Federal Aid to the States: 1940 Model

In the year 1930, before the Great Depression had unleashed its full fury, federal aid to the states totaled approximately $135,000,000. The highway grants represented more than one-half of this amount, and National Guard payments accounted for another 22 per cent. The number of subsidies did not exceed 11, even if we treat as separate grants the payments for forest fire protection and distribution of nursery stock—both administered by the Forest Service in the Department of Agriculture. Opposition to the principle of grants-in-aid was strong, and had compelled the abandonment of the grant for child hygiene. No uniform federal policy had been established concerning the purposes for which aid should be given, the bases on which it should be apportioned, or the extent to which the federal administering agencies should exercise supervision or control over state activities.But 1940 marks the beginning of a new decade. The tragic thirties are past, and the full force of their impact on intergovernmental relations can now be observed. It is timely, therefore, to re-examine the system of federal grants-in-aid, and note the more important changes that have occurred. The most obvious fact is the increased use of the subsidy principle.