The 100th Anniversary of Federal Aid for Highways

(This article originally appeared in the July 25, 2012 issue of Transportation Weekly.)

As the transportation community rests from its labors in the wake of the July 6 enactment of the long-awaited surface transportation reauthorization bill (Public Law 112-141), the nation’s capital prepares to empty for the August recess and the quadrennial party political conventions. It seems appropriate to note that next month will actually mark the centennial of the first federal appropriation to aid states and localities in road construction.  Interestingly, this fledgling attempt at helping states and localities fund their infrastructure was tied to a change in federal policy creating the demand for the infrastructure – whether or not the federal government should go into the freight transportation business via the Post Office.

The Constitution clearly gives Congress the power “To establish Post Offices and post Roads”.  Joseph Story, in his seminal Commentaries on the Constitution, noted that “In the first draft of the constitution, the clause stood thus, ‘Congress shall have power to establish post-offices.’ It was subsequently amended by adding the words ‘and post-roads,’ by the vote of six states against five; and then, as amended, it passed without opposition. It is observable, that the [Articles of C]onfederation gave only the power to establish and regulate post-offices; and therefore the amendment introduced a new and substantive power, unknown before in the national government.”[1]

But the scope of the federal power regarding post roads was in question from the inception.  Thomas Jefferson wrote to James Madison in 1796 asking “Does the power to establish post roads, given you by Congress, mean that you shall make the roads, or only select from those already made, those on which there shall be a post? If the term be equivocal, (& I really do not think it so,) which is the safest construction? That which permits a majority of Congress to go to cutting down mountains & bridging of rivers, or the other, which if too restricted may refer it to the states for amendment, securing still due measure & proportion among us…”[2]

As exercised in the 19th Century, the post roads power was simply used by Congress to designate certain state or local routes as federal post roads.  Designation of a post road gave the federal government monopoly power over mail carriage over that road (squeezing out private competitors) and ensured regular commerce over the road, which encouraged other kinds of commerce on that road as well.  Many railroads were later designated post roads as well.

Today, the federal government is basically, in the words of Ezra Klein, “an insurance conglomerate protected by a large, standing army” (since health insurance, Social Security and other forms of social insurance, pensions, and the Pentagon collectively ate up 88 percent of gross federal non-interest spending in FY 2010).  Similarly, back in 1912, the federal government was primarily a post office with a war machine and some land management.  In FY 1912, the Post Office (then a direct part of the federal government) represented 26 percent of total federal outlays (compared with 21 percent for the Interior Department, 16 percent for the War Department, 14 percent for the Navy, and 24 percent for the rest of the government).  And in 1912 the Post Office represented 54 percent of total federal civilian employment (and the 214,355 postal workers handily outnumbered the 85,801 soldiers in the Regular Army, the 49,765 sailors in the Navy and the 9,886 Marines).

During much of America’s first century, you had to go to the post office to pick up your mail.  (But there were a lot of post offices – the total number went from less than 20,000 in 1850 to more than 62,000 in 1890.[3])   Home delivery of mail was an experiment in Cleveland during the Civil War and rapidly expanded, but only to cities – until 1887, only cities with a population over 20,000 were eligible for free home postal delivery, and after 1887 that was expanded to cities over 10,000.[4]  But that still left rural America having to trudge all the way to town, over unreliable roads, to pick up their mail.  And America was heavily rural – according to the Census Bureau, 65 percent of the U.S. population was rural in the 1890 Census (though that share was steadily dropping).

Enter Rural Free Delivery.  Begun as an experiment in 44 selected communities in 1896, the home delivery of letters, newspapers and magazines (mostly via horse and buggy) in rural areas proved immensely popular – by 1910, the number of rural delivery routes had topped 41,000, covering almost one million route-miles.[5]  The Postmaster General’s annual report in 1900 said of RFD that “The immediate and direct results are clearly apparent.  It stimulates social and business correspondence and so swells the postal receipts.  Its introduction is invariably followed by a large increase in the circulation of the press and periodical literature.  The farm is thus brought into direct daily contact with the currents and movements of the business world…Rural free delivery brings the farm within the daily range of the intellectual and commercial activities of the world, and the isolation and monotony which have been the bane of agricultural life are sensibly mitigated.”[6]

