Peak Around the Corner

Next month U.S. railroads will face their first big test of World War II. The A.A.R.'s reiterated boast ("We can carry it all") will come face to face with over 150,000,000 tons of bituminous coal, which must be delivered before Christmas. The fall coal movement, coinciding with a seasonal industrial pickup, makes October the railroads' peak month of each year. This year, for the first time since 1930, October's weekly carloadings are expected to average around 1,000,000 cars.

Even some railroad men are a little scared. Transportation Commissioner Ralph Budd himself last fortnight wrote a letter to all U.S. shippers calling for "new records in the volume of transportation rendered per unit of serviceable equipment," hinting gently at the possibility of seven-day operations. A.A.R. Vice President Buford has already told members that they will have to reduce the average turn-around on freight cars to 11.8 days, a new low record (best previous: 12 days), made even more difficult by the fact that intercoastal shipping diversion is enforcing much longer hauls.

Chief reason for such precautions: the railroads' big belated orders for new freight cars are not being filled, despite A-3 priorities. Last week even the New Dealers on SPAB threw in the sponge on releasing steel plate for Harold Ickes' pipeline, admitted that plate for cars was now more important. It was a bitter admission for them: they were the wilderness voices that had urged big car purchases at a time when there was plenty of steel and the builders were not overworked.

Freight-car facts of last week: only Bethlehem Steel, which makes its own plates, was able to push its August output (599 cars) above July (244). Even Bethlehem produced cars at only 75% of rated capacity; American Car & Foundry turned them out at only 18% of capacity in August, Pullman-Standard at 15%; the industry as a whole was at less than 50%. For the first eight months of 1941, only 49,134 new cars were put into service v. 44,791 last year, but on Labor Day the railroads had 92,033 cars on order (v. 18,456 last year). The situation in locomotive stocks was just as serious.

Estimates of October freight-car supplies and loadings were a dime a dozen last week. Ralph Budd admitted that there would be 20,000 fewer new cars than the roads had planned for; the National Planning Association predicted a 40,000-50,000 car shortage; the latest OPM report figured there would be a deficit of 80,000 cars. But on one score there was clear agreement: the coal movement might be the backbreaking straw.

Next week A.A.R. will put into effect the "100% rule" (not used for coal since strikebound 1922): coal mines must use 100% of the cars they order each day, or have their next day's quota reduced. Crux of the coal problem is that the U.S. has never caught up with the coal lost in last April's 29-day strike.* All through late spring and summer the U.S. Government (from wolf-crying Harold Ickes to sanguine Ralph Budd) urged coal consumers to buy ahead, avoid the fall traffic peak. Yet, in the first seven months of this year, with industrial production up 15%, total coal loadings, which usually pace production (especially in boom periods), were up less than 8%; bituminous coal production through mid-September was up only 9%. Government officials shudder at the implications of some industrial stocks-on-hand statistics (as of Aug. 1): electric utilities had 62 days' supply (compared to 80 days' last year); Ohio steel mills had 20 days' supply (v. 23); Illinois-Indiana by-product coke ovens had 47 (v. 72). At year's end all U.S. industry will probably have no more than 27 days' supply. Other dangerous possibilities:

> New England's coal supplies depend mainly on water shipments. If any colliers are withdrawn for Navy or other defense uses, no one knows how the coal will be moved, even if the fuel-oil shortage (which would increase coal needs still more) proves a mirage. And New England's coal movement also normally depends on winter chartering of extra ships, which are not available this year.

> The Great Lakes area, which also depends heavily on water transportation for its coal, may be working itself and the railroads into a bottleneck. In the mad scramble for iron ore, Great Lakes ore boats, to save the five hours it takes to load coal, have been going back empty. If the Government requisitions any oil tankers from the Great Lakes (and there has been talk of it) the load on the railroads would be correspondingly increased.

> The West Coast used to get much of its steel through the Canal, may have to choose between steel and coal in the peak carloading period. More and more aid-to-Russia (and China) will have to move westward by rail too.

> Canada, now getting most of its coal from the U.S., will need an additional 1,500,000 tons of bituminous plus at least 600,000 tons of anthracite this season.

> The worst headache of all--a coal strike --was at least temporarily relieved last week. A five-day strike of 43,000 miners in the captive mines of U.S. steel mills, demanding a closed shop, was called off for a month pending further negotiation. The five-day stoppage left steel companies with little more than a week's supply of coal on hand. From a defense standpoint, probably the only thing worse than a coal strike would be a steel strike--and steel itself cannot continue production without coal.

Fortnight ago total carloadings reached the highest level for any week since 1930: 913,952 cars, of which 171,730 were coal. During October coal alone will run 225,000,250,000 cars weekly, with steel, arms, general merchandise and possible emergency oil movements carrying the total toward levels of 1929 (when the railroads had 600,000 more cars, some 15,000 more locomotives, than they have now*).

Last week railroads, Government men and shippers held their breath to see if the railroads would squeak through October. At best, most of them expected some regional dislocations, brief but perhaps acute, and no one liked to think about the fall of 1942. Ralph Budd had estimated that the 1942 peak would require 160,000 more freight cars than there are now (other estimates went as high as 370,000 new cars). With or without a steel shortage, 160,000 is more new freight cars than have been built in any year since 1923.

If the railroads get through this winter, they will merit a medal for operating ingenuity. They will not get one for foresight in ordering new cars.

* An exception: the railroads themselves, which use one-fifth of all U.S. bituminous coal. On Sept. 1 they had a summer-collected stockpile of 8,066,000 tons (v. 5,654,000 tons at the same time last year), around 10% of their yearly consumption.

* The A.A.R., proud of the steady long-term rise in efficiency of railroad operations, insists that the 1929 traffic peak could now be handled with 350,000 fewer cars. But if 1929's peak freight levels (1,200,000 cars a week) have to be handled again, that still leaves 250,000 cars for still more operational efficiency to replace.

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