USA > New York > A short history of New York State > Part 60
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The "free canal" amendment did little, however, to prevent the decline of the canals. Shipments continued to fall off until only 5 per cent of the total tonnage reaching New York from the interior in 1900 came by way of canal and river. Nevertheless, canal partisans argued that the mere presence of the canals helped to keep down railroad rates, which neither state nor federal commissions could regulate effectively. Undoubtedly, the water rate was the controlling factor in transportation between Chicago and New York. Late in 1887 the new-born Interstate Commerce Commis- sion noted the importance of the Erie Canal in influencing the railroad rates to New York City, but by 1900 the New York Produce Exchange sadly noted that the canal had almost ceased to be a factor in regulating rates.
Nation-wide revival of interest in waterways during the closing decade of the nineteenth century coupled with continued antirailroad sentiment led to agitation for an improved canal system in the state. Accord- ingly, the constitutional convention of 1894 paved the way by sub- mitting an amendment whereby the legislature might improve the canal system without regard to limits on the borrowing power of the state. The amendment carried, and the following year another amendment-sub- mitted this time by the legislature-calling for a $9,000,000 appropriation, also carried by a large majority. This appropriation was largely wasted.
Meanwhile, New York City businessmen, increasingly alarmed that the city might lose its commercial supremacy, put on a vigorous campaign
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for the improvement of the Erie Canal system, and in 1903 the voters of the state approved an appropriation of $101,000,000 for the Barge Canal, as the remodeled system was called. Here and there a voice was raised for the building of an even larger ship canal across the state. Unfortunately, the judgment of this small minority went unheeded.
From 1918, when the modernized Barge Canal began operations, to 1951, the volume of cargo moved over the canal system of the state per year rose from 1,159,000 tons to a record 5,211,500. This upward trend was interrupted during World War II, when tanker sinkings along the Atlantic seaboard cut sharply into petroleum shipments intended for the canals. Oil shipped through the canals during this period was princi- pally eastbound. The canals played important roles during World War II in transporting military landing craft from shipyards on the Great Lakes to ports of embarkation on the Atlantic Coast, in carrying essential sulphur from the Middle West to eastern defense industries, and in shipping South American bauxite to aluminum plants at Massena and in the province of Quebec.
The principal commodities transported on the New York State Barge Canal system are bulk items-in 1952 petroleum, chiefly in the form of gasoline, heating oil, and kerosene, constituted over 75 per cent of the canal tonnage, while grains comprised the second most important group of products handled. The total tonnage of petroleum and grain rose from 55 per cent of the canal trade in the early 1930's to almost 90 per cent, in 1952. Oil is shipped from depots in the port of New York to tank farms and other petroleum distribution points along the Hudson River and the canal system. While some grain is forwarded from Buffalo, the greater part of this traffic comes by Lake steamer to Oswego on Lake Ontario. There it is transferred to canal vessels and taken to Albany, where there are grain elevators equipped with every facility for large-scale handling of grains. The movement of oil is mainly westward, while that of grain is primarily eastward.
With the exception of the periods of World War II and the Korean conflict, both the federal and state governments since 1935 have co- operated in improving the canals, rivers, locks, and bridges of the system. From the inception of this joint project until the beginning of 1951, more than sixty contracts for canal improvements were awarded. These in- cluded deepening of channels; construction of bridge clearances, new lighthouses, buoys, bridge markings, and range towers; and straightening of curves. Plans are also under way to improve the approaches to the canal system. The deepening of the Hudson River channel from twenty-seven to thirty-two feet between the port of New York and Albany would allow large ocean-going vessels to reach the year-round port facilities at Al- bany. It is also anticipated that in time the Canadian program of deep-
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A SHORT HISTORY OF NEW YORK STATE
ening the Richelieu River canal system will be completed. This system connects the Barge Canal system with the St. Lawrence River and Mon- treal. When completed it will permit some 2,500 barges to operate be- tween New York City and Montreal.
