The coastwise traffic of the Atlantic and Gulf seaboard ports of the United States is handled mainly by three different groups of carriers:

1. The steamship lines which do a general freight and passenger business. While there are several important coastwise steamship lines, their number is relatively small, considering the volume of business.

2. The vessels operated by companies engaged in the manufacture and sale of lumber. The large lumber traffic coastwise is handled mostly by the lumber companies.

3. There is a heavy barge traffic in coal, especially from Norfolk and Newport News northward. This coal traffic is handled partly by individual carriers.

As the railroad companies are not engaged in the manufacture and sale of lumber, there is no connection between the railroads and the transportation of lumber coastwise. Several of the railroad companies leading to the North Atlantic seaboard are large owners and miners of anthracite coal. The Philadelphia and Reading Railway, the largest coal road, has an extensive coastwise service. In the case of the other hard-coal roads there is no direct connection between the railroad companies and the coastwise traffic in coal. The railroads do not engage in the coastwise transportation of soft coal, and the individual companies which conduct this coastwise coal transportation are distinct from the rail carriers; but the influence of the railroad companies upon the business of moving coal by water amounts in many instances to a virtual, though indirect, control.

There are two important coast wise lines owned and controlled by railroad companies. The larger one of these two is the Morgan Line, which operates a large fleet of vessels between New York and New Orleans and Galveston. The other distinctively railroad coastwise steamship line is the Old Colony Steamboat Company, controlled by

the New York, New Haven and Hartford Railroad. This line connects New York with Providence, Fall River, and other New England ports. Most of the general steamship lines engaged in coastwise business are managed by companies independent of railroad domination. It is, however, generally understood in financial circles that several of the steamship lines are controlled by men who have important holdings in the stocks of our Eastern railroad systems.

The vast coastwise trade of our Great Lakes is largely handled by vessels belonging either to the United States Steel Corporation, the Standard Oil Company, or the railroads having lake connections. The Grand Trunk, the New York Central, the Erie, the Lehigh Valley, the Delaware, Lackawanna and Western, the Pennsylvania, the Baltimore and Ohio, and the Great Northern railroad companies have lines of steamers operated on the Great Lakes for the purpose of enabling the railroad companies to participate more advantageously in the commerce originating and terminating in the region about the Great Lakes.

The policy of the British railroad companies has been to establish steamship lines from the British Isles to the leading Continental ports. The coöperation of rail and ocean carriers is more complete in the United Kingdom than in America. Although the British railroad companies, like most of the American railroads serving the Atlantic ports of the United States, have not found it necessary to establish transatlantic lines, the British railroads have found it advantageous to provide facilities for the direct and speedy handling of traffic between interior points in the United Kingdom and Continental ports. Traffic both within the United Kingdom and between the United Kingdom and the Continent is divided up territorially among the leading railway companies and their steamship lines; and excellent facilities have been de

veloped for carrying on the great trade between the British Isles and the Continental countries of Europe.

The coördination of the rail and ocean transportation services is becoming increasingly close. This higher degree of coördination will be an advantage to the shipper, unless it results in giving the carrier a monopoly that enables him to charge unreasonably high rates and to restrict his services to the more profitable branches of traffic. The shipper, however, is in little danger of suffering from monopoly in the ocean transportation service, because the all-pervading competition prevailing on the ocean gives the shipper a safeguard against extortion, as far as ocean transportation charges are concerned.

The growing consolidation of railroads may well give the shipping public some concern, because the scope of competition among land carriers can be largely restricted by monopoly and combination of rival railroads. Indeed, the interests of the shipper require that the influence of competition upon railway charges should be supplemented by an intelligent governmental regulation of the railroad. service; but with competition to safeguard his interests upon the ocean, and with real governmental regulation of the railroad service, the shipper may welcome the fullest measure of coöperation among rail and ocean carriers.

REFERENCES FOR FURTHER READING

The information presented in this chapter was mostly obtained by Dr. J. Russell Smith, Mr. Thomas Conway, Jr., and the author, by correspondence and interviews with men engaged in shipping. There is little printed literature upon the subject of the coöperation and combination of rail and ocean carriers. Some fragmentary data may be obtained from the Annual Reports of the Commissioner of Navigation, Washington, D. C., and from the "List of Steamer Lines Plying between Ports of the United States and Foreign Ports," compiled by the Bureau of Statistics, and published in the Monthly Summary of Commerce and Finance of the United States, August, 1903.

CHAPTER XIII

OCEAN FARES AND RATES

OCEAN fares and rates include the charges for carrying the mails, conveying passengers, and transporting various kinds of freight. The purpose of this chapter is to explain how the charges for each service are fixed and maintained, and to discuss the influence of competition; to show, in other words, how the forces discussed in the two preceding chapters operate in the making and regulation of ocean transportation charges.

The payments received by the steamship companies for carrying the mails were explained in Chapter VII, and little additional need be said. In letting ocean mail contracts the Government sometimes asks for competitive bids, and sometimes, without advertising for bids, makes arrangements with various companies in accordance with the provisions of general statutes. Not infrequently special laws authorize the executive department of the Government to negotiate for a particular mail service; and this is especially the case where shipping subsidies are included in mail payments; as, for example, Great Britain's contract with the Cunard Steamship Company, and the contracts of the German Empire with the North German Lloyd Company.

Mail payments are only partially determined by competition. Practically, all governments pay vessels of their own flag more for carrying the mails than they pay or would need to pay foreign vessels. The payments by the

United States Post-Office Department for carrying the ocean mails under the "noncontract " plan of payment are an instance of giving the domestic vessel more than the foreign one for the same service; and under the contract system, also, the United States pays more to American ships for carrying the mails to Europe than foreign steamship companies would charge.

Theoretically, the ocean mail contracts let by the United States under the Act of March 3, 1891, are competitive, the law stipulating that "said contracts shall be made with the lowest responsible bidder," and that "the rate of compensation to be paid . . . shall not exceed the sum of" four dollars, two dollars, one dollar, and two thirds of a dollar, according to the class of the ship, per mile of the outward voyage; but the number of lines now engaged in foreign commerce under the American flag is so small, that there is practically no competitive bidding under the Act of 1891, and the sums paid by the Postmaster-General for each of the seven contracts in force are the maximum rates authorized by the law.

The most important characteristic of contracts for the transportation of ocean mails is that the payments cover not only the mail service, but also numerous other obligations on the part of the steamship, the purpose of the country making the contract being to promote its mercantile and naval interests. This is equivalent to saying that the basis of ocean mail payments is political rather than commercial; that they are determined primarily neither by monopoly nor by competition, but by the policy adopted by each country to strengthen its industrial, commercial, and naval position among the competing nations.

Passenger traffic is handled entirely by steamship lines. The fares charged are competitive, but as the business is handled only by companies operating a relatively small number of large lines operated over well-established.