Our Railroads: Can They Haul the Load?

I

IF long continued, the European war eventually means a great increase in the demand for basic commodities produced in the United States. This demand will probably not be as great as in the former World War, and the recent amendment to our Neutrality Act will somewhat restrict our sales of munitions and other contraband of war. Nevertheless, this nation will still have to help feed and clothe a substantial part of the world and supply it with machinery and basic raw materials now that millions of men are withdrawn from productive activity in Europe. We shall also become a more important source of supply to those South American countries which were the leading customers of the nations now at war in Europe.

This means more railroad traffic. Assembling shiploads of materials at the seaboard for export is still distinctly a railroad job. Likewise, domestic production of war equipment will lift railroad tonnage. Three or four tons of coal, ore, and limestone are required for every ton of finished steel produced. Therefore any large expansion in the demand for steel products means a much greater demand upon the railroads for transportation. Finally, the railroad is the most economical general-purpose land transporter in its use of man power. If at some future stage of the present situation it becomes necessary to utilize the man power of our country to the fullest extent, the railroad would have to take over some part of freight movements now handled otherwise.

For these reasons it becomes a matter of national as well as commercial interest to appraise the condition of our railroads at the beginning of this second World War and compare their condition today with that of 1914, at the beginning of the first World War.

Twenty-five years ago only a few of our major railroads had established 90pound rail as standard. The bulk of the rail being laid weighed considerably less than 90 pounds to the yard and was supported almost exclusively on untreated ties. Tie plates which spread the load and protect the ties from abrasion were not used. Many long-span wooden bridges were still in commission. Permissible locomotive axle loads, on the average, were at least 10,000 pounds per axle below what they are now.

Today scarcely any Class-1 main-line rail weighs less than 100 pounds to the yard; much of it weighs 110 or 112 pounds; and for some time railroads with heavy traffic have been laying rails of 127 or 131 pounds, and up to 152 pounds. This heavier rail usually rests on treated ties which last two or three times as long as untreated ties. Tie plates are almost universal. Crushedrock ballast has been steadily substituted for dirt, gravel, and cinders. Portable tools and machinery have been developed in connection with track maintenance. Welding keeps up the rail ends at the joints, resulting in longer life of the rail. Also, the standard rail length has been increased from 33 feet to 39 feet, eliminating 49 joints per mile of track. There has been a great extension of automatic signaling; nearly all junction points today are protected by interlockers which automatically close one track when the go signal is given on the crossing track. Centralized control for signals and switches, permitting the movement of trains without unnecessary stopping or delay, is now commonplace. Finally, 23,892 miles of the 1914 lines have been abandoned, and only 10,530 miles of new line have been constructed, so that we now have 13,362 less miles of main-line track to maintain and operate.

So a tremendous improvement in the fixed railroad plant over which traffic must be moved is the first outstanding difference between the railroad situation today and that of twenty-five years ago. Nowhere else in the world is to be found track equal to our heavy-traffic lines.

Offsetting this advantage is a certain amount of deferred maintenance in the trackage situation. Earnings of our railroads have been so lamentably low that in order to function at all since 1932 they have had to reduce maintenance of way expenditures to the absolute minimum consistent with safety. During seven of the depression years a deficiency of something like 4,000,000 tons of heavy rail and about 50,000,000 ties has probably been created. Fortunately a large portion of this deferred maintenance can be made up in the course of a year or two. The railroads are already moving to meet this situation. In 1939 they applied about 850,000 tons of new rail against 599,000 tons in 1938; but, more important still, they ordered 1,329,000 tons of new rail for 1940 delivery. These were the largest rail orders since 1929. Purchases of ties during 1939 also increased about 17 per cent over 1938. Thus everything indicates that 1940 will be marked by a determined attack on deferred track maintenance.

