Diesel versus Steam

[gabe]

To Murphy Siding, N&W was indeed well known more its modern steam locomotives and even more importantly, its modern refurbishing and maintenance practices.  N&W virtually "dieselized" its repair and refueling operations to lessen the turnaround times of its steam locomotives.  N&W wanted to stay with steam but since it was becoming virtually the only major steam operation in the country, finding suppliers of parts for its power was becoming difficult to impossible, driving up operating expenses as a result.  Diesels started looking better because steam was becoming an oddball, among other things.  By analogy, Modesto & Empire Traction likes its 70-tonners, but it is getting harder to maintain them properly because of their age and unavailability of parts.

But didn't N&W build their locomotives in-house at this time?  As they would be the suppliers, I would think they would also be the parts distributors.  I am not saying you are wrong, but why didn't N&W's self-production aleviate this problem?

Gabe

[CNW 6000]

+1 on what was said re: GP40-2.  On the N&W issue being the sole source for anything, to me, is still an expensive propositon.  You have to get parts from somewhere and materials from somewhere even if you're building them yourself.

[MichaelSol]

To Murphy Siding, N&W was indeed well known more its modern steam locomotives and even more importantly, its modern refurbishing and maintenance practices.  N&W virtually "dieselized" its repair and refueling operations to lessen the turnaround times of its steam locomotives.  N&W wanted to stay with steam but since it was becoming virtually the only major steam operation in the country, finding suppliers of parts for its power was becoming difficult to impossible, driving up operating expenses as a result.  Diesels started looking better because steam was becoming an oddball, among other things.  By analogy, Modesto & Empire Traction likes its 70-tonners, but it is getting harder to maintain them properly because of their age and unavailability of parts.

But didn't N&W build their locomotives in-house at this time?  As they would be the suppliers, I would think they would also be the parts distributors.  I am not saying you are wrong, but why didn't N&W's self-production aleviate this problem?

On the steam diesel thread, I had reproduced a conversation between GM's manager of sales and H.F. Brown on the subject. It was a useful exchange, partly from the standpoint of representing a discussion by professionals of contemporary events, partly as it was addressed to and reviewed by professionals within the industry and the specific railroad in question, and interesting from the standpoint that Stuart Saunders makes an appearance in the disucssion:

H.G. McClean, Manager of Export Sales, GM/EMD:

"But perhaps the best refutation of [Brown's] statements came from the action of the Norfolk and Western Railroad. That was a large eastern railroad, having engaged in hauling coal and with, therefore, every incentive to use motive power energized by coal, whether steam locomotives or electrification. Some 100 miles of that railroad had been electrified through a mountainous area and handling heavy traffic in 1914. The railroad abandoned that electrification in 1951.

"Thereafter it had operated a fleet of modern steam locomotives in a way which was well known and admired throughout the world as a classically fine steam locomotive operation. In 1955 the Norfolk and Western had made the decision to buy their first diesel locomotive, and in 1958 had decided on complete dieselization. At the time of that decision they had a background of previous experience of electrification. They had excellent comparative operating costs for steam locomotives, possibly the best figures in the United States, and equally, as late starters, they had available to them from all the other railroads that had been dieselized, data on the results of dieselization on those lines to supplement their own diesel experience. The President of that railway, speaking at Roanoke 9th February, 1960 said, 'Our dieselization programme was a major factor in enabling us to improve our operating performance so substantially in 1959.' No more outstanding example is available to disprove the author's statement 'Diesel motive power has added to the financial burden of the railways.'"

H.F. Brown, Consulting Engineer, Gibbs & Hill:

"Mr. McClean has cited the 'action of the Norfolk and Western Railway as the best refutation of [Brown's] statements.' That was quite agreeable to [Brown], who had been a small shareholder in that well-managed railway for many years, and was quite familiar with its operations. It was one of the few financially sound railways in the United States because its principal traffic, coal, could not be diverted to automotive vehicles on highways. The experience of that railway with its motive power, steam, electric and diesel, was an excellent epitome of the whole subject under discussion.

