In the 1954 Act, 2 years later, it was raised to $175 million. But there again, if these limited grants continued indefinitely, they would never scratch the surface because our needs increase more rapidly than such expenditure could create adequate facilities.

The next page indicates the interstate system, and the vertical component of that chart indicates the density of traffic. Under the Administration bill, S. 1160, the money would be spent predicated on the needs, where the traffic is, where the congestion is, and not merely because there were a certain number of square miles within a given State.

The next one has to do with design, and I don't think that has anything to do with the problems that confront you gentlemen today other than by way of illustration.

As the result of this study, gentlemen, which General Clay headed, it was conceived that the Federal Government's prime interest, not only from a point of view of continuing our expanding economy, but for defenseand defense, of course, is predicated on our economy-that the Federal Government should assume the chief expense of this interstate system. In connection with the ability of the States to assume this responsibility, I believe I can say without fear of contradiction, certainly so far as the small State in which I live, it would not be possible and I reiterate what Governor Kohler has stated-the States themselves cannot create an interstate system for the simple reason that those agencies, namely the legislature, will spend the money in accordance with the votes, and those votes are not represented in the legislatures, and it is not politically possible for any State that I have visited-and I have visited 40 of them-to spend such amounts of money as are necessary in those congested areas; whether it be Detroit, Denver, or New York makes little difference.

It is because of those circumstances, gentlemen, in my opinion, that toll roads have come in and filled the bill, where, through such a medium, it has been possible to expend the amount of funds sufficient to create a facility, which it was not possible under our form of Government to spend that amount of money in that specific area to solve a specific problem.

I hope that will bring you up to date very quickly as to what has transpired during the past 15 months or so. And I don't believe that there is anything that I can add other than one or two points that I heard discussed, and I would like to mention these points.

There is one question that has been raised, the problem of subsidizing schools, the military, and social needs. And I think we must recognize those in their true perspective. The military and defense of our country is essential. We must be able to support it. It is insurance. We hope there will not be a fire, but we certainly want to have the insurance. Military forces are not a capital asset which earns for the economy. They are necessary, like insurance.

Insofar as schools, we all recognize they are desirable and essential. There again, we cannot evaluate or recapture immediately the earnings that the products or the output of the schools may subsequently produce.

I believe that highways are the only capital expenditure which the Federal Government can indulge in which immediately generates more business, more revenue, not only at the national level, but at all levels.

And on that business of having the Federal Government-I have been one who has made the most derogatory remarks about the Bureau of Public Roads. I have hidden behind their skirts. I have worked both sides of the street. And I would like to see them frankly get out of the secondary road system. I feel they have no place there. But I don't believe there is any means whereby we can get this interstate system other than by this capital expenditure, financed the same as we finance our homes or the Bell Telephone Company expansion, or what have you, out of the earnings, which amount to $1 billion per annum, currently. Borrow the funds then, pay off the amortization and interest on the bonds that are necessary to accomplish this end.

I might say, insofar as taxes, I agree with everything mentioned here. I think Secretary Humphrey is the greatest extractor known, and he gives you no novocain. But who else can build this system? You and I can't build it. Corporations can't build it. The States cannot build it or the political subdivisions thereof. Regrettably, in my judgment, the Federal Government is the only one that can.

Governor Foss, do you think the various States could provide aids to navigation for airplanes?

GOVERNOR Foss: No.

MR. DU PONT: I don't either. And regrettably, the subject we are discussing comes in that category. So I did want to clear up that question, if possible.

I mentioned the primary and secondary benefits that will accrue. I think it might be desirable to amend the bill to permit a greater transfer from one fund to the other. Currently it is possible to transfer 10 percent. The Association of Highway Officials have recommended a transfer of 25 percent, and in one of the amendments to the Gore bill there is a 20 percent recommended,

Insofar as rights of way, I think General Clay covered that.

There is one point, however, I wish to make. There are some 38 States that have limited access laws. They vary materially. In some States for each extension of a system you must get legislative action, which, of course, necessarily involves some delay. I think, Governor Stratton, in your State it is a rather slow procedure, if I am not mistaken.

Where the limited access legislation does not prevail, at the request of that State to expedite and acquire the right of way, the Federal Government would go in and acquire the right of way and immediately lease the land to that State for $1 a year until such time as the State enacted limited access legislation. And until that time the Federal Government would retain a strip five feet wide on either side.

I think that is about as much as I can offer. I'm playing the field here 'at the end.

Remarks of General Lucius D. Clay, Chairman, The President's Advisory Committee on a National Highway Program

Governor Kohler and Governors, I am very happy to have the opportunity to tell you of the plan that we developed in the Advisory Committee to the President. And I want to say, in starting, that in preparing that plan, we worked very closely with your Highway Committee and with your Executive Committee, and incorporated into our plan the general principles which are in the plan presented by the Governors' Highway Committee to the President.

Basically our plan is as follows: A continuation of the present primary and secondary program of highways which goes into effect on July 1 of this year, with the continued provisions for matching on a 50-50 basis for the primary and secondary programs. There is also a continuation of aid as contemplated in present legislation for the smaller cities, which again is a matching proposition.

