TOLLS WATERWAYS

The Case for Free Waterways

T. R. ENDERBY January 15 1934

TOLLS WATERWAYS

The Case for Free Waterways

T. R. ENDERBY January 15 1934

TOLLS WATERWAYS

The Case for Free Waterways

T. R. ENDERBY Generd Mmager, Canada Steamsbip Line

THERE IS NO DOUBT whatever that Canada has much more to gain by preserving a free waterway than by reverting to an imposition of canal tolls, and I readily respond to the editor's suggestion that I outline the chief reasons supporting this side of the case.

There are three chief reasons why a free waterway is distinctly to Canada’s national advantage, and they may be summarized as follows:

1. Canada is a country to which transportation costs are a matter of particular importance, not only because she is primarily an exporting country competing in world markets, but also because her centres of population, between which domestic trade is conducted, are separated by great distances. A free waterway is thus a benefit not only to the immediately adjacent territory but to all parts of the country, because water rates influence other rates. Canal tolls would inevitably mean higher transportation costs for almost every shipper throughout Canada.

2. Canada’s most important single commodity is wheat. Imposition of canal tolls would mean a direct and definite increase in the cost of shipping wheat and would correspondingly handicap Canada in world markets with ill effect upon the whole population.

3. Imposition of tolls on Canadian canals, unless there were equal tolls on American canals, which we could neither guarantee nor control, would mean diversion of traffic to United States canals, railways and ports. This diversion would seriously affect Canadian interests and would also defeat the one object for which tolls would presumably be imposed—namely, the raising of revenue.

With regard to the possibility of traffic diversion, one may well keep in mind as an example the proposal of New York State to deepen the present barge canals from Buffalo and from Oswego to Albany, where they join the Hudson River as a route to the sea. A deep waterway of this kind is a potential threat to the St. Lawrence route. It is obvious that the competitive project would be encouraged and that its completion would result in substantial diversion of traffic if the natural advantages of the St. Lawrence route are to be offset by an imposition of canal tolls.

There are, of course, other reasons why the imposition of canal tolls would not be good business for Canada and I shall refer to some of these later. I believe, however, that the three considerations which I have already summarized are so important, so definite and so unanswerable that they are in themselves ' sufficient to demonstrate the distinct advisability of preserving a free waterway.

Too Late to Impose Tolls

TT IS MORE than thirty years since tolls were abolished on Canadian canals, following similar action in the United States. Canal tolls today, like bridge tolls, may be regarded as out-of-date and the case for restoring tolls rests largely, if not wholly, on unprecedented conditions now prevailing. Most people will agree, however, that a step entailing such far-reaching consequences should not be taken for reasons

which are temporary. Nor should it be taken because tolls are charged on canals in other parts of the world, for our waterway is quite different in character from other arteries of communication.

Our waterway, for example, does not connect two oceans as does the Panama Canal. It does not cut off, as does the Suez, several thousand miles of sea travel between European and Far Eastern ports. It does not even connect two river systems or link adjoining watersheds as do the Erie Canal in the United States, the Grand Canal in China, and the great majority of canals in other parts of the world. The Great Lakes-St. Lawrence waterway is Nature’s outlet, and still the chief outlet, for the world’s great grain exporting area. Of the 1,470 miles, approximately, from Duluth to Quebec, only seventy-six miles consist of manmade canals, and these are merely lateral aids to navigation at isolated points on the system. If we disregard certain other portions where channel improvements have been carried out—St. Clair and Detroit Rivers and the St. Lawrence below Montreal—the balance of 1,394 miles remains a free highway requiring no “upkeep,” even as it required no original investment. Our canals may thus quite properly be regarded as navigation aids rather than as artificial channels. They may be classed with lighthouses and navigation buoys. It would seem quite as logical to say that every vessel passing a lighthouse should pay a toll for its upkeep as that the same vessel should pay a canal toll

The only remotely comparable system in the world is the Danube River in Southeastern Europe. There also the passage of all vessels up and down the waterway is free, but each riparian state maintains improvements and aids to navigation at its own expense.

Although movement on the St. Lawrence waterway is limited by climate to seven months of the year and is thus complementary to rail and other means of transportation, the whole structure of transportation rates and services in this country is interlocked with the costs and conditions of water-borne traffic. The natural advantages of water traffic have not only resulted in huge industrial development and investment along the St. Lawrence route, but have also led to legislative attempts to give certain inland areas approximate equality of costs by adjusting other transportation rates To revert now to imposition of canal tolls would inevitably have an unfavorable effect upon the industrial investment referred to and upon transportation costs in general.

In considering transportation by rail and water in Canada it should be kept in mind that no Government subsidy has ever been granted any private enterprise in the matter of vessel construction, maintenance or operation on our Great Lakes. It has been pointed out above that, even as regards the route, only relatively minor obstacles on a great natural free outlet have been canalized by Government assistance. Shore properties in the various ports of the system have been purchased or leased by the carrier companies and are subject to the same taxation as other industrial properties. It will thus be seen that the passage of canals is merely one of many items entering into the cost of water transport, and is the only item in which any form of state assistance is available to the shipper or to the carrier of commodities by this means of movement.

