Optimism, Pessimism

The Association of American Railroads still breathed confidence last week. Said Warren C. Kendall, chairman of its service car division : “There is no question of a car shortage. . . . We’ll keep ahead. We don’t care how fast it [defense expansion] goes.”

But if the approaching September-October traffic peak held no terrors for A.A.R., it held plenty for defense officials. A.A.R.’s optimism is based on its own estimate of 1941 traffic: 40,898,871 carloads, 12.5% more than last year. But carloadings thus far are up 17.3%. Non-A.A.R. economists on whom the Administration depends for railroad data now estimate 1941 carloadings at about 46,000,000, more than 20% above 1940. Their pessimistic forecasts: 1) there will be a shortage of about 135,000 cars this fall; 2) to avoid an even more serious shortage in the fall of 1942 (when the defense program is in higher gear) more than 350,000 new freight cars, including replacements, would have to be built.

On this basis, even the 270,000-car 1942-43 program adopted by A.A.R. in May is far too little and much too late. Building capacity is limited; not since 1925 has the U.S. produced as many as 100,000 cars a year. Moreover, the orders came after steel was tight and carbuilders had switched part of their plant to defense production. Car production in the first half of the year averaged about 6,000 a month; at this rate it would take more than three years to complete A.A.R.’s 270,000 cars. This week Ralph Budd, commissioner of transportation, admitted that the expansion program “has fallen down and is falling down” because of materials shortages (even though orders have A-3 priorities). Of 100,000 new cars which the roads expected by October, Budd predicted that 20,000 would not be delivered on time.

Last week a group of railroads (which remained carefully anonymous) talked over a plan for a $1,000,000,000 pool* to purchase new equipment with the help of RFC. This would ease the financial burden on railroads in receivership or short of cash, of which there are still many. For all roads it would avoid the necessity of selling any more equipment trust certificates in a market near the saturation point after whopping sales of $52,000,000 in June. It might even speed car production by bulking and standardizing orders and by multiplying pressure to make priorities effective. This plan did not come officially from the A.A.R. but from impatient individual railroads.

In Chicago last month, ICC Chairman Joseph Eastman urged a group of shippers to help ease the railroads’ burden by using trucks and barges wherever possible. A.A.R.’s Michael J. Gormley cracked back: “Let me say to you, Mr. Eastman, that we don’t want you to relieve us of any business by the trucks or any other methods. The railroads … are still in the game of looking for more business.” But if the roads do find themselves 135,000 cars short this fall, trucks (of which the U.S. now has about 5,000,000) will be a large part of the answer.

The whole answer must be a rationalization of all U.S. transportation agencies, making the most efficient use of every railroad car, truck, pipeline and barge. Budd said this week that the average freight car was in transit only 10% of the time, suggested that carrying capacity of the present car supply might be lifted as much as 25% by faster loading and unloading. A transport coordinator (with fangs) could force such a move, as well as quicker routing which inter-railroad competition now prevents. He could also free the present freight-car supply from wasteful short-hauls and from way-freight services that trucks could perform more efficiently.

To fill its role in this picture, the trucking industry needs some attention too. Late last month Budd set up a committee to study priorities for truck production, and some system of coordinating the nation’s numerous small truck lines for better efficiency. Meanwhile some truck assembly lines have been held up because parts makers were unable to get aluminum for magnetos (which take 11 oz. each). Truck manufacturers have finally achieved a summons to an 0PM meeting on priorities this week, should have no trouble making a case. A green light for truck production would not only ease transportation problems. It would also give Detroit, about to be turned economically topsy-turvy by curtailment of passenger cars (TIME, July 14), a chance to keep some of its men and machines at work.

*This was remarkably like a scheme worked out by Presidential Assistant Lauchlin Currie in the Lend-Spend Bill of 1939, which would have let the railroads turn in old equipment on new, thus get new cars without down payment and at low RFC interest rates. A.A.R. showed little enthusiasm and Congress, led by Senator Wheeler, defeated the plan.