This is one of the most heavily populated areas in America. In New Haven we have 500 people who use the railroad every day going to work from New Haven to New York.

We feel that the railroad can't be permitted to expire, because the cost is too great.

I have a formal statement, Mr. Chairman, that, with your permission, I will enter into the record.

Senator PASTORE. Certainly.

(The statement of Mayor Richard C. Lee follows:)

STATEMENT OF MAYOR RICHARD C. LEE

Mr. Chairman, ladies and gentlemen, my name is Richard C. Lee. I am mayor of the city of New Haven. It is a pleasure and an honor to testify before you concerning the future of the New Haven Railroad. I commend the members of this committee for their interest in the railroad and for scheduling this hearing in Connecticut to get ideas and information on how the problems of the New Haven can be handled most effectively.

We in New Haven and in Connecticut have, of course, a special interest in the future of the railroad. To a very great extent, its future is our future.

If it survives and prospers, we will do the same.

This intimate relationship between the destiny of the railroad and the destiny of Connecticut can be shown in many areas:

In employment.-The New Haven has a total payroll of approximately 10,000 employees. Of this number, some 4,500 live in the New Haven area. The loss of these 4,500 jobs would increase our regional unemployment rate by 60 percent. It would place an enormous load on public welfare agencies and the corresponding loss of purchasing power would depress the economy of the entire metropolitan area.

Since the depression of 1958, New Haven has made steady progress in the employment field. We have created jobs through redevelopment, and provided extraordinary placement, counseling, and on-the-job-training services to better gear the work force to the job market.

If the New Haven Railroad collapses, the fruits of 7 years of hard work will be lost. I am not an alarmist-in fact, I am an incurable optimist. But I also face facts, and the fact is that economic conditions in the New Haven region will be at their lowest point since the thirties if the New Haven ceases operations.

In business and industry.-In previous testimony before your committee, it has been estimated that a large share of Connecticut's industry would be forced to leave the State if the New Haven goes out of business. It is no exaggeration to say that New England will become another Appalachia if this happens. The costs-economic, governmental, and human-would be almost beyond

comprehension.

Passenger and commuter service.-New England is smaller in area and more densely populated than any other region in America. This means that our regional economy is closely tied to the business of moving people relatively short distances, rather than moving freight long distances. In other words, passenger service is at least as important as freight service to our well-being. Nearly 500 persons commute each day by train between New Haven and New York, according to the latest figures of the Connecticut State Labor Department. And this is in addition to the hundreds of New Haven residents who use the regular, long-haul passenger service on the railroad, which is part of the most heavily traveled rail passenger route in the United States.

It is clear, therefore, that the New Haven cannot, under any circumstances, be permitted to expire. The costs are too great. Your question, my question, everyone's question is-What do we do about it?

I would make two points to your committee today:

First, it is time we recognize that except for the railroads, every form of transportation in the United States receives massive Government subsidies. Air transport, highways, shipping and even helicopters are subsidized. This is as it should be. Our complex transportation network is essential to our national life.

So why not also subsidize railroads? There can be no reason for refusing

to give the New Haven, and other roads with similar troubles, the assistance they need to survive.

Let me be very blunt. New York and New England-the States served by the New Haven-provide approximately 25 percent of the Federal Government's income tax revenue. But we never receive anything close to that percentage of Federal grants and payments.

Where transportation is concerned, we have seen large Federal subsidies paid for airline service and interstate highways, largely to overcome the problems of long-distance travel found elsewhere in the country. I certainly have no objection to this method of financing national programs.

But, now we need to get some of this money back to overcome the economic problems of short-distance railroad runs. And we need this help now, without delay.

The 10,000 railroad employees thrown out of jobs (to say nothing of secondary unemployment) could cost the Nation as much as $750,000 per week-$39 million per year-in unemployment payments and lost Federal taxes. In addition, there would be enormous tax losses on the goods and services these people would otherwise purchase. I ask a question, and I recognize it is a rhetorical question: Do we not have an obligation not only to save the jobs of all of these employees, but, as well, to protect the buying power which they represent, to guarantee as much as possible against loss in taxes, State or Federal, and to prevent costly dislocation and disruption of our business and industry? Does not a subsidy for the railroad make sense in strictly economic terms, beyond the fact that all other forms of transportation are subsidized?

Gentlemen, to the 10,000 employees of the New Haven, to those who rely on the railroad for service and for their livelihood, to the entire State of Connecticut, and to the whole New England region, the answer is obvious.

Second, the assistance must be provided from several sources: Federal, which I assume is your primary interest today; State, which our great Gov. John Dempsey has endorsed, and has pledged to you; and local, which is my principal reason for appearing before you today. As mayor of the city where the New Haven Railroad has its headquarters, I have a special interest in its problems, and I would like to devote the remainder of my testimony to the local role in their solution.

