On July 12, 1954, President Dwight D. Eisenhower proposed a highway modernization program, with costs to be shared by federal and state governments. Modernizing the nation’s highways was a priority for Eisenhower to the delight of the road building community, which had been disappointed by President Harry Truman. In a pre-election statement to the Hearst Newspapers, candidate Eisenhower justified expanding federal government power with joint planning between state and local governments to modernize the road system:

The obsolescence of the nation's highways presents an appalling problem of waste, danger and death. Next to the manufacture of the most modern implements of war as a guarantee of peace through strength, a network of modern roads is as necessary to defense as it is to our national economy and personal safety.

We have fallen far behind in this task-until today there is hardly a city of any size without almost hopeless congestion within its boundaries and stalled traffic blocking roads leading beyond these boundaries. A solution can and will be found through the joint planning of the Federal, state and local governments.

Beginning with his State of the Union address on January 7, 1954, President Eisenhower and his administration began pitching road modernization to the public, Congress and state leaders, arguing it was in the “vital interests of every citizen” to have “a safe and adequate highway system.” Vice President Richard Nixon told the Governor’s Conference on July 12, 1954 that the goal of President Eisenhower’s “grand plan” was “a properly articulated system that solves the problems of speedy, safe, transcontinental traffic: intercity communication, access highways and farm-to-market movement, metropolitan area congestion, bottlenecks and parking.”

Although President Eisenhower signed the 1954 Federal Aid Highway Act in the days following Nixon’s speech, both Congress and state leaders resisted the bill because of costs and Eisenhower’s insistence that it be budget-neutral. But, the president pressed his case to Congress and eventually struck a deal with governors, creating a national gasoline tax to fund the interstate system. On June 29, 1956, President Eisenhower signed the Federal-Aid Highway Act, which authorized the building of the interstate highway system, the largest public works project in the nations history, providing $25 billion for the construction of 41,000 miles of roads over a period of 20 years.

The nation faces a very similar challenge today in its declining transportation infrastructure. This Spring, the Miller Center released a report, titled “Are We There Yet? Selling America on Transportation” that calls attention to the nation’s transportation infrastructure challenges. The report puts the situation frankly:

Two imperatives have collided: on the one hand the imperative to invest in a transportation system that will continue to grow our nation’s economy, create jobs, and enhance U.S. competitiveness; on the other hand, the imperative to come to grips with the nation’s short- and long-term fiscal problems, including especially the federal treasury’s unsustainable and still growing level of debt. In short, it’s not that our political leaders don’t agree that transportation is important or that infrastructure investments are needed; rather they can’t agree on whether or how to fund those investments given the current budget situation.

While many Americans will be celebrating Independence Day, July 4th is also worth reflecting upon as it marks the anniversary of Martin Van Buren’s signing of the Independent Treasury Act in 1840, a bill that “divorced” the federal Treasury Department from its relationship with all banks. While the deeply partisan battle for the Independent Treasury’s establishment would continue for six more years, the legislation marked a significant triumph in Jacksonian laissez faire philosophy and the assertion of States’ Rights and Supremacy. A brief look at the legislation’s history is also a reminder that the partisan rancor surrounding policy proposals to deal with the economic crisis the country faces today is not unique. Indeed, it suggests instead that we are amidst one of the nation’s periodic partisan battles over defining the government’s role in the economy and society.

The Independent Treasury Act was a response to the Panic of 1837. The economic crisis of 1837 was triggered by the Deposit Act of 1836 and the collapse of state banks that had been using funds distributed by President Andrew Jackson from the Bank of the United States as a basis for speculation. With the collapse of credit, banks could no longer redeem currency notes in gold and silver despite demand for it. Meanwhile, the situation was exacerbated by a depression in England, which ended British loans to the United States and forced the price of cotton to drop. The United States had also accumulated debts and unemployment rates were high. Although President Jackson used popular opinion to attack the national banks and although he extended executive power as a bulwark of popular rights against moneyed interests, the bottom line in 1837 was that the American economy was unstable.

In response to the economic crisis, President Van Buren, a proponent of Jacksonian laissez faire philosophy, called for a special session of Congress to deal with the government’s financial situation. Van Buren opposed the establishment of a new central bank, arguing that the American people had spoken against it in the previous two elections. Further, he argued that it was not government’s business to regulate “domestic exchange.” Instead, Van Buren proposed a policy that would completely separate the government from banks. In addition, the government would collect, keep and disburse it’s own funds independent of the national banking and financial system. (Senator Gordon of Virginia had made a similar proposal in 1836.)

As David Kinley wrote in 1893, the Independent Treasury System was established on the “violence of partisan feeling.” According to Kinley:

“It was a question on which parties lost and won; a question on which great statesmen changed their opinions, and parties shifted their ground; on which there was a flux and reflux of public opinion and governmental policy, until it was settled at last, nearly a half a century ago, more as a party issue than a question of scientific economics; a vindication of party strength, and a necessary outcome of the drift of practical politics rather than a triumph of economic and financial truth over fallacy, or the consensus of concerted and convinced opinion as to the merits of the question.”