A history of commerce

by Clive Day

669. Relative decline in transportation by canals and rivers.—The development of the railroad system has not entirely done away with the previous systems of internal transportation, but it has reduced them to subordinate importance. The decline is especially noticeable in the case of canals. Even in 1880 nearly half of the total canal mileage had been abandoned and a large number of the canals remaining in operation were not paying expenses. The cost of transportation on the canals has been reduced by deepening them to take in larger boats; tolls have been entirely abolished, as in the case of the Erie Canal; and still the superior speed and certainty of transportation by rail have robbed the canals of the bulk of the traffic. Some of the river routes have fared better. The Mississippi River system, notably, is still an important channel of trade, but even in the territory it serves the railroads far outrank it in importance, and most of the inland waterways have lost their previous significance.

670. Importance of the Great Lakes; St. Mary’s Canal.—While the country could now renounce, without very serious loss, the rivers and canals which were formerly so important as means of transportation, it could ill afford to dispense with the Great Lakes along its northern boundary. In the first half of the century Lake Erie was a useful means of communication with the growing States of the West, and gained greatly in importance with the construction of canals after 1825. It was not until the second half of the century, however, that the three western lakes showed their possibilities as channels through which the national resources might be conducted to districts where they could be best utilized. Between 1860 and 1900 the tonnage on the Great Lakes grew sixfold, and increased even more in carrying capacity as wooden sailing vessels gave place to large steel steamers. Freight rates have fallen below one tenth of a cent per ton-mile, and immense amounts of ore, coal, grain, and lumber have thus found a cheap means of access to market.

In 1855 a canal was completed to avoid the rapids in St. Mary’s River at the outlet of Lake Superior, and this canal, since deepened and improved, has become one of the great commercial channels of the world. The Lake Superior region has proved to be wonderfully rich in iron, copper, timber, and other products essential to modern industry. In 1913 the tonnage of vessels passing through the St. Mary’s Canal was greater than the tonnage entering the seaports of the United States from all foreign countries, and was more than double the tonnage passing through the Suez Canal.

671. Decline of American shipping.—In contrast with the great development of the means of internal transportation we have to note, in this period, a decided decline in the American shipping engaged in foreign trade. The total tonnage of the country was in 1913 nearly double what it had been in 1860, and entitled the United States to a position high up among trading countries. About one third of this total, however, was employed on the Great Lakes, and most of the remainder was engaged in the coasting trade. Both of these branches of navigation could be, and were, protected by law against the competition of foreign ship-owners. The trade of this country with other countries, however, could not be restricted to American vessels without danger of retaliation; and the attempts of the United States to favor its own vessels in foreign trade, by taxing foreign vessels at the port of entry, had been given up before 1860. Now in this branch of shipping, in which the vessels of all countries of the world compete on equal terms, the tonnage of the United States declined from 2.5 million in 1860 to 1.0 in 1913.

672. Effect of the Civil War on the merchant marine.—Of this great loss in tonnage the larger part fell in the years immediately following 1860, the period of the Civil War. The southern States, unable to break the blockade which closed their ports and prevented the sale of their cotton, sought to retaliate by loosing swift cruisers to prey on the ships which sailed under the United States flag. The most celebrated of these cruisers, the Alabama, was fitted out in England, and for two years, until its destruction by the Kearsarge in 1864, haunted the chief routes of trade, and captured no less than 69 vessels. Other cruisers were less successful, but altogether 261 Northern vessels were taken. The fear of capture caused a decline in tonnage far greater than the actual losses at sea; American ship-owners found their profits eaten up by heavy insurance charges, and sold their vessels to foreigners, who could navigate them in safety under a neutral flag. Altogether the country came out of the war with about a million tons of shipping less than it had owned at the beginning.

673. Other causes of decline.—The American merchant marine would have recovered from the losses of the war but for other difficulties which it faced. This was the period in which steamers began to gain rapidly on sailing ships, and in which iron began to be extensively used in ship-building. The Americans had at this time neither the resources nor the experience to compete with the English in the new forms of naval construction, and even before the war it was apparent that the English were drawing ahead. Moreover, the war had, indirectly, a great influence on the fortunes of American shipping, for it led to a great increase in the tariff and to heavy taxes of all kinds. It cost more both to build and to navigate an American ship than it had cost before the war or than it cost an English owner. Add to these influences the fact that the country was just entering the period of great railroad extension, and that the West now offered wonderful opportunities for the investment both of labor and capital; and it is not surprising that the American people turned from the sea to the land, and resigned the high position which they had formerly held in foreign carrying-trade.

674. Recent position of the merchant marine.—Since 1860, therefore, the United States has relied mainly upon foreigners to carry its freight across the seas. Of the tonnage that cleared from ports of the United States for foreign countries in 1913 about one quarter sailed under the American flag. The effective service of American ships did not, however, correspond to this proportion; they carried only about one-tenth in value of the exports that went out by sea. Various attempts have been made to stimulate the construction and navigation of American ships by the grant of subsidies from the national government, but the success has been very moderate, and the people have been in general unwilling to levy taxes for the support of this particular industry. In one respect legislation has become more liberal; the Panama Canal Act of 1912 made it at last possible, under somewhat severe restrictions, to register under the American flag foreign built vessels engaged in foreign trade.

675. Development of national manufactures.—Part of the energy diverted from the sea found a fruitful field of labor in the developing manufactures of the country. The period from 1860 to 1914 marked the advance beyond the age of trial and experiment in the history of American manufactures; at the close of this period the United States was the greatest manufacturing country of the world, supplying most of its own requirements for manufactured wares, and producing a large surplus for export to other countries. The development of the transportation system was the indispensable condition of this progress. The railroads have brought all parts of our great national domain so closely together, in a commercial sense, that the choicest natural resources of the continent have been made available at the centers of production. Abundant labor has been supplied both by the growth of the native population and by the increasing flow of immigrants. Leaders have arisen from the people, stimulated to energy by the rapid promotion which has been granted on proof of signal ability; and the necessary capital has been contributed by investors in all parts of the world, who have sought eagerly the opportunity to share in our industrial gains. Finally, our factories have enjoyed an advantage beyond those of any country, in the great market which has stood waiting to receive their products. Within boundaries, each of which measures thousands of miles, lay an area absolutely free to trade, provided with the most efficient instruments of transportation and communication, and settled by a people numbering nearly a hundred million, of prosperous producers and educated consumers.

676. Coal production and the use of steam power.—Not until this period did the country realize the full value of its hidden mineral wealth. The coal deposits of the United States are thought to be richer than those of any other whole continent, and the Ohio Valley has coal mines together with iron deposits and rich agricultural resources in a combination which is unmatched. The coal production of 1860 (13 million tons) was considerably larger than in previous decades, but it seems insignificant in comparison with 240 million of 1900, or the 509 million of 1913. Bituminous coal, the kind chiefly used in manufactures, formed only one third of the total output in 1850 and only one half even in 1870, while in 1913 it comprised four fifths of the whole. In coal production the United States now led the world.

The vast increase in the coal product was used in innumerable ways, but it found its chief employment in furnishing motive power to the transportation system, and to the factories of the country. In studying the history of coal production one is inclined to say that the country did not really enter the age of steam until after the Civil War. The total horse-power employed in manufactures in 1869 (2.3 million), was derived from steam and water in almost equal proportion. In the period closing in 1914 the power employed increased about ten-fold (to 22.5 million), and of the increase steam supplied nearly three-quarters.