STATE CANAL fCLL
The Diversion of Trade
» ^
^ f ho,m thb
'Cn^öFÜkw York
W'
- gaistals.
Statistician oí' the Kxohuntce,
ON THIS DIVERSION OF TRADE.
PROCEEDINGS OF A MEETING OF THE NEW YORK PRODUCE
EXCHANGE IN RELATION THERETO,
Held Reb 10, 187«.
HE
v-
til
NEW YORK :
William F. Jones, Steam Book it Job Printer,
42 Broad Street.
1873.
Proceedings of a meeting of the members of the NEW
YORK PRODUCE EXCHANGE, held at the
Exchange February 10th, 1873, in relation to
the rates of State Tolls on the Canals and the
Diversion of Trade from the New York Canals
and from New York City.
Produce Exchange, )
New York, February 10th, 187 H. \
The Exchange was called to order at 2 o'clock b}'
the President, Mr. Jewell, who stated that the meeting-
had been called under the rules, in obedience to a call
which had been posted on the bulletin, and which was
read by the Secretary. The call was as follows :
DANGER TO THE CANALS.
There appears to be now immediate danger of the defeat of
the Resolution before the Assembly at Albany for continuing the
present rate of Tolls on the Canals. If this Resolution should
be defeated, it implies an increase of about 50 per cent, to the
present rate of Tolls.
There will be a meeting of the members of the Exchange
on Monday, February 10th, at 2 o'clock P.M., to consider what
steps should be taken.
By order.
(Signed) A. S. Jewell,
President.
LIBRARY
BUREAU OF RAILWAY FCORCMICS
A AS H Ir» OTON. D. C. ^
jUN -¿0^" •'
4
Mr. Jewell then said that he hoped those present
would fully understand, as he had no doubt they did,
that the subject to be brought before this meeting, and
which was alluded to in the call, was one of the most
vital importance, not only to them as merchants, but
to all the citizens of the State and of the City of New
York, and to all interested in the movement of the
produce of the great West to the seaboard. The
attention of the Board of Managers had been called to
this matter, and they had some time since appointed a
committee to watch the course of legislation on the
subject. A member of that committee was now at
Albany, and had written to the effect that there was
great danger that the concurrent resolution referred
to in the call just read would be lost, unless prompt
measures were taken to save it. If lost, there would
probably be an increase of at least 50 per cent, in the
rates of canal tolls, and the gentlemen present coulcL
fully appreciate what a ruinous effect on the trade
and commerce of New York such a paralyzation of our
great artery of trade with the interior would have.
Mr. Carlos Cobb, at the conclusion of the President's
remarks, moved that a committee of three be ap¬
pointed to prepare a report expressive of the sense of
the meeting on this subject. The motion was carried
without debate, and the Chair appointed as such
committee, Messrs. Carlos Cobb, Geo. D. Cragin and
H. T. Buell.
During the absence of the committee, Mr. L.
5
Hazeltine, Jr., read a communication from Mr. M. M.
Caleb, setting forth the situation and urging imme¬
diate action on the part of the Exchange.
At the conclusion of the reading, Mr. Cobb, from the
special committee, presented the following report :
Whereas, As merchants, citizens of the State of New York, we
hold that the true policy of the State is to foster the freest pos¬
sible facilities for the cheap and profitable transit of the agricul¬
tural products of the West through her channels for transport¬
ation, and to promote in every possible manner the exchange of
commodities produced by sections thus brought into communi¬
cation. That such transportation and exchange is one of the
most important productive industries of the State. That as a
revenue measure solely it is better to tax accumulated wealth
rather than arrest industry in the work of production. Holding
such views, we have regarded with great satisfaction the enlight¬
ened policy of the Canal Board during the past two years in
important reductions of canal tolls. That in our opinion such
reduction can be carried still further with advantage to the State,
even to the removal of all tolls upon low-priced or other com¬
modities now driven to other routes or methods of transporta¬
tion than our canals, and such as shall be necessary to the return
■of light-boats. That in our opinion the Canal Board shall have
full power in the exercise of a sound discretion to regulate tolls
to meet emergencies, to a minimum, or even temporary suspen¬
sion of all toll charges, as is sometimes found necessary with
competing railroads and every other commercial pursuit.
