Those roads accompanied a switch from horse travel to the automobile in rural areas 30s-50s, and after WWII, air travel gradually made itself the preferred method of traveling great distances. So, as rail became less attractive, passenger travel waned. So did the number of smaller rail lines and spur tracks, as rail became primarily a means for moving cargo. Buses filled that gap for a while, and in places still do, but the car gives a freedom and options you just don't get with mass transit. The interstate system was at least in part for military (national defense) reasons, too. The rest just followed. We still have extensive unpaved roads here (some of the best gravel roads I have driven anywhere, and as a geologist, I have been on quite a few), but pavement has a raft of conveniences that people won't ignore nor will they readily abandon.
But the bottom line, here, is that there is a lot more territory than people, and you just can't run a train track everywhere.
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Smokin, accept your scenario; so take a journey w/me.
One can Fly to London, Train under the Channel from Dover to Calais, Drive, Fly or Train to Paris........and
so on until one gets to St. Petersburg or Warsaw.
My simple point is that both Europe and Asia have competing yet compatible public transportation systems.
We don't, because politics, not market economics, permitted one to effectively drive the other out of business.
By the way, we can thank the Republicans for this, starting w/hustler McKinley, followed by Roosevelt, then
Taft, Coolidge, Harding and Hoover.