University of California Transportation Center

Turnpike companies were the exemplary type of early American business corporation: they were the most prevalent, they were the most community laden, and they were unprofitable. The turnpike experience enhances our understanding of the evolution of the law of private and public corporations.

We explain that the state turned to the private sector for highway management because of intense commercial and regional rivalries and the failure of public alternatives.

Private management and toll-taking were startling innovations to some members of the community, however, and they protested the introduction of turnpikes. The bete noires of "private corporation" and "aristocracy" were often used to denounce turnpikes. The legislature both expressed and responded to these suspicions by writing laws favorable to local users and damaging to the financial viability of the companies.

Partly in consequence of the unfavorable laws turnpikes were unprofitable. Merchants, farmers, and landowners struggled to finance turnpikes, not in hopes of company dividends, but in hopes of improved transportation, stimulated commerce, and higher land values. Many turnpike projects were stillborn while those that were constructed hobbled along in a precarious financial state.