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Health Economics
FIFTH EDITION
Health Economics
CHARLES E. PHELPS
University of rochester
First published 2013, 2010, 2003, 1997 by Pearson Education, Inc.

Published 2016 by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY, 10017, USA

Routledge is an imprint of the Taylor & Francis Group, an informa business

Copyright © 2013, 2010, 2003, 1997 Taylor & Francis

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.

Notice:
Product or corporate names may be trademarks or registered trademarks, and are used only
for identification and explanation without intent to infringe.

Credits and acknowledgments borrowed from other sources and reproduced, with
permission, in this textbook appear on page 523.

Cover Designer: Suzanne Duda

ISBN-13: 978-0-13-294853-1 (hbk)

Library of Congress Cataloging-in-Publication Data

Phelps, Charles E.
Health economics / Charles E. Phelps. — 5th ed.
p. ; cm. — (Pearson series in economics)
Includes bibliographical references and index.

I. Title. II. Series: Pearson series in economics.

[DNLM: 1. Economics, Medical—United States. 2. Financial Management, Hospital—
economics—United States. 3. Health Policy—
economics—United States. 4. Insurance, Health—economics—United States. 5. Marketing of
Health Services—economics—
United States. W 74 AA1]
338.4’73621—dc23

2012000860
TO DALE—OUR TIME HAS JUST BEGUN… ONCE AGAIN.
Contents

Preface

CHAPTER 1 Why health Economics?

Important (If Not Unique) Aspects of Health Care Economics

How Markets Interrelate in Medical Care and Health Insurance
Afterthought
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 2 Utility and health

How to Think About Health and Health Care (or… How Health Economics?)
The Production of Health
Health Through the Lifecycle
A Model of Consumption and Health
Summary
Related Chapter in Handbook of Health Economics
Problems
Appendix to Chapter 2: A Formal Model of Utility Maximization
CHAPTER 3 The Transformation of medical care to health

The Productivity of Medical Care

Confusion About the Production Function: A Policy Dilemma
Physician-Specific Variations (Medical Practice Styles)
Extensive and Intensive Margin Differences: Are They Similar?
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 3: Marginal, Average, and Total Productivity

CHAPTER 4 The demand for medical care: conceptual Framework

Indifference Curves for Health and Other Goods

From Indifference Curves to Demand Curves
How Demand Curves Depend on Illness Events
Demand Curves for Many Medical Services
The Demand Curve for a Society: Adding Up Individual Demands
Use of the Demand Curve to Measure Value of Care
How Insurance Affects a Demand Curve for Medical Care
Time Costs and Travel Costs
The Role of Quality in the Demand for Care
Revisited: The Price Index for Health Care
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 4: Demand Curves and Demand Elasticities

CHAPTER 5 Empirical studies of medical care demand and applications

Studies of Demand Curves

Effects of Age and Gender on Demand
The Effects of Illness on Demand
Lifestyle and Its Effects on Demand
The Demand for “Illness”
The Demand for Quality: Choice of Provider Specialization
Other Studies of Demand for Medical Care
Applications and Extensions of Demand Theory
Decision Theory: Deriving the “Right” Demand Curve for Medical Care
Cost-Effectiveness Ratios and Demand Curves
Why Variations in Medical Practice?
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 5: An Example of Medical Decision Theory

CHAPTER 6 The Physician and the Physician-Firm

The “Firm”—Inputs, Output, and Cost

The Physician as Entrepreneur
The Physician-Firm and Its Production Function
The Physician as Diagnostician
Nonphysician Primary-Care Providers
The Size of the Firm—Group Practice of Medicine
Practice Ownership Patterns
The Physician as Labor
The Aggregate Supply Curve: Entry and Exit
The Open Economy: U.S.- and Internationally Trained Physicians
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 6: Cost Passthrough

CHAPTER 7 Physicians in the marketplace

Physician Location Decisions

Consumer Search and Market Equilibrium
The Consequences of Incomplete Search
Actual Search by Patients
Advertising and the Costs of Information
The Role of Licensure
Estimates of the Demand Curve Facing Physician-Firms
Induced Demand
The Role of Payment Schemes
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 8 The hospital as a supplier of medical care

The Hospital Organization
Who Is the Residual Claimant?
Where Does the Utility Function Come From? A Political Theory Model
Hospital Costs
Long-Run Versus Short-Run Costs
The Hospital’s “Cost Curve”
Another Complication: Outpatient Surgery
The Demand Curve Facing a Single Hospital
The Utility-Maximizing Hospital Manager Revisited
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 9 hospitals in the marketplace

Hospitals and the Market for Medical Staff

Hospitals and Patients
A Model of Equilibrium Quality and Price
Insurance and Competition in the Hospital’s Decision
Interaction of Doctors and Hospitals: “Goodies” for the Doctor
Interaction of Doctors and Hospitals: Patients for the Hospital
Competition—“Old Style” Versus “New Style”
Entry and Exit: The Pivotal Role of For-Profit Hospitals
The Hospital in Labor Markets
Nursing “Shortages”
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 9: The Hospital’s Quality and Quantity Decision

CHAPTER 10 The demand for health insurance

The Demand for Health Insurance

Reasons People Want Insurance
Choice of the Insurance Policy
The Patient Protection and Affordable Care Act: Prelude
Insurance Market Stability: The Question of Self-Selection
Income Tax Subsidization of Health Insurance
Empirical Estimates of Demand for Insurance
The Overall Effect of the Tax Subsidy on the Health Sector
“Optimal” Insurance
Other Models of Demand for Insurance
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendixes to Chapter 10:
Appendix A: A Detailed Calculation of Welfare Loss
Appendix B: The Calculus of the Risk/Moral Hazard Trade-off
Appendix C: The Statistics of an Insurance Pool

CHAPTER 11 health insurance supply and managed care

The Supply of Insurance
Insurance Exchanges in the PPACA
Managed Care: A Response to the Incentives of Traditional Insurance
Why Managed Care?
Market Share Trends
Types of Interventions
Which Interventions Work Best for Managed Care?
Long-Run Issues
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 12 government Provision of health insurance

The Medicare Program

Medicare Advantage
Operational Changes in Medicare
The Medicaid Program
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 13 medical malpractice

Background of the Legal System in the United States

The Economic Logic of Negligence Law
Judicial Error, Defensive Medicine, and “Tough Guys”
Medical Malpractice Insurance
Evidence on Actual Deterrence
Malpractice Awards: “Lightning” or a “Broom Sweeping Clean”?
Tort Reform
Tort Reform Writ Large
HMO Liability: A New Domain for Malpractice Law
Summary
Related Chapter in Handbook of Health Economics
Problems

