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But you are a practical man. I am a practical man. If you can't get the Ribicoff bill how are you going to get the Dodd bill? .

Mr. Rosan. I dont know that.

Senator PASTORE. It calls for matching relief on behalf of the States, and the Dodd bill is an outright grant for the first year, I think, of $20 million and then after that it is matched on a basis of 80 percent Federal, 20 percent State; 70 percent Federal and 30 percent State.

Well, that is nice, if you can get it. But it is going to be tough to get. It is going to be tough to get.

The trustees would appreciate it, because this is one bill that would give you an outright grant.

But then, of course, Mr. Ribicoff, he has analyzed this problem, too. He realizes the temper and temperament of Congress.

As a Senator, he is supposed to do something here.' But I don't think you are going to get a nickel out of the Federal Treasury. It is going to be a hard job to get a nickel, even if he is supposed to do something, after what we heard yesterday.

The fact remains that these bills, the Ribicoff bill, réquires matching on the part of the States, and the Pell bill requires that the States pick up the operating deficit.

And the only trouble with that is this, when you say two States can start doing this, then the other two States will sleep on their oars. Again we get back to let George do it. Mr. Rosan. That's right.

Senator PASTORE. This is the problem. This is the reason why I have been urging unanimity. This is the problem of Massachusetts, this is the problem of Rhode Island, this is the problem of Connecticut, this is the problem of New York. These are responsible officials.

And all I am saying is that we should sit down and get one plan, because if they don't get one plan, that makes our job harder.

You see, we are only part of the U.S. Congress.

I would be the first one to vote for relief. Abe Ribicoff is for relief. John Giaimo is for relief. And so is Mr. Irwin for relief.

Mr. ROSAN. Senator, we, in our prepared statement, have associated ourselves with the concept of matching funds. We are not asking the Federal Government to pick up this whole load.

I might even go further and say—
Senator PASTORE. No, no. I am only answering your question.

You see, the fact that you do that, you might forestall action on the part of the other two States.

Mr. Rosan. I understand that.

Senator PASTORE. And, of course, the other two States wouldn't put up any money, they would say, “Let's wait a couple of years."

That is the harm that would be done. I would suggest that you think about it, and give us your comments either now or sometime later on. Mr. Rosan. We will write the committee a letter.

We certainly appreciate the opportunity to appear here, and I certainly enjoyed your comments, Senator.

Senator PASTORE. Thank you very much.

We are going to recess until 1:3), and we will meet at the courthouse, the Federal courthouse, second floor.

(Whereupon, at 12:10 p.m. a recess was taken.)

AFTERNOON SESSION

The committee met, pursuant to recess, at 2 p.m., in the Federal Court Building, New Haven, Conn., Hon. John O. Pastore presiding.

Senator PASTORE. All right, we will come to order. Our first witness will be Mr. George M. Sage.

Mr. Sage. Mr. Chairman, members of the committee, I would like, first of all, to thank you for the opportunity to be able to be here to present my views on this subject today.

I have this prepared paper which I would like to make a part of the record.

Senator PASTORE. Very well.

(The statement of George M. Sage follows:) STATEMENT OF GEORGE M. SAGE, PROVIDENCE, R.I., FOR THE SHORT LINE, INC.,

INTERSTATE BUSES CORP., AND ENGLANDER COACH LINES, INC. My name is George M. Sage. My headquarters are in Providence, R.I., and I am the president and sole stockholder of three New England buslines. They are the Short Line, Inc., which operates principally in the Providence, Newport, Boston, Fall River, New Bedford, Cape Cod, and Hartford area ; Interstate Buses Corp., which operates between Providence and Springfield, Mass., to Albany, N.Y., and Englander Coach Lines, Inc., which operates from Williamstown, Mass., to Greenfield, Orange, Gardner, Fitchburg, Ayer, and Boston.

It is my purpose to state my position with regard to the subject matter of this: hearing; that is, my position as one engaged in private enterprise with graveconcern as to the effect of proposed legislation on privately owned carriers such as we are.

At the outset let me state that we are not in any way suggesting that the New Haven Railroad is not necessary to the economic welfare of the region; nor are we advocating that the railroad be put out of the passenger business. While recognizing that the railroad is in obvious need of some type of assistance, we feel some alarm that such assistance as might be rendered by the Federal Government or the States, could be in the form of a program that could cause. serious or fatal damage to privately operated, nonsubsidized, taxpaying carriers operating in competing modes of travel-and our own tax money could be contributing to our demise.

