In building these roads to make our State a better place to live, we certainly never intended to take anything away from any industry such as the railroad.

Certain regulatory agencies of the Federal Government, perhaps, have been a burden, if you will, on the railroad. The roads are a case in point. The airports, of course, and this is from the trustees themselves, receive Federal subsidies.

But I would like to say to you that in no way was my presentation intended to be critical. After many years of study on this matter, I presented this as a matter of fact. I hope it is the truth and not criticism, Senator.

Senator NEUBERGER. Don't you really think, though, that a great deal of the decline in the commuter service is not due to Federal subsidies or regulations, but merely to a change in pace and habits in 20th century living?

Governor DEMPSEY. Of course, commuter service, the problem in New York and Connecticut, has not declined. We just have 30,000 people who get up in the morning and 45 percent of these people get up in my State and go on to New York.

I suppose, Senator, it could be a commuter problem which could be summed up by people who work in a large city and want to live in the country. These are the commuters. They get up every morning to go to New York and come home every night. Ours are increasing; not decreasing.

Senator NEUBERGER. Thank you.

Senator PASTORE. Mr. Prouty.

Senator PROUTY. Thank you, Mr. Chairman. I see that Governor Volpe is here and, perhaps, Governor Chafee, so I don't want to take the time from their statements.

I am sympathetic, as a northern New Englander, certainly, to the problems of New Haven and also the problems as a result of lack of adequate rail service in northern New England States. We are very much concerned with that, and we think that is a problem which should be considered along with the overall problem which you mentioned.

Governor DEMPSEY. You are so right.

Senator PASTORE. Governor Dempsey, would you want to comment on the Pell bill as a long-range solution?

Governor DEMPSEY. Yes, sir; the Pell bill, Senator, we look upon that as a good bill for the long-range solution. It does call upon the four States. Many parts of this bill, we feel, could be workable.

Our present Transportation Authority, as it is set up now, could take immediate advantage of the Pell bill. The Ribicoff, the immediate, the Pell bill, the overall transportation problem, we would favor it, Senator, as well as the Dodd bill, yes, sir.

Senator PASTORE. A question has been raised on the Pell bill as to the constitutional inhibitions. Would you feel that there are any in Connecticut?

Governor DEMPSEY. We do not think so, sir. The question was raised and our attorney generally says we could work with this bill.

Senator PASTORE. Governor Chafee, we are ready to hear from you, sir.

STATEMENT OF HON. JOHN H. CHAFEE, GOVERNOR OF THE STATE OF RHODE ISLAND

Governor CHAFEE. Senator Pastore and other distinguished members of the committee, first, I would like to thank you very much, Senator, for those kind remarks you made in introducing me.

In considering the problems of the New Haven Railroad passenger service, I believe it is essential to consider the passenger service as an entity and not to attempt to break it up into separate sections such as New York City commuter, Boston commuter, and long-haul passenger.

This railroad only travels 230 miles on the New York-Boston, in that direct stretch, and in that distance goes through one of the most heavily populated sections of our Nation, serving directly at least seven major cities or communities-New York, Stamford, New Haven, Bridgeport, New London, Providence, and Boston.

While perhaps larger deficits can be attributed to the New York City commuter service than to the other passenger runs, the same tracks carry long-haul passengers and the abandonment or support of one section inevitably affects another.

Although the New Haven, as you pointed out, Senator, has asked the ICC for permission to abandon only one section of the passenger run, Judge Anderson, who is presiding over the New Haven's affairs under the Bankruptcy Act, has already given the railroad permission to ask the ICC for abandonment of all passenger service and such a request will inevitably follow.

Most attention has been devoted to the commuter problem, but the long-haul passenger service is of considerable proportions. For instance, over a million passengers get on and off the train in Rhode Island annually and of these no more than 150,000 could be considered

commuters.

Some testimony presented before this committee has suggested making it a condition of the Penn-Central acquisition of the New Haven freight operations, that Penn-Central also be required to take over the New Haven long-haul passenger service and possibly more passenger service.

