The Gas Tax At 100: Oregon Enacts America’s First-Ever Motor Fuel Tax, February 25, 1919

February 25, 2019

Last Friday, we published an article revealing that the federal government had indeed taxed gasoline briefly during the Civil War, but its only use then was as a fuel for lamps, not motor engines. We also described unsuccessful efforts by the Woodrow Wilson administration to levy a tax on gasoline for general revenues during 1914-1918. But those efforts had nothing to do with roads. Efforts by the State of Oregon to tax gasoline to pay for road aid, however, reached their culmination 100 years ago today.

Early road financing in the states.

For the first 100+ years of the American republic, road maintenance was strictly a local concern, and citizens (the able-bodied male ones, at least) were compelled to serve a certain number of days per year on a road gang, a process similar to jury duty.  A 1941 Brookings study said that “As late as 1889, the majority of the states depended upon statute labor as the chief source of support for road maintenance…It was the duty of the overseers to notify those assessed for highway work and to instruct them either to appear in person or send an able-bodied substitute or to commute the assessment in money at a rate fixed by law. Various combinations of facilities such as a team, wagon, plow, or horses, if accompanied by a man to manage them, could be substituted for the labor assessment.”[1]

This was not a particularly efficient method of labor management and led to much goofing off: “’Working out the road tax’ came to be viewed more as the occasion for neighborhood social gatherings and the exchange of the latest accumulation of stories than as a tax contribution.”[2]

The dependence upon statute labor lessened as the state role in road construction and maintenance increased.   Starting with New Jersey in 1891, states began to develop programs for state funding of a share of road costs, with all states enacting some kind of road aid law by 1917, while at the same time, states also began to designate certain roads within the state as being part of the state highway system and subject to some degree of state financial support (the first state system was established in 1893 and all states had them by 1924).[3]

Since statute labor could not be administered effectively at the statewide level, and since a growing proportion of roads were made out of something other than dirt (and thus required specialized materials and equipment, the procurement of which required cash money), states and localities began to find other means of financing.  By 1904, the percent of total state road and bridge financing paid in labor had dropped to 59 percent, with the remainder coming in the form of property taxes, bonds and state aid.[4]  But both the demand for good roads and the way to finance those roads were about to be transformed by a new advance in technology.

The advent of the automobile.

As mentioned last week, the rate of growth in private automobile ownership in the U.S. in the early years of the 20thcentury was phenomenal.  In 1900, there were only about 8,000 private automobiles registered in the United States. Five years later, the number was almost ten times that high.  In 1910, the number was up to 458,000 and by 1915 it was 2.3 million.  But an automobile was not nearly as well equipped to negotiate a bad, muddy, hole-filled road as was a horse. Vehicles with tires (cars, trucks and bicycles) needed better quality roads.

Automobile owners joined with farmers (who wanted to get their goods to market) and bicyclists in the “good roads movement” seeking greater government spending on roads.  And while cars were generating a need for greater spending on roads, they also presented new ways for states to raise that money.

Registration fees came first.  The head of the National Highway Users Conference noted in 1924 that “The first special impost was the registration or license fee. Like Topsy, it just grew. Originally it was intended not as a revenue measure but as a means of defraying the expense of registering and the identification of motor vehicles under the police power. The first registration law was enacted in the State of New York in 1901. By 1914 all the states had provided for the registration of motor vehicles, and after many legal battles it had been definitely established that registration fees could be levied in an amount exceeding the cost of administration, that is, to produce revenue. We find that by 1914 some 90 per cent of the total revenue was applied to purposes of road maintenance and construction.”[5]

The chart at right was published by the U.S. Office of Public Roads (then housed in the Agriculture Department) in Public Roads magazine’s inaugural issue, in May 1918. It showed how the rate of growth of total state expenditures on roads and bridges was no longer keeping pace with the rate of growth of both the number of automobiles registered in the U.S. and the total revenues from such registration (total road spending had dramatically slowed its growth rate starting in 1914).

