Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-25
STEADY INCREASE NOTED
In FEDERAL AID PROJECTS
u. S. Subsidies to States Have Risen From
$12,OOO,OOO in 1912 to $l34,4O6, 435 in
l93O-TWO Sides of Problem.
BY GEORGE B. GALLOWAY.
Editorial Research Reports.

cent years, the method of apportioning
such grants and the conditions attached
to the Federal payments, the new forms
being taken by Federal aid, and the
extension of Federal functions involved
IN the growth of the system. Current
efforts to relieve economic distress have
led to the introduction at the present
session of Congress of various measures
to extend or modify the Federal-aid SyS-
TEN. Unofficial proposals looking to
changes in the system are also being
advanced by interested groups and in
dividuals. S>ominent among these is
the propose! to relieve the States, at
least temporarily, of any obligation to
match payments offered by the Federal
Government and to have Congress make
outright grants to the States. 1t is also
suggested that the Federal Government
reimburse the States and municipalities
for expenditures they have made and
are making 10 mitigate unemployment.
These developments and proposals have
renewed the old debate as to the merits
of the principles involved in Federal
bid, In the course of which widely d.
Nergent views are being expressed.
Theories of Federal Aid.
The problem involved in Federal sub
eidies to the States is that of financing
locally administered services-such as
forest-fire prevention, agricultural ex-
tension work, highway construction. vo-
eational education and promotion of the
welfare of mothers and infants-which
are national in scope and significance.
There are at least three ways in which
such essential services could in theory,
be financially supported: % by the
States alone, CD by the Federal Gov
eminent alone, or 90 jointly by the
States and the Federal Government.
To leave the States to finance, with
out Federal assistance, what are essen
tally national services assumes that all
the States are able, or equally able, to
provide such services. In view of the
wide disparity between the States in
population, natural resources, assessable
value of taxable property, wealth and
income, this assumption is obviously I'M
tenable. To proceed upon it would re-
suit in the provision of inadequate serv-
ices in some States, and in a failure in
other States &c provide one or more of
these services.
To leave the financing of locally adj
uninsured national services to the Fed
eral Government alone would result it
is believed. in the sitting of local ini-
tiative and responsibility. 1t would
smack of paternalism, presenting the
Government at Washington in the role
OF ''paymaster and policeman" 1t
would also involve a heavy burden on
to be borne in the main by the Weather
States. For these reasons this alterna-
tive has never been seriously considered
In the United States.
Joint cooperation between the States
and Federal Government in the financ-
ing Of certain services is the third al
Tentative which, in practice, has been
ADOPTED. Under this arrangement the
central Government has become the
partner OF the States in providing and
administering certain services. On the
part of the Federal authorities, the mo-
tive has been to secure economy eff
cheney and uniformity in the work I'M
dertaken. Local authorities, on their
part, have regarded Federal aid as an
incentive and guide. and sometimes a
sine qua non, to the provision of salts
factory service.
Evolution Of FederaI-Aid System.
Under its power to appropriate money
Tor general purposes, the Federal Gov
eminent from its earliest days has as
sumed the responsibility of rendering
financial and administrative assistance
20 the States. The practice of granting
subsidies to the States from the Federal
Treasury began with the land ordinance
Tor the Northwest territory in 1875 and
has continued down to the present time.
Congress has made grants to the States,
particularly from the sale of public
lands, for schools, roads and canals.
Today the whole field of relationships
created by these subsidies is covered in
minute regulations reached by agree
1nent between State and Federal au-
thoritles. In recent years Congress has
actually entered the domain Of State
and local government and has created
new organs of administration which, in
2 strict sense, are neither Federal nor
State in character.
Origin of Modern System.
At first Federal aid took TIE form of
grants of land for the maintenance of
public schools G735). for universities
tlTSD, for use as seats of government
or TO defray the cost of erecting public
buildings, for reclamation, to aid the
States in building canals, to stimulate
railroad construction and for internal
improvements. Since 1900 Congress has
compensated the public domain States
Of the West for the curtailment in
their sources OF revenue caused by the
large areas OF untaXed Federal lands
within their borders by giving them a
portion of the receipts from such areas
rs per cent of the national forest reve-
nues Q90D, so per cent of the royalties
from potassium deposits G9l8) and 37la
per cent OF the receipts from leases TO
oil lands and water power sites. 1920.
The States have also received a per-
centage OF the receipts from the sale of
public lands within their borders. In
1887 and in l84l Congress distributed
surplus funds in the Federal Treasury
among the States in proportion TO their
representation in that body.
The modern subsidy system had its
inception in a bill introduced in 1857
by Representative Morrill, of Vermont
granting unit of 80 900 acres of public
land to each State for each of its Sem
ators and Representatives. the money
from the sale of the land to be invested
and the interest to be used for the en-
oowment of colleges of agriculture and
the mechanic arts. The bill passed both
Houses, was vetoed by President
Buchanan and was signed in 1862 by
President Lincoln after the Southern
members, who opposed it, had with
drawn from Congress. In 1890 Congress
made an annual appropriation of $25,-
600 TO each State and Territory for the
further use of the Immigrant colleges,
q sum increased to $50, year by an
act of 1907. A clause in the act of 1890
empowered the Secretary OF the Interior
70 withhold its annual allotment from
any institution mot fulfilling its obli-
Rations'-a device for extending Fed
eral supervision Of expenditures which
has been employed in all recent subsidy
legislation.
In 1887 Congress provided for an an
nual appropriation of $4,000 to each
State and Territory for the establish
nlent and maintenance of experiment
stations in connection with agricultural
colleges. This subsidy was increased in
1906 to $4,000 and in 1925 TO $4,000
annually. Every State has accepted the
Federal offer and established an expert
ment station in connection with its ag-
ricultural college. State appropriations
for this work greatly exceed the Federal