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is the need for money. If the railroad is important to New York and Connecticut, and we think this is apparent from all the testimony we have heard today, then New York and Connecticut must take the lead in coming to grips with the problem.
The trustees of the bankrupt New Haven have demonstrated that they are not interested in passenger service. This is where the States must come to the rescue. The most apparent way out is through creation of an authority, sufficiently well financed on a continuing basis by the States and the communities that benefit most directly from the railroad.
Whether the authority runs or leases the railroad or contracts for the service is unimportant at this time. What is important is that there be sufficient and continuing aid from the State and local governments so we can deal with the immediate problem and break the pattern of leaping from crisis to crisis.
Such an agency should be set up to plan for a coordinated transportation system in the whole Metropolitan New York area and be able to qualify for Federal assistance under the Mass Transportation Act. But we must bear in mind that the act does not provide for operating subsidies. For the most part, this will have to come from the States, in my opinion.
I support the announced plans of Gov. John H. Dempsey of Connecticut and Gov. Nelson Rockefeller of New York to lease and buy railroad cars for the New Haven. I also applaud their intention to explore the possibility of having the States enter into a commuter service contract with the New Haven and the New York Central Railroads. If implemented, these are steps in the right direction.
We should travel along the avenue of bistate cooperation. To do otherwise would be to veer off in the wrong direction and duplicate the mistakes of the past.
Senator PASTORE. I suppose that both Governor Dempsey and Governor Rockefeller can answer for themselves when they appear before the committee and Governor Dempsey will be here Thursday and Governor Rockefeller has agreed to come next Wednesday at 2 o'clock. But are you familiar at all with the details of this plan that they speak of? Does that contemplate any Federal contribution?
Mr. IRWIN. I have just spoken on the telephone with Governor Dempsey. He told me he was going to be here Thursday. I really don't know, Senator, beyond what I read in the papers on Sunday and Monday, on this plan. I do know that they are hoping that there will be some forms of Federal contribution to the general problem and my fear is that there may grow an illusion about the possibility of a lot of Federal money being available which will cause the States to slow down their own efforts.
Senator PASTORE. You know, it really isn't going to be any trouble here to work out a compact that doesn't involve any of the taxpayer's money. That is very easy to do, you know. You have had enough experience.
Now the big question here is, as we have said before, there is nothing wrong with the New Haven that cash won't cure. The big question is how much cash and who is going to put it up?
Mr. IRWIN. Right. I agree.
Senator PASTORE. I was wondering if this agreement on an emergency basis, saving the commuter service in Connecticut and New York contemplates any Federal contribution.
In your statement you have limited it to whatever benefits may be given under the Mass Transportation Act. Well, that is there; that act has been passed.
Mr. IRWIN. That is true, and there is money available for a program that Governor Dempsey and Governor Rockefeller have been talking about under the Mass Transit Act.
Senator PASTORE. All they have to do is make application for the
Mr. IRWIN. I think the Governor is going to urge this committee to pass legislation which is going to make more money available to the States to help meet this problem.
Senator PASTORE. Under the Mass Transportation Act or to cover deficits?
Mr. IRWIN. To cover deficits, Mr. Chairman.
Senator PASTORE. Well, now, the thing that bothers me in that regard, after all, we have to get a bill of that kind in shape.
Mr. IRWIN. Right.
Senator PASTORE. And if you are going to talk about deficits under a bistate plan, you would have to know pretty much what the details are. It would have to be debated in the Senate. After we got through it, it would have to go through the House and you would have to hassle with it.
I mean, what do you expect to happen to the railroad in the meantime?
Mr. IRWIN. I have stayed away from proposing any immediate Federal aid to this thing because I don't think it is a practical solution for the immediate problems for the survival of the New Haven Railroad in the next 6 months to a year.
I think that if we start talking about the possibility of Federal money for this, that people are going to sit back waiting for the Federal money to come, it may never come, and the railroad will go down the drain. This, I think, would be a very bad mistake.
I think as we look to the future, beyond the immediate problems of the New Haven, we look to, for example, Senator Pell's proposal for travel between Boston and Washington, I think that there there may be a proper role for the Federal Government.
