Senator DOMINICK. I happen to ride that myself on occasion. Is this problem going to be solved as far as the competing methods of transportation is concerned simply by putting more money into a railroad?

Mr. WEBB. Well, the service we believe is essential, especially the commuter services of the New Haven, and in view of the fact that the Federal Government has assisted competing modes, our endorsement of the bill is predicated on the premise, on this consideration, that some temporary assistance to the New Haven is justified while the States have an opportunity to take over substantially all of the responsibility.

Senator DOMINICK. Now, on your road subsidies which also were referred to here, the Federal highway program, that is paid for largely out of trust fund; isn't it?

Mr. WEBB. Yes; it is not our contention, Senator Dominick, we have no information to indicate that there is any subsidy for motor truck or motor bus operations. We do not suggest that they are being subsidized. It is true, of course, that when the Federal Government provides these magnificent rights-of-way, that the carriers who use them do gain a very great advantage in being able to pay for them as they use them, rather than, as the railroad, being required to furnish its own and pay for it regardless of the extent of its use.

Senator DOMINICK. As I remember correctly, the railroads were given entire sections of land when they were constructed.

Mr. WEBB. I do not believe that they were given sections in New England. But their contention on that is that they have repaid in the form of section 22 rates and otherwise.

Senator DOMINICK. The only reason I brought this up was that I have a feeling that this paragraph itself is kind of like trying to compare apples and organges. You have a wholly different type of competition and you have a wholly different system. I don't think that because we subsidize one.

I feel very much like the distinguished Senator from Ohio, that this means you have to subsidize the other one. And particularly, I don't think that this is necessary unless you can absolutely assure someone that it is going to operate effectively from there on in and you could eventually stop the subsidy. I feel this true of the airlines, as well as the railroads, I might add.

Excuse me, Mr. Chairman.

Senator LAUSCHE. You may proceed.

Mr. WEBB. Secondly, we have considered the comparative costs involved in direct Federal aid for the maintenance of essential passenger train services and in the construction of substituted transportation facilities. It is commonly estimated that the passenger-carrying capacity of one track of a double-track railroad is equal to that of 10 to 20 lanes of multiple-lane expressways. This fact should be viewed in the light of the explosive growth in population, especially in the large metropolitan areas.

Senator DOMINICK. Mr. Chairman.

Senator LAUSCHE. Yes.

Senator DOMINICK. I remember in the process of discussing before the Banking and Currency Committee the mass transportation proposal last year. And I distinctly remember, I believe, the distinguished chairman from Ohio coming into our committee and setting

forth figures which would indicate that in order to supply the necessary incentive for someone to ride a mass transportation system, as opposed to taking their own automobile, you had to pay the fellow a fee to get him to do this instead of having him pay a fee for the privilege.

Did you hear anything about that, Mr. Webb?

Mr. WEBB. No, I have not heard about that.

Senator DOMINICK. Does the chairman happen to remember those figures?

Senator LAUSCHE. Yes, testimony was given that as a partial result of a test in Chicago, the statistics showed that with some you would have to pay them to ride.

Senator DOMINICK. So you could have a magnificent railroad, well equipped, and have the continuing decline in traffic which you have had over the past-I guess it is 4 years, is it not, on the New York, New Haven & Hartford?

Mr. WEBB. Yes; longer than that, I think.

Senator DOMINICK. Someone mentioned the other day that it was now down to 26,000, whereas it had been carrying almost 48,000 per day back in 1958 or 1959.

Now, those figures may not be accurate on the commuter. We have a figure here given by the trustees, from the last 6 years, 26,000 in 1958 on the commuters down to only about 14,000 in 1964. I would presume that some of this is based on the fact that poor equipment and inadequate scheduling, a whole bunch of other things that could be

attributable to.

Mr. WEBB. Yes.

Senator DOMINICK. The only question I am asking is: Do you have any idea what in fact causes this, or has anybody any kind of a study of passengers who used to ride the New Haven & Hartford and now don't? Has anybody asked them?

Mr. WEBB. I am not aware of any studies on that particular point. There have been so many that I feel rather confident it must exist. Senator PASTORE (presiding). As a matter of fact, we went into that in quite some detail this morning with the trustees.

