Now, it is very significant that Governor Rockefeller brought in experts from New York.

They have this thing all figured out, that the deficit of the commuter service west of New Haven was only $400,000 a year.

Mr. ROSAN. That was in 1961, a study by Mr. Edwards.
Senator PASTORE. And, who knows, it must be more than that.

Mr. ROSAN. Of course it is. That was all done for a specific purpose.

Senator PASTORE. If we are going to begin to talk like that, we are never going to resolve this problem, of what we should do.

They get $5 million coming out of the properties in the Grand Central, and they say this is applied to the commuter deficit. What did you do with the rest of the money?

Mr. ROSAN. I don't know.

Senator PASTORE. If they begin to talk like that, we all are wasting our time.

Somebody has to sit down and look at this thing objectively.

All right. We can sit here and criticize these trustees. And sometimes I have been guilty of the same offense.

But they are three dedicated people, who have nothing personal to gain.

Now, it is true that somewhere along the line, somehow this railroad has to be managed by people who are absolutely proficient in the field. It can't go on this way forever.

The trustees have a special function to perform here under the order of the Court, and what they have been trying to do is to save the railroad until the reorganization is completed.

I think we have reached the point of reorganization, and you can't do it without cash. You can't do it without cash. And that is the basic problem we have here.

Now, the truth is that some people are saying that the passenger service ought to be included in the merger. Truthfully, I would like to see that happen. I am one of those who thinks it could happen.

I think something ought to be done about the commuter service on the Federal/State level insofar as west of New Haven is concerned and around the Boston area, and then to see if we can persuade the Pennsylvania and the New York Central to take in the long haul.

After all, if the merger goes through, they stand to save $100 million. That is the testimony before our committee.

And, after all, why can't they absorb the deficit that may be minimized when modern trains come in. It amounts to $6 or $7 million. You must realize that this feeds their lines south of New York, from Boston right down to New York.

The termination of the passenger service would mean that thousands and thousands of passengers would be taking a plane and not riding a train.

We have to sit down and talk about these things. That has not happened. We have been waiting. We have been waiting for George to do it.

Then we find out that George is dead. George is dead, he just isn't there.

This is the crisis, so we better get on our bicycles here and begin to move fast.

Mr. ROSAN. Senator, I can't think of anyone who could do that job, one with leadership, better than you.

Senator PASTORE. I was not looking for a compliment, but it is nice to hear it.

Mr. ROSAN. Senator, the problem that Mr. Bassett sort of touched on does raise a problem in our mind, and that is the question when you start using Federal funds or State funds, any public funds, whether those funds should be used by private organizations, and, for that reason, after much study of this problem, at least for the commuter end down here in New York and the New Haven area, our group is convinced that there must be some kind of an authority to run the commuter or passenger service.

And, for that reason, we associated ourselves with these bills that are before your committee, to create the enabling legislation, that will provide for a bi-State or four-State authority that can handle this problem, with a long-range concern.

This is the only way to avoid the problem, I think, that Mr. Bassett is concerned about, of mismanagement and so forth, of public moneys. It certainly would be a worry if I were an elected official.

Mr. Javits' bill creates a two-State authority. The Pell bill creates a four-State authority. I hope that the four-State authority bill is enacted.

I can see why, from the standpoint of the people in Massachusetts and Rhode Island, they would want a four-State authority.

I would hope you would extend it in such a way that it would provide the authority would become operational as soon as two States had joined in it.

And the reason why I make this suggestion is that we have had the unhappy example of the so-called Tri-State Transportation Authority which the Governors of New York and Connecticut pushed in 1963, and in which, up until yesterday, as far as I gather, New Jersey has refused to join.

It may be they would join for a limited purpose, as of yesterday, 2 years later.

I think it would be a tragedy if the authority to at least look at this commuter problem for a long-range solution in the New York-Connecticut area should be delayed.

I am not asking this because of the State or anything, but just because the administrative difficulties, legislative difficulties of getting the other two States to join, too, and I think that the four-State authority bill, if it is the one to be seriously considered, should be amended to take care of that problem.

Senator PASTORE. The only trouble with that, Mr. Rosan, is this, as I look at it-of course, if it finally resolves itself, gets to the merger stages, let's say, west of New Haven, you can readily see how the two authorities-that is, the two States of Connecticut and New Yorkwould look to salvaging that part of the commuter service.

But the thing that disturbs me about the authority becoming effective with two States ratifying it—and I am not excluding it, I think you make a lot of sense, I raise this question just to provoke your thinking and to get your comments on the subject-the Pell bill and the Ribicoff bill, both provide for matching funds.

The Dodd bill is an outright grant. The Dodd bill is liked by the trustees, and liked by a lot of other people.

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, requires 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 1:30, 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 grave concern 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 Line: 46-135-65--22

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.