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

PART ONE: Unease in the Golden Age (Page 5 of 6)

Congressional Action

Although the results of the special session of the 67th Congress led contemporary observers to refer to it as a "do-nothing Congress," it did pass the Budget and Accounting Act, which President Harding had requested on April 12. Under the new law, which Harding approved on June 10, 1921, the President was to submit an annual budget, with information on the condition of the Treasury and the President's program for the coming year. To help the President meet these responsibilities, the legislation also provided for creation of a Bureau of the Budget.77

The session also addressed the Federal-aid highway program before adjourning on November 23, 1921. The Congress would settle whether the Federal role would involve construction of a national highway system or aid to the States for highway construction and improvement.

In May, Senator Lawrence C. Phipps (R-Co.) introduced a bill, S. 1072, that provided relief in the form of a higher Federal share to the 11 western States with large amounts of untaxed public lands. The bill also added a year of availability for Federal-aid highway funds not expended by a State highway agency during its 2-years of availability under current law (the year for which it was authorized, and one additional year). These provisions were part of the Dowell and Townsend Bills, but the Phipps Bill, if enacted, would make them law without waiting for the more contentious provisions of the comprehensive bills to pass. The bill passed the Senate unanimously and was forwarded to the House, where the Committee on Roads substituted a bill developed by Representative Robsion. The Robsion Bill incorporated the Phipps Bill and the Dowell Bill developed by the AASHO legislative committee. The revised bill was silent on funding.

On June 27, the House took up the Phipps-Dowell Bill, which Robsion told his colleagues had been approved by every member of the committee except its chairman, Congressman Dunn. After summarizing the history and contents of the bill, the President's April 12 speech endorsing the Federal-aid concept, and noting its support by AASHO and the American Farm Bureau, Robsion discussed the Townsend Bill. AAA and the NACC, he said, had "for years been sponsoring a transcontinental or interstate system of roads." Their concept had been rejected in 1916 in favor of the Federal Aid Road Act. Of the Townsend Bill, which embodied the AAA concept, Robsion asked his colleagues:

Do we want to take this power from our State road department and vest it in a commission here at Washington? Do we want to substitute a strictly interstate system for our present interstate and intercounty system? Do we want to create a "tourist" system of roads or strengthen and build up our present "farm-to-market" system? Do we want to destroy the "producers-to-consumers" system and install a "joy-rider" system?

The AAA propaganda and "the editorials appearing in the great newspapers of the great cities of the country" in support of the Townsend Bill had two themes, Robsion said, namely that it would create a commission and that the commission will lay out these roads from coast to coast and to the great cities of the country, providing a great highway at least 20 feet wide for the tourists of the country." He was dismissive:

They want to take care of the joy riders of America. They nowhere seem concerned about the farmers getting their products to market or the millions of consumers in these cities having the benefit of these products.

In supporting a few interstate roads, the commission would ignore the interstate and intercounty system of roads laid out in each State:

These systems in the several States approved by the Federal highway department have been partly built; contracts have been let for other portions of these systems. State constitutions and laws have been changed and made to provide funds to build the entire system with Federal aid. This system of roads will serve every congressional district in the Nation. To cut down this system and to destroy it after we have spent five years and millions of dollars in building it up would be next to a crime.

He concluded his introductory remarks:

If we can cover our country with a network of good roads so that products of the country can be brought to the markets... in less time and less expense than it would require even to load these products on the train, it will mean much in the country. Water transportation, railroad transportation, should be joined up with every community of the Nation by means of good roads. A system of roads is contemplated in this bill, but would be impossible under the Townsend plan. The people want and must have an interstate and intercounty system and not merely an interstate system of highways. I trust that every friend of good roads will cast his vote for this bill. [Applause.]

Chairman Dunn was given 10 minutes to express his opposition to the Phipps-Dowell Bill. He began by pointing out the shift in political fortunes since 1916:

I want to call your attention to the fact that the bill reported January 6, 1916, was reported from a committee composed of 14 Democrats and 7 Republicans. This bill is reported from a committee composed of 14 Republicans and 7 Democrats.

Dunn said he had not considered the Federal Aid Road Act of 1916 "a square deal" and had been against it "from the start." Now, with the 1921 measure before the House of Representatives, he considered the present bill even "more unfair... because a few States will receive twice as much as any other State." He added that with so many other issues to consider, he thought it "a singular thing" that the "economy Congress" was even considering the bill in "these times of financial stringency." After all, he told his colleagues:

One hundred and fifty million dollars still remain in the hands of the Secretary of Agriculture, to be met by appropriations of $200,000,000 from the different States. I submit that in these times of financial stringency, if they can use that money within a year or two, $350,000,000 is a goodly sum for this country to spend on good roads.

