Wednesday, January 11, 2012

1950: Transportation

1950: Transportation

Archives consist of articles that originally appeared in Collier's Year Book (for events of 1997 and earlier) or as monthly updates in Encarta Yearbook (for events of 1998 and later). Because they were published shortly after events occurred, they reflect the information available at that time. Cross references refer to Archive articles of the same year.

1950: Transportation
Traffic Volume.
The aggregate volume of freight traffic by all types of carriers during 1950 increased substantially over 1949 but probably fell below the postwar peak in 1948 of more than one trillion ton-miles. On the other hand, although bus and rail passenger traffic continued downward through most of the year, total passenger-miles of intercity traffic of all agencies again increased in 1950 over the previous year. As in 1949, passenger-miles clocked by private automobiles rose considerably. Air-line travel also increased in 1950. Automobile and truck production continued at extraordinarily high levels as fear of shortages associated with the outbreak of the Korean War late in June resulted in greater demands. The expanded war production program and movement of military supplies immediately stimulated the freight traffic of both railroads and truck lines. It changed the maritime-cargo market into one of greater activity and higher shipping rates, and required the withdrawal of a number of merchant ships from the reserve fleet for use in the Pacific area. It created an additional demand for the carrying services of nonscheduled air lines, in connection with overseas military movements, and raised again the specter of freight car shortages, inadequate supplies of motor fuels, rubber, aluminum, and steel, and of labor stringencies in transport. Except for severe car shortages in the late summer and fall, nominal government operation of the railroads resulting from a labor dispute, and a strike of railway yard workers in December, no serious transportation difficulties developed in 1950. The higher level of rail freight traffic, continuance of a considerable part of the reduced employment occasioned by the coal and steel strikes late in 1949, and the increased use of Diesel motive power combined to restore the profitability of railroad operations almost to the 1948 level. Profits of motor freight carriers also rose substantially over the 1949 level, but those of bus lines were affected adversely by falling traffic due to heavier registrations of passenger cars. Shipping and air transport, also, operated under more profitable conditions in 1950 than in 1949. Highway investment, reflecting rising user-revenues, was at peak levels, but rail gross capital expenditures fell to some extent from the high 1949 level. Pipe lines were expanded further in 1950 and progress was made in equipping airports and airways with technical aids to air navigation. Stimulated by war activity, equipment purchases expanded in most agencies of transport in the last half of 1950.
Congressional Action.
Owing to the limited scale of the Korean War and the time required to convert to a war economy, transportation during 1950 largely presented the normal problems of a high-level economy. Thus, the declining relative position of the railroads and their low average rates of return since 1946 at high levels of traffic was given much attention in Congress and in transportation circles. The Subcommittee on Domestic Land and Water Transportation of the Senate Committee on Interstate and Foreign Commerce highlighted the railroad problem in its 1574-page report, Study of Domestic Land and Water Transportation. The Congress also approved several of President Truman's governmental reorganization plans, the most noteworthy of which abolished the five-man United States Maritime Commission and established in the United States Department of Commerce two maritime agencies, a three-man Federal Maritime Board, the regulatory agency, and a Maritime Administration to plan shipping routes. Since the Bureau of Public Roads had been transferred to the Department in 1949, the Department of Commerce appeared to have been chosen as the over-all agency to accomplish a more effective co-ordination of the vast Federal transport facility expenditures for airways, highways, and waterways.
Defense Plans.
To solve the problem of car shortages, the Defense Transportation Administration was established, with James K. Knudson of the Interstate Commerce Commission as its head. That agency also estimated steel requirements for a program of building 10,000 rail freight cars per month and presented them to the National Production Authority to insure adequate rail transportation in the future. In December President Truman established an Office of Defense Mobilization, which, as Chinese intervention in Korea threatened general war, included the field of transportation in its plan for an accelerated rate of mobilization for defense.
Changes in the Division of Traffic.
During 1949 the railroads' share of the intercity freight traffic in the United States fell below their 1939 share for the first time since World War II. Each of the other principal agencies increased their relative shares of the total ton-miles handled by public and private carriers of all kinds, excluding coastwise and intercoastal water carriage. The share of private and for-hire trucks exceeded ten per cent of the total for the first time. Although still an infinitesimal part of the entire ton-mileage, air freight continued to show the rapid growth evidenced in postwar years.
Although railroad traffic was adversely affected by strikes in the coal and steel industries during the peak season of 1949 and was materially aided by the Korean war boom in the last half of 1950, it is unlikely that the railroad share in 1950 will rise above the prewar percentage of total intercity ton-mileage. Truck registrations and traffic again increased in 1950 over the previous year, but rail carloadings in 1950 failed to equal the 1948 level. All freight agencies carried more traffic in 1949 and 1950 than in 1939, but, except for war years, the growth was greater for air, highway, and pipe-line carriers than for the other carriers. Using the 1939 traffic volume of each agency, weighted by value as the base, rail freight had risen 53 per cent by 1949, while air, highway, and pipe-line ton-mileages had risen by 941, 125, and 97 per cent, respectively. Water traffic increased by 16 per cent. Total ton-miles of intercity property traffic, as weighted by value by the Interstate Commerce Commission, rose from 801 billion in 1939 to 1,126 billion in 1949, a gain of about 40.6 per cent. Despite a growing population, intercity ton-miles per capita increased from 6,117 in 1939 to 7,548 in 1949.
Total passenger-miles of intercity travel by both private and for-hire carriers increased from 360.5 billion in 1948 to 447.6 billion in 1949, or 24.2 per cent. Automobile traffic increased 95 billion passenger-miles, with a greater volume than that of all other passenger-carrying agencies. This amazing 33.2 per cent gain raised the automobile's share of the total intercity passenger-miles to 85.52 per cent, compared with 79.74 per cent in 1948. The air lines picked up 820 million passenger-miles, or an increase of 13.8 per cent, and increased their share of total passenger traffic from 1.51 per cent in 1948 to 1.65 per cent. Railways lost 6.2 billion passenger-miles, or a decrease of 14.7 per cent under 1948; their share of the total fell from 11.62 per cent in 1948 to 7.98 per cent. Thus, in five postwar years, as their 1949 share fell below the prewar ratio, the rails lost all the relative passenger traffic gains of World War II. Intercity bus lines lost 2.4 billion passenger-miles, a drop of 10.1 per cent below the 1948 level; their share of the total fell from 6.53 per cent in 1948 to 4.73 per cent in 1949. Inland waterway passenger traffic fell 29.4 per cent, lowering the water share from 0.46 per cent in 1948 to 0.26 per cent.
During 1950 the scheduled air transport industry of the United States (16 domestic trunk lines, 12 local service lines, and 13 international lines) exhibited traffic gains comparable to or actually greater than those achieved in 1949, and on the whole improved its financial position. In the first half of 1950 most scheduled lines, the domestic ones in particular, maintained the steady rate of growth manifest during 1949. That rate of growth, true of both domestic and international carriers, was decidedly accelerated in the last half of 1950 as a result of the expanded activity incidental to the Korean War and limited war mobilization. The scheduled air freight operators and surviving nonscheduled passenger and cargo carriers enjoyed improved demand for their services, but the nonscheduled group still operated in the face of a national regulatory policy of restricting their numbers and the range of their operations to wholly irregular types of service.
No major changes in passenger-rate levels occurred in 1950, but the demand for low-priced coach services grew to such extent as to lower the average revenue per passenger-mile of all traffic. Although the Civil Aeronautics Board (C.A.B.) required somewhat higher coach fares, it was clear that both air lines and the public regarded air-coach services as a successful and profitable innovation. During 1950 the C.A.B. was reorganized and Congress provided for airsubsidy separation studies to bring to light recurrently the amounts of subsidy paid to air-mail carriers and to simplify the Post Office Department's problem of eliminating deficits.
World Air Transport.
