1 88 UNIVERSITY OF COLORADO STUDIES 



on the Atlantic seaboard farther south. The rate was made ^bout two 

 cents higher for New York than for Philadelphia, and three cents higher 

 than for Baltimore and Newport News. 



The result of this agreement whereby the natural routes of transporta- 

 tion were changed to help railroads that could not compete with the New 

 York Central, was soon seen in its effect on the growth of the city of New 

 York. That city began to lose in relative importance as a port of inter- 

 national trade. Its exports and imports, which had been increasing at 

 an enormous rate, while continuing to increase, yet showed a great dim- 

 inution in their rate as compared with that of other ports favored by 

 the differential. The merchants of New York besought the New York 

 Central to remove the differential. The New York Central agreed to do 

 so if the other roads would permit it. The roads interested were con- 

 sulted, and they announced that in case the differential was removed a rate 

 war would immediately be instituted. The differential was not removed. 

 The merchants of New York, unable to obtain satisfaction from the rail- 

 roads, thought of the Erie Canal. They appealed to the legislature, and 

 the result was the adoption of a constitutional amendment providing foi 

 the expenditure of $101,000,000 for the purpose of deepening, widening, 

 and straigthening the Erie Canal so that a 1,000 ton barge can navigate it. 

 The canal is owned by the state, and no tolls are charged for its navigation. 

 In this way it is expected that the problem of the differential will be in part 

 eliminated. The sum of $101,000,000 is therefore a part of what it will 

 cost the people of New York to allow the railway managers to maintain 

 such a freight rate as will enable export grain to be carried to other cities 

 than to that port which is its most accessible outlet. 



The Erie Canal is the most expensive waterway in the world, and 

 would long ago have been abandoned if it had not been that it is useful 

 as a restraint upon the railway managers in the matter of adjusting rates. 

 It has cost the state about three quarters of a milUon dollars a year for 

 many years, and this needless expense will have to be paid till the business 

 of making rates for railroads is put on a different basis. Aside from this 

 annual expense for the maintenance of the canal, and the $101,000,000 

 appropriation of 1903, and the $9,000,000 of 1896, there is the annual loss 

 to the entire country in the excessive freight rate that is maintained for 



