CHAPTER XXVIII

THE RELATIONS OF INLAND WATERWAYS AND RAILROADS AS CARRIERS

THE transportation services performed by the inland waterways differ in many particulars from the services rendered by railroads. Waterways are especially adapted to the transportation of such articles as grain, lumber, minerals, sand, brick, and other commodities that may be shipped in large quantities and at a slow rate of speed. The railroad is adapted to the transportation of all varieties of articles, and in the case of high-priced commodities requiring rapid transportation the railroad is the only carrier capable of performing the service.

The relations of inland waterways as carriers were well summarized in the following resolution adopted some years since by the Fourth International Congress on Inland Navigation: "The existence and development together of railways and waterways is desirable, first, because these two means of transport are the complements of each other, and ought to contribute each according to its special merits to the public good; second, because, viewed broadly, the industrial and commercial development which will result from the improvement of the means of communication must in the end profit both railways and waterways."

Waterways are both competitors and complements of the railroads. The two means of transportation serve commerce in different ways. When shippers are able to

choose between the two methods of transportation, the waterways compete with the railroads for the carriage of several kinds of traffic, and the competition of efficient waterways compels the railroads to make their rates with reference to water competition; but the ultimate effect of water competition is to increase the traffic and the revenues of the competing railroad lines. This fact may be explained by a brief analysis of the relations of the two agencies of transportation.

As competitors of the railroads, waterways place a limit on the maximum charges which the rail carrier may impose. The most conspicuous illustration of this fact is the effect of the rates on the Great Lakes upon the charges of the railroads that compete for the traffic free to move either by the lakes or by rail. In times past the Erie Canal has placed a very definite maximum limit upon railroad charges between the lakes and tidewater. At the present time, however, it is possible to carry traffic by rail about as cheaply as it can be moved by the unimproved Erie Canal. The enlargement of that waterway now in progress will undoubtedly restore to it the influence it has formerly had upon railroad charges.

The influence of water transportation on rail rates is especially conspicuous in the case of the Danube, Rhine, Elbe, and other rivers of Europe upon which there is a large volume of traffic.

A study of the annual report of the Chief of Engineers of the United States Army will show that a large number of navigable rivers of the United States, even in their present undeveloped condition, excrcise more or less influence locally upon the charges imposed by the railroads. This influence of water transportation upon rail transportation affects only a part of the traffic handled by rail, and its influence in the case of most waterways is local. The competition of waterways is not a complete and ade

quate regulator of charges of railroads, but it is of such advantage to the public that most countries are spending large sums of money to increase and widen the scope of water competition.

The public estimation put upon the efficacy and value of competition of waterways with railroads was stated twenty years ago, in the report prepared by a Senate committee, of which Hon. Shelby M. Cullom was chairman, to accompany the bill which in 1887 became the present Interstate Commerce Act. The report stated that

"The evidence before the committee accords with the experience of all nations in recognizing the water routes as the most efficient cheapeners and regulators of railway charges. Their influence is not confined within the limits of the territory immediately accessible to water communication, but extends further, and controls railroad rates at such remote interior points as have competing lines reaching means of transport by water. Competition between railroads sooner or later leads to combination or consolidation, but neither can prevail to secure unreasonable rates in the face of direct competition with free natural or artificial water routes. The conclusion of the committee is, therefore, 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 exercised in the past, an absolutely controlling and beneficially regulating influence upon the charges made upon any and all means of transit."

In order to be an effective competitor of the railroads the waterway must, however, meet the conditions of present-day commerce. No transportation agency can be of value to the public unless it is prepared to perform the transportation services shippers desire to secure. The

Great Lakes in the United States and the main waterways of Europe fulfill the transportation conditions demanded by present business methods. The same is true of a few of the rivers of the United States, though in the case of many of our rivers and most of the American canals this is not true. These antiquated waterways have ceased to be effective competitors of our railroads whose technical development is of the highest order.

Waterways are complements of the railroads. In the long run water competition is not ruinous, but helpful, to the railroads. The truth of this somewhat paradoxical statement is due to the fact that the two means of transportation are different agents of commerce. The waterway, such as the Great Lakes or the Rhine River, by providing facilities for the cheap transportation of a large tonnage of bulky commodities, so promotes industrial development and so increases the density of population as ultimately to give the railroads a larger and more profitable traffic than they would secure if the waterway were not in existence.

Canals, rivers, and lakes create a large share of their traffic. The cost of transportation determines to a great extent the amount of goods shipped. Cheaper rates give to existing categories of freight a larger and wider market and introduce into commerce new articles, such, for instance, as sand, stone, straw, fertilizers, and wood, which were formerly unable to bear the costs of transportation. Again, the waterway creates traffic for the railroads as well as for itself. It makes raw materials cheaper, increases the number of those that are available for use, and thus adds to the products of agriculture and manufactures seeking transportation. The effects of increasing and cheapening raw materials are complex; cheaper wholesale and retail prices and higher wages are possible, and these in turn prepare the way for a larger and more varied

consumption of goods. This means important additions to the shipments, especially of manufactured goods, the kind of freight which from its nature falls mainly to the railroads.

Being complements as well as competitors of the railroads, it is desirable both for the public and for the railroads that the two means of transportation should be coördinated. While there is no sharp division of freight between waterways and railroads one kind of traffic not being carried invariably by water and other kinds by rail -the coördination of the two means of transportation enables each carrier to handle the traffic for which it is best adapted. This coördination of rail and water routes has been well worked out on the Great Lakes with most economical results. The policy of Germany, France, and certain other European countries also is to coördinate rail and water routes for the purpose of enabling each means of transportation to perform to the best advantage the service for which it is adapted.

The coördination of rail and water transportation has a favorable rather than a detrimental effect upon railroad revenues. If the waterway carries a large traffic the freight and passenger business of the railroads becomes more profitable. In a thickly settled country, whose industries and trade require the transportation of large quantities of raw materials and manufactures, and where the traffic is so heavy as to provide a large tonnage for movement both for the railways and the waterways, the division of the traffic between the two carriers has the effect of making the traffic of the railroads relatively more profitable. Manufactures and other commodities of high value, upon which the rail rates are greater than they are upon materials of industry, constitute a larger percentage of the total traffic of the railroads than they would constitute if the waterway were not in existence. The effect of