According to the C.A.B.'s 'World Directory of Scheduled Common Carrier Air Lines,' 233 companies (178 foreign air lines and 55 U.S. certificated air lines, including 16 Alaskan operators) operated 1,111,000 miles of unduplicated routes as of Oct. 1, 1949, and scheduled 18,329,000 plane-miles per week as of that date. U.S. air carriers in domestic and foreign operations accounted for 51 per cent of the world's scheduled plane-miles, of which domestic services constituted 39 per cent and international, 12 per cent. A downward trend in the U.S. share has occurred since the war as foreign scheduled miles per week increased. Between Apr. 1, 1949, and Oct. 1, 1949, the Soviet Union experienced a 27 per cent increase in miles scheduled per week. As of the October date, 62 per cent of the miles scheduled by all foreign air lines were flown with American-manufactured aircraft. Including the U.S. air lines, 81 per cent of the world's scheduled air-line operations were carried out with American aircraft.
U.S. International Air Lines.
Traffic Levels.
Based upon the first nine months of 1950, the 13 U.S. international air lines generally experienced higher traffic levels than in 1949, according to estimates of the Air Transport Association of America (A.T.A.). Passenger-miles estimated at 2,222,108,000 for 1950 exceeded the 2,053,054,000 in 1949 by 8.2 per cent; 1950 freight ton-miles of 19,034,982 exceeded the 6,714,414 in 1949 by 183.5 per cent. Express ton-miles, however, dropped from 49,443,623 in 1949 to an estimated 42,586,511 in 1950, or 13.9 per cent. Total revenue ton-miles, including mail and passengers, rose 8.6 per cent from 297,169,334 in 1949 to 322,680,888 in 1950. The 1949 increases over 1948 were 12 per cent in total revenue ton-miles; 8.7 per cent in passenger-miles; 18.1 per cent in mail ton-miles; and 20.1 and 60.3 per cent in express and freight ton-miles, respectively.
Total operating revenues of the 13 air lines declined in 1950 to $262,092,731, or 4.4 per cent below the 1949 revenues of $274,154,538. Freight revenues of $4,813,920 were 128.8 per cent above the $2,103,622 reported for 1949. Express revenues were down 26.6 per cent; U.S. mail revenues, 7.8 per cent; and foreign mail revenues, 7.4 per cent. Operating expenses were reduced from $252,863,129 in 1949 to $246,810,873 in 1950, or 2.4 per cent, a lesser reduction than that of revenues. Consequently, net operating income dropped to $15,281,858, 28.2 per cent below that of $21,291,409 in 1949. Both the 1949 and 1950 profits were based upon estimated temporary U.S. mail rates; if the $75,000,000 of such revenue under temporary rates for 1949 were reduced by the C.A.B. to $55,772,860, the adjusted sum, most of the 1949 profit would be eliminated.
Domestic Airlines.
The A.T.A. estimated 1950 traffic revenues and expenses for the 16 domestic trunk air lines on the first ten and nine months, respectively, and those for the 12 local service (feeder) lines on the first nine months experience. The traffic and revenues of the scheduled freight lines, the nonscheduled lines, three territorial lines, and the Alaskan lines were not included.
The traffic expansion of the 16 domestic trunk lines, experienced in 1949, continued during 1950. Thus, estimated 1950 passenger-miles of 7,804,112,000 exceeded the 6,562,580,000 in 1949 by 18.9 per cent; 46,490,815 mail ton-miles in 1950 exceeded the 40,874,188 mail ton-miles in 1949 by 13.7 per cent; 35,299,018 express ton-miles in 1950 exceeded 27,329,361 in 1949 by 29.2 per cent; and 115,310,218 freight ton-miles in 1950 exceeded 94,189,591 in 1949 by 22.4 per cent. Total revenue ton-miles were 957,079,211, or 19.4 per cent in excess of the 801,508,281 revenue ton-miles in 1949.
Total operating revenues of the 16 domestic trunk lines, compared with $459,782,544 in 1949, were estimated at $523,932,082 in 1950, an increase of 14.4 per cent. Since operating expenses rose only 8.7 per cent, from $435,157,207 in 1949 to $472,892,838 in 1950, net operating income during 1950 more than doubled the 1949 profit. The $51,039,244 n.o.i. (before excess profits tax) estimated for 1950 exceeded the $24,625,337 in 1949 by 107.3 per cent. In 1949 trunk lines re-established a profit position by the curtailment of personnel, by increasing the average employee productivity, and by use of improved flying equipment. The ability to control expenses in the face of traffic and revenue increases in 1950 was an important factor in the greater profitability of that year. The operating ratio was 90.26 in 1950, compared with 94.64 in 1949, and revenue ton-mile expenses were 49.41¢ in 1950, compared with 54.29¢ in 1949. This profit rise was achieved with lower average rates; 1950 revenue ton-mile receipts were 54.74¢, compared with 57.36¢ in 1949; and passenger-mile receipts dropped from 5.76¢ in 1949 to 5.50¢ in 1950, no doubt largely because of the growth of coach services at fares varying from 4.0 to 4.5¢ per mile. Freight ton-mile receipts also dropped from 19.46¢ in 1949 to 18.97¢ in 1950, and mail ton-mile receipts from 110.17¢ in 1949 to 103.60¢ in 1950. Express ton-mile receipts rose from 32.78¢ in 1949 to 33.88¢ in 1950.
The 12 local service air lines included in the A.T.A. estimates for 1950 also improved their traffic, expense, and profit positions in 1950. Thus, 1950 passenger-miles of 184,940,622 exceeded the 133,821,000 in 1949 by 38.2 per cent and total ton-miles of 19,780,826 in 1950 exceeded the 14,142,804 in 1949 by 39.9 per cent. Operating revenues of these feeder lines increased by 23.9 per cent, from $21,940,629 in 1949 to an estimated $27,180,795 in 1950. The 34.4, 56.1, and 99.6 per cent increases in passenger, freight, and express revenues, respectively, compared with the 9.7 per cent rise in mail revenues, were encouraging, as they indicated a trend toward greater self-sufficiency. Mail ton-mile receipts, including a large subsidy element, dropped from $32.87 in 1949 to $28.12 in 1950. The slight increase in operating expenses, 19.3 per cent ($22,381,715 in 1949 compared with $26,704,115 in 1950), compared with that in total revenues, 23.9 per cent, brought the feeder lines from a $441,086 deficit in 1949 to an estimated $476,680 profit in 1950. Hence, the operating ratio fell from 102.01 to 98.25. Passenger-mile receipts dropped from 5.50¢ in 1949 to 5.35¢ in 1950 and freight ton-mile receipts from 31.77¢ to 29.07¢. Express ton-mile receipts rose from 35.54¢ in 1949 to 36.61¢ in 1950.
Nonscheduled Air Lines.
The nonscheduled air lines, limited to irregular operation by C.A.B. regulations which put several lines out of business by revocation of their Letters of Registration, formed a new association to prosecute more effectively the five-year fight for adequate operating authority to render air-bus and demand-type cargo and passenger services. Amos Heacock, president of Air Transport Associates, Seattle, was elected President of the new Air Coach Transport Association (A.C.T.A.), with offices in Washington, D.C. In a hearing before the C.A.B. in November the Association sought a revision in the regulatory agency's policy that large irregular carriers may not fly more than three roundtrips a month between any two major cities. Operations so limited were claimed to be unprofitable. The Association requested a stay of individual exemption denials under Draft Release No. 43, issued May 25, until the Transcontinental Coach Case is decided. In that case, 15 large nonscheduled air lines sought area certificates to render unsubsidized coach services. The Association proposed that certificated coach operators be restricted to demand-type, second-class, low-cost service, with flight departures dependent upon having load factors of 75 per cent, with high-density seating and no arrival or departure time dependability. Meanwhile, a number of large irregular lines continued to operate under precarious financial conditions, some finding opportunity in the Korean Airlift and in other contract work. Those in the Alaska-U.S. trade faced greater competition from Pan American World Airways, which quoted a special price of $75 from Fairbanks to Seattle on its DC-4 cargo run to compete with the $65 nonscheduled fare in C-46's. Only scattered data were available regarding the 1950 traffic and financial status of the irregular carriers. One line, California Eastern Airways, paid its debts with revenues derived from the leasing of its three DC-4's and its maintenance operations, and was discharged from bankruptcy.