But the Postmaster General also indicated the cost of providing this new service: “Good roads become indispensable, and their improvement is the essential condition of the service.”[7]  An Assistant Postmaster General wrote in his own report in 1900 that RFD was prodding counties to improve their roads: “The influence of rural free delivery in stimulating the work for good roads has been powerful in not a few instances in securing appropriations for the bettering of roads, the building of bridges, the repair of culverts, and the maintenance of way.  Special agents are instructed not to lay out routes over roads which can only be traversed with difficulty.  Appeals to county commissioners and supervisors rarely fail to secure the desired results.”[8]

The establishment of rural free delivery, and its popularity with rural citizens, was a huge boost for the “Good Roads Movement” started by bicycle enthusiasts in the 1880s.  In response to public pressure, Congress had created an Office of Road Inquiry within the Agriculture Department in 1893 – the antecedent of today’s highway research program.  The federal office was designed to provide information about the best practices for building good roads and was eventually required by law to be headed by a scientist.  But the federal role was restricted to providing information, not money, for road construction.

Rural Free Delivery had one major drawback – the Post Office only carried letters, printed material, and small envelopes and parcels (under four pounds, and as space permitted in a mailbag or wagon).  Those parcels had a fairly high postage rate (one cent per ounce).  Packages exceeding four pounds had to be shipped via one of the private express companies that operated over the railways, which necessitated traveling to a rail stop.  Outside the United States, an international postal agreement from 1880 permitted parcels of up to eleven pounds, but within the U.S., the Post Office largely stayed out of the freight business.  So while RFD brought information to rural America, it did not bring freight mobility.

Naturally, there was steadily increasing agitation from rural interests for the Post Office to start carrying freight, but the costs to the government would be extreme (and the lobbyists for the express companies were naturally against the prospect of competition).  Congress took no action until the 62nd Congress (1911-1913).

The 1910 elections (the Taft midterm) had switched control of the House of Representatives, ending the Republican’s sixteen-year majority that terminated in the overthrow of Czar Cannon.  The new Congress saw a number of “Parcel Post” bills introduced in both chambers.

The eventual vehicle for the change was the annual Post Office appropriations bill for fiscal year 1913 (H.R. 21279, 62nd Congress).  (This was back during the days when certain authorizing committees got to write their own appropriations bills as well, so the bill was produced by the House Post Office and Post Roads Committee, not the Appropriations Committee.)

The bill was reported to the House on March 4, 1912.  Section 8 of the bill provided for domestic Parcel Post for packages of up to eleven pounds at a rate of eight cents per pound, or half the previous rate for smaller packages.  The House took its time debating the bill, and after general debate, the House Rules Committee reported a special rule (H. Res. 444, 62d Congress) making in order certain amendments.  One of those amendments, by Rep. Dorsey Shackleford (D-MO), would have maintained the Parcel Post provisions already in the bill but would also have provided a new program of federal financial aid to states and localities for highway improvement, to be administered through the Post Office.

The Shackleford amendment would have required all state and local roads of more than one mile to be classified by grade and type of construction (the best-constructed, widest and flattest roads were Class A, not-so-good roads were Class B, and the worst roads were Class C).  The amendment then provided that “whenever the United States shall use any highway of any State, or civil subdivision thereof, which falls within classes A, B or C, for the purpose of transporting rural mail, compensation for such use shall be made at the rate of twenty-five dollars per annum per mile for highways of class A, twenty dollars per annum per mile for highways of class B, and fifteen dollars per annum per mile for highways of class C.  The United States shall not pay any compensation or toll for such use of such highways other than provided for in this section, and shall pay no compensation whatever for the use of any highway not falling within classes A, B or C.”

The provision giving extra dollars per mile for higher-quality roads was apparently designed to give states incentive to improve their roads at their own expense.  It was estimated that the cost to the Post Office (and hence the U.S. Treasury) for the payments at those rates would have been about $18 million per year.[9]

The Shackleford amendment was adopted by the House, and the Parcel Post provisions reported from committee stayed in the bill but were amended in one important respect.  When the bill finally passed the House on May 2, the rate for parcels up to eleven pounds had been changed to twelve cents per pound.

