CHAPTER 2. GOVERNMENT ASSISTANCE AND USER CHARGES

1. Introduction

A. FEDERAL AIDS TO TRANSPORTATION

This chapter is concerned with the area of Federal policy dealing with Government assistance provided the various forms of transportation and the desirability of a system of user charges to be assessed against those using such facilities.

Governmental assistance to transportation began when the Nation was created. It has continued throughout the years to the present day. Federal aids to specific modes of transport at any time have depended in a large measure on the different stages of our economic growth, as well as upon technological and related developments in transportation.

For the purposes of this study we divided this chapter under two major headings, one dealing with Federal aids to transportation and the other dealing with user charges. We subdivided the portion relating to the Federal assistance into three major periods of time:

(a) The early period, covering 1787 through 1916. Illustrated for this period are types of Federal assistance without reference to the finances involved.

(b) The modern period, covering 1917 through 1960. This period began with enactment of the Federal Aid Road Act and the Shipping Act of 1916. Information for this period identifies types of direct Federal assistance to the various forms of transportation, summarizes amounts involved, and other pertinent data.

(c) The projected period, from 1961 through 1975, which identifies trends concerning such assistance as related to the modern period.

Since this study was directed at Federal transportation policy, we did not concern ourselves with administrative details within each Federal assistance program. Nevertheless, following our summary of Federal aids to transportation, we identify certain transportation policy problems which have arisen during the modern period. These problems concern the relationship among different promotional programs, as well as the relationship between promotion of one mode and economic regulation of another. To the extent data were available, we also projected these problems into the immediate and long-range future. We also included recommended action for their effective treatment.

In our coverage of the user charge question we relied on past developments but our inquiry was directed primarily toward determining the present status of user charges as related to federally aided transportation programs, identifying past studies of user charges, and recommending a course of action. Where needed to explain present-day policy concerning user charges, with special reference to waterway transportation, we drew on historical data which extended far back into the early period.

2. The early period

Early Federal aids to transportation took a variety of forms. Although the following list is not intended to be a complete recital of

such aids, it illustrates the type of actions that were taken and the mode of transportation which benefited therefrom:

(a) Identification of navigable waterways as public highways, to be forever free. This was followed by enactment in 1882 of a policy prohibiting the collection of tolls or operating charges for use of any canal or other improvement of navigation belonging to the United States."

(b) Erection of new lighthouses, or completion of lighthouses started by the States, during the early days of the Republic.* (c) Beginning at the turn of the 19th century, placement of buoys in rivers to identify navigable channels."

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(d) Improvement of rivers and harbors, beginning in 1824. (e) Establishment and improvement of post roads, military roads, and territorial roads, including creation of the Washington Bridge Company to construct a toll bridge between Washington and Alexandria Island. These activities started early in the 19th century and continued for many years thereafter.'

(f) Use of 3 percent of net proceeds from sale of public lands in newly created States laying out public roads and canals, particularly with reference to States admitted to the Union between 1800 and 1820.8

(g) Improvement of the Cumberland Road (also called the National Pike) from Cumberland, Md., to St. Louis, Mo., between 1806 and 1844. William H. Clark points out that Federal construction of this road lifted roadbuilding out of private enterprise, and that the several States, jealous of their rights, drove the Federal Government out of roadbuilding and took over the construction of public roads."

(h) The dedication, for road purposes, of the outside boundaries of each section of land in new States and territories,10 and a wagon road program for the Western States during 1846-69.11

(i) Land Grants and monetary loans to railroads,12 as well as loans of Army Engineers to survey and construct railroads.18 These actions were taken primarily between 1840 and 1870. The land grants imposed certain obligations on the railroads. These included transportation of Federal property and troops over the

Details are discussed elsewhere in this chapter.

See, for example, 1 Stat. 53-54, 246, 251, 368, 418-419, 452, 464.

See, for example, 1 Stat. 353.

The first appropriation for river improvement was made in 1824. It committed the Federal Government to this promotional work and indicates that Army Engineers were to take charge. For further information see "Laws of the United States Relating to Improvement of Rivers and Harbors From August 11, 1790 to March 4, 1907" (58th Cong., 3d sess., H. Doc. 425).

See, for example, 2 Stat. 42, 125, 189, 457; 3 Stat. 315, 779; 4 Stat. 154, 244, 718. This was true with respect to admission of Indiana, Illinois, Alabama, and Missouri. See 3 Stat. 289, 429, 489, 545. Ohio was permitted to use E percent of such proceeds for roads; see 2 Stat. 173.

