The distribution of domestic vessels by districts in 1907 shows that the Atlantic and Gulf coasts are the most important districts, including nearly half of the total documented tonnage and two-thirds of the sailing-vessel tonnage. The Great Lakes have more than one-third of the total documented tonnage and almost half the total documented steam tonnage of the United States.

There has been a notable increase in the size of vessels on the coasts and the Great Lakes, similar to the increase in the size of railroad rolling stock and with similar results in the reduction of transportation costs. As a general rule, and with vessels of the same type, the larger the vessel the lower the cost of carriage.

The size of vessels is, however, limited in nearly all cases by the depth of channels and harbors and by the terminal accommodations. Though the limits vary widely on different classes of waters and at different ports and channels, it may be said in general that a great many vessels have already been built with as great draft as the waterways they use will permit, and that in the case of most of our rivers and canals the maximum draft of vessels is scarcely sufficient to permit very economical operation. This fact has a very important bearing on the possibilities of successful water transportation.

DIVERSITY IN VESSELS.

Reference has already been made to differences in depth of different classes of waterways as requiring differences in the size of vessels. These necessitate transshipment in order to secure through transportation, even between points both of which are on waterways. Other differences in physical conditions of different kinds of waterways also prevent the use of the same vessels for through shipments. Thus, vessels used on quiet inland waterways such as smaller inlets and lakes, and on rivers and canals, are neither sufficiently strong nor have they sufficient freeboard to permit them to be used on the Great Lakes or the ocean. Experts even assert that were there enough channel depth to take vessels like the great ore freighters from the Great Lakes to tide water, nevertheless it would be preferable, and almost necessary, to transship at tide water as now. These ore freighters on the Great Lakes are not in model or in structural strength adapted for ocean conditions.

Again, the narrowness and tortuousness of river channels almost entirely prevent the use of sailing vessels, and practically also prevent the use of large steam vessels such as are adapted to the Great Lakes or the ocean. Thus, even on a channel as deep as the Hudson practically no large ocean boats are seen at any distance above New York, though there is 25 feet of water up to Hudson, 100 miles above New York. Owners do not care to risk the dangers

of a restricted channel in large ocean-going craft. Again, in the present state of the art, even light-draft screw steamers can not be used to advantage on the Mississippi at any considerable distance above New Orleans. Aside from the shallow depth, the need for constant backing and turning at the innumerable bends makes the stern-wheel paddle the only generally successful method. The latter, of course, is useless on the open sea.

SPECIALIZATION OF BULK-CARGO VESSELS.

Specialization in vessels is not only with respect to the peculiar condition of the waterways, but it has gone further in adapting them to the peculiar conditions of the different kinds of traffic. This adaptation is especially conspicuous in what are known as bulk-cargo vessels; that is, vessels which do not carry package freight, or diversified freight, but which carry one or at most a few kinds of articles in bulk. Thus on the Great Lakes bulk steam vessels for ore or coal, and others for grain, are used to an enormous extent. On the Atlantic and Gulf coasts there are bulk vessels for coal, for oil, for fruit, etc. On the Pacific coast a type of steam schooner has been developed, especially intended for hauling lumber in bulk, and special lumber vessels are also used on the Great Lakes and the Atlantic Ocean. On the Ohio and Mississippi bulk coal barges are extensively used, and other bulk boats to some extent. The use of rafts of logs on the Great Lakes, on the rivers, and on the Pacific coast is a special development of bulk transportation.

This development of the bulk water carrier is highly significant of the peculiar demands of modern transportation. It has been most successful in those cases where the products to be shipped are either on or near the water, and where the destinations to be reached are likewise on or near the water. This is conspicuous, for example, in the case of the coal carried on the Monongahela, Ohio, and Mississippi rivers, most of which is produced at or very near the rivers. At the same time, a large part of the traffic in bulk water carriers reaches those carriers only by rail haul, and a considerable part is delivered by rail to the final destination. This occurs, as on the Lakes, where there is a large uniform supply, a corresponding demand, and a proportionately long water haul connecting the two.

This specialization of types of vessels, as in the various classes of bulk freighters, in the use of gasoline boats on the Mississippi River, etc., indicates the struggle of a system to adapt itself to its conditions. Probably had there been no rail competition, that adaptation would have gone much further and would have approached something like a good operating system, even on the inferior water

ways, such as rivers and canals. But in the keen struggle with the railroad for existence, hand-to-mouth methods have been necessary, except on the Great Lakes and the coast, and even there it is to some extent hampered by rail competition. Could the rail and water systems have cooperated instead of competing, it seems probable that a reasonable share of traffic would have produced a modern system of waterway transportation even on our smaller rivers.

From these considerations as to the character of our waterways, and of the vessels used upon them, it is obvious, as already stated, that our inland waterways are far from constituting a unified system, and that, save on the Great Lakes, and in the coal traffic on the Ohio, they are very inferior in efficiency to railroads. In a later part it will be shown that the traffic on rivers and canals of the United States is insignificant in comparison with the rail traffic, or with traffic on the Great Lakes and the coasts. Diversity in channel and navigation conditions, diversity in vessel types, in motive power, and in terminals, as well as in carriers' liability, insurance, freight classification, and traffic contracts generally, have resulted in extreme absence of organization of our water system as a whole. It is thus helpless in competing for long-distance traffic with a modern, unified, standardized system like that of the railroads.

