Second.-The competition the Canada Improvement must experience for the Western Trade.

To examine comparisons the routes should be defined; but for the present the definite route for the proposed Canal will not be discussed, and it will be assumed, as the basis of comparison, that from the foot of Lake Ontario to Whitehall, the navigation will be, namely:

Lake Champlain is taken as 120 miles.

The first object of competition that is presented is the Northern New York and Ogdensburgh Railroad. By this Railroad the distance from Ogdensburgh on the St. Lawrence to Rouse's Point on Lake Champlain is 118 miles. From Ogdensburgh to Rouse's Point, via the St. Lawrence, and the proposed Canal is,

The vessel will arrive at Ogdensburgh, and have nothing to impede its regular movement, via River and Canal, and for all freights that do not require great expedition, there can be no room to doubt the freight would proceed on to Rouse's Point, even if unloaded at that place for a market on the Vermont Central Railroad. To put this question at rest, it may be well to state that according to the Report of the State Engineer for the State of New York for 1853, the actual cost of transporting a ton of freight from Ogdensburgh to Rouse's Point on the railroad was 11 7/10 mills per mile, equal to $1.38c. per ton through. This allows no profit on Capital expended in construction. The cost of transportation by the River and Canal, allowing a liberal toll on the Canal, would not exceed two-thirds of the cost by Railroad. It is therefore evident the Canadian improvement would command the trade of Lake Champlain, except a comparatively small portion that would require rapid transit. This would make the proposed improvement the Channel of trade between the Western Lakes, and the greater portion of the New England States, including Boston, and the eastern portion of Massachusetts. The Railroad extending east from Rouse's Point, Burlington and Whitehall, with their numerous connections towards the Atlantic, would distribute and collect the trade on Lake Champlain. From Whitehall the Railroad via Rutland is a less distance to Boston by ten miles than the Railroad from Albany to Boston, and supposed to be a more favorable line to work. There is no doubt, as will subsequently appear, that transportation from the Western Lakes, viâ Canadian improvement, can reach Whitehall at cheaper rates than it can reach Albany, and consequently it will command the trade from Boston, and increase that trade. There was transported from Ogdensburgh to Rouse's Point, in 1852, 97,395 tons of Western freight. The same year there was transported from Albany eastward to the state line of Massachusetts, on the Albany and Boston Road, about 120,000 tons. There is also a large amount of Western produce carried coastwise from Albany to New England ports, that would be diverted by the proposed improvement. In view of this, and the Railroad tonnage above mentioned, it may safely be estimated that the opening of the proposed improvement would, find a trade on Lake Champlain of 300,000 tons eastern bound, and 50,000 tons western bound per annum. The western bound would be increased by the iron trade of Lake Champlain in ore and manufactures of iron, probably 20,000 tons, making a total of western bound of 70,000 tons per annum, or a total annual tonnage of 370,000 tons. The rich iron mines on Lake Champlain, and the extensive manufactories of the country between Lake Champlain and the eastern seaboard, with the commercial importance of the city of Boston, their connection with and dependance on Western trade, must steadily increase the trade via Lake Champlain, and render it of great importance to the proposed improvement. The impulse that will be given to this trade by the recent commercial treaty between the United States and Canada will further and greatly tend to swell its volume.

I now come to consider the sources of competition for the trade of the Western Lakes, that seeks an Atlantic market at the City of New York. This is the destination of the great volume of this trade, and it now finds its avenue through the Erie Canal. This channel of navigation, it is known, is in progress of enlargement, and is expected to be completed in a few years; this will greatly increase its present capacity, and cheapen the cost of transportation. It does not therefore appear that under existing circumstances it is necessary to make any comparison with the Erie Canal in its present condition, and I therefore proceed to consider the competition that must be anticipated from it, when enlarged as now proposed.

