How did private companies finance turnpikes
Turnpikes And Canals
( Originally Published 1918 )
Growth of interest in road-building. General interest in improving land transportation seems to have been stimulated soon after the Revolution ; numerous schemes were then devised for building turnpike roads and bridges. The movement was originated by private individuals, but later on the state governments fell in with it. The private individuals were interested in making money from tolls to be charged on the roads, and applied to the states for permission to construct roads and bridges to connect the most densely populated districts along the seaboard, and the interior with the coast. A temporary check was given to the movement by the European wars, about the close of the eighteenth century, which opened great opportunities for American shipping and thus diverted capital and interest. But population continued to increase and to move westward, so that a demand came back to the East for better connections, and the movement for road-making and river improvement revived strongly at the opening of the last century.
Successful turnpikes. This movement was stimulated by the success of the Philadelphia and Lancaster turnpike, opened in 1794, which was the first extensive enterprise of the sort in the country. It connected the Schuylkill River with Lancaster, sixty-two miles distant, and was later extended to the Susquehanna River, at Columbia, under the name of the Lancaster and Susquehanna Turnpike. The main stockholders of such turnpikes were the landowners adjacent to the road and the merchants who meant to use it ; and the state government determined the amounts of the tolls that were to be charged.
Road companies and state enterprises. Throughout the first quarter of the nineteenth century the building of roads by private companies was a regular mania in the seaboard states. The states themselves took a hand in the matter and voted money for road-building, set aside the proceeds of land sales, and even permitted lotteries to raise money to carry on the work — especially in the case of connecting up the frontier settlements, where the prospective income from tolls was not large enough to tempt private capital. Before 1800 the states had chartered very few road companies, but by 1811 charters had been issued wholesale. 26 in Vermont ; over 20 in New Hampshire ; upwards of 50 in Connecticut ; in the whole of New England about 180. By 1811 New York had chartered 17 companies covering a distance of 4500 miles ; and a third of this had been built. New Jersey had 30 companies and Pennsylvania a few more. This was the beginning; and the mania continued a little beyond 1825, when the enthusiasm for building canals took its place. An agitation arose for the Federal government to take a hand in this matter of internal improvements, of which more will be said presently.
Road-building not profitable. But the building of turnpikes did not prove to be a very profitable venture ; the tolls charged, though high as compared with present freight rates, were not enough to enable the companies to pay large dividends, because the bulk of the earnings had to be expended in making necessary repairs. Inasmuch, however, as many of the stockholders were the landowners and the merchants, they received some indirect return outside of dividends — the landowners saw the land adjacent to the roads increase in value, and the merchants reaped the benefit of improved facilities for transportation, which widened their markets.
Costs of transportation. On the whole, however, it may be said that the roads did not accomplish very much toward reducing the cost of transportation. It is said that, taking the country as a whole, transportation of merchandise cost $10 per ton per hundred miles. The rate from Philadelphia to Pittsburgh, when the through line by land was established, was about $125 a ton; in 1807 the charge between New York and Buffalo was P00 00 a ton, and twenty days were required for the transfer; that is, the New York-Buffalo charge was three times the market value of wheat and six times that of corn. These figures show, by contrast, the immense value of later transportation improvements. Articles that could not stand such rates were excluded from the market. The bad state of the roads and the high rate of tolls accounted for such high costs.
Bridge companies. Turnpike-building naturally drew with it bridge-building. In a great many cases the early bridges were built by corporations and were toll bridges ; some of them still exist. Bridge companies, like road companies, had their hard times, and lotteries were occasionally authorized by the state to raise additional funds. In the Eastern states, notably in Massachusetts, bridges, except for the stone piers and abutments, were made mostly of wood, and their only defect was lack of durability.
Gallatin's report. During the first part of the nineteenth century there was abundant Federal revenue, and a movement was started to use this treasury surplus to build roads and otherwise to improve transportation. Albert Gallatin, Secretary of the Treasury, was instructed to draw up a report showing the state of roads, bridges, and waterways and to present a plan for providing the country with an adequate transportation system. From this report important facts can be gathered as to the conditions of making such improvements. The roads cost between $1000 and $14,000 a mile. Fifty turnpike companies had been incorporated in Connecticut alone since 1803, and 770 miles had been built. New York showed the largest capital investment, and roads extended in every direction, but mainly from settlements on the North River towards the Susquehanna and the Great Lakes ; the road from Albany to Schenectady had cost at the rate of $ 10,000 a mile. South of the Potomac there were few artificial, roads undertaken.
