Transit Management and Operations

Changes in Ownership of Public Transit

Public transit has a long history in the United States, beginning in 1852 with New York City's horse-drawn streetcars. Electric streetcars were introduced in 1888, and mass transit ridership steadily increased through the end of the 19th century and into the beginning of the next. Although the Staten Island Ferry became the first public takeover of a private transit company in 1905 and Monroe, Louisiana, boasted the first municipally owned street railway in 1906, most transit companies were privately owned in the first decades of the 20th century.

That situation changed when the first major decline in use came in the 1930s during the Great Depression. Early in that decade, electric companies, who had acquired streetcars for nonpayment of bills, became major transit providers, but their reign was brief. The Public Utility Holding Company Act of 1935 (PUHCA), among other provisions, limited registered holding companies to business activities directly related to the conduct of their utility operations, forcing them to abandon their interests in transit companies. Congress repealed the PUHCA in 2005.

Transit ridership reached 23.1 billion in 1946, but by 1950, 60 percent of American households had a car. A decade later, with growing numbers of American families living in suburbs, three-fourths of American families owned at least one automobile. The Federal Aid Highway Act of 1956 authorized $25 billion over a 12-year period to pay for the National System of Interstate and Defense Highways. National mobility was becoming a reality, but Americans were traveling in cars rather than by bus and rail.

The Housing Act of 1961 granted cities $75 million to purchase failing transit companies, and communities across the country began public operations. By 1972, transit ridership dropped to a low of 6.5 billion trips. The National Mass Transportation Assistance Act of 1974 for the first time authorized the use of federal funds for transit operating assistance, but transit systems were forced [Page 1458]to compete with highways for funding until the Intermodal Surface Transportation Efficiency Act of 1991 earmarked money for transit and pushed multimodal services.

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