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Just after the war, the business boom caused an artificial congestion of the American railroads. It was in this period that the agitation for the power and water development of the St. Lawrence River waterway found its inception. Now that it is a definite issue before the Senate, it behooves us to take note of its potentialities.

The two benefits claimed for it are vastly increased water power and an economically profitable water outlet for continental produce, both American and Canadian.

When Harold G. Moulton of the Brookings Institute, the most impartial and intelligent of the international investigating bodies, published his report, he came to several significant conclusions. In the first place, he pointed out that it would be cheaper to build three double track freight railroads than to develop the St. Lawrence so that ocean vessels could navigate it. He showed that the customary reckoning between railroad rates and canal rates is utterly false, in that the first puts all the costs, including the overhead, on the shipper, whereas the second places only the actual transpiration charge on the shipper. That is, cost for cost, the water transportation as planned in the St. Lawrence development project would be far more expensive for the shipper, if the tax-payer was not supposed, as in the computations of the enthusiasts, to pay at least three and a half dollars per ton shipped on the overhead and capital costs. If we add to this the fact that it would not be profitable for ocean-going vessels to be routed through to the middle West because of their lower paying capacity than the lake boats, that the Canadian grain trade which would be sixty per cent of the marine commerce concerned, we can see that the waterway would be not only a great debit to the American taxpayer, but a very small benefit to the Middle Western shipper.

As for the water power, expected by the proponents of the plane to not only pay for itself, but to provide the capital used in the building and upkeep of the canal, there is hardly sufficient market at present to fund the installation of the new power plants, let alone large enough profit to create a surplus for the support of the proposed waterway. It is cheaper to produce power in New York by coal and steam, than to wire it south from the St. Lawrence valley.

While the building of the waterway would undoubtedly provide much employment, the same amount of money could be put to better use elsewhere. The only real benefit which would derive from it would be to make it possible to use the electric power potentialities as a lever for forcing the utility companies to lower their rates; but once again this could be better accomplished by some other methods. The objections of Ham Lewis on strategic grounds, are, of course, ridiculous; but they are neither so ridiculous nor so dangerous as the arguments of the proponents of this economic fallacy.