The Senate Committee on Post Offices and Post Roads reported H.R. 21279 on July 23, 1912.  The chairman of that committee, Sen. Jonathan Bourne, Jr. (R-OR), had his own Parcel Post bill (S. 6850, 62nd Congress) that introduced the concept of increasing the postage rate for packages by the distance they were being mailed (establishing zones by distance – zone 1 was less than 50 miles, zone 2 was 50-200 miles, all the way up to a sixth zone beyond 2,000 miles).  Under the Bourne bill, as approved by the committee, the postage for an eleven-pound package would only be 35 cents within a 50-mile zone but would rise to $1.32 if shipped more than 2,000 miles.[10]

With regards to the House bill’s program of annual financial aid to states for the use of post roads, the Senate committee struck out that provision, stating in its report that “Since this act is not to take effect until 1913, the committee deems it better to give further consideration to the subject and therefore recommends striking out this portion of the House bill and substituting a provision for the appointment of a joint congressional committee to investigate and report on the subject…We believe that Congress can act more advisedly when this subject has been investigated by a special committee.  The House Post Office Committee held no hearings on this subject.  Brief hearings were held by the House Committee on Agriculture.”[11]

During Senate floor debate on the appropriations bill as the annual session was winding to a close, Sen. Lee Overman (D-NC) filed an amendment on August 10 to appropriate $500 thousand per year to each state for “the building and repairing of good roads for star and rural routes now established, or which may be hereafter established.”   This would have cost $24 million in the first year (New Mexico and Arizona having joined the Union earlier in 1912, raising the total to 48 states), and the Overman amendment provided annual increases of $25 thousand per year per state.

When he actually offered his amendment to H.R. 21279 on the Senate floor on August 12, Overman cut the funding in half (to $250 thousand per year per state).  Predictably, the first objection raised to the Overman amendment was about funding formula equity for states.  Sen. Atlee Pomerene (D-OH) asked “In other words, that the State of Delaware and the State of Rhode Island would receive exactly the same amount as would be received by the State of New York, the State of Texas, or the State of Ohio?”[12]

Overman responded “The State of Delaware has two Senators here and the State of Nevada has two Senators.  There is no other way to make such a distribution that I can conceive of.  If we should divide the money according to population, New York would get so much more than Delaware and Ohio that it would not be fair.  Delaware contributes to this Government as a unit; so does North Carolina; so does New York; so does Ohio; and so do all the other States.”[13]

Overman’s amendment was rejected by a voice vote, and then, the original Senate committee proposal (killing the Shackleford provision and replacing it with a joint committee to study good roads) passed by a vote of 37 to 21.

A House-Senate conference committee was appointed and issued a conference report on August 23, 1912.  The recommended final bill included a Parcel Post provision for packages up to eleven pounds, based mostly on Bourne’s proposal (with eight distance zones, and with postage rates ranging from five cents for the first pound and three cents for each additional pound within one zone up to twelve cents for the first pound and twelve cents for each additional pound for zone eight, which extended all the way to the Philippine Islands).

The conference report also did not include the House provision paying states by the mile for post road usage.  The report did include the Senate proposal for a Joint Committee of Congress (five House members and five Senate members) “to make inquiry into the subject of Federal aid in the construction of post roads and report at the earliest practicable date…”  And the conference report added a new provision in as a sort of modification of the House federal-aid proposal – a new program that would today be called a “pilot project.”  The conferees recommended an appropriation of $500 thousand “to be expended by the Secretary of Agriculture, in cooperation with the Postmaster General, in improving the conditions of roads to be selected by them over which rural delivery is or may hereafter be established…Provided, that the State or the local subdivision thereof in which such improvement is made under this provision shall furnish double the amount of money for the improvement of the road or roads so selected.  Such improvement shall be made under the supervision of the Secretary of Agriculture.”[14]

A one-time appropriation of $500 thousand was a far cry from the House-passed estimated $18 million every year (and even farther from the Senate Overman amendment for $24 million per year with annual step increases).  But according to the Bureau of Labor Statistics CPI inflation calculator, $500 thousand in 1913 dollars is equivalent to $11.6 million in 2012 dollars.  This money represented the first direct monetary aid to states and municipalities for their own road construction, and the two-to-one matching requirement (for a federal cost share of 33.3 percent) ensured state participation and what would today be called the “leveraging” of federal funds.