Asked by Congressman Dowell why the bill was unfair, Dunn answered:

The Middle States and the Eastern States pay from two to four times as much as other States who get their allotments. The bill should be a 50-50 proposition, or the amount should be prorated according to assessed valuation instead of according to the area.

Dowell asked, "The gentleman's objection is that his own State [New York] pays more than it should pay?" Dunn replied that he was objecting to it "on behalf of the Middle and the Eastern States."

The chairman also objected to the maintenance requirement in the bill. If the Secretary found that any road constructed with Federal-aid had not been properly maintained, he would give the State 100 days to restore the road to a proper condition. If the State did not do so, the Secretary would refuse to approve any Federal-aid projects in the State for another 100 days. If the road still had not been put in a proper condition, the Secretary would contract for its improvement, with the cost deducted from the State's Federal-aid funding. After the State reimbursed the cost, the funds would be restored to the Federal-aid account for that State. "When," Chairman Dunn asked, "will that be paid?"

The maintenance requirement would be a financial burden to the States. As he had said, the States had $350 million and would get more under the bill for roads:

Nothing is said about the maintenance of those roads. Those States have about as much as they can do to maintain the roads they have already built if they will put them in proper shape, and they should not prepare now for as large an appropriation as they can get, to add to the already large sum available in the hands of the Secretary of Agriculture.

The Phipps-Dowell Bill also required the States to use State funds to match Federal-aid funds. It meant that the 17 States that had given their counties the responsibility for building and maintaining roads and for matching Federal-aid funds would have to change State laws, possibly even amend their constitution, to receive Federal-aid. States would have 5 years to do so. During the House debate on June 27, Representative Sam T. Rayburn (D-Tx.) provided the best summary of the mood in these States. Initially, he thought the Phipps-Dowell Bill was "a pretty good bill" but upon reading it again and again, he considered it "one of the most vicious pieces of legislation that has been presented to this House since I have been a Member." He continued:

[I am] sick and tired of the federal government's everlasting sticking its hand into the affairs of my state. I am against any building up of more bureaucracies in Washington to reach out into the states and tell the people what they shall and what they shall not do. [Applause.] One of the greatest issues in this country is coming within the next few years, and it is going to be as to whether or not the individual citizens of the several States of this land are capable in some way of managing at least a small portion of their own business [applause] instead of having to run to Washington every time they want to know whether we can or whether we can not do a thing.

The debate lasted about 40 minutes, after which the House approved the Robsion Bill, 266 to 77, with 88 Members not voting.78

Describing the 40-minute debate as "very acrimonious," Engineering News-Record said:

While there is no certainty that a federal highway commission will be set up, there already is speculation as to whom the President might chose for such a commission, if by any chance it were authorized. These names include those of George Diehl of Buffalo, president of the American Automobile Association, Samuel M. Williams, of the Highway Industries Association, and Roy Chapin, of the Hudson Motor Car Co.79

In an August 12 letter, Williams advised the magazine that:

I am not a candidate nor could I conscientiously consider the appointment if tendered, because I could not afford to accept a position, having assisted in the promotion of legislation for its creation.

He did not want to be among the "many examples" of people promoting legislation out of a "desire for the job." His sole motivation was "the public need" and he was confident that "three capable men" could be found to serve on the commission who had no direct involvement in creation of the bill, "and to those men I will pledge my loyal cooperation."80

The House bill, technically an amendment to the Phipps Bill that had passed the Senate, was referred to the Senate, which took it up on June 30. It was the last day of FY 1921, with no funds authorized for FY 1922. Senator Townsend recommended that the bill be referred to his committee. Neither of the alternatives to referral appealed to him. If the Senate approved the Phipps-Dowell Bill, it would go to the President for signature. Alternatively, the Senate could call for a conference with the House to resolve differences between the Phipps Bill the Senate had approved and the Phipps-Dowell Bill the House had approved. In either case, the Senate would not consider the Townsend Bill.

While Townsend proposed referral, a member of his committee, Senator Kenneth McKellar (D-Tn.), recommended that the Senate approve the Phipps-Dowell Bill. Because debate indicated that the Senators wanted to consider the new bill and the Townsend Bill, McKellar withdrew his motion. The Phipps-Dowell Bill was referred to the committee.