Scheduled All-Cargo Air Lines.
Certificated all-cargo services by Airnews, Flying Tiger, Slick, and U.S. Air lines were inaugurated late in 1949. These lines previously had operated as nonscheduled carriers under Letters of Registration or general exemption. For the period since inauguration through June 30, 1950, the four all-cargo lines totaled operating revenues of $6,660,616 and expended $6,978,938 in operating expenses. They thus sustained a net operating loss of $318,322. However, Airnews and Flying Tiger earned net operating incomes of $40,607 and $177,522, respectively, during that period. In the second half of the year, cargo operations of these carriers were more profitable; Flying Tiger reported $608,000 net profit for the quarter ending Sept. 30, 1950, and revenues of $3,500,000 against $4,964,168 for the 12 months ending June 30, 1950. Slick Airway's ton-mileage in August, September, and October rose to 4,982,904, 4,851,959 and 5,463,750, respectively, and its profits from $131,000 to $175,000 a month. In October Slick had 1,192 salaried and hourly employees. During the second quarter of 1950 the four certificated cargo lines carried 12,445,817 ton-miles of freight, with an average load factor of 69.64 per cent and an average utilization of 5.5 hours over 2,980,793 plane-miles. Air freight revenues averaged 15.88¢ per ton-mile. Total transport revenue per revenue ton-mile averaged 15.61¢, compared with total operating expense per revenue ton-mile of 18.58¢. Slick carried transcontinental freight for the U.S. Navy at a rate of 13.44¢ per ton-mile. Flying Tiger cut eastbound transcontinental rates by 25 to 42 per cent late in the year to develop eastbound volume.
The Pacific Airlift.
In the first three months of the Korean War, U.S. air lines hauled more than 3,000,000 ton-miles of military materials and supplies to West Coast ports of embarkation and Air Force staging bases. Both passenger and all-cargo lines participated in this freight run as a supplement to the Military Air Transport Service, but soon the common carrier rates, which were lower than the charter rates charged by passenger carriers when loads exceeded the capacity available in passenger flights, enabled the all-cargo lines to take most of the volume. This business was a significant factor in improving the position of Flying Tiger, Slick, and U.S. Airlines, which quoted rates of 16.0¢ to 19.1¢ per ton-mile, compared with charter rates by passenger carriers of 28.8¢ to 36.6¢ per ton-mile. At the end of the year the Pacific Airlift, organized in the summer of 1950 to support the Korean campaign, was restored to the midsummer level of operations with 252 military and air-line DC-4's, which were scheduled to make 1,000 trips a month, carrying about 5,000 tons of load outbound and about 5,000 soldier and marine casualties homebound. Of the 252 planes in the Pacific Airlift, 66 were U.S. commercial planes under negotiated charter, about half of which were from all-cargo or nonscheduled lines. The usefulness of commercial air-liners for military purposes created discussion of a subsidy program to develop a commercial fleet of 750 all-cargo planes in U.S. domestic and overseas operations.
Air-Coach Services.
The public widely acclaimed air-coach services at low fares during 1950, the second year of the experiment. The C.A.B., however, was still undecided as to the permanent role of those services. Nevertheless, the demand in 1950 exceeded expectations; approximately $40 million in revenues were realized by the ten scheduled lines offering coach services. Some 700,000 persons rode air coaches in the year ending June 30, 1950, and more than 650,000,000 passenger-miles were accumulated in scheduled coach services during the first eight months of the year. Since the 1950 level of passenger traffic by domestic, scheduled air lines was about two billion passenger-miles greater than in 1948, it was apparent that coach services between major cities developed a large part of the added increment. In September the C.A.B. granted permission to the scheduled lines to continue coach services until Mar. 31, 1951, but required that fares be raised generally from 4.0¢ to 4.5¢ per mile. Cited were the large proportion of coach traffic over the routes on which this service is offered, the substantial diversion from first-class services, and a belief that revenues would be maximized from higher fares. The intrastate fares between San Francisco and Los Angeles were still at 3¢ per mile at the end of the year. In December Trans World Airlines and American Airlines were granted one-year coach-service extensions. The reluctance of the C.A.B. to extend full opportunity to the development of air coach services was forecast by Examiner Madden's November 22 report in Docket No. 3397, Transcontinental Coach Type Service Case, which recommended denial of the applications of four nonscheduled lines for certificates authorizing scheduled coach services.
Air-line Safety.
According to the C.A.B., U.S. scheduled domestic and international air lines had four fatal accidents in 1950, with a loss of 144 lives. The 1.4 deaths per 100 million passenger-miles in 1950 compared with 1.0 per 100 million in 1949, but domestic scheduled air lines had 1.2 per 100 million passenger-miles, compared with 1.3 in 1949.
Labor Conditions.
Increased productivity of bigger and faster aircraft formed the basis in 1950 for a demand for a reduction in flight time and an increase in pay for the pilots of American Airlines. If granted, the precedent is likely to spread over the entire industry. The precedent of mileage limitations in contracts of locomotive engineers was cited. The Air Line Pilots Association sought a reduction of pilot flight time on Douglas DC-6's from 85 hours a month to 70, and on Convairs to 73 hours, with pay increases of $21.31 and $17.78 per month, respectively.
Both the volume of business and the profitability of freight forwarding declined during 1949, trends which were reversed during the first six months of 1950. In 1949, 56 large freight forwarders, with annual incomes of $100,000 or more, had revenues of $239,557,251, or 9.1 per cent less than the 1948 total of $263,424,263. Of the 1949 earnings, $128,450,743 were spent for railroad transportation services; $29,606,789 for motor freight services; $1,505,552 for water carrier services; $24,106,672 for pick-up, delivery, and transfer services; and $475,206 for other transportation. Purchases of services from the railroads declined 11.9 per cent in 1949, while those from motor and water carriers increased 1.4 and 73.7 per cent, respectively. The rail proportion of total purchased transportation fell from 72.3 per cent in 1948 to 69.8 per cent in 1949; that of the motor carrier rose from 14.5 to 16.1 per cent. Resumption of merchandise services by water lines and rate advantages influenced greater use of water transport. The tons of freight received from shippers declined by 11.1 per cent in 1949, but the number of shipments received from shippers declined only 2.9 per cent. The greater service per ton required of smaller shipments may explain a decline of only 4.1 per cent in operating expenses, although operating revenues (after purchased transportation) dropped 10.1 per cent, almost as much as tonnage. The result was a 58.8 per cent decline in net income, after income taxes, from $4,276,403 in 1948 to $1,761,905 in 1949.
The ownership of motor vehicles and the vehicle-miles accumulated on the extensive U.S. system of highways, roads, and streets during 1950 again exceeded all previous peaks. The rates of gain in automobile ownership and use over 1949 did not slacken as much as had been anticipated, for both the purchase of automobiles and automobile travel were expanded after the Korean war created fear of shortages of new automobiles and possible rationing of gasoline. Truck transport also developed materially, stimulated by the recovery of production and trade, which set in even before the outbreak of the Korean war, and by defense activity later in the year. However, intercity and urban bus travel declined, perhaps largely because of the more widespread ownership of passenger cars but also because of higher fares, and many bus lines in 1950 found operations less profitable than during 1949. Although the postwar highway programs of many states swung into high gear during 1949 and 1950, the progress achieved, except in limited sections, made no noticeable difference in eliminating congestion on the highways. The rate of progress in highway construction was again threatened by rising costs, which, during 1949, had fallen about 25 per cent from the peak 1948 level. In addition, the national emergency declared in December created uncertainties for highway construction, for materials, machinery, and manpower could be expected to be in short supply in 1951. One step taken by the Highway Research Board, the Bureau of Public Roads, by eastern states, and co-operating highway-user groups to alleviate the serious highway problem was the financing of a reinforced concrete road test, made near La Plata, Md., to ascertain the effect of frequent repetitions of heavy axle loads upon high-type surfaces. In December the American Association of State Highway Officials adopted a resolution to encourage similar road-test studies in other regions of the United States.
