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The Inter-State Staff Committee formed by the four Governors was able within a week of its formation to convince the Interstate Commerce Commission that additional extensions of loan guarantees to the New Haven would be justified by the commitment of the four States to work out a program of tax relief and other assistance.

Such a program was prepared and submitted to the legislatures of the four States in 1961.

I am proud to state that Connecticut's General Assembly enacted Connecticut's share of this program intact. Our action relieved the New Haven of all State taxation with the result that the New Haven Railroad has not been obligated to pay a penny in State or local taxes to Connecticut since 1961.

In addition, we inaugurated, and have continued in every subsequent year, an annual cash appropriation of $500,000 to pay the costs of bridge and crossing maintenance which would otherwise have to be borne by the railorad.

The aggregate annual savings to the railroad, in tax relief and direct assistance, has amounted to more than $1,500,000 every year since 1961.

I will not burden your committee with the details of Connecticut's participation with other governmental jurisdictions in a continuous effort to develop other means of bringing effective joint action to bear on the problems of the New Haven Railroad.

I will point out, however, that we in Connecticut recognize the need for governmental assistance going beyond the mere provision of tax relief and in 1963 established a Connecticut Transportation Authority with an initial appropriation of $1 million and bond authorization of $2 million.

There funds were specifically authorized for the assumption by the State of Connecticut of its fair share of the cost of underwriting the continued operation of essential interstate rail passenger service.

In 1963, in addressing a panel of the New England Governors' Conference, I said:

I hope that it will not take a total breakdown of this service to awaken similar recognition in other jurisdictions served by the railroad.

If the New Haven Railroad had suddenly ceased to function, many of us who are taking part in this New England Governors' Conference would be meeting in an atmosphere of crisis.

The New Haven Railroad is still running, but running on borrowed time and borrowed money. If the crisis is not already at hand, it is approaching rapidly. We must pool our best efforts now to work out a joint program to preserve essential rail transportation service.

No single State can by its own efforts provide a solution to the problems of the New Haven Railroad, nor underwrite the maintenance of essential interstate services.

No single State's taxpayers can, in fairness, be asked to help maintain a service which provides benefits far beyond that State's borders.

Study after study has recognized that the New Haven Railroad situation presents in an advanced form a national rail transportation problem which requires national planning and national action.

We in New England cannot wait for the formulation of a long-range national transportation policy to save the essential service now provided by the New Haven Railroad.

Nor can we sit by and watch these essential services being “studied to death" by one survey after another.

We must, I said, “in my judgment, unite in action to avert the total loss of the railroad."

It is in this spirit Connecticut has continued to work with our sister States.

In particular, we endorsed, and guaranteed Connecticut's participation in a $20 million program of equipment renewal for the distressed commuter operation from Connecticut into Grand Central Terminal in New York.

But for the unfortunate rejection of this program by a county legislative body in New York, vitally needed new equipment for the New Haven would be on order and well on its way to delivery at no cost to the railroad.

Connecticut is now engaged, jointly with the State of New York, in a three-phase program of direct governmental assistance to the New Haven.

This program contemplates the acquisition, and lease to the New Haven at a token rental of a dollar a year, of 80 new commuter cars and 50 completely reconditioned commuter cars, at a cost of $20 million: $5 million from Connecticut, $5 million from New York, and $10 million in Federal capital grant funds under the Urban Mass Transportation Act of 1964.

The second phase of this program is the development by the States of Connecticut and New York jointly with the Housing and Home Finance Agency of a demonstration grant project under the Urban Mass Transportation Act of 1964.

This demonstration project would help provide funds for the New Haven commuter service and the technical data necessary for the development of a long-range program of modernization and improvement of commuter services from western Connecticut and New York's Westchester County into New York City.

The third phase of this program contemplates the negotiation by Connecticut and New York of a commuter service contract with the New York Central Railroad and the trustees of the New Haven Railroad looking toward the eventual integration of interstate commuter service into New York City under the management of the New York Central.