"For years that railway had built its own steam motive power which was outstanding in its performance. But there was a short, difficult section of single-track line, having a 2.2 per cent grade against their prevailing heavy traffic in the mountains. That was further complicated by a long tunnel, creating a serious 'bottleneck' on their otherwise two-track line. Electric operation of that section was installed in 1914 for helper service of the through traffic. Also for complete electric operation of the heavy coal trains from the various gathering yards over the summit of the grade to the main departure yard. From thence heavy steam power could take the trains downgrade to the seaport terminal. That electrification was paid for out of earnings; created no additional debt; satisfactorily solved the operating problems; and was just another part of smooth, economic railway operation.

"Like all railway electrification installed in the United States in those early days, it had been necessary to install its own power plant for its operation. Railway loads were far too heavy to be assumed by the small isolated industrial and lighting plants then existing. By 1950, after 35 years of exceptionally severe operation, including the 1941-1945 war requirements, the power plant and the electric motive power had reached the end of their economic service life. Both required replacement.

"The diesel manufacturers were immediately on their doorstep, dramatic sales-tools in hand, to convert them to the 'modern way' of operating their railway. Their motive power officials, being excellent steam locomotive manufacturers as well as operators and maintainers, had been quietly collecting the facts concerning diesel operation from their associates on the connecting lines -- of which there were many. They compared the 'dramatized version' of the facts collected and saw further that their own steam costs were below either version of the diesel costs.

"That railway being principally engaged in coal haulage, and having excellent steam locomotives, had elected to retain their steam operation. They spent a considerable sum out of earnings to construct an entirely new double-track line over a new route through the mountains.That had much more favourable grades and a larger, shorter, double-track tunnel, all of which replaced the former single-track section that had required the electric operation. They had then returned to complete through operation with steam at speeds that were higher than the fixed-speed induction-motor type of electric locomotives had been capable of performing. All that was accomplished with no increase in debt and at about the same cost as new electric motive power and power supply.

"In 1955 there was a sharp increase in the coal export business to Europe. Additional motive power was required -- and soon. Their steam motive power had increased in age and was becoming more expensive to maintain. More especially since all other steam locomotive manufacturing had ceased, even for the various small replacement details, formerly easily obtained from suppliers, were no longer available. The Norfolk and Western had no decision to make by comparing motive power costs. They had no choice. They could no longer build, maintain, or purchase steam. They had no time to study and develop the new commercial frequency electrification

[MidlandPacific]

Michael,

One question - the financing issue is very interesting, but of course I'm not an expert, so let me see if I understand you.  The issue is not one of a narrow technical superiority or of labor costs, but rather of the effect on the company's finances of a replacement of the entire motive power fleet, while interest was still being paid on undepreciated motive power (which winds up being sold at a scrap value lower than the depreciated value, in most cases), with a form of motive power that depreciated much more rapidly? 

BTW, is there an important difference between GMAC financing and steam loco purchases that I'm missing, or is it simply the expense of all that interest that's the real issue?

[selector]

Earnings were never going to pay for recap and shareholders' expectations before more recap...ad nauseum, ad infinitum.  Somewhere in the mix was a requirement to maintain structures and rights of way. 

Would that be about right?  The bathtub would never fill because the plug could not be placed, even though the taps were both on full.

[MichaelSol]

Michael,

One question - the financing issue is very interesting, but of course I'm not an expert, so let me see if I understand you.  The issue is not one of a narrow technical superiority or of labor costs, but rather of the effect on the company's finances of a replacement of the entire motive power fleet, while interest was still being paid on undepreciated motive power (which winds up being sold at a scrap value lower than the depreciated value, in most cases), with a form of motive power that depreciated much more rapidly? 

I am probably going to regret this in the morning, but here goes:

Make the following assumptions:

Diesel electric cost $120,000, 1500 hp., 800,000 mile service life

Northern Steam locomotive, $160,000, 5,000 hp, 2,000,000 mile service life

Interest is 8%. The DE is financed through GMAC at 8 years; the Steam is purchased outright. The cost of overhaul of the DE is approximately 50% of the new cost, and is capitalized; probably through a new GMAC lease.

To obtain the same horsepower, 2 million mile service life, the DE cost will be $1,016,800, compared to the $160,000 steam cost. The Diesel Electric locomotive is pretty fancy horsepower.

Caveat: interest charges at the time the first generation DEs were purchased were on the order of $1-2%, and the "cost" does not include operating savings from the DE.