According to early estimates, new motor vehicle registrations during 1950, based on the first ten months, will approximate 5,950,000 passenger cars and 1,100,000 trucks. These totals represent a marked increase in new passenger car registrations and a significant gain in new truck registrations over 1949 figures. During that year new automobile registrations totaled 4,838,342 and new trucks, 961,961.
Preliminary estimates of the Bureau of Public Roads indicate that 1950 registrations totaled 48,484,000 automobiles, buses, and trucks (including publicly owned vehicles), an increase of 8.5 per cent over the 44,670,588 motor vehicles registered in 1949. Automobile registrations in 1950 totaled 39,710,000, a gain of 9.0 per cent over the 36,433,674 registered in 1949. Compared with the 27,372,397 automobiles registered in 1940, the 1950 figure represented an increase of more than 12.3 million automobiles in the ten-year period. The increase in car registrations since 1945 was almost 14 million, or more than 50 per cent. The fact that new car registrations in 1950 exceeded the net gain in total automobile registrations reflects scrappage of old models. Increasing resistance to the purchase of 1933 to 1936 used car models was reported by dealers in 1950. Truck and bus registrations for 1950 (including publicly owned vehicles) were estimated at a total of 8,774,000, or 6.5 per cent in excess of the 8,236,914 recorded in 1949.
Use of Motor Vehicles and Highways.
According to the Bureau of Public Roads, motor-vehicle travel in 1949 broke all previous records for the fourth consecutive year. Traffic on all rural roads, totaling 216.3 billion vehicle-miles, was seven per cent higher than in 1948, 16 per cent higher than in 1947, and about 27 per cent above the 1946 volume and the 1941 prewar peak. Geographically, the increases over 1948 ranged from four per cent in western states to nine per cent in eastern states, with a seven per cent increase in the central states. The lowest increase of one per cent over 1948 was in the Pacific region. These traffic estimates were based upon 800 automatic traffic recorders and special state traffic surveys. Of the 159 billion vehicle-miles in 1949 accumulated upon the 350,000 miles of main rural roads, 78 per cent was accounted for by passenger cars, one per cent by buses, and 21 per cent by trucks and truck combinations. Seventy-four per cent of all travel on rural roads occurred on those main state highways. The remaining 26 per cent was spread over 2,670,000 miles of secondary and local rural roads, mainly under county jurisdiction. Although the Bureau of Public Roads discontinued its estimates of total urban and rural highway travel during the year, that agency's estimate for 1948 was 398 billion vehicle-miles, about equally divided between rural and urban travel. The Automobile Manufacturers Association's estimate of total highway travel for 1949 was 425 billion vehicle-miles. Considering the 8.5 per cent increase in 1950 registrations, the estimate for that year was 456 billion vehicle-miles.
Highway Safety.
The downward trend in highway fatalities of 1948-1949 was reversed in 1950, although in the first eight months of that year the death rate per 100 million vehicle-miles did not rise. During the first nine months of 1950, 24,580 highway fatalities occurred, compared with 22,896 in the same period of 1949, an increase of 11 per cent. The estimated mileage death rate for the first eight months of 1950 was 6.9 deaths per 100 million vehicle-miles, a figure identical with that for the same period of 1949 but down 37 per cent from the 11 deaths per 100 million vehicle-miles in the first eight months of 1941. The increase in fatalities was general, 37 states having more deaths in the first nine months of 1950 than in the comparable period of 1949. Only North Dakota, Vermont, Oklahoma, Minnesota, Arkansas, Pennsylvania, and West Virginia had fewer highway fatalities than in the 1949 period.
New Highway-Use Data.
Of considerable interest because it represents the newest comprehensive-statistical measurement of average highway use by type of motor vehicles in the United States is a report which listed the average use for vehicles operated during 1949 in the State of Washington as follows:
Highway Development.
Total expenditures at all levels of government for highways, roads, and streets were almost $3.7 billion during 1949 and probably approached the $4 billion level during 1950. Of the 1949 total, $2,082 million was expended upon state highways, $923 million on county and local roads, and $631 million on city and village streets. An additional $59 million represented miscellaneous Federal expenditures. The $3,695 million spent in 1949 was divided into $2,001 million for capital outlay, $1,574 million for maintenance and administration, and $120 million for interest on debt. In 1949 highway capital outlays of $2.0 billion compared with $1.3 billion gross investment in railroads. More significantly, the $1.4 billion capital outlay on state highways compared with only $320 million gross investment in rail right-of-way and road facilities. In 1949 more than $2.0 billion was derived from highway-user payments.
In recognition of the continued importance of the highway program, Congress enacted the Federal-Aid Highway Act of 1950, approved Sept. 7, 1950. The new law raised the level of assistance to the Federal-aid system to $500 million annually to cover the fiscal years ending in June 1952 and June 1953. An additional $79 million a year was authorized: $20 million for Forest Highways; $17.5 million for Forest Roads and Trails; $10 million for National Park Roads and Trails; $6 million for Indian Roads; $4 million for the Inter-American Highway; $3.5 million for Alaska Forest Roads; and $5 million for Public Land Roads. The 1950 Act approved state and local government use of Federal-aid funds to retire road construction bonds, a device injected to meet the threat of toll highways which have developed in the East. An appropriation of $70 million for the 40,000-mi. interstate system which would allow the shifting of all funds to national defense in event of a national emergency did not pass. To permit advance planning, the Bureau of Public Roads on November 28 apportioned $400 million of the $500 million to the states, the remaining $100 million to be apportioned after the final 1950 population census figures have been considered.
Perhaps the most serious highway problem in 1950 was the effect of the rising proportion of heavy vehicles and of frequent axle- and gross-load overloading. The average load carried by all trucks and combinations in 1949 was 2, 40, and 76 per cent above the averages in 1948, 1941, and 1936, respectively. In 1949 more than 5 per cent of all trucks and combinations exceeded a state legal weight limit, and 16 per cent of the combinations were illegally overloaded in some particular.
Transit Industry.
Early data showed that U.S. carriers handled 17.3 billion passengers in 1950, or 9 per cent less than the 1949 level of 19 billion passengers. As a result of falling traffic and rising wages and other costs, 81 per cent of the U.S. cities of more than 25,000 population had 1950 fares of 10 cents or more, with a high of 17 cents on the rapid transit division of the Chicago Transit Authority. Sixteen per cent had cash fares ranging from 11 to 17 cents and only 4.1 per cent of the cities still had the five-cent fare in effect in 1945 in 31.5 per cent of the cities. Rising fares in 1950 failed to maintain operating revenues at the 1949 level, although they gave strong support to revenues. To hold expenses at a minimum, vehicle-miles operated were reduced 5.7 per cent, unprofitable lines were abandoned, and maintenance forces were reduced. Nevertheless, operating expenses were approximately the same in 1950 as in 1949 and net revenue before income deductions and income tax declined about 10.5 per cent. Although a decline of more than four per cent occurred in employment, rising wages and other labor costs held expenses to the 1949 level. A new high basic wage rate of $1.65 per hour, established in Chicago and Pittsburgh in 1949, was raised to $1.70 in Chicago in 1950. However, during the first four months of 1950, 32 per cent of the wage disputes were settled without granting a wage increase. The average increase in this period was 4.7 cents per hour, compared with 7.6 cents per hour during the first half of 1949 and 5.5 cents in the last half. Labor demands, pressed in 1950, called for a 40-hour week with the same take-home pay, greater insurance contributions, paid sick leave, three-week paid vacations, and higher pensions.
Intercity Buses.