Clark, William H., "Rivers and Railroads," Boston; L. C. Page & Co., 1939, p. 29.

10 Ringwalt, J. L., "Development of Transportation Systems in the United States," Philadelphia; published by the author, 1888, p. 26.

11 Jackson, Turrentine, "Wagon Roads West," University of California Press, Berkeley, 1956, discusses this program and its adequate performance record.

12 Ringwalt, op. cit., p. 153. Some 242,000 square miles of lands were granted to railroads; and some $64,600,000 were loaned to them, based on second mortgages on the roads.

13 Hill, Forrest G., "Roads, Railways and Waterways." Norman; University of Oklahoma Press, 1957, 248 pp., contains numerous illustrations of the contributions made by Army Engineers to early transportation, including surveys and construction of railroads.

land-grant portions without charge or, as in the case of mail, at reduced rates.14

(j) Expression in 1893 and the ensuing years of Federal interest in farm-to-market traffic to improve transportation of agricultural commodities. This included construction of "object lesson" roads with the aid of Federal funds.15

(k) Experimental airmail flights began in 1911. Beginning in 1912, the Post Office Department sought funds for airmail. The first appropriation was made in 1916.

When the early period ended there were four forms of transportation in various stages of economic development. These included waterway, road, rail, and pipeline, which started in that chronological order. A fifth form, air transport, was on the threshold.

As viewed in perspective, the Federal Government was identified with varying degrees of promotional interest in waterway, road, and rail transport during the early period, and it began showing an interest in air transport when the period closed. However, no evidence could be found to show any Federal aid to the oil pipelines that were built by private enterprise.

Numerous interactions between the Federal, State, and local governments and private enterprise with respect to public and private interest in transportation had crystallized into an identifiable pattern of responsibility. Recognizing that certain Federal aids were provided, that pattern of responsibility can be generally described as follows:

(a) In railroad and pipeline transportation, private enterprise would provide, improve, and maintain the way, and furnish the equipment.

(b) In waterway transportation, the Federal Government would provide, improve, and maintain navigable channels, and private enterprise would furnish and operate the vessels.

(c) In highway transportation, State and local governments would provide, improve, and maintain roads and streets, and private enterprise would provide and operate the vehicles. Subject to certain modifications, that pattern of responsibility has been extended into the modern period, even to the present day.

Major policy problems which originated during the early period include the overextension of railroad service, the toll-free policy on waterways, and the conflicts between railways and waterways at river crossings.

3. The modern period

The modern period of Federal assistance to transportation (191760) embraces direct Federal aids to highway transportation, to navigation, to aviation, and to the merchant marine. Based upon information furnished by the Federal agencies responsible for administering transportation programs, the monetary magnitude of these programs during this period total no less than $33.6 billion in Federal funds. Details are summarized in table I.

(a) Federal aid for highways. Of this total, almost $20.7 billion represent Federal-aid highway funds which have been made available

14 The Transportation Act of 1940 canceled the rate concessions applicable to movements of mail and Federal property, other than military and naval traffic. The rate concessions applicable to the latter were dropped in 1945.

15 This information was obtained from the annual reports of the present-day Bureau of Public Roads for that period.

to the several States for improvement of the Federal-aid highway system.16 By 1960 this system included approximately 800,000 miles of roads, with more than 769,000 miles in rural areas, and some 30,000 miles in urban areas. This system represents slightly more than onefifth of our entire road network, estimated at 3.6 million miles.

Key routes of the Federal-aid highway system are identified as the National System of Interstate and Defense Highways. By statute the Interstate System may not exceed 41,000 miles in length. It has some 35,627 miles in rural areas and 4,980 miles in urban areas. Table III, page 174, summarizes the mileage of the Federal-aid highway system. Motor vehicles traveling over the Federal-aid highways and other roads have reached the astonishing total of 73 million in 1960. Of this total, 60.7 million are passenger cars, 270,000 are buses, and 12.1 million are trucks. Table IV, page 174, summarizes the growth in motor vehicle registrations from 1895 to date.

Legislation was enacted in 1956 to expedite completion of the Interstate System by 1975 and to continue the improvement of other Federal-aid routes at a rate of expenditure involving between $900 million and $1 billion annually. The accelerated highway program is now underway."

