasible 163-169

CHAPTER IX

The Waterways of Germany. Cost, Traffic Development,
and Financial Success

1. Brief history of waterway development in Germany. —
2. Waterway development has kept good pace with the gen-
eral growth of the country in last thirty years. — 3. Develop)-
ment of traffic not uniform. — 4. The Rhine River, because
of exceptional conditions, has shown a great increase in
traffic. — 5. Traffic on the Main River developed only by
means of enormous subsidies. — 6. The Saar River has failed
to develop the resources along its banks. — 7. Traffic on the
Rhine-Marne Canal mainly coal and ores. — Development
slow. — 8. The Main-Danube Canal a complete failure. —
9. Traffic on the Danube very small, and but slowly increas-
ing. — 10. The "Mark Waterways" economically a failure.
— 11. The new Berlin-Stettin Canal to involve a heavy
economic loss. — 12. Waterways of eastern Prussia unim-
portant. — 13. The Weser River — a complete failure. —

14. The Dortmund-Ems Canal not an economic success. —

15. The Kiel Canal military in its aim. — 16. The new
Rhine- Weser Canal a probable economic failure .... 170-227



xvi CONTENTS

CHAPTER X

Examination of the German Transportation Policy

1. Transportation by water believed to be cheaper than by
rail. — 2. Canals as a relief to railways in areas of congested
traffic. — 3. The military argument for waterways. — 4. De-
centralization of industry. — 5. The aid to agriculture only
incidental. — 6. Summary statement. — 7. Reasons for con-
tinuing the waterway policy 22S-257

CHAPTER XI

A Comparison op German and American Transportation
Conditions

1. Geographic conditions unusually favorable to water trans-
portation in Germany. — 2. German industrial conditions
likewise favorable to water traffic. — 3. Administrative con-
ditions incomparably more favorable in Germany than in
the United States. — 4. Conclusion 258-270

CHAPTER Xn

Transportation in France

1. Historical sketch of waterway development. — 2. French
railway policy. — 3. The Government prevents competition
for waterway commodities. — 4. Waterways entirely sup-
ported at public expense; railways yield a large revenue to
the Government. — 5. Waterways carry only about one
fourth the slow freight, and their proportion decreasing. —
6. Four fifths of the waterway traffic in one fifth the area.

— 7. Transshipments are rare. — 8. When railways have
been permitted to lower their rates they have diverted traf-
fic from the waterways. — 9. Dividing traffic between two
agents of transport involves a heavy economic loss. — 10.
French railway rates much higher than those of the United
States. French water rates higher than American rail rates.

— 11. Reasons for the continuation of the waterway pol-
icy. — 12. Comparison of French and American transporta-
tion conditions 271-297

CHAPTER Xin

The Waterways of Belgium

1. Brief historical statement. — 2. Traffic development. —
S. Waterways conducted at a heavy annual loss. — 4. Deficit



CONTENTS xvii

paid out of railway earnings. — 5. Railways not allowed to
compete with the waterways. — 6. Railways cooperate with
the waterways. — 7. Conditions in Belgium exceptionally
favorable to waterway development 298-808

CHAPTER XIV

The Canals of the Netherlands

Extent of the canal system, and ownership. — 2. Ship-
canals of Holland. — 3. The Rhine canals. — 4. Interior
canals. — 5. The lateral canals. — 6. Influence of custom
on present waterway policy. — 7. Contrast with American
transport conditions. — 8. Railway development in Holland
difficult. — 9. Tolls and dues. — 10. Conclusion .... 309-323



CHAPTER XV

The Lakes-to-Gulf Ship Canal

Introduction. — 2. Probable cost of the undertaking; en-
gineering difficulties. — 3. Traffic necessary to yield returns
on the investment. — 4. Ocean vessels would not use the
route. — 5. The project visionary in the extreme .... 324-352

CHAPTER XVI

"Fourteen Feet through the Valley"

Introduction: ocean and lake vessels could not use the route.

— 2, The coasting trade in winter would not be undertaken
by Lake boats. — 3. A depth of fourteen feet unnecessary for
the barge traffic. — 4. Sufficient water power could not be de-
veloped to warrant the enormous expenditures involved . 353-369

CHAPTER XVII

A Depth of Eight Feet from Lakes to Gulf

Introduction. — 2. Traffic necessarily of low grade. — 3.
Agricultural produce would make little use of the waterway.



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