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

PART FOUR: President Eisenhower Takes Charge (Page 4 of 5)

Unveiling The Grand Plan

On Monday, July 12, with the internal deadlock showing no signs of action, the President went public. The site was Bolton Landing at Lake George, New York. The event was the meeting of the Governors' Conference, which opened the same day, July 12, 1954.

In the opening sessions that morning, Governor William G. Stratton (R-Il.) expressed impatience and annoyance that the Governors had not been able to attain their objective of getting the Federal Government to drop the Federal gas tax and Federal grants-in-aid to the States. Governor Robert B. Crosby (R-Ne.) urged the Governors' Conference to "double and triple and guadruple its efforts in the next Congress" to achieve these objectives.280

Governor Byrnes of South Carolina indicated he had been surprised to read of passage of the Federal-Aid Highway Act of 1954 "at a time when the Governors seemed to be in accord that the grants should be reduced." Governor Howard Pyle (R-Az.) added that the increased Federal-aid funding was "an act of appeasement" to deter the Governors from pressing their campaign. Pennsylvania's Governor Fine, who had expressed his views on the subject to AASHO in 1953, was also disturbed by the increase. Moreover, he was not impressed by the reasons given for increasing Federal-aid highway grants instead of terminating them.281

The President had planned to address the Governors that evening. However, he instead went to State College, Pennsylvania, to attend the funeral of his sister-in-law, Mrs. Milton S. Eisenhower, who had died of a blood clot that Saturday. Before going, the President gave his notes for the speech to Vice President Nixon to deliver to the Governors.282

Flying to Lake George on the President's plane, the Columbine, the Vice President, former Governor Adams (who had voted for the conference's unanimous resolutions in past years calling on the Federal Government to get out of the gas tax business), and Press Secretary Jim Hagerty (who had attended many Governors' Conferences as press secretary to Governor Dewey of New York) were apparently unaware of the discussion during the morning session.

That evening, Nixon addressed the Governors. The President's speech, he said, had been advertised as "informal," but judging from the notes, "I can tell you that the President follows the rule that the best informal speech is the one that is very well prepared."

The President's notes began by observing that each State is "great in potential achievement, because joined with 47 others, they form the mightiest of temporal teams - the United States of America." The Nation's purposes, to build a cooperative peace and the strengthening of America and her friends, can be achieved only on "a sound economic base." To assure such a base, America must be "an example of national progress in its standard of living," must maintain "a military dike on our defense perimeter," and "achieve the fullest possible productive strength, exploiting every asset, correcting every deficiency in our economic situation." He added:

We don't want a blueprint for a regimented economy, but we must have vision, comprehensive plans, and cooperation between the States and Federal Government.

On the positive side, the President said that "we live in a dramatic age of technical revolution through atomic power." The Nation had seen "a revolutionary increase in opportunity, comfort, leisure and productivity of the individual." On the dark side was the Nation's transportation system. Although the President conceded the transportation system was the best in the world, it was "far from the best that America can do for itself in an era when defensive and productive strength require the absolute best that we can have." In particular, "our highway net is inadequate locally, and obsolete as a national system." The increased funding authorized that year seemed like a substantial sum, but it was only "a good start." Nixon summed up the goal: "a 50 billion dollar highway program in ten years is a goal toward which we can - and we should - look."

The President, Nixon said, had intended to illustrate the need for good roads with a personal anecdote, as follows:

35 years ago this month, the Secretary of War initiated a transcontinental truck convoy to prove that the gas engine had displaced the mule, even on our relatively primitive roads. A Second Lieutenant named Dwight Eisenhower went along as an observer. All-weather roads in the United States at that time totaled 300 thousand miles. The autos and trucks numbered 7 million, 600 thousand. That truck convoy left Washington on July the 7th. It arrived in San Francisco on September 5th, sixty days and 6000 breakdowns later.

Given the haphazard way the Nation's highways had evolved and their deteriorating condition, the President saw five "penalties of this obsolete net":

Our first most apparent, an annual death toll comparable to the casualties of a bloody war, beyond calculation in dollar terms. It approaches 40 thousand killed and exceeds one and three-tenths million injured annually.

And second, the annual wastage of billions of hours in detours, traffic jams, and so on, measurable by any traffic engineer and amounting to billions of dollars in productive time.