Senator DOMINICK. Excuse me. I wasn't able to attend this morning.

Mr. WEBB. And finally, Mr. Chairman, we have considered whether it is fair to trust upon the States and local communities total responsibility for solving immediate passenger train problems and virtually full responsibility for developing long-term solutions.

In the latter part of 1960 and during the first 6 months of 1961, the Commission worked closely with the States of New York, Connecticut, Rhode Island, and Massachusetts in attempting to avert reorganization proceedings for the New Haven. Our joint efforts were frustrated or handicapped by many responsible persons and organizations who sincerely believed that reorganization proceedings would solve the basic problems of the carrier. Despite the prevalent belief that reorganization was a panacea, three of the four States involved enacted tax relief or other assistance measures in 1961-and you have already heard about the last-minute amendment which prevented the Massachusetts Legislation from becoming effective. But for the widespread and erroneous belief that reorganization was a sovereign

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remedy for the New Haven's miseries, I am confident that the assistance programs launched in 1961 would have been expanded.

It is unrealistic, however, in our opinion, to expect State and local governments, all of them hard pressed for revenue, to call for unpopular sacrifices generally believed to be unnecessary.

Of course, I think that has all changed now. Every thinking person, I believe, must recognize that there is a crisis certainly for the New Haven at this time.

Our interim report in the New Haven investigation case is devoted almost exclusively to an explanation of why reorganization would not solve the basic problems of the carrier. The Commission stated in its report at page 423:

*** it is erroneous to assume that both the relief afforded by section 77 proceedings and that being considered by governmental agencies would be realized. To indulge in that assumption is to ignore political realities and the psychological impact of a section 77 proceeding.

In that same report which was served early in 1961, we stated at page 425:

When a carrier enters into reorganization, it is the duty of the trustee-a duty that this Commission would be most reluctant to thwart-to preserve at all costs that part of the operation which shows some economic vitality and to abandon the rest. The Congress recognized the practicalities of the situation when it enacted part V of the act. The Congress knew that reorganization proceedings involving major railroads would result, sooner or later, in the dramatic curtailment of essential transportation services and consequent loss of employment.

And we conclude in that report:

We are unable to find *** that the essential service of the New Haven can be perpetuated solely by an exercise of the authority conferred by section 77 on this Commission and the courts. If the major problems of the New Haven require political solutions, the many interests directly affected might reasonably conclude that the section 77 procedure is not an adequate mechanism for the effectuation of their desires.

The purpose of this recitation, Mr. Chairman, is not to prove that the Commission and the States were right and their critics wrong. It is now all too obvious that the confidence which many had expressed in the efficacy of section 77 proceedings were misplaced. Our purpose in reciting these background facts is to suggest, first, that invidious comparisons between what the various States have done, or between what they and Federal Government have done, do not aid in solving the problem at hand; and secondly, that no solution is likely to be reached in an atmosphere of recrimination.

Turing now to the compact bills, we have suggested in our report filed with the committee, that S. 348, the Pell bill, and S. 1234, the Javits bill, be amended to specify those activities of the proposed authorities which are exempt and those which are not exempt from Commission regulation.

In addition, we have suggested several clarifying amendments to allay any fear that the proposed authorities could engaged in direct or destructive competition with existing carriers.

There are two important differences between the Pell and Javits bill. The Pell bill would not require the Federal Government to assume any responsibility for the operating losses of the authority. Section 307 of the Javits bill provides that the Federal Government shall pay one-third of the operational deficits incurred by the authority.

As indicated in our comment on Senator Ribicoff's proposal, we do not regard any permanent program of direct Federal financial assistance to railroads as desirable, and we would hope that it would not be necessary for the Federal Government to assume responsibility for operating losses incurred by a bistate or multistate transportation authority. However, if such assistance should prove to be necessary, we would recommend that it be authorized to the extent proposed by Senator Javits in the title III of his bill, which is one-third of a sharing of the losses.

The second major difference between the two bills is that S. 348 envisions a four-State compact and S. 1234 a two-State compact. The choice as between these two approaches requires a judgment that is essentially political in nature.

You are, of course, much closer to the States and their public officials than we, and therefore, we are unable to express any helpful opinion as to whether S. 348, S. 1234, or some bill combining the features of both should be approved.