This appears to be a very risky step and I think should be approached warily because of the danger that the Penn-Central, who has been entering the marriage with the New Haven freight operations as a somewhat reluctant bridegroom, could well balk at this requirement and back out of the whole arrangement.

If that happened, it has been clearly stated by the trustees that the only alternative would be liquidation of the New Haven Railroad, that is, if they are not in the Penn-Central merger that is leaving Rhode Island without any class I railroad. While an organization might come in and pick up the pieces or some of them, the possibilities are so doubtful that I would hope great caution would be used before jeopardizing acquisition by the Penn-Central of New Haven's freight operations.

The interest of Rhode Island in keeping New Haven freight service is demonstrated by the fact that 59,000 to 60,000 carloads originate or terminate annually within our borders. In addition, over 8,000 truck trailers come or leave by piggyback per year, which means they are not crowding the highways.

For the preservation of New Haven passenger service what is needed is operating subsidies. While guarantees for capital sums would be helpful, the only real solution is an operating subsidy which we must realistically expect to continue year after year.

The State governments are prepared to contribute toward this, but I believe it unrealistic to think that the States can handle it alone. In other words, we need Federal help toward meeting the New Haven's passenger operating deficit.

It is fair for you gentlemen and Senator Neuberger to ask whether the States have attempted to do anything to help the New Haven or are we just running to the Federal Government crying for help as soon as difficulties arise.

In Rhode Island in the past 4 calendar years we have given local people property tax relief in the amount of $1,701,000 and State tax relief in the amount of $639,000 for a grand total of $2,340,000 tax relief. When we consider that about 4 million rail passengers have arrived or departed in Rhode Island in that period, the subsidy of 58 cents per passenger indicates we have been attempting to do our part.

As you know, there is nothing new in the Federal Government helping out passenger transportation systems with operational subsidies. as Senator Neuberger pointed out.

Currently, the Federal Government is contributing $67 million annually in operating subsidies to 13 short-haul commercial airlines. Additional millions are spent in capital subsidies to airlines through Federal grants for the construction of airports. Buses are indirectly subsidized since they have the use of highways toward which the Federal Government has contributed very substantial sums.

It might well be felt that the New Haven is strictly a regional problem, and that the area involved should take care of this situation themselves. I do not believe that this has ever been the attitude of the Federal Government, which has looked on any regional problem to be of national concern.

Thus originated TVA, the great dam and power projects in the Northwest, irrigation systems in the Southwest, considerable Federal aid to Alaska when it was hit by that terrible earthquake.

Senator PASTORE. I might interpose here-and Pastore voted for all of them.

Governor CHAFEE. I hope you receive reciprocity, $1,070,000,000. I think that might be $1,100,000,000, I may be a few million off there, help to Appalachia. Now, southern New England needs some Federal help in the form of operational subsidies for this railroad.

While the New Haven primarily serves our people, it also serves passengers who start their journeys hundred of miles away or embark from our area to go great distances.

It is a key method of transportation for thousands of servicemen who serve at military establishments in the New York, southern and northern New England areas.

I would like to interpose here that I would like to echo Governor Dempsey's point that the railroads, I believe, are deserving of the same national attention and assistance that competing methods of transportation receive.

Briefly, I would like to discuss the bills that are being considered today. First, I would like to thank all of the sponsors for their in

terest in tackling this difficult problem. Each bill shows a great deal of careful thought and is obviously the result of considerable labor. S. 348 proposed by Senator Pell sets up a Northeast Rail Authority of the four States-New York, Connecticut, Rhode Island, and Massachusetts.

Senator PASTORE. May I interrupt at this point while you are here, Governors. A suggestion was made that we include in this the State of New Jersey. Will you give that some thought and I will come back to that question later on. Give that some thought.

Governor CHAFEE. Yes, sir.

This is useful and the suggestion for dividing up the total State contribution is helpful. That is Senator Pell's bill I am referring to. The subsequent sections providing for a Federal guarantee of the authority's bonds would assist the authority in obtaining low interest rates. While this bill has much merit it does not go far enough in my opinion. What is needed is Federal assistance with the railroad's operating expenses. Anything short of such assistance means, in my opinion, that no passenger service will be available within 12 months.

