Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 91, no. 2338]: January 4, 1913

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REAL ESTATE AND JANUARY 4, 1913 OUR GAINS FROM THE ERIE AND PANAMA CANALS Freight From Middle West, Which Has Gone to the Pacific by Rail, Will Hereafter Come Through New York—Natural Advantages Restored to the "Gateway of the Continent." By FREDERICK B. De BERARD, Statistician of the Merchants' Association HE completion of the Panama Canal Avill greatly modify the ex¬ isting currents of trans¬ portation, not only upon the sea, but throughout a large part of the area of the United States. To the effect of the Panama Canal in changing the direction of transportation movements -will be added that of the Erie Canal; and the result will be pro¬ foundly beneficial to the North Atlan¬ tic States, and particularly to the City of New York and its adjacent territory. Hitherto the main currents of trans¬ continental traffic have been by rail, the west-bound rail traffic (including the rail and water routes via the Gulf ports) to Pacific terminals in 1911 aggregating approximately 3,481,600 tons, as against 494,600 tons moving by the water routes via the Panama and Tehuantepec isth¬ muses. Until 1907 this disparity was still greater, despite the fact that water rates were from 20 to 60 per cent, less than rail rates. The reason for the relative¬ ly small use of the water routes was the control of the steamship lines by the transcontinental railroads, which dis¬ couraged shipments by bad service, in¬ adequate facilities and extreme slow¬ ness; and which prevented competition by independent lines by temporary rate- cutting until competitors were driven out of the field. After 1907 these con¬ ditions were bettered by the opening of the Mexican State railroad across the isthmus of Tehuantepec and the opera¬ tion in connection therewith of the American-Hawaiian Line, which has rap¬ idly developed a large traffic. Trammels Will Be Removed. The completion of the Panama Canal will at once remove all the trammels which have hitherto throttled the water traffic in order to force the greater part of the trafiic over the railroads, at high¬ er rates. Free competition in water carriage will at once result, by reason of that provision of the recently passed law regulating canal tolls, which for¬ bids railroad ownership of or interest in any steamship line. From this free¬ dom of competition will follow speedy and adequate service, hitherto prevent¬ ed, so that the cheaper water routes will become available for much of the traf¬ fic hitherto forced over the rail routes. New York and the East generally have been placed at a serious disadvan¬ tage by the largely compulsory use of the transcontinental rail routes, for the reason that it has been deprived in large degree of the benefit of low water rates, which if untrammelled would give it nearly all the Pacific Coast trade. The interest of tht rail lines west of Chi¬ cago has been to exclude New York as far as possible from the Inter-mountain and Pacific territories to be served by Western cities. This is because the rail rate from all points east of the Mis¬ souri River to points on the Pacific Coast is the same. Thus the amount re¬ ceived for hauling a carload from New York, or from Chicago, to San Fran¬ cisco is the same, but in the former case the amount is divided between the East¬ ern and the Western railroads, while in the latter case the Western railroads keep it all. The potential water com¬ petition has had the efifect, however, of forcing a very low transcontinental rail rate—much lower than the local rates exacted by Western lines between in¬ termediate points. The latter have fought vigorously against this discrim¬ ination; and it has recently become evi¬ dent, from the attitude of the Inter¬ state Commerce Commission, that the Western railroads must either abandon their policy of abnormally low through rates to Pacific points, made to meet water competition, or correspondingly scale down their now highly profitable local rates. Will Reverse Traffic Currents. There can be little doubt as to what they will do in this dilemma. The trans¬ continental traffic is of very doubtful profit at best; the local traffic at high rates is vital; and it is likely that, with the real and vigorous competition of water rates following the opening of the Panama Canal, the Western railroads will abandon the attempt to force traffic to reach the Pacific Coast by rail, by means of a highly artificial rate system. The abandonment of the blanket rate between points east of the Missouri River and Pacific terminals (already practically ordered by the Interstate Commerce Commission) and the advent of untrammelled water carriage between tlie Atlantic and Pacific Coasts will cause a radical change in the trafiic cur¬ rent between the Atlantic and Pacific Coasts, not only by substituting the water for the rail route, but also by causing a partial reversal of the rail movement. Even at present water rates, commodities originating 500 miles west of New York and destined for the Pa¬ cific Coast can reach their destination most cheaply if shipped eastward to New York and thence by water. The present obstacle is defective service. More Freight Business Here. Under the new conditions, with lower rates and ample service, a great volume of freight which has hitherto moved westward by rail to the Pacific Coast will hereafter move eastward by rail for trans-shipment by water, thus concen¬ trating on New York the bulk of the large trade with the Pacific Slope. To sum up the effect of the Panama Canal upon the trade relations between New York and the Pacific Slope: The existing railroad control of the situation will be broken up. The influences which have been tending more and more to deprive New York of the far Western trade will be nullified, and through its command of a through water-route freed from railroad control and with rates made by genuine competition, it will be confirmed in its control of the already very important and rapidly growing Pa¬ cific Coast trade. In addition it will be¬ come the shipping point for a wide range of manufactured products made within a radius of 500 miles or more, of New York's City Hall which now reach the Pacific Coast by the westward all-rail routes. New York Chief Beneficiary. The influence of the Panama Canal up¬ on foreign trade relations is compli¬ cated by many economic conditions. One fact is certain: that as America's volume of exports increases those ex¬ ports will mainly find their outlet from Atlantic and Gulf ports, with a great preponderance in favor of New York, because of its more available water route, via the Erie Canal, from the in¬ terior. The Central States must of ne¬ cessity be the situs of great manufac¬ turing development, not only by reason of contiguity to raw materials and fuel, but also because of central location with reference to a large consuming population. In many branches of in¬ dustry in which freight is not a large factor the Eastern States will continue large producers. When the Panama Canal is available, such part of these manufactured products as is exported can with few exceptions reach any part of the world more cheaply through New York than through any other American port. Hence, whatever benefit the Panama Canal confers in the promotion of foreign trade, New York will be a chief beneficiary, as it will surely be¬ come the great export market where American manufacturers of every class will maintain selling agencies. The Erie Canal's Part. Let us now consider the part which the Erie Canal will take in this econom¬ ic readjustment. For many years past the Erie Canal has been obsolete, al¬ though it has exerted an important in¬ fluence in the modification of rail rates upon grain and coarse freights. Many elements of waste have entered into canal freights which thereby have been maintained at a higher level than would otherwise be economically necessary. Moreover, the canal has not been use¬ ful as a carrier of high-class freights by reason of slowness of transit. In the carriage of bulk freights small units have been employed at an excessive