CHAPTER 14 Externalities in health and medical care

Externalities, Property Rights, and the Control of Externalities

Externalities of Contagion
Solutions to the Externality Problems
International Issues—Expanding the Scope of the Externality
Externalities from Tobacco
Information as an Externality
Research as an Externality
Reasons for Such Little Research on Medical Effectiveness
Transfusion-Induced AIDS and Hepatitis
Summary
Related Chapters in Handbook of Health Economics
Problems
Appendix to Chapter 14: Value of Life
CHAPTER 15 managing the market: regulation, Quality certification, and
Technical change

A Taxonomy of Regulation
Licensure
Measuring Quality
Paying for Outcomes: Accountable Care Organizations in PPACA
“Certificate of Need” (CON) Laws
Price Controls
Drugs and Devices: The New Wave of Medical Care
Summary
Related Chapters in Handbook of Health Economics
Problems

CHAPTER 16 Universal insurance issues and international comparisons of

health care systems

Aggregate International Comparisons

Increase in Costs and Health Outcomes
The Patient Protection and Affordable Care Act of 2010
General Considerations for a National Health Policy
A Final Conundrum
Summary
Related Chapters in Handbook of Health Economics
Problems
Author’s Postscript
Bibliography
Credits
Index
Preface
What’s New in this Edition?
As with previous editions, this edition revises and updates all data tables
where new data are available. The advent of the Patient Protection and
Affordable Care Act (PPACA) in 2010 has led to changes in many chapters of
Health Economics, most notably in the organization and focus of Chapter 16.
However, rather than just appending a discussion of the PPACA at the end
of the book, the fifth edition integrates PPACA issues (as appropriate)
throughout the book.

Chapter 1 integrates the PPACA into the overall market equilibrium

analysis.
Chapter 10 discusses key requirements in the PPACA, including the
requirement that all people in the U.S. must have health insurance
coverage, the requirement that employers provide health insurance for
their employees, and the importance of the PPACA rule eliminating the
use of pre-existing conditions in health insurance underwriting.
Chapter 11 discusses the PPACA requirement that states form
“insurance exchanges” to help individual buyers find low-cost health
insurance if they are not insured through employer groups. Chapters 11
and 12 also discuss a new health care delivery model envisioned in the
PPACA—the Accountable Care Organization.
Chapter 15 expands the discussion of regulated prices for hospital care
to include Medicare’s new linkage of outcomes of care to
reimbursement and the encouragement of Accountable Care
Organizations, both facets of the PPACA legislation.
Chapter 16 summarizes the entire PPACA and expands the previous
economic analysis of universal insurance in the U.S. to include what
options are available to address each issue, and how the PPACA
 actually dealt with the key issues surrounding implementation of
universal insurance coverage.

Other significant changes to this edition are:

Chapter 3 expands the discussion of cost-effectiveness analysis,

including (in addition to a discussion of Quality-Adjusted Life Years) a
new analysis of the Disability Adjusted Life Years (DALY) measure that
is used by the World Bank, the World Health Organization, and many
European nations.
Chapter 6 explores physician practice ownership patterns, taking note
of recent changes such that over half of all physician practices are now
owned by hospitals.
Chapter 6 expands the discussion of International Medical Graduates
including new data and discussion that links together IMG certification
and quality and medical resident “fill rates.”
Chapter 9 extends the discussion of nursing practice, including a new
analysis of internationally trained nurses and their role in the U.S.
nursing market.
Chapter 10 explores the analysis of the tax subsidy to health insurance
by introducing explicitly the share of health insurance premiums paid
by employers into the analysis and new data and forecasts of the extent
of the tax expenditure attributed to the exclusion of employer paid
health insurance from the tax base.
Chapter 11 introduces new estimates of the insurance “loading fee” by
employer group size, using the first firm estimates of this relationship
in the literature.
Chapter 11 expands and adds new data on the discussion of the market
shares held by different types of health insurance plans.
Chapter 12 examines the changes in the Medicare Part B deductible
over time.
Chapter 12 adds a new discussion about the extent of enrollment in
Medicare Advantage (Part C) programs as an alternative to traditional
Medicare coverage.
Chapter 12 explores ambulatory surgery and its effect on hospital
occupancy, as well as an expanded discussion of hospice use as an end-
of-life alternative to hospitalization.
Chapter 13 adds a new discussion about the relationship between
quality of care and negligence lawsuits.
Chapter 14 approaches the topic of transfusion-related illnesses to
discuss the extent of this externality in a wide set of nations, rather
than focusing wholly on the United States.
Putting the Fifth Edition in Context
The study of health economics is becoming more important and more useful.
The health care sector continues to grow in size, both in absolute dollars and
as a portion of the overall economic activity of the United States. In terms of
employment, now about one person of six in the country is employed in the
health care sector.
The government’s role in health care has become increasingly important
through the years, beginning with the founding of the U.S. Public Health
Service in 1798. Many people point to the 1965 creation of Medicare and
Medicaid as a landmark step in the government’s role in health care. In 2010,
however, sweeping new legislation heightened the government’s role in
health care even more—the Patient Protection and Affordable Care Act
(PPACA), sometimes referred to in shorthand as the “Affordable Care Act.”
This edition of Health Economics contains numerous new analyses of issues
created or highlighted by passage of the PPACA. Readers will find these
analyses throughout the book.
The PPACA does not bring legislative change to a halt. Indeed, as this fifth
edition goes to press, numerous issues remain unsettled regarding the most
basic structures built into the PPACA. Perhaps most important are legal
challenges to the very core of the Act—the requirement (“mandate”) that
individuals obtain health insurance coverage of at least a minimum level as
defined in the Act. Numerous lawsuits arose shortly after President Obama
signed the PPACA into law, most of them challenging the constitutional
validity of the individual mandate. Numerous lawsuits challenged the
constitutionality of the PPACA, with conflicting rulings from several Circuit
Courts of Appeals. As one would expect in such a situation, the Supreme
Court “accepted certiori” on these cases in the autumn of 2011, as this edition
went to press. A ruling is expected before the 2012 summer recess of the
Supreme Court—after the publication of this edition.
Readers of this text will find analyses of many of the facets of the PPACA
as it was crafted. As the legal landscape changes, this background should
allow the reader to understand how the environment may shift in the future,
and readers should be able to use the tools and approaches contained in this
book to understand the conse quences of various changes. Indeed, readers
will find that even the core legal challenge to the PPACA’s individual
mandate can be analyzed using key economic issues examined throughout
this textbook, including understanding how insurance markets work and
game-theoretic approaches to understanding how they would work in
various alternative legal settings.
To analyze health care economics in general and the PPACA specifically,
one must use a wide array of analytic tools and approaches. Useful tools
include cost-effectiveness analysis, game theory, and a careful analysis of the
linkages between lifestyle choices (tobacco, diet and exercise, alcohol abuse,
etc.) and health outcomes. A parallel development comes from the world of
genetics and molecular medicine, leading to a whole new array of diagnostic
and therapeutic alternatives not previously available as well as a better
understanding of how our genetic heritage may control our lifestyle choices.
(For example, some of us are genetically disposed to become addicted to
nicotine.) These new findings from genetic medicine require rethinking not
only diagnostic and therapeutic choices for physicians and their patients but
also the structure of health insurance programs and (most importantly) how
new technologies are introduced into the list of covered services. These same
genetic findings alter the legal and ethical landscape in thinking about
health care.
Additional Resources
Each chapter points readers to key chapters in the two-volume compendium
Handbook of Health Economics edited by Anthony Culyer and Joseph P.
Newhouse (2000). This two-volume series (part of an extended series of
Handbooks in Economics edited by top scholars in their fields) contains
summary articles from state-of-the-art researchers in topics spanning a wide
array of the field of health economics. These articles, while “dated” to the
2000 publication year, still stand as a useful resource for scholars in this field
and will do so for years to come.
The Companion Web site for Health Economics
(www.routledgetextbooks.com/textbooks/9780132948531) offers additional
resources for students such as useful Web links, additional material on the
role of genetics in obesity and the use of alcohol and tobacco, and self-study
quizzes. The Companion Web site also features three appendixes culled from
the text. These online appendixes consist of material covering Marginal Tax
Rates in the United States, a Review of Health Policy and Systems in
Selected Countries, and an Introduction to Basic Economics Concepts.
Acknowledgments
I wish to express my appreciation to the entire Pearson publication team for
their excellent help and collaboration in preparing this fifth edition,
beginning with the manuscript management, copyediting, production (many
thanks to Karen Berry at Laserwords and Alison Eusden at Pearson), and all
other steps leading to publication. I particularly wish to thank David
Alexander and Lindsey Sloan at Pearson for all of their help in this process
and valued guidance in thinking about additions, modifications, and
inevitable deletions in the book.
Acknowledgments

