Dan,
I think you have nailed it. Accounting decidedly was trying to eliminate the narrow gauge in 1945. The D&RGW was still under the care of a reciever, and the aggressive post-WWII modernization program was intended to make a more efficient and profitable business, getting the railroad out of receivership in 1947. The motorway program of the 1930's would be expanded because the railroad wanted to downsize branch lines and the narrow gauge. It seems unlikely that the railroad would have needed the seven locomotives even if the Army had paid the freight to deliver them back to Alamosa or Salida.
The traffic on the Third Division lines out of Alamosa was dwindling - Colorado Fuel & Iron was figuring out that it cost them less to ship coal a longer distance in standard gauge cars from mine to steel mill than it did to ship it from Crested Butte with the break in gauge and resultant transfer at Salida. Conversion of the Monarch branch to standard gauge eliminated the last of those transfer expenses for CF&I.
Even though there was a boom in business to the San Juan basin oil fields, the D&RGW was not actively trying to modernize the narrow gauge. Management recognized that the oil field traffic would be relatively short-lived, and that the cost of standard gauging the line was not going to be a profitable investment, since local business would diminish after the oil field development ended. Since the existing motive power was sufficient to handle the business, the return of the well worn K-28's wasn't really necessary.
The post WW II plan was for the railroad to become a dieselized bridge route for transcontinental traffic, leaving local business to trucks. As Jerry Day notes, the D&RGW had retained the biggest and most modern narrow gauge power; the smaller K-27s were adequate for needs on the RGS (which was on borrowed time after 1945), so unless there was an enormous upturn in business, the locomotives taken by the Army were not needed. Having gotten through the war without seven K-28's, the only reason the D&RGW would need them was an upturn in business on the narrow gauge exceeding war-time traffic, this was, of course, unlikely. The upturn in business on the line to Farmington was occurring just as the coal and limestone business on the lines out of Salida was being wound down. The coal through abandonment of the CF&I mine at Crested Butte; the limestone due to standard gauging. Once the need to move train loads of pipe and drilling supplies ended, the D&RGW moved to abandon the narrow gauge - all except the Silverton branch, a profitable tourist carrier. By then the other K-28's would have been useful, but who knew in 1945? Ironically, the D&RGW missed their chance to obtain OR&L 90, which was stored in Honolulu until she was scrapped in 1966. Although she would have needed a conversion to coal firing, it would have provided a fourth K-28 to the Silverton fleet.
Charlie Mutschler
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