Engineering News-Record summarized the debate:

Strong objection was voiced to any proposition which requires a state to modify its constitution and its laws so as to participate in the benefits of a federal appropriation. It was pointed out, however, that this condition would merely prohibit the states from raising the money by bond issues but would in no way preclude the securing of the fund by taxation, which would require no change in the constitutions of those states. The discussion in the Senate brought out that there is considerable opposition to any change in the existing law. It was declared that the existing law worked out fairly well and that it would be better to let well enough alone than to embark upon a revolutionary system. The question also was raised as to whether it would be constitutional for the federal government to lay out a post road and then order the state to maintain it. The federal government, it was pointed out, does not build post-offices and then attempt to order the states to keep them in repair.81

Senator Townsend had held 10 days of hearings in 1920 during the 66th Congress and, after introducing the new version of his Federal Highway Commission bill, held an additional 13 days of hearings in the 67th Congress, from May 13 to June 2, 1921. MacDonald testified on May 24 and 25 in opposition to the Townsend Bill. He said that, "the big important fact in this whole debate" was that the Federal-aid highway program "recognized the necessity of reconciling the conflicting claims of the advocates of States rights on the one hand and on the other of those who favor a policy of centralization in matters which affect, first of all, the locality, and afterwards the Nation as a whole." He listed the three main characteristics of the program:

First, Federal supervision of State expenditure of Federal grants; second, the power vested in Federal authorities to discontinue such grants if the proper standard of efficiency is not maintained; and, third, the requirement that in order to secure Federal grants the State or local bodies must match the amount of such grants at least with equal amounts.

He considered it a general principle that the States should retain the initiative in the selection of roads to be included in the Federal-aid system, "but the Federal Government should be given authority to review the selection and require modifications based on certain principles to be incorporated in the law." Otherwise, he said, "the Federal authority would be subject to too many contrary views," as illustrated by the many "bloodless battles" that had been fought over designation of county and State systems.

After describing the structure of the BPR, MacDonald said he had "no predilections" for a bureau or commission organization at the Federal level. Under his principles, either would operate in much the same way:

Now, any commission or board of public works, or any other form adopted, will have to use about that same organization. Therefore, so far as I can see, the advantage that would be gained [from a Federal Highway Commission] would be the substitution of five men for the chief of the bureau - and I am not prepared to say that you could find five men who would do the work much better than myself, Mr. Chairman. [Laughter.]

Senator Townsend asked if a commission could administer the road department better than the BPR, "with the best man on earth in charge of it, which I will concede you may be? [Laughter.]" MacDonald replied, "Mr. Chairman, I think that that question is entirely a matter of the men that are selected."82

On June 20, Senator Townsend introduced a revised bill. Section 3 called for an independent post roads and Federal Highway Commission of three members (reduced from five by committee amendment) that would take over all highway responsibilities from the Department of Agriculture. Section 6 described the purpose of the commission:

That the commission in cooperation with the State highway departments shall, from time to time and subject to such changes as they may deem advisable, designate, and establish an interstate system of highways, composed of primary interstate roads which shall, by the most practicable routes and with due consideration for the agricultural, commercial, postal, and military needs of the Nation afford ingress into and egress from each State and the District of Columbia. Such interstate system may include highways to and from important water ports, and highways connecting at the border with the main highways in countries adjoining the United States; but shall not include any highway in a municipality having a population, as shown by the latest available Federal census, of five thousand or more, except that portion of any such highway along which, within a distance of one mile, the houses average more than 200 feet apart.

The commissioners would have final say on which roads were included in the interstate system, which was to be free of tolls. However, under Section 8, the State highway departments would construct and reconstruct the interstate highways, subject to commission approval.

Under Section 13, only "durable types of surface and kinds of material" were to be used so the system "will adequately meet the existing and probable future traffic needs and conditions thereon." Section 14 provided that the right-of-way would be "of ample width and a wearing surface of an adequate width, which shall not be less than twenty feet" unless the commissioner approved a variance.

In view of the President's concerns about highway maintenance, Section 6 strengthened highway maintenance (defined in Section 2 as the "constant making of needed repairs to preserve a smooth-surfaced highway."). The provision was similar to the maintenance requirement in the Phipps-Dowell Bill.

No projects could be approved until the State "has made adequate provision" for maintenance of the selected highways. Following construction of one of the highways, if a State did not carry out its maintenance responsibility, the commission would serve notice on it. If the highway were not restored to proper condition, the commission would refuse to approve any other projects in the State, but would restore the highway itself and charge the costs to the funds apportioned to the State. After the State reimbursed the commission with State funds, the funds would be restored to the State's account and projects could again be approved.

