the States engaging in socialism or the Federal Government engaging in socialism, we are met with the problem here that unless something is done and done quickly the ICC has already testified that there is a distinct and I am quoting their language-possibility that we will have to cut out the passenger service.

Now, the President of the United States made a very fine and attractive and glamorous offer the other day-and he is a dear friend of mine offering $20 million for high-speed trains from Boston to Washington. Am I correct?

Mr. MARTIN. Correct, sir.

Senator PASTORE. Now the question arises: Where are you going to put these high-speed trains if the ICC discontinues passenger service? Where are you going to put them?

So, don't you see, the issue of the moment and the important issue now is to save that passenger service in the meantime. And how are we going to do it? It is like a man saying, "I am going to build a beautiful house," but he never gets a lot to put it on.

Now, we have to have those passenger trains running from Boston up to New York in order to put these fast-speed trains on when the President gets around to doing it. Am I right or wrong? And the big question that arises here is: How are you going to do it? How are you going to do it?

Now, you come here and you say we have programs. Well, we do have programs, good programs, and I voted for them. We have the Urban Mass Transportation Act and that takes care of the commuter service. We have abundant evidence here that Governor Volpe is beginning to do something about the mass transportation or commuter service around Boston, and we hope that that will be taken out of the way. We have evidence here already, and it is going to be corroborated, I hope, at 2 o'clock by Governor Rockefeller, who will be here. Incidentally there will be more Senators here at 2 o'clock than there

are now.

An agreement is being worked out between the State of Connecticut and the State of New York to do something about the commuter service west of New Haven, which is a salutary thing. That has been criticized by some people, but it is a salutary thing, because I think the drag on this whole system has been the commuter service, and if we once get that out of the way I think we end up with an operating deficit every year of $6 million for the long haul. Personally, my opinion is that if these Governors get together and sit down and talk with the officials of the New York Central and the Pennsylvania, who are already willing to take over the freight service, and guarantee to them that they will provide for the commuter service and there are provisions in the law to help them even in that-that in all probability they could persuade this combine to bring about the merger, taking over the long haul passenger service.

And look what it means to the Pennsylvania. If you stopped passenger service from Boston to New York tomorrow, where would the Pennsylvania get the customers and the passengers to ride southward and in other directions? Do you realize what it means to them to have people get on the train in Boston, to get on the train in Providence and Westerly, in New London, in New Haven, in Bridgeport, in Stamford, in order to get down there to the depot in New York and continue their journey southward or westward-not to have that cut off?

That is one of the faults that I find here. A long time ago these officials should have conferred with these people, because you cannot do this in a public hearing. You do this in the quiet of a Governor's office-and I have been a Governor. That is where you get it done.

Now, the point I am making to you, Mr. Martin-I understand what the philosophy is of this administration, and I think it is good policy. The day has got to come when we have got to cut out these subsidies and let private enterprise take its course. But we have a problem here that no matter what you do-in other words, we would have never lent this money if we did not know this was a desperate situation. Now, the fact that we have lent them money in the past is no solution to the problem now.

I do not know how familiar you have been with public life. Here first of all you have got four States, and no Governor wants to begin to tax his people unless he has to. There is no pleasure, there is no joy in suggesting a tax bill. That is one sure way of losing the office you occupy. It is never pleasant, never pleasant.

Now, these Governors maybe should have done something 4 years ago after this railroad went into bankruptcy, but that is a lot of water over the dam. They did not do it. They were waiting for George to do it, and finally the easy way out was to let the Federal Government do it.

Now, it is not so easy, especially when you come here and listen to a man like Mr. Lausche. And he is a learned man. He has his point of view and he is consistent. He has felt the same way about this from the first day I met him.

Now, the point you have here is this. There is no existing Federal program today that will take care of the situation between Boston and New York on the long haul-will you agree with that?-excepting this remaining amount under the law that expired on June 30, 1963, of $4.5 million. Am I right or wrong?

Mr. MARTIN. Correct, sir.

Senator PASTORE. I am correct. Now you do have a hiatus. You have a Federal program that can help Governor Dempsey and Governor Rockefeller to take care of the situation with reference to the commuter service, and I hope that they take care of it, but in the meantime you have got to preserve the right-of-way. You have got to preserve that train that comes down from Providence because if you preserve only the tail and you lose the body of the dog you are going to have an awful kind of a funeral. And that is what we are trying to avoid the funeral of the New Haven.