 

 

 

[MidlandPacific]

Michael,

One question - the financing issue is very interesting, but of course I'm not an expert, so let me see if I understand you.  The issue is not one of a narrow technical superiority or of labor costs, but rather of the effect on the company's finances of a replacement of the entire motive power fleet, while interest was still being paid on undepreciated motive power (which winds up being sold at a scrap value lower than the depreciated value, in most cases), with a form of motive power that depreciated much more rapidly? 

I am probably going to regret this in the morning, but here goes:

Make the following assumptions:

Diesel electric cost $120,000, 1500 hp., 800,000 mile service life

Northern Steam locomotive, $160,000, 5,000 hp, 2,000,000 mile service life

Interest is 8%. The DE is financed through GMAC at 8 years; the Steam is purchased outright. The cost of overhaul of the DE is approximately 50% of the new cost, and is capitalized; probably through a new GMAC lease.

To obtain the same horsepower, 2 million mile service life, the DE cost will be $1,016,800, compared to the $160,000 steam cost. The Diesel Electric locomotive is pretty fancy horsepower.

Caveat: interest charges at the time the first generation DEs were purchased were on the order of $1-2%, and the "cost" does not include operating savings from the DE.

That makes perfect sense (it's been years since I took engineering economy, but the effect of compound interest is lodged firmly in there).  Was it uncommon to float bonds to pay for motive power in the steam era? 

And of course, when railroads bought Northerns, they bought them in relatively small numbers to augment their existing fleet - when they dieselized they replaced the existing fleet!

[gabe]

Michael,

One question - the financing issue is very interesting, but of course I'm not an expert, so let me see if I understand you.  The issue is not one of a narrow technical superiority or of labor costs, but rather of the effect on the company's finances of a replacement of the entire motive power fleet, while interest was still being paid on undepreciated motive power (which winds up being sold at a scrap value lower than the depreciated value, in most cases), with a form of motive power that depreciated much more rapidly? 

I am probably going to regret this in the morning, but here goes:

Make the following assumptions:

Diesel electric cost $120,000, 1500 hp., 800,000 mile service life

Northern Steam locomotive, $160,000, 5,000 hp, 2,000,000 mile service life

Interest is 8%. The DE is financed through GMAC at 8 years; the Steam is purchased outright. The cost of overhaul of the DE is approximately 50% of the new cost, and is capitalized; probably through a new GMAC lease.

To obtain the same horsepower, 2 million mile service life, the DE cost will be $1,016,800, compared to the $160,000 steam cost. The Diesel Electric locomotive is pretty fancy horsepower.

Caveat: interest charges at the time the first generation DEs were purchased were on the order of $1-2%, and the "cost" does not include operating savings from the DE.

 

 

 

I always thought diesels were more expensive than steam locomotives?

Gabe

[Murphy Siding]

I am probably going to regret this in the morning, but here goes:

Make the following assumptions:

Diesel electric cost $120,000, 1500 hp., 800,000 mile service life

Northern Steam locomotive, $160,000, 5,000 hp, 2,000,000 mile service life

Interest is 8%. The DE is financed through GMAC at 8 years; the Steam is purchased outright. The cost of overhaul of the DE is approximately 50% of the new cost, and is capitalized; probably through a new GMAC lease.

To obtain the same horsepower, 2 million mile service life, the DE cost will be $1,016,800, compared to the $160,000 steam cost. The Diesel Electric locomotive is pretty fancy horsepower.

Caveat: interest charges at the time the first generation DEs were purchased were on the order of $1-2%, and the "cost" does not include operating savings from the DE.

I always thought diesels were more expensive than steam locomotives?

Gabe

Yes-on a horsepower to horsepower basis.  Note that in Michael's example, it would take 3-1/3 1500 hp diesels @ $120,000 ( $400,000) to equal 1 5000 hp steam locomotive @ 160,000.

[Anonymous]

Wait a sec here. You have to FINANCE the power? Why not pay it off in full and be done with it?

I dont think you need three Desiels to match a steam, remember one good diesal can put down Tractive Effort equal that of a steam engine. Both can only run so fast anyhow.

