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if the merger was approved by the ICC with the proviso that the New York Central and the Pennsylvania Railroad should take over the New Haven Railroad. And that was not to take over the New Haven freight service, but take over the New Haven freight and passenger service.

In my judgment this merger will ultimately be approved. These two railroads which are in much stronger position now than they were in 1961 anyway, should be required as part of the merger to take over the operation of the New Haven Railroad.

Senator PASTORE. Do you have any fear in that regard, Mr. Kennedy, that there may be a desire on the part of both the Pennsylvania and New York Central to withdraw their merger proposal?

Senator KENNEDY. No; I think that it is so attractive to them, Mr. Chairman, this merger is so attractive to them, that I think-and they are willing to take over the freight service—so that the only question really is the passenger service. The increase in profits that will result from this merger, if it is permitted, will be quite considerable.

I think that they could afford also to run the New Haven Railroad. Their merger presumably will provide great savings and increased income, and there is every reason to believe that the new combination could operate the New Haven's long haul passenger service without undue burden. Should circumstances change drastically at some future date, the multi-State agency contemplated by the Pell bill could always contract to subsidize it or take it over. I am hopeful that long before this happens, a high-speed run between Boston and Washington via New York will have mooted the whole problem.

In the main, what we are doing here today is talking about the long term. We are not solving the immediate New Haven problem in the sense that what we do will insure that people can keep getting to work next week or next month. That is primarily, Mr. Chairman, up to the States, and there is some reason to believe that New York has finally awakened to this responsibility and is now taking steps to meet it.

What we are doing is providing a vehicle by which every commuter line in the New York City area and in the rest of the five-State area, together with appropriate long-haul facilities, can be modernized so that people can get to work comfortably, safely, quickly and economically in 1975 or 1980.

I must end on a note of caution. We have heard so much about the financial problems of the New Haven, the Erie-Lackawanna and certain other carriers for so long a period that we run the danger of becoming immune to the threat of dissolution or bankruptcy. But the fact is that while most railroads in the country are doing relatively well and improving, many New York carriers are in extremely serious and rapidly deteriorating conditions.

The New Haven, for example, is experiencing a constant increase in operating expenses and a constantly increasing deficit. Its operating revenues have been dropping steadily. We cannot assume, simply because of their importance, that these carriers will continue in business on their own. On the contrary, we must act quickly to assure that they do.

I might say in that connection, I think that Judge Anderson who has been involved in this matter for such a long time has shown great patience over the period of the last 4 years.

To that end, I hope the committee will report the Pell bill, with the changes I have suggested.

Thank you for allowing me to appear before you this afternoon.

Senator PASTORE. Thank you very much, Mr. Kennedy. As I understand it you are in favor of the so-called Pell bill with some modifications which would incorporate some of the ideas that are contained in the Javits bill?

Senator KENNEDY. That is correct.

Senator PASTORE. Now, the Javits bill does call for some Federal participation. Would you be opposed to that?

Senator KENNEDY. I think the Javits bill is limited to a 2-year period which calls for one-third participation on the part-insofar as the deficit is concerned-on the part of the Federal Government, and two-thirds by the States.

I would not be opposed to it. I think what should be understood, Mr. Chairman, is that what is needed is not just to meet the rising costs and the increasing deficit, but what is required by the New Haven Railroad now is some modernization. What is going to be required is the raising of the platforms and new cars for the New Haven Railroad, and self-operated doors for the New Haven Railroad. As long as we continue to think just in the past and not what is absolutely required in the operation for the future, I think we are making a mistake.

I am not against some Federal participation, but I think that we should understand that this is primarily a State and local problem and we should meet it as such.

Senator PASTORE. So far as immediate emergency is concerned, you feel it is the primary responsibility of the States themselves?

Senator KENNEDY. I do. I think the Federal Government can come in and help to some extent under the Mass Transportation Act, but I think primarily this is a State and local problem and should be handled as such.

Senator PASTORE. Thank you very much, Mr. Kennedy.
Senator KENNEDY. Thank you, Mr. Chairman.

Senator PASTORE. We will be in recess for 5 minutes awaiting the arrival of the junior Senator from Massachusetts.

