is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

Urban Mass Transit In The United States

Zachary M. Schrag, Columbia University

The term “urban mass transit” generally refers to scheduled intra-city service on a fixed route in shared vehicles. Even this definition embraces horse-drawn omnibuses and streetcars, cable cars, electric streetcars and trolley coaches, gasoline and diesel buses, underground and above-ground rail rapid transit, ferries, and some commuter rail service. In the United States mass transit has, for the most part, meant some kind of local bus or rail service, and it is on these modes that this article focuses.

Nationwide in 1990, mass transit carried only 5.3 percent of commuting trips, down from 6.4 percent in 1980, and an even smaller percentage of total trips. But while mass transit may seem insignificant on this national scale, since the early nineteenth century it has shaped American cities and continues to do so. And in an age of concern about greenhouse gases and petroleum dependence, mass transit provides an important alternative to the automobile to millions of Americans.

The Era of Private Entrepreneurs

Omnibuses and horsecars

The history of mass transit on land in the United States begins in the 1830s with the introduction of horse-drawn omnibuses and streetcars in Eastern cities. Omnibuses — stagecoaches modified for local service — originated in France, and the idea spread to New York City in 1829, Philadelphia in 1831, Boston in 1835, and Baltimore in 1844. Omnibuses spared their passengers some fatigue, but they subjected them to a bumpy ride that was scarcely faster than walking. In contrast, horsecars running on iron rails provided smoother and faster travel. First introduced in New York City in 1832, horsecars spread in the 1850s, thanks to a method of laying rail flush with the pavement so it would not interfere with other traffic. By 1853, horsecars in New York alone carried about seven million riders. Whether running omnibuses or horsecars, private operators were granted government franchises to operate their vehicles on specific routes. After the Civil War, these companies began to merge, reducing competition.

Steam railroads

Even as some workers learned to depend on omnibuses and horsecars for their daily commute, others began riding intercity trains between home and work. Wealthy merchants and professionals could afford the fares or annual passes between leafy village and bustling downtown. Yonkers, New York; Newton, Massachusetts; Evanston, Illinois; and Germantown, Pennsylvania, all grew as bedroom communities, connected by steam locomotive to New York City, Boston, Chicago, and Philadelphia. Following the Civil War, some New York entrepreneurs hoped to bring the speed of these steam railroads to city streets by building elevated tracks on iron girders. After a few false starts, by 1876 New York had its first “el,” or elevated railroad. This was the nation’s first rapid transit: local transit running on an exclusive right-of-way between fixed stations.

Horse-drawn vehicles were noisy and smelly, and their motive power vulnerable to disease and injury. Steam locomotives on elevated tracks were even noisier, and their smoke and ash was no more welcome than the horse’s manure. Looking for cleaner alternatives, inventors turned to underground cables, first deployed in 1873. Steam engines in central powerhouses turned these cables in endless loops, allowing operators of cable cars to grip the cable through a slot in the street and be towed along the route. This proved a fairly inefficient means of transmitting power, and though twenty-three cities had cable operations in 1890, most soon scrapped them in favor of electric traction. San Francisco, whose hills challenged electric streetcars, remains a visible exception.

Electric streetcars

In most cities, however, electric streetcars seemed the ideal urban vehicle. They were relatively clean and quick, and more efficient than cable cars. Inaugurated in Richmond, Virginia, in 1889, streetcars — also known as trolleys — rapidly displaced horsecars, so that by 1902, 94 percent of street railway mileage in the United States was electrically powered, and only one percent horse-powered, with cables and other power sources making up the difference.

“Traction magnates” and monopolies

Unlike horsecars, both cable-car and electric-streetcar systems required substantial capital for the power plants, maintenance shops, tracks, electrical conduits, and rolling stock. Seeking economies of scale, entrepreneurs formed syndicates to buy up horsecar companies and their franchises, and, when necessary, bribed local governments. “Traction magnates,” such as Peter Widener in Philadelphia and New York, the brothers Henry and William Whitney in Boston and New York, and Charles Yerkes in Chicago, transformed the industry from one based on monopolies on individual routes to one based on near or complete monopolies in whole cities. But in taking over small companies, the barons also took on enormous corporate debts and watered stocks, leaving the new companies with shaky capital structures. And many behaved as true monopolists, callously packing their cars with riders who had no other choice of transportation. In many cities, the transit companies earned terrible reputations, depriving them of public support in later decades.