Other public works advocated. This report of Gallatin's expressed the opinions of many of the leading men of the country, and its recommendations, had they been followed out, would have contributed strongly to our industrial development. Gallatin was in advance of his time, but the main features of his plan deserve to be known and compared with what actually took place later on. He wanted a canal from Boston to North Carolina across the principal capes, except Cape Fear ; a great turnpike from Maine to Georgia, along the whole extent of the Atlantic coast ; the construction of four artificial roads from four important Western rivers to the nearest corresponding coast streams ; the improvement of the navigability of these coast rivers ; a canal around the falls of the Ohio ; an improvement of roads to St. Louis, Detroit, and New Orleans ; inland navigation between the North River and Lake Champlain and, by canal, between the former and Lake Ontario ; a canal around Niagara Falls ; and the opening of navigation for sloops from Lake Ontario to the extremities of Lake Michigan. The military, commercial, and political advantages of these works were all emphasized, and they were to cost, with some other local improvements, about $20,000,000. The scope and daring of Gallatin's vision are remarkable.
The Cumberland Road. But this report came to Congress at an unfavorable time, shortly after the Embargo was laid and when the treasury surplus was wasting away. The nation's attention was directed toward other things than internal improvements, and the only enterprise of any magnitude that was embarked upon was the Cumberland Road. This highway connected Fort Cumberland on the Potomac with Wheeling on the Ohio ; it was. commenced in 1811 and completed in 1818, later being extended as far as Springfield, Ohio, and finished to that point. It was partly completed to Vandalia, Illinois, and surveys were made as far as Jefferson City, Missouri. This road responded to a real need and became one of the great highways connecting East and West. It stimulated the trade between Baltimore and the Western country at the expense of Philadelphia.
The Wilderness Road. Another important road leading to the West, but not built by the Federal government, was the Wilderness Road, which played a prominent part in the settlement of the West, for along it moved a stream of population, by way of the Cumberland Gap, into Kentucky and Tennessee. The original trail was laid out by Daniel Boone in 1774-1775, to the falls of the Ohio ; it developed from a trail to an immigrant path, then to a route for pack horses, and at length to a wagon road. The legislature of Virginia appropriated money for improving the road, and private funds also were raised, yet by the time of the War of 1812 it was still in very primitive condition. We have said that this was the great immigrant road. Of the 75,000 inhabitants of Kentucky in the year 1790, more than nine tenths were said to have entered by way of the Wilderness Road. In 1800 this population had increased to over 220,000, and a large proportion of the increase had, again, arrived by the same highway. " It was this moving host," says one writer, "that gradually wore a spotted trail into an immigrant trail, a pack-horse route, and a wagon road."
Modern road-building. We scarcely need to go into the matter of modern road-building, as it is familiar to all, except to emphasize the influence exerted toward betterment of roads by the increasing use of the automobile. The line of progress has been progressively to straighten and smooth the roadways, and the straightest and smoothest is, of course, that road which consists of ribbons of polished steel — but this sort of road we reserve for a chapter by itself.
Rise of the canal-building craze. General Washington was impressed as early as 1772 with the necessity of building canals and improving river channels ; and it will be recalled that Gallatin recommended not a few canal projects. But the real era
of canal construction was the second quarter of the nineteenth century. Canals were not unknown in this country even in the eighteenth century, but it was not until the Erie Canal had been built and finally put into operation, in 1825, that the great impetus was given to the projection of other works.
How to link East and West. The westward movement of population during the first two decades of the last century was sufficiently striking to catch the attention of everyone, but especially of those far-seeing men who were looking forward to the future industrial importance of the West. It became the ambition of leading merchants, notably in New York, Pennsylvania, Mary-land, and Virginia, to secure a predominant influence over Western trade. But nature had provided only one outlet to tidewater for the products of this region, and that was by way of the long river-route to the Gulf ; for not much attention had as yet been drawn to the St. Lawrence route. The Allegheny Mountains were regarded as a most formidable barrier to travel and trade. The problem and concern was how to link the West with the East by an adequate system of communication and transportation.
The Erie Canal. For a time roads were considered to be the only practicable means to this end ; but when it became generally known that canals were a good device for meeting commercial needs, and that they were superior to any other known means of transportation, new schemes were brought forward from various quarters to connect the West and East by canals. Great enthusiasm seized upon certain districts; while Pennsylvania, for example, was talking about the matter, New York was acting, and the Erie Canal was the result. Its successful completion, in 182 5, and its operation gave New York a decided ad-vantage in the Western trade. New York had a considerable advantage of position, for it had been unnecessary to pass over the mountains in reaching the West, nature having provided the Mohawk Gap ; so that when Pennsylvania later built her competing route, partly by rail and partly by canal, her defeat was inevitable, for there was no natural depression in her mountain ranges, and her extra costs and other difficulties formed a handicap which prevented her from meeting the competition of the New York canal.
Popularity of canals. The canal-building mania was not, how-ever, confined to projects for connecting the West with the East. It was confidently believed by many during this period that canals were the last word in transportation and that the sooner the country was copiously supplied with them the better. It was also the conviction that they were going to be high-dividend payers. It was even argued in some of the states that the receipts from tolls on the state canals would go far toward paying the major expenses of government and defraying the charges for public education. Canals were thought to be a sort of wonderful discovery leading to general ease of life and felicity.
