Specially Incorporated Transportation Companies in the United States to 1860: A Comprehensive Tabulation and Its Implications

Robert E. Wright
(Augustana College, Sioux Falls, SD57106, USA)

Abstract: New data on corporate chartering activity show the extent to which large scale U.S. transportation networks were privately controlled prior to the Civil War. By means of special acts of incorporation, entrepreneurs chartered over 10,000 for-profit transportation corporations with total minimum and maximum authorized capitals of $2.89 and $4.48 billion, respectively. Not all of those corporations completed their infrastructure improvements (bridges, canals, railroads, or roads) but total investment in private transportation companies clearly outpaced government transportation expenditures. Private control was encouraged because prevailing views, bolstered by the failure of several state-controlled canal systems in the late 1830s and early 1840s, held that private managers were better at controlling costs than public ones were. The view that corporate managers had more powerful incentives than government officials did to forge incentive-aligned agreements with construction contractors was largely correct. Although they made numerous mistakes and were constrained by the inherent nature of the transportation modes that they managed, private managers built and maintained transportation networks that dramatically reduced travel times and freight costs over the antebellum era. In addition, their companies earned risk-adjusted returns acceptable to many investors.

Key words: antebellum America; business history; capital investment; corporations; incentive structures; private enterprise; public goods; transportation infrastructure

JEL codes: L33, N71