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Mr. SCHAMUS. I should certainly hope so. I would be astonished if the ICC allowed them to get a dime. Why should the bill be worded, if possible, to go to the ICC in this case?
Senator PASTORE. You are, obviously, dealing with a complex of 100 Senators, 435 Representatives. I don't see how you are going to bring these bills on, and particularize it for one railroad, in one part of the country.
That is a practical question.
It is easy for you, it is easy enough for me, as we are sitting here, to discuss these matters pro and con.
But, unless you draft the bill, unless you provide in the bill or specify a bill that is national in scope, you are going to run into difficulty.
For instance, this bill could help the Pennsylvania Railroad as well. Mr. SCHAMUS. Yes.
Senator PASTORE. You can't begin to name railroads. The minute you begin to name railroads in the bill, you are in trouble. You can't get it passed.
One virtue of Senator Ribicoff's bill is the fact that it is national in its application.
And that's what Mr. Ribicoff has said, today it is the New Haven, tomorrow it might be someone else.
Therefore, in my opinion when you talk about limitation, limitation amounts to no authorization.
Mr. SCHAMUS. True.
Senator PASTORE. You don't limit it by time, you don't limit it by name.
Mr. SCHAMUS. Why don't you add something else? Why don't you require, as a condition to going before the ICC, that they have an overall loss, not merely a passenger revenue loss, but a limit on the amount of dollars, so that in that way, you prevent what you are talking about from happening?
Senator PASTORE. That is something to consider.
Senator PASTORE. At least, I think the history should be made clear that what we are talking about here is a railroad that cannot survive because it is not making money either on the freight or the passenger services.
Mr. SCHAMUS. That is the very reason why this situation can very quickly be reversed, that it has not had a history of being a very profitable railroad as a freight transporter over the years but, more recently, it more than broke even.
Senator PASTORE. Let me say, then, if the New Haven Railroad was making, let's say, $10 million on the freight, and losing $10 million on the passenger service, we wouldn't be here.
Mr. SCHAMUS. Exactly.
Senator PASTORE. Another thing, we know the New Haven has been losing money on the passenger service to the tune of $12 million, and losing about $6 million a year on the freight. That is the situation.
And the way it is going, as Judge Anderson pointed out, after all, there is a public interest to be considered here, and there is the interest of the creditors to be considered.
I am repeating in substance, not verbatim, what he said.
He said, you can't keep draining this thing in the public interest, to the point where you destroy the interest of the creditors.
That is the point he makes in his opinion, and he mentions the fact that the time has come, the time has come when something has to be done, and the trustees have applied for permission, for discontinuance of the commuter service. They have announced they will file later on for the discontinuance of the whole passenger service.
Whether this is being done in order to put the pressure on the public authorities, to get them to do something here, that is something I don't know, and it is not up to me to speculate.
I do know this, as a practical man, that you can't keep losing money forever, and end up with a profit.
Mr. SCHAMUS. Of course not. I would like to make one other observation, Mr. Chairman. You asked a reason why a Western State Senator would vote for the New Haven. I am not pressing for a New Haven bill, as such.
One aspect I think ought to be made clear in the bill as finally drafted, a national disaster here should be stressed, because, after all, God forbid we should get into a war, this area has to be served by a functioning railroad.
Senator PASTORE. That is correct. Mr. SCHAMUS. And it should be functioning for passengers as well as for freight, to move soldiers as well as goods.
Senator PASTORE. That is the argument we have, the justification that I think, hopefully, will be persuasive.
That is the reason why I am not satisfied with the reaction that we received yesterday.
I don't want to be vitriolic, or to be critical in my discussion, because this matter is still under consideration.
But I can't accept the philosophy that there is no national interest involved here. Of course there is.
What if that merger does not go through? What if the whole New Haven is cast free, and then, God forbid, what if we have another war? What are we going to do with these military installations? What are we going to do with the industries here?
After all, New England is part of the United States of America, just as the farmlands are, or any other region.
If we can call upon the whole people of the United States to be concerned over the plight of the farmers, after all, I think we can give some concern to the jobs in our areas.
We are talking about, more or less, the same thing. I am in accord with you.
But I have been repeating here some of the things that cause some concern.
Mr. SCHAMUS. Did you ask Mr. Martin just how much he discussed this with the Director of the Bureau of the Budget?
Senator PASTORE. No, I didn't ask him how much he discussed it.
I asked him whether he was expressing his own opinion, or that of the administration, and how far he had gone in accumulating what he considered to be the administration's position.