We should esteem it a public calamity should the Canal Board
be forced, for want of proper and timely legislation, to return to
the canal policy which ruled the toll-sheet of twenty-one years
since, the effect of which is seen in the present power of five or
six rivals for the carrying trade. Therefore,
liesolœd, We, as members of the New York Produce Ex¬
change, urgently request Senators and Members of Assembly
representing the seaboard constituencies of this State to promote
the passage of the concurrent resolution asked for by the Canal
Board, allowing it to fix the Canal Toll-Sheet for 1873 upon the
•basis of that of 1871 and 1872.
6
The Statistician to the Exchange, Mr. E. H.
Walker, then presented the following report, which
he had prepared on the subject under consideration.
REPORT.
Mr. Walker, Statistician for the Produce Exchange,
said :
Mr. President :—The Erie Canal, from 1826 to 1856, was
the only route for commerce between the seaboard and the
Western and Northwestern States. The State Canals, as per
Auditor's report to the Constitutional Convention of 1866, had.
cost on the 30th of September of that year, including construc¬
tion, improvements, repairs, maintenance, and legal interest on.
all their expenditures, $210,093,502 35, and their revenue, with
legal rate of interest, to same date was $202,619,515 08, leaving
a debit balance against all the Canals of $7,473,987 72. The
Erie Canal had cost to that date, including legal interest,
$141,421,425 23, against a revenue for the same period from all
sources, including legal interest, of $182,857,915 87, leaving a
credit balance of $41,436,490 64. There was, at the same date,
a debit balance against the lateral canals, of $48,946,870 08,
including the
Champlain Canal $2,980,930 03
Oswego Canal 5,797,593 08
Cayuga and Seneca Canal 2,521,890 33
Chemung Canal 4,134,619 14
Crooked Lake Canal 1,269,305 30
Chenango Canal 8,413,312 60
Black River Canal 8,231,425 72
Genesee Valley Canal 15,255,237 53
Oneida Lake Canal 272,453 76
Baldwiusville Canal 70,102 59
The Oneida River Improvement, the Seneca River Towing
Path, and the Cayuga Inlet had an aggregate credit balance of
$36,387 17.
Under a provision of the Constitution of 1846, the General
Fund State Debt was made a charge upon the revenues of the
7
Canals, which provided that $350,000 be annually taken for a
Sinking Fund for its liquidation ; also, $200,000 per annum for
the expenses of the State Government. The General Fund
Debt included the $3,000,000 first loaned and afterwards given
to the Erie Railway, to aid its construction. This annual con¬
tribution of $550,000 has been taken from the canal revenues,
with only a few exceptional years, since 1840. In years of
deficient harvests, diminished tonnage and revenue, when there
was not sufficient income from tolls, a tax, to make good the
deficit, was levied to meet the Constitutional requirements.
During the same time the taxes levied from the people for
canal purposes have not much, if any, exceeded the aggregate
of the $550,000 annual contribution from the canal revenues to
the Sinking Fund of the General Fund Debt.
The result is that this grand system of Public Works has been
constructed, maintained, -und is owned by the State, without cost
to the people.
During the period from 1836 to 1872, inclusive, the value of
the property transported on the New York canals to and from
tidewater has aggregated about seven thousand million dollars,
a sum thrice that of the present national debt. The people, be¬
sides having the ownership of the canals free of cost, have had
the resulting benefits of this vast inland commerce, including the
building every ten years of five thousand canal-boats and their
equipment, at a cost of ten million dollars, the employment of
one hundred thousand of the population of the State in carrying
on that commerce ; the profits of bankers, insurance companies,
warehousemen ; value and rents of property of this commercial
metropolis which this commerce has built up ; commissions on
sales, as well as the development and prosperity of our ocean
commerce.
