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"Clearly Vicious as a Matter of Policy": The Fight Against Federal-Aid

PART ONE: Unease in the Golden Age (Page 3 of 6)

Refining the Program

Senator Townsend opened hearings of the Committee on Post Offices and Post Roads on "Good Roads" on May 4, 1920. He summarized the issue facing the Congress:

The question before Congress is whether we shall continue that method of Federal aid, and if so, whether we wish to appropriate larger sums of money to use after 1921, or whether we wish to change that policy and adopt some other.

His first witness was M. O. Eldridge, AAA's Director of Roads. He had been the ORI's third employee, joining the BPR's predecessor organization in 1894 as a draftsman, and rising to Assistant Director. He was one of the organization's most prolific writers and speakers, in demand for good roads conventions around the country. He had drafted the first Federal-aid bill with Director Martin Dodge for Congressman Walter P. Brownlow (R-Tn.), who had introduced it on December 1, 1902. Eldridge left the BPR in 1919, and now supported creation of a Federal Highway Commission to build a National Highway System. Based on his unique position to observe Federal-aid in operation, he described for the committee some of the weaknesses of the Federal-aid program. For example, one of the weaknesses was the matching requirement:

[Matching] funds are raised by the various States from State sources for the purpose of meeting State aid and Federal money. There are several States, however, which depend entirely upon local contributions to meet Federal money. We feel that if the Federal aid act is accepted in the spirit in which it was passed, that the States should be willing to raise from general taxation a sufficient amount of money to meet the Federal appropriation and not depend upon the counties to produce this money. The Federal Government raised this money from the wealthier States and it is distributed throughout the country - in other words, contributions in a way from the wealthier States to the poorer States.

When Chairman Townsend asked what difference the source of matching funds made, Eldridge explained, "The whole idea of an aid measure is to permit the stronger unit to help the weaker." Relying on the weaker, as in these States, he said, "We would never within a reasonable time be able to build an adequate system."

The committee heard from many other advocates of long-distance roads, including George Diehl of AAA, Henry Shirley, and S. M. Williams. Several State highway officials, as well as BPR officials, including Thomas MacDonald, testified in support of the Federal-aid highway program. MacDonald.

On August 30, 1920, MacDonald released a statement indicating that in the absence of Federal legislative action during the current fiscal year, "the resulting uncertainty as to the future of this work will seriously handicap the States and cause the entire road-building program to suffer a serious setback." The final funding authorized for the Federal-aid program, $100 million, had been apportioned to the States on July 1. MacDonald believed, however, that the States should know at least a year in advance what funds would be made available to them so they can plan their construction activities.57

Eldridge reported on MacDonald's comments in the American Motorist column "Highway News, Views and Gossip." While agreeing that "a definite and well-established policy should be adopted promptly," Eldridge said of the proposal to renew the Federal-aid program:

There is a widespread feeling that Federal funds are being dissipated in a number of States on highways which have little or no national significance, and that Federal dollars are being used by some States as a bait to raise money for the building of roads which by rights ought to be built by the States, by the States and counties, or by the counties themselves without Federal assistance.

Under the present arrangement some States, especially those containing vast areas of Government owned, non-tax paying lands, and innumerable counties are seriously embarrassing themselves to meet the Federal appropriations.

As a result there is a growing demand for a comprehensive system of national highways, laid out and paid for by the Federal government and properly coordinated with roads constructed and maintained by the various States and counties.58

The changes in the program and the increased funding authorized in February 1919 accelerated the Federal-aid highway program, but it was soon hindered by economic conditions affecting the country.

The Federal Government had accumulated huge deficits to finance its participation in the war. As a result, according to financial historian John Steele Gordon, "The First World War caused a serious inflation and the Consumer Price Index nearly doubled between 1915 and 1920." The Federal Reserve, created in 1913 as a central bank to help avoid the disruptive swings that had characterized the American economy, kept interest rates low until November 1919. "Then it moved the rediscount rate - then its major means for influencing interest rates - in a series of abrupt steps from 4 percent to 7 percent over the next eight months." This was, Gordon said, the Federal Reserve's "first serious policy mistake." He explained:

The economy, in fact, had already been moving toward recession with the end of vast military orders and the revival of European agriculture. The Federal Reserve's action turned a decline into a near disaster. The money supply contracted by 9 percent, while unemployment shot up from 4 to 12 percent. GNP [Gross National Product] declined by nearly 10 percent.