In spite of alternative outlets for Canada’s surplus products, such as the Vancouver-Panama and Hudson Bay routes, the St. Lawrence system is still the dominant outlet and will almost certainly continue as such. Even rates on wheat moving westward are closely affected by lake costs of shipment, for much of the westward movement, particularly from Saskatchewan points, takes place after the close of lake navigation. Rates on lake shipments are subject to the closest competition and would immediately reflect any such additional cost as tolls on canals.

It is conservatively estimated that 73 per cent of Canada’s population is directly influenced and benefitted by the existence and maintenance m a free waterway. Regions—

British Columbia and the Maritime Provinces particularly— not directly affected have received in recent years other compensating benefits. British Columbia now enjoys a much lower scale of railway rates than the relative cost of construction and maintenance of lines in that province would indicate. The Maritime Freight Rates Act provides statutory reductions of rail freight rates at the public expense for the benefit of Maritime shippers.

Canals Serve Canadian Industry

TN THE LIGHT of these facts it is not difficult to see C c

unwillingness of the Central and Prairie Provinces to suffer an increase in the cost of moving their surplus products to world markets, which the restoration of canal tolls would certainly entail.

Several arguments of doubtful significance have been mentioned in connection with canal tolls during recent months. The two most frequently cited are that “toll-free Canadian canals subsidize” (a) "the shipment of Scandinavian wood pulp to the United States,” (b) “the shipment of United States coal to Canada.” Let us consider for a moment the facts of each case.

In 1932, 90,000 tons of foreign pulp wood were shipped through Canadian canals. On the other hand. 800,000 tons of Canadian forest products moved through these same canals during that year. Since there is no legal possibility of levying discriminatory tolls on our canals—this was settled by the Washington Treaty of 1871, in perpetuity— we could only block this stray trickle of foreign pulp wood by penalizing a flow of Canadian forest products nine times as great.

Moreover, a great part of the 90,000 tons of foreign pulp wood passing through our canals in 1932 was carried in Canadian ships and represents traffic which these ships have won from the previous route of via Baltimore by United States railroads. To impose canal tolls thus would penalize both our own shippers of domestic pulp wood and our own ships, without any compensating advantages to either.

With regard to shipments of United States coal to Canada, it may be said quite definitely that canal tolls would do nothing to lessen these imports, whether they move by rail or by water. It is obvious, of course, that rail shipments —which are substantial—would not be impeded. So far as coal shipments by water are concerned, imposition of canal tolls would still leave the water rate well below the rail cost

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and such shipments consequently would not be diverted to Canadian railways. The United States coal shipper would not be affected by the extra charge. It would simply mean an additional cost per ton to be paid by Canadian industries now using this water-borne coal in places like Toronto and Hamilton. If any shippers of coal were adversely affected by canal tolls it would be our own Canadian shippers of Maritime coal which is now beginning to enter Ont ario by water and which will probably move on a much larger scale if not impeded by such penalties as canal tolls. This introduces the question of the ex tent to which Canada's canals are serving Canadian industries and Canadian ship ping-~an extent which is perhaps not fully appreciated. These are the facts: 1. In 1932, 73.7 per cent of all freight passing through Canadian canals origin ated in Canada. 2. In 1932. 90 per cent of the vessels and 85 per cent of the registered tonnage passing through Canadian canals were of Canadian registry. This highly favorable picture has not always existed. It is only since 1922 that Canadian freight passing through our canals exceeded that of the United States. The figures are illuminating. In the eleven-year period from 1911 to 1921 inclusive, freight originating in the Dominion formed only 32 per cent of the total carried, but in the suc ceeding eleven-year period, 1922 to 1932, our share has risen to 70 per cent. These facts effectively dispose of the er roneous claim, which I have heard some

people advance and which I have read from time to time, that "our toll-free canals are maintained chiefly for the benefit of foreign ships and shippers." It also exp1air~s the logical motive for the tolls which this Dom inion levied prior to 1903, for in those faroff days the balance of traffic was predom inantly of United States origin. But today the circumstances are exactly opposite and tolls would be as illogical as they were jus tillable thirty years ago.

Tolls Not Practicable

N OCCASION for reopening the toll question in Canada has been a state ment attributed to President Roosevelt that his administration favored "a tonnage tax upon shipments making use of all river and harbor projects undertaken by government henceforth." It is significant that this pro nouncement contained no reference to tolls. On the contrary, it contemplated a much wider source of revenue-namely, an annual inland water-tonnage tax on vessels. This is a horse of a very different color. Tolls levied on canals in the United States would certainly be cause for reconsideration of our position in that respect, but a tonnage tax on vessels using their inland waters is no concern of Canada. The Roosevelt plan itself is open to serious objection on practical grounds. There is first the problem of d~stingnishing between inland vessels on the one hand and those engaged in coastal and ocean trade on the other. Furthermore, the well-established practice in the United States of subsidizing

native ocean shipping would have to suffer radical revision. Otherwise an inland tonnage tax could not fairlyemdash;and probably not constitutionallybe levied. The proposal of any similar measure in Canada would be open to the same objections.

