The National Interstate Defense Highway System

In the years immediately following World War II, urban highway construction became a priority and, in order to bolster that position, the BPR began to provide assistance to Chicago and other cities by helping with metropolitan engineering studies funding over 150 studies during the early 50’s.  The distribution of urban funds, which began in 1947, was based on statewide surveys funded by the BPR that showed that highway needs were especially critical in urban areas.  In the meantime the BPR was moving ahead with the plan for the Interstate, which most engineers at the time considered the ultimate solution to the problem of urban congestion.  Between 1952 and 1954 major contentious issues were discussed such as the level of increase in federal gasoline taxes, the amount of funding to be provided for interstate roads, the use of federal funds for utility relocations, the inclusion of tollways in the interstate system, and the development of the trust-fund concept.  Previously these notions had not been publicly raised.  Those issues that weren’t resolved during this period were at least given proposed solutions so that during the following months noses could be counted and passable legislation created.

The idea of a trust fund, first established in the 1956 legislation actually goes back to the 1930's.  By then many states had already joined Oregon, which was first in 1919, in levying a tax on gasoline to raise funds for road construction.  But by the 30's a significant amount of this money was being diverted to other projects, much to the dismay of the US Bureau of Public Roads (BPR) who had advocated the enactment of these taxes.  To counter the problem BPR engineered the Hayden/Cartwright Act of 1934, which authorized withholding federal aid from states that diverted their MFT to projects other than road construction.  At the same time the Bureau lobbied the automobile industry to mount a campaign to make the public realize that these taxes actually generated money necessary to build and improve roads–for their benefit.  The 1954 Highway Act provided $875 million in federal aid partly reflecting the amount of money that would be generated that year.

In summarizing the hearings that led up to the 1954 legislation, author Bruce Sealy stated, ”most witnesses believed that the development of urban highways was the primary goal and that the interstate system was the best means of achieving it.”  Seeley also quoted the AASHO Secretary as saying that the interstate was the nerve center of the economy in times of peace and in war.  The 1954 legislation provided federal dollars to the states based on the traditional allocation formula but in a departure from the past covered 60% of the cost while allowing state’s to allocate all of their primary and urban funds to the interstate system.  This removed all doubt as to where the federal government's priority was and where the future focus would be.

In early 1954 at a conference of state governors President Eisenhower presented a bold plan to overcome the accumulated deficiencies in the system by spending $5 billion extra dollars during the subsequent ten years.  The president's plan was to be fleshed out over the next months by the Clay Committee (the committee was headed by General Lucas Clay appointed by the president and the former Allied Commander in Europe-a job originally created for Eisenhower during World War II), the American Association of State Highway Officials and the bureau.  During that same period Senator Albert Gore of Tennessee, Chair of the Senate Subcommittee on Roads was holding hearings on his own version of a bold highway initiative.  Both bills called for significantly higher funding for roads on a national scale but differed in how to achieve that.  The Eisenhower Administration proposed, along with the National Governors Conference, to create a national road financing authority to issue bonds and provide additional funding for the interstate while the Gore bill called for a one cent increase in the federal motor fuel tax to accomplish the same thing.  The administration supporters testified that the old “pay as you go” system was too little too late to meet present needs, requiring 30 plus years to complete the interstate system.  The Chair of the Senate Finance Committee, Harry F. Bird Jr. of Virginia called Eisenhower's plan a scheme to evade the national debt limit and remove the highway program from the control of Congress.  In spite of widespread public, media and political enthusiasm for an initiative both proposals were defeated leaving it up to the second session of the 84th Congress to work out something that could be passed and satisfy the motoring public’s desire for a new roads.  Despite the setback, the obvious interest in getting something done set an optimistic tone for the following year.

When Congress returned for its second session in 1955 the administration quickly got their attention by jettisoning the national bonding authority and endorsed the “pay as you go” philosophy.  Congress put four committees to work to look at all aspects of potential highway legislation.  One area of contention in 1954 had been labor's insistence that the 1935 Davis Bacon Act apply to all interstate contracts.  This act required that the federal contractors pay the locally prevailing labor rate, the purpose of which was to eliminate the importation of cheap labor.  Regardless of the merit of the provisions and its adverse effect on the cost of the work, without the support of labor in that era, the legislation could not pass.  The provision was therefore included. 

An important innovation developed over the years and incorporated into this legislation was the concept of treating the interstate as a single huge project to be constructed over a set period of time from a dedicated revenue source.  The national priority that this set had only one thing that was similar-the Pacific Railroad Act of 100 years earlier, which for that time was on about the same scale. 

Things began to move quickly when the House Ways and Means Committee approved higher federal excise taxes on tires, vehicles and lubricants while increasing the federal MFT. They combined these sources into a new Highway Trust Fund explicitly connecting revenue to the size of the federal highway program.  The large new revenue stream eliminated the need for a national road financing authority and kept the purse strings firmly in the hands of the Bureau.  The bill envisioned spending 25 billion dollars on the newly renamed National System of Interstate and Defense Highways over the next twelve years, matched on a 90/10 federal/state basis.  The proposal, which was a compromise of the early administration and Gore bills, passed the House and the Senate soon following suit.  A conference committee worked out a provision for partial utility reimbursement, somewhat higher usage fees for heavy trucks and increased appropriations to other federal aid programs.  President Eisenhower signed the bill on June 29,1956.  The motoring public would now bear witness to the construction effort that had been promised and would indeed become the largest public works project in the country's history.  In the process it would alter the landscape and the economy not only of the Chicago area, but also in virtually every town, hamlet and city in the country.