But a registration fee occurred just once per year (and that was only after states went from one-time registration to annual registrations, as shown in this table) and bore no relationship whatsoever to the actual use of the vehicle and thus to the wear and tear that the vehicle put on the roads.  At the same time, the first federal aid to states for road construction was flowing through a law passed by Congress in 1916 (Public Law 156, 64ththCongress) , which required even more money at the state level for use as matching funds. That seminal federal Good Roads Act provided $75 million in road aid over five fiscal years ($5/$10/$15/$20/$25 million over FY17-18-19-20-21) (see more details here).

Oregon – initial discussion of road funding.

In Oregon, as in other states, the issue of road funding had been under debate for some time. A longtime professor of history at Southwestern Community College in Coos Bay, Hugh Hoyt, did his doctoral dissertationin 1966 on the Oregon good roads movement from 1900-1920. Hoyt describes a series of battles over state road aid bills, starting in 1911, that “raged violently between the two groups most effective in promoting good roads, representatives of farmers and of the Good Roads Association. Both groups wanted state support of road building; disagreement concerned the source, disposition, and control of funds to be used for building.”[6]He also describes arguments between rural and urban interests over a 1915 proposal to quadruple the local property tax levies that went to road building, from one-quarter mill to one mill (rural areas were against it) which went down to defeat, even as “Washington [state] adopted that year a two-and-one-half-mill levy for roads.”[7]

The enactment of the federal law providing for matching funds to states for road aid in July 1916 prompted additional discussion of state roles and financing. One of those giving some thought to the problem was a lawyer from Eugene named Louis E. Bean, who had been re-elected to the Oregon House of Representatives in November 1916. (Bean had earlier served a term in the House and another in the state Senate).

In an article in the Oregonian appearing on December 26, 1919, a nameless reporter wrote that Bean had been thinking hard about how the state should organize its road building:

“Mr. Bean has been giving the subject of road legislation considerable study. He believes that one solution of the road question would be the adoption of a general plan under which certain main highways of the state should be taken over and maintained as state highways.

“Then, within the several counties, other roads, less important than the state highways, yet important for communication between the larger points of the county, should be designated as county highways and be maintained by the county. The remaining roads should be local in character, he says, and should be maintained by the road districts from the road district funds.”

-The Oregonian, December 26, 1919

The article said that Bean’s answer for the funding source for the road program was “A tax on gasoline and automobile oils, as being an equitable measure of the power of the car and its consequent wear on the roads, and as a means for providing funds for state highway improvements…”[8]

The following day, the Oregonian issued an editorial supporting Bean’s idea for a gasoline tax and focusing on a 1 cent per gallon tax rate. The editorial hit on several issues relating to a gasoline tax as a road use charge that are still valid today:

  • Issues with off-road use: “Objection would arise, however, from launch owners, operators of gasoline tractors, farmers who use gasoline for miscellaneous power purposes and others whose employment of gasoline has nothing to do with the highway problem.”
  • Relatively small total cost to most motorists: “One cent a gallon of gasoline mounts rapidly. A light car of, say, 24-horsepower, if modern, will make under careful driving about twenty miles to the gallon. Six thousand miles is a fair annual mileage. Reduced to gasoline that means consumptions of 300 gallons per year, or a tax of $3. The sum is the exact equivalent of the license charged the owner by the state. Licenses now yield about $200,000 a year.”
  • Intense users pay more: “But the gasoline tax would more than double license revenues, for cars in commercial service and many private automobiles in constant use. They would pay, if a gasoline tax were imposed, in proportion to the use they made of highways.”
  • Also taxes outof-state visitors: “Tourists from other states, who now pay nothing towards upkeep of Oregon roads, would contribute also.”[9]

Bean did introduce a 1 cent per gallon gasoline tax bill in the 1917 session of the legislature. In order to make the bill revenue-neutral to taxpayers, Bean paired it with a provision that would have lowered the specific gravity minimum requirement of gasoline sold in Oregon from 58 degrees to 60 degrees, which he estimated would have lowered the cost of gasoline by about a penny per gallon.[10]However, Bean’s gas tax bill was not enacted by the legislature (and, in any case, it would have deposited money in the general fund, not a separate road fund, though it would have allowed eventual redirection to the road fund).