I limit my proposal to a pretty narrow area, although I, of course, would support anything that this committee might get together in this area. But the truth is, it is going to be hard to pass it in the Senate and even harder to pass it in the House.
Senator PASTORE. You have made a fine contribution, Mr. Irwin. You have been very frank and honest about your point of view. Mr. IRWIN. I really don't believe
Senator PASTORE. And you may have subjected yourself to criticism back home.
Mr. IRWIN. I think this is true, Senator. But I believe we have to keep our feet on the ground right now if we are to keep the New Haven operating to the end of this year and into next year.
Senator PASTORE. And as an emergency measure on saving the commuter service in Connecticut and in New York, in a nutshell, you think that is pretty much a State responsibility?
Mr. IRWIN. I do, sir.
Senator PASTORE. And local community?
Mr. IRWIN. I do. And in fact, when you look at what has happened already in the country, Mr. Chairman, you will see that, for example, in Pittsburgh, they have addressed themselves to this problem this way: Philadelphia, Boston, San Francisco have undertaken a tremendous program in this area. I think one of the reasons we have
a problem here is that we do have two different States and each State is sort of jockeying with the other. I think Rhode Island and Massachusetts have an interest involved here, too.
Senator PASTORE. Of course, they do.
Mr. IRWIN. I think that all four States, frankly, should get together to see to it that the New Haven survives because it is terribly important to the economy of all four States.
Senator PASTORE. I am afraid that is where we meet the impasse. I heard that the Governors met today.
Mr. IRWIN. They met last night.
Senator PASTORE. And they resolved that you need some Federal cash. Well, maybe you do. I am just pointing up the divergent points of view and naturally, of course, the Governors feel that it would be easier for the Federal Government to do it. We feel it would be easier for the States to do it, and that is the question.
Any questions of Mr. Irwin?
Thank you very much. It is a fine contribution you have made for us. You have been very helpful.
Mr. IRWIN. Thank you.
Senator PASTORE. Any other Member of Congress here to speak on these bills?
The Chair hears none.
We will stand in recess until 10 o'clock at the same place tomorrow. (Whereupon, at 3:30 p.m., the committee recessed, to reconvene at 10 a.m. the following day.)
THE CRISIS IN PASSENGER TRAIN SERVICE
WEDNESDAY, MARCH 3, 1965
U.S. SENATE, COMMITTEE ON COMMERCE, Washington, D.C.
The committee met, pursuant to recess, at 10:05 a.m., in room 5110, New Senate Office Building, Hon John O. Pastore presiding.
Senator PASTORE. Our witnesses this morning are the trustees of the New Haven Railroad and I would invite them to come to the witness chairs and bring with them any of their associates or staff members or anyone with whom they feel they might want to consult during the process of testifying.
STATEMENT OF RICHARD JOYCE SMITH, TRUSTEE; ACCOMPANIED BY WILLIAM J. KIRK, TRUSTEE; HARRY W. DORIGAN, TRUSTEE; ROBERT W. BLANCHETTE, GENERAL COUNSEL; JAMES WILLIAM MOORE, COUNSEL FOR TRUSTEES; JOSEPH AUERBACH, SPECIAL COUNSEL FOR TRUSTEES; AND HOLLIS COYLE, COMPTROLLER; THE NEW YORK, NEW HAVEN & HARTFORD RAILROAD CO.
Mr. SMITH. Senator Pastore, this is Mr. Kirk, my cotrustee; Mr. Dorigan, an operating trustee; Mr. Blanchette, general counsel; Mr. Moore, counsel for trustees; and Mr. Auerbach, special counsel for the
Senator PASTORE. We are very happy and honored to have you gentlemen, and we would look forward with great anticipation to your testimony this morning.
We have here a lengthy statement from Richard Joyce Smith, who I understand will be the spokesman for the trustees. During the conference that I had with your attorneys yesterday, they said that you would have the long statement placed in the record and that you would give us a recapitulation of it, and then we would get into a question period. Is that satisfactory?
Mr. SMITH. That is correct, sir.
Senator PASTORE. Would you prefer to read the statement? It doesn't make any difference to you?
