A drop axle is probably going to be the only appropriate action given the space you have to work with. Reason I know is that I made the conversion to straight axle this month on my 1954
Flying Cloud. Check to see how much travel your suspension has before bottoming out, that will determine if spacers will even be possible. As for my setup, I just pulled the original drop axle in favor of a straight axle and the added height. In addition, had the springs re-arched to get another inch and 1/4. That part was necessary given the three inch clearance to bottoming out was reduced by an axle a full inch taller. Rule of thumb: You want to have a minimum of three inches space for spring travel. Although less may suffice, having an axle slam into the frame can't be a good thing. A good suspension shop will take your leaf packs apart, inspect and clean them up. If they're not heavily rusted they'll give you many more years of service, and the 36 inch length is favorable to anything shorter as they provide a smoother ride and spread the impact as the trailer was designed.