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on, that maybe we will have a factor in Federal financing which will result in an inflated dollar, an inflation which is not contemplated on the basis of only one resort to revenue bonds of this type; to wit, for highways?

General Clay. Quite obviously, Senator, we have no inflated values in our estimates. They are based on present costs.

As to whether or not we are going to have an inflationary policy in the 10 years ahead, I certainly consider that you are far better qualified to answer that than I am.

I feel certain that our own program is not inflationary if it is done on a self-liquidating basis. These bonds are paid off on a definite application of revenue. It is not inflationary.

It is inflationary only when you issue bonds and do not provide the revenues to pay for them, and so our plan is not inflationary. In fact, as to whether or not other appropriations and other succeeding governments are going to bring about inflation over the next 10 years, I cannot say. I do know from the published announcements of Treasury with respect to its application of money controls, its efforts to balance the budget, that we perhaps can look ahead to a period in which we have a reasonable stability.

How long that stability will last, I hesitate to judge. I personally am confident that we have at least 10 years ahead of us in which we are not going to have any runaway inflation, and I feel reasonably sure that with a self-liquidating program, we can build these roads, and they will so encourage the utilization of the automobile, and the increased number of automobiles on the roads, that it will be the greatest single factor you can make against inflation, and so I am absolutely convinced that this is an antiinflation measure as it is.

Senator HRUSKA. Of course, General, when you say through a selfliquidating project, heretofore, particularly up until 1954, there wiis not any such thing as linkage between gasoline tax and roadbuilding.

Senator GORE. It is not in the 1954 act.

Senator Hruska. Except that the amount returned by gasoline tax is now devoted to roadbuilding purposes.

If we are resorting to a revenue bond issue for the purpose of making this completely self-liquidating, why not extend that policy to schools and hospitals, and so on, and maybe you should apportion all the general revenues through bond issues and have them self-liquidating.

General Clay. As a matter of fact, Senator, I cannot answer that. I know of no place right now where you have a direct tax which is as closely associated with the user as you do here and which your precedent has been more and more approaching; that is asking that the tax be made available for road improvements.

It was because of the various acts passed by the previous Congresses, and the matching of the funds by the State and Federal Governments, that we felt caused this tax to be placed in a slightly different category than any other that I know of.

It was because of that that we felt we could make it applicable to the servicing and retirement of the bonds and thus to make this a selfliquidating project.

I personally am convinced that is sound. If the Federal Govern. ment could carry that out, I think it would be a very good and wholesome thing and might be the very next step toward preventing the inflation that all of us fear.

Senator HRUSKA. I have one other instance to bring up in that connection, General: I know of one State in which 80 percent of its revenues are earmarked for particular purposes, leaving in the general till about 15 or 20 percent of the revenue to do its appropriating from.

I do not mean to suggest that the Congress of the United States is going to get into that sort of thing, but is this not a possible start in that direction, to a point where Congress will be a very nominal body, insofar as appropriating general revenues is concerned?

Senator GORE. Will the Senator yield there?
Senator HRUSKA. Yes.

Senator GORE. Alcoholism has become a great problem in this country. We might earmark the liquor tax for a home for alcoholics.

Our veterans' benefits are big, tremendous. Hospitals are overcrowded. I receive calls and telegrams almost daily pleading for assistance to obtain admittance to some hospital that is overcrowded.

Surely we could find some course that we could earmark for veterans' benefits, and, as you say, pretty soon the Government would be operating and not in one straitjacket but many.

We have one now, which is the national debt. It is within the power of Congress to raise that national debt. I would prefer one straitjacket to many. Excuse me.

Senator Case. Mr. Chairman, would the Senator yield to me at that point for a very brief observation ?

Senator HRUSKA. Yes, sir.

Senator Case. The senate committee did not accept the linkage provision that was in the bill as it passed the House last year. The Senate struck that out. It is true that the Senate in the Highway Act of 1954 in the Congress did say, not formally in the act, but in our explanation of it that we were now providing for Federal aid in an amount approximately equal to that which the Federal Government was collecting from the gasoline tax, and the motor fuel tax, and lubricating oils; however, we in striking out the House provision, definitely developed last year that to dedicate the Federal gasoline tax as such to highway uses would be to impose upon the purchasers of gasoline who used it for nonhighway purposes a tax to be dedicated for road purposes.