The railroad's problems are many sided-it must modernize its equipment, improve its scheduling, and tighten its management and operations. Cities can do nothing about these matters.

But we can help with the housekeeping problems, the layout, and physical plant problems and, to some extent, the financial problems. For years railroad stations have become more and more the centers of blight and decay, more and more ugly, antiquated, late 19th-century or early 20th-century mausoleums, not only dirty, but grossly inefficient. Downtown rail yards-with their air pollution and poor utilization of valuable city land-have become an anachronism. Therefore, I make the following proposal for aid to the railroad from the city of New Haven:

1. Our Church Street redevelopment project can be extended across Union Avenue to include some 15 acres of railroad property. This area now contains the railroad parking areas, the railroad station proper, certain track area, and a freight and express terminal.

2. The city would acquire, through the redevelopment agency the entire 15 acres, including the railroad station building. This would provide a substantial amount of working capital to the railroad.

3. The city, working with the railroad, private capital, and redevelopment participation, would reorganize the area as follows:

(a) Demolish the present railroad station building, which is ugly and inefficient, and no asset to the city or the railroad.

(b) Through private capital-and the city would actively negotiate to find a private developer-there could be built a new, modern, efficient building. The building would be located about 100 yards south of the present station. It would contain space for railroad ticket, traffic, and dispatching functions (on a lease basis), and related facilities to serve travelers-a restaurant, a bus terminal, and similar uses.

This would be a convenient, attractive, economical building. It would be on the city's tax rolls and at the same time reduce the railroad's operating expenses. (c) Using our revenue bond powers, which might be underwritten by the private developer, the city would build ramp parking for a minimum of 600 cars. The parking would serve not only commuters, but also people who work in the

railroad buildings and passengers using the railroad for longer trips to Boston. Providence, Washington, D.C., and other points. Tied in with the parkingperhaps on the ground floor of the building-would be the freight operations connected with the station.

(d) Convenient access to the station and the parking would be provided via ramps from the Church Street extension and from Union Avenue. A sheltered platform for loading and unloading would be located directly off the ramps. This, in outline form, is a proposal that can have great benefits for the railroad and the city.

Finally, gentlemen, I want to tell you that the city was prepared to take this action 5 years ago. I made essentially the same proposal at that time to Mr. George Alpert, then president of the railroad, and to his real estate department. Shortly after that, however, the railroad went bankrupt, Mr. Alpert stepped down as president, and no action was taken.

I offered the same kind of assistance-in more general terms-to Judge Anderson in October 1961, shortly after the railroad reorganization.

The idea was not made public since at that time the offer was made as a proposal to be the basis for discussion and negotiation between the city and the railroad. The proposal was not followed through by the railroad; hence, I dropped it. The idea, however, makes economic sense, esthetic sense; and it is a symbol of our city's willingness to participate in and to help in any way possible in rebuilding the railroad.

We are rebuilding our city, as you probably saw when you came in. Nearly $175 million in new construction has been completed or is underway through redevelopment, and nearly $50 million is on the drawing boards. We are prepared to do our share for the New Haven Railroad as part of this massive reconstruction of the city.

I am filing for the committee's use copies of my statement. I thank you, Mr. Chairman, for the opportunity to appear before you.

Mayor LEE. I will get to the heart of my testimony, which is that these 10,000 employees would cost the Nation as much as $750,000 a week, or $39 million a year, in unemployment dollars and losses of Federal taxes.

In addition, there would be an enormous tax loss on goods and services these people would otherwise purchase.

I feel we have an obligation not only to safeguard the jobs of these employees but to protect the buying power which they represent, to guarantee as much as possible against loss in taxes, State or Federal, and to prevent costly dislocation and disruption of business and industry.

I feel a subsidy of the railroad makes sense, in strictly economic terms, beyond the fact, of course, that all other forms of transportation are subsidized and, in my opinion, are going to continue to be subsidized in one form or another.

The State is doing all it can. I commend our outstanding Governor, Governor Dempsey.

I know that your primary interest is keeping—although you have a basic interest of continuing the railroad in operation, my basic reason in appearing today is primarily local.

I have a substantial interest in the problems of the New Haven Railroad, and I want to devote my testimony to the local railroad and the solution of the problems.

We can do nothing as a city about the problems of modernization of equipment, improvement in scheduling, and effectiveness of management operation.

We can help, as a city, with housekeeping problems, with the layout, with the physical plant problems, and, to some extent, the financial problems.

For years railroad stations have become more and more centers of

blight and decay, more and more antiquated, like 19th or 20th-century mausoleums, and not only dirty and unattractive, but grossly inefficient.

