railroads to treat all alike. All discrimination was prohibited. The Interstate Commerce Commission, created by the act, has had its power increased by supplementary legislation and now has fairly complete control over the railroads.

Most of the states have commissions of their own with control over commerce within the state. Sometimes the state commissions have acted contrary to sound economic policy and have hindered rather than helped the railroads.

Mr. Alfred P. Thorn, in an address* before the State Bar Association of Tennessee, showed some of the faults of the state commissions:

"Three states have passed laws making it illegal for a carrier having repair shops in the state to send any of its equipment, which it is possible to repair there, out of the state for repairs in another state; fifteen states have attempted to secure preferred treatment of their state traffic, either by heavy penalties for delays or by prescribing a minimum movement of fifty miles per day-one of these States imposing a fine of ten dollars per hour for the forbidden delay; twenty states have hours-of-service laws, varying from ten to sixteen hours; twenty states have fullcrew laws; twenty-eight states have headlight laws, with varying requirements as to the character of the lights, and fourteen states have safety-appliance acts. Sixteen states have enacted statutes, each asserting for itself the individual right to control the issue of stocks and bonds of interstate carriers.

"It is manifest that if such issue is to be regulated by the individual state, every state is at the mercy of the Quoted by Kahn, Business and Economics, p. 81.

*

others. A bond to be available in the market, must, as a rule, be secured upon the whole railroad line; and this crosses many states. One of the states, therefore, if it possesses the power to regulate the issue of securities of an interstate carrier, may defeat a financial plan approved by all the other states, and necessary to the carrier's transportation efficiency."

It would seem to be clear that railroads doing an interstate business should be left to the jurisdiction of the Interstate Commerce Commission.

The Railroads and the Great War. The war brought a great demand for railroad transportation. There were millions of soldiers to be transported and millions of tons of supplies to be taken to the ports of embarkation. The task was a heavy one for the railroads and the United States Government assumed control. Mr. McAdoo was made director-general of railroads. He treated the railroads of the country as a unit, and important savings and increased efficiency were secured. Unnecessary passenger trains were eliminated, and rates for passengers and freight were raised. It became necessary to increase the pay of railroad employees and this was done. Government operation was successful inasmuch as the required service was rendered, but it was not a financial success. The conditions were exceptional and probably private ownership would have been at least as unremunerative. The railroads were restored to their owners in September, 1920, with certain temporary government guarantees.

Water Transportation.-American shipping was important in colonial times. Successful shipyards were operated in all the colonies before the Revolutionary War. The

Courtesy of the New York Central Lines Magazine

THE TWENTIETH CENTURY LIMITED, ON THE NEW YORK

CENTRAL RAILROAD

prevalence of war in Europe during the closing years of the eighteenth century and the opening years of the nineteenth century aided the American merchant marine. Not only did our merchant ships carry goods for Americans, but about one-half of the exports of the United States in 1801 was composed of foreign goods which were brought to the United States from South America and the West Indies for shipment to Europe. Shipments direct from South America to Europe were subject to capture, but the danger from British ships-of-war was averted by landing the goods in American ports and then reshipping them. Professor H. C. Adams says: "The growth of American shipping from 1789 to 1807 is without parallel in the history of the commercial world."

The American merchant marine suffered seriously as a result of the English Orders in Council of 1804 and 1807 which declared all ports in France or of her colonies and allies closed to neutral vessels unless they first entered a British port and paid duties to Great Britain. Napoleon responded by his Milan decree which declared that any ship obeying the English Orders in Council was subject to capture. The War of 1812 and the restoration of peace in Europe resulted in the loss of most of our carrying trade.

In 1840 the carrying trade of the United States began to revive. This was the day of the American clippers, which surpassed all ships of their time. In building wooden ships we had an advantage both in material and in skill of ship-builders. These clipper ships, so-called because of their sharp, overhanging prow, were especially designed for the trade with China. They went, however,

to every port. By the time of the Civil War, our shipping trade was about equal to that of England.

During the Civil War American shipping declined because of the ravages of Confederate cruisers. However, it is probable that our shipping would have declined if there had been no war. Changes were taking place which made our ships unable to compete with the ships of England.

These changes were the substitution of iron ships for wooden ships and of steam for sails. England led in the substitution, but America confidently clung to the old style. America saw her mistake too late. Our carrying trade was practically lost. In 1914 less than 10 per cent of our foreign trade was carried in American ships.

Shortly after the United States was forced to enter the World War by the hostile acts of Germany, it became evident that the war would be lost unless more ships were built to carry supplies to England and France, or unless the unlawful submarine policy of Germany could be defeated by destroying the submarines. The United States, in co-operation with our allies, was successful in both endeavors. By Act of Congress a Shipping Board was created with almost limitless resources. During the first year of its operations-August, 1917, to August, 1918-574 ships were launched, with a tonnage of 3,017,238. The activities of the Shipping Board were just reaching their height when the armistice was declared. The production of ships from September, 1919, to February, 1920, was at the rate of 4,250,000 tons a year. In June, 1920, the United States had a sea-going merchant marine of 12,406,123 tons, compared with 18,110,652 of England, exclusive of her colonies and dependencies.