The suggestion in this bill that we make a definite linkage by appropriating the specific revenues derived from the taxes imposed by certain sections of the Internal Revenue Code—to wit, those on gasoline and diesel oil—is responsible, I think, for the bill that Senator Carlson introduced the other day; and I frankly state that it is partly responsible for the bill which I introduced which proposes that the Federal gasoline tax collected on gas used for nonhighway purposes be refundable.

Most of the States refund gasoline taxes for use on farms and in tractors and for other nonhighway uses. I think it is manifestly impossible to expect that the Congress, when it recognizes the situation, will ever approve a dedication of the Federal gasoline tax to the build ing of interstate roads.

The only way the rural sections of the country would accept a dedication of the Federal gasoline tax would be if that dedication includes the servicing of construction of farm roads as well as the Interstate System.

There are too many great open spaces where the Interstate System offers nothing to the people who pay gasoline taxes or use gasoline for nonhighway purposes.

Senator GORE. Without objection, one additional question, and then we will have to adjourn.

Senator THURMOND. General Clay, I believe you testified that from the standpoint of protecting the national defense or promoting the economy of the country or conserving lives and preventing injuries and property damage, that you felt this system of roads was essential; is that correct?

General CLAY. Yes, sir.

Senator THURMOND. I presume in making that statement that your committee is not necessarily bound or wed to any particular method of financing on the question of reimbursing toll roads, if the Senate should deem some other system is preferable, is it?

General Clay. As far as our committee is concerned, Senator, we would like to have a highway program that would complete the Interstate System. We think that is vital and essential to the country.

When it gets to the question of the toll-road reimbursement or the reimbursement of the States, our committee made that recommendation in full conscience. We would certainly not want to see you destroy the opportunity of having an Interstate System completed within the next 10 years, and as far as the financing is concerned, it was our view that the method which we recommended was the most conservative method in which this program could be built.

There again we would not want, at least I would not want to see the question of how this road system was to be financed prevent us from having a completed Interstate System in the next 10 years.

I think it is absolutely vital that we complete that system.

Senator GORE. General, would it be convenient to you at some future time to return for further questioning, if the committee should so desire ?

General CLAY. Yes, any time. I am at your service.
Senator GORE. Thank you very much. The committee is adjourned.

(Thereupon, at 12:10 p. m., the committee was adjourned, subject to the call of the Chair.)


MONDAY, MARCH 14, 1955


Washington, D.C. The subcommittee met at 10:10 a. m., in room 412, Senate Office Building, Senator Albert Gore presiding.

Present: Senators Gore, Thurmond, and Kuchel.
Also present: Delegate Bartlett of the Territory of Alaska.
Senator GORE. The committee will come to order.

The committee is pleased to have before it this morning Mr. James L. Bossemeyer, representing the National Association of Travel Organizations.



Mr. BoSSEMEYER. Gentlemen, my name is James L. Bossemeyer. I am executive vice president of the National Association of Travel Organizations. Our association has headquarters in Washington, D. C. We appreciate the privilege of appearing before your committee to express our views concerning the steps needed to meet the crisis in transportation caused by our inadequate, outmoded, and unsafe system of highways.

Our organization is a nonprofit corporation. The key groups of members are the more than 40 State and territorial travel promotion offices and more than 60 regional and metropolitan travel promotion organizations. These nonprofit organizations supported by public funds represent taxpayers throughout the Nation.

Also affiliated with us are nearly all of the important segments of the travel industry. For example, the American Hotel Association and many State hotel associations are members. Many leading resorts and travel attractions are members. Membership also includes the Air Transport Association of America and a number of airlines; four regional railroad passenger associations and a number of leading passenger carrying railroads; the American Merchant Marine Institute, Inc. and some of its individual shipping lines; the National Bus Traffic Association and leading buslines, and a number of its affiliates.

The American Automobile Association and a number of its affiliates and some independent automobile clubs are members. More than a hundred magazines and newspapers which feature travel advertising and travel articles are members. The list also includes oil companies, automobile manufacturers, travel shows, travel agents and other cate

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