But in the 1917 session Oregon did enact a new law doubling the amount of annual auto registration fees as a “pay-for” for the road program, which was projected to raise about the same amount of money as Bean’s 1-cent gas tax. As part of this deal, the legislators agreed to put before the state’s voters an initiative authorizing a $6 million bond issue over five years for the State Highway Commission to provide for “construction and maintenance of hard-surface highways, post roads, and forest roads” and to “make the surplus arising from license fees collected on motor vehicles a fund to apply thereon,” which passed in June 1917, 54.8 percent to 45.2 percent.[11]

How was Oregon able to get a user fee increase (auto registration fees) to pay for a road-building program? Hoyt reports that C.C. Chapman, a good-government advocate and editor of the Oregon Voter, had been recruited by a prominent road builder in the waning days of the 1917 legislative session to draw a map of roads to be funded by the Highway Commission. The map excluded Multnomah County but, Hoyt reports, “Roy Klein, a Highway Commission employee at the time, later recalled that the map had been drawn showing roads to ‘pass in front of every county commissioner’s front door.’”[12]

Hoyt wrote that the license fee increase passed the House (barely) and then the Senate extended the session to tamper with the map, and a conference committee amended it further. (The Oregon State Capitol building burned to the ground in 1935, destroying all legislative records, so further research is impossible.) Paraphrasing Chapman, Hoyt also said that Bean’s gas tax bill in the 1917 session “died in a committee composed of property owners who failed to recognize the tax relief they might gain if road building could be financed by other than property taxes.”[13]

But more money would soon be needed, as the federal appropriation (and thus the required 50 percent matching share) would keep on increasing.

Oregon – the 1919 gas tax.

It was two freshmen state representatives in Oregon who wrote the first law levying an excise tax on gasoline in order to pay for increased road construction.  William Dennis (R-Carlton) and Loyal Graham (R-Forest Grove) had been elected in 1918 on a good roads platform, and upon taking office, Dennis was assigned to be chairman of the roads committee.[14]

At the start of the 1919 legislative session, numerous road proposals were put forward, and support quickly coalesced around an additional $10 million in road bonding authority. One outlier on the proposed “pay-for” list came from state Sen. Walter Pierce (D-La Grande), who “introduced a state income tax measure, which he believes will raise between $1,500,000 and $2,000,000 a year. All of this income tax Senator Pierce wants devoted for road building. The Senator is probably the only member of the Legislature who is voicing objection to a bond issue for the construction of roads, and he is willing to raise revenue from any source available to secure cash rather than suffer a bond issue.”[15]

By January 24, chairman Dennis was working to consolidate a lot of different proposals in a single bill, and the Oregonian predicted: “People interest in roads can bear this in mind: Before a road bond and programme are adopted, there will be much wrangling and ill feeling, but in the end all will be well and those who are seeking to play politics with the roads will be quietly squashed.”[16]

Five days later, a decision had been made to split the $10 million in road bonds 75-25 between trunk lines and secondary roads, and the bill had been amended so that the Pacific Highway from Portland to the California line was to be built first, then the Columbia River Highway. Pay-fors were still being discussed – another registration fee increase, a property tax increase, and a gas tax (introduced by Graham) were still on the table.[17]

Momentum quickly built for Graham’s gasoline tax, which had been endorsed in principle by the state good roads convention the previous month. The increased property tax millage (for local roads) and the additional increase in the annual registration fee were also kept alive. Graham later wrote that the legislature had figured out how to use other fees to eventually retire the new $10 million bond issuance but that:

“…there was no provision for the maintenance of the highways after they were constructed, and I believe it was Mr. Dennis who conceived the idea that a tax of 1¢ per gallon on gasoline would create such a fund for upkeep and betterment.   Mr. Dennis began the preparation of such a law. In it he provided that the tax should be collected at the gasoline stations scattered over the state.  After he had prepared the bill and submitted it to the committee, and then to the House, it was thought that the method of collection of the tax would be too expensive.  I then prepared a bill changing the plan of collection from the local gas seller to the source of distribution, viz., the wholesaler of gas.  As I remember it, at that time there were but four wholesale distributing plants.  This bill became the law.”[18]

-Rep. Loyal Graham

The bill levying the 1 cent gasoline tax passed the state House with only four dissenting votes and passed the Senate with only two “nays.” It became law on February 25, 1919, as chapter 159 of the General Laws of Oregon, 1919. Graham later said (as reported by Hoyt) that although the legislature had been working from an estimate that the gas tax would raise $150,000 per year, the tax actually gained over $290,000 in its first six months of collection.[19]

1 cent in February 1919, according to the Bureau of Labor Statistics CPI Inflation Calculator, would be the equivalent of 16 cents today.

