Learn about Life in the 1920s

Funding to Improve the U.S. Highway System in 1927

IT is "cheaper to have good roads" than to go without them, it has been stated in high official circles in Washington, and the Federal Government as well as States and subdivisions are now definitely committed to huge highway expenditures.

More than a billion and a half dollars was spent in this country last year on road-building and maintenance, it is estimated, and touring motorists who have been "detouring" most of the time will readily believe it. As a result we find a definite stimulus to many lines of industry, including concrete, steel, brick-making, etc., and an important influence on national habits in distribution and transportation. The fall road-building season, writes J. C. Royle in a Consolidated Press dispatch from New York, is now in full swing, and is absorbing a large quantity of itinerant labor released from the harvests. Mr. Royle reminds us that in the public budget, counting local, State and national governments "payments for roads are now exceeded only by expenditures for education and protection of the public peace." He adds:

In 1906 local governments supplied 96 per cent. of the funds for roads. Today the State governments supply about 37 per cent., the Federal Government 10 per cent., and the local governments 53 per cent. The annual activity in the fall for rehabilitation of old roads and building of new ones is one of the mainstays of several industries, including cement and other building materials.

The cement industry of America has increased tremendously in the last two years. The American industry made 184,000,000 barrels of cement in 1926 and shipped 161,000,000 barrels. This was about 38,000,000 barrels under actual capacity. From this it can be seen readily how much the fall road-building campaign means to this industry. About 27 per cent. of the total domestic production is used in construction of paving and highways.

The building of highways has changed the trend of many other industries. It has been responsible in part for the development of the automobile trade. It has altered the marketing of live stock and farm products and the delivery of steel and other manufactured goods. The coming winter is expected to see more highway traffic than ever before, and States and communities are making preparations to keep the main roads open, feeling they can not have them closed by snow or other causes without suffering serious financial loss.

The enormous expenditures in highway building are, of course, to be charged directly to the motor-car, which, as we read in The Index, published by the New York Trust Company, "representing a tremendous financial investment and performing an essential function, could not reach its greatest efficiency unless improved highways were provided." While horse-drawn traffic prevailed, roads were a matter for local administration, but, as we are reminded in The Index, the motor brought the question into a broader jurisdiction:

In 1916 the Federal Government recognized the new situation by passing the Federal Aid Road Act, appropriating funds for road building, now amounting to about $80,000,000 a year. Under the terms of the Act the States accepting participation in the Federal fund were required to organize highway departments and to provide sums at least equal in amount to those supplied by the Federal Government. All of the States accepted these provisions. The Federal Aid system comprises about 184,000 miles—not unduly extensive; these roads will connect practically every city and town of over 5,000 inhabitants in the United States. Practically 90 per cent. of the nation's population will live within ten miles of a Federal Aid road.


State appropriations for road building have far exceeded Federal expenditures, we read further, many of the States extending to the counties assistance corresponding to the Federal Aid system. A few words about highway financing, as developed in recent years, are then presented in the New York bank's little periodical:

At the outset of modern road building the usual practise was to defray the cost from property taxes, and from bond issues. Later, as it was recognized that the automobile received a special benefit from the road improvement, a special vehicle tax was instituted. The average total, Federal and State, of special taxes per car is now about $26; the levy has purposely been kept low in order not to discourage the purchase of automobiles.

Yet the total sum annually produced by special taxes and property taxes has grown, it is estimated, to an amount equivalent to about half of the total annual highway expenditures. The revenue from the gasoline and automobile taxes has made possible a lowering of the general property tax, and particularly of the assessments on contiguous farm land, which has sometimes been unduly taxed.

The general use of bonds has effected a further distribution of costs, and there has been a recent tendency to resort too often to the issue of securities. Today the current general tax receipts used for highway development amount to only about 4 per cent. of the annual tax bill of the nation and its subdivisions.

Experience with motor transportation has taught the lesson that national highway improvement begins to pay for itself almost immediately and continues to do so as long as the degree of development is not in excess of the economic traffic needs. If the automobile stimulated the building of good roads, it is equally true that good roads have made the universal use of the automobile possible, and in so doing have played an important part in the progress of American industry.

Source: The Literary Digest for November 12, 1927



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