At the same time, companies anticipating monopoly profits made several decisions that would prove disastrous when they faced competition from the automobile. To secure franchises and to mollify unions, many companies often pledged to employ two men on every vehicle, to remove snow on the streets for which they had the franchise, and to pave the space between their tracks. One especially important commitment made by most transit companies was a pledge to forever provide service for a nickel, regardless of the length of the ride, a departure from the European practice of charging by the zone.

The “golden age” of street railways

Throughout the late nineteenth and early twentieth centuries, the growth of street railways was closely tied to real estate development and speculation. Each line extension brought new land within commuting distance of the employment core, sharply raising real estate values. By the 1890s, some entrepreneurs, such as F. M. Smith in Oakland, Henry Huntington in Los Angeles, and Francis Newlands in Washington, D.C., and its suburbs, were building unprofitable streetcar lines in order to profit from the sale of land they had previously purchased along the routes. But they still wanted farebox revenue, and several companies built amusement parks at the ends of their lines in order to get some ridership on weekends. For the most part, riders were drawn from the ranks of white-collar workers who could afford to spend ten cents a day on carfare.

By the late 1890s, mass transit had become indispensable to the life of large American cities. Had the streetcars disappeared, millions of Americans would have been stranded in residential neighborhoods distant from their jobs. But it was structured as a private enterprise, designed to maximize return for its stockholders even as it was required by franchise agreements to serve public needs. Moreover, the industry was premised on the assumption that riders would have no alternative to the streetcar, making revenue growth certain. In this world, transit executives felt little need to worry about watered stock or unprofitable extensions. In the twentieth century, that would change.

From Private to Public

The first subways

The first limit to private enterprise as the basis for mass transit was the capacity of city streets themselves. As streetcars jammed main thoroughfares, city governments looked for ways around the congestion. The London Underground, opened in 1863, showed the promise of an urban subway, but no private company would invest the enormous sums necessary to tunnel below city streets. Likewise, urban transit was so firmly in place as a private enterprise that few Americans imagined it as a function of city government. In the 1890s, the Boston Transit Commission, a public agency, proposed a compromise. It would issue bonds to build a tunnel for streetcars under Tremont Street, then recoup its investment with rents charged to the privately-owned street railway whose cars would use the tunnel subway. Opened in 1897, this short tunnel was the first subway on the continent.

New York’s subway

Meanwhile, in 1894 New York voters approved a similar plan to build transit tunnels using public bonds, then lease the tunnels to a private operator. Though it shared the same financial model as Boston’s, the New York plan was vastly more ambitious. Electric trains, rather than individual streetcars seen in Boston, ran at high speed the entire length of Manhattan and into the Bronx. The first segment opened in 1904 and proved popular enough to inspire calls for immediate expansion beyond the 21 route miles initially planned. After much debate, in 1913 the city signed the “dual contracts” with two private operators, calling for the construction of another 123 route miles of rapid transit, using both public and private capital.

Impact of World War I

In retrospect, the 1913 dual contracts may have been the high-water mark for privately financed urban mass transit, for within a few years, the industry would be in dire trouble. During and immediately after World War I, inflation robbed the nickel of most of its value, even as wages doubled. Companies begged legislatures for permission to raise their fares, usually in vain. By 1919, street railways in New York, Providence, Buffalo, New Orleans, Denver, St. Louis, Birmingham, Montgomery, Pittsburgh, and several smaller cities were in receivership. In response, President Wilson appointed a Federal Electric Railways Commission, which reported that while electric railways were still necessary and viable private enterprises, it would take a profound restructuring of regulation, labor relations, and capitalization to return them to profitability.

Arrival of automobiles

In the long run, the greatest threat to the transit companies was not inflation but competition from affordable mass-produced automobiles, such as the Model T Ford, fueled by cheap gasoline. In 1915, there was one automobile for every 61 persons in Chicago. Ten years later, the figure was one for each eleven. Nationwide, automobile registrations increased seven and a half times. Not only did each driver represent a lost fare, but many went into business as jitneys, offering rides to commuters who would otherwise take the streetcar. Moreover, automobiles clogged the same city streets used by streetcars; drastically reducing the latter’s average speed. By the mid-1920s, the transit industry spiraled downward, losing revenue and the ability to offer reliable, swift service. Patronage dropped from a local peak of 17.2 billion in 1926 to a nadir of 11.3 billion in 1933. In several major cities, plans for subways died on the drawing boards.

Beginnings of municipally-owned mass transit

Some reformers believed that the solution was to redefine transit as a public service to be provided by publicly owned agencies or authorities. In 1912, San Francisco launched the effort with its Municipal Railway, to be followed by public systems in Seattle, Detroit, and Toronto. In 1925, New York Mayor John Hylan broke ground on the IND, for “independent,” subway, a city-owned system designed to compete with the private transit operators, whom Hylan considered corrupt.