Third, all the civil suits that clog up our courts. It has been estimated that more than half have their origins on highways, roads and streets.

Nullification of efficiency in the production of goods by inefficiency in the transport of goods, is another result of this obsolete net that we have today.

And finally, the appalling inadequacies to meet the demands of catastrophe or defense, should an atomic war come.

These penalties warrant the expenditure of billions to correct them.

Nixon then sketched the broad outline of the President's vision for creating "the highway net as it should be":

[First,] a grand plan for a properly articulated system that solves the problems of speedy, safe, transcontinental traffic - intercity communication - access highways - and farm-to-market movement - metropolitan area congestion - bottlenecks - and parking.

Second, a financing proposal based on self-liquidation of each project, wherever that is possible, through tolls or the assured increase in gas tax revenue, and on Federal help where the national interest demands it.

And third - and I would emphasize this, particularly at this Conference, because I know how deeply the President believes in this principle: a cooperative alliance between the Federal government and the States so that local government and the most efficient sort of government in the administration of funds, will be the manager of its own area.

And the fourth, very probably, a program initiated by the Federal government, with State cooperation, for the planning and construction of a modern State highway system, with the Federal government functions, for example, being to advance funds or guarantee the obligations of localities or States which undertake to construct new, or modernize existing highways.

Then, Nixon emphasized that he was reading the last sentence of the President's notes exactly as he wrote them:

Quote, "I hope that you will study the matter, and recommend to me the cooperative action you think the Federal government and the 48 States should take to meet these requirements, so that I can submit positive proposals to the next session of the Congress."283

The President's proposal surprised the audience - electrified it, according to observers, and not in a positive way. The impact was all the more stunning because the Governors, expecting a friendly, informal speech in praise of the Governors' Conference and the important work the Governors did, had no warning that the President intended to challenge them on a subject they were on record, time and again, as opposing. Columnist Doris Fleeson commented on it a couple days later:

Though they were dealing with their closest friends, they [the President and his aides] sprang the huge project as a surprise... Apparently nobody read the newspapers which were put aboard the President's plush plane, the Columbine, before it took off from Washington with the Vice President for the conference here. Nor, apparently, did any one bother to case the joint after arrival here in the early afternoon.

The chairman of the conference, Governor Thornton of Colorado, whom Fleeson described as "the President's backer and golfing companion," was surprised:

He was also upset, viewing the program as offered with no preparation, as seemingly extravagant, hazy and embarrassing to the President's friends in the light of conference history.284

Governor Thornton immediately sought clarification of the President's proposal from Sherman Adams, who had lingered at the Sagamore Hotel after sensing something was wrong. The following morning, Adams called Governor Thornton from Washington with clarification. On that basis, Governor Thornton told the Governors during the morning session:

Governor Adams told me personally to tell this group of Governors that the President's entire idea is to improve our highway system with the full cooperation of the States, regardless of the final plan adopted.

It seems impossible to take away the revenue coming from the gasoline tax without some plan to replace that amount by the states or Federal Government. There must be a specific plan developed so that we do not leave the problem unsolved.

In other words, we must continue to improve our highway system because it is essential to the well being and health of our country. This can be done by the Federal Government, or by a cooperative plan between both levels of Government.

In effect, he [the President] is asking the Governors of this conference what they want. The problem has been given us. The President would like to know our solution.285

The Governors also were confused about the total amount of funding the President had mentioned. Governor Thornton's view was that the $50 billion over the next 10 years was in addition to the $40 billion that State and local governments normally would spend.

Despite Governor Thornton's attempts to minimize the damage done by the President's shocking proposal, many Governors were angry and frustrated. Governor Fine denounced it. The plan placed "a cloud on the forty-eight-state highway systems," he said, "because of the assertion that our [highway] systems are obsolete." He pointed out that Pennsylvania, with 41,000 miles of improved highways, had spent $537 million of State funds for highways over the past 4 years and had pioneered the turnpike system:

We want to continue to build our own roads unimpeded by any Federal system. We have our program for the next 12 years.

Warning the Governors not to be "lulled asleep by any sedatives, such as we will be managers of our own areas, nor by flattering remarks," he said:

We want the Federal Government to get out of the gas tax and fuel oil fields once and for all and now is the time to do it before we embark on any new Federal aid program.