The canal era. It was the states, not the corporations, that em-barked in most of the enterprises of the canal era. The Erie Canal was built by the state of New York and operated as a public work, and expense was not spared to make it a worthy one. It was 363 miles in length, 4 feet deep, and had a width of 40 feet at the top and 28 at the bottom. Pennsylvania built in all over 900 miles of canal between 1826 and 1842. The greatest amount of canal mileage at any time in our history was 4468, built at a cost of $214,000,000, mostly by state governments. Nearly all the canals were financial failures, and, built as they were in the years of financial stringency following the panic of 187, some of them brought their states to the verge of bankruptcy. It was the coming of the railroads, about the middle of the century, that caused the abandonment of many canals. Some canals were bought up by the railroads and operated for a time ; a few, like the Erie, have continued to exist, and some of them perform an important local, or even more than local, function clear up to the present day. Aside from the competition of the railroad, there were several causes for the failure of the canals. freshets, especially in the spring, rolled up extraordinary expenditures for repairs ; they could be operated only during the open seasons, being frozen up in winter ; many were built as a consequence of log-rolling of one sort or another, had never been needed, and were doomed from the outset. It has been said that there was a much larger percentage of absolute failures, together with a much smaller percentage of decided successes, in canals than in any other important class of American public works designed to promote the movement of passengers and freight.
Services and improvement of the Erie Canal. The Erie Canal, connecting the Great Lakes with the ocean by way of the Hudson River, was, on the whole, the supreme effort in our canal-building ; it has been, in fact, the most important canal this country has ever constructed, unless the Panama Canal be excepted. It contributed a large share towards making New York the metropolis of the Union. For a long time it was able to with-stand the competition of the railways ; up to 1866 the canal traffic comprised about 6o per cent of the freight movement across the state of New York. A marked shrinkage in business followed between 1866 and 1895. During all this time the railway traffic greatly increased, for the railways were kept up-to-date and the canal was not ; neither the size of the channel nor that of the locks was increased after 1862. A plan for enlarging and rebuilding the Erie Canal was adopted by the state of New York in 1903 and completed in 1918. It is to be kept as a first-class waterway and used by steam-towed barges with a capacity several times that of the boats formerly used and with a speed greatly increased over that of the latter.
The Panama Canal. The Panama Canal is not within the United States proper, but it should receive mention here. The idea in building it was, of course, to connect the two oceans and to obviate the long voyage around Cape Horn, just as the Suez Canal obviated the necessity of doubling the Cape of Good Hope. The thought of piercing this isthmus had been in men's minds for over a century, and the French had already spent millions upon the project before it was undertaken by us. A strip of territory ten miles wide, known as the Canal Zone, was purchased by the United States from the republic of Panama, and a canal of the lock type, with a summit eighty-five feet above sea level, has been constructed. This has been a great engineering under-taking, and the world will watch with interest to see whether it justifies all the expectations of an economic and political order which its advocates prophesied.
The improvement of natural waterways. The increasing volume of traffic on our railways — more than they seem able to take care of has turned attention recently to the question of improving our natural waterways to supplement the railways. This is, in a sense, a return to an older system of transportation which the railways had almost driven out. Some people think the time may soon come when we shall regret that the canals have been so generally closed up. Parties in the Central West and others have been urging Congress to connect the Great Lakes with the Mississippi by a canal of large dimensions, some advocating a fourteen-foot waterway from the Great Lakes to the Gulf, utilizing, -of course, the Mississippi and other streams — the fourteen feet to be a minimum at any point.
Whatthe waterways can do. It seems fair to say, in regard to such projects, that we cannot expect always to have only the best and swiftest means of transportation. We have got to the point where our life is a continuous rush and have somewhat lost the sense of proportion ; we insist on. speed at every point, impatiently expecting to receive heavy, imperishable freight about as quickly as other kinds, discarding the sailing vessel in favor of the steamer at almost every point. But all this speed costs that which cannot be replaced ; the coal the steamer burns is here and is gone, while the breezes that carry the sailing vessel are here, in undiminished force, as they were when men first began to sail. It is coming to be seen that a careful distinction between kinds of freight — whereby some of it can be transferred rather slowly by water, while the railroads are freed to rush to its destination that sort of freight which cannot wait and much of which is now damaged by being held up on account of congestion — will represent an economy and conservation of resources to which we have hitherto been comparative strangers, but to which we must sometime come. It is a question of utilizing all varieties of resources in their degree, rather than of employing only one because it is the best.
Retirement of the states from building state works. The crisis of 1837 was the beginning of the end of state works along the line of transportation improvements ; it had come to be realized that many of the enterprises were premature, and that on some of them the state money had been recklessly squandered. With the coming of the railroad a movement rose in the various states for selling the canals, and for the entire withdrawal of the state governments from the building and operation of internal improvements. The field was thus left clear for the railway to develop as the enterprise of private individuals and corporations.Source: www.oldandsold.com
Category: Personal Finance