Switch to busses

For their part, private operators looked for technological fixes. Some companies tried to regain profitability by switching from streetcars to gasoline and diesel buses, a process known as “motorization.” Because buses could use the same streets provided free of charge to private automobiles, they bore lower fixed costs than did streetcars, making them especially attractive for suburban routes with less frequent service. Moreover, because many laws and taxes applied specifically to streetcars, a transit company could shed some of its more expensive obligations by changing its vehicles. But buses could not match the capacity of streetcars, nor could they slip into subway tunnels without concerns about exhaust. Another option was the trolley coach, a rubber-tired bus that, like a streetcar, drew electric power from overhead lines. First deployed in large numbers in early 1930s, the trolley coach avoided the capital costs of laying steel rails, but never did trolley coaches account for more than a sixth of total bus ridership.

Meanwhile, in an effort to save surface rail transit, several operators joined to design a new generation of streetcar. Introduced in 1937, the Presidents’ Conference Committee, or PCC, car was streamlined, roomy, and adaptable to various uses, even rapid transit. But it could not reverse the industry-wide decline, especially after 1938, when the Public Utility Holding Company Act took effect. Aimed at reforming the electric industry, this New Deal legislation had the unintended effect of forcing many electric utilities to sell off their street railway subsidiaries, depriving the latter of needed capital.

Impact of World War II

World War II provided a last hurrah for privately operated transit in the United States. In 1942, American automobile manufacturers suspended the production of private automobiles in favor of war materiel, while the federal government imposed gasoline rationing to limit Americans’ use of the cars they already owned. Left without an alternative, Americans turned to mass transit in record numbers. The industry reached its peak in 1946, carrying 23.4 billion riders.

The Age of Subsidy

Collapse of ridership after WWII

Following the war, transit ridership quickly collapsed. Not only were cars again available and affordable, but so were suburban houses, built so far from central employment areas and scattered so sparsely that mass transit was simply impractical. Moreover, the construction of new roads, including federally-financed expressways, encouraged automobile commuting, whether by driving alone or in a carpool. As a result, transit ridership dropped from 17.2 billion passengers in 1950 to 11.5 billion in 1955. By 1960, only 8.2 percent of American workers took a bus or streetcar to work, with another 3.9 percent commuting by rapid transit. Moreover, about a quarter of all transit riders were confined to New York City, whose island geography made automobile ownership less desirable. For American transit companies, there was even worse news, in that off- peak ridership declined even more steeply than transit commuting. Companies purchased expensive labor and equipment to muster enough capacity to serve the morning and evening commutes, but most of that capacity lay idle for the midday and evening hours.

Abandonment of streetcar lines

The decline in ridership left privately-owned transit companies financially weak and vulnerable to takeover. In an attempt to cope with the resulting decline in revenue, most American transit companies (including dozens acquired by National City Lines, a holding company with ties to bus manufacturer General Motors) chose to abandon their streetcars and their high capital costs. By 1963, streetcars carried only 300,000 riders, down from 12 or 13 billion per year in the 1920s. Some argue that the replacement of roomy, smooth railcars with smaller, polluting diesel buses in fact drove even more passengers away. Nor had transit companies escaped the problems that drove them into bankruptcy in the 1910s; they still faced high labor costs, strikes, inflation, high taxes, traffic congestion and difficulty in raising fares.

Municipal takeovers

In this environment, transit was no longer viable as a profit-making enterprise, and it also proved a drag on the budgets of those cities that had already taken over transit operation. Not wanting to lose mass transit altogether, city governments established publicly-owned transit authorities. The New York Transit Authority, for example, began operating the subway system, elevated lines, and municipally owned bus lines in 1953. Once a private industry that paid taxes, transit now became a public service that absorbed tax dollars.

Increasing federal role

Even municipal takeovers could not stop the bleeding. Desperate, cities turned to the federal government for subsidy. Since 1916, the federal government had financed road building, including, since 1956, ninety percent of the cost of the Interstate Highway System, but there were no comparable funds for mass transit. Beginning in 1961, the federal government financed small-scale experimental projects in various cities. The federal role increased with the passage of the Urban Mass Transportation Act of 1964, which authorized $375 million in aid to the capital costs of transit projects, with each two federal dollars to be matched with one local dollar. Another breakthrough came with the Highway Act of 1973, which gradually allowed states to abandon planned freeways and use their Trust Fund allocations for the capital costs of mass transit projects, though these would be matched at a less generous rate. Later legislation provided some federal aid for transit operating costs as well. Thanks to such measures, by the mid-1970s, transit patronage had reversed its long decline. Having dropped from 17.2 billion rides in 1950 to 6.6 billion in 1972, patronage was up to 8.0 billion in 1984.