If a railroad ordered X units from a Engine Factory, it gets celebrated as a boost to the local area's economy but since these units are being financed, they are never truely bought and paid for. It's the Banks or financers that celebrate.

[erikem]

 ......

H.F. Brown, Consulting Engineer, Gibbs & Hill:

....

"In 1955 there was a sharp increase in the coal export business to Europe. Additional motive power was required -- and soon. Their steam motive power had increased in age and was becoming more expensive to maintain. More especially since all other steam locomotive manufacturing had ceased, even for the various small replacement details, formerly easily obtained from suppliers, were no longer available. The Norfolk and Western had no decision to make by comparing motive power costs. They had no choice. They could no longer build, maintain, or purchase steam. They had no time to study and develop the new commercial frequency electrification for 60-cycle operation which would be required. They purchased diesels from the two manufacturing companies and it cost them approximately $86,000,000. That was more than they wished to divert from the unappropriated earned surplus. So, like all other railways, these were purchased by means of equipment trust certificates.

.....

I seem to recall that the main reason for shutting electric operation on the Milwaukee and electric freight operation on the South Shore was the unavailability or high cost of parts for the electric locomotives. In both cases, electric operation had been historically cheaper than diesel - although in the case of the South Shore, the electric distribution system was not up to handling 10,000 ton trains.

In the case of the N&W, steam could have lasted a few more years had there been another major road or two providing a market for steam locomotive parts. Similarly, the Liitle Joes may have lasted longer had there been on the order of 100 Joes running in this country instead of 15. 

I also recall that the Magma Arizona continued steam operation into the early 1960's as traffic was expected to dry up before the cost of new diesel locomotives could be paid off. 

[Murphy Siding]

I dont think you need three Desiels to match a steam, remember one good diesal can put down Tractive Effort equal that of a steam engine. Both can only run so fast anyhow.

  I guess what I've read, is that EMD designed the FT's in 4 unit sets of 1250 hp each, to match the performance of  typical big steam engines they were hoping FT's would replace.

[Anonymous]

I dont think you need three Desiels to match a steam, remember one good diesal can put down Tractive Effort equal that of a steam engine. Both can only run so fast anyhow.

  I guess what I've read, is that EMD designed the FT's in 4 unit sets of 1250 hp each, to match the performance of  typical big steam engines they were hoping FT's would replace.

Right Im sorry for my misleading comment. I treat the ABBA as one engine. The ABBA does a good job as a set against a Steam Engine Im thinking of a 4-8-4 or similar.

[selector]

Tractive effort gets the train underway, but horsepower is needed to sustain momentum on grade.  In that respect, the nod goes to the steamer once speeds are in excess of, I dunno, 20 mph?  If you have horsepower matched by virtue of numbers of gen sets, as in ABBA, then the nod falls back to the diesels because they also get ground-shaking start-up on heavy drags unmatched by a lone steamer.  At least, that is my understanding....

[snagletooth]

Tractive effort gets the train underway, but horsepower is needed to sustain momentum on grade.  In that respect, the nod goes to the steamer once speeds are in excess of, I dunno, 20 mph?  If you have horsepower matched by virtue of numbers of gen sets, as in ABBA, then the nod falls back to the diesels because they also get ground-shaking start-up on heavy drags unmatched by a lone steamer.  At least, that is my understanding....

Didn't someone back in the day make just that point. They asked EMD to send just one F against there one steamer.

[Anonymous]

I know most of everbody is saying that Steam is better.  Well in my opion I would rather see a Diesel out on the mainline than a Steam locomotive.  The Diesels are a lot more economical to use, and a lot less work to maintain.  Plus you dont have to worry about boiler explosions and loosing you life due to one.

[gabe]

I know most of everbody is saying that Steam is better.  Well in my opion I would rather see a Diesel out on the mainline than a Steam locomotive.  The Diesels are a lot more economical to use, and a lot less work to maintain.  Plus you dont have to worry about boiler explosions and loosing you life due to one.

I don't think that is the point. 

The point centers more around the debt railroads incurred as a result of diesels and having a rapid program of retiring the steamers rather than prematurely retiring them.

Gabe

[Modelcar]

....It most likely would have been more prudent for the companies that still had "good" steam engines to use them until they reached the end of their service life.  But I wonder, by doing so they would have had to extend in time all the infrastructure to keep them serviced as well as personnel to do such work....

