the previously existing formula with two modifications: one for small States and the other for the large public land States.
For small States, which were receiving virtually meaningless amounts of aid (for example, less than $25,000 apiece for Delaware, New Hampshire, Rhode Island, and Vermont in 1917), a floor of at least one-half of 1 percent of the total apportionment was established. For the large western States, whose extensive areas of untaxable federally owned land put them at a serious disadvantage, the remedy was to increase the Federal share of highway funds above 50 percent in proportion to the ratio of public lands to the total area of the State. The areas within national forests, parks, and monuments were excluded from the calculation.
To insure that Federal funds would be spent on roads of more than strictly local importance, the Act required that all Federal-aid funds be expended on a primary system of highways limited to 7 percent of the State’s total highway mileage on November 9, 1921. This interconnected system included two classes of highways: (1) Primary or interstate highways, comprising 3⁄7 of the system, and (2) secondary or intercounty highways, comprising the remainder. No more than 60 percent of the funds apportioned were to be expended on the primary or interstate highways.
City residents began to benefit from the highway improvement program long before the expenditure of Federal-aid highway funds on municipal streets wa authorized. By focusing attention upon the improvement of intercity and interstate routes, the creation of the Federal-aid primary system under the 1921 Act stimulated more travel over greater distances than had been possible before.
Urban automobile owners began to venture beyond the city limits on “joy rides,” and commercial and intercity trucking developed. On the other hand, although farm-to-market trucking of agricultural commodities became common in many areas, the horse and wagon was still an important factor in such movements.
Highways a Local Program
The highway program was still essentially a local one in 1921, financed largely from property taxes and general-fund revenues and concentrated on county and local roads. If the work-relief expenditures of the thirties are excluded, the estimated capital outlay of $337 million for county and local roads in 1921 was not equaled until the early fifties. At the same time, almost three-fourths ($771 million) of the more than $1 billion of total current revenue (i.e., exclusive of bond proceeds) available for road and street purposes was obtained from county and local sources. The Federal and State governments furnished the remaining $285 million, of which $123 million (43 percent) came from State imposts on motor vehicles.
Bond proceeds of $353 million increased the current (exclusive of bond receipts) highway funds available by about one-third. The county and rural local governments borrowed about 57 percent of this sum ($202 million) and the States the remainder. Borrowing by municipalities was not reported.
Increasing Role of Credit Financing
It was common practice to issue highway bonds secured by a general pledge of the taxing power of the issuing authority. These general obligation or full faith bonds are still predominant among the obligations issued to finance toll-free capital projects.
The same corner in 1966.
As the revenue potential of highway-user taxes came to be realized, the practice of issuing State highway bonds gathered momentum. Those highway administrators who advocated credit financing contended, with much justification, that the savings to highway users brought about by acceleration of the road-improvement program would more than compensate for the interest charges on the bond issues.
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