He added that the move reversed wartime inflation, with wholesale prices experiencing "one of the sharpest declines in American history" between 1920 and 1921.59

These changes in the broader economy affected the road builders who were ready to get to work after the war. The BPR's annual report for FY 1921 summarized the problems:

The first part of the [fiscal] year, that is, from July to October 1920, was marked by railroad congestion [affecting transportation of materials for road construction], material shortages, high prices, and scarcity of labor. These conditions not only worked to the disadvantage of contractors who had entered bids when prices were lower and working conditions more favorable, but they also tended to reduce the amount of work placed under contract and generally to obstruct the progress of highway construction.

About the close of the 1920 working season there was in progress a change in general economic conditions which continued throughout the winter. As a result, when the 1921 working season opened, labor was more plentiful and wages were somewhat lower; the material supply, because of large curtailments in general building enterprises, was adequate, and the [rail] car shortage, which had been so large a factor in hampering the preceding year's work, was entirely eliminated. There had appeared, however, instead of the labor, material, and transportation difficulties of the previous year, the money stringency, which has marked the balance of the fiscal year 1921. During this period bank credits have been difficult to secure, bonds have been disposed of with difficulty, and while construction work has gone steadily forward and a large amount of new work has been let, the bid prices have not been reduced below last year's figures as greatly as had been expected.

The "money stringency" reduced rates for bond sales and increased rates for loans that contractors often needed for their work.

In addition, the fact that FY 1921 was the final year of authorizations posed a new set of problems, as explained in the annual report:

The fact that a new apportionment of funds was not made in January, 1921, made it impossible for the States to maintain an unbroken continuity of policy and administration in respect to Federal-aid work, and this condition has resulted in an unprecedented number of withdrawals, cancellations, and modifications of existing projects as the States have endeavored to adjust their programs to a reduced rate of expenditure.

Given "so large and important a national policy as Federal aid implies," the report stated, "the Federal Government should as nearly as possible be uniform, consistent, and prompt." The report added:

The probable cost of administering Federal aid in the several States will no doubt be appreciably increased, owing to the fact that the States do not yet know whether Federal aid will be continued, under what conditions it will be continued, or what appropriation is likely to be made, so that it is practically impossible for them to make any definite plans with respect to the administration or financing of future work or to conduct the necessary studies preparatory to filing applications for additional aid.60

A New President

Before Congress considered the Federal-aid highway program again, a new President would take office. In 1920, the Republicans nominated Senator Warren G. Harding of Ohio, with Governor Calvin Coolidge of Massachusetts as the Vice Presidential candidate. The Democratic nominee was Governor James M. Cox of Ohio. His Vice Presidential candidate was Assistant Secretary of the Navy Franklin Delano Roosevelt, who had assumed office in March 1913 with the incoming Wilson Administration. Roosevelt was a vigorous 38-year old who was then perhaps best known for his cousin, former Republican President Theodore Roosevelt (1901-1908).

In a blow to Senator Townsend, his Republican Party endorsed Federal-aid in its platform for the presidential election. "We favor liberal appropriations in cooperation with the States for the construction of highways," the plank read. The platform did not address the subject of a Federal Highway Commission. The Democratic Party's platform also favored "continuance of the present Federal aid plan under existing Federal and State agencies." Neither statement was encouraging to advocates of the Townsend Bill, but Eldridge pointed out that "advocates of highway improvement can find solace in the fact that the subject is now one which calls for national attention in some form or another."61

Harding summarized his views on highway development:

One of the greatest economic problems, if not the greatest problem of modern civilization, is distribution. There can be no doubt of the position of the good roads movement in the solution of the problem.

I believe that federal and state governments must not only put their shoulders to the wheel to create good roads, but they must insist on the maintenance of roads in good condition. A good road gone wrong is almost worse than no road, because it is a streak of memorial to neglect and waste.

The roads we build in America must be built, first, for use in the distribution of products rather than for merely passenger riding. We must foster the use of motor trucks. We must build urban terminals for truck service to make new ties between communities and between city consumption and country production.62

Although the highway community was cheered by the statement, good roads played no part in the outcome of the election. Harding, who called for a return to "normalcy," won a landslide victory on November 2, 1920, over Cox.

By then, the momentum had shifted to advocates of Federal-aid, as illustrated when AASHO held its annual meeting on December 13-16, 1920, in Washington, D.C. A brief account of the meeting in BPR's Public Roads magazine for December 1920 stated, "One of the most gratifying features was the spirit of mutual helpfulness and harmony which pervaded the meetings." The "animating purpose" of participants was "the fixed determination to build up for America a splendid system of highways in the shortest possible time."

