This article is a part of our series From Lighthouses to Electric Chargers: A Presidential Series on Transportation Innovations

Warren G. Harding’s two years and five months as president tend to be ranked towards the bottom of the list of presidencies because of several financial corruption scandals committed by his Cabinet members, and Harding’s own sexual infidelities while in the White House, all of which became public knowledge shortly after his death.

However, the in-office sex scandals of several of the post-Harding presidents, along with the fact that later investigations showed that Harding personally had almost nothing to do with any of the corruption scandals (he was prone to political cronyism and a poor judge of character) have led to gradual re-evaluation of Harding’s achievements while in office.

Even though he served little more than half a term, that term followed the transformative Wilson presidency, to the point that Harding campaigned in 1920 on a “Return to Normalcy.” In transportation policy, as well as in other aspects of his presidency, Harding’s presidency was about finishing business left unfinished by Woodrow Wilson, and occasionally trying to undo some of Wilson’s legacy.

(Wilson left much undone because his fellow Democrats lost control of both chambers of Congress in the 1918 elections; Harding was in a position to accomplish more because his party gained so many more seats in the 1920 elections that the GOP held a 59 to 37 margin in the Senate and a 299 to 131 margin in the House.)

Budget Act

The massive growth in the size of the federal government that accompanied World War I had finally convinced Congress of the need for a centralized federal budget, which had been proposed as far back as the Taft Commission in 1912. As of 1920, every Cabinet Secretary submitted his department’s annual funding request directly to Congress, and the only way the President could influence those requests was a function of how closely the Secretary obeyed his orders. Similarly, there was no centralized accounting of the total spending provided by the annual spending bills, or a comparison to anticipated tax receipts.

The House and Senate had passed a bill in 1920 creating a centralized budget system with the president in charge, through a new Bureau of the Budget, and it also created a new General Accounting Office, led by a Comptroller General, to help Congress audit spending. President Wilson vetoed the bill in June 1920 because he did not want Congress to be able to remove the Comptroller General, and Congress could not override the veto.

One year later, President Harding signed the Budget and Accounting Act of 1921 into law, which was almost identical to the law that Wilson vetoed. To set up the new Bureau of the Budget and run it during its pivotal first year, Harding recruited Charles G. Dawes, former banking executive, Comptroller of the Currency, and head of purchasing for the American Expeditionary Forces during the war.

Director Dawes let all the departments and agencies know who was in charge and created the system of information Circulars in use to this day (including the first Circular A-11 which provides guidance every year to agencies on how to prepare their budgets). Proposals for new legislation now had to fit within the budget constraints set by the Bureau at the President’s behest, and the Bureau would advise the President whether or not signing a bill into law would conflict with the budget plan. Capital spending and operational spending would henceforth be in direct competition for scarce resources under the budget’s spending total.

In December 1921, Harding and Dawes submitted the first federal budget, for fiscal 1923, calling for $3.506 billion in outlays, mostly offset by $3.338 billion in receipts.

(File this away for trivia night: Who is the only former U.S. Budget Director who later: became Vice President, won a Nobel Peace Prize, and wrote a song that was the first #1 hit on the Billboard pop charts sung by an African-American artist? Charles G. Dawes for the song, “It’s All in the Game,” that’s who.)

Highways

Woodrow Wilson had signed the Good Roads bill into law in 1916, creating a federal-aid highway program whereby certain amounts of federal spending authority were apportioned to each state via a formula. A state could then spend its own money to improve roads within the state, certain in the knowledge that the federal government would repay 50 percent of the state’s expenses up to the annual amount of apportioned spending authority. This is well-known.

Map of roads improved with federal aid near the Massachusetts-New York-Connecticut state line prior to the 1921 Act. Photo source: Bureau of Public Roads, America’s Highways 1776-1976.

What is less well-remembered today is that the original 1916 law was considered a failure by many at the time, because the law had no connectivity requirement. Most states chose to upgrade a mile or two of road here or there, which didn’t do much for long-distance travel times and made it hard to visualize progress from a statewide, much less nationwide, level.

Congress spent 1920 split between a state-led faction that wanted an extension of the same state-run program on a larger financial scale, versus an industry-led faction that wanted to end the federal-aid program and replace it with a National Highway Commission that would build its own system of national highways at a uniform level of quality. The inability to reconcile those two positions led Congress to adjourn for the year in 1920 without extending highway program funding for fiscal 1923. (As usual, FHWA historian Richard Weingroff has the whole story.)

The same Republican Convention that had nominated Harding also endorsed a platform endorsing “liberal co-operation with the States for the construction of highways,” implying that Harding would endorse the continuation of the program. In his first address to the new Congress in 1921, President Harding said that the principle of federal aid to states for good roads was “acceptably established, probably never to be abandoned” but asserted that Congress “ought to prescribe conditions to federal appropriations which will necessitate a consistent program of uniformity which will justify the federal outlay.”

He then called specifically for Congress to require states to maintain the roads that were improved with federal aid, saying that “I know of nothing more shocking than the millions of public funds wasted in improving highways, wasted because there is no policy of maintenance…Such conditions insisted upon in the grant of federal aid will safeguard the public which pays and guard the federal government against political abuses, which tend to defeat the very purposes for which we authorize federal expenditure.”