Mr. SMITH. No, sir. I will just make a few remarks, if that is agreeable to the committee. Then I would like to have Mr. Kirk go into some detail on the financial figures and financial condition of the railroad.
Senator PASTORE. Fine. Without objection the statement will be inserted in the record in its entirety at this point.
(The statement follows:)
My name is Richard Joyce Smith. I reside at Southport, Conn. I have been a member of the Bar of the State of Connecticut since 1927 and a member of the Bar of the State of New York since 1934. From 1927 to 1933, inclusive, I was a member of the faculty of the Yale Law School conducting courses in public law, including seminars on public utility and railroad regulation.
During the academic year of 1929-30, I was a social science research council fellow engaged in research on the regulation of the supply of electric service in Great Britain and Ireland.
In 1931 and 1932, I was special counsel to the Committee on Interstate and Foreign Commerce on a study of Public Utility Holding Companies in association with its chief counsel, Walter M. W. Splawn, who thereafter became a member of the Interstate Commerce Commission.
In 1944 and 1945, I was chief counsel of the Special Committee of the U.S. Senate Investigating Petroleum Resources. I am a partner of Whitman, Ran
som & Coulson, attorneys at law, New York City. I have been a partner of that firm or predecessor firms since 1934.
During that period, I have been chiefly engaged in practice related to public utility regulation, corporate reorganizations, and other specialized corporate matters. For a period in 1953 and 1954, I was retained as special counsel to the New York, New Haven & Hartford Railroad Co. on corporate matters.
From April 1955 to November 1955 I was a member of the board of directors of the New York, New Haven & Hartford Railroad Co.
From 1957 to 1959 I was a cotrustee of Northeastern Steel Co. of Bridgeport, Conn., in reorganization under chapter X of the Bankruptcy Act.
On July 26, 1961, together with William J. Kirk and Harry W. Dorigan, I was appointed a trustee of the property of the New Haven Railroad by order of Chief Judge Robert P. Anderson of the U.S. District Court for the District of Connecticut in a proceeding instituted before that court on July 7, 1961, for a reorganization of the New Haven under section 77. of the Bankruptcy Act.
Judge Anderson is now a judge of the Court of Appeals for the Second Circuit but still sits on New Haven matters by designation.
Our appointments were ratified by the Interstate Commerce Commission by order dated July 31, 1961, and we three qualified as trustees on August 3, 1961. In accordance with the directions of the order of appointment, since August 3, 1961, we have been in charge of the operations of the New Haven Railroad and have been engaged in extensive studies upon which to formulate a plan for reorganization of the railroad.
It has seemed to the trustees that the greatest assistance which we could render to the committee would be to furnish various historical and current data on the New Haven, together with the views of the trustees as to the problems existing on the New Haven, the area in which solution to those problems may lie, and the policies which the trustees are now following.
In order to simplify the presentation of this information, I intend to cover various general matters in my testimony.
Mr. Kirk will furnish for the record pertinent financial and passenger service data and will also testify with respect to the unique approach in our service area represented by the Massachusetts Bay Transportation Authority.
Mr. Dorigan, who not only has coequal functions with Mr. Kirk and me in all general matters involving the bankrupt's properties, is the full-time resident trustee in day-to-day charge of operations. Since we did not anticipate that the committee desired testimony on operating matters, Mr. Dorigan has not prepared a formal statement. He is, however, present at this hearing and will be glad to be of such service to the committee as it may desire.
The three trustees have reviewed the statements which Mr. Kirk and I intend to make, and I am authorized to state that the opinions and policies which are set forth in those statements constitute the unanimous views of the trustees. In order to make these hearings as fruitful as possible for all persons having an interest in the New Haven, we have also brought with us to this hearing the railroad's chief passenger officer, chief accounting officer, and its vice president in charge of planning and research. If there is any detailed information which the committee desires, we would be glad to call upon these three officers to supply it or, if the committee desires, each of them is available to appear before the committee. We also have the counsel to the trustees, Professor Moore, with us and others of our legal counsel who are engaged on matters which are of considerable concern and importance to the trustees. We requested them to be