Originally the entire responsibility for highways in Nebraska rested with the counties. In 1917 the Legislature accepted the provisions of a federal law and appropriated money to match federal funds for highway construction. This act marked the beginning of the state highway system.
The route now designated U.W. 281, extending from Mexico to Canada, runs through east-central Nebraska from Webster County in the south through Boyd County in the North. By the mid-1920s all sections of this highway had been laid out in Nebraska. The number "281" was first applied to its entire length in this state in 1933.
In 1929-1930 a section of this road beginning four miles south of O'Neill and continuing to the south fork of the Elkhorn River was the subject of one of a series of federally directed projects to test construction methods for bituminous roads. These roads were covered with a mixture of oil, sand and gravel to a thickness of several inches. Although such a road surface had rarely been used in Nebraska to that time, so successful was the experiment that this bituminous mat became the principal type of paving used in the state until the 1950s. On March 30, 1960, U.S. 281 was formally dedicated as the national "American Legion Memorial Highway."