The postwar decline in the traffic and profitability of the intercity bus industry continued during 1949 and the first six months of 1950. The 1,145,424,000 passengers carried by 366 Class I intercity and local or suburban carriers in 1949 represented a 12.7 per cent decrease under 1948 traffic of 1,312,426,000 passengers. About the same rate of decline (12.2 per cent) continued in the first six months of 1950. In that period 491,492,000 passengers were carried by 251 Class I carriers, compared with 559,560,000 in the first half of 1949. Operating revenues during 1949 were $483,803,801, 6 per cent less than the 1948 revenues of $514,896,705. The smaller decline in revenues than in passengers reflected fare increases. However, despite higher fares and a 6.7 per cent curtailment of service, measured in bus-miles operated, the net income after income taxes of the intercity and local or suburban carriers declined from $35,774,963 in 1948 to $22,667,463 in 1949, or 36.6 per cent. Factors in this lessened profitability were the increased registration of passenger cars, long strikes in the Pacific Northwest and the Midwest, and the inability to curtail operating expenses enough to offset lower revenues. Total expenses in 1949 fell only 2.5 per cent under the 1948 level and the operating ratio in 1949 was 91.8 compared to 88.5 in 1948. Wage increases contributed to the resistance of operating expenses to fall as much as service was curtailed. During the first six months of 1950, the 251 Class I carriers for which data were available cut bus-miles 8.1 per cent and total expenses 8.0 per cent, although again the decline in revenues was less than that in passengers carried, 8.7 per cent compared with 12.2 per cent. Despite greater ability to control costs, the decrease in revenues occasioned a 41.4 per cent drop in net income before income tax, compared with the same period of 1949.
For-hire truckers not only shared the material gain in 1950 traffic with private truckers, but they generally made considerably higher profits than during 1949, in which year Class I intercity motor carriers had an operating ratio of 94.7 and a net income after income taxes of $63,431,825.
The general 1950 situation was good. In the first six months of 1950, Class I carriers coupled relatively great increases in tonnage and revenues with better control of operating expenses, hauling 97,199,513 tons of revenue freight, or 21.2 per cent more than the 80,172,634 tons during the first six months of 1949. Those carriers with annual operating revenues of $200,000 or more earned $1,079,233,234 in the first half of 1950, or 25.5 per cent above the 1949 figure for the same period. Although the average haul may have increased or more high-rated traffic may have been carried, the greater increase in revenues than in tonnage suggested higher rates in 1950. Since total expenses increased only 22.7 per cent to $996,395,945, the operating ratio dropped from 94.4 per cent in the 1949 half-year period to 92.3 per cent in 1950, resulting in a net income before income taxes of $80,239,817 in the first six months of the year. After income taxes, the net amounted to $54,627,788. As the Korean War stimulated freight traffic considerably during the last half of the year and truck rates increased in some areas, 1950 third-quarter reports revealed that revenues of Class I carriers increased 32.3 per cent over the same period of 1949; tonnage, 25.1 per cent; and expenses, 30.4 per cent. The American Trucking Associations (A.T.A.) estimated that 1950 would show revenue, tonnage, and expense increases for those carriers of 25, 25, and 23 per cent, respectively, over 1949. A.T.A. also estimated aggregate revenues of Class I, II, and III motor freight carriers at $3,750,000,000 in 1950, compared with about $3,000,000,000 in 1949, and an increase in total intercity ton-mileage of private and for-hire trucks from 93.6 billion in 1949 to 115 billion in 1950.
Large increases have taken place since 1941 in mileage and cubic capacity of the U.S. network of pipe lines for transportation of petroleum and petroleum products. By Jan. 1, 1950, pipe-line mileage had increased to 152,814 miles, 25,463 miles greater than that of May 1, 1941. Excluded from this total are the 'Big Inch' and 'Little Inch,' World War II government-built large-diameter lines which were sold and converted to natural-gas service in December 1946. A demonstration of the economy of large-diameter oil lines resulted in an increase of 8,748 miles of crude-oil trunk lines ten inches or more in diameter; smaller diameter lines were decreased by 2,555 miles. During the 1941-1950 period, trunk lines for transportation of petroleum products more than doubled in mileage, an increase of 11,880 miles. On Jan. 1, 1950, such lines were in operation in 35 states and the District of Columbia. Under construction was one line which would connect Salt Lake City with the Pacific Northwest. Nevertheless, the traffic volume of large oil pipe line companies (annual revenues of more than $500,000), subject to the jurisdiction of the I.C.C., declined 9.4 per cent in 1949 from the 1948 figure, although transportation revenue was maintained. It will be noted that postwar traffic exceeded the peak war year, 1944, in spite of full resumption of Gulf-Atlantic tanker service ('Big Inch' and 'Little Inch' operations excluded).
U.S. railroads made a notable recovery in both freight traffic and general profitability of operations in 1950. However, until the last months of the year, rail passenger traffic continued in a decline which set in shortly after World War II and which resulted in heavy passenger deficits. This situation prompted railroads to withdraw marginal passenger schedules, particularly on branch lines, and to institute some rate reductions, coupled with improved service, to recapture coach passengers on routes of dense traffic. A recovery in rail employment occurred in the last six months of 1950, reflecting freight traffic gains and the influence of normal seasonal traffic patterns which had been altered by the serious coal and steel strikes in 1949. As continued high investment in economical Diesel locomotives, large freight cars, and heavier rails appeared inadequate to restore rail profitability to levels expected by ownership, the railroads stimulated a Congressional movement to find solutions by urging the renewal of national transport regulatory and promotional policy. They again cited the adverse effects upon the railroads of Federal aid to air and water transport and of the continued rapid growth of highway transport, in part aided by subsidies to the heavier trucks and truck combinations. During the late months of 1950, the railroads considered the wisdom of filing for a further freight rate increase, but only the eastern railroads followed through with a petition, dated December 1, for a four per cent increase in traffic 'within, to, from, and via Official Territory,' except for rates on anthracite and bituminous coal. Thus the postwar rate spiral, which had been stabilized for more than a year, again started an upward motion, contributed to by rising wages, wage and hour demands, and the resumption of general inflation which followed the outbreak of the Korean War. Although the labor disputes which brought nominal government control of the railroads, beginning August 27, continued into 1951, the stepped-up defense mobilization program gave promise of greater freight and passenger traffic and higher profits in 1951. However, the effect of an excess profits tax was a major uncertainty to investors.
Traffic Trends.
Cumulative carloadings aggregating 35,270,376 for the first 47 weeks of 1950 (ending November 25), compared with 32,789,888 and 39,183,882, respectively, in the same periods of 1949 and 1948. Thus, loadings in the 1950 period were 7.6 per cent above those of the comparable 1949 period, but 10.0 per cent below those of 1948. The greatest increases over the 47-week period in 1949 were in coal and coke carloadings (16.2 and 23.3 per cent), but forest products loadings increased 13.2 per cent; ore loadings, 13.4 per cent; and miscellaneous loadings, 9.3 per cent. Grain, livestock, and merchandise in less than carload lots declined 6.7, 12.1, and 7.5 per cent, respectively. Coal, coke, and ore loadings were low in 1949 because of coal and steel strikes. High forest product loadings reflected the peak 1950 construction of housing.
As in the case of carloadings, the railroads made a considerable recovery in freight ton-mileage during 1950. A preliminary estimate for Class I railways approximates 590 billion revenue ton-miles, or 12 per cent more than the 527 billion revenue ton-miles in 1949, the low since 1942. The greater percentage increase in 1950 ton-mileage than in carloadings probably reflects longer average hauls and higher average loads per car. A similar estimate places 1950 revenue passenger-miles at 31.1 billion, or 11.1 per cent below the 35.1 billion revenue passenger-miles in 1949.
Revenues, Expenses, and Rate of Return.