Are the State Canals " played out " '? The State Engineer, in
his report transmitted to the Legislature, January 3d, 1872,
states that " the total number of tons moved one mile on all the
canals and railroads in the ,State from 1860 to 1869, inclusive,
was 19,662,593,782 ; of this amount the canals, with an average
season of less than 7-J months in each year, transported 48 2-10
per cent., or very nearly one-half ; and all the railroads in oper¬
ation the whole time transported 51 8-10 per cent. In several
of these years the canals transported more freight in seven and
8
one-half months than all the railroads in the State did in the
whole twelve months. In 1860 there were 3,146 miles of rail¬
roads in operation in this State, and in 1870 there were 4,773
miles, an increase of 1,627 miles.
" The average yearly business upon the canals for the nine
years following 1860 is 19 per cent, greater than for that year,
while upon all the railroads of the State the increase has been 89
per cent, greater than in I860."
The accretion of population in the whole country has been
about 33 1-3 per cent, in each and every decade since 1790, with
an approximately corresponding increase in production and con¬
sumption. The increase of the population in the Northwestern
States has been in a much greater ratio than this, with a
corresponding increase in production and internal trade and
commerce.
The State of New York no longer has sole control of the vast
inland commerce of the country. There have been since 1856
active competitors. The movement via the St. Lawrence was
commenced in that year, and about that time the five great
through lines of railway, reaching the seaboard at Baltimore,
Philadelphia, New York, Boston, Portland and Montreal, were
put in practical operation for freight transportation. The Chesa¬
peake and Ohio Railway lias just been completed, with a shorter
line from Chicago, St. Louis, Lousville and Cincinnati, than any
of the roads heretofore mentioned. Previous to 1856 the State
of New York had almost the entire carrying trade between the
Western and Northwestern States and the seaboard, the City of
New York being the distributing point for the neighboring sea¬
board cities.
The New Dominion Board of Trade, at a recent session,
recommended to its Parliament, now in session, the enlargement
of the Weiland and St. Lawrence Canals to dimensions that will
pass 1,500 ton vessels.
The aggregate movement of cereals by the St. Lawrence
route for the four years from 1856 to 1859 inclusive was 19,193,-
440 bushels, against 50,885,790 bushels for the four years ended
with 1871, an increase, comparing the two periods, of 31,692,350
bushels, equal to 165 per cent. There is now an annually in¬
creasing diversion of Western trade via the St. Lawrence and
9
Ogdensburg for export and distribution in the New England
States of upwards of 22,000,000 bushels of cereals and their
products.
The deliveries of Western Grain at Montreal in 1872 were
17,628,853 bushels, against 4,846,883 bushels in 1856, an increase,
comparing the two years, of 12,781,970 bushels, or 263 per
cent.
The receipts of Western Cereals at Philadelphia, Elour in¬
cluded, for the three years ended with 1868 aggregated 27,237,-
564 bushels, against 50,037,121 bushels for the three years ended
with 1871, a gain of 22,799,557 bushels, equal to 84 per cent.
The receipts at Philadelphia in 1866 were 7,260,515 bushels,
against 24,117,150 bushels in 1872, a gain of 16,856,635 bushels,
equal to 232 per cent.
The receipts of Grain at New York aggregated for the three
years ended with 1858, 176,343,636 bushels, against 222,075,838
bushels for the three years ended with 1871, an increase of 45,-
682,202 bushels, equal to 26 per cent., while the receipts at New
York in 1856 were 57,044,916 bushels, against 90,481,922 bushels
in 1872, an increase, comparing the two years, of 57 per cent.
The receipts of Flour and Grain at tide-water by the Erie
and Champlain Canals for the four years ended with 1859 were
equal to 136,353,447 bushels, against 186,451,240 bushels for the
four years ended with 1871, a gain, comparing the two periods,
of 36 per cent.