He admitted, that as far as he knew, it had not been brought to the attention of the President, but it had come to the attention of the Budget Bureau, the Department of Justice, and he named three or four-I think six in all. Now, that does not bind me. Mr. SCHAMUS. Of course not.
Senator PASTORE. This does not bind the committee, and there is a path left for us, and until the President of the United States tells me that that is the national policy, I am going to keep trying.
Mr. SCHAMUS. Sir, may I make one more sentence, and I will conclude?
Senator PASTORE. Yes. Mr. SCHAMUS. I am puzzled by what Mr. Martin said, for this reason.
The Director of the Bureau of the Budget, Mr. Kermit Gordon, who is the one to put up the money, said last week-he spoke to me last week, and never expressed the opinion we are talking about.
I don't believe Mr. Martin represents the administration's considered judgment on this. I think it is very much in flux.
Senator PASTORE. Let me put it this way, I hope so. I hope you are right.
Mr. SCHAMUS. So do I.
Senator PASTORE. I hope you are right, that this does not reflect the considered judgment of the administration.
I think we have a serious problem here, that does concern the U.S. Government.
Mr. SCHAMUS. Of course. Thank you very much. Senator PASTORE. Thank you. Mr. Riani? Mr. RIANI. I was going to suggest, Senator, I can forego reading the complete statement, and, if you want it, it can be inserted into the record.
Senator PASTORE. All right, fine, and then you can just give us a thumbnail recapitulation, because I think we are getting to the point where we are repeating.
Mr. RIANI. That's right.
Senator PASTORE. Then your statement will be included in the record in its entirety. Mr. RIANI. Thank you. (The statement by Arthur Riani follows:)
STATEMENT PRESENTED BY MR. ARTHUR RIANI, MEMBER OF THE EXECUTIVE BOARD,
RHODE ISLAND AFL-CIO ON BEHALF OF MR. THOMAS F. POLICASTRO, PRESIDENT, AND MR. EDWIN C. BROWN, SECRETARY-TREASURER
Mr. Chairman, the Rhode Island AFL-CIO welcomes this opportunity to be heard before the Senate Commerce Committee concerning the salvation of passenger rail service along the northeastern seaboard. The findings of the Commerce Committee on the pending legislation will have a deep and lasting effect upon the economic future of the northeast area. The pending legislation with which we are primarily concerned is with the salvation of the New Haven Railroad and the development of a modernized rapid rail service between the heart of New England and our Nation's Capital.
We are not expert in the running of a railroad. However, we do know that rail service along the eastern seaboard must be saved. We know that the Senate Commerce Committee has the awesome responsibility to lay a sound foundation for future needed rail service. We believe that the final opportunity to save the remains of what was once a successful railroad is right now.
We are well aware of the fact that for at least 50 years, business publications have been reporting the pending demise of railroads. That labor costs were too high, taxes were to high, and that revenue was too low. Yet somehow,
someway, the railroads continued to operate. Somehow, someway, the railroad Shylocks managed to garner their pound of flesh. The announcement of each crisis came to be considered another cry of wolf. We do not believe the present reported crisis of the New Haven is a cry of wolf.
Because of the failure of management to manage properly, the New Haven is down on its knees struggling to keep alive. It is another example of too much freedom for the free enterprise system. The New Haven Railroad management has exercised its freedom to ruin the road. The passenger trains of the New Haven are uncomfortable and unattractive, they run late, frequently break down, broken doors and windows are not repaired—and the trains are too hot in the summer and too cold in the winter. The service of the New Haven is in jeopardy. It must be saved. The Senate Commerce Committee must come forth with a lasting solution. No stopgap remedies will be meaningful, unless a long-range solution can be found.
We could go into a long discourse as to why we believe that the New Haven is in its present predicament. History is clear on the evil of the road. The New Haven is the victim of stock manipulations, the overabundance of hierarchy, real estate and land deals, and methods of Chinese bookkeeping. We have learned from the operation of the New Haven that it is a classic example of how not to run a railroad. To damn the past history of the road will serve no useful purpose now. We must face the situation as we find it, and try to salvage the remains and build to the future.
The Governors of the four States most vitally concerned have indicated that they are ready to move forward in a manner than can salvage the rail service.
As members of the interested public, we of the Rhode Island AFL-CIO, feel that there are three major actions that must be taken. To accomplish this, will take the combined leadership and resources of the Federal Government in cooperation with several States and private sources.