According to the Association of American Railroads, the total operating revenues of Class I railroads in the first ten months of 1950 amounted to $7,683,079,585, compared with $7,157,346,135 in the same period of 1949, an increase of 7.3 per cent. On the other hand, operating expenses amounting to $5,795,241,147 through October 1950, compared with $5,775,134,157 in the first ten months of 1949, showed an increase of only 0.3 per cent. The net railway operating income for the first ten months of 1950, constituting the sum left after payment of operating expenses and taxes, but before payment of interest, rentals, and other fixed charges, amounted to $814,671,802, compared with $542,809,666 in the corresponding period of 1949. Net income for the 1950 period, after interest and rentals, totaled $575,000,000, or an increase of 90.4 per cent; the 1949 figure was $302,000,000. Thus, the over-all rate of return on property investment (value of road and equipment as shown by the books of the railways, including materials, supplies, and cash, less accrued depreciation) for the 12 months ending Oct. 31, 1950, was 3.99 per cent, compared with 2.93 per cent for the period ending Oct. 31, 1949. Eighteen Class I railroads, of which nine were in the Eastern district, two in the Southern region, and seven in the Western district, failed to earn interest and rentals in the first ten months of 1950.
The greater revenue of Class I railroads in the first ten months of 1950 reflected both the 3.7 per cent freight rate increase authorized by the I.C.C. on Aug. 2, 1949, and the heavier traffic during the third and fourth quarters of 1950. Although rail carloadings during the first two quarters of 1950 dropped 4.5 per cent below those of the first half of 1949, carloadings in the third quarter of 1950 exceeded by 16.9 per cent those of 1949 and in October 1950 were 51.0 per cent above those in October 1949. The sharp gain in October continued into November, reflecting the absence of coal and steel strikes, such as occurred in 1949, as well as military preparations in 1950. Although the relative situation was somewhat different for passenger revenues, it appeared that, percentage-wise, the southern and western railroads showed greater increase in their total 1950 revenues than the eastern carriers. All regions showed percentage declines in passenger revenue but that of the eastern carriers was less than the decreases in those regions which did not benefit from the increased passenger fares of Nov. 28, 1949.
Operating Expenses.
The success achieved by the Class I railroads in limiting operating expenses during the first ten months of 1950 to the 1949 level can be attributed to several factors. One was the lower than anticipated cost of the 40-hour work week for nonoperating employees, effective Sept. 1, 1949; another, the absence of additional wage increases except those for yard employees effective Oct. 1, 1950. During the first five months of 1950 employment ranged from 2.0 to 8.6 per cent less than in the corresponding period of 1949. Not until July did employment materially exceed that of the same month in the previous year. Again, the increased use of Diesel-electric locomotives, which, during the first six months of 1950 averaged 6,018 gross ton-miles of cars, contents, and cabooses per $1.00 of fuel expense, compared favorably with 2,612 gross ton-miles averaged by coal-burning locomotives; 2,701 ton-miles by fuel-oil burning locomotives; and 2,907 ton-miles by electric locomotives. Significant operating averages reflecting freight train performance, such as cars per train, net and gross tons per train, and gross ton-miles per train-hour and train speed, were all higher in the first five months of 1950 than during that period of 1949. Gross ton-miles per train-hour, an excellent single measure of rail-freight transportation efficiency combining the speed factor with the total weight of the train behind the locomotive and tender, increased from 41,707 in the first five months of 1949 to 43,480 in the comparable period of 1950.
Increased Costs.
According to the Association of American Railroads, prices for railway fuel, materials, and supplies increased from an index of 206.9 in July 1949 to 223.4 on Oct. 1, 1950, an increase of 8.0 per cent (1934-1939 as 100). Although fuel oil and Diesel fuel prices remained 22.6 and 9.2 per cent lower during the first six months of 1950 than during the comparable 1949 period, the prices of coal and electric current to the railroads rose 3.4 and 1.6 per cent, respectively. The inflationary movement accompanying the Korean War occasioned price increases after Oct. 1, 1950. The higher prices and higher wages agreed upon late in the year or to be agreed upon early in 1951 were the principal bases for the petition made by the eastern railroads on December 1 for a 4.0 per cent increase in freight rates.
Rate of Return.
The 3.99 per cent rate of return estimated for 1950 operations exceeded the average return of 3.33 per cent during the four years, 1946-1949. In April the railroads advised the Senate Committee on Interstate and Foreign Commerce that they regarded these rates of return as unduly low in a period of peak peacetime levels of traffic. Nevertheless, the Class I railways made gross capital outlays averaging $996,285,000 per year during 1946-1949 (higher than that of any five-year period between 1920 and 1945) and $1,038,800,000 during 1950. While the 1950 figure was down 19.8 per cent from that of $1,294,680,000 in 1949, in the ten-year period between 1940 and 1949 the railroads invested more than $7 billion in their properties. In that period, the railroads installed 10,200 new Diesel-electric locomotive units, 1,700 new steam locomotives, 570,000 new freight cars, 4,200 new passenger-train cars, 11,000 miles of automatic block signals, 9,600 miles of centralized traffic control, and have laid in replacement 13,000,000 tons of new and heavier rail.
Late in 1950 the railroads faced settlement of the prolonged yard-employee disputes involving the 40-hour week, with pay for 48 hours, which led to government seizure in August, and of possible new wage demands by nearly all classes of railway employees occasioned by sharp rises in the cost of living during the second half of the year. On June 15 a Railway Labor Act Emergency Board found in favor of a 40-hour basic work week for yard employees, with higher rates of pay for work in excess of 40 hours, and of increased wages and certain changes in rules with respect to road employees. Upon refusal of employee groups to settle the disputes on that basis, conferences with John R. Steelman, the President's representative, resulted in a proposed settlement which granted an increase of five cents an hour for road employees and 23 cents an hour for yard employees, a three-year agreement, and a provision that for each point of increase in the Consumers' Price Index of the Bureau of Labor Statistics an additional increase of one cent an hour in wages would be granted. Agreements, based on the Steelman formula, were made between certain railroads and the Railroad Yardmasters of America, Railroad Yardmasters of North America, Inc., and the Switchmen's Union of America, and became effective on Oct. 1, 1950. Other operating labor groups refused to settle and a three-day wildcat strike of yard employees in key terminals, ending Dec. 16, 1950, was halted at President Truman's request on grounds of national danger. Subsequently U.S. District Judge Michael L. Igoe of Chicago entered an order requiring the Brotherhood of Railroad Trainmen and 76 lodges and individuals to show cause why they should not be held in contempt for violating an injunction. The settlement of the wage dispute, reached finally on December 21, gave 120,000 yardmen a retroactive increase of 23 cents an hour, with another two cents on January 1 and, in addition, a cost-of-living provision. The 180,000 road service workers were awarded a retroactive increase of five cents an hour, five cents an hour on January 1, and an escalator cost-of-living provision. The 40-hour issue was postponed until January 1, 1952. The estimated annual cost of the terms agreed upon was $131,000,000.
Motive Power and Equipment.
The aggregate gross ton-miles in freight trains during the first six months of 1950 was only about 2.0 per cent less than during a similar period of 1949. Those handled by Diesel-electric locomotives, however, increased 38 per cent between the two periods, compared with decreases of 20 and 23 per cent, respectively, in trains powered by coal- and oil-burning steam locomotives.
More locomotives but far fewer freight cars were installed in the first half of 1950 than in the similar period of 1949 or 1948. Class I railways put 1,122 Diesel and five steam locomotives into service in the 1950 period. Comparable figures for 1949 were 969 Diesel and 41 steam; for 1948, 620 Diesel, 24 steam, and four electric. Diesel installations in 1950 were running 15.8 per cent ahead of 1949 and 81.0 per cent over 1948; but steam and electric installations appeared to be approaching the zero point. Orders and installations of new locomotives continued to set records after July 1; the October figure of 239 was the greatest number for any month since 1923. On the other hand, the decline in rail carloadings in 1949 and in the early months of 1950 greatly discouraged purchase of rail freight cars. Cars placed in service by Class I roads and railroad-owned refrigerator car companies during the first six months of 1950 numbered 12,795, 76.8 per cent less than the 55,158 installed in the same period of 1949, and 74.9 per cent less than the 50,918 installed in the first half of 1948. The greater rate of car retirements than of replacements, which began in July 1949 (56,000 by Nov. 20, 1950), stimulated national concern at the time war broke out in Korea and serious car shortages were felt. In their own interest and pressed by shippers and the government, the railroads immediately increased their orders for new cars. On November 1, railroads and private car lines had 122,488 freight cars on order.