Downtown rail yards, with their air pollution, and poor utilization of available city land, have become an anachronism.

Therefore, I make the following proposal to the railroad from the city of New Haven.

Our Church Street land development program can be extended across Union Avenue to include some 15 acres of railroad property. This area now contains the railroad parking areas, railroad station proper, certain track areas, and freight and express terminal.

The city would acquire, through the redevelopment agency, the entire 15 acres, including the railroad station.

This would provide a substantial amount of working capital for the railroad.

The city, working for the railroad, providing capital and redevelopment participation, would reorganize the area as follows:

Demolish the present railroad station building, which is ugly and inefficient, and no asset to the city of New Haven, to say nothing of the railroad.

Through private capital, the city would actively negotiate to find a private developer. There could be built a new, modern, efficient building, that would be located about 100 yards south of the present station.

It would contain space for railroad ticket, traffic and dispatching functions, on a lease basis, and related facilities to serve travelers, a restaurant, a bus terminal, and similar uses.

In other words, it could be a nucleus for a new transportation center. It would be a convenient, attractive and economical building. It would be on the city's taxrolls and, at the same time, reduce the railroad's operating expenses.

Using our city's revenue bond powers, and we may end up underwriting it by a private developer, which has already been done in New Haven, the city would erect a ramp parking facility to accommodate

600 cars.

The parking facility would serve not only the commuters, but, also, people who work on the railroad, passengers using the railroad for long trips to Boston, Providence, Washington, D.C., and other points. And tied in with the parking, perhaps on the ground floor of the building there would be a freight operation connected with the station, and convenient access to the station and the parking would be provided via ramps from the Church Street extension and from Union Avenue. A shelter platform would be located directly off the ramps.

I think, gentlemen, that this is a proposal which has great merit both for the railroad and for the city.

The city of New Haven was prepared to take this step 5 years ago. I made essentially the same proposal at that time to Mr. George Alpert, then President of the New Haven Railroad.

Shortly after that, the railroad went bankrupt, and Mr. Alpert stepped down as President, and no action was taken.

And that same kind of assistance, in general terms, was offered to Judge Anderson in October of 1961, shortly after the railroad's reorganization.

The idea was not made public, since at that time the offer was made as a proposal to be a subject of discussion and negotiation between the city. and the railroad.

It was not followed through by the railroad, and I dropped it.

The idea still makes economic sense, financial sense, and esthetic

sense.

This is a sample of our city's willingness to participate in and attempt to make possible any relief to the New Haven Railroad.

We are rebuilding our city, as you probably saw when you came in. Nearly $175 million in new construction has been completed or is underway, and nearly $50 million more is on the drawing boards.

We are prepared to do our share for the New Haven Railroad as part of this amazing reconstruction of the city. We need the New Haven Railroad, and we need it desperately.

Senator PASTORE. Thank you. If I understand you, Mayor, the city would buy the existing property and pay the New Haven for it, and then build these facilities through a public bond issue and lease

it back?

Mayor LEE. Yes. Sir, we would extend our redevelopment project, which is right there now, across the street, to include the 15 acres.

We would acquire, through our development program, the present railroad building, and related freight yard lines which are on Union Avenue.

Senator PASTORE. For which the railroad would be paid?

Mayor LEE. That is correct. We would then acquire land and relocate the building by a private developer, to build a new structure which would house the railroad ticket facilities, a waiting station, and such other functions as a bus terminal, perhaps, and a restaurant. Senator PASTORE. And the railroad would pay for its use?

Mayor LEE. The railroad would lease the ground floor, hopefully, for ticket facilities and a waiting station.

Senator PASTORE. Let me say this to you, Mayor, that this proposal made our coming here worthwhile.

Mayor LEE. Thank you very much, sir.

Senator RIBICOFF. I want to comment about Mayor Lee, that this is in line with everything he has always suggested, which is very constructive, very practical, and very valuable.

I would hope that the trustees would immediately open negotiations with you, Mayor Lee, because it makes sense, and it makes commonsense, and I don't think they ought to wait for all these other proceedings.

You have now publicly explained your city's position. It is a good one, and I hope the trustees would have sense to start talking to you

at once.

Mayor LEE. Thank you very much, Senator.

Senator PASTORE. Thank you very much, Mayor. It was a pleasure to have you.

Mayor LEE. Thank you.

Senator PASTORE. We will hear now from Mr. Michaelian.

Mr. MICHAELIAN. Mr. Chairman, Senator Ribicoff, Congressmen, my name is Edward G. Michaelian. I am elected county executive of Westchester County, vice chairman of the Metropolitan Regional Council, chairman of the Metropolitan Area Coordinating Committee for the Price-Day Transportation Committee.