1950s brought better highways, but also lower sales, calls for reforms

President Dwight Eisenhower signed the Federal-Aid Highway Act into law on June 29, 1956, in his room at Walter Reed Army Medical Center near Washington, D.C. It was one of 27 bills he signed that day as he recovered from intestinal surgery.

There was no signing ceremony for the highway law. There were no pictures for posterity, no commemorative pens for its congressional sponsors -- just Ike and White House aides.

It was an anticlimactic birth for an interstate highway system that would profoundly alter American society: 41,000 miles of limited-access, multilane highways that would connect major U.S. cities within a decade.

The nation's largest construction project wasn't even the day's top news story. Most Americans heard more about film star Marilyn Monroe and playwright Arthur Miller marrying in upstate New York.

The $25 billion road bill had bipartisan support, but still required two years of hard wrangling to pass after Eisenhower proposed it. It was a huge victory for longtime road advocates, including automakers, dealers, and NADA.

Within six months, the December 1956 edition of NADA Magazine reported, 31 states had awarded 107 construction contracts for the new system. Federal aid provided the bulk of the funding.

The Interstate Highway System was the product of decades of grassroots support for better national roads. It tapped into the Good Roads Movement founded by bicyclists in the 1890s, as well as scores of named national trails in the 1910s and '20s that were created out of dues collected from businesses and chambers of commerce along the routes. 

State and federal highway departments had been chronically underfunded. Eisenhower nurtured the public support needed for such a massive infrastructure investment. Previous presidents also wanted better roads, but were thwarted by more pressing challenges. 

Before World War I, the much smaller federal government managed to map a single, theoretical, transcontinental road by 1916. More than two decades later, President Franklin D. Roosevelt publicly floated the concept of 10 national toll roads -- three east-west roads and seven north-south ones -- to provide jobs for unemployed workers. 

Then World War II began in Europe. The Korean War broke out before Roosevelt's successor, Harry Truman, could even disband WWII-era price controls. 

But with the Korean armistice in 1953, Eisenhower's slate was clear. 

No previous U.S. president had a better appreciation for good roads. Historians credit Eisenhower's enthusiasm primarily to his exposure to Germany's autobahn system during World War II. He acknowledged his admiration of the four-lane divided highways that were designed to speed troop deployment and military logistics. 

As Allied forces that Gen. Eisenhower commanded closed in on Berlin in 1944 and 1945, the transition from cramped French, Belgian and Dutch roads to the wider autobahns -- straighter and without crossroads -- was clear. 

But Eisenhower's love of roads started before World War II. One of his Army assignments in the 1930s was assessing the military capability of French roadways. He knew what good roads could do -- and what bad roads couldn't do.

In 1919, Lt. Col. Eisenhower, then 28 years old, joined the U.S. Army's first transcontinental road trip. To demonstrate its motorized capabilities and promote better roads, a convoy of 24 officers and 258 enlisted men aboard 80 trucks, cars, and motorcycles -- and a Molitor wrecker -- left Washington, D.C., along the Lincoln Highway, bound for San Francisco.

The plan was straightforward: Follow the route of the first major U.S. sea-to-sea road as defined by a 1916 law. The convoy would cross plains, mountains and deserts over 56 days, with evenings set aside for speeches, dinners and entertainment organized by local boosters.

The experience was sobering. The Army knew big chunks of the route consisted of proposed, not actual, roads. Each day, scouts drove ahead to find and mark the road so the convoy wouldn't get lost, a U.S. Department of Transportation history recounts.

The account identified four key challenges: the roads, bridges, vehicles and speeches. Most of the roads weren't paved. They were narrow and dusty when dry, muddy when wet.

Vehicles slid into ditches and bogged down in sand or mud. They had to be dragged out by the wrecker or pushed by soldiers.

Light-duty bridges also thwarted the convoy. The Army reinforced some, detoured around others and built new ones in some locations. The convoy ignored several bridges, finding fords and simply driving across low spots.

Vehicles broke down: tires, axles, bearings, motors and other parts shook off on the bad roads. Mechanics who were trained to repair horse-drawn wagons struggled with new technology. Eisenhower's diary said the converted mule-skinners' salty language "colored the air."

The convoy drew avid crowds. The 80 vehicles passing through a community often created the biggest local event in years. Soldiers grew to hate the speeches.

Eastern roads were passable, but deteriorated west of the Mississippi River. Eisenhower's report noted: "Two days were lost in the western part of [Nebraska] due to bad, sandy roads." The convoy fell behind schedule.

The worst travel came in Utah. It took a full day to pull each vehicle through 200 yards of quicksand. On another bogged-down day, water supplies had to be rationed until fresh barrels of water arrived from 12 miles away -- by horse-drawn wagons.

