History of Private Roads in USA

[Anonymous]

Private Highways in America,
1792-1916
Daniel B. Klein
Fifteen years ago only technology aficionados and laissez-faire idealists entertained the notion of private highways. Today, however, public officials and entrepreneurs are struggling to make the notion a reality. Four private highway projects are underway in California and many other states are following suit.

The notion of private highways, which would seem fantastic to our parents, was commonplace to our great-great-grandparents. Initiated in the 1790s in the growing Republic, these roads stimulated commerce, settlement, and population. During the nineteenth century more than 2,000 private companies financed, built, and operated toll roads. States turned to private initiative for much the same reason they are doing so today: fiscal constraints and insufficient administrative manpower. Knowledge of our toll-road heritage may help encourage today's budding toll-road movement.

The Turnpike Heyday, 1800-1825
Once the state of Pennsylvania chartered a private company in 1792 to build a road connecting Philadelphia and Lancaster, rival states felt impelled to follow. Private initiative was the only effective means of providing new highways, because state and county finances were almost nonexistent and town resources were meager. Private control and user fees were bold steps, but once taken, states could only continue to move forward. In an age before the canal and railroad, legislators were willing to test community and political custom to get highways built.

The turnpikes were financed by private stock subscription and set up to pay dividends. Built with a surface of gravel and earth, turnpikes were usually 15 to 40 miles in length, and cost $2,000 per mile to build. They were massive undertakings and relied on widespread investment from the community. Stock purchased was more like a contribution to community improvement rather than a business investment. Some travelers objected to the idea of paying tolls, particularly to a corporate monopoly. Legislators, often suspicious of corporate motives, wrote extensive (and economically debilitating) restrictions into company charters, specifying conditions for construction, maintenance, and toll rates, and toll collection.

The progress of turnpike incorporation is shown in Table 1. Only Pennsylvania, Virginia, and Ohio subsidized their turnpike companies; New York chartered the most turnpikes. The opening decade of the nineteenth century saw the most charter activity, though roughly one-third of the companies chartered failed to construct a single mile of roadway.



The unprofitability of turnpikes soon became obvious. The vast majority of turnpikes paid only very small dividends or none at all. First, toll evasion was rampant, as people would circumvent tollgates - a practice known as " shunpiking. " Second, many roads were built in advance of settlement and travel demand was low. Third, legal restrictions and regulations, limiting both toll rates and countermeasures to shunpiking, hamstrung the turnpikes' abilities to improve their financial situation.

But poor financial returns did not necessarily mean unfruitfulness. Even an unprofitable turnpike stimulated commerce, raised land values, and aided expansion. Therefore, community leaders resorted to a fascinating array of tactics to boost the turnpike cause despite the sad prospects for dividends. Supporters used newspaper appeals, town meetings, door-to-door solicitations, and correspondence to apply social pressure. In this way as in others, American communities relied on voluntarism, as so elegantly described by Alexis de Tocqueville, to meet local needs. The result in terms of turnpike construction in New York is shown in Figure I.

Canals, Railroads, and Spur Turnpikes, 1826-1845
In the late 1820s canals began competing with many of the major turnpikes. Railroads joined in a bit later. Between 1825 and 1845 turnpike mileage dropped considerably. At the same time, however, the canals and railroads changed the patterns of trade and development, and stimulated new demands for shorter toll roads that would serve as feeders. Table I shows that turnpike activity by no means ceased with the advent of canals and rails.

Plank Road Fever, 1847-1853
High hopes for a new kind of short feeder road were placed in the idea of plank roads, organized like turnpikes but surfaced with wooden planks. Plank surfacing promised a smooth, inexpensive alternative to turnpikes, which sometimes resembled a river of mud. Plank road fever struck in the late 1840s and thousands of miles of plank roads were constructed.

Civil engineers and enthusiasts predicted that plank roads would last eight years before needing to be resurfaced. Beginning in 1847, rural Americans financed and constructed plank roads in massive numbers. Table 2 shows total incorporation for several states. Figure 2 shows the plank road system in New York.



But the planks wore out twice as fast as predicted- usually within four years. The movement ended as suddenly as it had begun. Most plank road companies folded, while others converted their operations to gravel turnpikes.