In this enquiry it becomes necessary to consider at what point, Buffalo or Oswego, this trade will be taken on the Erie Canal. Buffalo has hitherto been the principal port for transhipment to the Erie Canal. But Oswego has for several years been gaining on Buffalo, in consequence, it is believed, of the introduction of screw propeller steam vessels on the Lakes, giving greater certainty in the time of navigation. The completion of the enlargement of the Erie Canal will give improved facilities to Buffalo. On the other hand, if the Welland Canal be enlarged so as to admit an easy canal navigation for the largest class of vessels, but adapted to the navigation of the upper Lakes, it is believed Oswego will regain all she may lose by the enlargement of the Erie Canal. If the Welland Canal should not be enlarged, Oswego will probably lose on Buffalo, as the size of propellers adapted to the most economical transport on the upper Lakes, as found by more recent experience, cannot pass that Canal as it now is, as will be seen by the Table A. in Appendix. It is therefore assumed, as necessary to the following comparison, that the Welland Canal will be enlarged, so as to pass propellers of 600 to 700 tons burden. (It is understood the New York Canals, both from Oswego and Buffalo, to Albany are to be equally enlarged.) Buffalo has no doubt controlled a large portion of the Lake trade by her market, which is by far more important for this trade than any other west of New York. In view of the improvements that will probably benefit both Buffalo and Oswego, it is not to be expected their relative advantages will be very materially changed. Regarding the question of transport merely, Oswego will probably have some advantage over Buffalo, and therefore the object of comparison will be attained, by considering Oswego as the port at which freight will change between the Erie Canal boats and Lake vessels. We are therefore brought on even terms with the Lake trade, to the foot of Lake Ontario. From this point, then, the competition must commence, for the trade destined to New York.

The introduction of steam propellers, on the Lakes, renders it more important to open Canada, by which Lake vessels may proceed from one stretch of natural navigation to another. They carry their means of propulsion with them, and are ready to proceed either by Lake, River or Canal, without the aid of other power. No towing is required, and consequently no provision of steam or animal power is to be held in readiness for use when they enter Canal or River.

In examining the cost of transportation, the ordinary rates, that are supposed to afford a fair remuneration for the business, will be sought, and not the ranges above and below the scale, that are effected by varying circumstances, not necessary to be followed in this enquiry, nor will it be essential to examine the cost of many articles of freight. Flour is an important article of the Lake trade ; it will afford a good basis of comparison, and will therefore be taken as sufficient for the purpose under consideration.

The rate for transporting flour by propeller from Chicago to Buffalo is often twenty-five cents per barrel. This rate, in the opinion of very experienced navigators, affords a fair compensation for the business, paying current expenses, and yielding a return for the capital invested in the vessel. The distance is eleven hundred (1100) miles. Calling, in round numbers, ten barrels to the ton, (equal to 2160 pounds,) the cost of transportation is 2.27 mills per ton per mile, or a fraction under a quarter of a cent per ton per mile. If 30 cents per barrel be taken for this transportation, it may be regarded as a liberal basis for any comparison the case requires. At this rate the cost per ton per mile is 2.27 mills, or nearly 2 3/4 mills.

The voyage is lengthened by passing on down the St. Lawrence and through Lake Champlain; no new expense of loading or unloading, or delay in port, and the prolonged voyage is an element to reduce the rate per mile. The current in the St. Lawrence will be in favor of the greatest tonnage, and with Canals at the rapids of the river, will not be more and probably less hazardous than the great Lakes. Lake Champlain is narrow, and as safe for the class of vessels that will occupy this navigation as a Canal. It is therefore believed a safe estimate to continue the voyage from the foot of Lake Ontario to Whitehall at the rate of 2 3/4 mills per ton per mile, through the natural navigation, including the insurance on the St. Lawrence and Champlain.

The cost of Canal transportation cannot be arrived at so satisfactorily, owing to the uncertainty of the rates of toll. According to the Report of the Auditor of the Canals of the State of New York, on tolls, trade and tonnage, for 1853, the toll on flour was 6 mills per ton of 2000 lbs., per mile, for the years 1851-52 and 53, or 23 cents per barrel on flour from Buffalo to Albany. The average cost of transportation, including toll, was, for 1851, 49 cents, 1852, 53 cents, and for 1853, 56 cents on a barrel of flour. The lowest rate of transportation was 43 cents per barrel in August, 1851, and the highest was 74 cents in October, 1853. The average for the three years is a fraction under 14 mills per ton per mile, and this is according to the rates reported by Mr. McAlpine, State Engineer for 1852. No lower rates have been reported than above quoted, and therefore 14 mills per ton per mile may be regarded as the cost of transportation, including toll, at the rate now established for flour on the Erie Canal.

The completion of the enlargement of the Erie Canal will reduce this cost. It has been seen the toll amounts to 6 mills per ton per mile on the present Canal, and if ten barrels are taken for a ton, the toll is 6.48, nearly 6 1/2 mills per ton per mile. Flour being counted at 216 lbs. per barrel. The freight on the present Canal, exclusive of toll, is say (very nearly) 7 1/2 mills per ton per mile, counting ten barrels to the ton. The increase of tonnage will induce most probably a reduction of tolls, especially if competition is to be met. What this may be, it is impossible to conjecture. I have supposed it could not go so low as to reduce freight and toll on the enlarged Canal, below 8 mills per ton per mile. This would reduce the cost by Erie Canal between Buffalo and Albany of transporting a barrel of tour (as in 1853) from 56 cents to 31 1/3 cents, including toll. It is therefore assumed that 8 mills per ton per mile will be a fair basis for comparison of Canal transportation by the enlarged Erie Canal.

