Change of Heart

Ralph Budd, the railroads' man on the Defense Commission, switched all the way around last week from his familiar story that the railways need no new equipment to handle their defense load. First he swallowed his last rosy prediction, made only two months ago, that 1941 carloadings would be no more than 9.4% above 1940 (TIME, March 17). Then he came out--in approval of a recommendation by the Association of American Railroads--for immediate purchase of 100,000 new freight cars.

This was a final surrender by Budd and the A.A.R. on the issue of expansion. In the summer of 1939, when Washington began worrying about rail capacity, Presidential Assistant Lauchlin Currie worked out an ingenious plan to let railroads turn in their old equipment for new, finance modernization at almost no interest cost. Tacked on to the Administration's Lend-Spend Bill, the plan was defeated because of A.A.R. opposition.

Currie then had the National Resources Planning Board make a fact-finding study which was turned over to Budd when he joined the Defense Commission. The study's recommendation: a 500,000-car building program, with 100,000 to be ordered at once. Its warning: without new cars the railways would be in trouble as soon as the Federal Reserve Board production index neared 160; at that level of business activity they would create a first-class mess if they dumped rush orders for 100,000 cars on to overworked steel mills, fabricators and foundries. To Budd this viewpoint was the talk of "astronomical statisticians."

Last week the National Resources Planning Board's warning had proved right. Budd thought that 100,000 cars could be built in twelve months; but even before the railroads' belated call for new equipment, everybody was fighting for steel, plant space, new machinery. Railroad equipment builders long since had hedged against stagnant car sales by filling up their plants with orders for shot & shell. The builders had 42,000 new cars on order: their consensus was that if new orders were placed right away and 0PM gave them steel priorities, they could turn out another 40-45,000, or a total of 82-87,000 in the next year. Difficulties: 1) this would take steel away from other industries which need it; 2) Budd was talking about 100,000 cars over & above the present backlog.

Said Washington quidnuncs: "If Roosevelt can't screw up enough courage to drop Budd now, he'll never be able to fire anyone."

Gulf, Mobile & Ohio paid $38,963 damages last year for livestock hit by its trains. Last week its officers blinked at an unprecedented letter. Wrote honest W. D. Myers of Deemer, Miss.: "It was my cow that got out of place and there will be no claim filed."

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