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So we plead with you today, and we are very much impressed with the attitude expressed on the part of our elective officials, and we plead with you today to please do something, and do it quickly, so that the New Haven Railroad will continue operating while we can still arrange for some sort of a more permanent solution.
So that is the hope and desire of the Bridgeport area chamber of commerce.
I might also comment about the front page of the New York Times this morning, which said that the congressional help for the New Haven is believed doomed, and you have enlightened us, Senator Pastore, that that is not quite the way it is.
But, at the same time, in that upper left-hand corner there is another headline which says Johnson submits $10 million plan to promote arts.
I am not against arts, but I think we ought probably take care of our physical equipment before we take care of our cultural, so we will be around to enjoy the arts.
Senator PASTORE. Mr. Zellers, you are a very prominent and important businessman and your appearance here before the committee, is as a representative of the community of Bridgeport.
What have you to say to this argument that is being made-I don't mean debate it-I mean, merely to provoke your thinking on this subject and get your reaction about subsidies for various modes of transportation.
Now, I realize that we have, from time to time, engaged in certain subsidies, for instance, airlines; we subsidize them, and a few others.
I came up on the 7 o'clock plane from Washington. I don't think there were more than eight people on it. It had to make a stop at Ipswich, and then it went to Bridgeport, and I think about four people got on there. And then I got off at New Haven.
I can't see how that airline exists, unless we do something about it. What have you to say, as a businessman, with reference to adopting a national policy of underwriting deficits of the passenger railroads when you have other media of transportation that do not receive direct subsidies?
The argument is this, in essence. If you are going to subsidize the New Haven, are you going to subsidize me if I don't make money running my business? Where does all this take us? These are important questions. The question was raised here what are we doing in Pakistan?
That is a good question. What we are trying to do there is, of course, to promote peace in the world. Sometimes we do a lot of these things, not because we want to give then a handout for the sake of giving them a handout.
I think, if we spend any money in Pakistan, if we spend any money in India, I think we are doing it for American security in the ultimate sense.
If we are not doing it for American security in the ultimate sense, we ought to get out of it. But that is the reason why we do it.
We feel that unless you stabilize the economy of some of these governments, they will fall or become weak, so the Communists can take them over.
The communistic movement, as you know, is a vulture movement. Anytime a society is ready to die, they dive in.
With this observation I have just made, because this is one of the biggest arguments we are going to get into in the Senate-let's face it, we are going to have to answer a lot of questions from a lot of people, we are going to have to stand up, and they are going to say, well, if we are going to subsidize the operational deficits of the New Haven, we better begin to prepare ourselves to subsidize all of the railroads in the United States.
What would be your answer to that, if someone threw that at you?
Mr. ZELLERS. I liked very much your statement this morning, Senator, that you felt that this was a matter which should
have the combined attention of the municipal, county, State, and Federal levels, but you should all get together and decide how this is to be arranged.
My personal feeling is that, as far as the immediate cash problem of the New Haven is concerned, that that much should be a one-shot proposition.
In other words, if a man is drowning, let's toss him a life preserver while is is swimming to shore, and then let us-when I say "us," I mean, of course, the legislative bodies—arrange for a permanent solution, whether that be an authority, which I believe preserves many of the incentives of private enterprise, even though some of the financing comes from the Goverment, or some other means. But that, in the long run, should be the arrangement.
And I am not for subsidies.
And I don't regard it as a benefit payment, if you wish to call it that, to the New Haven Railroad.
To me, that is not a subsidy, because subsidy, to me, means a continuing payment of moneys to support a rather long-range basis, an operation which otherwise can't go on.
Senator PASTORE. Are you saying, then, that, in fact, that as a matter of emergency to meet the crisis, you would subscribe to a municipal program, or a program that requires the U.S. Government to make certain contributions that would be matched by the State, but on a permanent basis you would expect the States to take up the operaional deficit ?
I think a great deal can be done to modernize and to improve the whole structure of the New Haven.