At the same time, he urged the Governors to accept the President's invitation to submit their recommendations. "An invitation has been extended to us to meet with some one, and I believe we should accept it." Governor Fine thought a special session of the Governors' Conference should occur in Washington after the fall elections to discuss the issue. Accordingly, he introduced a two-part resolution:

  1. the Governors' Conference urges the Federal Government to relinquish any claims to revenues raised by the system of gasoline and motor fuel taxation and return such sources of taxation exclusively to the states.
  2. a special Governors' conference be convened in Washington, D.C., by the chairman of the conference during November or December, 1954, to discuss and counsel with the National Administration and explore the prospects of the integration of the proposed Federal highway program into the respective state highway programs with subsequent supervision of any program lodged with the respective state highway departments.

Governor Dewey and Democratic Governor G. Mennen Williams of Michigan joined in Governor Fine's resolution. Because 1954 was an election year, Governor Dewey added that he thought the Governors should appoint a committee of Governors not up for reelection to go into the details of the highway plan.

The resolution had broad support, but would not be voted on until the following day. As this day of revolt against the President's proposal ended, Governor Thornton talked informally with reporters. The highway program was, he said, considerably more complex than the Governors seemed to think. To get the Federal Government out of the gas tax business, the Governors would have to convince their congressional delegations to approve the change and convince the State legislatures to enact standby programs to take over all highway construction. Governor Thornton thought a commission should be established to bring about Federal-State cooperation in the building of transcontinental highways.

He added that in the event of a recession, the President's program "would be a sound stimulant for employment." He scoffed when a reporter jokingly asked if such a program might be called a "boondoggle," a term that had been applied to some of the make-work programs of the 1930s.286

By July 14, the Governors' opposition to the President's proposal had begun to abate. Observers attributed the change to additional "clarification" of the President's proposal. Democratic Governor Frank J. Lausche of Ohio, who had remained silent during the attacks on the President's proposal the previous day, Democratic Governor Charley E. Johns of Florida, and Maryland's Republican Governor Theodore R. McKeldin explained that they thought the President's proposal had been misconstrued. In their view, the proposal meant no interference with State functions, but rather a willingness to use Federal credit to help build toll roads if necessary. Governor Lausche, whose State had embarked on an extensive toll program, said he would welcome such help.

Governor McKeldin accused the Governors of "buck fever." He said that on June 11, the Council of State Governments had issued a statement on highway needs:

One month and two days later President Eisenhower adopted our council's report in a speech to us. Is that a cause for the jumping jitters that swept these tables yesterday?

Let us not plunge into panic just because the President notes his approval of the very program we have been advocating. Rebuilding the highway systems of the states and the joint system of highways among the states is a job that must be done.

With the tide of opinion turning, Governor Fine's resolution of the day before was significantly altered before being approved unanimously. The demand that the Federal Government abandon the gas tax was eliminated at the insistence of the public lands States. These States received more in Federal-aid than their populations would pay if the gas tax were shifted to the States.

The approved resolution declared that the Governors' Conference was "highly pleased by the President's willingness and determination to work with the states on this important problem." The resolution directed the Executive committee to work with AASHO to study the status of road problems and the position of the States on highways. In addition, the resolution suggested a meeting of the Governors later in the year to discuss the subject with appropriate officials.

Political observers saw the reversal as an indication that the President's supporters were in control of the conference. They cited the fact that Democratic Governor Robert F. Kennon of Louisiana, known as "an Eisenhower Democrat," had succeeded the President's friend, Governor Thornton, as Conference President.287

A historian of the Governors' Conference, Glenn E. Brooks, explained that the change in attitude was at least in part because "the figure of $50 billion over a period of ten years stirred the thinking of every governor present." He added that, "the sturdy principles of states' primacy had been visibly shaken by the proposal."288

The same morning the Governors' Conference adopted the resolution, the President held a news conference in Washington. Glenn Thompson of The Cincinnati Enquirer asked the President for his ideas on how the $50 billion in highway building could be financed. The President responded:

Well, I don't think there is any one way. As a matter of fact, all I made was a proposition. I believe we are at least $50 billion behind in our road networks. We are suffering from it in losses of life; we are suffering from it every day in terms of inefficient operation of all of our transportation throughout the country...