The preamble to the Oregon law said that gasoline-powered vehicles traveled the state roads and that “it is necessary…that the state expend large sums of money for the regulation and supervision of such vehicles, machines and engines upon the public highways and for the repair of the damage done to said highways by the use of such vehicles, machines and engines thereon…”[20]As the best-ever study of the early history of the gas tax says, “The preamble to the law made its purpose clear. Gasoline, said the legislators, was used to propel vehicles over the roads, and this damaged the roads.  A tax on gasoline was therefore a just way to help pay for the construction and maintenance of highways.”[21]

The $10 million bond issuance for good roads was enacted as separate legislation by the 1919 session of the legislature, and it did not have to go before the voters for ratification (as the $6 million bond issuance had to do in 1917) because the $10 million was designated as an emergency measure. The increase in the property tax millage for state market roads had to go before voters in June 1919 (adopted, 65% to 35%), as did a constitutional amendment tripling the total amount of road bonds that each county could have outstanding at any one time (from 2 percent of total property assessed value to 6 percent), adopted 60%-40%.


Three other states quickly followed Oregon’s lead in enacting a gasoline tax during 1919 (New Mexico, Colorado, and North Dakota), some so quickly that it is doubtful that they were inspired directly by Oregon’s example. And not all of the gas taxes enacted by subsequent states were dedicated to road building – we will have more discussion of those in follow-up articles later this year. But as the graphic below shows, once Oregon made the leap, states were quick to tax gasoline – all 48 had adopted some sort of gas tax within a decade.


[1]Dearing, Charles L. American Highway Policy.Washington: The Brookings Institution, 1941 pp. 42-43.

[2]Dearing p. 43.

[3]U.S. Department of Transportation. Federal Highway Administration. America’s Highways 1776-1976: A History of the Federal-Aid Highway Program.Washington: Government Printing Office, 1976 p. 80.

[4]Burnham, John Chynoweth. “The Gasoline Tax and the Automobile Revolution.” The Mississippi Valley Historical Review, vol. 48, no. 3 (December 1961), p. 436.

[5]Britton, Roy F. “Highway Taxation: Present Status and Probable Future Trends.” Annals of the American Academy of Political and Social Science,vol. 187 (September 1936) p. 80.

[6]Hoyt, Hugh Myron, Jr. The Good Roads Movement in Oregon: 1900-1920. Unpublished Ph.D. dissertation (University of Oregon, 1966), pp. 218-219. Retrieved online from February 23, 2019.

[7]Hoyt p. 227.

[8]“Gasoline Tax Proposed,” The Oregonian, December 26, 1916 p. 7.

[9]“Let Gasoline Do It,” The Oregonian, December 27, 1916 p. 8.

[10]“House Is Absorbed in Five Road Bills,” The Oregonian, January 23, 1917 p. 6.

[11], “Oregon Bonds for State Highways, Measure 7 (June 1917).” Retrieved from,_Measure_7_(June_1917)on February 24, 2019.

[12]Hoyt p. 234.

[13]Hoyt p. 236.

[14]Burnham p. 438.

[15]“Income Tax Sought for Road Building,” The Oregonian, January 23, 1919 p. 6.

[16]“Ten Million Road Bond Issue Sure,” The Oregonian, January 24, 1919 p. 1.

[17]“Road Bonds Bill Fast Taking Shape,” The Oregonian,January 29, 1919 p. 1.

[18]Graham, Loyal. Letter to Finla G. Crawford dated July 2, 1932, quoted in Crawford’s book Motor Fuel Taxation in the United States (Self-published; Syracuse, 1932) pp. 1-2.

[19]Hoyt p. 239.

[20]General Laws of Oregon, 1919 p. 219.

[21]Burnham p. 440.

Search Eno Transportation Weekly

Latest Issues

Happening on the Hill