I wish to express my appreciation to the entire Pearson publication team for

their excellent help and collaboration in preparing this fifth edition,
beginning with the manuscript management, copyediting, production (many
thanks to Karen Berry at Laserwords and Alison Eusden at Pearson), and all
other steps leading to publication. I particularly wish to thank David
Alexander and Lindsey Sloan at Pearson for all of their help in this process
and valued guidance in thinking about additions, modifications, and
inevitable deletions in the book.
Exploring the Variety of Random
Documents with Different Content
 LAKE CHAMPLAIN. 689 stylish at that time and was kept in
elegant order, — our townsman Sion E. Howard then being steward
and having charge of this department. There was a railing around
the boat, but no pilot-house to protect the pilot from storms, and in
fact there was no attempt made to shelter the deck, or to use it as
at the present day in any way- for passengers. She run very
successfully between St. Johns and Whitehall for some years — the
price of passage at that time being $10, which included "board and
lodging" be the trip longer or shorter — until she was destroyed by
fire at 1 o'clock in the morning, on the 5th of Sept., 1819, on her
passage from Burlington to St. Johns. BUENIKG OF THE STEAMER
PHCENIX. Capt. Jehaziel Sherman was running the Phoenix that
season, but upon her fatal trip was not on board, being confined at
home by sickness ; and his son, Capt. Richard W. Sherman, then a
young man, was in command of her. At that time Port Kent had not "
become the starting place for all other parts of the world," and the
course of the steamers from Burlington was the same as at the
present time, when running direct from Burlington to Plattsburgh,
viz. : near Rock and Appletree Points, between Colchester reefs, and
thence on the west of Stave and Providence Islands, and east of
Valcour and Crab Islands. It was on a clear moonlight evening,
Saturday, September 4, 1819, as Capt. Sherman relates to us, " We
left Burlington at 11, P. M. with every thing in apparent good order
about the vessel, a regular watch being kept at night. I remained on
deck until we passed the reefs of Colchester, in company with Geo.
Burnham, the Custom House Officer. The passengers, I think, had all
retired. Having been up all the night previous, I told my pilot to call
me at Crab Island — and Mr. Burnham said he would do the same —
and then went below to my stateroom, lay down and fell asleep, the
wind blowing fresh from the north-east." Our townsman, D. D.
Howard, was the steward and barkeeper of the boat, and occupied
the same room with Capt. R. W. Sherman, which was in the forward
end of the boat and was reached by another flight of stairs than
those which led to the gentlemen's and ladies' cabin. There was no
connection below between the cabin and forward end of the boat,
the boiler being in the Qenter, the state-room of Capt. Jehaziel
Sherman upon one side of it and the kitchen and pantry upon the
other, the latter adjoining the cabin. Col. Harry Thomas, whose wife
and family still reside in Burlington, and John Howard, so long
known to our citizens as "Uncle John" of the Howard Hotel, were on
board, Mr. Howard being on his way to Montreal as a special
messenger for the Bank of Burlington, with $8,000 in charge. It was
customary for the pilots and those on duty all night to take a Innch
in the pantry about midnight — and for some reason this night a
candle was left by some of them burning between the shelves,
which soon set fire to them, and the pantry being by the side of the
boiler made the woodwork very dry and combustible, and soon it
was all in a blaze. John Howard had deposited his money in the bar,
which was in the cabin, and had taken the room next to the pantry,
and was consequently the first to discover the fire. He at once
aroused all the passengers in the gentlemen's cabin, and from
thence rushing to the ladies' cabin awakened all there, hurrying all
on deck as fast as possible— most of them in their night clothes —
with such portion of their dress as they could seize in the hurry of
the moment. In a very short time the fire burst forth from the
pantry, and, communicating to the oil about the engine, soon
enveloped the whole center part of the boat in flames and almost
cut off communication between the two ends. Meanwhile Capt. R. W.
Sherman and D. D. Howard, who were in forward, had made their
way over the top of the wheelhouse, without coat, hat or boots, and
were attempting to save the money in the captain's offige, but were
foiled in the attempt, the fire having already come up through the
skylight, encircling the office in flames. It was now about 1 o'clock
on the morning of the 5th of September, and the boat was some 14
miles from Burlington, about 4 miles from Colchester Point and 2
miles from Providence Island. The flames spread with great rapidity,
and but one alternative remained, as death by fire was certain in a
few minutes to those who should remain onboard. Capt. Sherman
says : " The starboard boat was then settled away and left with
about 20 persons, including all the lady passengers, the stewardess,
Mrs. Wilson, having pre 
 690 VERMONT HISTORICAL MAGAZINE. viously brought to
the ladies in the boat all their things from the ladies' cabin. This boat
was then started off for Providence Island in charge of Col. Thomas
and D. D. Howard, the latter having the $8,000 in charge, while
Capt. Sherman, John Howard, and Mrs. Wilson remained on board
the burning steamer to aid in saving the rest with the larboard boat,
which was much the larger boat of the two. This boat was then
settled away, and my men placed at the bow line which held her to
the steamer to prevent her being shoved off before all were on
board, as she could carry all that remained without difficulty. After
14 persons had been lowered into it and while Mrs. Wilson had gone
below for her things, the line was cut by some person in the boat
and she dropped astern, leaving myself and ten others on board the
burning steamer. Their names are as follows : Capt, R. W. Sherman,
Vergennes ; John Howard, Burlington ; Samuel Harris, Hebron, N.Y.;
Dr. Trinett, Boston, Mass.; Austin Wright, fireman, Whitehall ; Gilbert
Painter, about 12 years old, Quebec; Mrs. Wilson, stewardess,
Charlotte, Vt.; Ziba Manning, pilot, Whitehall ; Stephen Kellis, cook,
New York ; Harvey Black and Andrew Harrison, deck hands,
Burlington. The five first mentioned were saved, and the other six
were lost." Mr. Elias Hall, late of Rutland, who was well acquainted
with the lake and was a passenger, published an account of this
disaster some years since, and also related to me, before his death,
the circumstances. He says : " He was in the last boat, holding it to
the vessel and watching the bow line, when John Pierson of
Shelburne cut it, which let the boat swing around, when there was a
cry to ' cut the stern-line or we shall go under,' and Pierson then cut
it off close to my side." When this act was done and the bowline
severed, almost the last hope of life to the few left behind was cut
