Private road

A private road is a road owned and maintained by a private individual, organization, or company rather than by a government.^{[citation needed]}

See also: Private infrastructure

Private roads in the US

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.

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.

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. "With but few exceptions, the vast majority of the stockholders in turnpike were either farmers, land speculators, merchants or individuals and firms interested in commerce."

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. Turnpike activity by no means ceased with the advent of canals and rails.

The toll road idea endured to the end of the century. Discoveries of gold, silver, copper, and 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.

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.

Turnpike Incorporation, 1792-1845:

State	1792-1800	1801-10	1811-20	1821-30	1831-40	1841-45	Total
New Hampshire	4	45	5	1	4	0	59
Vermont	9	19	15	7	4	3	57
Massachusetts	9	80	8	16	1	1	115
Rhode Island	3	13	8	13	3	1	41
Connecticut	23	37	16	24	13	0	113
New York	13	126	133	75	83	27	457
Pennsylvania	5	39	101	59	101	37	342
New Jersey	0	22	22	3	3	0	50
Virginia	0	6	7	8	25	0	46
Maryland	3	9	33	12	14	7	78
Ohio	0	2	14	12	114	62	204
Total	69	398	362	230	365	138	1562

Bridges and other infrastructure

The first private toll-bridge company, the Charles-River Bridge, opened in 1786 was called "the greatest effect of private enterprise in the United States." Its investors were rewarded with a return of 10.5 percent annually for the first six years. Through 1798, about 59 bridge companies were chartered in the states under consideration, principally in New England. Many of them failed and some were unprofitable, but a considerable number, especially in the Boston area, had proven themselves lucrative by the end of the century. In contrast to the turnpikes, the bridges did not suffer from toll evasion and liberal exemptions, and when profits were low they commonly obtained toll increases.

Many enterprises were undertaken to make improvements, and it is debatable whether they can be counted as business corporations. There were marine and agricultural societies, but then come corporations for land improvement, lumber cultivation, and inland navigation. For example, a "case near the line" is the River Machine Company, incorporated in 1790 to dredge the Providence River. "The merchants of Providence had agreed to raise $1,000 in forty ’equal shares’" for the project. The company was to collect tolls from certain vessels, but any surplus was to be used at the end of twenty years for other improvements. "Thus no dividends were contemplated."

Analysis from a public goods perspective

See also: Public goods

To what extent can we expect private initiative to have been successful in providing roads, as evidenced in early United States? Despite the large social benefits of the roads, it would seem that the individual could find no advantage in supporting them. Since citizens knew that turnpike stock was a poor investment, purchasing stock was much like paying for the road. Once stock subscriptions were sufficient to construct the road, there would be no way to withhold the benefits of the road from those who did not contribute. The input of a single individual would not make the difference, or so it would seem.

On the basis of narrow self-interest it would have been foolish for any one person to make a voluntary sacrifice. Turnpike stock subscription appears to have been a [[free rider problem]] par excellence. In view of the apparent free rider problem, the success was striking. The movement built new roads at rates previously unknown in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million (excluding state investment) in Pennsylvania. (A turnpike typically had a construction cost of $700 to $3,000 per mile and a length of 15 to 40 miles.) Based on the population of 1830, per-capita turnpike investment was approximately $3.90 in Massachusetts. Between 1794 and 1840, 238 private New England turnpikes built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 550 miles by 1821; Maryland’s operated 300 miles of private road in 1830. Turnpikes also represented a great improvement in road quality .

The local turnpike was supported by the more prominent citizens, but it is not as though a handful of affluent landowners paid for the project. Stock subscription was broad-based, In most cases upwards of 50 people contributed, usually over 100 for a larger turnpike, no one with more than 15 percent of the stock. After the most travelled routes had been converted to turnpikes, it became more difficult to raise money for their construction, but nonetheless turnpikes continued to be built, even though, by 1805, hope of direct remuneration had disappeared. Yet between 1805 and 1838 over 500 turnpikes were chartered and built, each one representing a separate instance of public good provision. Even though the turnpikes offered enormous nonexcludable benefits, far outweighing the costs of the project, a straight application of the simple public-goods model would lead us to doubt that many turnpikes were built and that a single one was built after 1805.

