Where Are the Cars?

In Washington, Government officials talked of a coal shortage in many cities this winter. U.S. coal production was off so much that adequate stockpiles for winter could not be built up. In Oregon, some lumber mills had so much wood stacked around that they had to close for lack of storage space.

The reason for all this was a familiar one: the chronic freight-car shortage had become critical again. There were not enough cars to haul coal, wood, oil as fast as they could be produced.

Supposedly, the freight-car shortage had been solved last February. At that time, car builders, steelmakers, railmen and the Office of Defense Transportation agreed on a program to turn out more cars (rising to 10,000 a month by September), and thus solve the shortage once & for all. That program, said Iron Age, "is shot to pieces."

Blame for Steelmen? That was no overstatement. Production in August was only 6,000 cars, and in September, 7,597. Hardly anyone expected that the figure would go any higher for the last three months of this year. As the railroads were sending 6,500 cars a month to the junk yards, the U.S. was barely making more cars than it lost. Though freight traffic is up 80% over 1940, U.S. railroads now have about the same number of freight cars (2,000,000-odd) as they had then. Everybody concerned pointed the blame at the other fellow.

The steelmen, who are blamed by the railmen for the failure of the building program, pointed a finger at the car builders. Walter Sheldon Tower, head of the American Iron & Steel Institute, said that steelmakers had, by Government figures, supplied carmakers with enough steel to build 26,950 cars in June, July and August--5,950 more than the program figure. But production for domestic use in those months totaled only 17,369.

Blame for Railroads? The car builders replied that the steel did not come in an even flow, that this had caused unbalance in the supply of parts, etc. But the railroad companies' own car-building shops, supposedly working under the same conditions, had slightly exceeded their quotas. Scheduled to build 15% of the new cars, they had actually built 27% of all cars in August.

To fix the blame for the flop of the program, Senator Clyde Martin Reed, chairman of the Senate's transportation subcommittee, called car builders and railmen to Washington this week. But an investigation would hardly stretch the bottleneck fast enough. And a hard winter would squeeze down and close many a plant. The likeliest solution was Government allocation of steel. Though they dread the effect allocation would have on their markets, many steelmakers, who need cars as badly as anyone to haul coal and ore, privately thought that allocation was the only way out.

As it has a dozen times in recent months, the steel shortage nipped motor car production this week. Five Detroit auto plants were closed down; some 37,000 workers were laid off. With General Motors limping along at only 65% of capacity, Chairman Alfred P. Sloan Jr. said that "it looks as if it would be two years at least" before there was enough steel. Ford Motor Co. did more than grumble; it earmarked $18 million to build a blast furnace and buy a secondhand rolling mill to turn out steel itself.

One steelman who disagrees with the industry's views--that present capacity, plus 2,500,000 tons expansion already planned, is enough--is Harold J. Rutten-berg, onetime crack economist for the C.I.O. steelworkers' union and now vice president of the Portsmouth Steel Corp. He thinks that the U.S. needs about 10 million tons of added capacity. To get it, Ruttenberg told the New York Society of Security Analysts that the steel industry should have more incentive to expand. To offset the inflated cost of expansion, the Government, said he, should give preferential tax treatment to steel profits spent on plant expansion.

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