The Interstate Compromise of 1956

Howard Rosen, Ph.D.
Program Director
University of Wisconsin-Madison
President, Public Works Historical Society

Even with widespread agreement following the end of World War II that some sort of national high-speed, limited access highway system was needed, there was not sufficient agreement among the key interest groups to allow for congressional approval. The biggest issue was funding. How was such a vast program to be financed? Who would bear the costs? The oil companies, tire manufacturers and trucking firms were opposed to tax increases on gasoline that would hurt their profits. Cities wanted the program to be based on population, while the larger, more rural states wanted the program to be based on mileage.

The Federal-Aid Highway Act of 1954 tried to establish a compromise among these competing interests. It included a formula that was 60-40 matching, with one-half based on population and the other half based on the federal-aid formula (equal portions of roadway distance, land area and population). While this served to increase overall funding, basic issues remained to be resolved.

President Eisenhower sought to break the impasse by creating the President's Advisory Committee on a National Highway Program. Headed by retired general Lucius D. Clay, this committee recommended the formation of a Federal Highway Corporation that would issue bonds. Gas tax revenue would be used to retire the bonds in 30 years. The report of the "Clay Committee" was submitted to Congress in February 1955.

Congressional political realities quickly surfaced to put roadblocks in the way. Senator Albert Gore (D-TN), Chairman of the Subcommittee on Roads in the Senate Committee on Public Works, introduced an alternative bill and Harry Byrd (D-VA), Chairman of the Senate Finance Committee, was vigorously opposed to any sort of debt financing for the Interstate. Byrd was concerned about using gas tax revenues to pay off bond interest, and that the proposed Federal Highway Corporation would not be under congressional control. Byrd also opposed providing a credit to toll and non-toll segments already built. Because revenue legislation is required by the Constitution to originate in the House of Representatives, it would fall to the House Ways and Means Committee to solve these problems.

The House and Senate formally rejected the Clay Committee's plan in 1955. Congress also defeated a modified plan put forth by Representative George H. Fallon (D-MD), Chairman of the Subcommittee on Roads of the House Committee on Public Works. Fallon's plan was important because it included a federal share of 90% and also changed the name of the program to the "National System of Interstate and Defense Highways."

So while the Interstate program was politically stalled in the summer of 1955, several things contributed to making the final compromise possible. In September 1955 the Bureau of Public Roads issued a series of maps (the so-called "Yellow Book"), which included maps of 100 urban areas and where the Interstate would be located. Cities now saw they would be included in the new system. Overall opposition to increasing the gas tax was reduced, since some increase was now seen as absolutely necessary to fund the program.

In this improved environment, Representative Fallon introduced a revised bill, the Federal Highway Act of 1956. In this new bill, funds would be allocated on a "cost to complete" basis. Representative Hale Boggs (D-LA) of the House Ways and Means Committee proposed the method of financing. The Highway Revenue Act of 1956 increased the gas tax and (at the suggestion of the Secretary of the Treasury, George Humphrey) it created the Highway Trust Fund. The Fallon and Boggs bills were combined into one by the House Public Works Committee, and as the Federal Highway Act of 1956 it passed by a vote of 388 to 19. With relatively minor changes, the Senate approved the bill by voice vote. On June 26, 1956 both the House and the Senate approved the bill, and President Eisenhower signed it into law on June 29 while he was in the hospital.

The Interstate Program could not begin until many obstacles were overcome. At its beginning, it held out enormous promise. As Secretary of Commerce, Sinclair Weeks stated, the Interstate would be "the greatest public works program in the history of the world."

Howard Rosen can be reached at (608) 262-4341 or rosen@engr.wisc.edu.