The New York Barge Canal system has numerous connected reservoirs, dams, and other controls in lakes and natural watercourses designed not only to meet the needs of shipping but also to control floods, particularly in the Mohawk and Hudson valleys. The impounding reservoirs and feeder canals which help maintain adequate depth in the Barge Canal system tend to minimize fluctuations in the levels of the Mohawk and Hudson rivers. The dams and spillways of the canalized sections of the Mohawk also provide controls on the rivers' flow.
The canals serve as a drainage system for central New York. To conduct water to the central portions of the Erie and Oswego canals, a series of feeder canals were dug through the Montezuma Swamp between Rome and Lyons. These feeder canals drew off much of the surface water and transformed the swamp into thousands of acres of fertile farmland.
The canal system of the state is also a source of water power. Two state hydroelectric plants at Crescent and Vischer Ferry, between Water- ford and Schenectady, use surplus canal water and sell power to utility companies. Along the canal routes, surplus water is made available for farm and domestic purposes, and permits are granted for occupancy of unused canal lands.
Finally, the canal system of the state is used by those in search of recreation and relaxation. During the summer months the waters of the canal system are used by thousands of boating enthusiasts, fishermen, and vacationists. In 1952 registrations of privately owned pleasure boats on the canals numbered 2,308, and 2,068 lock permits were issued to boat- men. Along the banks of the canals are picnic grounds and camps, mostly private, on lands leased from the state. New York residents and visitors are permitted to use the canals for fishing, canoeing, and boating, except at locks and dams. It should be noted, on the other side of the picture, that the state canal system, for all its advantages, costs the taxpayers a large sum of money, since it produces little revenue.
Air transport, of minor significance during the first quarter of this century, became increasingly important for passengers and freight. The domestic commercial air traffic originating in the state in 1951 totaled 2,000,000 passengers, 10,000 tons of air mail, and 34,000 tons of air cargo. The New York State Department of Commerce estimates that by 1960 the demand for air service will have grown to 7,000,000 passengers, 25,000 tons of air mail, and 75,000 tons of air cargo.
Recent studies indicate that the demand for air express and air freight
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service is largely for such items as machinery, automotive parts and equipment, printed matter (including news publications ), photographic and projection goods, textiles, and apparel, perishable items, and medical and pharmaceutical preparations. The Auburn plant of the American Lo- comotive Company has used air service to rush parts weighing several tons to disabled ships thousands of miles away, and the International Business Machines Corporation sends heavy units by air freight to all parts of the United States from its Endicott and Poughkeepsie plants. Lobstermen of Long Island have greatly widened their market by ship- ping by air. Increasing quantities of perishables, such as flowers, fruits, and vegetables, are going by air.
Greater New York became a terminal for the leading airlines of the world. At first, air traffic was served by Newark Airport, which was easily reached by the Lincoln Tunnel, but pressure on Newark was relieved when La Guardia opened in 1939. So rapidly did air transport grow, how- ever, that the combined facilities of Newark and La Guardia were in- adequate. As a consequence New York's largest field, at Idlewild on Ja- maica Bay, was opened in 1948. Since its opening, imports and exports by air have more than doubled, and this international port has had to expand its facilities almost constantly. Air terminals within the city main- tain a transportation service with all three airports. The larger cities of the state have direct service to New York City and interconnections link- ing them with each other and with the Middle West, the South, and New England. Service for smaller communities of the state is rapidly in- creasing. In 1950 the state had 291 airports, including commercial, mili- tary, municipal, and seaplane bases; twenty-one of these were served by scheduled airlines.
Any account of transportation in the state would be incomplete which failed to mention the revolution in the means of urban travel and com- munication. Prior to the Civil War, horse-drawn vehicles were the only means of conveyance in the cities of the state. Horse-drawn stages or omni- buses were put on tracks in the 1850's, and for half a century they fur- nished the principal means of city passenger traffic. But the horse-cars were small, slow in their movement, and wholly inadequate to the needs of rapidly expanding centers of population.
