$35 Rails?

"Mr. Myron C. Taylor, chairman United States Steel Corporation. . . .

"Mr. Eugene G. Grace, president Bethlehem Steel Corporation. . . .

''Mr. L. E. Block, chairman Inland Steel Company. . . .

"Mr. Arthur Roeder. receiver Colorado Fuel & Iron Company. . . .

"Gentlemen:

"In accordance with the understanding reached at the conference with the President on Monday. Sept. 25, at which all of you were present, with the exception of Mr. Roeder, it is my pleasure to inform you that the steam railroads of the country are prepared, under certain conditions ... to purchase at least 844.525 tons of steel rails and 245,221 tons of fastenings. ... I shall be glad if each of you will inform me by letter as soon as possible what the base price ... of your company . . . will be on standard Tee rails . . . in event of the purchases mentioned above. . . .

''Sincerely yours,

Joseph B. Eastman."

The Federal Coordinator of Transportation was acting as President Roosevelt's fixer in a huge deal. Having lined up the carriers, he was now fishing for a deep price-cut from the four U. S. railmakers. Shrewd bargainer, he told them in his letter last week that for such a thumping order they ought to shave at least $5 from the present price of $40 a ton. If the railmakers groaned that $35 a ton would be ruinous--as they have ever since President Roosevelt proposed the idea--Mr. Eastman politely suggested that the best "way to clear up that point is to afford Government accountants an opportunity to examine the books and records of the steel companies."

All this was part of President Roosevelt's scheme for stirring the stagnant market for producer goods. NRA was stirring up consumer markets by its triple attack on wages, hours and employment and was about to launch a monster "Buy Now" campaign. Lumber, with the promise of 250 million feet in orders from the Civilian Conservation Corps, and now rails, were the first producer goods selected. If Mr. Eastman could wangle a satisfactory price from Messrs. Taylor, Grace, Block & Roeder, the Public Works Administration would finance the carriers in the purchase of about 500,000 tons of rails. The balance the railroads were willing to buy on their own account. Last week some observers believed that Mr. Eastman would compromise at $38 a ton.*

Steelmen, who estimate that their code will jump labor costs for the industry as a whole at least $100.000,000 annually, cocked their eyebrows at the plea to chop rail prices. Was not price cutting banned by their code? They had gathered that the idea was to raise prices--as they were busily doing in other lines--not cut them. Some steelmen called it downright unfair.

In a normal year U. S. railroads lay about 3,000,000 tons of rails. Last year they laid 304,000 tons, bought new only 185,000 tons. But already saddled with debt (and regulation), few railroadmen were eager to go further into debt just to help the railmakers and the NRA. But the only one who spoke his mind was Edward Eugene Loomis, rugged president of Lehigh Valley, the late George Fisher Baker's closest friend. "Lehigh Valley does not need rails at this time," snorted Mr. Loomis. "Great days we're having now for hair-trigger planners and schemers! They bob up on every side. . . . All are hellbent upon forcing their plans into operation just as an experiment. That old-fashioned quality of business mind usually, though inadequately, referred to as common sense seems to be passing out of existence. I mourn its passing."

*Pennsylvania R. R. informed Coordinator Eastman it would buy 100,000 tons, nearly twice as much as any other road, that it. was perfectly willing to pay the going price of $40 but that in return it insisted on placing its orders where it pleased, not have them allocated by Mr. Eastman.

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