Six days late, the convoy reached San Francisco and a grand governor's gala. Its average pace over 62 days was 6 miles an hour. Eisenhower called the trip "an undoubted success," but added: "There was a great deal of sentiment for the improving of highways."

On issues other than roads, the U.S. auto industry and NADA endured a tumultuous period throughout the 1950s, contrary to current notions of post-WWII America as the beneficiary of an unbroken three-decade wave of prosperity.

Today's industry observers routinely describe the Great Recession, marked by a 35 percent crash in U.S. auto sales from 2007 through 2009, as the worst economic crisis since the Great Depression. But the 1950s had two such swoons: Sales fell 34 percent from 1950 through 1952, and 35 percent from 1955 through 1958.

Throughout the 1950s, sales declined from 7.2 million autos in 1950 to 6.7 million in 1959 -- the only down decade in U.S. industry history. The Korean War, from June 1950 to July 1953, greatly disrupted the auto industry. President Truman re-imposed price controls on vehicle sales and rationed steel production, cutting automakers to 70 percent of their 1950 levels. In 1952, the National Production Authority limited U.S. auto production to 4.3 million vehicles.

Steel rationing locked in auto market shares: General Motors, Ford, and Chrysler controlled about 90 percent of the U.S. market. Independent manufacturers, including Nash, Frazer, Packard, Kaiser, Henry J, Hudson, Studebaker and Crosley, split what was left, and rationing hindered product development and hastened the end of many brands.

Yet even as brands failed or merged, bulging dealer inventories barely declined, prolonging a cutthroat environment of discounting. The 1956 dealer count was 41,018 -- 90 percent of 1947 levels.

In 1956, fervor to reform the auto industry was running high in Washington. Lawmakers and regulators expressed alarm about both the postwar rise of large multinational corporations and consumer complaints about dealer practices.

NADA's convention in Washington in January 1956 drew a record 13,000 delegates. The association's outgoing president, Frank Yarnall, opened the convention by reiterating NADA's theme throughout the 1950s of the need for more ethical dealer behavior.

Yarnall urged dealers to reject discredited retail practices and not to offer zero-down or long-term loans to marginal buyers.

"Public confidence in the automobile industry must be restored by a return to the Quality Dealer type of operation," he said. "Don't let the buyer have no equity at the start of the loan. And slow up on advertising that creates the bad paper."

Many of the convention speeches focused on the factories and their difficult relations with dealers.

Sen. Joseph O'Mahoney, a Wyoming Democrat and head of the Senate's antitrust and monopoly subcommittee, deplored GM's size. He said the automaker's 500,000 shareholders, 600,000 employees, 19,000 dealers and 21,000 suppliers created "an economic state" bigger than most U.S. cities.

Sen. Mike Monroney, a Democrat from Oklahoma, called for fairer dealer franchise contracts to blunt the power of large automakers. NADA's executive vice president, Frederick Bell, closed the convention with a thunderous call for franchise reform. Brandishing a copy of a 1939 Federal Trade Commission report detailing onerous factory policies, he said dealers were demanding that such "unfair practices" end.

"That's what dealers wanted in 1939," Bell said. "And that's what they want in 1956 and they're getting awfully tired of waiting."

Bell initially had advocated that dealers adopt "a conference table approach" of negotiating with automakers. But he declared support for federal franchise legislation in 1939, saying that years of direct talks had accomplished nothing.

After World War II, federal antitrust law had worked against exclusive sales territories. Since the late 1940s, automakers had eliminated most territory guarantees. After Congress rejected a federal franchise law, NADA shifted its focus to state legislatures, where it gained wide influence.

Federal antitrust investigations of automakers in the 1950s helped dealers win on several issues: extending franchise agreements to five years from one, permitting terminations only for cause, enabling dealers to sue factories for breach of contract, giving dealers the right to designate a successor, and creating better warranty labor rates and equitable liquidation settlements.

In 1956, Congress passed the Auto-mobile Dealer's Day in Court Act, which codified dealer recourses against manufacturers. Legislative hearings expanded to probe deceptive dealer practices, leading to the enactment of the Monroney price-sticker law in 1958.

Automakers and NADA supported the mandate for window stickers listing each vehicle's specifications, equipment, installed options, taxes, fees and manufacturer's suggested retail price. Ultimat-ely, greater transparency about pricing helped allay customers' suspicions of dealers.

These developments, along with a decline in dealer numbers to fewer than 35,000 by 1961 and the rise of dealer councils whose members were elected by dealers, gradually eased dealer-factory tensions.

At the 1961 NADA convention, outgoing President Birkett L. Williams praised dealer councils, Automotive Executive reported.

"To my mind," Williams said, "there has never been a time when factory-dealer relations were as good as they are now."