While grants or guarantees for capital equipment are helpful, they do not meet the need for adequate operating money. There is need for this money immediately and the need will continue.

S. 1289, Senator Dodd's bill, provides substantial Federal subsidies, which taper off and end after 5 years. As you pointed out in your summary at the beginning, I do not believe that at the end of 5 years the deficits will be greatly reduced nor will the States be any better able to carry 100 percent of the burden.

S. 325 presented by Senator Ribicoff would, in my opinion, provide the best formula to save the New Haven passenger service. Under the formula in the Senator's bill, the Federal Government would provide an approximate 50-percent subsidy of the current deficit while the States would contribute the balance.

I believe an excellent result would be obtained by combining the provisions of this bill with those of Senator Pell's pertaining to the guarantee of bonds, proceeds of which would be used to purchase capital equipment.

Thank you for permitting me to testify. I do hope the committee will reach the conclusion that Federal assistance to this railroad would be helpful to the Nation and that to be effective such assistance must include money for operating expenses.

Thank you very much.

Senator PASTORE. Now, I should like to ask you the question I asked Governor Dempsey. In the event the Ribicoff bill is passed, are you prepared to say that Rhode Island will assume its part of the obligation?

Governor CHAFEE. Well, certainly speaking for the Governor, I will make every possible effort to see that our State assumes those responsibilities. As you know, I am not in complete control of our legislature and

Senator PASTORE. You can call upon me for that. [Laughter.]

Governor CHAFEE. If we could work out a bargain that you will take care of the legislature, I can guarantee I will take care of the executive and between two of us we can come to the promise that Rhode Island will do its part.

Senator PASTORE. Senator Dominick.

Senator DOMINICK. Mr. Chairman, I just want to add my voice to that of the chairman in welcoming Governor Chafee to this hearing which is very important not only to this whole area, but probably nationally.

I say that advisedly because I think that we are working on something which may establish a principle of treatment for railroads regardless of where they are. This is why I think it is of real major importance.

Governor, I would like to get your viewpoint once again on a question I have asked some other witnesses and that is, Can you see any logical reason for making a distinction between passenger service on the New Haven and passenger service in any other railroad anywhere? Governor CHAFEE. No, I could not. I think this comes back to our original point as mentioned by Governor Dempsey that the railroads, I think, are deserving of equal national consideration as the other methods of transportation do. It is the most efficient, economical way of hauling people to and from our great metropolitan areas and between them. I think it is archaic the way they have been looked on as fair game for every taxing authority.

But we, I mean the States as well as the Federal Government, have been doing all sorts of things to help competing modes of transportation, particularly the airports. While the Federal Government substantially assists airports, States or municipalities step into and subsidize these areas.

So I do not think the New Haven should be treated any differently. Naturally, I am here because of an emergency dealing with the New Haven and some of the bills are not particularly local, as Senator Pastore pointed out.

I believe Senator Ribicoff's bill applies nationally. That is the one I have been supporting. So I think this is something that every section of the country is deserving of equal treatment.

Senator DOMINICK. You feel that if we get into this operating subsidy that you mentioned in your statement, and I am saying "we," I am talking about the General Treasury getting into it, do you think that the taxpayers are ever going to get off this?

Because, after all, they are paying for it.

Do you realistically think that we can get out of it?

Governor CHAFEE. No, sir; I do not. I think just as the Federal Government is in the road business, on the A-B-C program, 50-50, and they are going to be in it indefinitely.

On interstate highway they are in for 90 percent and I don't think it is going to end with this 40,000 miles being built, there will be other sections come up, like your NWT Airlines and certainly in the construction of airports, I think you will be on this because it is just the cheapest way of spending your money, I think.

It is better to spend your money this way, our money, everybody's money, than building these continually larger roads to clog into these cities when I think the people should be hauled by railroad to the greatest extent possible.

Senator DOMINICK. Of course, as Senator Neuberger has pointed out, we had a considerable subsidy for the railroads to begin with and rereading all kinds of books in the last century where all kinds of peo

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