By the end of that session of Congress, in November 1921, Harding was ready to sign into law the landmark Federal Highway Act. It maintained a few key principles of the 1916 law – apportionment of funding permission to state highway bureaus via a multi-factor formula, empowering the states to utilize that permission to improve roads within the state, with Congress picking up 50 percent of the cost once the project was completed.

But instead of allowing states to pick just any road upon which to expend federal aid, the new law required each state to designate “a system of highways not to exceed 7 per centum of the total highway mileage of such state…Upon this system all Federal-aid apportionments shall be expended.” The law also split this new system up, with no more than 3/7ths of the miles designated as “primary or interstate highways” and the remainder as “secondary or intercounty highways,” with the latter receiving a minimum of 40 percent of each state’s apportioned funding until fully improved.

And, per Harding’s exhortation, section 14 of the new law penalized states that failed to maintain any highways improved with federal aid.

The Bureau of Public Roads (BPR), an office within the U.S. Department of Agriculture, quickly began working with the 48 state highway bureaus to ensure that their designated federal-aid roads formed a connected national system. According to BPR’s annual report, at the time, 7 percent of total U.S. road-miles would have been 200,624 miles, but the states only submitted 168,881 miles at first, or 5.8 percent of the national total. By November 1, 1923, less three months after Harding’s death, BPR approved the map of the federal-aid system and released it to the public.

Map of the 168,881-mile Federal Aid Highway System of the United States, approved November 1, 1923. Photo source: University of Minnesota Library online.

BPR stated that the completion of the routes on that map would “result in a connected system of arterial highways that will permit unobstructed highway transportation between all cities of 5,000 population or larger.”

Budget Act + Highways = Contract Authority

The 1921 highway law had only contained one year’s worth of funding, a $75 million appropriation for fiscal year 1922. Funding the next year would prove difficult for Congress, because to accompany the executive branch budget consolidation approved by Harding earlier in 1921, Congress had also consolidated its own fiscal procedures. This meant that the House of Representative’s Roads Committee and the Senate’s Post Office and Post Roads Committee would no longer be allowed to write their own appropriations for the good roads program into their authorization bills.

The full story is here, but the House consolidated a year ahead of the Senate, so by summer 1922, Congress was in the unusual situation of sending the fiscal 1923 Post Office appropriations bill to a House-Senate conference consisting of three members of the House Appropriations Committee and, for the last time, five members of the Senate Post Office and Post Roads Committee. The House version of the bill included more highway authorizations, but the Senate bill included an actual $50 million appropriation for fiscal 1923. (The difference between an authorization and appropriation is that an authorization allows Congress to create programs and set maximum funding levels while an appropriation provides the actual funds for these programs to operate.)

At the end of their negotiations, the conferees made the Solomonic decision to split the baby. Instead of making an either-or choice between an authorization and an appropriation, the conferees created an authorization that behaved like an appropriation, called “contract authority.” The $50 million authorization for 1924 could be apportioned to states, and states could then sign contracts and spend money and legally obligate Congress into paying them back, which would require Congress to pass an eventual appropriation to pay the bills and liquidate the obligation.

President Harding signed the bill into law in June 1922, and Congress never looked back, creating new contract authority on a year-by-year basis for the highway program before making it a recurring feature of all future highway authorization bills starting in 1925.

Contract authority is still in use today and is the primary means of funding federal transportation infrastructure programs. Authorization laws provided almost $82.3 billion in contract authority for federal-aid highway, mass transit, safety, and airport grant programs for fiscal year 2025.

Maritime

World War I had brought a tremendous need for merchant shipbuilding, and the federal government spent $3 billion building merchant vessels (about $50 billion in today’s money). Wilson’s answer for how to support that large a fleet after war’s end was the Jones Act of 1920, requiring that point-to-point marine cargo service in the U.S. and its jurisdictions be carried on ships built and registered in the U.S. and flagged by U.S. crews.

However, Wilson left Harding with the problem of how to find the crews for these ships and pay for an ongoing merchant marine program (the U.S.-flagged civilian fleet that transports goods during peacetime and supports military operations in times of war.) Wilson had proposed that Congress support the U.S. merchant marine by levying higher tariffs on imports delivered by foreign vessels than by U.S.-flagged and crewed vessels.

In February 1922, Harding addressed a joint session of Congress and proposed something different – uniform tariff rates, but setting aside 10 percent of all tariffs to a fund to pay for the U.S. aid to the merchant marine. Legislation was referred to committee, but never made it to the House or Senate floor during the regular 1922 Congressional session.

In the 1922 elections, voters rejected Harding’s party, with the GOP losing 77 House seats and 6 Senate seats. Nonetheless, Harding went so far as so summon an extraordinary session of the lame-duck Congress later that month, solely for consideration of the merchant marine bill, before the new Congress took office on December 5. (This may have been the only time in U.S. history that a president has summoned an extraordinary session of Congress solely to consider a transportation bill).