(Recess.)

Senator PASTORE. Our next witness is the distinguished junior Senator from Massachusetts, Mr. Edward Kennedy.

STATEMENT OF HON. EDWARD M. KENNEDY, U.S. SENATOR FROM

THE COMMONWEALTH OF MASSACHUSETTS

Senator KENNEDY. The recent petition filed by the New Haven Railroad to discontinue certain commuter trains in the New York and Boston area again emphasizes the critical need for protective action with respect to the services of this important carrier.

The New Haven is a vital lifeline to New England industry, as well as a commuter and intercity passenger line of absolute necessity. Yet circumstances are rapidly closing in upon this resource. The Federal court responsible for administering its receivership has indicated that barring extensive and immediate relief to the New Haven, this line may be brought to liquidation. The problem for some States

appears to be more acute today than it has been in the entire history of this financially troubled carrier.

In my State, the pending New Haven petition for passenger discontinuance involves three of five commuter lines in the Greater Boston area. However, the language of the petition makes it clear that in due time, the New Haven will petition for the discontinuance of its entire passenger system.

Mindful of this, and fresh from its experience with recent Boston & Maine discontinuances, the Massachusetts Bay Transportation Authority last week moved quickly to arrange with the New Haven for the continuation of commuter services south of Boston.

This arrangement, hopefully, will be in effect by May 1. In the meantime, the New Haven has agreed, in the event of any discontinuance order by the ICC, nevertheless, to continue commuter service to July 1 this year.

There are estimated to be about 6,000 commuters who could be affected by any shutdown of New Haven service in Massachusetts.

The MBTĂ estimates that nearly all of these commuters will be accommodated by the new program, and that adequate bus service to rail depots will be provided for those living outside the contract area.

I intend to watch this transition of commuter service very carefully, and I will urge that no discontinuance be permitted until the new program is finalized, and working adequately.

Massachusetts is determined to solve its share of the commuter crisis with respect to the two major New England railroads and it is hoped that its experience with the MBTA will be a helpful example to other States who are seeking a similar solution to their mass transportation problems.

By way of background, in 1962, we qualified for a $3.6 million demonstration grant from the Housing and Home Finance Agency to experiment with commuter fares, increased service, and the combined use of rail passenger, rapid transit, and bus passenger service within the Boston metropolitan area. The Commonwealth contributed an additional $1.8 million to the project, and has supplied some 50 percent of almost $3 million more for urban transportation planning presently undertaken.

These efforts led in turn to the establishment of the MBTA, a public agency, authorized to administer and provide funds for a comprehensive mass transit program throughout the Boston commuter area.

Its first major effort was to contract with the Boston & Maine for continued service to more than 11,000 daily passengers from areas north and west of Boston. Recently, it received the distinction of being the first transit authority in the country to receive a major capital grant ($4.7 million) under the new Urban Mass Transportation Act.

This indicates to me that with conscientious planning and strong efforts, States and communities can meet the critical impact of these train discontinuances in the commuter areas.

Solving the New Haven commuter crises, important as this is, is still only a part of the total picture. There must be a continuation of frequent intercity rail passenger service between major growth centers from Boston to New York, and from Springfield and Hartford to New York if studies of passenger potential justify it. Demand for this type of service is bound to increase as running time is shortened between points and the quality of service is improved.

Many people, especially our older citizens, prefer fast train service to automobile travel. This mode of transportation is in many ways less expensive and more practical than air travel.

Tourists and weekend travelers prefer the train if it is efficient and clean. A most important point is that the economy of a region is enhanced by the proximity of rail service, both freight and passenger, and with the economic development potential which exists between New York and Boston, and other southern New England points, rail service holds much hope for the future.

The Interstate Commerce Commission made an extensive investigation of the continuing need for intercity rail passenger service in 1959. In its conclusions in the Passenger Train Deficit case in 306 I.C.C. 484, No. 31954, May 18, 1959, it states:

We are of the view that the complete elimination of passenger train service would not be a solution in the public interest. Economic railroad service is, and for the foreseeable future will be, an integral part of our national transportation system and essential for the Nation's well-being and defense. That a solution is neither easy nor immediate does not make it less necessary.