I had a report from a city yesterday of 22,000, and it said "Our No. 1 problem is parking." The parking spaces, the thruways, the great networks that we need, all of these must be done. Now, in the great part of these I very much favor these self-liquidating projects.

The Government has made the proposition that we are ready to do our part in going forward with this planning and exploring a way. I have no definite plan, although we have been studying it for a year with people from the outside because, of all people, we must have the Governors and legislatures in with us. Until they come to me and show me their proposition and something that we can get together on, it is really idle to say how any single project will be financed.

I think there could be certain cases in which the Federal Government would have to do it all, possibly, because of some particular Federal use; but, by and large, it should be local and, I would say, exploit the self-liquidating idea as far as is possible.

This, I should point out, that I am talking about has nothing to do with the normal road building that is going on now, in which the gasoline taxes and all that were involved. This is entirely over and above that.

Raymond P. Brandy of The St. Louis Post-Dispatch asked the President for his view on letting the States have some of the gasoline taxes. The President responded:

As I recall, what was at issue this year was one-half a cent, and for the moment, we thought until this whole thing could be worked out and studied, we should continue as we had been rather than trying to make a change from which we couldn't retreat.

I don't believe that there is a final decision made, except this: that everybody to whom I have talked believes that we should put the maximum authority and responsibility in the States that they are capable of taking. If you put responsibilities there, you have got to let them have the money to do it.289

Outside the Governors' Conference, the reaction to the President's proposal was generally positive. On July 13, the day after the Vice President's speech, the bold headline in The Washington Post and Times Herald put it simply:


Editorially, the newspaper commented that the plan was anything but extravagant. "On the contrary, it reflects economy in the best sense of the word."

Washington's most prestigious newspaper of the day, The Evening Star, commented in an editorial:

As numerous Governors have been quick to indicate, the President's "grand plan" for a vast program of highway improvement and expansion is more than a little bit controversial in terms of how the States are to figure in it. But what is not controversial about it is the fact that some such program - regardless of conflicting views as to methods of financing and directing it - is imperative for the future well-being of the Nation...

More than a few of the Governors have taken a rather dim view of all this because of a fear that it would seriously impinge on States' rights. Nevertheless, although it lends itself to debate in that respect, there can be no doubt - in view of our expanding economy and fast-growing population - that something like the President's proposal needs to [be] put into effect in one way or another, and the sooner the better.290

The American Municipal Association's president, Mayor William E. Keep of Kansas City, Missouri, applauded the President "boldness, vision, and faith."

The Wall Street Journal took the opposite view:

We don't think the Federal Government has got to draw up 20-year plans and appropriate billions to get roads built.

As might be expected, highway groups were delighted. Ralph Thomas, president of AAA, called the proposal "one of the most important, far-reaching and forward looking steps that has been initiated by a President in many years." ARBA could not see how "a Nation that travels on wheels and depends on the industry of the Machine Age for its economy and its very preservation" should not embark on the plan, however the funding and other details may be worked out.291

In an unsigned editorial in American Highways magazine, AASHO said the President had "really dropped a bombshell, figuratively speaking," with a plan that had been variously described as "a grand plan" and "an earthquake." The editorial added:

In our humble opinion, however, the greatest contribution growing out of the President's remarks was the powerful manner in which he drew the public and press attention not necessarily to the drastic situation we face now, but to the much more drastic situation we will face 10 and 20 years hence.

After pointing out that the magnitude of present problems "becomes infinitesimal in anticipation of our future situation," AASHO stated that:

An answer can be found, and an answer will be found, but it will require the utilization of the best thinking and talent, both technical and financial, and legislative, available to us in America.292

Building on the Momentum

The President did not want to lose the momentum he had established. On August 10, he met at the White House with a committee of the Governors' Conference to discuss his proposal. The committee, which was headed by Governor Kohler, included Governors Kennon, Lausche, and Pyle as well as Democratic Governor Lawrence W. Wetherby of Kentucky and Republican Governor Paul L. Patterson of Oregon. Secretary Weeks and Secretary of the Treasury George Humphrey were among the aides who joined the President and Governors for the discussions over lunch.