We had a suggestion here by the distinguished mayor of this city. That is one thing. It won't be the answer, but it is some help.
I think it is pretty generally conceded that what you are up against here in this part of the country is the fact that the run, first of all, is short. It is from Boston to New York.
After all, I think we have about the finest roads you can find any place in the country that run parallel with the railroad.
As I was coming in by plane there was the Connecticut Turnpike running side by side with the railroad. And
all these things, of course, have contributed to the deterioration of the road, plus the fact, of course, there was some argument about mismanagement, which I think helped to do a great deal of it.
But, essentially, it is hard for me to imagine that overnight you can reconstruct this losing proposition, $17 million annually, to a profitable organization overnight. I think it is going to take some doing. I think it is going to take some imagination. I think there will have to be something done about the commuter service, one way or the other, in order to alleviate the burden to some extent.
But the point I make here is that the vicissitudes, the economic development, or valuations, have played an important part in the deterioration of this particular line, which is a terminal line.
The New Haven has a lot of trouble on this per diem charge, where the railroad gets these cars from out West, and the western roads want to raise the charge because they feel, if they do, that the New Haven will send the cars back quicker.
The New Haven can't do that. For example, the reason is the new law that was established, under which we are compelled to fill up these cars before we fill up our own cars, and then send them back.
The trouble with us is we receive this merchandise by rail, and then we ship it out maybe by truck, and we don't get around to filling up these cars the way we want to.
But, be that as it may, do you see anything inimical to our free enterprise system for the Federal Government to begin to underwrito operational deficits of railroads?
Mr. ZELLERS. Yes.
Of course, I can't speak to the New Haven Railroad. This gets me into an area about which I may be a student, but not an expert.
But I do know that the Erie-Lackawanna Railroad this May Senator PASTORE. They are in trouble. Mr. ZELLERS. They are in trouble, yes. They have offered to give to the authority the right of way—I mean, access to the right of way, on a lease basis, or something of that kind, and that, I suppose would be a means of eliminating a loss of $8 million a year.
In other words, if they could just get rid of that loss, and let somebody else use the tracks, and pay a fair price for them, then they would feel they were better off.
And I would think an approach of that type I believe the same think was done in the case of the Long Island Railroad, with the authority that expires shortly, where the towns forgave taxes and I guess other governmental bodies forgave taxes..
It was operated on an authority basis. You might say that it was subsidized to the extent of the tax forgiveness.
But you mentioned earlier about competing forms of transportation in one form or another. I don't know of a competing form of transportation that is not subsidized. The money may not be paid directly, as it is to airlines, but it is a form of subsidy.
Senator PASTORE. The busses, like Mr. Sage just pointed out, they are not subsidized.
Mr. ZELLERS. Some people might say they were, indirectly, because they have access to and they use these turnpikes.
Senator PASTORE. That is stretching the point. I can't see that. That is stretching the point.
Mr. ZELLERS. Certainly, if a catastrophe visits them, as it did in 1958, for the New Haven, the New Haven had to reconstruct its rightof-way, and pay for it.
And, of course, the Merritt Parkway-of course, the other turnpike did not expect it—the Merritt Parkway had to be reconstructed with public money.
And it is as I say, to me, the immediate problem is to get some cash, and I don't say that it should be I don't think it should be entirely paid by the Federal Government.
Senator PASTORE. You know, the Government has already guaranteed, through their loan program, the sum of $53 million. Mr. ZELLERS. I know that.
Senator PASTORE. The Federal Government has already paid $28 million. Who knows, they may never get back the rest, as far as that is concerned. And that is another obstacle you run into.
I don't think we ought to run off with the notion here that the Federal Government has done nothing for the New Haven. We guaranteed $53 million. Mr. ZELLERS. That's right.
Senator PASTORE. And $28 million of that the Federal Government paid out. . This all happened before the bankruptcy proceeding. I want to make that clear. Since their appointment the trustees have been meeting their obligations.