In the 1870's New York City pioneered with "elevated" or railroad lines built above the streets. The cars, more commodious than the horsecars, were drawn by small steam locomotives. In the 1890's the shift from steam to electricity was made, and the city did not bid farewell to this means of transportation until 1956, when the seventy-seven-year-old landmark, the Third Avenue El, was demolished. With the successful application of electric power to railway cars came the first really great revolution in city transportation. The transition from horse to electric power began
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A SHORT HISTORY OF NEW YORK STATE
in 1890 and was almost complete by 1902. The need for better transporta- tion was so great that there was no lack of entrepreneurial interest or available funds. Soon cities and even towns and villages throughout the state, convinced that their hopes of future growth and power depended upon a "trolley line," became enthusiastic boosters of the electric street railway. In New York City the entrepreneurs Thomas Fortune Ryan and August Belmont struggled for control of the rapidly expanding transit lines. Their activities in this respect were reminiscent of the practices employed by Jay Gould and Cornelius Vanderbilt in their fight for the control of the Erie Railroad: financial manipulation, overcapitalization, political bribery, and corruption.
Although the elevated and surface lines were a vast improvement over horsedrawn transport, they were wholly inadequate to the needs of the rapidly growing metropolitan area. New York, therefore, followed the example of London, Paris, and Boston in providing underground trans- portation. Its first subway of what is today by far the largest under- ground transportation system in the world was opened in 1904. In 1940 the city purchased the privately owned Interborough Rapid Transit (IRT) and the Brooklyn-Manhattan Transit (BMT) system, combining them with the city-built and operated Independent Subway System. In the mid 1950's the system comprised approximately 250 miles of lines. Trains operate day and night on a schedule of one and a half to fifteen minutes. The lines use twelve bridges and eleven underwater tunnels and carry as many as 100,000 people at peak hours of operation. In general the subway is considered as the quickest as well as the safest means of transportation in the metropolitan area.
In recent years the automobile and the motorbus have supplemented the subways and practically supplanted the surface lines. As early as 1905 the Fifth Avenue Coach Company had imported a single twenty-four- passenger double-decked motorbus. In a few cities electrically powered buses made use of overhead trolley wires.
Taxis operate in almost every city and village of the state. In the larger cities large company-operated taxi fleets compete with each other and with the other means of transportation. The presence of the motorbus and the ever-growing number of taxis have greatly increased traffic and park- ing problems. In 1955 New York City's subway and bus system was put under the professional management of a Transit Authority, a three-man salaried team with expert knowledge of labor management, banking, and transportation. Traffic direction and parking is also one of the chief con- cerns of the police department. The erection of bus terminals and public garages in recent years, together with provision for one-way traffic on designated streets, has eased somewhat the congestion in the crowded and what at times seems to be a hopelessly entangled metropolis.
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Every region of the state has almost instantaneous communication with every other region as well as with the outside world. As a result of a series of inventions: first, the telegraph, then the telephone, then the radio, and finally television, space and time are no longer barriers; the range of intercourse has been widened; contacts are more numerous. Iso- lation and parochialism have tended to disappear.
Chapter 39
Market Place of the World
It appeared to be part of the commercial destiny of New York from a very early period that, in addition to being an important agricultural and manufacturing state, it should be- come conspicuously a center for wholesaling, retailing and gen- eral merchandising of goods. .
Nearly every important primary or staple product now has a definite exchange located in the city of New York, and de- signed for the facilitation of trading operations in that par- ticular kind of product .- H. PARKER WILLIS
NEW YORK'S world leadership in trade and commerce can be attributed to its geographical location, its large population, its excellent transporta- tion facilities, the diversity of its industries, the high average income of its people, its large aggregation of firms in varied financial fields-bank- ing, insurance, corporate security underwriting, security and commodity brokerage-and the concentration of highly specialized business and pro- fessional services available in many fields. In this chapter both domestic trade and commerce with foreign lands will be considered.
The internal trade of the state is determined, in large measure, by the size and buying power of its population. New York has long been the most populous state in the Union, and it tops all the leading industrial states of the nation in per capita income. In 1950, for example, the average money income for each man, woman, and child was $1,864, or $428 above the national average. The total of almost $30,000,000,000 in income to individuals led all other states and exceeded that of California, the second- ranking state, by almost $9,000,000,000.