off, and a scene ensued which was truly distracting and heart
rending. Eleven persons were left on board the burning steamer, in
the dead of night, which was then nearly overspread with flames
and those fanned by a strong wind blowing fresh from the north-
east. The cries for assistance from those who could not swim were
pitiable, and, to add to the horror and cruelty of the awful scene,
McVein, the engineer of the steamer, who was in the larboard boat,
a few rods off, refused to return to save those who had been left —
and when others who were in the boat insisted upon going back, he
threatened "to knock the first man overboard with an oar" who
should rise to make the attempt. The two boats made for Providence
Island and landed their passengers, and immediately returned to the
burning wreck. Col. Thomas in charge of one, and D. D. Howard of
the other. In the meantime, while they were gone, John Howard and
Capt. R. W. Sherman, with the same coolness and presence of mind
which they had exhibited throughout the terrible scene, continued to
provide the best means then left at their command to save the
others until the small boats could return. Benches, boards, plank,
tables, were thrown overboard as fast as persons were let down into
the water. Mrs. Wilson was placed between two settees, but the-
rolling of the waves displaced them in a short time, and herself with
five others who could not swim, soon sunk into a watery grav&.
Ca.pt. Sherman was the last man to leave the vessel. He says : "
The vessel was then on fire twothirds her length or more, and soon
after the others were overboard I took a table leaf and jumped into
the water from the larboard quarter and made for Stave Island.
Soon afterwards I hailed a person afloat some distance from me,
which proved to be Austin Wright, and told him, if he was picked up
by either of the boats, to say he bad seen me, and that I should try
to reach Stave Island, and that if I was living they would find me on
or near it. I owe my life to having given him these directions;
because one of the boats, upon their return from Providence Island
found him, and upon his relating my directions to him, the boat was
at once started in the direction ef Stave Island, and I was picked up
about 40 rods from it, having been in the water two hours and a
quarter, and was quite insensible. When I came to my senses I
found myself in the bottom of the boat, and at once ordered my
men to put about and go to the wreck in hopes of saving others ;
and, after rowing around it and finding no one, we made for
Colchester Point, where we landed and went up to a fisherman's hut,
Mr. George Burnham carrying me in his arms. After remaining here
an hour and recovering ourselves, we again went to the wreck,
which had drifted some distance
 LAKE CHAMPLAIN. 691 from where the boat took fire, and
lodged upon Colchester reef, now known as the outer reef, and
extinguished the fire, the ■yessel having burned to the water line."
The light from the burning vessel had already been discovered in
Burlington, and Capts. Robert and Lavater White, Capt. Almas
Truman, Capt. Dan Lyon, all of whom are now living, with others put
off early in the morning with their sloops for the scene of the
disaster, taking with them provisions and all kinds of clothing for the
passengers, ^hich the residents of the village bad brought down to
the wharves. The citizens of Grand Isle also went over to Providence
Island early in the morning with food and clothing, and during the
day the passengers were all brought to Burlington, where every
attention and kindness was shown them. We cannot too strongly
commend the heroic exertions and noble efforts of Capt. R. W.
.Sherman, John Howard, and Harry Thomas, and Mrs. Wilson, nor
admire too highly the coolness and presence of mind so strikingly
manifested by them in saving the lives of so many in so short a time
; as says a passenger, " It could not have been ten minutee from the
time the fire was discovered, before every person had left the
steamer, so rapidly did the flames communicate to every part of the
vessel." Especially praiseworthy and commendable will the self-
sacrifice of these persons appear on the page of history when
compared with the selfishness and inhumanity of the person who cut
the line of the last boat before it was half full, leaving on board a
female who was neighbor of his, who had so bravely assisted all the
ladies under her care into the first boat, and was willing to take her
chance for safety in the second one, — or with the cruelty of the
engineer McVein, who refused when solicited by the passengers in
his boat to return to rescue his own comrades and Captain, who had
been his daily associates and friends for years. When we consider
that this disaster occurred in the night — with a fresh wind to scatter
the flames, and create a sea — with almost all on board in sound
sleep, and with everything 80 combustible around them, we cannot
give too much credit to the above named persons for their brave and
noble conduct, and think there are but few instances upon record
which would compare with them. An instance of depravity which
occurred in connection with this disaster it may be well to mention.
When the small boats arrived at Providence Island the first time, no
one but Colonel Thomas and D. D. Howard were willing to take
charge of them, to return for those who had been left. Mr. Howard
had the bag with $8,000, which his father had thrown into the boat
to him as she left the steamer, but rather than not have the boat
return he left the money in care of some of the passengers. Amidst
the confusion which arose after he had left on his return trip, an
Irishman got hold of the bag, rifled it, and with the first boat which
came over from Grand Isle in the morning, he took passage back
and as fast as possible made his course for Bell's Ferry upon the
west side of the Island, in hopes to get to Plattsburgh before the
loss of the money was discovered. Mr. Sion E. Howard,* who was
one of the first citizens to arrive at Colchester Point, and Providence
Island, was directed by his father to look after the money, and upon
making inquiry found it had been stolen, and that the Irishman was
missing. Mr. H. at once crossed over to Grand Isle, and soon getting
track of him followed on as rapidly as possible, overtaking him near
the Ferry, when the man, immediately suspecting the nature of his
mission, turned upon him hors du combat with two large knives,
threatening to stab him if he advanced. Mr. Howard, nothing
daunted by his threats, stepped to the fence and drawing out a
stake, summoned the man to surrender, which after some words he
concluded to do, and gave up all the money to Mr. Howard.* We
close the account of this awful disaster with the following statements
taken from the Northern Sentinel of Sept. 10th, 1819 : A CARD. Mr.
Henry Chapman and family, of Boston, Mass., and Thomas W.
Thompson, of Concord, New Hampshire, acknowledge with great
sensibility the efficient, humane and polite attention shown by the
gentlemen and ladies of Burlington, to themselves and fellow-
