In the annals of transportation, there is no more interesting chapter than that which deals with the contest that has been carried on for nearly half a century, between the railways and the lakes and canals for the grain traffic between Chicago and New York. This contest is interesting, not only to Americans, as the people who are engaged in it, and whom it more directly concerns; but also to the people of Europe, and of Great Britain in particular, the cost of whose food supplies is affected thereby.
Up to the end of 1874, the rate charged by railways for the transport of grain from Chicago to New York was seldom under 50 cents per 100 lbs., which is equivalent to about ·58d. per ton per mile—taking the distance at 950 miles. Ten years previously the average rate was rather more than double this amount. But from 1875 onwards there commenced what is called a “war of rates,” in the course of which the cost of transportation was subject to the most sudden and violent fluctuations, apparently without the slightest reason or excuse, except that of the caprice of the competing companies. Thus, in 1879, the year started with a rate of 85 cents, which fell in February to 20, in April to 15, and in May to 10 cents per 100 lbs., the latter rate being exactly sixteen times more than the rate which obtained in January 1865. By the end of the year, the rate had risen again to 40 cents, and in 1880 it never fell below 30 cents. In 1881 the maximum was 40 and the minimum 12 cents; in 1882 the extremes were 30 and 12½cents; in 1883 there was only a difference of 5 cents in the recorded maximum and minimum; and in 1884 the fluctuations ranged between 15 and 30 cents.[237]
At the lowest rate quoted over this period—the 10 cent rate of May 1879—the railways were actually carrying grain between Chicago and New York for rather over 0·11d. per ton per mile. At the same rate of transport, goods should be carried between London and Edinburgh for 3s. 8d. per ton, a fact which will perhaps bring home to the British trader what such a low rate would mean to him. The average rate over the last three or four years has, however, been about double this figure, while for the American railways as a whole it has been nearly four times as much.
The promoters of the improved Erie Canal claim that the cost of transport of wheat between Chicago and Buffalo by the large steamers that now navigate the lakes is now only 2 cents a bushel, or 8d. per quarter for a distance of about 800 miles. The remainder of the distance between Chicago and New York being by canal, the cost of transport has been over 4 cents per bushel for about 400 miles, being more than twice the cost, with more than twice the time in transit, for only one-half the distance.
The circumstances of the Erie Canal are, however, exceptional. Seldom, indeed, do railway freights run so low as they do on the 950 miles of railway that separate Chicago from New York. Over this distance, the great trunk lines have recently been carrying freight at the rate of 15 cents, or 7½d. per 100 lbs.[238] This is equivalent to about 14s. per ton, or exactly 0·174d. per ton per mile. There is probably no such low rates for railway transport in the world. But this low rate is due entirely to the competition of the lakes, rivers, and canals. It is very exceptional even in the United States. The average rate charged for transport in the United States in 1888 was ·45d. per ton per mile,[239] which is 164 per cent. more than the Chicago to New York rate already quoted. The railway companies do not admit that the competition of the canals was the cause of the remarkable difference here shown, but allege that it was due to “the very active competition that existed among the three main lines of railroad all striving for the business.” This has been an element in the case, without doubt; but no one who is familiar with railway pools, conferences, and arrangements, is likely to suppose that if the water route had been closed, the railways would have continued rates that were most probably highly unremunerative, notwithstanding that 1131 tons of paying freight have been brought from Buffalo to New York in one train.[240]
Mr. W. Shelford points out[241] that in the United States one half of the exports of wheat are from districts whose nearest point is 1400 miles from the Atlantic seaboard. This wheat is carried by water and rail, which are in independent hands, and form alternative routes. The routes between Chicago and New York are:—Rail, 912-990, say 950 miles; water, lakes, 985 miles; river and canal, 420-1405 miles; that is, the water route is 50 per cent. longer than the railway. Yet the water route rules the rate, because the water transport costs ⅛d. per ton per mile, while the railway transport costs nearly ⅕d. per ton per mile, and the total rate by water between Chicago and New York is two-thirds of the rate by rail. So far, there is a prima facie case in favour of canals.
But if the cost of transport by water be taken separately for the lakes and Erie Canal, it appears that the cost on the lakes is 1⁄12d. per ton per mile, and the cost on the Erie Canal and Hudson River is ⅙d. per ton per mile, so that the cost of transport on the Erie Canal is double that on the lakes, and is nearly the same as the transport by railway.
Notwithstanding the very low rates charged for transport on the canals of the United States, the Interstate Commerce Commission reported in 1887 that “the experience of the country has demonstrated that the artificial waterways cannot be successful competitors with the railways upon equal terms.”
The transport of wheat grown in the Western States of America, between Chicago and New York is the largest business of its kind in that country. There are in the United States between 35 and 40 millions of acres of land under wheat crops, an area about one-half that of the whole surface of England, Ireland, and Scotland. On this vast area there was grown, in 1886, 459¼ millions of bushels of wheat, and of this quantity 129½ millions of bushels were transported from Chicago, the great warehousing centre, to New York, in the proportions of over 46 millions by canal and river and over 80 millions by railway. For many years there has been a great scramble for this traffic between the two rival systems of transportation. The predominance has lain now with the railway and then with the canal, and both, as we have seen, have had to reduce their rates from time to time in order that they might have their share of the traffic. The fluctuations in the quantities carried by the two systems within recent years have been remarkable. In 1881 only 38 millions of bushels out of a total of 139¾ millions were carried by canal, but in 1887 the canals carried 46 millions out of 127½, showing a remarkable advance in the interval. This advance is, no doubt, mainly due to the fact that in 1883 the tolls on the New York State canals were abolished.[242]
Appended is a table showing the estimated cost of transportation of freight between Buffalo and New York (400 miles) by different systems of water conveyance, inclusive of tolls,[243] (From the Report of State Engineer of New York for 1878.)