Although I might be assured that no such thing is intended, my fears are not unfounded in the light of the experiences suffered in the operation of Englander Coach Lines as a result of the experimental program conducted by the Massachusetts Transportation Commission with the Boston & Maine Railroad between Fitchburg and Boston, Mass., in 1963 and 1964. Let me illustrate :

The present operation of Englander Coach Lines, Inc., was established as a result of the Boston & Maine Railroad abandonment of passenger service on its route from Troy, N.Y., to Boston, Mass. Service was established between Williamstown, Mass., and Boston, Mass., where surveys indicated patronage would sustain for a private carrier. The B. & M. Railroad continued to operate passenger service between Boston and Fitchburg, a distance of about 50 miles, out of the total distance of 140 miles. This operation was started in 1958 and operated at a loss until the year 1962. For the year 1962 the gross revenue was $208,500. Expenses were $176,000, with a profit of approximately $32,500. This was the first year the company had shown a respectable profit. Equipment and facilities investments of $170,000 had been made to establish this enterprise. Revenues appeared to be on a continued increase, and then the experimental program was put in which provided a subsidy for the B. & M. to increase service and reduce fares between Fitchburg and Boston, where the railroad competed with the buslines. Approximately 50 percent of the revenues earned by Englander Coach Lines were earned in this competitive segment of its route. We therefore found ourselves in direct competition with a Federal program in which one mode of transportation was being subsidized to the direct detriment of another.

The competitive impact was substantial; our one-way fare from Ayer to Boston was $1.65; under the new program, the rail fare dropped from $1.99 to $1.10. In addition, there were eight trains on weekdays compared to six. The following tabulation of passengers carried and passenger revenues, by quarters for the years 1961 through 1964, will show the direct effect on Englander Coach Lines :

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As can readily be seen with the initiation of the experimental program in January 1963, and continuing until the program was terminated in March 1964, Englander's revenues and passenger count showed a continued decline. Had the experiment continued there is no doubt in my mind that Englander Coach Lines would have had to go out of business. With the termination of the subsidy program, and reinstitution of higher fares on the railroad, Englander's patronage began to increase and present indications show it will continue to

do so.

While such experiments may prove worthwhile from the point of view of the planner, the economist, or others concerned with transportation problems, It is difficult for the individual who has time and money invested, and for the employee whose livelihood is involved, to sit idly by and see his own tax money be used to destroy him. This is our prime concern with the ultimate result of legislation designed to assist the New Haven Railroad.

The Short Line, with headquarters in Providence, serves Rhode Island and a large portion of south-central Massachusetts. It currently operates in competitive service between Providence and Boston with the New Haven Railroad. The Provide-Boston route is responsible for a substantial portion of Short Line's regular route revenues. It is my concern that the granting of some type of subsidy to the railroad would result in a substantial reduction of fares, and Short Line could well find itself in a position similar to that which Englander experienced.

In addition, in April 1963, as the first step in an overall downtown master plan development of Providence, Short Line opened a million dollar bus terminal. The terminal is owned by the Industrial Foundation of Rhode Island and is operated by the Short Line. This terminal is dependent for supporting income on the revenue earned from the other bus companies which operate into Providence, and pay the Short Line a commission for the use of the terminal facilities. Most of these carriers might also be seriously affected and again this could have an adverse effect on the Short Line. Wtih an annual payroll of 1,600,000 supporting 261 employees, serious economic reverses to this company could have a substantial impact on the Rhode Island employment situation.

I would like to point out that assistance to one mode of transportation can have harmful effects on routes operated by other modes. Where one is subsidized, such as in the case I have just mentioned, and defensive changes in the other must be made as a result, it could well be that the facilities presently performing a useful function might not be available should different future policies be decided upon by the agency in charge.

I am strongly opposed to any form of Federal subsidy in public transportation; I feel it is only fair that if a competitor is subsidized, affected carriers should have some protection in order that imbalances of existing modes of public transportation are not created.

Our bus operations by their very nature also act as feeder routes thereby providing services to the trunk carriers. Communities which otherwise would have no public transportation are able to enjoy this service. If private enterprise is to be undermined through the subsidizing of trunk carriers, it is questionable if feeder carriers could continue to operate.

I ask that these matters be given your consideration in attempting to find a solution for the problem at hand. I thank you very much for this opportunity to present my views.