sufferers by the awful conflagration of the steamboat Phoenix, on
Lake Champlain in the night qf the 4th-5th inst. They consider it but
an act of justice thus publicly to say, that more judicious
arrangements for their relief and the relief of those passengers who
were destined to the northward and Canada, could not, in their
opinion, have been made. * Since tbla article was •written,
deceased. — Ed.
 692 VERMONT HISTORICAL MAGAZINE. A CARD. GENERAL
BARNCM Wishes to make his acknowledgments to the citizens of
Burlington for their indefatigable exertions in attempting to save
from the wreck of the steamboat Phoenix, such property as was
practicable to secure. They nave also laid him under a more
particular obligation for the promptness in which they turned out
with clothing, provisions, liquors, &c., to comfort the surviving
passengers and crew who escaped the ravages of the flames, and
were providentially rescued from a watery grave. For this Godlike
act, words are insufficient to express his feelings — they can better
be conceived than described ; he can only say their humanity and
benevolence on this distressing occasion will, during his life, be held
in grateful remembrance. He cannot in justice to his own feelings,
omit to make a single exception, vizMi. Samuel Wainwright, who
refused to go with, or loan his boat to carry clothing to cover the
nakedness of the suffering females and others who were cast upon a
desert island. Capt. Richard W. Sherman wishes also to return his
most grateful thanks to the citizens of Burlington for their kindness
to him, and his distressed crew and passengers, in furnishing them
with every comfort which was possible for human beings to bestow.
The second boat of this Company was put on to the stocks at
Vergennes, in the winter of 1815 and 1816, and called the
Champlain. Fearing the Messrs Winans, whose boat was wrecked
this season, would build another, and desiring to avoid any
competition and to dispose of them without trouble, the Company
made a contract with them to build this boat, using the engine and
boilers of the " Vermont," her construction being planned more to
Bink the engine than to accommodate passengers. Capt. George
Brush, who now resides at Montreal, and to whom we are indebted
for many particulars, superintended the construction and fitting out,
and took command of her when she came out the following
September. Her speed was but about 4 miles an hour. It should be
borne in mind that these boats were far inferior to those of the
present day in their manner and as well as style of finishing — the
Champlain being arranged similar to the Phoenix, with short guards,
flush deck aft, with no cabins or covering above the main deck,
except an awning of canvas. The Company found upon trial that
both these boats were too slow, and that something must be done
to increase their speed. It was therefore decided during the winter
of 1816 and 1817 to transfer the engine of the Phoenix to the
Champlain, which brought her up to a speed of 6 miles per hour. A
new engine for the Phoenix was built by McQueen in New York, 42-
inch cylinder and four feet stroke, which gave her a speed of 8 miles
per hour. The Champlain came out at the opening of navigation in
1817, making two trips a week between Whitehall and St. Johns,
and the Phoenix came out in July. Soon after she had taken her
place upon the line, the Champlain was burned to the water's edge,
while lying at the dock in Whitehall, caused by the imperfect
construction and arrangement of her boilers. In 1818, Captain
Sherman and Amos W. Barnum of Vergennes, Guy Catlin of
Burlington, and Tunis Van Vechten of Albany, built the Congress at
Vergennes, using the engine and boilers of the Champlain which had
been before used on the Hudson River and on the Phoenix and tried
by fire on the Champlain. This boat came out in 1818, and was
commanded by Captain Daniel Davis during that season and most of
the next, and in the winter of 1820 was sold by the owners to the
Champlain Steamboat Company, and Captain R. W. Sherman was
appointed to command her. The Phoenix having been burnt the fall
before, the Congress was now the only steamboat on the Lake, and
she continued to run on the line alone until the Company, in the
winter of 1819 and 1820, built anothGr boat which they called the
2d Phoenix, using the engine built by McQuean for the first Phoenix,
which had been saved from the wreck, and which came out in July
1820, under command of Capt J. Sherman, and was said to be at
that time the fastest steamboat in the world. These two boats were
arranged and finished similar to the first Phoenix, although some
improvements were afterwards made, and the guards were
extended full all around. The Company having incurred serious
losses in the destruction of two steamboats by fire, still persevered
in their enterprise, and in the Spring of 1821 found themselves with
the Phoenix and Congress in good order. These boats were put on to
the route between St. Johns and Whitehall under command, at
different times, of the Messrs. Sherman, Harrington, Burnham and
Lathrop, making three trips per week and continued to run with
success for several years, being the only steamboats on the lake, the
fare through between St. Johns and
 LAKE CHAMPLAIN. 693 Whitehall being $6.00. Thus far the
Com- , pany had made Vergennes their place for building and
repairing their boats during the winter, it being the residence of
Captain J. Sherman, who had the superintendence of this portion of
the business. But on account of the early closing of the Otter Creek
by ice, and other reasons, which made it very inconvenient for them,
they determined to find some other place more accessible at all
seasons of the year, and Messrs. FoUett and Van Ness were
appointed a committee to carry out the resolution. In 1820 these
gentlemen made choice of the present location at Shelburne Harbor
and purchased some 4 or 5 acres of land, where since have been
erected wharves, store-houses, ways, machine and carpenter shops,
saw mills, and all the machinery necessary for hauling out, repairing
and building boats, including engines and boilers. Boats can enter
this harbor at the last moment, when the lake is closed by ice, and
can come out as soon as it is clear in the spring, and withal a secure
harbor is afforded at all times from all winds and seas, — and has
now become the main ship-yard on the lake for the repair of
steamers and large vessels. Meanwhile Captain J. Sherman, in 1817,
had taken to Lake George the original engine of the Vermont which
was tried upon the Champlain and then taken out, and in connection
with the Messrs. Winans, built the " Caldwell." This was the first
steamboat on Lake George, was 80 feet long, 20 feet wide, 8 feet
deep, 20-horse power, and cost $12,000. She was burnt in 1821.
Captain Sherman, in 1824, built the " Mountaineer," at Caldwell, 100
feet long, 16 broad, 8 deep, 20-horse power, — cost $12,000, speed
6 miles an hour, run 13 years, and was condemned at Ticonderoga
in 1837. The John Jay was built by Captain Sherman, in 1838, at
Ticonderoga, 140 feet long, 17 wide, 8 deep, — cost $20,000, 40-
