e and the finished products of industry, but also because it
enables the merchant to turn his stock oftener and thus do business
with less expenses for capital.

As a third effect of improved transportation may be mentioned the
acceleration which it has given to the growth of cities. Cheap and
efficient transportation has led manufacturers to locate their plants
where they can command a large supply of labour and where they have
the greatest advantages for the distribution of their products. The
great manufacturing establishments are now located in Chicago, New
York, Philadelphia, Pittsburg, and the other large cities. Conditions
of transportation have become a stronger factor than even the location
of the sources of raw materials in determining where an industry shall
be established. The effect of the railroad upon the location of
agriculture has been no less potent. The railroad has brought new
agricultural regions into cultivation and destroyed the profits of
cereal agriculture in many parts of the Eastern States.

Another important consequence of improved transportation and
communication has been that of bringing the nations of the world into
closer economic and social relations. With the growing solidarity of
the economic interests of the countries of the world, with the
multiplication of the intellectual and other social ties that unite
the nations, their political relations inevitably change, and for the
better. Nothing is doing more to advance the attainments of the
cherished ideal of international amity than is the development of
transportation.

XI. FREIGHT TRANSPORTATION BY RAIL

THE ORIGIN OF RAILROAD TRAFFIC ASSOCIATIONS

The performance of the transportation services necessitates the
co-operation of carriers. When the government owns and operates the
railroads of a country they are managed by a single authority, and the
different parts of the railway system are fully co-ordinated; but when
the railroads are operated by a large number of independent
corporations, co-operation can be secured only by means of traffic
associations composed of representatives of the railway companies, and
intrusted with the power of making arrangements affecting joint
traffic, and settling questions involving the interests of two or more
companies.

Two distinct causes brought about the establishment of railway traffic
associations. The first cause was the necessity of co-operation to
facilitate the joint business of