And again, in the Passenger Fares case, the Commission called for Federal and State cooperation to keep the New Haven's passenger systems in operation:

“Rail commutation service," it said, “will be more essential and much more widely used 10 years from now than it is today assuming that it is still available.”

Commissioner William H. Tucker, before a joint meeting of Passenger Traffic Officers and Railroad Ticket Agents, in October 1963, sounded the warning to those who expect to rely on the private automobile to serve their mass transit and intercity travel needs. He said:

While the urban dwellers look at their clogged highways as a problem which reached its greatest proportions during rush hour commuter traffic, most city planners and transportation experts see separate transportation problems-commutation and intercity travel ..

I am convinced that more commuters will have to turn to rail service for the longer commuter trips to the city. Moreover, reduced accessibility to the cities will affect intercity travel and place a premium

that form of transportation which will be economical, time saving, and efficient. In my opinion modernized rail passenger service can provide this service at the lowest economic and social cost in many areas, particularly in the short-to-medium-distance trips.

As a means of direct assistance in the preservation of intercity passenger service, I favor the development of a four-State authority along the lines suggested by the able junior Senator from Rhode Island Mr. Pell—which in time, might be merged into a larger authority handling surface passenger transport along the Northeast corridor.

I cosponsored the Pell bill because I felt that it had the advantages of Federal subsidy without committing ourselves to a heavy financial outlay, and because it placed the responsibility of operating deficits on the States which used the railroad.

This is not to say that I would oppose the legislation advanced by the distinguished Senators from Connecticut, if such came to the Senate floor for action. Any effective stopgap legislation to relieve the passenger burden of our New England railroads would receive my support.

It is just that I believe that if those State and local areas who use and benefit from existing commuter passenger travel put their minds to the problem, they can work out a successful program with existing Federal assistance.

Since its receivership, the New Haven's rail freight plant has suffered drastic decline, as have its freight revenues. Force to divert its dwindling freight revenues to cover passenger losses, the carrier has not been able to update and streamline its operations as have other railroads. This, it is said, has worked an economic hardship on shippers and receivers, and has discouraged industrial and importexport activity in the New England area.

Mr. Robert B. Hanyon, in an excellent series in the Boston GlobeFebruary 7 and 8, 1965-cited one company which wanted to build a $50 million plant in New England, but located elsewhere because of the uncertain rail situation.

At a time when we from New England are seeking to spark a program for regional economic development—when we are trying to offset worsening losses in industrial employment by attracting new industry—we cannot afford to let our only southern New England railroad wither on the vine. It is a resource we cannot afford to lose.

This Nation is well into an era of regional competition. New England shippers and receivers must have available a viable, modern, and efficient rail freight service to national markets in which they compete.

No area can enjoy effective economic expansion without having fast and frequent rail service, both for bulk and piggyback traffic, connecting its major growth centers.

By finally taking positive action now at the State and local level to cooperate with the carriers in relieving their passenger burdens, we will be getting a double benefit for our money. We will be preserving essential rail passenger service and will retain for development the rights-of-way and facilities to meet the demands of the future; and we will be providing the rail carrier with the substantial opportunity to channel its freight revenues into the maintenance and improvement of its freight services.

This, I suggest, is the way to build a better and stronger New England.

Senator PASTORE. Thank you very much for an excellent statement. Mr. Pell, I will permit you to ask any questions if you desire.

Mr. PELL. I just have one query; that is, do you see the possibility of a fusion of the authority bill with perhaps Ribicoff's and Dodd's approach for quick funds and the Javits approach of having the guarantee of the $500 million shared by the States with the Federal Government.

Senator KENNEDY. It is the question, "Do I see a fusion of this?" Mr. PELL. A fusion of the ideas of this as a possible solution?

Senator KENNEDY. I would reserve a decision on that particular question until I had a greater opportunity to examine it in more detail. It isn't quite the approach which has been suggested by my testimony and I would say that the approach which has been suggested is based upon experience in my own State of Massachusetts, although I think it would be unrealistic to think that this would be comprehensive in examining the problem as extensive as the needs of the New Haven.

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