The receipts of Flour and Grain at seaboard ports, including
New York, Boston, Portland, Montreal, Philadelphia, Baltimore,
and New Orleans for the year 1872 were equal to 163,953,117
bushels, while the receipts at tide-water by the Erie and Cham-
plain Canals were 53,711,100 bushels, or only 32 per cent, of the
receipts at seaboard ports. The receipts at seaboard ports other
than New York were 74,074,748 bushels in 1872, or 45 per cent,
of the whole.
The receipts at New York, Flour included, in 1872 were 90,-
481,912 bushels, of which 33,142,889 bushels were by railroad,
against 53,711,100 bushels received at tide-water by the Erie and
Champlain Canals. Of the 75,267,387 bushels of Grain, 50,570,-
133 bushels were by the Hudson River and Coastwise by the
ocean.
10
The following exhibits the receipts at Lake Ports of Flour
and Grain as compared with the receipts at New York and at
tide-water by the Erie and Chainplain canals
Lake Ports.
Years. Bush.
1868 122.434,037
1869 137,363,124
1870 133,751,061
1871 167,543,863
1872 170,600,388
Total five years. .731,692,468
Average five years. 146,338,494
New York.
Bush.
70,068,428
64,447,421
68.895.632
88,712,785
90,481,922
382,606,188
76,521,237
Tide-water, by
Erie and Ch'n
Canals.
Bush.
52,426,300
40,625,240
38,116,600
55,283,100
53,701,100
240,152,340
48,030,468
Of the 731,692,468 bushels of Grain received at Lake ports
during five years, 382,606,188 bush., or 52 per cent, were deliv¬
ered at New York by all routes, rail and water, while the deliv¬
eries at tide-water by the Erie and Champlain Canals were 240,-
152,340 bush., or 33 per cent, of the aggregated receipts at Lake
ports. The average of the receipts at Lake ports for the last five
years was 146,338,494 bushels, against 76,521,237 bushels average
receipts at New York, and 48,030,468 bushels average receipts at
tide-water by the New York Canals.
The Tolls were reduced in 1870, which reduction has been
continued through 187(1, 1871 and 1872. The effect of the re¬
duction is shown by the foregoing exhibit of the comparative
receipts at Lake ports and deliveries at New York and tide¬
water. It has been claimed by those advocating an advance in
the rates of toll that the carrier obtained an increase in freight
equal to the reduction in tolls. In 1869 the toll on "Wheat and
Corn from Buffalo to Troy—345 miles—was, at 3 mills on Wheat
and 2Jr mills on Corn, as follows :
Wheat. Com.
Bu.. 60 lbs. Bu., 56 lbs.
1869 6.21 cts. 4.83 cts.
1870, 1871 and 1872 3.15 " 2.898 "
Reduction per bushel 3.105 cts. 1.932 cts. per bush.
The season average of Freights from Buffalo to New York by
Canal for five years has been as follows :
1868.
1869.
1870.
1871.
1872.
Wheat.
Com.
Bush.
Bush.
15.06
12.9
14 07
13.8
11.02
10.3
12.70
11.1
13.00
11.7
11
In 1869, before the reduction of tolls, the deliveries of Grain
at tide-water by Canal were 011 the ratio of 29 per cent, of the
receipts at Lake ports. This ratio has been increased only about
three to three and one-half per cent, by the reduction, which
indicates that the competition from rival routes is still strong.
It takes now three or four bushels of Corn at its value at
points of production beyond the Mississippi to pay for the trans¬
portation of one bushel of Corn to the seaboard. Those who
advocate an increase in tolls go for its costing more than four
bushels to transport one to market, or for the consumers pay¬
ing an increased price for Corn. New York consumes fifty mil¬
lion bushels of Grain more per annum than is grown within her
borders. An advance in the rates of toll, and a consequent ad¬
vance in freight charges, increase the cost of this amount of Grain
to an aggregate exceeding what the State will derive in revenue
from the increased rate of tolls.
