But if there is a Federal obligation to do something about retaining passenger service on any railroad, why is there more of an obligation to do it with respect to the New Haven than there is on any other railroad in the country?

Governor DEMPSEY. I think the answer, Senator, is this. I hope that the United States of America will recognize this road as perhaps a direct means. If tomorrow-God forbid-we were at war, I would think that the United States of America would need this vital transportation system. Civil defense, alone, would indicate

Senator DOMINICK. Wait a minute. I am not talking about abandoning the road or the lines or even the cars. What I am talking about is whether or not we should separate in our minds the need to have a governmental support completely of passenger service as opposed to freight service.

Therefore, we would subsidize in one form or another, through the Federal Government and the States, all passenger operations and let the railroads take care of their own freight operations.

Governor DEMPSEY. You would be helping; you would be joining with the States to keep the passenger service alive if the Federal Government, if you see fit, passes any of these bills. You may not.

The freight service, as you know, arrangements or agreements are now, I understand, being conducted by the trustees with other railroads. I am not familiar with the negotiations one bit.

But it would seem to me, Senator Dominick, that the Congress of the United States must have an interest in this particular plant. Just because it is New England, or New York, I feel you are interested in the whole country.

Senator DOMINICK. Let me ask one more question, if I may. Let's suppose that the railroad, unencumbered by the passenger service, can make a going enterprise out of the freight service. Let's just supthat for a minute.

pose

Do you then feel-I will put it this way-that it is the function of the States to maintain passenger service where they feel that passenger service is needed, or do you feel that it is the function of the Federal Government to do it because of a national principle involved, or would you insist on a joint effort?

Governor DEMPSEY. I would not insist. I would like to eliminate that word. I would hope for a joint effort of the continuation of the essential passenger service to New York and to New England.

Senator DOMINICK. Would you feel the same way on a passenger service in New Mexico?

Governor DEMPSEY. If it was as vital to the State of New Mexico as this problem is to New England, if I were a Member of the Congress, sir, not only would I support it, but I would vote for it.

Senator DOMINICK. Thank you. That is all.

Senator PASTORE. Mrs. Neuberger.

Senator NEUBERGER. I don't like to be parochial about this problem. I think I am familiar with it, although to a great difference of degree, because we have had exactly the same problem with the Southern Pacific Railroad and its so-called commuter service between Portland and San Francisco and Los Angeles. The utility commissioners of the two States allowed the Southern Pacific to discontinue the only really good passenger line we had, namely the Daylight. It inter

ested me, in looking into it, to notice that trustees or owners of these railroads love to separate, for bookkeeping purposes, the passenger service and the freight service. Senator Dominick indicated the freight service is lucrative.

With the Southern Pacific, they have absolutely no competition. They have the whole way to themselves. Yet you would think they had to build separate tracks to run the passenger cars from the freight cars, for they charge up the whole running of the passenger service separately. This gets kind of annoying.

I must say you have given a marvelous argument for nationalization of the railroads. As I reread your testimony, you say over and over again that this is a national rail transportation problem, a national policy, and it is essentially national in character, and the national policy occurs over and over again.

So maybe if it is of benefit to the Nation, whether it is New England or in time of war, we have a really good argument for this industry that is having such a rough time, and I am a railroad buff.

I commute from Oregon to Washington by railroad. I do it because I like it and because I like to give them some business. But it is a really rough problem, I think, as Senator Dominick indicated, for use, from the Far West, where we have need to wonder about this, unless it is so much in the national interest that the U.S. Government take over this ailing business. You have given a good argument for it. Specifically, I thought there was a certain suggestion of great criticism when you said that heavy subsidy by the Federal and State governments of competing methods of transportation and Federal regulatory restrictions of the railroad's ability to compete are important factors in the New Haven's distress.

Now, I suppose you mean subsidy to the airline and building airports. Is that what you meant?

Governor DEMPSEY. One of them.

Senator NEUBERGER. Did you mean the trucking industry, too, receiving heavy subsidy as competition?

Governor DEMPSEY. You could consider that, I suppose. This would take us, if we went into this, Senator, it would take a little time.

Senator NEUBERGER. I recognize that the trucking industry is subsidized because the taxpayers of this country build the roads. But I also remember, where I only know railroads in the West, where the railroads were subsidized by giving them some valuable land in alternate sections to build the things.

So would you mind taking time to tell me what Federal regulatory restrictions you think have brought about part of the New Haven's distress?

Governor DEMPSEY. Of course, they have real problems on their freight. As you know, many years ago when the ICC came into being, it was brought into being, of course, to cure what we call, today, a monopoly.

Certain rates were set; certain freight rates were set. Of course, you almost answered the question, yourself, Senator, when you said the roads are a case in point.

There isn't any question, and the trustees keep saying this over and over again, but that we do have to build roads. We certainly do because factories build their plants on these roads.

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