Now, these problems have to be joined together. There is a way to take care of the commuter service, and I have urged upon Governor Dempsey to go ahead together with Governor Rockefeller.

I understand that the legislature in New York yesterday appropriated $5 million for their share. Governor Dempsey is ready to come up with his $5 million, and I understand that they are going to make an application under the mass transportation law to take care of that, and I hope that they can straighten that out.

But it still remains that a petition has been filed to discontinue certain commuter service, and we have been told that the next step is to cut out passenger service from Boston to New York. Now, that is our problem. That is our problem, and we are meeting here as reasonable people to see if we can resolve it.

The Senator from Rhode Island feels this-and I want to make my position clear. The Pell bill, if it is properly modified and amended in order to remove any objection on the part of the Treasury Department and still leave the responsibility of meeting the deficit to the States, would be a desirable bill for a permanent solution in the event that you cannot get inclusion of rail passenger service in the merger. But that still leaves the emergency problem now. That is our dilemma. Now, the Governors have come here and they have said, "We like the Ribicoff bill," and the Ribicoff bill provides not that the Federal Government put up all the money but that whatever the Federal Government puts up it shall be matched by the States. I realize that that is a new concept, but the Ribicoff bill does not apply alone to New Haven. The Ribicoff bill is national in scope. It has a limitation of an authorization of $100 million. Once you have used that you have got to pass a new law. And for the life of me I cannot see the unreasonableness of the proposal in view of the fact that the President wants to develop his fast-speed train. We must recognize that there is a problem on railroad passenger service, and that to salvage this situation we require a little cooperation on an emergency basis between the Federal Government and the States themselves.

Now, that is all it amounts to. For every nickel that the Federal Government would have to put up under the Ribicoff bill as an intermediary measure, it would have to be matched by the States. That is all this amounts to.

I realize that you cannot speak alone for the administration, but I hope that I have not been wasting my time here. I am not here for the enjoyment that I get out of having you people come here, valuable people, to testify. It took a lot of time to write this presentation that you made, and to a large extent I agree with it, but what we are looking for now is an emergency solution to this problem until such time as a decision is made on a long-range basis.

Now, what you are saying in essence is this: The long haul is the responsibility of the States themselves, and for the life of me I cannot see why the Federal Government should be interested in the commuter service and save it and not be interested in the real lifeblood of the railroad itself, which means the long haul. How do you separate one from the other? How do you save the commuter service and allow the long haul to die? And why is it not socialistic to put a nickel in that train that starts in Westchester County, in Connecticut, and runs to Manhattan and yet it is socialistic to put a nickel in that train that runs from Providence to New York? How do you arrive at that distinction?

I say that the long haul is just as much a problem as the commuter service. The Mass Transportation Act only provides for commuter service, and all we are trying to do is to give the same treatment to this long haul, which is on the verge of dying. All we are trying to do is to save it until such time as President Johnson can save all of railroad passenger transportation in the United States of America. Do you have any observations to make?

Mr. MARTIN. I do not think I could agree myself, Mr. Chairman, that the long haul business is in acute jeopardy if the short haul, the commuter problem, is solved. If the States and/or the local governments could assume the passenger deficit that accrues from the commuter service and that load was taken from the back of the trustees, then

looking toward the long view, a rationalization of the railroad, the possible inclusion of that railroad in the merger with Pennsylvania Central, I do not think myself that the long haul service, the intercity service that you speak of between Boston and New York, would be lost. Senator PASTORE. It is a $6 million deficit a year.

Mr. MARTIN. If we have people to handle it, as was forcefully suggested to those States in the years 1961 and 1962 that they could handle the commuter problem, I do not think the railroad would be in the shape it is in today. But as you say that is water over the dam. That is history. They were told that, and the relief they provided by and large was meaningless, particularly this tax relief.

Senator PASTORE. You know what happened there. A little politics got into it.

Mr. MARTIN. I understand, sir.

Senator PASTORE. I mean I do not think that the problem was really understood. Rhode Island has done about the best it could, but it could do more.