II

Since 1914 there has also been a thorough change in the character of operating methods. Twenty-five years ago freight moved from division point to division point, with more time spent in freight yards while trains were being shuffled and reshuffled than was spent in actual travel. Practically no locomotive passed over more than one short division. In 1938 the railroads moved slightly more freight traffic than in 1914, with only about two thirds of the freight-train mileage and a decrease of about 65 per cent in the time consumed between terminals. As a result, last year the average freight train per hour of operation developed slightly more than twice the number of revenue ton miles than were turned out per freight-train hour in 1914. Transit time between important centres has been cut to one half, one third, or even one quarter of what it used to be twenty-five years ago. Today freight moves on regular schedules just as definite as those of passenger trains, and freight trains move at speeds equal to those of passenger trains of twenty-five years ago. Important cities not more than four hundred miles apart are connected by overnight trains. Third-morning delivery between New York and Chicago and New York and St. Louis is now standard practice. Even such a haul as Detroit to San Francisco is covered in four days. Hundreds of railroad divisions have been abolished and locomotive runs of four hundred and five hundred miles are now common everywhere, and in some favorable regions locomotive runs of 1000 miles are regularly scheduled. The newer type of air brake adequately controls longer and faster trains. Fuel required for a given quantity of work has been reduced about one third, and in consequence thousands of installations for coal, water, and other services have become superfluous and been abandoned. Industry’s warehousing problem is greatly reduced by these swift and dependable schedules, since factory wheels can be geared to rails.

All these improvements have resulted in a great economy in man power. Freight traffic handled by our railroads in 1938 — as has been stated — was slightly greater than that of 1914. Yet at the end of 1938 the railroads employed only 939,171 persons working a basic eight-hour day, whereas at the end of 1914 they had 1,640,029 employees working a basic ten-hour day. Railroad employment at the beginning of 1939 was subnormal and has since been expanded considerably, yet under any conceivable traffic our railroads can do with three men what would have taken five in 1914. The number of man-hours has been cut in two.

An illustration of the increase in efficiency is the almost complete disappearance of car shortages. During the World War of 1914 and before, such shortages were chronic. In 1925 the railroads organized a shippers’ regional advisory board for each distinct economic traffic region. Each regional board has a committee reporting on every important commodity in that territory, and is composed of shippers and producers who really know the situation. Four times a year the railroads receive board estimates on the number of cars necessary to move each commodity supply during the ensuing quarter. Guessing on car requirements is largely eliminated. Steps are taken in advance to assemble at each important traffic gateway a sufficient car supply to move anticipated traffic. This increase in operating efficiency and intelligent cooperation has decreased by billions of dollars the working capital required to maintain stocks and reserves of material in manufacturing and merchandising.

Another interesting illustration of the interplay of improvements in track and facilities, and in operating methods on the other hand, is the fact that accidents on our railroads since 1914 have been reduced more than 80 per cent. In 1914 the railroads killed 232 and injured 13,887 passengers, killed 3259 and injured 165,212 employees. In 1938 they killed 81 and injured 2345 passengers, killed 512 and injured 16,569 employees. As compared with 1914, the reduction in the number of passengers killed in 1938 was 61 per cent; in passengers injured, 83 per cent; in employees killed, 85 per cent; and in employees injured, 90 per cent. And 1938 was an unfortunate year, because an unpredictable cloudburst caused the loss of more than forty passengers. Train accidents killed only one passenger in 1932 and again in 1935, three in 1937, four in 1931, and seven in 1936. This is in sharp contrast to the German railroads, which in the first four months of the present war had ten major accidents in which they killed 368 persons and injured many more.

Hence, the second outstanding difference in our railroad situation today, as compared with twenty-five years ago, is a tremendous increase in the safety, efficiency, and intensity of railroad operation.

