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 by different private shippers or by common carriers among whom competition prevailed.

Sec. 5. #Rapid building of American railroads#.  The canal was just reaching the peak of popular favor when the railroad in 1830, after a half-century of slowly accumulating technical improvements, burst into view as a demonstrated success as a means of transportation.[2] The railroad excels in adaptability any other agent of transportation; it can go over mountains or tunnel through them.  It is markedly superior in certainty; it may be blocked for a day or two by floods and snows, but it suffers no seasonal stoppage of traffic.  In speed, even the early railroad so far excelled that the canal could survive only by dividing the traffic, taking the lower grades of freight, and leaving to the railroad the passenger traffic and fast freight.  Even in respect to cheapness, the unique virtue of waterways in favored localities, the railroad made rapid gains.  Improvements in roadbed, rails, cars, engines, and other equipment soon reduced greatly the cost of conducting traffic on the main lines of roads.  Because of these qualities railroads soon surpassed in importance every other agency of internal transportation.  The miles constructed and miles in operation in the United States, by decades since 1830 were as follows (route mileage, not counting double tracks and sidings):