Over and above that, we have recommended that the United States take over the major responsibility for the full completion of the interstate system over a 10-year period to thoroughly modern standards, with median lanes, rights of way acquired to permit controlled access where traffic warrants it now, and at later dates in places where the traffic growth warrants it.

The Governors had recommended a continuation of local participation and we based our recommendation in part on theirs, but we limited the contribution of the States to what they are now required to contribute to the $175 million a year which becomes available the first of this year for the interstate system. In other words, the Federal Government takes over approximately 93 percent of the responsibility for the interstate system. The cost of that system is $23 billion. To that has been added a cost of $4 billion to provide access roads from centers of population to tie in with the interstate system so that the interstate system will be fully usable, which it is not at present.

We further were of the view that in equity those States which had issued bonds or had constructed or authorized the construction of toll roads to provide roads of adequate standard on the interstate system were entitled to some reimbursement. Arbitrarily, it is true, we fixed for those roads constructed prior to 1951, 40 percent of the cost, less financing costs, and after 1951 to 1955, 75 percent; thereafter, 100 percent of costs, less financing. We recommended that this money be provided by a bond issue to be issued

by an authority or a corporation created for the purpose, supported by the difference between the gasoline revenues received by the Government under its present tax and the expenditures to be undertaken by the Federal Government on Federal primary and secondary roads.

Using a very conservative rate increase, this gasoline tax over the next 30 years would provide for a continuation of the present primary and secondary road programs, would support and service the issue of $25 million of bonds which would be retired in 30 years, which we estimated as the useful life of the roads to be constructed under this bond issue.

That, in substance, was the recommendation which we submitted to the President, and which he in turn sent to the Congress.

That legislation is now receiving consideration in the House. It has been introduced by four separate Members of the House, and at the moment is the only bill which is being studied by the House Public Works Committee, and to which it is giving very diligent and very careful consideration. What will come out of that, I do not know. We do know that there is a tendency to provide a part of the cost of this road system by increasing the Federal gasoline tax.

The Senate picture is a very much different picture and to some degree a confusing picture. There have been four or five bills introduced in the Senate, varying in their composition. And I believe that a subcommittee has approved a bill introduced by Senator Gore, which was amended late on Friday before being reported out on Saturday, and of which no copies yet are available. However, in substance, the Gore bill, which appears to have the endorsement of the Senate subcommittee, provides substantial increases in the annual appropriations for primary, secondary, and the interstate system. It still requires a 50-50 matching provision, as do the recommendations of our Committee, for the primary and secondary roads. It provides a billion dollars in the first year for the interstate system on a 75-25 basis, requiring a 25 percent contribution from the State Governments. This amount is increased as revenues increase over a 5-year period, which is as far as the bill provides, although, if carried for an additional 5 years and projected on the same incremental basis, it would provide about the same amount of money as contemplated in the report or recommendations of our Committee.

The basic difference is that in the Gore bill the appropriation is supported in part by deficit financing, by an increase in the annual budget, and it includes a recommendation, which could not be adopted by the Senate since it is a tax measure, for a 1-cent increase in the gasoline tax to partially pay for the road improvement program as it goes along.

Basically, the principal difference is that the Gore bill does not extend over the 10-year period and therefore does not fully provide for the completion of the program. It provides funds on a 75-25 basis, in the interstate system, keeping the same provisions for matching as in the former bill; and it raises its revenue by a different measure, or methods, than the recommendations which we have made to the President.

Basically, I would like to point out that another fundamental difference is that it makes no provision for any return or credit to those States which have built sections of the interstate system according to standard, whether by State bonds or by toll roads.

I would like to go back to one other point for a minute. We gave great consideration to an increase in the gasoline tax to help support this bill. We did not recommend it for, I think, two fundamental reasons: One was that we felt-and certainly the Governors' Highway Committee believed— that any raising of the Federal tax on gasoline would increase the difficulties of the States in using this source of revenue to raise the money to meet their share of the program. And, secondly, I think that we were convinced that it was not fair to the motorist, because a study of the tax charge now paid by motorists shows that it runs on an average throughout the United States about .49 cent per vehicle mile. It is estimated this entire interstate system would cost about .4 cent per vehicle mile and therefore generates a profit from the taxes paid by the motor vehicle user, which is, in fact, available for the support of the secondary roads. Cities and States on the interstate system both make a profit on their investment, even under this tremendous program, in the generating of tax revenue for the support of our lesser roads. The primary system breaks about even. Therefore, it does not seem fair that the motor vehicle user using the interstate system should be taxed even further by the Federal Government for the support of that system.

As of the present moment I believe that the House Committee is giving very real consideration to the bill which we have proposed. I do not think that it is a lost cause in any sense of the word. However, it may well indeed be that there will be eventually a compromise between whatever comes out of the House Committee and what comes out of the Senate Committee. I think I have touched on the salient points of the two proposals, and, of course, I will be very happy to answer any questions.