The people of the Northwestern States give to the New York
Canals about seven-eighths of their entire tonnage moved East¬
ward. They say, witji good reason, " Our productions have been
tolled sufficient to construct your grand Erie Canal and pay for
all its improvements, repairs and maintenance, with a surplus
over and above this, up to 1872, of about fifty million dollars, a
sum sufficient to nearly pay the first cost and_maintenance of all
your non-paying lateral canals. You have the resulting benefits
arising from the commerce we give you, and we believe it
unjust to be obliged to contribute three hundred and fifty thous¬
and dollars per annum toward the payment of your General
Fund Debt, and two hundred thousand dollars per annum for the
support of your State Government." The course of trade is an
indication of the ugly feeling of the people of the Northwestern
States, who strive to avoid this injustice by favoring the routes of
our competitors.
It is alleged that the people of this State are taxed for canal
purposes to benefit the grain-growers of the Northwestern
States. Having in view the actual financial situation of the
canals in their relation to the people of the State of New York,
the untold benefits resulting from a canal commerce reckoned by
thousands of millions of dollars, in which all the people within
her borders directly or indirectly share—the impression prevails
that the party making the allegation is either a paid emissary of
12
those who do not want cheap transportation or a political
demagogue seeking popularity and votes by the uustatesmanlike
allegation.
If the City and State of New York desire the trade and com¬
merce of the growing West in its full measure of increase, the
necessary action must be taken to encourage and invite it by
cheap transportation. The proposed increase in the levy of tolls
would be as much of a bar to inviting the trade of the West as a
foot less draught of water in the canal. Our Legislators at
Albany should bear in mind the causes that have made this the
Empire State. Competition from rivals outside this State is every
year growing stronger. "A cent or two per bushel, or even a
fractional part of a cent per bushel, will change the currents of
trade. Wise statesmanship should seek rather to foster, encour¬
age and protect this vast and growing inland trade and commerce
instead of legislating it into the hands or our competitors.
After the reading of the report, Mr. Whittemore
spoke in support of the report of the Special Commit¬
tee, as well as the conclusions reached in the report
just read. He maintained that the State ought not to
receive any surplus revenue from the canals, as the
gain to the whole people from the traffic was of itself
revenue enough. The Canal Board should have
power to regulate the tolls so that they should all
produce money enough to provide for necessary re¬
pairs and running expenses. This should be made
the fixed poli 03- of the State.
After Mr. Wliittemore's remarks, the report submit¬
ted by Mr. Cobb was adopted without a dissenting
voice.
It was then ordered that one thousand copies of Mr.
Walker's report, with the proceedings of the meeting,
be printed for the use of the members.
13
Mr. Starke spoke on the general question, saying
that there was a general but very mistaken impression
to the effect that the geographical position of New
York so assured its control of trade as to make its
financial and commercial supremacy secure. This he
was convinced was a mistake. The securing of the
Produce trade of the West was a necessary step to
keeping the return trade in imported and manufac¬
tured articles, and he would warn gentlemen that New
York was threatened on every side. Canada and New
England were straining every nerve, as were also the
Pennsylvania Central, the Baltimore & Ohio, and more
recently the Chesapeake & Ohio, Railroads. The
exertions made by Canada were especially alarming
to New Yorkers, and he did not think it any exaggera¬
tion to say that this city could not hold its own for
three years as against Canada without special effort.
Mr. Orr then spoke in the same strain of the neces¬
sity to New York of free communication with the
West, and he also wished to call attention to the in¬
terest of the West in the question. The system of
high charges for the transportation of Produce must
cease for the benefit of all parties. When the farmer
of the West must sell 25 bushels of grain to buy a
coat, or 20 to buy a hat, it was evident there was a
wrong to be adjusted, and the adjustment would soon
come. The question was, should 'New York or some
other port reap the advantage 1
After some further remarks, the meeting adjourned,
14
the President first announcing that Messrs. Hoyt,
Fisk, Earle, Dorrs, Starke, and others, would leave for
Albany that evening to lay the views of the Exchange
before the Association.