JLF head John Hood offers up a fascinating look at the early history of the state-subsidized N.C. Railroad in his column today. A highlight:
Decades of modern scholarship about transportation and economic growth during the 19th century have demonstrated that government railroad subsidies were rarely useful and often counterproductive. One 2001 study examined whether American states such as New York and Michigan with constitutional prohibitions against government investment in railroads ended up with less-extensive rail networks than states such as North Carolina that allowed government investment. After adjusting for population, the study found that non-subsidy states produced at least as much railway mileage during the period as subsidy states did. The author concluded that “state enterprise mostly crowded out private enterprise” in railroad development. One of the most-influential economic historians of the 19th century, Albert Fishlow, had drawn a similar lesson decades earlier. In his seminal 1965 work American Railroads, Fishlow concluded that to the extent governments subsidized the industry, their efforts mostly led “to excess and wasteful construction.”
Naturally, defenders of the North Carolina Railroad tried to characterize their critics as shortsighted fools who didn’t favor economic development. Josiah Bridges, a Franklin County Democrat, defended his unsuccessful 1850 attempt to rework the railroad’s charter this way: “I am as much in favor of internal improvement as any man here, provided the system be conducted by individual enterprise. But … when the people are to be taxed to accomplish any system the benefits of which are not, and cannot be, equally distributed throughout the whole state, I feel bound to record my vote against it.”