horse power, speed 12 miles an hour, and commanded by Captain L.
C. Larabee, condemned in 1848. In 1849, the second John Jay was
built. Length 145 feet, breadth ■ 20, depth 8,— cost $26,000, 75-
horse power,, speed 13 miles an hour, commanded by Capt. L. C.
Larabee, — burnt July 29, 1856, whereby 6 persons were lost.
Steamer Minnehaha built in 1849, by the Lake George Steamboat
Company. Length 150 feet, breadth 20, depth 8},— cost $27,000,
75-horse power, speed 13.} miles an hour, — ■ commanded by
Captain James Gale, and now running. She is a beautiful boat, and
no place in the country offers more inducements for the traveler and
tourist than Lake George. Nov. 18th, 1824, the Champlain Ferry
Company was chartered by the Legislature of Vermont, with
authority to establish a ferry between Burlington and Port Kent, N. Y.
The stock of this Company was liberally subscribed for by the
enterprising citizens of Burlington, — such as Samuel Hickok, John
Peck, Luther Loomis, Prof. James Dean, Andrew Thompson, Timothy
FoUett, Philo Doolittle, E. H. Deming, Henry Mayo, Ozias Buel, Wm.
A. Griswold and A. W. Hyde. — It was organized by the election of
Samuel Hickok, Timothy FoUett, Philo Doolittle, John Peck, and Prof.
James Dean as Directors ; by the appointment of Samuel Hickok,
President, and Philo Doolittle, Clerk and Treasurer. About the first of
July, 1825, this Company had built and put upon this ferry the
steamer " General Green," a vessel of 160 tuns and propelled by a
30-horse power engine. This steamer, commanded by Capt. Dan
Lyon, continued to ply between Burlington, Port Kent and
Plattsburgh until the close of the season of 1832, making 8 years. In
July, 1833, the steamer Winooski was put on to the ferry in place of
the General Green, which was converted into a sloop, and in 1834
the trip was extended to St. Albans Bay. Oct. 21st, 1821, a charter
was granted by the Legislature of Vermont to Charles McNeil, of
Charlotte, Vt. and H. H. Ross, of Essex, N. Y. for a ferry between
those points. Ferry boats propelled by horse-power, were used, and
this route for crossing the lake for many years was very popular,
especially on account of the facilities furnished for carrying cattle,
sheep, horses and teams. In 1827, this Company built the steamboat
Washington, which proved to be too expensive for ferrying, when
she was employed for a time in towing up the lake towards-
Whitehall, and finally sold to the Cham. Trans. Co. March 9', 1829,
the proprietors, Messrs. Rosa and McNeil, becoming directors in the
latter company, receiving for the Washington a certain amount of
stock of the Co. In 1848 the proprietors built the steamer Bouquet
which run for a few years, when, the business
 694 VERMONT HISTORICAL MAGAZINE. being so much
diverted by the railroads, it was found impossible to sustain her on
the ferry and she was sold to parties in Canada. Nov, 4th, 1826, a
charter was granted for a steamboat company to Julius Hoyt,
Orange Ferris, N. W. Kingman, L. Brainerd, Wm. O. Gadcomb,
George Green, Joshua Doane, David Stevens, Jr, and Noah B. Wells,
under the name of the St. Albans Steamboat Co. The company was
organized by the election as Directors — N. W. Kingman, N. B. Wells,
L. L. Dutcher, John Lynde and John Palmer, the last two gentlemen
residing in Plattsburgh; N. W. Kingman was appointed President, and
L. L. Dutcher, Clerk. This Company built, in 1828, the steamboat
Macdonough — Charles Lampson being master builder, and John
Ward and Co., of Montreal, furnishing the engine. She came out
under command of Capt. Wm. Burton, who now resides at
Cleveland, Ohio, and run for several years on the route between St.
Albans Bay and Plattsburgh, connecting at the latter place with the
line steamers through the Lake and the steamers of the Champlain
Ferry Co., until January, 1835, when she was Bold to the Cham.
Trans. Co., with all the rights, franchise and interests of the St.
Albans Steamboat Co. Oct. 26th, 1826, the Vermont Legislature
granted a charter to Ezra Meach, Martin Chittenden, Stephen
S.Keyes, Luther Loomis, Eoswell Butler, Eleazer H. Deming, " for the
purpose of transporting by use of tow boats or otherwise
passengers, goods, wares, merchandise, or any other property on
Lake Champlain," under the name and style of the "Champlain
Transportation Company," which is the present " Steamboat Co." as
it is usually called. The corporators and their associates met at the
hotel of John Howard, in Burlington, Nov. 10th, 1826, and organized
by the appointment of a board of directors and committees to
procure subscriptions to the stock, to make such investigations, and
devise such plans as were necessary for carrying out the objects of
the charter. Several meetings of directors wer« held during the year
1827, subscriptions were procured for the whole stock of the
company and arrangements were made for building a boat. This
boat, called the "Franklin," was completed at St. Albans in the Fall of
1827, under the direction of a committee consisting of Luther
Loomis, Roswell Butler and Philo Doolittle, Capt. Jehaziel Sherman
having the immediate charge and superintendence of the
construction. He had been at Troy for two or three years in the
service of the Troy Steamboat Co., superintending the building of the
steamer Chief Justice Marshall and other boats, and was conversant
with all the improvements which had been made, both in machinery,
models, and finishing. No pains were spared to make this boat
complete, especially in the conveniences for passengers. She was
provided with an upper deck throughout, with a ladies' cabin on the
main deck, which was the first boat provided in that way. She
commenced her trips Oct. 10th, 1827, between Whitehall and St.
Johns, the rate of passage being reduced to $5, under command of
Capt. J. Sherman, who resigned at the end of the season and retired
from the Lake, Capt. R. W. Sherman succeeding him. Business under
the terms of the charter having actually commenced, the
stockholders held their first annual meeting at Burlington, for the
election of nine directors, January 31st, 1828. The following
gentlemen were elected : Wm. A. Griswold, Samuel Hickok, Luther
Loomis, James Dean, Jehaziel Sherman, Asa Eddy, N. W. Kingman,
Lawrence Brainerd and Philo Doolittle. These gentlemen, with
Timothy Follett, George Moore, John Peck, Henry H. Ross, Heman
Cady, S. E. Howard and Andrew Thompson, after the number of
directors was increased, continued to act with slight change until
about 1846. Wm. A. Griswold was elected president, and Philo
Doolittle treasurer and clerk, which ofiice he held through all
changes of the company with great acceptation to all parties until his
death, January 19th, 1862. Mr. Griswold continued president until
the year of his death, 1846. The season of 1828 opened with the
following steamboats on the Lake : the Franklin, Washington,
Phoenix and Congress, the General Green between Burlington and
Plattsburgh, and the Macdonough in the laLter part of the season
between Plattsburgh and St. Albans, affording the public more
facilities than the business required. It proved not to be the most