For many years, the needs of national defense, as determined by the Nation's military officials, were taken into account in Federalaid highway development without increasing the cost of the program. This achievement was possible because the highway routes deemed to be of military importance were the same as the routes having principal commercial value. Also, the design and construction standards required for peacetime requirements were deemed adequate for defense purposes.is However, with the development of guided missiles, a few years ago it became apparent that a 14-foot vertical clearance for highway grade separations, approved for commercial vehicles, would be inadequate for highway movement of such missiles and that a 16-foot vertical clearance would be required for defense purposes. In other words, for the first time in more than 40 years of Federal-aid highway development national defense considerations have imposed requirements in highway design which exceeded the requirements of commercial vehicles.19

(b) Funds for navigation.-No less than $7.1 billion in Federal funds have been expended in aid of navigation. This sum includes about $5.7 billion for navigation improvements by the Corps of Engineers; $219 million for similar work by the Tennessee Valley Authority; some $1.7 billion for U.S. Coast Guard work relating to navigation; and $158 million for charts and other aids by the Coast and Geodetic Survey. Details are shown in tables V-A (Corps of Engineers), V-B (Tennessee Valley Authority); V-C (U.S. Coast Guard); and V-D (Coast and Geodetic Survey), page 175. Although the bulk of these expenditures was made in aid of domestic

16 See table II, p. 173, for details.

17 Additional details can be found in a report submitted by the Secretary of Commerce to the Congress, in January 1959, entitled "Progress Report on the Federal-Aid Highway Program." 35 pp. (86th Cong., 1st sess., H. Doc. No. 74.)

18 The extent to which national defense considerations have been included in Federalaid highway development is summarized by Dr. Walter Kurylo, "A Study of the FederalAid Highway Program With Special Emphasis on Its Major Budgetary and Planning Aspects" (an unpublished dissertation presented to the American University, Washington, D.C., May 1959), pp. 67-70, 130-152,

Is For details see U.S. Congress, House of Representatives, Committee on Public Works, Special Subcommittee on the Federal-Aid Highway Program, Defense Highway Needs, hearings. [No. 86-19.] February 1960. 430 pp.

navigation some amounts were attributable to foreign commerce. Due to limitations of personnel and time, no effort has been made to isolate these costs from each other.

According to a report recently prepared by the Corps of Engineers there are about 20,153 miles of commercial waterways in the United States.20 Table VI, page 178, summarizes this mileage according to authorized channel depth. This mileage represents about one-third of the 60,000 miles of waterways deemed navigable.

The Corps of Engineers reports that as of December 31, 1958, there were 23,060 U.S.-flag passenger and cargo vessels (exclusive of fishing and excursion vessels and general ferries). Table VII, page 179, contains additional information concerning these vessels. A statistical report prepared jointly by the Outboard Boating Club of America and the National Association of Engine & Boat Manufacturers indicates that in 1959 there were 7,800,000 recreational boats in existence on all waters in the United States. Table VIII, page 180, identifies these recreational boats by type.

(c) Funds for aviation.-Almost $4.5 billion have been involved in the Federal aviation program from its inception in 1927 through 1960, exclusive of amounts made available for airports for the Nation's Capital. Table X, page 182, contains details.

As indicated in table X, page 182, construction and operation of the Federal airways system represents the major item of expenditures. In 1959 it involved the operation of some 639 air traffic facilities along some 220,000 miles of Federal airways. Using these airways were some 1,853 aircraft of certificated air carriers, 186 belonging to noncertificated air carriers; 21 certificated helicopters; and more than 70,000 aircraft engaged in general aviation, which embraces all other civil flying, general aviation flying for business industry, agriculture, air taxi, and aircargo services, instruction, geophysical research, survey and patrol, and nonbusiness personal uses. Table IX, page 181, summarizes aircraft by type. In addition to civil flying, the air navigational requirements of military aircraft has contributed to about 40 percent of the use of the Federal airways system (FAA estimate).

(d) Promotion of the merchant marine.-The Shipping Act of 1916 created the U.S. Shipping Board to provide a merchant marine of the best equipped and most suitable types of vessels to carry the commerce of the country and to serve as a naval or military auxiliary in time of war or national emergency. From the standpoint of promotion of transportation, the functions of the Shipping Board related to the growth and development of a privately owned and privately operated merchant marine.

The Board was directed to investigate the relative cost of building merchant vessels in the United States and in foreign countries, and the relative cost, advantages, and disadvantages of operating in the foreign trade vessels under the U.S. registry and under foreign registry. For a number of years it aided the merchant marine through indirect aids, such as loans for construction of vessels, research, and promotion of port development and other water transportation facilities.

20 This report of the Corps of Engineers was submitted to the U.S. Senate, Select Committee on National Water Resources, and published under title of "Water Resources Activities in the United States; Future Needs of Navigation" (86th Cong., 2d sess., committee print No. 11, May 1960).