Throughout the 1930s, due to the economic depression, which reduced the business volume, the federal funding for highways decreased to and remained at the level of $150 - $180 million (Dilger 14). However, this did not stop the formation of huge industries around transportation via highways. Oil, automotive and road-building industries became powerful lobbying agents. General Motors Co. and Yellow Coach continued with their underhanded operations to replace trolley systems in cities.
1932: The federal government put a $0.01 per gallon tax on gasoline in order to help alleviate the national budget deficit. This generated about $200 million annually on average through the 1930s (Dilger 15).
1933: Second Avenue Railroad, a streetcar company, was the first one to give in to buses in New York City. The East Side Omnibus company bought it and coverted the trolley lines to buses. The New York Railways line, another major streetcar company converted its last line to buses by June 1936. By the end of 1936 almost all, except half a dozen short trolley routes, belonging to the Third Avenue Railway system, was were replaced by bus lines. The remaining stuborn lines were eventually motorized by 1946 (Schrag 74-75).
Around the same period all across the U.S., street car companies were struggling and coming to the same end in all major cities, including Philadelphia, Baltimore, New Orleans, Chicago, Boston, Los Angeles, and San Francisco.
1935: The Motor Carrier of 1935 passed. It gave power to the Interstate Commerce Commission to set new regulation on trucking business. The regulations mainly governed routes, shipping rates, and mergers. The real target of the regulations, however, was the new-comers to this business. It was designed to restrict the number of companies entering the business and thus maintaining the competitively of existing trucking and railroad companies.
By the beginning of 1940s, despite relatively lower amounts of funding, there were about 650,000 miles of highways, streets, and roads either completed or improved (Owen 133). The quality of these works, on the other hand, was another story. Because these projects were undertaken mainly to create jobs, thousands of unskilled workers were employed to hastily finish these projects, which later on needed a lot more money to be fixed and maintained. Moreover, there was little attention given to the coordination and integration of different transportation modes. This oversight, among other things, made it easier for the automotive and oil industries to hijack the country’s mass transit options in upcoming years.
1939: New York World’s Fair. General Motor’s Futurama pavilion at the fair attracted a huge attention from the public, drawing about 5 million visitors. Futurama's semi-science-fictional depiction of the future, according to the clairvoyance of GM, put the automobile and highways in the first rank of public’s imagination. Along with the private automobile and highways, it also endorsed detached single family homes as the ideal habitat on their models.