profitable seasou, especially to the Cham. Steamboat Co., whose
boats had become old and somewhat behind the age. The Cham.
Trans. Co. was gaining ground with their "splendid steam packet
Franklin," while the Cham. Steamboat Co. was losing;
 LAKE CHAMPLAIN. 695 and during the wint^ the latter
leased for two years their steamers the Phoenix and Congress to
Timothy FoUett and C. P. Van Ness. These gentlemen with their
accustomed shrewdness and sagacity at once entered into an
engagement with the Cham. Trans. Co., hy which each party were to
put a boat on to the line, andtlie proceeds of the business to
be^^ivided between them. During the winter the Cham. Trans. Co.
purchased the Washington of Messrs. Eoss and McNeil, which rnder
the arrangement ■with Messrs. Follett and Van Nfss was used with
the Phcenix for towing • while the Franklin and Congress were
placed upon the line between St. Johns and Whitehall as passenger
steamers- This proved to be a profitable arrangement for both
parties, and much more convenient for the public Meanwhile the
affairs of the Cham. Steamboat Co. had become somewhat
embarrassed, having already lost two steamers by fire, and the
stockholders mostly residing at Albany with as much business of
their own as they could attend to, and consequently unable to give
the proper personal attention to their interests on the lake which
was required to make them successful, they decided to relieve
themselves of all further trouble by advertising the Phoenix and
Congress with all their other property for sale at public auction at
Whitehall on the 20th July, 1830. The sale took place, aftd Isaiah
Townsend, of Albany, became the purchaser and owner of the Cham.
Steamboat Co. and all its property. The lease of Messrs. Follett and
Van Ness having expired at the close of the season 1830, also put an
end to the arrangement with the Cham. Trans. Co.; but Mr.
Townsend in behalf of the Cham. Steamboat Co. renewed it upon
similar terms for 1831, '52i and '33. While the Companies were
operating under the new arrangement, negotiations were pending
between their officers from time to time for consolidating the stock
of the two> and uniting them in one permanent and common
interest. Several propositions were exclianged, which finally
terminated in an agreement entered into, at Albany, Feb. 22d, 1833,
between the two Companies, by which the steamers Phoenix and
Congress, the real estate at Shelbxinie Harbor, and all other property
of every name and nature of the Lake Cham, Steamboat Co. was -
sold, and transferred to the Cham. Trans. Co., Isaiah Townsend,
Esq., the president and owner of the former Company receiving
therefor an equivalent in the stock of the latter Company. Thus these
two rival companies were consolidated in one, and the permanent
arrangement proved to be as profitable for the parties in interest, as
the temporary ones before had been while these negotiations were
pending. Capt. Jehaziel Sherman, in 1832, built at Fort Cassin a
steamboat called the "Water Witch." This was a small boat, poorly
arranged for passengers, but still of power and capacity enough to
tow, and running betweefife Vergennes and Whitehall would
consequently take some of the travel, thus come in conflict mbre or
less with the business of the Cham. Trans. Co. The St. Albans
Steamboat Co. and the Cham. Ferry Co. still continued to run their
boats, which to a certain extent interfered with the business of the
Cham. Trans. Co. The latter Company believing that the business
then done by all three Companies could be performed with less
boats by one Company, and thereby save the expense of three
organizations and extra boats, appointed Wm. A. Griswold, Luther
Loomis, and Philo Doolittle a committee with full power " to enter
into negotiations with the owners of any steamboat or boats on Lake
Champlain, and to make such arrangements with such owners as
they might judge best for the interest of the Co." They at once held
a conference with the owners of the " Water Witch," the "Winooski"
and "Macdonough," and, after several interviews, agreed "with each
of these parties -upon the conditions of purchase for their Tespective
boats and property. 'The terms of this agreement having been
submitted to the directors, the action of the -committee was
confirmed, and on the 27t'h day of Jan., 1835, the St. Albans Co.
transferred the Macdonough with all their other property ; the Cham.
Ferry Co. conveyed their charter with all its franchise, the steamer
Winooski and all their other interests, and Capt. J. Sherman
delivered the " Water Witch" with all her apparatus, &c. to the
Cham. Trans. Co., the several parties receiving for their respective
interests a certain number of shares of the capital stock of the
Cham. Trans. Co. THE BUELINGTON AND WHITEHALL. These
negotiations being consummated, the Cham. Trans. Co., in the
Spring of 1835,
 696 VERMONT HISTORICAL MAGAZINE. found themselves
the owners of every steamboat on the lake and free from all
opposition. Their first object was to give the public all the facilities
required, and at the same time 80 arrange their trips as to use as
few boats as possible. The Franklin under command of Capt.
Sherman, and the Phoenix under command of Capt. Lyon, were put
on to the line, and the Winooski under Capt. Flack run the Ferry
between Burlington and St. lAlbans. Some of their boats however
were old and deficient in many of the modern improvements, and
they determined during the season to build a new boat of the most
improved model and machinery, and while this boat was building to
enlarge the Winooski and fit her up for passengers, to run'on the
line with the Franklin. Henry H. Ross, J. C. Sherman, and Philo
Doolittle were appointed the committee to present a plan and
estimate for the boat, and Capt. R. W. Sherman was appointed to
superintend its construction at Shelburne Harbor. While this work
was going on, Peter Comstock who was largely interested in
passenger boats on the Champlain Canal, and was also extensively
engaged in the forwarding and transportation business at Whitehall
(and who by the way was one of the most persevering, energetic,
and "driving" business men ever known in the valley of Lake
Champlain), laid the keel of a steamboat at Whitehall. Knowing the
energetic and determined disposition of Comstock, this movement
upon his part not a little annoyed the Cham. Trans. Co., and
especially as they were already engaged in building a new boat
themselves, and besides in the purchase of the Cham. Ferry Co.
property in which Cornstock was interested they had " taken care of
him liberally." Having however gone to the extent they had to get
control of the lake, and believing prudence to be the better part of
valor, they again resorted to compromise, and in August, 1836,
closed an arrangement for the boat with Mr. Comstock, be binding
himself for the term of 8 years not to build another boat, or operate
in any way against the Company. It was then determined to make
this boat, which was called the " Whitehall," equal in power and
capacity to the one then building at Shelburne Harbor, which was