There • is considerable logic in the view that Canada would gain, on balance, if she ignored any precedent which the United States may, in future, set either of tonnage tax or tolls. The consequent diversion of traffic to Canadian water routes, railways and ports would more than compensate for any difference in revenue which such a policy might involve.

It has recently been advocated in some quarters that Canada should exercise her right to levy canal tolls independently of any action which may be taken in the United States. That the Dominion possesses the legal right is not open to question, providing

always that any tolls levied do not discriminate against the ships or products of any nation. Such a course, however, is ojien to weighty objections on other than purely legal grounds.

Tolls charged on the Canadian Sault Canal would simply divert all traffic through the United States Sault Canal and thus defeat the whole purjxise of the toll.

If then we concede free jiassage through the Canadian Sault but levy tolls at Welland and on the St. Lawrence Canals, we immediately create a situation involving serious regional discrimination. It is reasonable to assume that such a condition would not long be tolerated by the injured districts and interests without testing its constitutional validity in the higher courts.

Users of Canadian canals, moreover, would justly demand that, in all fairness, ocean shipping to Montreal be charged tolls for the $30,000.000 which have been sjient in deepening and widening the ship channel of the Lower St. Lawrence. Otherwise foreign shipping would be receiving an unfair advantage over the predominantly Canadian shipping using the canalized route above Montreal. It is not hard to imagine the devastating effect of such an impost on Montreal as an ocean port.

So much for the domestic consequences of canal tolls. The international consequences are equally unattractive.

Diversion of Traffic to U. S.

XTOT ONLY was the period 1873-1902, when tolls were levied on Canadian canals, one of the most stagnant and discouraging in this country's economic history. It was also marked by rejieated disputes and costly retaliation between Canada and the United States on questions relating to canal traffic and charges thereon. The unique interrelation of our resjiective canals and waterways makes a return to such a destructive and quarrelsome condition, if tolls be restored, almost inevitable.

One of the most imjiortant factors bearing on the toll question is the recent Deep Waterway Treaty concluded between, but not yet ratified by, our neighbors and ourselves. Under the terms of this treaty, the future expenditure on canal improvement falls jirincijially on the United States. A large part of our share of the cost has already gone into the completion of the new Welland Canal and other sections of the route. Now if tolls are to be levied they must necessarily be based on the whole cost. With traffic now largely Canadian in origin and still more dominantly in vessel registry, it is obvious that Canada’s interest is best served, from the standjioint of financial and economic advantage, by excluding any reference to tolls from the treaty, now and later.

One of the reasons for the recent reojiening of the canal toll question has been the pressing current need of the Dominion for revenues. It is well known that the bulk of present Federal revenue is derived from those regions and activities bordering on and connected with the Great Lakes-St. Lawrence system. Furthermore there is some wellfounded doubt as to the suitability of either tolls or tonnage tax as a means of augmenting the public treasury. Either method would act as a direct brake on water-borne traffic and increase the real as well as the apparent cost of shipping Canada’s main exjiortable commodity to world markets.

The independent levying of such tolls or tonnage tax by this Dominion could only result in diverting a substantial proportion of our present water and rail traffic to the routes, railways and jxirts of the United States. This would also tend to defeat the jiurjiose of the tax as a source of public revenue.

Even if our legislators could suceed in unravelling or cutting this Gordian knot of canal tolls, in which are tangled so many strands of jiolitical, legal, dijilomatic and sectional interest, there would still remain a substantial balance of national economic advantage in maintaining our present system of toll-free canals.

It has served us well in the thirty years that have elapsed since 1903. It has done much to maintain the supremacy of the AllCanadian St. Lawrence route to world markets in face of every effort put forth by our own neighbors to confer this supremacy ujion the Buffalo-Albany (“All-American”) route or the Lakes-to-Gulf of Mexico outlet.

The benefits have not been limited to the wheat grower of the West and the great industries and jxirts of the East. It has also, in these recent decades, brought a great and lasting increment of traffic to the railways of the Dominion which link up at so many jioints with our natural waterway from the heart of this rich continent.

Pneumatic Tires on Trains

A HIGH-SPEED gasoline-driven rail^wav bus of new design recently tried out on the Long Island Railroad matched speed with a crack steam-ojierated express train of the same road. Rolling on pneumatic tires encased in steel flanged wheels, the rubber never touches the rails.

The new train made its début in a test run near New York City. Two gasoline motors controlled with a throttle resembling a steering wheel drive the car at. speeds up to

ninety miles an hour. It seats forty-two jiassengers. weighs only ten tons, and its economy of operation is exjiected to adapt it especially to branch-line service.

Through this design, the shock-absorbing qualities of pneumatic tires are secured, with little danger of a puncture. The steel wheels float free of the car frame, on their own axles, unless a puncture occurs; then they take the full load after the car has dropjied three-fourths of an inch . Imperial Oil Review.