Income payments in the state are derived from the sources listed in Table 18. New York led every state in each of the five income segments except agriculture, but even its income from farming was greater than that of all the New England states combined.
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MARKET PLACE OF THE WORLD
569 Table 18. Sources of income to individuals in New York in 1952.
Source
Total
% of state income
% of total in N.Y.C.
Trade and service industries
$9,694,500,000
42.4
76
Manufacturing payrolls
7,513,900,000
33.2
48.4
Construction payrolls
968,300,000
4.2
52.7
Government
4,080,700,000
17.9
61
Agriculture
341,200,000
1.5
.14
Trade and service industries have provided a greater share of total in- come for almost a half century. New York Ctiy, because of its many shops and department stores, wholesale establishments, hotels, theaters, museums, and specialized business services, derived more than a third of its income from these sources and thus served to raise the state's propor- tion from the upstate average of approximately 25 per cent. In the resort counties, notably Sullivan, 40 per cent of all income came from these sources.
While the proportion in New York from manufacturing payrolls was very close to the national percentage of 23.9 in 1952, it was by no means representative of all parts of the state. Although New York City's manu- facturing payrolls accounted for more than half the total for the state, the city was dependent upon manufacturing wages and salaries only to the extent of 19 per cent of total income, whereas in the remainder of the state manufacturing payrolls supplied 33.2 per cent of all income. According to the state Department of Commerce, manufacturing income and that from service and trade tend to complement each other. In other words, in those parts of the state where one is high the other is low. In the mid-Hudson and northern areas, where attention is centered chiefly on farming and where there are many resort areas, the proportion of in- come from manufacturing is slightly under that of the state as a whole. In the other areas the dependence upon manufacturing as a source of in- come is greater, ranging from just under 30 per cent of the total in the Elmira area to about 40 per cent in the Mohawk Valley. The Niagara Frontier and the Rochester area run a close second and third, respectively, to the Mohawk Valley in industrial concentration.
Payments from government included salaries and wages to civilian and military personnel, pensions, benefits of various kinds, bonuses, and the like. On a county basis the range varied from 10 to 35 per cent of total income. In almost every instance in which a high percentage is derived from this source, one finds a state institution of some kind. Thus in Albany County, where the state capital is situated, about 26 per cent of the income came from this source in 1952.
Income by counties varies greatly. In 1952 Westchester County led all
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A SHORT HISTORY OF NEW YORK STATE
others with an average income of $2,701 per capita. Nassau was second with $2,386, and Schenectady was third with $2,351. Two other counties in addition to New York City bettered the state's per capita figure of $2,062-Monroe and Niagara. Of the counties outside the New York metropolitan area, eight were above the upstate average of $1,682 and forty-five were below. The counties in which industrial centers are located almost without exception have higher incomes. Counties whose resi- dents depend to a great extent on farming for a livelihood have the low- est per capita incomes.
New York City accounted for over 60 per cent of all income received by individuals in the state. It is also significant that in 1954 no less than 53 per cent of the state's retail sales were made in New York City. The city and its suburban counties are less dependent upon salaries and wages than the upstate counties. They derive 16 per cent of their income from investments in securities, real estate, patents, and copyrights. The corre- sponding figure for the rest of the state in 1951 was 9 per cent.
Not only has there been a great increase in the amount of money per capita which the people of the state have had at their disposal during the last hundred years, but there have been new conditions under which do- mestic trade has been conducted-new methods of distribution, changes in transportation, emphasis on design and packaging of merchandise, and the stimulation of buying through advertising and other activities. The growth and urbanization of population has also had a large effect on the character of domestic trade.