If the enlarged Erie Canal will so reduce the cost of transport, being in sectional area about 3 to 1 of the old Canal, it may be proper to enquire how this will compare with the proposed Ship Canal, which is to be three times the size or area of the enlarged Erie Canal. No doubt the cost of transport will be in favour of the Ship Canal, but the cost of construction may be greater per mile for the latter, provided the same facilities occur. I have not the means to investigate this question, but from what has been done there is not much reason to suppose the Ship Canal will involve materially greater cost per mile than the Erie Canal when enlarged; if not, it would be reasonable in a comparison to place transportation at least one mill per ton per mile less on the Ship Canal than on the enlarged Erie, and still leave the same provision for tolls as the Erie Canal. The question of tolls, however, depends on the amount of tonnage secured. And for greater safety it is better to estimate the cost of Canal transport, including tolls, as equal in the two cases. In this there is doubtless a concession in favour of the enlarged Erie Canal, that may not and probably will not be realized.

From the above it appears the Ship Canal will have ample margin to command so much of the Lake trade as will supply the shores and the outlets eastward from Lake Champlain, as has been before stated. The same principle of computation makes the cost from Ogdensburgh to Rouse's Point 83 1/2 cents per ton, or 8 1/2 cents per barrel, on flour, while the Rail must have 13 cents, and this gives no interest on the cost of construction.

From the foot of Lake Ontario to the Hudson River; The Champlain Canal as at present.

From the foot of Lake Ontario to the Hudson River; The Champlain Cancel enlarged as the Erie.

Difference in favour of Canadian and Champlain route 7.7 cents per ton, or nearly 1 cent per barrel, on flour. Here again the routes would be close competitors, leaving the advantage in a moderate degree in favour of the Canadian.

It is proper to remark that the Hudson River in its present condition, from Troy to a point about 20 miles below, is not a sufficient navigation to accommodate vessels of the draught of water that is intended for the proposed Ship Canal, and will require to be improved. Such improvement has long been contemplated, and some efforts have been made to secure the object, but so far, not much, if any, improvement has been accomplished. If such work were effectively done, it would be highly beneficial to the vast trade that passes this portion of the river, and especially so to the commercial interests of the Cities of Troy and Albany. Tide water now reaches Troy, and such improvement as would fully provide for the navigation of vessels from the upper Lakes, is believed to be quite practicable, and no doubt will eventually be made. From a point some 12 or 14 miles below Albany the navigation of the Hudson is in the highest degree adapted to the navigation of even much larger vessels than proposed.

From the preceding it appears

1st. If the Champlain Canal is not enlarged, which is the most unfavourable view, the difference against the Canadian improvement will be five cents per barrel on flour to Albany.

2nd. With the Champlain Canal enlarged as the Erie, the difference against the Canadian improvement will be 14 cents per barrel on flour to Albany.

3rd. The Champlain made a Ship Canal, avoiding all transhipment, the difference is in favour of the Canadian improvement nearly one cent per barrel on flour.

The voyage could be made by propeller from Chicago to New York in 13 to 15 days. The Canadian route would save about the time lost by the delay incident to transhipment at Oswego or Buffalo.

In the 2nd and 3rd comparisons the two routes would be so near equal that an active competition could be maintained for the New York trade.

In the 1st comparison for the trade to New York, the Canadian route would be able to compete at those seasons, when freight should rule high, overcoming the small difference against it; and at such times secure a fair share of this trade. It will be observed that in the foregoing comparisons no allowance has been made for superior and consequently more economical transportation by Ship Canal of three times the size, with locks adapted to vessels of 600 tons instead of 200 tons. In regard to tolls they will probably be alike, and have been so considered.

Thus far the subject has been considered without reference to the influence of pressure on the enlarged Erie Canal, that the rapidly increasing Lake trade is sure to produce, and which will necessarily increase the charges of transport. But it may be expected that such increase will lead to a reduction of tolls, if the State of New York considers it her interest to retain as far as possible the trade on this Canal. The reduction of tolls on one route would lead to a corresponding reduction on the other, and the comparison still holds good. By the time, however, these improvements are completed and in full operation, the Lake trade will have become so large that no jealousy need be felt, as both routes will be remunerated with their respective shares, especially in view of its progressive expansion. (Some further remarks bearing on this point will be made in a subsequent part of this Report.)

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