Post-1970 rebirth of rail mass transit

Part of the recovery was due to the rebirth of rail transit since the early 1970s. The process began in Toronto, whose transit commission used cash from its heavy wartime ridership to open a new subway in 1954. In 1955, Cleveland opened a short rapid transit line along an old railroad right-of-way, and in 1957, California created the multi-county San Francisco Bay Area Rapid Transit District to allow planning for a rapid transit system there. After years of planning and engineering, the system opened for operation in 1972. It was soon followed by the first segments of rapid transit systems in Washington, D.C. and Atlanta, with additional systems opening later in Miami and Baltimore. These new rail systems were fantastically expensive, absorbing billions of federal aid dollars. But they are technically impressive, and they can attract riders. In Washington, for example, the percentage of people entering the city core during the morning rush hour who use transit rose from 27 percent in 1976, the year the Metro system opened, to 38 percent in 1996, an impressive gain when compared to the massive losses of previous decades. More recently, several cities have invested in new light-rail systems, similar to the streetcars of a century earlier but generally running on exclusive right-of-way, thus avoiding the traffic congestion that doomed the streetcar.

Recent legislation

Another bit of good news for the industry came in 1991, as Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA). (The law was renewed in 1998 as the Transportation Equity Act for the 21st Century, or TEA-21.) Both pieces of legislation increased the flexibility with which state governments could use their federal transportation grants, encouraging relatively more investment in transit, bicycle, and pedestrian projects and relatively less new road building.

At the start of the twenty-first century, mass transit remains an industry defined by public ownership, high costs, and low revenues. But few would argue that it is unnecessary. Indeed, several trends — increased congestion, concerns about energy shortages, citizen resistance to highway-building, and an aging population — suggest that mass transit will continue as a vital component of metropolitan America.

Continuing debates about mass transit

In large part because of these many policy implications, the history of urban transit in the United States has been fiercely debated. At one extreme are those who believe that mass transit as a thriving industry died of foul play, the victim of a criminal conspiracy of automobile, rubber, and oil producers who hoped to force Americans to depend on their cars. At the other extreme are those who see the decline of transit as the product of market forces, as a free and wealthy people chose the automobile in preference to streetcars and buses. In between, most scholars emphasize the importance of policy choices, ranging from road building to taxation to traffic management, which encouraged driving and hampered the transit industry’s ability to compete. But even within this interpretation, the degree to which these policies were the product of an open and democratic political system or were imposed by a small elite remains the subject of a vital historiographical debate.


Barrett, Paul. The Automobile and Urban Transit: The Formation of Public Policy in Chicago, 1900-1930. Philadelphia: Temple University Press, 1983.

Bottles, Scott L. Los Angeles and the Automobile: The Making of the Modern City. Berkeley: University of California Press, 1987.

Cheape, Charles W. Moving the Masses: Urban Public Transit in New York, Boston, and Philadelphia, 1880-1912. Cambridge, MA.: Harvard University Press, 1980.

Cudahy, Brian J. Cash, Tokens, and Transfers: A History of Urban Mass Transit in North America. New York: Fordham University Press, 1990.

Foster, Mark S. From Streetcar to Superhighway: American City Planners and Urban Transportation, 1900-1940. Philadelphia: Temple University Press, 1981.

Hood, Clifton. 722 Miles: The Building of the Subways and How They Transformed New York. New York: Simon & Schuster, 1993.

Jackson, Kenneth T. Crabgrass Frontier: The Suburbanization of the United States. New York: Oxford University Press, 1985.

Miller, John A. Fares, Please!: A Popular History of Trolleys, Horse-Cars, Street- Cars, Buses, Elevateds, and Subways. New York: Dover Publications, 1960.

Owen, Wilfred. The Metropolitan Transportation Problem. Washington: Brookings Institution, 1966.

Smerk, George M. The Federal Role In Urban Mass Transportation. Bloomington: Indiana University Press, 1991.

St. Clair, David James, The Motorization of American Cities. New York: Praeger, 1986.

Citation: Schrag, Zachary. “Urban Mass Transit In The United States”. EH.Net Encyclopedia, edited by Robert Whaples. May 7, 2002. URL