Steel--At the time of the strike, the steel industry
was preparing for a strike of its own. The steel
strike never materialized but the industry had shut
down a substantial amount of its operations in antic-
ipation of the strike. Consequently, the strike to
the three roads owned by U.S. Steel (i.e., DMGIR,
B&LE, and EJ&E), had no measurable impact on the
economy above that which had already occurred.

Automobiles--Auto production, especially auto assembly, is normally affected very soon after reduction in rail service because railroad cars are, effectively, a part of the assembly line. However, the model change in the latter part of July meant that cutbacks in rail service were much less critical than would ordinarily have been expected.

ESTIMATES OF ECONOMIC IMPACT OF RAIL STRIKE

Tables 2 and 3 present estimates of the economic impact of the July-August rail strikes. Estimates of impact from termination of Southern, UP, SP, N&W, and AT&SF were developed by considering all of the previously mentioned factors. As can be seen from Table 2, the ICC Western District was most affected by the rail strike with an annual rate of decrease in economic activity registering almost 2 percent by August 2. (Figure 2 shows the geographic boundaries of all the ICC districts.) For the nation as a whole, the annual rate of the decline in economic activity was approximately half of that of the Western District when the strike was ended. Cumulative GNP losses as of September are estimated to be in the neighborhood of 200 million dollars, with approximately two-thirds of that decline being a temporary

1

Cumulative losses as of September 30, 1971 were estimated to allo for any delayed impact from the strike; however, no significan impact was discovered after August.

The three ICC district used for analysis in Table 2 are shown

in Figure 2.

The districts to which the railroads have been assigned for statistical purposes are shown below and on the accompanying map.

In some cases, especially where the operated mileage of a road dues not lie wholly in a single district, some arbitrary assignments are necessary.

Eastern District

This district comprises the section from Maine along the Canadian beundary to the westerly shore of Lake Michigan down through Chicago and Peoria to St. Louis, thence along the Mississippi River to the mouth of the Ohio River, and north of the Ohio River to a point near Kenova, W. Va., thence southward thence alon: the Kentucky and along the kentucky and West Virginia boundary, thence east to the Virginia boundary to the southwestern corner of Virginia,

Atlantic.

Southern District

This district comprises the section east of the Mississippi River and south of the Ohio River to a point near Kenova, W. Va., and a line theace following the eastern boundary of Kentucky and the southern boundary of Virginia to the Atlantic..

Western District

the

Canadian boundary between

This district comprises the section on Washington and the westerly shore of Lake Michigan o Chicago, west of a line from Chicago through Peoria to St. Louis and the Mississippi River Culf of Mexico.

to the

postponement of economic activity rather than a permanent

loss.

In examining Tables 2 and 3, it should also be noted that the impact of each of the five roads was largely confined to the district in which it was located, although the SP, UP and Southern did have a minor impact on the Eastern District. Within a region, however, the effects of the strike varied considerably. For example, the impact on Idaho was relatively larger than that on the Western District as a whole since the UP normally provides almost all of the rail service to Idaho, and that not provided by the UP is mainly through lines and serves none of the larger cities in Idaho.

Another point that should be realized in examining the estimates of Tables 2 and 3 is that during the first week of the strike the econoric impact was mostly caused by losses in the agricultural areas of Southern California and parts of the Southeast. Almost all of the permanent effects of the strike were also confined to these areas. Most industrial sectors of the economy, e.g., coal mining, chemical production, steel production, etc., experienced only temporary losses which will most probably be recovered. In the case of West Virginia coal mining, for example, an interesting situation existed which dramatically reduced the impact of the strike on this industry. More specifically, in recent years West Virginia storage facilities for coal have been vastly expanded, allowing coal production to continue during a two-three week absence of rail service. In past years, this was not the case--nined coal was loaded directly into rail cars and a rail strike had an immediate impact on coal mining. It is interesting to note that Department of Labor

1The coal industry had its recovery slowed somewhat by a strike

of its own.