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The Federal Highway Act of 1921 increased the limit of Federal participation in road costs to $20,000 per mile, a change that had been urged by the eastern and northern States to compensate for the wartime inflation in the cost of the higher types of road pavements. When Congress again considered the financing of the Federal-aid program in April 1922, this limit became a bone of contention. Rural interests wanted the limit cut back to as low as $4,000 per mile to force the States to use the less expensive construction types and, thus, more rapidly provide some kind of improvement for the entire Federal-aid system, and particularly its less heavily traveled parts. Eventually, a compromise was reached on a limit $16,250 per mile for projects funded in fiscal year 1923, falling to $15,000 per mile in 1924 and thereafter.

This was only a minor setback for Federal aid. Much more important was Congress resumption of the desirable practice of authorizing aid funds several years in advance by authorizing appropriations of $50 million, $65 million, and $75 million for fiscal years 1923, 1924 and 1925. Since most State legislatures met biennially, this advance notice of Congress intent was of the utmost importance to the States in planning their own matching appropriations and budgets.

This removal of uncertainty in the Federal-aid program coincided with a drop in wages and a lowering of price levels for construction materials. The State highway departments, profiting from their past mistakes and added experience, had developed much more effective construction organizations and procedures, and these were matched by a stronger and more efficient construction industry. The result was the completion of 10,247 miles of construction at a cost of $189 million—3½ times as much as had been accomplished since the Federal-aid program began—in the single fiscal year of 1922. To Chief MacDonald the mere recital of statistics could not possibly convey an adequate idea of what was accomplished. In 1922 he wrote: "But merely to say that this year has added 10,000 miles to the previously existing mileage conveys no adequate sense of the far-reaching effects of the work that is being done. The 10,000 miles completed represent something more than the equivalent of three transcontinental roads. They are not transcontinental roads. They are not even connected roads, though as the work continues they will be connected ; but each separate project is to some community a new opportunity, a means of bettering, in some respects, the economic and social status of the community, and together they form the links which, eventually united, will constitute a new means of transportation, no less important to the country as a whole than that offered by the railroads."

The 1922 record was possible mainly because at least two-thirds of the work was of low type, such as graded earth, sand-clay and gravel, and this in turn came about because the BPR adopted a stage construction policy in the early years of the Federal-aid program: "In many instances it has been found advisable to grade and drain a road and delay an expensive pavement until a later time. This policy will be continued under the same conditions: that is, when the volume of traffic at the time of the original construction is not large enough to require any better surface than can be built of selected soil, sand-clay, or gravel, when financial considerations require that the expense of a pavement be deferred, and when, as in the light of past experience it has often been found advisable, a delay to allow the subgrade to become stable is believed to be necessary. In such cases the plan will be, as it has been in the past, to so design and construct the grades and drainage structures and whatever temporary surfacing that is applied, that any additions or subsequent improvements can be made without loss of prior investment."

Most of the stage construction projects were in the West, the Prairie States and the South where traffic was light and roadbuilding was least advanced. The intention to build by stages was set forth in the project agreement, or contract between the Government and the State, and only a portion of the Federal share of the cost of the project was paid upon completion of the first stage; the rest was held back until the final stage was finished. As traffic increased, the State upgraded the initial construction with better surfaces, but these second stage projects did not become an appreciable part of the total Federal-aid program until about 1926, when 11 percent of all mileage improved was second stage. By 1933, however, 55 percent of the mileage was in this category.

The basic concept of stage construction was good, but it failed to take into account the enormous increase in vehicle ownership and road traffic that would occur during the 1920’s, or the rapid evolution in highway engineering. In the 5 years or so that elapsed between original and second stage construction, many States changed their ideas as to what were adequate or desirable standards. Instead of following the original plan for the second stage, they upgraded it, and in many instances made minor relocations to eliminate sharp curves. Thus, the stage construction, or “wait and see” approach, resulted in abandoning some of the original construction, but also avoided premature investment in high-type work that would later have proved inadequate.

The stage construction policy accomplished its purpose which was to give the poorest portions of the Federal-aid system a modest improvement as soon as possible. This philosophy was well expressed by Chief MacDonald in his annual report for 1926: "An exactly similar policy was followed by the builders of the railroads, whose first object was to ‘get the traffic through,’ leaving until a later date the perfecting processes of ballasting, banking of curves, etc. It is the only satisfactory method of dealing with the conditions existing in many of the Southern, Middle Western, and Western States in which there are thousands of miles of main road still entirely devoid of any improvement whatever."

However, not everyone agreed with this policy, and some influential critics asserted that the Federal aid was being frittered away in low-grade work that would never handle the traffic. They pointed to the original Federal Aid Boad Act of 1916 which

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