Some in Congress opposed Harding’s plan as a subsidy for private business. In his opening address to the session, Harding took issue with that term, comparing the maritime situation to the just-enacted highway bill:

“’Government aid’ would be a fairer term than ‘subsidy’ in defining what we are seeking to do for our merchant marine, and the interests are those of all the people, even though the aid goes to the few who serve.

“If ‘Government Aid’ is a fair term—and I think it is—to apply to authorizations aggregating $75,000,000 to promote good roads for market highways, it is equally fit to be applied to the establishment and maintenance of American market highways on the salted seas.”

After days of debate, the House passed Harding’s bill, but only by a vote of 208 to 184, and 84 of the “yes” votes were Republicans who had already lost their seats in the elections. The Senate never took up the bill, and Harding’s calling a lame duck session just after a thumping election loss led Senator George Norris (R-NE), on the following day, to introduce what would become the Twentieth Amendment to the Constitution, shifting the start dates of Presidential and Congressional terms to shorten the time for lame duck sessions. (Merchant marine reform would have to wait until 1928.)

Railroads

As the nation prepared for war, Congress gave the president permission in law in August 1916 to “take possession and assume control of any system or systems of transportation” if needed in time of war. Once the war started, Wilson issued a proclamation in December 1917 exercising that authority and nationalizing all U.S. railroad and inland waterway transport. After the war ended, Congress passed the Transportation Act of 1920 to return the railroads to their previous owners by the end of that year.

However, the underlying labor-management disagreements that had existed before the war erupted again in peacetime. The 1920 law had created a new federal Railroad Labor Board to mediate such disputes. On June 10, 1922, the Board issued a decision calling for 12 percent wage cuts for most guilds not actively involved in train operations, to take effect July 1. Those unions rejected the Board’s report, and the Great Railroad Strike of 1922 began on July 1, with 400,000 workers walking off the job.

Because the operational unions were exempt from the pay cuts, they did not strike, so most trains kept running. Railroads quickly began replacing striking workers, and violence predictably ensured. By mid-August, Harding informed a joint session of Congress that he had personally attempted mediation of the strike (backed by his Commerce and Labor secretaries), but his proposal had been rejected by the railroads. He complained to Congress that he lacked power to force an end to the strike.

One Harding biographer reports that on August 26, 1922, the President, Attorney General, Commerce Secretary, Labor Secretary, along with the chairmen of key House and Senate committees, went on a three-day cruise on the presidential yacht Mayflower. No records were kept of the meeting, but when the yacht docked back at Washington on August 29, Attorney General Daugherty went straight to his office to confer with his staff, and thence to Chicago.

In the Windy City, Daugherty went to the courtroom of a brand-new federal judge, James H. Wilkerson, who had been confirmed by the Senate just six weeks beforehand, and obtained an extraordinary nationwide temporary restraining order ending the rail labor strike on September 1, soon converted by the court into a nationwide injunction. The strike was over, and labor was apoplectic.

The frustration of Harding, Congress, and the railroads felt about not being able to settle railroad strikes in an orderly way, combined with labor’s anger at the unusual end to the 1922 strike, eventually led to the Railway Labor Act of 1926 and the system for mediating and resolving disputes still in use today.

Hoover

Finally, Harding deserves credit for bringing the boundless energy and inventiveness of Herbert Hoover into the transportation field. Harding wanted Hoover, already well-known as an organizational genius and humanitarian, as Commerce Secretary. According to one biographer, Harding wanted Hoover so badly that when conservative senators who wanted Andrew W. Mellon to be nominated as Treasury Secretary made it known that they opposed Hoover at Commerce, Harding sent them a simple message: “Mellon and Hoover, or no Mellon.”

Under Harding, Hoover maximized Commerce’s jurisdiction, to the point that he became known as the “Secretary of Commerce, and Undersecretary of Everything Else.” In addition to his work on railroad and merchant marine issues under Harding, Hoover’s memoirs make clear that while his subsequent work to establish strong federal roles in regulating civil aviation and encouraging states to work cooperatively on highway safety, while brought to fruition under the Coolidge Administration, the work began under Harding.

Death 

Harding’s appreciation of transportation, unfortunately, may have facilitated his death. Harding had planned to take the longest trip ever taken by a sitting President, a two-month sojourn he called a “Voyage of Understanding.” It took 15 days by a private Pullman rail car to go from Washington D.C. to Tacoma, Washington, where he boarded a naval vessel to spend 19 days exploring Alaska (including driving the final spike in the Alaska Railroad).

Harding returned to Seattle via ship and was making his way down the West Coast by Pullman car when, after several days of not feeling well, he died suddenly, in San Francisco, of what is now believed to be a heart attack, on August 2, 1923.

President Harding’s private Pullman car, the Superb, in which he rode during the lower-48 portions of his 1923 Voyage of Understanding. Photo source: By Elton Saulsberry – Own work, CC BY-SA 3.0

For further reading:

Murray, Robert K., The Harding Era: Warren G. Harding and His Administration, University of Minnesota Press, 1969

Dean, John W. Warren G. Harding. Times Books, 2004

Walters, Ryan S. Hard. Harding: The Jazz Age President. Regnery History, 2022