We feel that the following action must be taken, and taken soon:
First, stopgap legislation must be enacted that will permit temporary financing during the present emergency confronting the New Haven. We recommend the enactment of either Senator Dodd's bill S. 1289 or Senator Ribicoff's bill, S. 325.
Next, the Commerce Committee should recommend favorable passage of Senator Pell's plan, S. 348. The Pell plan is a refreshing and practical imaginative innovation designed to solve a perplexing transportation problem. It would create a multistate public authority with Federal backing that would lead to the future operation of the New Haven Railroad.
Third, legislation to carry out the long-range proposal of President Johnson for the creation of rapid passenger service along the east coast be enacted.
The Rhode Island AFL-CIO is opposed to any further Federal or State subsidies that prolong a lingering death for the road. If additional financial help is granted, it must be coupled with a permanent solution. We need the Dodd or Ribicoff bill to sustain life for a short time longer. Then, we must have the longer range plan advocated by Senator Pell.
Senator Pell is to be commended for coming forth with a revolutionary proposal that can have long range and lasting good effects on the northeast area.
No one State can solve the problem alone. It is not a responsibility of the Federal Government alone. Senator Pell's plan is a reasonable, commonsense approach to a regional problem, the dying passenger service of the New Haven.
We would much rather have private enterprise work out this predicament. However, we are realistic enough to realize that private enterprise cannot meet this challenge. Private enterprise cannot meet the New Haven challenge any more than it could have invested the great sums necessary to develop the network of highways crisscrossing our Nation; private enterprise could not have pioneered and maintained the aircraft industry, or space travel of the future; and private enterprise could not have developed our merchant marine. We have our highways, airports, spacecraft, atomic energy, and merchant marine, because of substantial financial and technical assistance from a realistic and concerned Government.
The Pell plan calls for at least the four States most vitally concerned to form a public authority to operate passenger service between Boston and Washington. We raise two points about his plan. One minor, the other of greater importance.
The minor point at question is concerned with setting the salary of the executive director by legislative edict. We feel such action is restrictive. We feel that this responsibility should rest with the authority. Times change and the
price of a director may change. The authority should not be hampered by legislative restrictives to obtain best possible person to run the railroad.
Our other point is a major one. We realize and fully appreciate Senator Pell's concern to preserve passenger service. However, the New Haven has not confined its abandonment practices to passenger service alone. Time and time again, the Interstate Commerce Commission has permitted this railroad to abandon freight service. With the continued shrinking of passenger and freight service, the economy life of New England has been withering on the vine.
We believe that the New Haven must be considered as a single unit. Separating passenger service from the freight service will cause confusion of operation, and resort to more of the familiar and confusing Chinese bookkeeping.
We urge the passage of the Dodd or Ribicoff bills, the Pell plan, S. 348, and President Johnson's transportation system of the future.
Mr. RIANI. I am a member of the Brotherhood of Railroad Trainmen.
Our main objective here is, first, to see that stopgap legislation must be enacted which would permit the temporary financing during the present emergency confronting the New Haven.
We recommend the enactment of the Dodd bill and Ribicoff bill.
Next, the Commerce Committee should recommend favorable passage of the Pell plan. The Pell plan is a refreshing and practical imaginative innovation designed to solve a perplexing transportation problem. It would create a multistate public authority with Federal backing that would guarantee the future operation of the New Haven Railroad.
Third, legislation to carry out the long-range proposal of President Johnson for the creation of rapid passenger service along the east coast should be enacted.
Primarily, this is what it consists of, and we hope you will give it serious consideration.
Senator PASTORE. I certainly will. You can be assured of that.
Mr. BIXLER. My name is Herbert E. Bixler. I am vice president of Systems Analysis & Research Corp., transportation consultants.
I have an A.B. degree in economics, Amherst College, 1932.
Toward the end of my career with the New Haven, I became general superintendent of transportation, one of whose duties it is to schedule passenger trains, distribute equipment, and arrange service.
Senator PASTORE. How long ago was this?
Since that time, I have been with the Northeast Airlines, engaged in the preparation of economic studies, one of whose markets is the New York-Boston passenger market.
For the last 3 years I have been engaged with the Systems Analysis & Research Corp., a firm which specializes in economic studies, particularly transportation.
We performed two of the original four studies for the Northeast corridor, which was a project for the Department of Commerce.
I am sorry to make a statement that sounds somewhat self-serving, but I think I may say that I would be considered extremely stupid, if, after looking at this problem for as long as I have, and not learn something about it.
I wish to call your attention to the fact that this problem before