One of the speakers was E. T. Meredith, an agricultural journalist who had become Secretary of Agriculture after David Houston left office on February 2, 1920, to become Secretary of the Treasury. "No single thing," the new Secretary told the State highway officials on December 13, "will contribute more largely to the development of our national life and the upbuilding of our country as a whole than the great highway system upon the construction of which the institutions we represent are now engaged." He did not agree with those who thought "large national problems" could not be addressed "under our dual system of government." He responded to the critics:

One group says that there is a tendency for the National Government to encroach upon the field of the States, while another thinks that the Federal Government in order to make its work effective should extend its authority to the smallest political unit. Both groups, apparently, find no difficulty in agreeing that the States and the National Government are working at cross-purposes. Let us not be disturbed by these voices. Similar expressions have been heard since the first days of the Continental Congress, and 145 years of successful operation has not silenced them. But all of us here, I am sure, have faith in our Government, in the stability of its dual character, and in the ability and willingness of the Federal authorities and the authorities of the 48 States to work harmoniously and successfully under it.

He believed that "a carefully prepared building plan" was needed from year to year to put highway building "on a systematic basis" to serve all classes of traffic. Because highway construction would "be limited by physical factors for some years to come," he said that "the only sound policy to follow in the circumstances is that of building roads in the order of their economic importance." Highways should be classified "to the end that as the principal roads in each State are completed, they will connect with those of contiguous States, and thus automatically become links in a national system which will serve all parts of the country." To accomplish this purpose, he said that future legislation "should not disturb the principles embodied in the act of 1916."

Further, with the program authorized only through FY 1921, prompt action was needed to prevent disruption. He had asked Congress to extend the program, with some modifications, at a rate of $100 million a year for 5 years beginning with FY 1922, and provide funding "on an adequate scale" for roads within or adjacent to the national forests. The "principal modifications" he sought were to address the problems facing western States with large amounts of untaxed public land that made the 50-50 matching requirement difficult to sustain, as well as "the maintenance of Federal-aid roads by the State highway agencies rather than by the counties."

The success of the program depended "in no small measure upon the certainty with which we and those who work with us can plan ahead for a number of years." Continuation of the program would provide jobs for former members of the armed services. Moreover, 40 State legislatures would be in session over the winter, and they would need to provide the funds to match future Federal-aid highway apportionments. "We should know, therefore, without delay whether the necessary appropriations will be provided for the continuation of the existing program during the next five years.63

The members adopted a resolution supporting extension of Federal-aid:

Whereas necessary highway improvement will be seriously retarded in every State and possibly cease in some States unless Federal aid is continued; and

Whereas such reduction or cessation would seriously affect commerce and the public welfare in all of the States;

Resolved, That the American Association of State Highway Officials, representing every State in the Union, urges strongly that Congress shall at this session extend further the provisions of Federal assistance to the States in a manner and amount proportionate to the existing needs, and accordingly strongly urges passage by this Congress of House bill 14905, known as the McArthur bill.

Representative Clifton N. McArthur (R-Or.) had introduced a bill on December 10, 1920, consistent with Secretary Meredith's views. It called for $100 million a year through FY 1925 for the Federal-aid highway program and a total of $100 million through FY 1931 for national forest roads and trails. The bill provided that "preference shall be given to such projects as will expedite the completion of an adequate national highway system connecting at the State boundaries." In addition, the Secretary of Agriculture could reduce the State matching share in areas with large amounts of "patented land and national forest land."

As White recalled, "At that convention the issue was finally brought to a successful conclusion." AASHO also appointed a legislative committee of 18 members to work on Federal legislative issues. The committee selected Markham to remain in Washington to represent AASHO on legislative matters.64 In his autobiography, Markham recalled that he was reluctant to take the position:

I was sure there were men of larger experience in contacts with governmental bodies, that my State was not one of the wealthy, heavily populated, road-minded States, and therefore there should be several others who were better qualified to undertake this new and particular work.

Markham also was hesitant because he had never met the man who had nominated him, Nebraska State Highway Engineer George Johnson, and did not even know who he was at the time. Johnson explained his reasoning, as Markham recalled:

All right, if you must know, I will give my definite reasons for suggesting you be our representative. Senator Curtis of Kansas is the floor leader in the United States Senate, Philip P. Campbell of Kansas is Chairman of the Committee on Rules of the House of Congress [sic], which controls all legislation. Senator Curtis and you have been close friends for years. Representative Campbell and you lived in the same house in college and you have maintained a close, friendly relationship. No other member of the Association has such contacts with the Congress already established. Have I not stated the facts?