The reason I raise this question with a man like you is to give you and the record, and the people who are in this room, and the people who are watching these proceedings, an idea of how difficult this really
Mr. ZELLERS. It is difficult.
Senator PASTORE. And you get an idea of what the trouble is here, the way the Government operates and how difficult it is to get money out of the Treasury Mr. ZELLERS. It should be shared.
Senator PASTORE. Fundamentally, I am beginning to believe more and more that the one saving thing here is this merger petition that is pending. I always refer to that.
If it is true that these two great railroad giants are going to save $100 million, and public necessity and convenience requires, then some very, very strong and powerful considerations should be given as to whether or not they should embrace some of this responsibility, too. And I just can't get away from that. Mr. ZELLERS. May I ask you a question on that point? Senator PASTORE. Yes.
Mr. ZELLERS. Am I correct that the steps for this merger between the Pennsylvania and New York Central Railroad, first would require a decision by the Interstate Commerce Commission examiner, and then, even assuming that this is favorable, the entire matter has to be reviewed by the full Commission?
Senator PASTORE. That's right, which is a quasi-judicial proceeding, and parties can intervene and take an objection.
They expect a report from the hearing examiner within a matter of weeks. The best that I could extricate from the Chairman of the ICC, when he appeared before the committee last week in Washington, was that at best-at best-we couldn't expect a decision on this from the full committee until the latter part of this year. Mr. ZELLERS. From the examiner? Senator PASTORE. No, from the Commission itself. Mr. ZELLERS. From the Commission itself?
Senator PASTORE. Yes. And then it might go over to next year. · The point I am making is this, they have been barraged by letters
from Congressmen and Senators from New England, who have been insisting—who have been insisting—that the merger should not be allowed unless they combine within the merger, the New Haven complex, the freight and passenger service.
You heard the testimony here. The answer has been loud and elear. They would take in the freight service on the condition that they would assume no obligation as to the
service. That does not exclude the ICC from making a determination that the passenger service be included in the merger.
And, therefore, I have been saying this time and time again, in view of the fact that the merger does mean so much to these two companies and considering the fact that the Justice Department did originally object to the merger, and now, I understand, feels differently about it-perhaps something can be worked out.
Senator Robert Kennedy came before the committee and testified that just before he resigned as Attorney General he wrote a letter embracing his view that the objection of the Justice Department should be removed.
I think if that objection is not removed, I think those of us who are interested in this should engage ourselves with the Justice Department to make them understand how serious this is.
I think, if we can adjust the commuter service, and have these Governors sit down-and I say it so often now I am even getting tired of hearing it from myself—sit down and talk this matter over, I think it can be resolved.
But, going back to this question of the Federal Government, we have to realize that while the bite is small, at this juncture the cake we bite at is big.
Mr. ZELLERS. That's right.
Senator PASTORE. This involves the whole national policy. You can bet your bottom dollar, if we begin subsidizing the operational deficit of the New Haven, we have to be prepared to meet the deficit of every defunct railroad in this country.
Mr. ZELLERS. Yes.
I know a lot of people have said and I am not trying to be vitriolic about this—"If you subsidize this, why can't you help us?”
I said that myself a hundred times. But, let's face it, this is a big problem.
Mr. ZELLERS. My thought now, in the timetable you mentioned about the Interstate Commerce Commission's decision, that it would be coming forward in either late this year or early next year, I want to point out, as I am sure I don't need to point out, the New Haven Railroad needs help, and it needs help long before that. And that is what I am trying to bring out.
Senator PASTORE. That is the form of the Dodd bill.
Mr. ZELLERS. That is what we are addressing ourselves to at the moment. We share your reluctance about the Dodd bill, or to recommend subsidy operation, as involving such language. But we have studies that have been put out that made concentrated thought given to the terms “kill the legislation," "go over to," "go up to."
Senator PASTORE. Mr. Ribicoff's bill makes a tremendous amount of sense. So does the Dodd bill. The only trouble with the Dodd bill is,