LIMITATIONS OF TRANSSHIPMENT.

It can not be expected that any reasonable expenditure on our inland waterways will wholly remove these difficulties. It would never pay, except in a few cases, to try so to deepen and improve the rivers and canals as to permit vessels suited to the ocean to use them to any appreciable extent. Transshipment from one water carrier to another will continue to be necessary on most long inland, or partly inland, hauls, even from and to points actually on waterways. Moreover, the greater part of our traffic originates in, or is destined to, points not on waterways, so that transshipment from rail to water will always be necessary on most longer hauls which seek to use the waterways at all. Since such a large portion of our traffic is long-distance traffic which will thus involve transshipment, the question of the future development of our inland waterways resolves itself into one of relative operating expenses and of investments of capital. There is little doubt that for a given distance a continuous water haul in a boat of even moderate size is, and will continue to be, cheaper in operating costs alone than a similar continuous rail haul. If the channels are made deep enough to permit the use of relatively large boats, this greater cheapness will, in some cases, be sufficient to cover also the additional cost of transshipment. The question is, however,

whether besides doing so it will afford enough saving to cover reasonable interest on the investment in waterways and water terminals necessary to secure such measure of efficiency. This is a question which can only be answered after most exhaustive engineering estimates of the cost of constructing waterways of different depths and most thorough investigations of operating expenses of different kinds and sizes of vessels, in comparison with expenses of rail transportation. It should be noted, however, in considering how far expenditures of capital for improved water routes are advisable, that in some cases the railroads have already reached the limit of their carrying capacity and that they will have to make additional investments of capital if they are to meet the demands of transportation. The relative amount of investment necessary thus to increase the facilities of the railroads, as compared with the investment necessary to afford adequate water routes and terminals, must therefore likewise be taken into account.

BUSINESS ORGANIZATION AND FINANCES.

OWNERSHIP.

Prior to the development of steam navigation vessels were usually owned and operated by individuals or small groups of individuals. Sailing vessels are even now more commonly thus owned than by corporations. The corporate form, however, has gained steadily, at first with steam vessels and later with sailing vessels and barge lines. There was a total of 37,321 vessels, with a total gross tonnage of 12,893,429 tons, and valued at $507,973,121, included in the census of 1906. Of these, corporations owned more than one-half of the number, and more than three-fourths of the total tonnage and value. Of steam vessels corporations controlled 42.6 per cent, representing 87.6 per cent of the gross steam tonnage; and of freight and passenger vessels running on regular lines they controlled 56.8 per cent, with 91 per cent of that tonnage. The proportion of vessel tonnage owned by corporations is everywhere larger than the proportion of the number of vessels so owned, indicating that the vessels owned by corporations are usually the larger ones.

In 1906 the average size of vessels owned by individuals was 113 tons, of vessels owned by firms 223 tons, and of vessels owned by corporations 526 tons. Many steamship corporations, however, are essentially private affairs with few stockholders. They often are controlled by a few individuals, often of the same family. Navigation companies have been in most cases conservatively capitalized and their stock not offered in the open market. But in recent years there have been some notable changes in these respects. By expansion

or consolidation there have been developed quite a number of great corporations with large fleets and operating many lines over a wide territory. The most striking instance of consolidation has been that of the Consolidated Steamship Lines, commonly known as the Morse Combination, including half a dozen important Atlantic coast lines, covering a large share of the regular packet-line business in this important district.

An especial feature has been the recent acquisition and operation of steamer and barge lines by railroad companies and by industrial and trading concerns, including several of the great combinations, such as the United States Steel Corporation, the Standard Oil Company, the Southern Pacific (Railroad) Company, the New York, New Haven and Hartford Railroad Company, the New York Central Railroad, the Pennsylvania Railroad, and others.

These developments will be described at length in subsequent parts of this report.

FINANCIAL.

The list of concerns set forth in the tables in this report is by no means complete, while the information is also inadequate for a satisfactory report on their financial operations. The scope of the inquiry was limited to a few of the most important facts relating to the capital stock (in case of corporations), indebtedness, gross earnings, and operating expenses. But even on these points the failure of many concerns to make any report renders the details incomplete, and only a few general and tentative conclusions can be drawn therefrom.

The information in regard to capital stock and indebtedness is more complete than in regard to earnings and expenses, but even there special difficulties are encountered. Where navigation lines are owned by railroads or industrial corporations there is usually no specific record of the capital invested in the navigation lines as distinguished from the remaining property of the corporation.

The aggregate capital stock of navigation companies reported to the Bureau is $248,720,178; the aggregate bonds and other indebtedness is $170,387,005, making a total capitalization of $419,107,183. This is for 366 companies, operating less than half the total vessel tonnage in the United States.

In the information as to earnings and expenses, the utter absence of anything approaching uniformity in the method of accounting makes the returns of limited value. The aggregate gross earnings of concerns reporting earnings and expenses amounted to $81,708,289, and their aggregate operating expenses amounted to $65,816,251, leaving net earnings of $15,892,038. Operating expenses thus aver