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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 underwrite operational deficits of railroads?

Mr. ZELLERS. Yes.
Senator PASTORE. As a banker, do you see it!
Mr. ZELLERS. I would not like to see that.

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,

bodin other words, itinating a losstofat kind, and that the right of

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 is.

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 PASTORÉ. 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 clear.. They would take in the freight service on the condition that they would assume no obligation as to the passenger 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.
Senator PASTORE. That is one thing that you are confronted with.

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,

reluctvolving ade cortos comendot

regardless of the $20 million, there is no matching obligation for the first year which, I think, would throw the thing off.

Let Congress be in the position it is in, and let the administration take the position it has, I think that the Ribicoff matching is a reasonable matching.

It is limited to the $100 million, and maybe we could cut that amount down a little bit.

But the fact of the matter remains that this would require matching, from the start, and that bill does not apply alone to the New Haven, that would apply to the Erie-Lackawanna that you are talking about, or could apply to any other railroad in the United States of America, as an operating expedient.

But I have not lost all hope. We are still plugging.
It is a pleasure to have you here.

Mr. ZELLERS. Thank you very much. And I appreciate it very much, your reception.

I have this literature that the chamber of commerce issued 2 weeks ago, and I might just leave copies with you.

Senator PASTORE. Fine. We will have it included in the record by reference.

Mr. Bober.

Mr. BOBER. Thank you. I am Joseph Bober, secretary-treasurer of the Connecticut State Labor Council, AFL-CIO, which is the parent body for all the AFL-CIO local unions in this State, with a membership in excess of 150,000 people. Today I am speaking here on behalf of the council and its president, John J. Driscoll.

(The statement of John J. Driscoll follows:)

STATEMENT OF JOHN J. DRISCOLL, PRESIDENT, CONNECTICUT STATE LABOR COUNCIL,

AFL-CIO, PRESENTED BY JOSEPH BOBER, SECRETARY-TREASURER, CONNECTICUT STATE LABOR COUNCIL, AFL-CIO

Gentlemen, my name is Joseph Bober and I am secretary-treasurer of the Connecticut State Labor Council, AFL-CIO, the parent body for all AFL-CIO local unions in this State, with a membership in excess of 150,000 people. I am appearing today on behalf of the council and its president, John J. Driscoll.

Organized labor in Connecticut is most concerned about the present state of the New Haven Railroad because it appears that unless immediate steps are taken by governmental agencies to provide it with cash for current operations and for the purchase of modern equipment, the New Haven Railroad may terminate all passenger service and curtail its freight operations. Both are vital to Connecticut and to the workers in this State.

The abandonment of passenger service, if permitted, would not solve the financial problems of the road since it is clear that part of the current overhead charged to the passenger service would have to be absorbed by freight. These common costs in 1963 amounted to $19.6 million, or approximately 30 percent of the total cost of passenger services. If such costs were to be borne by freight, it would mean that the cost of freight service into and out of Connecticut would be increased significantly. Connecticut is one State that depends heavily upon importation of raw materials and the exportation of finished products and the railroad is the principal carrier. If the freight costs of Connecticut employers--as well as those of Massachusetts and Rhode Island, we might add-are increased significantly, we fear that our employers would suffer loss of business to other States which are closer to the sources of materials or markets or both. Our members and many nonunion workerswould suffer from this through curtailment of employment opportunities. This might, we suggest, also affect the national economy in view of the large contribution Connecticut has been making to the production of 'defense items, since all such items would become more costly. Already, some employers are threatening to move from Connecticut if rail freight is not available.

Passenger service is also vital to Connecticut since we have some 30,000

commuters who reside in Connecticut. They are the source of income and employment to many Connecticut residents and the curtailment or abandonment of commuter services would cause many of them to leave Connecticut and move closer to the place of their employment. Increasing the charges of commuting does not answer the question of curing the passenger deficit since an increase in rates to make the passenger service self-sufficient would result, we are told, in exorbitant rates.

It appears to us that the only feasible solution is to return to subsidization of the railroad. This approach was used in the early days to get the railroad into existence and we have to return to it to keep it going. Of course, Federal money can only provide a temporary solution. We have asked the State of Connecticut to provide funds as well. If the New Haven Railroad can get new equipment and keep its operations going, we hope that the cash position would be improved sufficiently to permit the road to become self-sufficient.

We are therefore urging your committee to report out favorably the bills now under consideration or a committee bill which would aid the New Haven now. We would favor combining the bill introduced by Senator Abraham Ribicoff with the bill introduced by Senator Thomas Dodd since this would provide immediate cars for the New Haven, as well as other passenger-carrying lines. The Pell bill also might be incorporated into the two bills since it provides a public authority to supervise the spending of Federal-and perhaps Statemoney. While the matter is not directly before your committee, I might add that we do not believe that any merger of the New Haven with other lines should require the acceptance of the passenger service, as well as the freight service.

As we see the situation, time is running out. Lack of available cash threatens the very day-to-day existence of the line. The equipment is deteriorating and deferred maintenance is bringing the road close to the allowable safety limits. We urge your committee most respectfully to act now to aid Connecticut and the entire New England area before it is too late.

Thank you.
Senator PASTORE. Thank you very much for an excellent statement.
Mr. Bradford.

Mr. BRADFORD. My name is Amory H. Bradford. I am a member of the New York bar, and a resident of New York City.

I spent my entire life along the New Haven Railroad. I grew up in Providence, R.I., Senator.

I am appearing here in behalf of the Regional Plan Association, as a member of its executive committee and past president.

It is a 36-year-old civic organization, which has worked in planning in the New York metropolitan area.

I have a prepared statement, which I would like to file with the committee.

Senator PASTORE. Without objection, it will be so incorporated. (The testimony of Amory H. Bradford follows:)

TESTIMONY OF AMORY H. BRADFORD FOR REGIONAL PLAN ASSOCIATION My name is Amory H. Bradford. I live at 3 East 94th Street, New York City. I am a member of the New York bar. I am speaking here for the Regional Plan Association as a member of its executive committee and past president. The association is a 36-year-old civic organization which has always worked for an efficient, attractive, and varied metropolitan area surrounding the port of New York.

We are not going to testify on any of the particular bills before you but only on the general principle of substantial Federal investment in modernizing the commuter railroads.

In late 1960, this committee commissioned Regional Plan Association to report on commuter problems in the New York metropolitan region. We worked with a former Interstate Commerce Commissioner, Anthony F. Arpaia, on the recommendations. At that time, we came to certain conclusions, and the intervening time, as we believe, served only to underscore their soundness :

There is no feasible alternative to railroad commuter service in the New York metropolitan region, taking the service as a whole.

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