The Big Freeze

3 minute read
TIME

THE ECONOMY The Big Freeze

The thermometer of U.S. industrial production dropped rapidly last week in the big freeze of the coal strike. Barron’s weekly business index skidded from 182.8 (1936-39 average: 100) to 175.3. Although it reflected only the first four days of the strike, the drop was almost two points a day.

The slump was bigger and more rapid than in last spring’s strike because 1) industrial production was so high and stockpiles of components (i.e. parts) so low; and 2) the high production was burning up stockpiles of coal much faster.

Down Steel. First to show signs of industrial starvation were the big users of coal. Steel production was down to 60% of capacity v. 91.4% the week before the strike. (In the first week of last spring’s coal strike it had dropped only nine points.) This week, it is expected to drop to 50% of capacity, or lower. The magazine Steel predicted it would drop below last spring’s low of 43% of capacity, if the strike lasted another week.

Carnegie-Illinois, biggest U.S. steel producer, cut its Pittsburgh production to 35% of capacity v. 104% the week before. Total steel loss for the week: 504,000 tons—enough to make 200,000 autos. Bethlehem laid off 8,000 of the 14,000 employes in its Johnstown plant, bringing the total laid off by railroads and steel plants alone to an estimated 70,000. The total of idle workers in all industries is expected to pass 1,000,000.

Railroads were hit from two sides. Coal-burning roads were pinched by lack of fuel to run trains. And coal-hauling roads were hit even harder. Example: the Norfolk & Western normally gets 95% of its revenue from carrying coal.

Down Autos. Automakers had enough coal and steel to keep going for another week—unless makers of parts had to stop production before that time for lack of steel, coal, or power. (Birmingham Gas Co. this week notified its industrial customers that if temperatures went down to freezing, it would have to divert their entire supply of gas to domestic consumers.) Ford, Chrysler and Hudson used the Thanksgiving weekend as an excuse for temporary shutdowns. Unless the coal strike ended, 500,000 autoworkers would be out of work by Christmas. They would be out sooner if an embargo was clamped on all but essential freight.

Railroads, declaring that the halt of coal and other shipments had improved their supply of locomotive fuel, doubted that such an embargo would be necessary. Nevertheless, there was so much talk about it in Washington that the railroaders had embargo plans ready. If it were put into effect, not only autos but almost every other big & little industry would be frozen.

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