III

In equipment we find an essentially different picture. The railroads owned 62,523 locomotives and 2,291,750 freight cars in 1914. At the beginning of 1939 they owned only 43,810 locomotives and 1,721,998 freight cars. Twenty-five years ago 78 per cent of the then existing freight cars and 50 per cent of the then existing locomotives had been bought within the preceding ten years. This equipment was of relatively new physical units, and, according to the standards of that time, modern. Today only about 20 per cent of our freight cars and only about 7½ per cent of our locomotives have been bought during the past ten years. Hence, by contrast, something like 80 per cent of our cars and more than 90 per cent of our locomotives are relatively old physical units — certainly not modern by today’s standards. In other words, our car and locomotive inventories contain a high degree of obsolescence, the result in part of ten years of inadequate earnings.

Yet any presentation of the equipment situation based solely on a comparison of the number of units is grossly incorrect, because it overlooks the improvement in the size and character of equipment which has taken place since 1914. Average carrying capacity of the present freight cars is more than ten tons greater than the average carrying capacity of the freight cars of twentyfive years ago. Therefore, while we have a much smaller number of cars, the deficiency in their total carrying capacity is only about 2,000,000 tons. Recognition that the freight-car supply must be promptly increased in sheer carrying capacity is found in daily news items to the effect that this, that, or the other railroad has just bought or is inquiring for some hundreds or thousands of new cars. Only about 50,000 additional new cars are required to bring our freight-car carrying capacity back to what it was in 1914. This shortage was provided for by orders during 1939 for 54,439 freight cars for domestic delivery; but, since at least 100 or more freight cars are destroyed or retired every operating day, further purchases must continue to be made during the current year sufficient to cover the losses and retirements.

In the locomotive field there is no shortage comparable to that in the carrying capacity of freight cars, but there is a high degree of obsolescence. Although our railroads today own 19,000 fewer locomotives than they did in 1914, the average tractive force of the present ownership is two thirds greater. Therefore the total tractive force of the present locomotive inventory is substantially greater than in 1914, and still in excess of current need. Unfortunately, many of these locomotives are not fitted for the intensive type of operation which our railroads have developed. To maintain relatively high speed requires large drivers. Operation of small drivers at high speeds results in excessive vibration, which not only involves wear and tear on the track, but also means excessive time and cost of repairs. For these reasons the modern freight locomotives of today are constructed with drivers practically as large as those placed on passenger locomotives. But the majority of our reserve of existing freight locomotives have the small drivers consistent with the drag-haul operations of twentyfive years ago, but which are not consistent with the high speed of today.

The same situation holds in boiler horsepower. Haulage of heavy trains hour after hour at the speeds of today calls for high sustained boiler horsepower. As a result, a large portion of the freight locomotives which were bought for the drag-haul operations of even twenty years ago, and which constitute an important part of our existing tractive force, have only about half the boiler horsepower required to handle modern freight trains at modern speeds. These older locomotives can still cope with service on branch lines and on main lines where trainloads are small; but for heavy, high-speed freight movements there is a real need for at least 1000 modern high-speed steam freight locomotives. If traffic continues to grow, this need may soon become 2000 or even 3000 such locomotives, largely of the 4-8-4 type.

From the point of view of sheer capacity, the equipment needs of the railroads are approximately as stated above. But lower maintenance costs, higher intensity of use, and greater profit of operation would undoubtedly be promoted by purchases of new equipment greatly in excess of these figures. There are still numerous terminal operations which would be improved by new motive power, including many Diesel electric switchers. There is a new 5400-horsepower Diesel electric freight locomotive available which deserves trial, and modern steam locomotives also show revolutionary advances over older types. In the freight-car field improved design and the use of modern high-tensile steels lead to weight reductions of from two to five tons per car, and radically improve the ratio of the pay load to the deadweight. The development of roller bearings for both cars and locomotives has taken place since the bulk of the existing equipment was purchased. Our railroads, therefore, could profitably use 200,000 to 300,000 additional new freight cars and some thousands of new locomotives to replace the most obsolete units.