During debate in the House on the conference report, the chairman of the House Post Office and Post Roads Committee (Rep. John Moon (D-TN)) summed up the negotiations:

There was also a proposition upon this bill that provided for the Government paying rent, or hire, if I may so express it, for the State for the use of their roads for post-road purposes.  The Senate saw proper to disagree to that action of the House.  The action in the House on that proposition was almost unanimous.  We were unable to get the Senate to recede from that position under any conditions.  Therefore, in order that this question of good roads, the building of post roads, and the uplifting socially and economically of the people of the country by this means should not be lost in consideration of this question, that it should remain before the House and before the country, we offered a proposition to the Senate by which a commission should be appointed to investigate fully the question of good roads, the feasibility and desirability of legislation along that line, the manner of cooperation between States, counties, and the United States – in fact, the whole question – and provided for a commission which is to report to this House at a later day.  We also provided for the sum of $500,000 to be used to experiment, practically, under the direction of the Department of Agriculture and the Postmaster General, for the purposes of obtaining information along those lines necessary to the perfection of the good-roads proposition.  The Senate accepted these propositions, and they are now contained in this report.[15]

No other discussion of roads took place in the House debate on the conference report.  There was no mention of aid to roads at all during the even briefer Senate debate on the conference report.  The bill was signed into law the following day (August 24, 1912) as Public Law No. 386 of the 62nd Congress.

The $500,000 pilot project for aid to states and localities for road construction suffered the fate of many new programs (problems with implementation).  The official Federal Highway Administration history of American roads (published in 1976 and not yet surpassed) sums it up so:

In order to treat all States equally, and also to get information representative of all parts of the country, the two Departments divided the $500,000 appropriation equally between the 48 States.  They then, in a joint letter, notified each governor of the apportionment and asked that he designate about 50 miles of road within his State on which rural delivery was or might be established as an experimental post road.  Five governors did not even bother to reply to this request; six refused to participate; and 28 indicated that they were unable to comply for lack of legal powers or because of conflicting State statutes.  Two States, Georgia and South Carolina, declined to participate because of Federal statutes requiring an 8-hour work day and the Executive Order of May 18, 1905, barring the employment of convict labor on Government work.  In the end, only Alabama, Iowa, and Oregon agreed to designate post roads and accept the Federal subsidy.[16]

USDA and the Post Office then tried a different approach, backing off from the concept of equal apportionment of funds and instead using their discretion to bypass state governments and instead select 17 projects totaling 458 miles in 13 states for designation and improvement.  The roads were not completed until 1918, and the process for dealing directly with 28 different county road departments, each with different fiscal rules and requirements, was difficult.  The primary lesson learned from this experiment, according to FHWA’s later history, was that “Federal aid should be dispensed only through the 48 States, avoiding the complexity of dealing with the Nation’s more than 3,000 counties.”[17]

Parcel Post was a resounding success – the following year, the 11 pound domestic limit was increased to 20 pounds, and the limit was raised again soon after that to 50 pounds (reaching 70 pounds by 1931).  From a cold start in 1913, the Post Office carried 18 million items via Parcel Post in FY 1915, rising to 95 million items by 1920.  The boom in mail-order companies was tremendous – Sears, Roebuck quintupled its orders in the first full year of Parcel Post.

The low rates of Parcel Post enabled agricultural commodities and other goods to be shipped via the mails.  The National Postal Museum reports that “Six eggs were the first objects sent by Parcel Post from St. Louis. Mailed to Edwardsville, Illinois, from the main city post office at 12:05 a.m., the eggs came back to St. Louis in the form of a freshly baked cake, which was delivered at 7 p.m.”[18]  In June 1914 the New York Times reported that Yale University students “found they could send home their laundry and get it returned at less than they would have to pay for their laundry here. They quickly found out that they could get their clothing, books, and room furnishings, except furniture, delivered by parcel post for less cost than by express.”