So I have no idea how this trade off of buying "new" diesels before the steamers were "used up" worked out in the finances.  Sure seems like purchasing the new diesels in the appropriate time though, would have been the thing to do....Almost all companies did and of course never went back to the "old" system.

[MichaelSol]

Remarkably, the statistical record for any given railroad, and the industry as a whole, is quite accessible. Anyone who cares to "prove" their point can do just what Brown did -- go to the numbers and see what they say.

For the MILW, this was an easy exercise, and applying an inflation adjustment to provide "constant" dollars, the following information comes out of the 1945 and 1960 annual reports:

Locomotive fleet maintenance, plus fuel, plus financing charges.

1945: $1.24/1000 ton miles.
1960: $1.54/1000 ton miles.

This is a 25% increase in costs during a time when revenue declined by 17.5% and all other operating expenses declined by 23%.

Interestingly road crew costs increased as a result of Dieselization. The 1945 cost associated with road service train crews was 89 cents per 1000 ton-miles, and after Dieselization was completed had increased to 96 cents per 1000 ton-miles, a 12% increase in road crew costs.

During this period of time, wages associated with maintenance of way decreased by 41% and wages associated with station agents declined 43%. This confirms what Brown stated specifically -- that the savings in crew costs would be negligble and suggests even that dieselization brought about some unexpected inefficiencies -- perhaps a "union" inefficiency.

Overall, fuel, maintenance, financing, and road crew costs, which represented 18.5% of revenue in 1945 consumed 23.3% of revenue in 1960. Overall, these expenses increased by 21% from $2.13 in 1945 per 1000 tons to $2.59 per 1000 tons in 1960.

For this specific railroad, fuel costs and maintenance costs declined, but these savings were overwhelmed by financing costs and crew cost increases.

 

[MidlandPacific]

That's an extraordinary story.  You really should put that into an article for "Trains."  There must be some interesting documentation, somewhere, of the internal discussions that surrounded these decisions.

I wonder how much of a role appliance availability really played in N&W's decision to dieselize.  Most railroads in Latin America didn't dieselize for years, and few of them could have had a tenth of the experience and the facilities of the N&W. 

 

[MichaelSol]

Now, the Milwaukee figures are pretty much representative of what railroads were showing as "proof" of declining maintenance costs.  Of course, 1945 was a year of heavy usage, whereas 1960 represented a year of considerable decline in general activity and attrition in carloadings -- a post-WWII trend during the 1950s. 

And this is where Brown brought an engineer's insight into the analysis. Railroads were comparing fleet results. The MILW fleet referred to in the previous post in 1945 represented locomotives with an average age of 27 years, and included steam power that had been built before 1915. The 1960 numbers represented a fleet with an average age of 7 years. This was the sleight of statistical hand that characterized presentations on the issue.

Brown pointed out that that maintenance figures were widely available for the various age classes of steam, and that with thousands of diesel-electric units having been produced in the years prior to 1960 -- the date of the publication of his study -- there was finally a good data base over a broad selection of railroads, age categories, maintenance practices, and manufacturers that would permit an age-based comparison of motive power types, rather than the inherently misleading fleet-based comparison.

And the results were surprising.

Repair costs per 1000 rail-locomotive miles, expressed in constant 1953 dollars (cents).

Age (years) ... Electric ... Steam ... Diesel
2 ................ 2.5 ...........6 ..............10 cents
5................. 4.5............8 ..............15
10 ............... 7.5 .........11...............23
15 ............... 10 ..........18...............32

[Brown, p. 271]. Now, this was published in a peer-reviewed publication. One of the peers was EMD. These figures and how they were calculated were not challenged by EMD and that is an interesting part of the story.

 

[MidlandPacific]

I really think you're onto something. 