Section 20 provided $100 million in FY 1922 and $100 million in FY 1923, with the funds apportioned among the States in accordance with the existing Federal-aid formula. The Federal share would remain 50 percent, except that the share could be increased in States with large amounts of public land. Under Section 24, the bill provided $5 million in FY 1922 and $10 million in FY 1923 for forest roads in the States and the territory of Alaska.83

That same day, Senator McKellar released a minority report that portrayed the dispute as between advocates of the Federal-aid highway program and those who supported the AAA plan embodied in Senator Townsend's bill. The Townsend Bill was, McKellar's report said, "the same old plan" that AAA had been promoting for years "somewhat modified to get votes":

It eases up on the proposition rather than states it in its baldness, but the effect of it will be the same.

Comparing the Federal-aid program and the program proposed in the Townsend Bill, the report said:

The difference between the two measures may be best described by stating that the present law provides for Federal aid to the States in the construction of highways and the proposed Townsend bill provides for State aid to Federal automobile highways.

The report endorsed the stewardship of Chief MacDonald as "a most efficient executive," and stated that the work "ought not to be encumbered with the political logrolling of a commission."

The commission would have "unlimited power to establish a system of primary interstate roads" and the Federal funds would be expended only on this system, which "will no doubt take many years to build." The report asked:

Thus we see that the question resolves itself simply into this: Are we going to stand by the present law, which provides for Federal aid to roads built by the States with the approval of the Federal Government, or are we going to turn our system into the automobile association plan of primary interstate roads?

After summarizing the views of State highway officials who had testified on the Townsend Bill, the report said:

Thus it will be seen that the preponderance of the testimony of the seven highway commissioners does not uphold the proposed measure. Some of these witnesses spoke pleasantly of the new bill... It is further seen that the American Association of State Highway Officials have indorsed the Dowell bill, which is an amendment to the present law, which Dowell bill has already passed the House of Representatives. Of course such State highway officials as were examined had to be careful of what they said, because none of them desired to lose their influence with the powers that be.84

The new Townsend Bill was a product of compromise to broaden support for the concept of a Federal Highway Commission. According to Engineering News-Record:

There was every prospect of a deadlock, but as each faction in the committee recognized that there must be an agreement if there is to be any legislation at this session, Senator Townsend finally agreed [to a compromise]... Senator Townsend pointed out that the compromise is a recognition of the principle, at least, that the federal government shall have something to say about the location of the roads, by confining these roads to a system and stating that the interstate roads must be given attention first.

Senator McKellar, of Tennessee, led the minority of the committee which insisted that the state highway commissions should not be deprived of the right of locating and designating the roads within their states which are to be improved. In order to secure greater power for the state highway commissions, Mr. McKellar and the others of the minority agreed to the provision of the bill creating a federal highway commission. Thus as a result of the compromise, the Townsend bill, as it came onto the floor of the Senate, carried with it no change in the procedure for the approval of highway projects. The provision of the existing law was continued, wherein the states lay out the system subject to the approval of the federal agency.85

Eldridge, writing in the June 1921 issue of American Motorist, reported on a recent interview with Senator Townsend, who said that focusing Federal aid on the most important State roads of an "interstate character" was "the next logical step in cooperation with the several States in highways [sic] improvement." He said that the work should no longer be confined to one bureau in one department since highways "now concern five branches of the Government and there should be a distinct authority which can deal with all departments and possess an independence of procedure." Federal funds should be used in cooperation with State funds on the most important highways:

In State after State we have progressed from State aid to the counties, to State systems of intercounty highways, and we are now seeking a form of Federal aid to the several States directed toward interstate highways which subsequently may be included in a national system.86

A New Danger

While the committee worked on the legislation, the country's fiscal situation continued to worsen. In mid-July, Congress and the President engaged in an unrelated debate that raised concerns among highway supporters on both sides of the debate. The issue was a measure to give a bonus to World War veterans to compensate them for the civilian pay they lost while serving their country. Harding initially supported the bonus, but turned against it because of his preference for tax cuts and a balanced budget, issues he stressed in a message to Congress on July 12, 1921. Biographer Russell summarized the issue and the debate:

