Public Versus Private Control of the Transit Industry

How Does Public Control Compare With Private Control of the Transit Industry?

As Cheape (1980, 211) notes in his comparative study of US transit systems before World War I, transit expansion in the early 20th century represented a social overhead investment to encourage regional development by private enterprise (cited in Yago, 1983). The needs of mechanization and transit service were subordinated to these developmental goals. By World War I, this led to a combination of corruption and poor management resulting in a credit collapse and massive private disinvestment in transit (Smerk 1975, 135; cited in Yago, 1983).

At the local level, the increased militance of transit unions, some of the first labor organizations in US cities, drove labor costs considerably over the industrial wage average. The lack of extensive service and growing fare levels politicized transit among consumers as well, leading to increased demands for public control. Virtually every US city was the scene of legal battles, referenda over fare hikes, public ownership campaigns, and investigations of transit corruption (Miller, 1960; Warner, 1968; MacShane, 1974; Holli, 1969; Crooks, 1968; Jackson, 1969; Bean, 1968; Fogelson, 1967; cited in Yago, 1983).