Cities have historically responded to population growth by expanding their limits or overflowing into adjoining suburbs. Within the past few years, however, private investors and large companies have begun to build new, preplanned cities for up to 300,000 people. These new cities are entities in themselves--with houses, industrial sites, stores, and cultural centers, all integrated in a comprehensive master plan.

Preplanned cities have many advantages over old urban centers that were built little by little with almost no regard to coordination. In preplanned cities, industrial and residential sectors are separate. Comprehensive transportation system eliminate traffic congestion and waster treatment systems prevent air and water pollution. New towns usually have better recreational and cultural facilities than old cities of comparable size. They lure large industrial firms that provide the city with adequate tax revenue. By attracting white-collar and blue-collar industries and building homes for a variety of income levels, new cities could achieve a balanced social and racial population.

Yet despite all these advantages, only a few new cities are being built, for these preplanned towns pose tremendous problems to a developer.

To begin with, private entrepreneurs and even large companies are wary of financing them. Reston, Virginia, is a case in point. Between 1962 and 1964 Robert Simon, an architect, made unsuccessful attempts to borrow money for Reston from eighty different sources, including banks, insurance companies, and large corporations. Finally, just five days before the deadline set by Simon's contractors, Gulf Oil made a fifteen million dollar commitment. The price: first mortgage on all of Simon's land, an option to buy stock in Reston, and the only gas station in town.

There were good reasons for this wariness. To get reasonably low land prices new town developers have to go well beyond established areas of rsidence. But few isolated areas have either the roads or basic utility lines required by a new town, even in its early stages. At Reston, more than 20 miles from Washington, $14 million had to be spent for roads, sewers, and water supply.

Most new towns are built in rural counties whose officials are not used to handling the decisions and red tape that go along with setting up a town for hundreds of thousands of people. Developers must almost always fight for zoning changes. Counties sometimes cannot build schools fast enough to accommodate the influx of people. There are always disputes about who should pay for access roads to the new city. For example, a four-lane highway runs through Reston linking Dulles Airport and Washington. But no one can get on or off at Reston. The Federal government insists that an exit or entrance at Reston would slow down traffic on a road heavily traveled by Government officials and foreign dignitaries.

Even after a city is built, a developer faces obstacles in getting people to buy his homes. Commercial and industrial facilities usually take more time to build than private homes. But companies are reluctant to move in until there are potential employees living in the vicinity. On the other hand, homeowners do not like to be the first ones in a new city. They want to wait until there are stores and jobs in the neighborhood. Some families are repelled just by the idea of living in a preplanned community. Physical remoteness and poor access roads intensify selling problems. The developer's only alternative is to push early home sales--even at a loss--and subsidize early commercial facilities.

Perhaps because of these problems of financing, location, and sales promotion, new cities like Reston have not become self-sufficient entities with perfect social mixes and solvent treasuries.

Still, the preplanned city is one of the most imaginative solutions to the age-old urban problems of congestion and coordination. The Government for years has been underwriting the expansion of old urban centers, thus helping to create one racially and socially segregated suburb after another. With the population of the United States still growing rapidly, Federal financing of new towns--either with FHA-insured mortgages or direct construction subsidies--is becoming a more and more attractive alternative.