Harding's most open challenge to Congress came over a bill to grant the soldiers of the World War a bonus. Demanded by the many unemployed veterans, belligerently backed by the American Legion, the bonus bill - called with virtuous euphony the Soldiers' Adjusted Compensation Bill - was not a measure most election-conscious congressman would care to oppose. To Harding, pledged to deflation and a balanced budget, such a measure was against his whole conception of normalcy. It would, he told Congress, hinder readjustment and restoration (the alliteration he found unavoidable) and imperil the financial stability of the country. So strongly did he feel about this "treasury raid" that he appeared in person before the Senate and spoke against what otherwise seemed certain of passing both houses. By his independent action Harding deferred the day of the bonus, but he stirred up much bitterness among the veterans and their congressional supporters. Congressman Bourke Cockran of New York was so incensed that he attempted to bring a resolution of censure against Harding accusing him of acting in an unconstitutional manner by thrusting "the personality of the Chief Executive into the grave deliberations of the representatives of the people."87

Congress put the measure aside until 1922.

The debate over the Bonus Bill raised "a new danger" for highway legislation, according to Engineering News-Record:

The reasons which caused the President to oppose soldier-bonus legislation are thought to have actuated him to take a similar attitude with respect to the $100,000,000 appropriation being asked for highway development. While there has been no announcement from the White House on the subject, it is believed that the President prefers that this appropriation be delayed until the condition of the Treasury has improved.

Leaders in both the Senate and House have not been friendly at any time during the session to the suggestion that additional funds be appropriated at this time for federal-aid work. During recent weeks, with the more general recognition that the Treasury situation is really serious, this attitude has come to be regarded in a more sympathetic way. For that reason it no longer is the difference of opinion between those favoring the Townsend bill or the Dowell bill that threatens to delay highway legislation - it is the apparent crystallization of sentiment in favour of restricting appropriations regardless of their urgency.

An editorial in the same issue stated that the week's news from Washington "offers little cause for enthusiasm among the supporters of amendments to the present federal highway law and an appropriation of funds for federal aid at the rate of $100,000,000." Legislation, whether the Townsend Bill or the Phipps-Dowell Bill "may go the way of the soldiers' bonus bill in the general campaign for economy which is being carried on at the national capital." True, the editorial conceded, a substantial amount of Federal-aid funding had not yet been used, but that mainly was in States "which have been slowest in carrying out their construction programs." The "progressive States" had used all their funds and the absence of a new authorization "will disrupt the road-building program and the engineering organizations in those states which have been most active in road building." This argument, therefore, was "misleading." The editorial concluded:

If further federal-aid appropriations are withheld by Congress, such action will be justified only by the need for the most drastic economy in the conduct of the Government's business and not because, apparently, a certain amount of federal money for road construction still remains to be absorbed.88
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  1. Kimmel, Lewis H., Federal Budget and Fiscal Policy, 1789-1958, The Brookings Institution, 1959, p. 5. A management function was added to the Bureau's responsibilities under Reorganization Plan No. 1 of 1939. The agency was renamed the Office of Management and Budget under Reorganization Plan 2 of 1970, effective July 1, 1970.
  2. Congressional Record, Proceedings and Debates, Volume LXI, Part 3, June 6 to June 28, 1921, p. 3086-3094.
  3. "Phipps Road Bill Passes House," Engineering News-Record, June 30, 1921, p. 1137.
  4. "Williams Not a Candidate for Highway Commission," Engineering News-Record, August 18, 1921, p. 295.
  5. "Phipps Highway Bill Goes to Senate Committee," Engineering News-Record, July 7, 1921, p. 35.
  6. MacDonald, Thomas H., Interstate Highway System, Committee on Post Offices and Post Roads, United States Senate, May 24-25, 1921, p. 260, 312.
  7. Report, Mr. Townsend, from the Committee on Post Offices and Post Roads, Continuation of Federal Aid in the Construction of Highways, 67th Congress, 1st Session, Report No. 134.
  8. Minority Report, Mr. McKellar, from the Committee on Post Offices and Post Roads, Continuation of Federal Aid in the Construction of Highways, 67th Congress, 1st Session, Report No. 134, Part 2.
  9. "Senate Passes Amended Townsend Bill," Engineering News-Record, August 25, 1921, p. 337.
  10. Eldridge, M. O., "Townsend Measure Designed to Meet Needs of the Day," American Motorist, June 1921, p. 22.
  11. Russell, p. 460.
  12. "New Federal-Aid Road Funds May Be Withheld," Engineering News-Record, July 21, 1921, p. 122, and "Road Bill Prospects," p. 89.
Updated: 06/27/2017
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