Luckily in the case of both cars and locomotives, new equipment can be manufactured within a reasonable time if orders are placed promptly. Each time a partial delivery is made on an equipment order, the new cars or locomotives can be promptly put to work and immediately begin to effect a prorata improvement; whereas important changes in track or physical plant, like reducing a grade or building a new bridge, require the work to be completed before any operating benefit can be derived from it.

IV

Railroad plant, of course, consists of more than trains, stations, cars, and locomotives. The more intensively cars and locomotives are used, the higher must be the standards of maintenance; and the smallest possible time must be consumed in repairs. From this angle, the railroad situation of today is also outstandingly better than it was twentyfive years ago. Owing to the substantial reduction in the number of cars and locomotives to be maintained, the railroads today have more shop capacity than they know what to do with. Many of these shops need more modern tools and machinery. But, aside from this, the increase in the efficiency of railroad shop management since the last World War has been so great that something like 200,000 workers will do a better job maintaining cars and locomotives today than about twice that number did in the latter days of the first World War.

Owing primarily to the development of good roads and the automobile, since 1914, the railroads have lost about one third of their passenger traffic. From 1923 to 1933 there was a steady and persistent decline. About five years ago the railroads started to speed up passenger service, reduce fares, and supply a gradually increasing number of air-conditioned cars. These improvements, plus a growing congestion and danger on our highways, have led to a reversal of the previous tendency, and railroad passenger traffic is again increasing. The purchase of a few thousand new interchangeable lightweight air-conditioned day coaches would enable the railroads gradually to establish fast through daycoach trains between all the principal points of the United States, like the recently established New York to Chicago and New York to Florida day-coach trains and similar trains that had previously been put into operation by a number of the Western railroads. On such trains they could accommodate a large increase in travel, and they have some surplus of passenger locomotives capable of moving the reduced dead-weight of these trains. The Pullman Company also has a reserve of older cars to accommodate a substantial increase.

Up to this point we may conclude that the railroads have a tremendously superior track and physical plant today, with some deferred maintenance to be made up; that they have outstandingly improved operating methods, resulting in a great intensification in the use of plant and equipment; that they have more than enough shop capacity to maintain their equipment; but that there is a high degree of obsolescence in the existing ownership of cars and locomotives, with some shortage in the carrying capacity of the freight cars and a considerable need for replacing old slow freight locomotives with modern high-speed freight locomotives. As a nation we are tremendously fortunate in the fact that track and operating conditions have been so enormously improved because these are achievements, not of a day, but of long-continued effort over the years. On the other hand, making up the deferred maintenance in track and replacement of our car and locomotive inventories can be accomplished gradually in a relatively short time, provided our railroads have the income and capital necessary to finance the prompt remedy of these deficiencies.

V

And this brings us to the centre of the railroad dilemma. From the financial point of view our railroads are definitely worse off than they were twenty-five years ago. In 1914 only 18,608 miles of road were in the hands of receivers or trustees. At the end of 1939, 77,414 miles of road were under the jurisdiction of the courts, including a dozen large properties. While the railroad industry as a whole increased its earning power by about $200,000,000 in 1939, yet in three of the previous seven years of depression the railroads failed to earn their fixed charges, and in two other years they covered them by only a trifling amount, despite the fact that during this period fixed charges as a whole were gradually reduced by some $40,000,000 a year. The average return on railroad property investment over these seven years of depression was less than 2 per cent. And during these seven years the railroads paid out only $785,000,000 in dividends — mostly from surplus and not from earnings — while their taxes amounted to $1,646,000,000!

Little recent legislation has been definitely hostile to the railroads. Nevertheless, almost every change in public policy since 1931 has tended to injure them in one way or another. The attempt to raise agricultural prices by curtailing production cut traffic. Efforts to raise the price of commodities, through NRA or otherwise, hurt the railroads as chief consumers of many of these commodities. The Social Security tax added about $95,000,000 a year to their expenses, enough to buy all the ties necessary to put all track in tiptop condition. In short, without anyone’s deliberately willing it, during these past seven years wc have seen the practical destruction of the earning power of our railroad investment. In recent years equipment trust securities could still be sold on an attractive basis and strong roads could occasionally refinance an existing bond issue at a lower rate of interest, but, broadly speaking, no important new capital has been or is voluntarily going into improvement of railroad plant.