These actions, I strongly believe, clearly demonstrate the commitment of the States of Connecticut and New York to joint action which will insure, with appropriate public support, the preservation, improvement, and modernization of this essential public service.

What we ask of the Congress is an equivalent recognition of the vital stake of the Federal Government in the preservation of services essentially national in character.

We consider Federal assistance in this endeavor not only essential but entirely appropriate and warranted.

The situation of the New Haven Railroad represents in its most acute form a national transportation sickness. This sickness is the result of conflicting national policies whose historical justification has long since been eroded by the reality of modern American economic life.

The troubles of the New Haven Railroad today cannot be blamed solely on the compounding of errors by a succession of incompetent managements. Heavy subsidy by the Federal and State Governments of competing modes of transportation, and Federal regulatory restriction of the railroad's ability to compete, are important factors in the New Haven's distress.

The urgent requirements both of the national defense and the national economy require a national transportation policy which assigns

rail transportation its rightful priority in the national transportation network.

A small but glaring example of the conflict in the various Federal agency approaches to our New England rail crisis is the recent termination by the Post Office Department of a $500,000 mail service contract with the New Haven Railroad on economic grounds.

This is the latest in a 2-year series of mail contract terminations reducing the New Haven's mail revenue by $1.3 million a year. From the standpoint of the Post Office Department alone these terminations may have had clear economic justification.

From the viewpoint of the distinguished Senators on this committee, who have spent and are preparing to spend so much time and effort in the consideration of ways and means to bring Federal assistance to bear on the New Haven's problem, the justification may not seem quite so clear.

Other, graver questions of national public policy are involved in petitions now pending before the Interstate Commerce Commission.

A petition has been filed by the trustees of the New Haven Railroad for partial discontinuance of commuter service in Connecticut and New York. Some 7,500 daily commuters-mostly residents of Westchester County, N.Y.—will be without service if this petition is granted.

This so-called Larchmont plan will, according to the trustees' own figures, produce a net saving of $600,000 annually as against an annual passenger service operating deficit of some $12 million.

The trustees have made it plain that this petition is merely a first step in their program to petition for discontinuance of all passenger service.

Meanwhile, the Interstate Commerce Commission is understood to be preparing its decision on the merger petition of the Pennsylvania and New York Central Railroads.

The Interstate Commerce Act itself requires that regional economic impact be considered by the Commission in passing upon a merger application. Nowhere, Mr. Chairman, is such consideration more vital than in the case of this giant Penn-Central merger, which by substantially reducing (if not eliminating) rail competition in the Northeast will produce savings to the merged company conservatively estimated at $60 million annually.

Without passing on the larger issues of this merger, let me say that failure to include at least the freight service of the New Haven Railroad in the merged system will be a death blow to the New England economy.

Yes, you may well question whether it is sound public policy to encourage a merger of such hugely profitable dimensions without at least attempting to require recognition of the matching public responsibility.

Is it fair to let the New Haven's passenger service be left high and dry by this emerging corporate giant?

Connecticut, Mr. Chairman, an intervenor in this merger proceeding, has made its position very clear: We oppose any merger of the Pennsylvania and New York Central Railroads unless such merger includes and incorporates the New Haven Railroad in the merged system.

This, too, has been the unanimously agreed position of the six New England Governors for the past 3 years.

The bills, Mr. Chairman and members of the committee, before your honorable committee are carefully drafted to assure Federal partner

ship in the vital enterprise of saving railroad service essential to the national interest.

Senators, we desperately need your help.

Legislation has already been introduced in the Connecticut General Assembly to assure Connecticut's participation in the four-State authority envisioned by S. 348, should this proposal commend itself to the Congress and to the legislatures of the other States.

Legislation already enacted in Connecticut would qualify the New Haven Railroad for emergency assistance under S. 325 or S. 1289.

I assure you that Connecticut's General Assembly will act promptly to provide Connecticut participation in any effective joint program of assistance to the New Haven Railroad.

Gentlemen, the hour is very late.
We in Connecticut hear the seconds ticking away.

As always, we stand ready to bear our full share of the responsibility to preserve the rail service which is essential to the very life of our State.

