Private-Built Roads Worked Before

By Bradley Harrington

“The legislative powers vested in Congress are specified and enumerated in the eighth section of the first article of the Constitution, and it does not appear that the power proposed to be exercised by the bill is among the enumerated powers…” – President James Madison, vetoing a federal public roads and canals bill, 1817 –

After last week’s recommendation that Wyoming turn its roads over to private enterprise, several readers questioned me on just how that could happen.

I guess that idea’s just a bit much for some people, wedded as they are to socialist highways – but the facts of American history, to say nothing of fundamental economic principles, support my thesis, not theirs.

Consider:

► By 1800, writes economist Daniel Klein, “America already had 69 private road-building companies” chartered by several states. Such organizations, moreover, “built new roads at rates previously unheard of in America… Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road.” (“The Voluntary Provision of Public Goods? The Turnpike Companies of Early America,” 1990.)

And people think private firms can’t build and maintain roads?

► Turnpikes, in fact, were prosperous for everyone and turnpike companies had no shortage of investors. As Benjamin De Witt penned in 1807, “Turnpikes encourage settlements, open new channels for the transportation of produce and merchandise, increase the products of agriculture, and facilitate every species of internal commerce.” (“A Sketch of the Turnpike Roads in the State of New York.”)

And schools teach that road works require tax dollars?

► Indeed, writes Thomas DiLorenzo in 2004 in his classic work “How Capitalism Saved America: The Untold Story of Our Country from the Pilgrims to the Present”:

“Ingenious early American transportation entrepreneurs even invented a kind of privatized ‘law of eminent domain’ whereby rights of way were paid for with shares of stock in the turnpike companies. The value of the property was determined not by government assessors – who would seize private property to build government-owned roads – but by freedom of exchange in the free market.”

And local, state and federal fools tell us that that “rights of way” require government theft of property?

► And, because such transportation corridors were built for profit, they got built where they needed to be built – not where some political hack wanted them built in order to win votes back home in his voting district.

► With regard to this last, DiLorenzo slams the point home: “With government-funded projects… the whims of politicians tend to replace the desires of consumers, and the result is always economic inefficiency and political corruption.”

Sound familiar? Then let’s consider some more:

► “Starting in the late 1830s,” DiLorenzo continues, “many states subsidized the construction of canals and railroads – and the subsidies invariably turned out to be disastrous.”

As DiLorenzo quotes historian John Bach McMaster: “In every state which had gone recklessly into internal improvements the financial situation was alarming. No works were finished; little or no income was derived from them; interest on the bonds increased day by day and no means of paying it save by taxation remained.” (“A History of the People of the United States, Volume 6,” 1914.)

► Furthermore, government involvement in public works projects were such catastrophic calamities that several states – Indiana, Illinois, Ohio and Michigan – had, by 1851, amended their state constitutions “to prohibit state subsidies for internal improvements… By 1860 Missouri and Massachusetts were the only two states in the Union that had not yet amended their state constitutions to prohibit internal improvement subsidies.”

These are a few of the facts of United States history and economic reality. One can only wonder what would have happened had America’s private transportation industry been left alone to blossom.

But Abraham Lincoln, Ulysses Grant and the rest of the Republicans, all vociferous advocates of railroad subsidies, put an end to that in the 1860s and 1870s with their silly schemes to “build” America.

Not that they floundered any less than did their state-based predecessors in that arena, mind you, for all of their nonsense blew up when overinflated railroad bonds finally collapsed. That created the Panic of 1873, and – before that was all over – more than 90 percent of the railroads were bankrupt.

Out of that wreckage, incidentally, emerged J.J. Hill, the man who singlehandedly, without a penny of state or federal loot, built railroads for profit, completing the Great Northern Railroad in 1893.

Had our politicians paid more attention to the fateful words of James Madison instead of caving in to special-interest legislation, the transportation history of America would have been radically different. But it’s never too late to push the bumbling bureaucrats out of the way and let the free market do it better, cheaper and faster.

Bradley Harrington is a computer technician and a writer who lives in Cheyenne, Wyoming; he can be reached at brad@bradandbarbie.com.

 

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