Toll Roads in the Far West, 1850-1890
other minerals in California, Colorado, and Nevada sparked rushes of newcomers. Even before statehood for Colorado and Nevada entrepreneurs organized their own toll road enterprises to serve the mining communities, and some got rich in the process. Well over 360 toll roads were constructed in California, Colorado, and Nevada alone. This experience indicates that private initiative can provide infrastructure for economic development-so long as government respects people's liberty to do so.

The Good Roads Movement and the End of the Toll Road, 1890-1916
By the end of the nineteenth century, state and county governments had grown in capabilities and new agencies began setting goals for centralized highway management. Independent private toll roads were not thought appropriate in the era of progressive governance, and most of those remaining were bought out or shut down. Observed a county board in New York in 1906:



The ownership and operation of this road by a private corporation is contrary to public sentiment in this county, and [the] cause of good roads, which has received so much attention in this state in recent years, requires that this antiquated system should be abolished.... That public opinion throughout the state is strongly in favor of the abolition of toll roads is indicated by the fact that since the passage of the act of 1899, which permits counties to acquire these roads, the boards of supervisors of most of the counties where such roads have existed have availed themselves of its provisions and have practically abolished the toll road.



Conclusion
In 1991 Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA), which changed the 75-year policy against toll roads. It permits the use of federal funds on toll roads, including ones designed, constructed, and operated by private groups. It sheds the old requirement that states repay federal funds if the facility is transferred to private control. Although highway financing should be strictly private, ISTEA greatly improves the present system, which relies on unpriced highways built and operated by government. Under ISTEA, America might begin to rediscover the effectiveness of private management and the economic virtue of user charges. With new electronic technologies of toll collection, toll roads make more sense than ever.

As we enter the potentially new era of privately managed highways, the historical expenence with toll roads offers some important lessons. First, private operation is more flexible, creative, and motivated to serve than government control. In the nineteenth century, private road companies consistently out-performed their public-sector alternatives. Second, private roads will not be constructed without the prospect of private gain. If governments over-regulate or renege on their promises, private road development will not occur. Finally, infrastructure is an economic good best left to private action.

Private roadways have always made philosophical sense. Now even many public officials understand that they make economic sense as well.


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At the time of the original publication, Dr. Klein was an assistant professor of economics at the University of California, Irvine.
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Reprinted with permission from The Freeman, a publication of The Foundation for Economic Education, Inc., February 1994, Vol. 44, No. 2.

[DSchmitt]

I don't agree with the conclusion that private management of highways is better. I am biased however. I'm an engineer in a public highway bureaucracy.

It bothers me that modern private highway advocates are always willing to make money on private highways after the government puts up the money to build them.

I've seen the same thing with private high speed passenger rail schemes.

[MP57313]

QUOTE: Originally posted by kissmycaboose7
[Four private highway projects are underway in California and many other states are following suit.

I drive on one of those highways - Ca. 73 - which is a bypass to congestion through Orange County (same county where the author resides/works from). As far as I know, revenue from tolls has fallen short of projections for this and other toll roads.

They were partly privately financed, but have state highway numbers and are monitored by CHP (California Highway Patrol).

[DSchmitt]

The toll highways in California are a fraud. The State pays of the majority costs to build them, agrees not to improve parallel non toll routes, and guarentees the private operator a profit.

[Anonymous]

I was hoping to see if there was a parrell here with the building of Private Roads(And canals) in the 1800s to railroads..The history of the US Route System is instresting with US 1 and US 20. US 20 was started as the Boston Post Road as a way to get mail out to the interior of the US. Railroads were helped along by the Federal Goverment not only by granting Right of Way land but Natural Resource land that had trees,grain,Coal and later Oil. In the railroads infancy in New England,,,Towns and States Subscibed to the Railroads Stock as well as granted Eminate domain to railroads

[tree68]

Local subsidy of industry is not limited to transportation. More than a few enterprises of all kinds have benefitted from tax relief, low interest loans, and grants offered or brokered by local governments eager to bring business into their community.

Toll roads can certainly work, if their income is sufficient to meet costs. Many major bridges are quasi-private entities. The NY State Thruway is a going concern, and has been for decades. While it is owned by the state, it is operated as an "authority." I don't have any numbers (and don't feel like looking them up), but I'm sure it stands pretty well on its own.

