The Privatization of Roads and Highways - Ludwig von Mises Institute

Public Goods and Externalities: The Case of Roads 149
before the end of the nineteenth century, it is a little ironic that the private
road companies should have been chartered only because it proved
impossible for the states themselves to raise enough capital to build the
roads everyone seemed to want. 71
Although the early part of the nineteenth century was the
heyday of private road construction, similar efforts are to be
found much later on. The Lincoln Highway, for example, was
built in the twentieth century. 72 Although not privately owned,
its impetus, and much of its financing, came from private
sources. The idea for a road across the United States was first presented
by Carl Fisher in 1912 to a body of automobile and allied
businessmen, who, as we can imagine, had an immediate and
pressing interest in the construction of highway mileage. And
there were dozens of private contributions, including $300,000
from Goodyear and $150,000 from Packard, although these were
given to various state governments for actual construction.
Furthermore, if the existence of externalities are held to be an
impediment to the private construction of roads, then the existence
of private railroads throughout American history must be
counted as evidence to the contrary, for the external effects are
virtually the same in the two cases. Yet the existence of externalities
has never acted as a barrier to private railroad construction.
Indeed, as of 1950, there were some 224,000 miles of railroad
track in operation, 73 virtually all of it privately owned; this is
truly ample testimony to the fact that the existence of claimed
externalities has not interfered with the construction of substantial
railroad mileage.
71Wooldridge, Uncle Sam, The Monopoly Man, pp. 129–30; emphasis
added.
72See The Lincoln Highway (Lincoln Highway Association; New York:
Dodd, Mead, 1935).
73U.S. Bureau of the Census, Statistical Abstract of the United States, 1976,
p. 604.