Freight Rates, Passenger Fares, and Service.
Except for a number of specific freight rate decreases to meet truck competition, 1950 was a year of relative freight-rate and passenger-fare stability. The railroads continued their effort to obtain increases in railway mail pay, pointing out that mail rates have increased but 25 per cent since the beginning of World War II, compared with increases of 57.3, 75, and 34 per cent, respectively, in freight rates, express rates, and passenger fares. A tentative agreement between the Post Office Department and the railroads for a $153 million retroactive mail payment for the period February 1947 through December 1950 awaited approval by the Interstate Commerce Commission late in the year.
Freight Classification.
Of considerable interest during 1950 were the steps taken toward the adoption of a uniform freight classification for the United States, a uniform scale of class rates in the territories east of the Rocky Mountains, and the investigations entered into by the Interstate Commerce Commission of the class rates in and between the Mountain Pacific Territory and other territories. The tentative classification submitted to the Commission on June 30 by the railroad committees, after nationwide hearings, and the 1945 class rate scale suggested by the Commission, amended for rate increases since that date, were the bases for discussion by carriers, shippers, and government agencies who looked toward a solution of the Class Rate Case, instituted in 1939, to bring about greater uniformity in class rates. As the class rate proceedings before the Commission approached final decision, the U.S. Supreme Court on November 27 dismissed the State of Georgia's conspiracy suit (State of Georgia v. Pennsylvania Railroad et al.) against 19 northern and southern railroads which alleged that a conspiracy had maintained rates for Georgia higher than in Official Territory.
War influences in 1950 reversed recent postwar trends in American overseas shipping. The rising demand for ocean-freight services caused dry-cargo and tanker rates to rise as sharply in the last six months of the year as they had in the early stages of World War II. The need for a stepped-up shipbuilding program was indicated as the Korean War required withdrawals from the reserve fleet and the danger of submarine warfare in a third world war aroused national security interest in the production of fast cargo ships and additional passenger liners. As the year ended, plans were being drafted to meet the national emergency with adequate shipping facilities. Early in December Admiral E. L. Cochrane, Federal Maritime Administrator, appointed a new National Shipping Advisory Board to formulate shipping policy in anticipation of the national emergency, subsequently declared by President Truman. An appropriation of $126,000,000 for 16 new, fast cargo carriers was sought from Congress. However, shipping was in a better position to operate under emergency conditions than at the outbreak of World War II. The American merchant fleet at the end of 1950 consisted of about 1,200 active private vessels, an additional 130 vessels under Military Sea Transport Service charter, 50 reactivated vessels, and 20 more to be reactivated in January, 1951. These craft were only about half the average age of those in service before World War II and were six to seven knots faster than the old prewar fleet. An additional 2,000 ships remained in the reserve fleet. Inland waterway carriers also were ready for a full-scale war effort with a more modernized barge and towboat fleet.
U.S. Merchant Marine in 1950.
In 1950 tonnage under U.S. registry was more than one third of the gross tonnage of the world's ocean-going vessels. However, after deducting the number of vessels in the inactive reserve fleet, the U.S. share was little more than one fifth of the world's active-vessel tonnage. Vessels of the active merchant fleet in 1950 were 83 per cent privately owned; 14 per cent was owned by the Military Establishment; and 3.0 per cent chartered by the government from the Federal Maritime Board. Ninety-three per cent of the fleet had been built since 1940 and 43 per cent of the vessels were capable of speeds of more than 13 knots. Tanker-vessel tonnage increased 66 per cent over prewar years; dry-cargo vessel-tonnage increased 18 per cent. On Mar. 31, 1950, there were 542 privately owned dry-cargo vessels employed in foreign trade and 149 in domestic trade; at that time, also, 153 tankers were in foreign trade and 266 in domestic. Significant vessel shifts since 1939 include a 20-25 per cent decrease in domestic dry-cargo tonnage and a 200 per cent increase in foreign trade dry-cargo tonnage. A 17 per cent increase took place in domestic tanker tonnage, while American-flag foreign trade tonnage had risen to 2,440,000 deadweight tons, eight times larger than in 1939. The great increase in the tanker fleet in foreign trade reflected the greater requirements for oil imports in the postwar period. On Mar. 31, 1950, the American passenger fleet consisted of 38 privately owned ships, 11 government-owned vessels, and six vessels, including a superliner, on the ways. The passenger-capacity at that time was 13,974. On July 1, 1950, the Military Sea Transport Fleet consisted of 190 vessels: 60 cargo freighters; 72 tankers; 52 passenger types; and six miscellaneous vessels. Ten coastal cargo vessels were added by the end of the year.
The heavy demand for tonnage to meet logistic requirements for the Korean War increased the active American Merchant Marine to 1,350 vessels of about 16 million deadweight tons, according to the National Federation of American Shipping, Inc. On September 1 the private fleet totaled 1,177 ships (over 1,000 gross tons) of 14,021,000 deadweight tons (7,331,000 D.W.T. dry-cargo and combination; 6,690,000 D.W.T. tanker-cargo). In August 90 Victory-type vessels were withdrawn from the reserve fleet and bareboat-chartered to private operators for time-charter operation in the Military Sea Transport Service. The National Defense Reserve Fleet, excluding tugs, cableships, concrete ships, and military auxiliaries, decreased to 2,069 vessels, among which were 1,603 Liberty ships, 151 Victory vessels, 36 'overage' dry-cargo and combination ships, and 24 tankers.
As of November 16 Americans had ordered 56 ships in Europe, of which 41 were under construction and 15 had been completed. The 56 vessels totaled 860,552 deadweight tons. At that time only 29 vessels of 550,000 deadweight tons were on order in the United States. Of these, mostly ore carriers, 138,770 tons represented vessels ordered from inland yards for service on the Great Lakes. Early in January 1951 shipbuilding in U.S. yards had considerably improved with the prospect of Congressional allocation of $350,000,000 for the construction of 50 superspeed cargo ships. This program would reopen the Government yards at Wilmington, N. C., at Vancouver, Wash., and at San Francisco and Alameda, Calif.
Ocean-Freight Rates and Ship Prices.
As in the early days of World War II, ocean rates and ship prices rose rapidly after the outbreak of the Korean War. Late in September two T-2 tankers reportedly were sold at a figure somewhere between $1,650,000 to $1,750,000 each. Six months earlier the price had been $900,000. In the same period three of four Liberty tankers, which had been offered at $300,000 six months before, sold for $500,000 each. During August and September charter rates for tankers soared; the light oils rate rose from 20 per cent below the old U.S. Maritime Commission scale in late July to 50 per cent above that scale. By December coastwise tanker rates for clean cargoes were 110 per cent over the old Maritime scale, while rates for dirty cargoes climbed 92.5 per cent above it. This was the first time that tanker rates had approached the July 1948 level, when coastwise rates went above 200 per cent of the Maritime scale, then slid off rapidly. Shortly after the beginning of the Korean War, tramp ship dry-cargo rates rose for a time. By the first of October, however, dry cargoes were scarce at North Atlantic ports and rates were depressed. Scrap metal rates to the United States had risen 15 to 20 per cent because of the unwillingness of ship owners to bring their vessels to U.S. ports. By December that situation had greatly changed; tramp owners were running (spot) ships for higher rates for the first time since 1947, instead of chartering a month or so in advance of loading date. Chartering of vessels for imports of ores and scrap metal to the United States had come to a standstill, for ship owners were finding outward rates so attractive that they preferred to return to U.S. ports in ballast. On December 7 a Liberty ship was chartered at a rate only $1.50 under the old Maritime scale and was fired for a cargo of grain from the United States to Greece, December loading at $15.80 per ton. With the resumption of European demands for U.S. coal, the coal rates strengthened late in the year. In December six ships were fixed for voyages from the United States (north of Hatteras) to North France at $9.95 per ton — double the rates of a month earlier. Time charters for foreign vessels were fixed for four to 12 months at $3.25 to $3.50 per deadweight ton.