Meanwhile the country is surfeited with idle capital which will accept a relatively small income if assured of safety or given reasonable grounds to hope for a steady future. In a sense, therefore, our railroad situation is really in the lap of the government. If the government ceases to press policies which are injurious, most of our railroad mileage will work out its own financial salvation. With regard to some portion of the existing mileage which cannot reëstablish credit in the near future, the government will undoubtedly have to act as banker, yet most of the loans made by the government for this purpose will probably earn their living and in due time be repaid.

There is another way in which the coöperation of the government on the one hand, and of private shippers on the other, will shortly be needed. If I have at all succeeded in portraying the enormous intensification of railroad operation today as against twenty-five years ago, it must be apparent to all that the existing and future capacity of our railroad facilities requires the maintenance of this same intensification. In short, if a given volume of traffic is to be produced from many less cars, locomotives, and train miles than formerly, then these cars must be promptly loaded and unloaded and no shipments dispatched before there is a certainty that they can and will be unloaded on receipt. In the World War of 1914 the freight cars of the United States, to an increasing degree, were immobilized as storage warehouses and lined up on the Atlantic seaboard long before there were ships available to move their contents.

Any repetition of this practice would cripple our railroad service and in a large measure destroy the enormous improvement in that service brought about during the past twenty-five years. However, government officials and traffic managers of our large industrial concerns today understand railroad requirements far better than they did twenty-five years ago. Likewise, the railroads themselves, in their rules governing the interchange of freight cars, have empowered the Car Service Division of the Association of American Railroads to establish embargoes in appropriate cases. As time goes on, the public will need to be reminded often of these requirements if they are to be met.

If traffic continues to increase rapidly, one or two tight spots may develop in keeping abreast of the demand for transportation. At such times it is almost inevitable that there will be proposals for the government to take over the railroads. I believe, however, that anybody who will study the history of the federal control period during the former World War will conclude that it was one of the worst mistakes made by our government in connection with our participation in that war. The car shortages of that period were not the result of a transportation breakdown, but of uncontrolled misuse of cars, resulting in their being used for storage and not for transportation. Federal control caused no increase in the ability of our railroads to handle traffic; but it did cause a tremendous increase in operating expenses and a much greater cost to the public than would have been incurred under private operation. In 1918, the first year of government control, freight traffic handled was only 2 per cent in excess of 1917, but the increase in operating expenses was 41 per cent. In 1919, the year after the war was ended, the traffic handled by our railroads under government control was almost identical with that which they handled under private control in 1916, the year before this country entered the war; but the operating expenses in 1919 under federal control were 87 per cent higher than they were in 1916 under private operation. Today the railroads are better organized and have greater facilities and practice in coöperating to meet their public responsibilities than ever before. No one interested in adequate railroad transportation at the lowest possible overall cost to the country should contemplate government participation in operation.

In its annual report submitted to Congress in January of this year, the Interstate Commerce Commission concurs in the conclusion that this country need not contemplate another period of federal control of railroads. Among the reasons which it cites are the improvement in the physical plant of the railroads; increased power and arrangements for dealing with emergencies; the lessons learned by government shippers during the former World War; and the better organization of the railroads.

Adequate railroad facilities cannot be improvised overnight. Government has force, but all its force is no substitute for intelligent planning and management. Just one thing is necessary for our country to secure adequate railroad transportation for the needs of tomorrow — and that one thing is the assurance of a reasonable return on the investment in our railroads. Granted this, — whether the next few years find us at war or at peace, — our railroads can give to the people of the United States a character of service never before realized anywhere.