Distribution of goods, in the two decades after the 1860's, was largely carried on by commission merchants-who usually handled staple goods -wholesalers, country general stores, and peddlers. Most manufacturers at this time sold their goods directly to wholesalers, who in turn sold to the specialized shops in their own city and to general stores in the out- lying towns and villages. Many of the wholesale houses began as general stores. The wholesaler saved the manufacturer the expense of salesmen, relieved him of the burden of delivering small quantities and of the book- keeping and credit expense of handling a multitude of small accounts, warehoused his products, and often helped to finance his operations. The manufacturer was thus free to devote himself entirely to production. Dependence upon the wholesaler, however, placed the manufacturer at his mercy when disputes arose over prices, quality of product, and other matters. As a consequence, large manufacturers increasingly sold directly to the consumer.
Some trade was carried on by peddlers, who either on foot, on horse- back, or by wagon journeyed about the state selling to housewives a mis- cellany of articles from tinware to textiles. By 1870, however, the heyday
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MARKET PLACE OF THE WORLD
of the itinerant peddler was at an end, although a constantly decreasing number continued their activities to the end of the century.
Some general stores carried on both wholesale and retail operations. The country merchant was both a buyer, or assembler, as well as a re- tailer who might sell sugar, molasses, salt, kerosene, and other manufac- tured articles and imported luxuries for cash or in exchange or "trade" for the farmer's surplus, butter, cheese, potatoes, and other products. Before the federal government authorized the establishment of the Rural Free Delivery, the general store also housed the local post office. Almost down to the present, the general store also served as a social club-a gathering place for the menfolk of the neighborhood who, seated on cracker barrels or nail kegs around a barrel or box stove, told tall tales of individual prowess or carried on heated political debates. Not until the coming of radio and television did the country general store cease to function as a social center. The proprietor of the small store, irrespective of location, had very elementary ideas of merchandising and accounting. He had little or no knowledge of the business cycle and consequently sometimes overstocked his store at high prices. As late as 1890 some stores had on their shelves bolts of calico which were acquired in 1865 at sixty cents a yard. Sales methods at these stores were also costly and time consuming.
Before the end of the nineteenth century small general stores, espe- cially in the urban centers of the state, began to face competition from large-scale retailers of three kinds: department stores, mail-order houses, and the chain store.
The department store, of which A. T. Stewart's was a forerunner, was, and still is, really a collection of specialized stores housed under one roof. Few of the early department stores were developed from general stores, although some of the later ones came into being in this way. The depart- ment store had distinct advantages over the old-fashioned store. Among these were acquisition of products at lower costs, one sale price for every- body, lower retail prices, elaborate display facilities, and larger volume of business. Today, New York City alone has more than a dozen of these tremendous department stores, of which Macy's, Gimbel's, Lord & Taylor, Bloomingdale's, Altman, Abraham & Straus, Stern's, and Saks are among the better known. Almost every upstate city of any considerable size has at least one department store.
If the small, old-fashioned store had reason to regard the department store as a dangerous competitor, it had even more reason to fear the ap- pearance of the mail-order house. The first of these, established in the Midwest in 1872 by Montgomery Ward, was soon doing a flourishing business by mail, especially with farmers. A second mail-order house, Sears, Roebuck, came into being when a young station agent in 1884 be-
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A SHORT HISTORY OF NEW YORK STATE
gan selling watches by mail. Both companies incorporated and moved to Chicago, where within a short time the volume of business of each far outstripped that of any department store in the nation. Other mail- order houses were subsequently established and built up substantial businesses. In New York the effect of the mail-order house was at first most heavily felt by the country store. In due time merchants in all parts of the state were to experience mail-order house competition. Even in the city of New York the mail-order houses affected adversely the volume of department-store trade.
Historically the chain store, the third competitor of the small retail store, antedated all other competitors. The oldest retail chain store, and still one of the largest in America, is the Great Atlantic and Pacific Tea Company, established in the 1850's. Its early policy was to eliminate wholesalers, brokers, and other middlemen and to sell tea at lower prices than its competitors. This was accomplished through a chain of stores and by mail orders to clubs of consumers. In the 1880's spices and other groceries were added to the tea and coffee line. Peddlers with horses and wagons were sent out to do door-to-door selling. Premiums and trad- ing stamps were used to stimulate store sales. But the fundamental prin- ciple upon which the prosperity of the business was predicated has always been that of buying in quantity and selling at the lowest possible prices.
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