Some years ago, when I visited Ecuador, I was surprised to discover that the engineering staff of their national railroad had basically retired two sets of American-built diesels and had reached the point where they were cannibalizing their third set, a group of 1990-era Alstoms.  They were, however, still running a bunch of Baldwin steam, one dating from 1901.  Now, there was a lot of cannibalization going on in the tiny steam fleet, too, but it was more a product of urgency (i.e., "air pump broke, need another one now, switch 'em out and fix the damaged part later") than a fleet that was consuming itself.  Someone explained the problem: it was just plain easier and cheaper to make replacement parts on the spot for steam engines then it was to buy the replacement parts (often expensive, and requiring considerable electronic expertise, and manufactured abroad) for the diesels.  Even at the lowest end of the technological spectrum, it was impossible to manufacture parts like bearings for the diesels, but they could cast and machine brass bearings for the cylinders of the steam engines on the spot. 

At the time, it never occurred to me that something like this could apply to the states - I assumed that exchange rates, relative educational levels, and the cost of labor made steam feasible for them, but not for us.  But now I'm not so sure.

[ChuckHawkins]

Mr. Sol, are the repair costs made up of true variable factors? I mean
things like labor, materials, etc, that will be expensed in the year of
the repair activity. How were major steam rebuilds in what I might
catagorize as Class III, IV, and V repairs accounted for? Were they
expensed or capitalized? Does your data capture and report that?

[MichaelSol]

Mr. Sol, are the repair costs made up of true variable factors? I mean
things like labor, materials, etc, that will be expensed in the year of
the repair activity. How were major steam rebuilds in what I might
catagorize as Class III, IV, and V repairs accounted for? Were they
expensed or capitalized? Does your data capture and report that?

For my back of the envelope MILW comparison, I used the ICC Uniform System of Accounts, "Steam locomotive repairs -- other" and "Diesel locomotive repairs -- other." An interesting irony I just happened to notice, the volumes I am using here at home of the Statistics of Railways in the United States are from the library of the Baldwin Locomotive Works.

If by "your data" you are however referring to H.F. Brown's study, you will have to read his discussion of how capitalization of certain maintenance and rebuilding expenditures for accounting purposes skewed the "interpretations" of maintenance costs in various ways-- which he explains in perhaps the kind of detail you are looking for. For evaluation purposes, Brown favored treating all rebuilding expenses as a cost of maintaining the equipment and by using large data samples, showed consistent and predictable cost curves related to age -- age being a surrogate for locomotive miles.

 

[Modelcar]

....In simple terms, and considering all the facts and figures of above posts comparing Steam to Diesel motive power.....Is the answer, railroad companies would now make a better profit for themselves if somehow they could now change over from Diesel to Steam power for all their activity of business hauling freight over the rails.  In a timely manner.

[IRONROOSTER]

....In simple terms, and considering all the facts and figures of above posts comparing Steam to Diesel motive power.....Is the answer, railroad companies would now make a better profit for themselves if somehow they could now change over from Diesel to Steam power for all their activity of business hauling freight over the rails.  In a timely manner.

Now that's funny.

Paul 

[VAPEURCHAPELON]

And don't forget that MANY railroads purchased modern HIGH SPEED steam power - and used it for SLOW SPEED DRAG SERVICE! If these engines would have been used most of their service lifes at speeds they were designed for the maintenance and fuel costs would have been FAR BETTER than they already were.

I am steam loco mechanic, fireman and engineer, and have worked several years every day at a steam engine repair shop, and after that in a large shop for the most modern electric and diesel engines, and one thing I can tell you: the complexity to overhaul a diesel or electric locomotive is FAR GREATER than for a stemer of equal power.

[jockellis]

