The Smith-Hayden Act, also called the "20 Year Extension Act," was sponsored by Sen. Marcus A. Smith (D) and Rep. Carl Hayden (D), both of Arizona, and was the first significant modification of the Newlands Reclamation Act of 1902. It extended payments for construction costs on reclamation projects from 10 to 20 years, and allowed flexibility in the actual amount of construction costs made during the early years of repayment. Sen. Smith described it as “a broad scheme that will ultimately reclaim the West.”
It was introduced in the Senate on Feb. 26th and was passed with a provision giving the States Federal loans interest free on Mar. 18th. When it reached the House, however, southern and northeastern Congressmen worked to kill the bill or at least amend it because they believed the western states received too many special “pork barrel project” favors under its provisions. Most objected to the interest free loans. Rep. Oscar Underwood (D) of Alabama introduced the “Underwood Amendment” to the bill which required that Congress vote for appropriations from the reclamation fund instead of allowing the Secretary of the Interior to allocate them. Supporters of the bill accepted this provision in exchange for Rep. Underwood helping to block an amendment that would have required high interest to be charged on any loans given to Western states for land and water reclamation projects. “Even the highest payout under this act,” said Rep. Hayden, “is at a lower rate than the interest charge which the average American farmer must pay when he mortgages his land.” Passage of the bill assured Westerners of the long-term Federal commitment to water resource development.