The huge expansion of Parcel Post also led Congress, in the FY 1916 Post Office appropriations act, to encourage rural letter carriers to switch over from horse-and-buggy delivery to motor vehicles – which naturally required better roads.  The 1915 report of the Postmaster General referred to the new motorized delivery service by saying that “reports reaching the department since the extension of this method of transportation on rural routes indicate that there is a rapidly awakening interest in good roads in sections where the conditions now render impossible the operation of this class of service.”[19]  At the time, the Post Office was an integral part of the federal government.  The government decided to go into the freight transportation service in a big way, and eventually would have to start financing the infrastructure to support that freight transportation service.

As for the Joint Committee, with Sen. Bourne as chairman and Rep. Shackleford as vice chairman, the panel held extensive hearings and engaged in written correspondence with the head of every state highway department and every foreign embassy to inquire as to road construction and funding practices within the U.S. and across the globe.  In January 1915, the Joint Committee on Federal Aid in the Construction of Post Roads issued its final report (House Doc. No. 1510, 63rd Congress, 3rd Session) – a 323-page treasure trove of information.  In addition to detailed reports from the head highway officials of each of the 48 states, and information from many foreign governments, the report also contained all of the statistical data culled by the USDA Road Office over 20 years as to U.S. road mileage, condition, and location, as well as all of the information from the Post Office on postal route miles.  Perhaps most importantly, chapter IX of the Joint Committee’s report contained the first-ever “formula runs” – nine different scenarios for apportionment of possible future federal-aid highway apportionments to states based on different weighting of factors like population, area, the mileage of different types of roads, and property tax valuations.

The role of the Post Office in federal transportation policy development cannot be underestimated.  The decision to provide direct federal service for freight delivery in rural areas “primed the pump” for automotive demand that eventually required a federal role in the road infrastructure to support those vehicles.  (In a similar way, the contemporaneous development of air mail led directly to the development of passenger air service – the Post Office was paying air mail contractors to fly regular daily point-to-point service carrying just a few small bags of mail, so the contractors naturally realized that they could fit a few seats in those planes and sell rides to passengers, and since the cost of the flight was completely paid for by the Post Office anyway, all passenger revenues were pure profit.  Thus the vaunted airline business model was born.)

The successes (and failures) of the $500,000 experimental federal-aid highway appropriation, the explosive demand placed on rural roads by Parcel Post, and the detailed data gathered by (and recommendations made by) the Joint Committee all led directly to the first real and permanent program of federal aid to states for highways – the Federal Aid Road Act of July 11, 1916.

[1] Joseph Story, Commentaries on the Constitution of the United States, vol. 3, sec. 1122.

[2] Thomas Jefferson, letter to James Madison of March 6, 1796, cited in The Works of Thomas Jefferson (Federal Edition) (New York: Putnam, 1904-05), vol. 8 pp. 226-227.

[3] Statistical Abstract of the United States 1930 in table No. 372.

[4] National Postal Museum website at retrieved on July 24, 2012.

[5] Statistical Abstract of the United States 1930 in table No. 377.

[6] Annual Report of the Postmaster General 1900 pp. 5-6.

[7] Annual Report of the Postmaster General 1900 p. 5.

[8] Annual Report of the Postmaster General 1900 p. 119.

[9] Senate Report 955 of the 62nd Congress (to accompany H.R. 21279), p. 25.

[10] Senate Report 955 of the 62nd Congress (to accompany H.R. 21279), p. 15.

[11] Senate Report 955 of the 62nd Congress (to accompany H.R. 21279), p. 25.

[12] Congressional Record, August 12, 1912, p. 10707.

[13] Congressional Record, August 12, 1912, p. 10708.

[14] House Report 1242 of the 62nd Congress (conference report to accompany H.R. 21279), pp. 4-5.

[15] Congressional Record, August 23, 1912 p. 11756.

[16] U.S. Department of Transportation.  Federal Highway Administration.  America’s Highways 1776-1976: A History of the Federal-Aid Program p. 82.

[17] U.S. Department of Transportation.  Federal Highway Administration.  America’s Highways 1776-1976: A History of the Federal-Aid Program pp. 82-83.

[18] National Postal Museum website at retrieved on July 24, 2012.

[19] Annual Report of the Postmaster General 1915 p. 26.

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