G'day, Y'all,
Sorry to disappoint anyone thinking a modern turbine is more resiliant than one in 1940 or so. Probably just the opposite since they are stressed so much more. Incidentally, the largest ships often are gas turbine powered. These generate HP that diesels cannot hope to match. Turbine blades, and I do non destructive testing, Magnaflux and Zyglo, on these stainless steel wonders, have to be machined and polished to within a few thousandth of an in on the blade and a few 10,000ths of an inch on the base. As the turbine spins, rotors have to pass between stationary blades, stators, and smart engineers have designed them to withstand stresses only when the tolerances are correct. If you've ever watched "Sargeant York" and seen no mans land with the shot off tree trunks, that is what a turbine looks like when a blade lets go and takes out all those behind it.
The steam turbine was by no means "mature" in 1940. That brings up a gripe when I read a history and find that James Watt "perfected" the steam engine. Rot! Those folks in the coal-fired and nuclear power plant business are still improving their external combustion engines.
I enjoyed the history of locomotion. You might add that Ferdinand Porsche in the 1890s invented the prime mover, dynamo, electric motor combination.
Funny how America "just had to go to diesels" while Europe continued with steam for another 25 years. I saw a German Santa Fe type locomotive for sale in a Trains or MR and it was built in 1984. You could buy brand new Chinese steam past the mid 1990s and they are getting rid of steam now only to show the world during the Olympics that they are modern. Thankfully, they are buying GE. Downside is that they want to start producing parts for American locomotives.
Happy story. The producer of disk brakes for outlaw sprint cars in my town decides that he can use Chinese castings and save money over what he was spending on American castings. His customers started complaining about the quality of the brakes and go elsewhere for their brakes. He is now out of business. The end. Isn't that a great story?
Diesels were very, very important to the war effort in the recent unpleasantness. But war materiel and associated costs were paid for on a cost plus 10 percent basis, so the American railroads didn't mind in the least spending the money to fix up every old locomotive on their properties since they were going to make 10 percent on their money and have their use for many years to come. Even the Erie paid dividents for the first time in over 70 years.
Truth is, American railroads could be doing just as well now as when they had steam. If they were free to set their own rates. But the ICC and now the Surface Transportation Board put a damper on what they could charge. Before WW I, American railroads knew what was going to be needed for the war effort, a car pool. They came to a gentlemen's agreement on this illegal practice to prepare for the war. The atorney general of the U.S. called in all the RR presidents and told them that if they didn't disband this, he would prosecute them. The government would not allow the railroads to earn the money or do whatever was needed to support the war until the feds steps in an temporarily nationalized the railroads.
P.S.,
Chad Thomas, is that you standing on the Jupiter at the Golden Spike Ceremony?

[cordon]

By "mature" I meant that steam turbines were in full production and routine use in power plants.  I did not mean to say that they were at the end of their development.  The War Department (now the Department of Defense) began jet engine development in World War II with Westinghouse and General Electric because those two companies had most of the world's experience with hot (steam) turbines.

 

[TomDiehl]

Remarkably, the statistical record for any given railroad, and the industry as a whole, is quite accessible. Anyone who cares to "prove" their point can do just what Brown did -- go to the numbers and see what they say.

For the MILW, this was an easy exercise, and applying an inflation adjustment to provide "constant" dollars, the following information comes out of the 1945 and 1960 annual reports:

Locomotive fleet maintenance, plus fuel, plus financing charges.

1945: $1.24/1000 ton miles.
1960: $1.54/1000 ton miles.

This is a 25% increase in costs during a time when revenue declined by 17.5% and all other operating expenses declined by 23%.

Interestingly road crew costs increased as a result of Dieselization. The 1945 cost associated with road service train crews was 89 cents per 1000 ton-miles, and after Dieselization was completed had increased to 96 cents per 1000 ton-miles, a 12% increase in road crew costs.

During this period of time, wages associated with maintenance of way decreased by 41% and wages associated with station agents declined 43%. This confirms what Brown stated specifically -- that the savings in crew costs would be negligble and suggests even that dieselization brought about some unexpected inefficiencies -- perhaps a "union" inefficiency.

Overall, fuel, maintenance, financing, and road crew costs, which represented 18.5% of revenue in 1945 consumed 23.3% of revenue in 1960. Overall, these expenses increased by 21% from $2.13 in 1945 per 1000 tons to $2.59 per 1000 tons in 1960.

For this specific railroad, fuel costs and maintenance costs declined, but these savings were overwhelmed by financing costs and crew cost increases.

 

Statistics can "prove" what you want them to prove, depending on what factors you choose to work with.

Using figures of cost per thousand ton miles distorts when ton miles decrease. Even using what is presented here, note the figure quoted above "revenue declined by 17.5%" implying that ton-miles decreased, or they lost a lot of premium freight, between the time periods being compared. Interest rates and labor costs being a somewhat constant expense, when ton-miles decrease, these costs per ton-mile will of course increase.

Other factors that weren't even mentioned that should be taken into account: during WW2, defered maintenance and equipment replacement was commonplace due to restrictions by the War Production Board. How much of this equipment maintenance and replacement cost (with associated finance charges) were "catch up" for the war years?