Following the meeting, Governor Kohler told reporters that he thought "an erroneous impression" had been left at the Governors' Conference that the Governors were hostile to the President's program. He said there was general agreement on the "compelling necessity of increasing highway building" and "the sooner the better." As for the $50 billion over 10 years, Governor Kohler indicated that this was not a hard and fast estimate. The final total might be higher or lower, with the majority of roads built as toll-free rather than toll roads. He added that the meeting didn't address such details as whether the Federal Government should get out of the gasoline tax field.

While in Washington, the Governors also met with AASHO's president, Alfred E. Johnson (Chief Engineer of the Arkansas State Highway Department), and Executive Secretary Hal H. Hale. The meeting, according to an editorial in American Highways, was "one of the most cooperative, serious, and determined sessions that one can imagine."293

Leaving the White House, Governor Kohler had told reporters that he believed the next move was up to the Governors and that they hoped to report on their recommendations in November. However, the President was not about to wait for the Governors. He had asked the Governors for their ideas on how to accelerate the highway program, but he simultaneously launched his own initiatives to review the options.

On August 20, the President established two committees to explore the issues. First was an Interagency Committee, chaired by Commissioner du Pont, of representatives from the Departments of Commerce, Defense, and the Treasury as well as the Budget Bureau and the Council of Economic Advisors. The Interagency Committee would consider economic requirements for a national road program and submit them to the second committee established on that date. The second committee, known formally as the President's Advisory Committee on a National Highway Program, was to work with the Governors and the Interagency Committee to develop a plan for submission to Congress. It was headed by General Lucius D. Clay, an engineer who had become a friend of General Eisenhower's during the war and now served as an informal advisor to the President.294

For the committee, General Clay chose Steve Bechtel of Bechtel Corporation, Sloan Colt of Bankers' Trust Company, Bill Roberts of Allis-Chalmers Manufacturing Company, and Dave Beck of the International Brotherhood of Teamsters. All of them, Clay would say, were easily recruited. "They recognized that this was an important undertaking and they wanted to be part of it."295 However, none of them was directly involved in road building. Expertise in that field came from the Clay Committee's Executive Secretary, Francis (Frank) C. Turner, a career BPR employee who had joined the agency in 1929 and was now Assistant to Commissioner du Pont.

General Clay had little interest in the Interagency Committee's recommendations. He set out to follow the President's instructions, which were to develop a plan that would be self-liquidating and satisfactory to the Governors.

On October 7, in room 474 of the Executive Office Building in Washington, General Clay opened the first public session of the President's Advisory Committee on a National Highway Program. During the hearings on October 7 and 8, testimony was taken from 22 organizations, including AASHO and ARBA. Rose summarized the results:

Farm leaders sought more mileage at less expense to their constituents, all without diminution of their own influence in local road-building affairs. Auto Club leaders argued for more attention to packed Interstate roads in urban areas, preferably by chopping farm-market construction from the federal payroll. Truckers, as always, wanted more roads built, provided only that taxes remained low... According to one observer, "hearings which the... Committee held... did not reveal any... consensus with respect to... finance." What it came down to was that "suggestions reflected... the interests of the group which the speaker represented."296

Meanwhile, the Governors' Conference Special Highway Committee, headed by Governor Kohler, was completing its study as requested by the President at Bolton Landing. The Executive committee of the Governors' Conference approved the report by the Special Committee on Highways on November 30, 1954. Governor Kennon presented the report to President Eisenhower and General Clay in a White House meeting on December 3.

The Governors agreed that an adequate highway construction program was needed for the coming 20 years at approximately double the current rate of expenditures. To accomplish such a program, the Nation's highways should be divided into three systems - the Interstate System, other Federal-aid systems, and State and local systems. The Governors used an estimate of $101 billion for the cost of needs on all highway systems, with the figure derived from the draft BPR report on highway needs requested by Congress in the 1954 Act. Of this total, the Governors estimated that the Federal responsibility totaled about $30 billion over 10 years, including the cost of the Interstate System. Based on the preliminary BPR survey of the cost of constructing the Interstate System by 1964 to meet 1974 traffic needs, the Governors estimated the cost to be $24 billion, of which about $13 billion would be expended in rural areas and the remainder in urban areas.298