[Junctionfan]

Private highways don't work. Take it from me who watched the conservative government of Ontario privatize the 407. The company has expensive toll prices and so hardly anybody on the highway. It has also made the other already conjested highways more conjested because all the would be 407 traffic is now using different routes and now increasing accident rates as well as maintainance requirements.

[Anonymous]

The New York State Thruway is a "Authority" which runs I-90 and also has resposibility for the Barge Canal system. They recieve grants from the state and dole out grant to buisneses who want to locate near interchanges and Canal locks. They do make a surplus but a loath to support other modes of transportation such as rail and discourage hitchiking.

[Wdlgln005]

The Chicago Skyway is another tollway that just does not pay. The second that I-94,I-80 was built, traffic came off the Skyway in droves. Indiana is lucky to have no competition for their Tollway, then continuing into Ohio. High tolls + severe congestion on the other routes is the only way the Skyway gets enough money to pay the bills.

Another myth is to have the origonal bonds paid off & then remove all tolls so you could drive "free" like any other highway. The best policy is to put the money away to build a highway BEFORE you do construction. That's what we do here in Tennessee. No taxes going to bondholders. don't worry, the roadbuilders have plenty of projects to keep busy.

[MP57313]

QUOTE: Originally posted by DSchmitt
The State pays of the majority costs to build them, agrees not to improve parallel non toll routes, and guarentees the private operator a profit.

That's what happened on the Ca 91 through the Santa Ana Canyon. Metrolink service only makes a small dent in the congestion. East of the toll section some commuters get around the congestion by blasting through parallel residential arteries...some unhappy folks in the Corona area

[MP57313]

QUOTE: Originally posted by Wdlgln005
[Another myth is to have the origonal bonds paid off & then remove all tolls so you could drive "free" like any other highway.

Actually this has happened on a couple of bridges in California. Vincent Thomas Bridge (Terminal Island) and Coronado Bay Bridge (San Diego) are now freebies in California.

But the toll roads are the opposite...the tolls keep rising (much faster than inflation) but I think it is worth it to avoid the congestion. I haven't reached the breaking point yet!

[Junctionfan]

The only problem with that is although those routes are not conjested, it means that somewhere else is. In fact it might be worse depending on what alternate route is being used, it could have a major negative effect on safety.

[Anonymous]

One of the most successful and busy private highways is the Pennsylvania Turnpike. The original four lane section between New Jersey and Ohio was rushed to completion during World War II. One of the most important and busiest section runs over and thru the Allegheny Mountains from New Stanton to Mechanicsburg. This 164 mile section connects transcontinental Interstate 70 to Interstate 81which is fed by I78 from New York. The right of way was origianlly surveyed by by the NYC interests more than 100 years ago. Never completed as a railroad the line eventually became a highway. The auto and truck traffic is awesome and continuous 24/7. I would venture to guess more freight traverses this highway than carried by both CSX and NS lines combined which parallel it. It's that busy.

[mvlandsw]

QUOTE: Originally posted by tabiery

One of the most successful and busy private highways is the Pennsylvania Turnpike. The original four lane section between New Jersey and Ohio was rushed to completion during World War II. One of the most important and busiest section runs over and thru the Allegheny Mountains from New Stanton to Mechanicsburg. This 164 mile section connects transcontinental Interstate 70 to Interstate 81which is fed by I78 from New York. The right of way was origianlly surveyed by by the NYC interests more than 100 years ago. Never completed as a railroad the line eventually became a highway. The auto and truck traffic is awesome and continuous 24/7. I would venture to guess more freight traverses this highway than carried by both CSX and NS lines combined which parallel it. It's that busy.

The original road ran only from Middlesex, near Harrisburg to Irwin, near Pittsburgh. Successful in what way? It's constantly under construction, in poor condition, has the highest tolls, many accidents,many safety problems, low speeds, and congestion. It originally was to be free after the construction costs were paid off, but that will never happen.

[bobwilcox]

Your historical anaylsis has a large hole. What happened to toll roads in the Northeastern and North Central U. S. with the rise on an industrial economy between 1865 and 1914. I beleve they went extinct in the face of long haul railroads fed by "free" local roads.