History of the Louisville & Nashville Railroad

20 Resurrection and Redirection: War and Modernization, 1941-59

20 Resurrection and Redirection: War and Modernization, 1941-59 Like a phoenix risen from the ashes, the L & N shook off the clogs of depression and, under the powerful stimulus of war, achieved performance peaks that would have been considered impossible a few years earlier. Year after year it shattered financial and operational records that had gone unchallenged since the prosperity of the mid-1920s. For a few years at least, World War II solved nearly all the L & N's major problems. It brought the company more business than could be handled comfortably, drastically reversed the decline in passenger revenues, sharply curtailed the threat posed by the new competitors, and expedited the company 's drive to streamline its operations. Only the worsening dilemma of labor relations resisted the invigorating tonic of wartime conditions, but even here differences were at least ameliorated in the name of patriotism. Of course the war created its own difficulties and aggravated existing ones, especially in the realm of maintaining or upgrading equipment and physical facilities. But these were minor compared to its positive effects. Once the conflict ended, however, it was widely feared that the inevitable postwar economic dislocation would thrust the L & N (and other railroads) back into that sea of troubles from which it had so recently emerged. The painful experience of 1920-21 had not been forgotten, and the turbulent conditions encountered in 1946 seemed to confirm that suspicion. For a time the road to readjustment looked to be long, tortuous, and uncertain in its destination. WAR AND MODERNIZATION, 1 9 4 1 - 5 9 45 3 There seemed to be good reasons for these apprehensions. Scarcely had the victory cheers faded when most of the prewar problems reappeared in virulent form. Equity capital was desperately needed but remained scarce to the point of extinction. Rival modes of transportation regained fresh vigor and commenced a period of unprecedented growth. Their impact upon the L & N's traditional sources of business was profound enough to drive the company into a furious effort to retain old markets and seek new ones. In that quest governmental regulation and taxation policies once more became an intolerable burden to the L & N management. Labor relations assumed new dimensions that made them progressively more critical and costly. To the unadjusted eye the postwar situation seemed grimly reminiscent of the company's prewar dilemma. In that context the fight for survival looked to be a discouragingly uphill one. A rampant inflation was developing momentum, and the labor unions had grown powerful and restive. Against these twin pressures on costs the L & N could offer only a feeble response. The rigid federal regulation of rates made it impossible for railroads to react swiftly to rising expenses, and whatever tariff increases the ICC eventually granted could never compensate the company for revenue lost in the interim. Taxation policies, especially the provisions on amortization of equipment, further aggravated the shortage of capital. The bitter competition with other transportation modes underscored the latter's numerous advantages, such as flexibility, relative lack of regulation, and especially the benefit of public subsidies. Despite this bleak picture, the times were in fact changing. The railroads would never retrieve their earlier prosperity and superiority, but neither would they suffer the catastrophe of elimination prophesied by many observers. Several factors account for their survival in reasonably good shape. For one thing the postwar years, after the brief trauma of reconversion, ushered in a long term period of prosperity. The railroads gleaned a somewhat unequal share of this economic bonanza but it was sufficient to keep the stronger systems healthy and to buttress them against short-term slumps. A second factor concerned the nature and sources of this new prosperity . Contrary to expectations the high level of wartime industrial productivity did not fall off sharply after 1945; instead it merely shifted direction to meet new sources of demand. The most obvious wellspring was the tremendous craving for consumer goods that had been unobtainable during the war years. To meet these needs industrial firms in turn required new and replacement equipment which had also been in short supply under wartime priorities. The production stimulated by these 4 5 4 HISTORY OF THE LOUISVILLE & NASHVILLE RAILROAD demands insured the railroads of a growing base of industrial and manufacturing business. It also reinvigorated the market for raw materials. For example, the astonishing increase in demand for electricity generated a voracious demand for coal, which assured the L...