Given the overriding Federal interest in the Interstate System, the Governors believed that the Federal Government should assume primary responsibility, with State participation, for financing its construction. The Governors suggested several funding options, including general tax revenue, issuance of bonds, or establishment of a national road financing authority. More specifically, the Governors wanted to limit the States' share of costs to about $140 million a year, the amount they were contributing as their share of the cost of the Interstate System under the Federal-Aid Highway Act of 1954. On this basis, the Federal share of the $24 billion would be $22.5 billion, with the States contributing $1.4 billion over the 10-year construction period.299

In addition, the States should, the Governors believed, be given "due credit" for the funds expended, either from public or toll road revenues, for construction of satisfactory sections of the Interstate System. The States or their political subdivisions would be responsible for construction, maintenance, administration, and policing of the Interstate System.300

What was absent from the Governors' report was a demand that the Federal Government stop collecting revenue from excise taxes on gasoline and other highway user products. Because the States and localities would have primary responsibility for construction of all systems other than the Interstate System, the Governors "strongly recommended that the present federal excise tax rates on motor fuels and lubricating oils not be increased and that no other federal highway user taxes be levied." The report added:

[So] long as the national government levies excise taxes on motor fuels, lubricants and motor vehicles, it will continue to make allocations to the states for highway construction on the above other federal-aid systems, at least at the rate obtaining under the Federal-Aid Highway Act of 1952 and in accordance with existing formulas.301

According to a White House news release on December 3, 1954, the President referred the Governors' recommendations to General Clay for study.

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  1. Quoted from the proceedings in Brooks, Glenn E., When Governors Convene: The Governors' Conference and National Politics, The Johns Hopkins Press, 1961, p. 79.
  2. Egan, Leo, "Eisenhower Bids State Join U.S. in Vast Road Plan," The New York Times, July 13, 1954.
  3. During this period, according to Ambrose, the President was trying to "build up" Nixon as a possible successor in 1956. The unfortunate circumstance that prevented the President from attending the Governors' Conference offered just such an opportunity. Ambrose, p. 251.
  4. Address of Vice President Richard Nixon to the Governors' Conference, Lake George, New York, Dwight Eisenhower Library, July 12, 1954. The speech is available at https://www.fhwa.dot.gov/infrastructure/rw96m.cfm.
  5. Fleeson, Doris, "$50 Billion More for Highways," The Evening Star (Washington, D.C.), July 14, 1954.
  6. Folliard, Edward T., "D.C. Road Parley of Governors Seen," The Washington Post and Times Herald, July 14, 1954.
  7. Folliard, Edward T., "D.C. Road Parley of Governors Seen," The Washington Post and Times Herald, July 14, 1954.
  8. By tradition, the presidency of the conference alternated between Democratic and Republican Governors.
  9. Brooks, p. 80.
  10. "The President's News Conference of July 14, 1954," Public Papers, 1954, p. 635-636.
  11. "Our Highways and the Future," The Evening Star, July 14, 1954.
  12. "Reaction to President Eisenhower's Plan," Road Builders' News, July-August 1954, p. 2.
  13. "A New Era in Highways," American Highways, October 1954, p. 2. (Unsigned editorial in AASHO's magazine.)
  14. "A New Era in Highways," American Highways, October 1954, p. 2. According to a 1972 speech by Johnson, Governor Kohler was particularly concerned about construction time - he could get a State project underway in less than a year, while it took an additional year for a Federal-aid project. Governor Kennon invited Johnson to meet with the highway committee at the Governor's mansion in Baton Rouge, where with Governor Kennon's assistance, he helped overcome the Governors' objections to the President's program. "A Commentary on My Years in Washington," American Highways, October 1972, p. 4.
  15. For information on General Clay, see https://www.fhwa.dot.gov/infrastructure/clay.cfm.
  16. Smith, Jean Edward, Lucius D. Clay: An American Life, Henry Holt and Company, 1990, p. 618-619
  17. Rose, p. 75-76.
  18. The members who had not been able to attend the White House meeting on August 10 were John Lodge (Connecticut) and Allan Shivers (Texas). Governor Kennon, as Chairman of the Governors' Conference, served as an ex officio member of the highway committee.
  19. Executive Committee of the Governors' Conference, A Cooperative Program for Highway Construction, December 1954, p. 14.
  20. Cooperative Program, p. 27.
  21. Cooperative Program, p. 26.
  22. Cooperative Program, p. ii..
Updated: 06/27/2017
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