called the " Burlington." Every effort was made by the Company to
make these two boats equal to any upon any other waters at that
time. The Burlington was finished and took her place in the line at
the opening of navigation, 1837, under charge of Capt. R. W.
Sherman, and the Whitehall came out the next season under
command of Capt. Dan Lyon, both of them much larger than any
boats before in use. In 1841, the " Saranac" was built to run on the
ferry in* place of the Winooski which had become too old for
passenger service. The Company were now provided with three
good boats, which under their excellent commanders became very
popular with the traveling public. Up to this time the price of
passage through the lake had been established at $5, which
included meals and berths. Although the accommodations furnished
were superior, yet this price was regarded by many as extravagant,
and furnished a sufficient pretext for the starting of an opposition
company. OPPOSITION STEAMERS. This pretext, with a variety of
other causes which are always at hand to stir up opposition, induced
certain individuals mostly in the State of New York, to procure a
charter iu that state for a Company under the name of the N.y. and
Cham. Steamb't Co. The grievances of these parties were not
however so serious as to prevent them from entertaining favorably
propositions from the old Company and finally to abandon their
project and become stockholders and directors in it. The effect
however of this manifestation of public feeling respecting the price
of passage induced the directors to reduce the fare through the lake
from $5 to $3, charging extra for meals and rooms, which has
continued to the present time. This consolidation was no sooner
effected than Peter Comstock again appeared upon the stage, and
commenced building another boat, at Whitehall, which was called
the " Francis Saltus." Some overtures were made to the Cham.
Trans. Co., to purchase it, but having already decapitated several
times the hydra-headed opposition, they decided to change their
"base of operations" and put themselves upon the defence to arrest
the advent of their opponent. It is however due to Mr. Comstock to
say, that there was a rumor current at the time (which was believed
to be well founded), that certain stockholders in the old company
were secretly interested with him in this operation, and that he was
induced to go into it by them, expecting thd Cham. Trans. Co. would
purchase the boat
 LAKE CHAMPLAIN. 697 as before, and a good speculation
be made out of it. The directors of the Co. however denied any
knowledge of the matter and strenuously resisted any attempt to
identify the Co. in it. The Saranac was fitted up for the purpose of
entering the combat, and when the Saltus came out in 1845 under
charge of her brave and fearless commander Capt. H. G. Tisdale, the
Saranac took her place by the side of her, \nder her cool, popular,
and experienced Captain P. T. Davis! These boats left each end of
the Lake at the same time, making the passage by daylight, arriving
at the opposite end about together, sometimes one leading up the
narrow lake and sometimes the other. The Burlington and Whitehall
formed the night line through the lake at this time, charging the
regular fare, $3. The Saltus continued to run for 3 years as an
opposition boat, and during the time received a fair share of public
patronage. This was the first opposition ever upon the lake which
was sustained with any degree of firmness, and it being at a time
when passengers went from Whitehall to Troy in canal boats or
stages, the spirit of strife exteuded to them, and opposition lines
were there formed which run in connection with the Saltus, adding
greatly to the excitement, as well as to the popularity of an
opposition. The " indomitable" Comstock was largely interested in
business upon the lake and through to Troy in boats and stages,
having a large number of experienced men as agents at this time,
and consequently had an extended influence and a large circle of
friends who warmly seconded his enterprise. But there was a serious
obstacle to overcome, and it needed no great foresight to discover
that unless parties j,oined him with an abundant capital, it was only
a question of time how long he could sustain himself. The Champlain
Transportation Company running the Burlington and Whitehall as
night boats, at full fare, could well afford to run the Saranac at 50
cents fare, and still in the aggregate make money ; and although the
Saltus might even charge $1.00, it was not sufficient to pay
expenses and provide for decay and repairs. It was an object for the
public to cry "opposition," even if they did not patronize it, in order
to keep the fare reduced, and this fact alone needed no
demonstration to prove that the treasury of the opposition must
sooner or later be exhausted, unless the zeal and liberality of the
public and its friends should keep it replenished by donations. Such
friendship is always of short duration and furnished, in this case as
in all similar ones, a poor capital upon which to operate steamboats.
Although Mr. Comstock displayed superior generalship in its
management, and his immediate friends and employers fought
manfully, yet the affairs of the "Saltus" became embarrassed and she
was transferred to a party in Troy for moneys advanced, and, with
her consort, the Montreal, which was then in frames, passed off
quietly in March, 1848, into the possession of the Champlain
Transportation Co., which had so kindly "relieved" many of her
predecessors. Here we should do great injustice to the history of the
times as well as fail to call to the mind of our readers some of the
most interesting reminiscences of their times, were we to omit to
mention a celebrated class of public men who first appeared upon
the stage under the auspices of these competing companies, and
became as celebrated in their profession as did the rival steamers
and their commanders. We refer to the passenger agents, more
generally known in common parlance as " runners." We should also
do great injustice did we fail to give to Whitehall the credit of first
bringing forward these ubiquitous men to public notice, and of being
afterwards the nursery and school of their training and education.
Their business was to await the arrival of stages, packets, steamers,
and then to accost the passengers, expatiating upon the superior
comforts and facilities which their respective lines afforded — and by
the most ingenious arguments and eloquent appeals, which were
peculiar to themselves, to induce the travelers to believe that each
line was the best : "got through to Troy first," "was the mail line,"
"was the opposition to monopoly," was the line "which went right
straight through," with a variety of other phrases, all expressive of
the superior facilities of each. By some these agents were voted a
nuisance, by others as great friends to the traveler. Conspicuous
among them, and we may truly say the founder of the system, was
Augustus Beed, Esq., a man of good address, great energy, and
withal possessing
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