Mr. MARTIN. I do not think the problem ever got to be focused on sharply until the trustees petitioned the Commission to discontinue this

service.

Senator PASTORE. That is right. That is when we all got excited, because now you are facing the discontinuance of the service, and it is like everything else. Appalachia has been dying for 20 years you know that, Mr. Martin-but when did we take care of it? Three weeks ago, after 20 years. It is always the case. Why? Because it means money. It means putting up money. That is nothing new in the poltical framework of our existence.

Now, to stand here and say this problem should have been taken care of 5 years ago-well, that is not the only problem that has been delayed and delayed. I can point out 15 problems right now that the Congress should be taking care of. This question of the rules of the Senate that has been going on since time immemorial has not been straightened out. To have somebody come along and say this is a long-lived problem which should have been taken care of a long time ago does not explain why we are here today. The fact of the matter is that we are on the edge of the abyss. We are on the edge of the abyss.

The freight service loses $6 million a year. It cannot bail out the passenger service anymore. The passenger service loses about $12 million a year, and the whole deficit is $17 million a year. How do you rectify this? The trustees said the only answer was, and the judge corroborated it, to file a petition to discontinue the service. The question I ask you is: Once that service is discontinued, where are you going to put this $20 million that President Johnson wants for a modernized, fast-speed railroad? On whose right-of-way? You would have to start from the beginning. It would be pennywise and pound foolish.

Now, if the result of this is going to be, "Look here, Mr. Governors, whether you like it or not you are going to bail this out," then I say withdraw your offer of high-speed trains. If this whole business is a State responsibility, why are we in it at all? Why are we in it at all? What obligation is it of the Federal Government to give the people of Boston a fast-speed train if there is no obligation to give them a train at all?

That is the problem. I know you cannot resolve it. We have to hassle it out in the committee and on the floor, but that is why we are here, Mr. Martin. I do not relish this job. I have stayed awake nights trying to figure out a solution.

Personally, I think this is what ought to happen. Immediately the Governors ought to resolve the commuter service like you said, because there is relief available. They should sit down and talk with the combines, both the Pennsylvania and the New York Central, and see if they cannot reach some agreement. In the meantime, if that cannot be done and the final solution is the Pell bill, then we ought to sit down and see what we can do about that. But that is what it amounts to, and we have to consider the Ribicoff bill.

Now we have a respite until maybe August. If the ICC says at that time, "Look, we can't put the deficit operation on the back of a company by force; we cannot in good conscience do that," then we really have a dilemma that is almost akin to a nightmare.

Thank you very much, Mr. Martin, for coming here today, and I thank your two assistants. They did not have much to say, but they looked active, alert, and intelligent.

Mr. Kohl, we are very happy to have you. I am sorry about the amount of time we have taken up. I realize you are a busy man, but we have not been resting on our oars. You may proceed.

STATEMENT OF JOHN C. KOHL, ASSISTANT ADMINISTRATOR (TRANSPORTATION), HOUSING AND HOME FINANCE AGENCY; ACCOMPANIED BY RICHARD BRYANT, OFFICE OF GENERAL COUNSEL

Mr. KOHL. Mr. Chairman, members of the committee, I am glad to be here, and I am accompanied by Mr. Richard Bryant, Office of General Counsel.

I am glad to present testimony of the Housing and Home Finance Agency with regard to the four bills now under your consideration in connection with Federal assistance for the New Haven Railroad. My testimony shall concentrate on the relationship of those bills to the urban mass transportation program, which has, since its authorization in 1961, been the responsibility of the Housing Agency, working in close coordination with the Department of Commerce. We concur with that Department in recognizing the Federal obligation to make intensive use of its existing programs to assist the States and local governments in dealing with the complex problems stemming from the New Haven situation.

It must be emphasized, as you have heard so many times this morning, that the role of the Housing Agency, as authorized by the Urban Mass Transportation Act, includes only one aspect of the total railroad problem-commuter services-as distinct from freight and long-haul, or intercity, passenger services.

The basic approach of the Federal program in urban mass transportation was worked out after careful study by the Housing Administrator and the Secretary of Commerce. It was determined that Federal assistance could most effectively be directed to the capital needs of the local transportation systems, and that any public support of day-to-day operations should be the responsibility of the State