Daniel Klein points out that community isolation, citizen familiarity, and weak, decentralized government bred close social ties and a strong participatory ethic. Towns of the early nineteenth century were independent and strong, and in the first three decades of the republic, the township held almost all of the administrative power of government. Alexis de Tocqueville, in his opus Democracy in America, says the towns "are independent in all that concerns themselves alone; and among the inhabitants of New England I believe that not a man is to be found who would acknowledge that the state has any right to interfere in their town affairs." The participatory nature of town government in early America has been well noted. This feature often makes it pointless to draw lines separating private and public works. At the same time, religious congregations often showed a penchant for making themselves busy in various improvement endeavors, such as schools, libraries, and poor relief. By generating the requisite social relations, or "social capital", as well as human capital, the religious and benevolent activities not only incited but empowered the application of voluntary efforts to community goals. The citizens’ cooperation with government efforts is noteworthy, but more significant is the willingness to forge public improvements by voluntary association.

Things have changed a lot since 1810. Neighbors are often strangers, so how can we expected social pressure and the like to curtail free riding? On this, Klein has two remarks: one, whether it be a street association or the American Cancer Society, suasion tactics often yield results, as reported regularly in Nonprofit and Voluntary Sector Ouarterly. Second, if voluntary forces are deemed ineffective in providing public goods, that in itself is a policy issue. The ability of voluntary association to provide infrastructure, education, security, and poor relief depends on the exercise and spontaneous development of certain institutions, activities, and sentiments. Since governmental bodies dominate these services it is no surprise that the faculties of sodality remain degenerate. When a problem arises government is expected to deal with it. Participation does not become a personal responsibility and organizing leadership does not become a source of social esteem. Thus there is a lesson in the broader circumstances of early America which bred effective voluntary forces, as well as in the specific ways those forces established turnpikes.

Links

• Articles, essays and reviews
  • The Privatization of Roads and Highways by Walter Block, 2006, Introduction
  • Theories of Highway Safety (pdf) by Walter E. Block, July 2011
  • "Free Market Transportation: Denationalizing the Roads" (PDF) by Walter Block
  • Rejoinder to Carnis on Private Roads (pdf version) by Walter Block, 2010
  • "Privatize the Highways — and All Roads for That Matter" by Zachary Slayback, August 2011
  • "New Ideas for Roads" by Jeffrey A. Tucker, April 2009
  • The Freeman Review: "The Privatization of Roads and Highways" by Arthur E. Foulkes, April 2011
  • "A Step Closer to Privatizing Infrastructure?" by Briggs Armstrong, June 2011
  • The Free Market: "Private Roads" by Eric Peters, February 1996
  • "Management versus Ownership: The Road-Privatization Debate" (PDF) by Laurent Carnis, Summer 2001
  • "New Directions in Road Privatization" (PDF) by Laurent Carnis
  • "Road Shortage in Socialist Paradise" by Per Bylund, July 2011
  • From Privies to Boulevards: The Private Supply of Infrastructure in the United States during the Nineteenth Century (pdf) David T. Beito (in Jerry Jenkins and David Sisk, "Development by Consent: The Voluntary Supply of Public Goods and Services", 1993
  • Private-Public Partnership for low volume roads: the Swedish Private Roads Associations (pdf) by Sven Ivarsson, 2003
  • Highway Aggravation: The Case For Privatizing The Highways by Peter Samuel, June 1995.
  • Roads in a Market Economy by Roth, G., 1996
  • The Mythology of Holdout as a Justification for Eminent Domain and Public Provision of Roads (pdf) by Bruce L. Benson, 2005
  • Private Roads Work by Bart Frazier, January 2009

• Other media
  • "The Privatization of Roads and Highways" panel discussion with Walter Block, January 2009 (YouTube, abridged YouTube)
  • "Privatization of Roads" lecture by Walter Block, July 2010
  • Privatization: Roads, Eminent Domain lecture by Walter Block, August 2004
  • Lew Rockwell Show: Road Socialism interview with Walter Block, August 2008 (YouTube)
  • Taking Politics Out of Transportation: Economist Bruce Benson on Private Roads news magazine by Reason.tv, December 2010
  • Tolls, Not Taxes: How Americans Want to Fix Traffic Jams news magazine by Reason.tv, February 2012
  • Private Roads news magazine by John Stossel, 2010
  • The Case for Private Roads segment from Stossel, 2010
  • Infrastructure Spending segment from Stossel, 2011
  • There Were Private Roads Before Government Roads

• Free-market roads and Private road at Wikipedia