Mr. SAGE. I thank you very much for the opportunity to present our views.

Senator PASTORE. Mr. Sage, I thank you for this presentation. It serves to point out how difficult this problem really is, when you look at the other side of the coin.

We have been hearing testimony, we have been reading in the newspapers, why the Federal Government should subsidize the New Haven and keep it running, and now here you are, you are a Rhode Island resident, operating in Rhode Island, and your position is categorically that the Federal Government should not subsidize the operations of the long run.

Isn't that correct?
Mr. Sage. Basically, that would have to be our position.

Senator PASTORE. I am not being critical of you. I mean, it goes to prove how we get in the middle of this squeeze.

Mr. SAGE. Surely, I think we can understand that, why I do feel this side should be pointed out.

Senator PASTORE. There are 261 jobs in Rhode Island, which might be affected if we subsidize the New Haven.

The Governor made quite a speech. His reaction to Mr. Martin's testimony was to the effect that this was a terrible letdown of the New Haven, and our area of the country.

So, from day to day, we become more in the position of Solomon. And who knows the answer?

Thank you very much, Mr. Sage. It was a pleasure to have you here.

Mr. SAGE. Thank you very much.. Senator PASTORE. Mr. Zellers. Mr. ZELLERS. Mr. Chairman, and other distinguished Members of the Congress of the United States, my name is John B. Zellers. I am the assistant vice president of the Peoples Savings Bank of Bridgeport, Conn.

I am appearing here today as the chairman of the Railroad Committee of the Bridgeport area Chamber of Commerce, as well as the Fairfield (Conn.) Chamber of Commerce.

Bridgeport has a dual area of interest in this topic being discussed today. First and foremost it is a highly industralized part of the State of Connecticut. It, therefore, is interested in the freight part of this service.

Then, also, it is interested in the passenger part of the service, because it acts to a considerable extent as the bedroom for many families whose employment is in New York and must, therefore, go back and forth to New York, earn their money in New York, and spend a lot of it in—and most of it in Fairfield County.

In Bridgeport there are 600 industrial firms. The total employment in Bridgeport is 130,000 people; 75,000 of those are engaged in industry.

So that we rely, to a considerable extent, upon the freight service and also the passenger service now provided by the New Haven Railroad.

I think, if there is one great quality that human beings have, it is the ability to learn from the past, so that they may be guided in the future.

I am sure that there are quite a few people in this room who are acquainted with the transportation problems of Los Angeles and San Francisco.

Both of these cities did have, at one time, excellent rail transit arrangements.

For one reason or another they let those go by the board. I think in Los Angeles it was because they got enchanted with thruways.

They tore up tracks for thruways and now, as I understand it, they are engaged in a very energetic campaign to restore these rail lines.

So that much the same is true of San Francisco. I saw in the paper not too long ago an account of a demonstration of a rail system which was 41/2 miles long, where they are trying out different methods of automatic operation, new equipment, a new sort of thing.

We got our demonstration of operations going every day. Let's keep it, because it is vital to the entire area.

This morning there was a comment made about $8,700,000 going to Pakistan.

I have a clipped reproduction of the way the Bridgeport Post happened to treat this. I don't think there was anything deliberate about it.

But, on the same page that has this arrangement for the $8,700,000 to Pakistan, which was written up, there is an item telling of the severe situation in which the New Haven Railroad finds itself. They say, "The stock is empty," one official said, knowing that the New Haven trustees have committed the last $5 million in emergency reserves for operating expenses.

I submit, with all deference to our international situation, if it is good enough for Pakistan, it is good enough for us.

There is another aspect of this, too, and that is the cost of creating turnpikes.

I believe the Connectitcut Turnpike—the final cost was approximately $50 million. I understand it is about 120 miles long. So that we have an average cost of about $430,000 per mile.

And I think you will agree that the miles constructed down at this end, the west end, probably were a lot more costly than the miles constructed up toward Collinsville because of the density of the population.

So what we are talking about here is $5 million to keep the New Haven Railroad alive, which is a public necessity, and is less than the cost of 1 mile of a new turnpike.

I am no statistician, but I have seen figures that indicated the problem of the New Haven Railroad, as it exists, and, if that were thrown on to a turnpike structure, it would require another turnpike of the same capacity that we now have.

And, as someone so ably' said this morning, where do the cars go when they go to New York, because it is suffering from indigestion of automobiles now.

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