Markham had to admit he had. After returning home, he secured a leave of absence from the Kansas State Highway Department and moved to Washington to represent AASHO during the congressional deliberations.65

A similar change occurred within ARBA during its annual meeting in Chicago on February 9-12, 1921. President-elect Harding wrote to ARBA president M. J. Flaherty on January 21, 1921, at the request of Chicago Mayor William Hale Thompson. Harding regretted he could not attend the sessions "because of my deep concern for more and better roads." He said:

Our civilization depends on communication and transportation, and as it becomes increasingly complex, that dependence increases. Every great community is held together by its means of transportation, and so vast a country as ours is the more in need of ample facilities. Our country roads we have not kept pace with. The development of other transportation, railroads, waterways, our new merchant marine, cannot be of fullest utility unless good country roads supplement them. The country road bears the same relation to these, that the capillary circulation does to the system of veins and arteries in the human organism.

In recent years there has been nation wide realization of the road problem. We need to devise and adopt means, financial and engineering, to solve it. I believe we shall progress greatly, in the years of peace and prosperity which I am confident lie ahead of us, toward this solution, and such organizations as your own will contribute much to that end.

In contrast to the annual meeting in early 1920, ARBA in 1921 resolved "that it is the sense of this convention that federal aid as now practiced be continued and extended and that federal aid be applied on such interstate highways as will ultimately form a national highway system.

Fiscal Year 1922

As the new year began, the Federal-aid highway program was authorized through FY 1921, which would end on June 30, 1921. The State highway agencies had no way to know if Congress would act on FY 1922 funding or, if so, when it would do so.

Markham, in his autobiography, recalled the circumstances as Congress attempted to address the issue during the first week of February 1921:

One day I received a cordial invitation from Senator Townsend to call at his office at a certain hour. Arriving on time (which has been my life custom on all occasions) I was ushered into a room where the Senator was seated at a desk surrounding by about twenty-five people, most of whom I knew and who had been carefully selected as... they represented the manufacturers of automobiles and the traveling public through automobile clubs. A lone, empty chair was placed at the right of the Senator and I was invited to be seated. In good "old class meeting" style the men responded, some holding cards in their hands on which they had noted their arguments. With but one exception they all told the Senator that "their people" sanctioned his bill, since it established a definite road plan... and an appropriation was provided and not simply an authorization as in the House bill.

And so there I was, a little mouse in a trap and a good sized chunk of cheese held at arm's length before me. Then the Senator, feeling that the trap had been well sprung, asked me for my opinion. While I was in the midst of explaining that I had no authority to accept such a plan since the State Highway Departments favor a cooperation plan to be carried out under present State and Federal officials, the gong rang for a hurried vote call for the Senate, then in session, and the Senator left by way of the subway with the announcement that we would hold another meeting soon.

As we left the building this group of political strategists asked me to go to town for lunch, but I was headed the other way. They called to me to assure me again that the only way to get real money for roads was to accept the Townsend bill.66

Markham informed members of the House Committee on Roads about the plans for the Townsend Bill. The committee quickly reported an amendment to the Post Office Appropriations Act for FY 1922 that would provide $100 million for continuation of the Federal-aid highway program and $3 million for forest roads and trails. With the 66th Congress set to end on March 3, an extension would eliminate the urgency of action on an extension that would include Senator Townsend's major program changes.

Representative Sam R. Sells (R-Tn.) introduced the amendment (technically, a substitute for the McArthur Bill) on February 7. He said that he realized the method was not ideal:

We have thought it best to provide for a continuance of the work during the next fiscal year, leaving to a later Congress any changes in the system which circumstances may render.

To defer action at this session of Congress would be dangerous, and might defeat all road construction in many of the States, where further legislative action is necessary to enable them to become beneficiaries under the existing system. The legislatures of probably two-thirds of the States are in session now, and until Congress decides this question none of them can act intelligently or provide adequately for a continuing program.

Committee Chairman Dunn, who had not been present for the committee's vote said:

I feel rather embarrassed in presenting this matter to the House, because of the lack of business acumen, you might say, that has been displayed by the committee.

In the first place, early in Decemebr [sic] a flock of delegates came to this city and asked for a hearing, which was more like a deafening than a hearing. The Committee on Roads heard them on the subject of additional appropriations for good roads. In spite of the fact that it was shown that there was $200,000,000 balance in the Federal road fund, and in spite of the fact that there had been only $47,000,000 paid out of the original appropriation, they insisted with great clamor that this additional appropriation be made at this time...