Domestic Shipping.
During 1950 domestic shipping benefited from the economic recovery in the first half and the defense activity in the last half of the year. Despite a delayed opening of Great Lakes shipping, shipments of iron ore, coal, and limestone on that waterway were at peak volume. It was estimated that the iron ore movement in 1950 was about 76 million tons and that the coal movement up the lakes was 51 million tons. Barge traffic on the inland waterways, particularly in bulk commodities, was also brisk. However, coastal and intercoastal carriers remained under the handicaps of relatively high costs and rates.
Inland Waterways Corporation.
Special interest existed in the progress of the Inland Waterways Corporation because of its deficits in the postwar period and the pressure brought by private barge lines and railroads for discontinuance of government operation. For the fiscal year ending June 30, 1950, the consolidated net deficit was $733,600, $266,405 less than in 1949. Operating revenues were $9,811,552 in fiscal 1950, or 4 per cent less than in 1949; traffic handled was 2,641,394 tons, compared with 2,705,314 tons in 1949. Tons towed for the account of others decreased from 327,183 tons in 1949 to 167,254 tons in 1950, or 49 per cent. On the other hand, the corporation succeeded in its attempt to give relatively more merchandise service. Merchandise freight amounted to 29 per cent of the total carried in 1950, compared with 22 per cent in 1949.
Water-borne Commerce.
According to the American Waterways Operators, Inc., a trade association for the barge and towing vessel industry in the United States, the 1949 water-borne commerce as a whole upon the 27,000 miles of navigable inland waterways (excluding the Great Lakes) exceeded that of 1948 by an estimated 10 per cent. Barge traffic again increased during 1950. A factor in the growing inland waterway commerce was the ability of the large barge operators to keep rates virtually at the same level (some 1950 bulk rates were lower) as those at the close of World War II and still operate profitably. Costs were held down despite rising prices by use of modern equipment and improvements in loading and unloading which further reduced turnaround time. Use of Diesel tugs (the only type built since 1942) meant faster hauls, fewer towing units for the same tonnage movement, and low labor, fuel, and maintenance costs. In October a backlog of orders existed for 20 such towboats. A number of large barges, with capacity up to 3,000 tons per unit, were also on order.
Regulated Water Carriers.
The 1949 domestic freight revenue of Class A and B water carriers (annual revenues of more than $500,000 and from $100,000 to $500,000, respectively), subject to the Interstate Commerce Commission (I.C.C.), totaled $205.6 million, or 22.9 per cent greater than the $167.3 million in 1948. However, tons of revenue freight dropped from 70,331,000 in 1948 to 68,260,000 in 1949, a decrease of 2.9 per cent. During the first six months of 1950, compared with a similar period of 1949, Class A and B water carriers experienced a freight-revenue increase of 15.9 per cent on domestic traffic but a slight tonnage decrease of 0.1 per cent. Since many bulk-commodity common and contract carriers are not regulated by the I.C.C., the rising revenues of Class A and B regulated water carriers probably reflected rising water rates on other traffic as rail rates rose. The greatest increases in freight revenues in the first half of 1950 were experienced by the Atlantic and Gulf Coasts carriers, followed by the Pacific Coast group. The Great Lakes group experienced a 24.3 per cent decline in freight revenue and the largest drop in tonnage. The barge lines on the Mississippi system and the intercoastal ship lines made significant gains in tonnage. The Pacific Coast carriers recorded a 12.5 per cent drop in tonnage but a 20.6 per cent increase in revenues. Passenger revenues and traffic were generally lower in the 1950 period.
Intercoastal Shipping.
From 40 to 65 ships engaged in intercoastal trade between 1945 and 1950, less than half the number (143) in prewar service. During 1949 and the first half of 1950, 55 ships operated in that trade, of which 27 were privately owned and 29 were chartered from the government, but, as the postwar vessels were larger and speedier, the drop in carrying capacity was not so great. Although tonnage of dry-cargo capacity dropped 47 per cent from 852,000 gross tons in 1939 to 458,000 in 1949, the one-third average increase in sea speed (from 11 to 15 knots) yielded an intercoastal fleet approximately two thirds as large as the prewar fleet. The 1949 tonnage moved in intercoastal trade amounted to 3,774,660 long tons of dry cargo in 1949, about 40 per cent less than the 6,309,000 long tons in 1939. During the first six months of 1950 an 11.7 per cent increase occurred in the tonnage (short tons) of large intercoastal carriers.
Coastwise Shipping.
The coastwise dry-cargo trades (Atlantic, Atlantic-Gulf, and Pacific) have recovered less from the World War II curtailment of domestic shipping. Only three of more than 12 prewar steamship lines, the Newtex, Pan-Atlantic, and Seatrain Lines, were active in 1950 as common carriers in Atlantic and Atlantic-Gulf trade. Since 1948, only one common carrier, the Coastwise Line, has provided such service in the Pacific coastal waters, although a number of common carrier lines had operated in the prewar period. However, seven contract lumber carriers had resumed operations by 1950. Only 72 privately owned vessels of 588,000 deadweight tons and six chartered vessels plied the coastwise routes hauling dry cargo as of December 31, 1949, compared with 235 vessels of 1,187,000 deadweight tons as of June 30, 1939. The 1949 dry-cargo tonnage on the Atlantic-Gulf coastwise lane had revived to 50 per cent of the 1939 level of 27,512,000 long tons, but the 650,000 long tons handled in the Pacific trade in 1949 was only 20 per cent of prewar volume. Atlantic-Gulf regulated carriers increased their tonnage by 7.0 per cent during the first six months of 1950, while the tonnage of Pacific Coast carriers dropped 12.5 per cent. The outlook for both trades was highly uncertain because of the threat of general war, but the Atlantic-Gulf shipping appeared to have the best prospects should such war not occur. The situation of tankers on both coasts, however, was quite different. A full recovery occurred shortly after the end of World War II, since the costs of shipping oil by water were far lower than by other methods. High shipping costs and rates in dry-cargo trades relative to rail costs and rates were still hindering recovery in the dry-cargo segments. Palletizing, the use of metal containers, and the hauling of truck-trailers upon ships have been tried in an effort to reduce dry-cargo handling costs, the prime barrier to recovery.
Noncontiguous Shipping.
The postwar recovery of shipping between Alaska, Hawaii, and Puerto Rico and the United States has been relatively great. Only air cargo and some rail and highway transport to Alaska exist as alternatives to shipping by water. Air cargo rates have been too high to attract other than high-valued commodities. Dry-cargo and vessel tonnages in the noncontiguous trades by 1948 had recovered to about 79 per cent of the prewar level; in that year the noncontiguous dry-cargo tonnage was 3,869,000 tons compared with 4,580,000 long tons in 1939. Recent changes in customs laws with respect to filing of export declarations have lessened the statistics available for those trades.
The Congressional investigations of the status and future of domestic shipping were conducted during 1950 and the President's Water Resources Policy Commission published its report (December 17), A Water Policy for the American People. The Commission recommended that improvement of inland and intracoastal waterways should be continued as an important objective of multiple-purpose basin programs; that waterway charges should not be considered 'yardstick' rates; and that the levying of tolls for waterways should be worked out as part of the problem of reconciling and making workable a coordinated transportation system. Full-cost rates for both rails and barge lines were favored to sustain that policy. The Subcommittee on Domestic Land and Water Transportation of the Senate Interstate and Foreign Commerce Committee heard the railroads' complaints against the allotment of traffic to barge lines which receive subsidies in the form of free waterways, and in November published them in its Study of Domestic Land and Water Transportation. By the year's end, its recommendation had not been released. A Subcommittee on Merchant Marine and Maritime Matters, headed by Senator Warren G. Magnuson, reviewed the status of coastal and intercoastal shipping in its Merchant Marine Study and Investigation, published August 30, 1950. That study emphasized as factors in the decline of those trades (1) the high cost of replacing prewar vessels and the lack of specially adapted ships; (2) the high postwar costs of handling cargo; and (3) the depressed rail rates.

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