We regard each bill as a possible long-range solution of the railroad passenger problem in the areas involved, but neither bill, in our opinion, should be regarded as a substitute for the Ribicoff bill, or the approach also recommend in the Dodd bill.

Thank you, Mr. Chairman.

Senator PASTORE. Where does the proceeding stand now, Mr. Webb? Mr. WEBB. An examiner's recommended report is expected shortly. I would judge that it is possible, assuming that all went smoothly, for the Commission to reach its final conclusion in the matter late this year or early next year.

Senator PASTORE. Well, inasmuch as the future of the New Haven depends upon what the decision in the merger is going to be with reference particularly to the inclusion of either freight or passenger service, I mean, is that the best we can do-wait for next year for a decision?

Let me ask the question this way first. When were these proceedings commenced?

Mr. WEBB. I would like to ask Commissioner Tuggle, Chairman of Division 3, if he would comment and perhaps Director Forbes as well. Mr. TUGGLE. The proceedings were originally filed nearly 2 years

ago.

Senator PASTORE. Two years ago?

Mr. TUGGLE. A little over 2 years ago but the hearings were not completed until, I believe, last September. Because of a labor agreement reached by the applicants and the labor unions, it was necessary to have a brief reopening for that evidence to be admitted into the record and to be considered. Actually, the examiner has been working on the report for about 5 months and presumably it is about ready for release sometime in the very near future.

After the recommended report of the examiner comes out, then the parties, under our rules, have 30 days to file exceptions and so many days to file replies to the exceptions. Undoubtedly, due to the magnitude of this case, some of them will want several months to analyze the record and file them, both applicants and protestors.

After the exceptions and replies and protests are considered, the Commission will set it for oral argument and after that it shouldn't be too long a time before we hand down a decision.

Mr. PASTORE. Do you agree with Mr. Webb that this will be some time next year, the year of 1966?

Mr. TUGGLE. I understood him to say later this year or next year. Mr. PASTORE. It strikes me from your testimony that the Commission, insofar as emergency relief is concerned, subscribes more or less to the Ribicoff bill.

Mr. WEBB. Yes, we do, Mr. Chairman, but as I indicated it would be possible to combine the Ribicoff bill with some of the features of Senator Dodd's bill and as I indicated, it would be possible, I think, to put everything in one bill.

Mr. PASTORE. The thing we are up against here, of course, is not only the emergency and the crisis that exists insofar as the railroad is concerned. We are up against the proposition here that Judge Anderson has already allowed, or ordered that the trustees file a petition for the discontinuance of certain commuter service with a notice that there is going to be a petition filed for the discontinuance of the entire passenger service. When will you resolve that question?

That question will be resolved before the merger decision takes place, is that correct?

Mr. WEBB. Yes, that is correct. We have 4 months under the law to decide the first petition which has an effective date of March 29, 1965; some 4 months thereafter we will have reached our decision on that application.

Then, if the New Haven files its second application to discontinue all passenger service along, say, the first of June with the 30-day notice, we would have to reach our decision on that around the first of December or before.

Senator PASTORE. So, it is fair for me to state that a decision will be made on discontinuance of passenger service long before a decision is made on the merger?

Mr. WEBB. Before, anyway.

Senator PASTORE. All right. I will leave it your way. At any rate, we are going to have some time in between your decision on the discontinuance of passenger service and your decision as to whether or not the merger will include the New Haven freight or passenger service, is that correct?

Mr. WEBB. Yes, that is correct. There will be some intervening period there.

Senator PASTORE. Now, if we adopted the Pell bill providing for the creation of a four-State compact and an authority was created to run the railroad and then you made a decision on the merger, what we will have done on the Pell bill will have been futile.

Mr. WEBB. It is difficult

Senator PASTORE. What I am trying to do, Mr. Webb, I am not trying to confuse you with a lot of cagey questions. What I am getting at here is a practical proposition. Let us face it, and sometimes the thing that irks me is all the redtape that is involved in the process of taking care of a problem that is immediate.

Now, I realize that the Federal Government is being called upon to provide cash. I understand the Governors met a short while ago and said the Federal Government should put up money. Some Members of Congress say the States should do it. In the meantime, someone suffers the railroad, the people who are serviced by the railroad suffer.