Everyone knows something about good roads. We have a great many roads in this country which are not good, but there are a sufficient number of good roads so that people understand the value of them. There is no argument against them. The question is whether in the present financial situation in this country, when we are committed to economy, and when we are faced with so many unpaid debts, and when so many supply bills are not acted upon, we shall pass this $100,000,000 of an extra appropriation with a balance of $200,000,000 remaining in the Treasury unexpended and $117,000,000 not yet even allotted... This good-roads question is one that ought not to come up now in this short session.

He noted that under the 1916 Act, the 50-percent Federal share was limited to $10,000 per mile, but that this figure had been increased to $20,000 and some even spoke of increasing it to $40,000:

Now to go on and build these roads at the present price of materials, the high cost of construction, and add to this already large amount of unexpended money would be little short of ridiculous.

Congressman James B. Aswell (D-La.) asked the Chairman to yield, but he would not. "Everyone knows," the Chairman said, "that arrangements can be made to take up this matter later on. We do not need to do it in the short session." He recommended that the House turn down the amendment, adding, "I have no false idea about how this will be treated, but I did want to express my opinion."

Aswell replied that the Chairman had the right to take any position he saw fit, but in opposing the amendment, Dunn had done "exactly what every member of that committee expected him to do." He went on:

He has voted against road building every time, although he is on the Roads Committee. He did not preside at the meeting of that committee when this bill was reported. He has been bitterly opposed to road building, and his statements are incorrect when it comes to the fact of the matter. If this appropriation, this bill, does not pass this House now, 26 States of this Union will be forced to suspend road building at the end of this fiscal year, and everyone who has investigated honestly knows that to be the fact.

Congressman John Marshall Robsion (R-Ky.), a member of the Committee on Roads, concurred in this summary of the chairman's views:

This House can not follow the leadership on the question of roads of our distinguished friend from New York, who is the chairman of our Committee on Roads. As I understand him, he is now and has always been opposed to the proposition of Federal aid for roads. He is against this bill. He is the only member of our Committee on Roads who is opposed to Federal aid for roads, and he is opposed to this bill. If every member of the Roads Committee entertained his views, there would be no necessity of a road committee in the House of Representatives, because the committee would never bring out a road bill.

As the debate ended, the House voted as Chairman Dunn had anticipated, adopting the amendment by a vote of 278 to 58, more than the two-thirds required under the special rules of consideration.

The bill went to the Senate, which began considering the provision on February 17, 1921. Throughout the debate, Senator Townsend repeatedly explained that while he favored good roads, he favored the use of Federal funds for interstate roads. He opposed consideration of the FY 1922 funding until his committee had "an opportunity to devise a plan, a scheme, a system, if you please, for the construction of roads which would conserve the money which the Federal Government has appropriated or is proposing to appropriate." He added:

What I am asking is that we let this matter go for a few weeks until we have had time to consider a real proposition; and that is the one matter of business that our committee has on hand now, the one thing that we propose to ask for at the very beginning of the next session of Congress.

As Markham put it:

Messaged to the Senate, our bill found plenty of friends and the doughty Senator from Michigan found it necessary to state that if the bill were referred to the Senate committee, since the Congress was soon to adjourn and the incoming President had already given assurance of an extra session of the new Congress, that the whole matter would be adjusted to the satisfaction of everybody.67

The Senate declined to approve the FY 1922 funding before the 66th Congress ended.

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  1. "Last Federal Aid Money Allotted," Western Highways Builder, September 11, 1920, p. 9, 18.
  2. Eldridge, M. O., "Growing Demand for Federal System," Highway News, Views and Gossip, American Motorist, October 1920, p. 26.
  3. Gordon, John Steele, An Empire of Wealth: The Epic History of American Economic Power, HarperCollins Publishers, 2004, p. 295-296.
  4. MacDonald, Thomas H., Report of the Chief of the Bureau of Public Roads, October 15, 1921, p. 1-2, 6-7.
  5. Eldridge, M. O., "Party Planks on Good Roads," Highway News, Views and Gossip, American Motorist, August 1920, p. 30.
  6. "President-Elect Harding on Good Roads," Good Roads, November 10, 1920, p. 233.
  7. Meredith, E. T., "The Address of the Secretary of Agriculture," Public Roads, December 1920, p. 4-6.
  8. White, p. 12. Following enactment of the Federal Highway Act of 1921, Markham would remain in Washington as AASHO's first Executive Secretary.
  9. Markham, William Colfax, Autobiography of William Colfax Markham, Ransdell, Inc., 1946, p. 147-148.
  10. Markham, p. 149-150. Markham presented this material as a single paragraph; paragraphs breaks have been introduced for readability.
  11. Congressional Record, Vol. LX, Part 3, p. 2742-2746, 3303-3308. Markham, p. 150.
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