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The Merchant Marine Act of 1920.-Under the terms of the act of 1920, the ships built or building by the United States Shipping Board were transferred to a new shipping board. This Shipping Board is composed of seven commissioners appointed by the President with the consent of the Senate. The Shipping Board is authorized to sell all vessels which it does not want. Americans have the first option of purchase. The board may lay out ship routes and operate them, or it may sell or charter ships to American citizens for operation on these routes. The sum of $25,000,ooo a year for five years may be used by the board, out of its revenues, as loans to American builders of steam vessels. These loans shall not exceed more than two-thirds the cost of the ships and shall be secured by liens on the ships.

Trade on the Great Lakes.—The navigation laws of the United States restrict the coastwise trade of the United States, the trade on American rivers, and upon the Great Lakes to American ships. The trade on the Great Lakes is of much importance. Grain, iron ore, and copper ore are the principal goods that are shipped East via the Great Lakes. Coal and heavy machinery and manufactured goods make up the bulk of west-bound shipments.

Summary.—In this chapter we have followed the development of transportation from colonial times to the present. The great obstacles to inland transportation were the dense forests and the numerous rivers. It was much easier to go from New York to Boston by sea than to go by land. In the days of Sailing ships an ocean voyage was always uncertain and at times dangerous. Roads were much desired and were built by private companies as soon as it was thought they would pay. Both Federal and state governments aided in road construction and the principal cities of the United States were connected by roads as early as 1840. With the advent of railroads interest in long-distance wagon-roads declined, but has been revived in our own days by the coming of the automobile. Gradually toll roads were abolished by the states assuming ownership and now toll roads are very few. The canal came into prominence early in the nineteenth century. Though canals are more expensive to build than roads, the cost of hauling a ton per mile on a canal is much less than by road. The building of canals was, in turn, halted by a better system of long-distance transportation. Railroad-building commenced in the third decade of the last century, but did not reach large proportions until after 1840. From 1840 to the opening of the Civil War railroad construction was pushed with energy in the states east of the Mississippi River. The first lines were short ones, but before the end of this period local lines were being consolidated into through lines. After the Civil War, the transcontinental lines were constructed, the Federal Government helping with land grants and with loans. Private ownership and operation of railroads was unrestricted until the passage of the Interstate Commerce Act in 1887. This act, as amended from time to time, is designed to compel the railroads to deal fairly with all their patrons. The foreign commerce of the United States was carried in American ships until 1807. The American carrying trade suffered by the English Orders in Council, Napoleon's Milan decree, and the War of 1812. In 1840 it was revived again to decline during the Civil War. The Shipping Board built a vast merchant fleet during the World War and the American Merchant Marine Act of 1920 seeks to keep our merchant marine on the sea.

TOPICS FOR DISCUSSION, DEBATE, AND SPECIAL REPORTS

1. What long-distance roads pass through your city? Where do they go? 2. What canals are in your state? Have any canals in your state been abandoned? Why? 3. What are the principal railroads of your state? What are the principal goods they ship into your city? What do they take out of your city ? What competition do the railroads of your city have to face? 4. Are there any automobile trucking companies which operate long-distance routes from your city? Where do they go? How do rates compare with the railroad rates? Would you prefer to ship household furniture by railroad or automobile from Indianapolis to Cleveland if the rates were the same? if it cost 25 per cent more to ship by an automobile truck? Why? 5. Do you think the Merchant Marine Act of 1920 was a measure in the interest of all Americans? Give reasons for your opinion. 6. Should subsidies be given to American ships in order to enable them to compete with English and German ships? Why can't they compete without subsidies? What advantages come to America through a large merchant marine?

CHAPTER XIV

MERCHANDISING

Trade Produces Utility.—The ancient Greeks and Romans did not look with favor upon trade. To build up a fortune by trade implied to them that cheating had been practised. Both parties to a trade may and ordinarily do profit. A man who has more automobiles than he needs may exchange one of them for a piece of land upon which to build a summer cottage, with a man who has a large amount of land and wants an automobile. Both parties to the transaction benefit. It makes no difference whether the transfer is made directly by barter or indirectly through the use of money and a middleman. It is clear that an article, in the possession of one who can use it, is worth more than in the possession of one who cannot use it. Therefore exchange creates a variety of utility which we may call “possession utility.”

The advantages of trade are well illustrated by an experience of General Grant when he was President of the United States. Grant had purchased a horse from a butcher for the sum of $250. He was pleased with his bargain and, showing the horse to a senator, boasted that it had cost him only $250. The senator was not impressed with the bargain and remarked: “Well, I think I would rather have the $25o than the horse.” The President

replied: “That is just what the butcher thought.” .

Each party to the transfer was pleased. The President preferred the horse; the butcher preferred the $250. Every exchange, unless deception is employed, may be beneficial to both parties. Importance of Merchandising.—The business of merchandising ranks as one of the most important in the United States. Every person is a merchant at one time or another. In the United States about 4,000,000 people make a living by trade. Only agriculture and manufacturing give employment to larger numbers. Storage.—A merchant buys in large quantities and sells in Small quantities. His business is to provide goods at the time and in the quantities needed. All merchants store goods, but the business of storage may be separated from merchandising, as it is by many warehouseInen. Though storage is an economic service, it may be a means of “cornering” the market. For example, a man may buy all the eggs for sale and place them in storage. He has “cornered” the market and may refuse to sell except at an exorbitant price. “Cornering” the market is a dangerous game. As prices rise goods will flow from other places and this tends to lower the market price. Probably more money has been lost than gained by attempts to “corner” a market. If goods are stored in time of abundance and sold in time of scarcity, the market tends to be stabilized, since buying goods for storage when they are abundant creates additional demand, and selling them when they are scarce creates additional supply. The price of eggs in June, for example, would be lower were it not for the thousands of

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