business corporation to become
important, and further by the fact that its work was in various ways
closely connected with the coinage and regulation of money, which had
already become a governmental function. The railroad was the form
of corporation next in point of time to become a great problem; this
because of the peculiarly vital and far-reaching effects that such
railroad transportation has upon all other kinds of business in the
community, as appears in what follows.

Sec. 4. #The era of canals.# Canals were used in the ancient empires
for irrigating, for the supplying of cities with water, and for
navigation. In the late eighteenth and the early nineteenth centuries
they were rapidly built in England and America. Six canals had been
built in the United States before 1807, but the "canal-era" in America
dated from the beginning of work on the Erie canal in 1817, and
continued until about 1840, when nearly all new work ceased; over 4000
miles of canals had been built at a cost of $200,000,000.

The great advantage of canals is cheapness of operation due to the
simplicity of the machinery needed and to the great loads that can be
moved with small power. A cent a ton-mile proved to be a paying rate
on a small canal. For heavy, slow-moving freight, a railroad can even
now barely rival a parallel canal at its best. As canals, however, can
be built only along pretty level routes and where the water supply is
at high level, their construction is limited to a small portion of the
country. The principle of diminishing returns applies strongly to
the construction of canals; the first canals in favored locations
are easily constructed and economically operated, but it is only
with greater cost and difficulty that the system can be successively
extended. In temperate climates the use of canals is limited by ice
to a part of the year, and by the summer's drought sometimes still
further. At its best, therefore, the small land-locked canal is fitted
only to be a supplementary agent in the system of transportation
wherever another transportation agency of higher speed and greater
regularity is possible. Far different is the case of the oceanic canal
in a tropical climate.

Canals do not appear to have developed any serious problems calling
for public regulation of rates. A first simple legislative act fixing
the rate of tolls for boats was sufficient. Charges were made by
distance as on a toll road and the boats were owned b