Senators, we cannot bear this burden alone. I am very grateful to you, Mr. Chairman.

Senator PASTORE. Governor Dempsey, first of all, I thank you for a very powerful and very brilliant statement.

My first question is this: It was developed here through Mr. Smith and the trustees that they have had conversations with the management of the New York Central and the Pennsylvania with regard to the inclusion in the merger of both the freight and the passenger service.

They have a fast agreement that the merger combine is willing to take over the freight service but with the strict understanding that it will not include the passenger service.

What have you to say to that—but let me add this, too—that they stand ready at any time to sit down and talk with the Governors of the four States with reference to what can be worked out concerning the passenger service.

Governor DEMPSEY. That last statement, Senator Pastore, is so well received by the Governor of Connecticut, that this is all we are asking.

We, in Connecticut, realize very well what the job the trustees have. They, of course, must protect creditors. We, in Connecticut, have a. public responsibility, but it has always seemed to me, Senator, that the best way to protect all of us to unite together, to get together the States and the Federal Government and trustees to lay our cards on the table and to tell us what they need.

Then if this help is not forthcoming, we will take the consequences.

I would say to you, Mr. Chairman, in answer to your question, we would welcome, first of all, any meeting with the four State Governors. with the trustees. We have tried this on several occasions.

The answers that perhaps are made available to you, sir, have not always been made available to us, especially those of us who must before our general assemblies and ask taxpayers for millions and millions of dollars and, in turn, be questioned by them for the answers that lie only with the trustees.

We are not trying to cross-examine anyone. We are not trying to probe into the affairs of the creditors. What we ask, sir, is that the trustees tell us what mergers they are talking about. Is it freight? Is it passenger? If it is, what burden rests on our shoulders so that

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I can report to my people exactly what the situation is, and whether it is freight, Senator Pastore, or only the passenger service, we, in Connecticut, will pick up this balance to insure both for the State of Connecticut.

Thirty thousand people in my State are commuters between Connecticut and New York. Five thousand of my people depend on this railroad for a living. They must receive consideration.

Senator Pastore, one of the great economic bloodlines of our State is the freight service of the New Haven Road. We want to continue this freight service. We know the problems of the trustees and we hope that they recognize ours as public officials trying to get taxpayers' money to keep this line alive.

Oh, yes; they have been on borrowed money. It is late. We are all on borrowed time. I say to you again, any plan that the Federal Government and the trustees can agree on, you will find Connecticut in the forefront.

Senator PASTORE. How do you think we ought to go about that? Do you think I could arrange that meeting?

Governor DEMPSEY. Senator Pastore, I think, today, the bills that are before you, out of these three or four bills—I have only seen three perhaps one that calls for the getting together is the one that calls for an authority.

We, in New York and Connecticut, are doing this without a compact and without an authority because we have the machinery set up. If the other States want to set up such machinery or if they do have it, if they will include the problems of the New Haven Railroad, and, as you know, some of the States only have buses, if they will include it, I would say to you, Senator, if the Federal Government, under any one of these bills, gives us any indication of any help at all, the Governors of these States will get together quickly, I assure you, with the trustees.

Senator PASTORE. To answer your question on that, Governor Dempsey, you are a seasoned public official and I think you know the score maybe better than we do.

The processes in the Congress are slow—you know that—and when you say the Government gives us assurance, well, the Government, of course, is the Congress of the United States that has to act on these bills.

And after this committee has decided on any particular bill, it has to be debated on the floor, and there, of course, you get the divergent points of view. You cannot expect the man who represents the State of California to feel the emergency as much as I might from the State of Rhode Island where the line runs. And that is part of our problem.

Then after we get through with it in the Senate, it goes over to the House. Now all of this is going to take some time, and I would hope this, that you wouldn't make it a condition precedent that you find out first what the Federal Government is going to do before you Governors, who have the immediate problem, step in and do something about it as well.

Now, I will state my own personal conviction. I don't know how far the Federal Government is going to go in making a contribution or adopting any one of these bills.

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