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me imperative that steps be taken to guarantee the continuance of this service which the trustees have indicated they intend to abandon. I particularly endorse Senator Pell's bill in this regard because it would assure the continuance of the service on a regional, interstate basis-an approach which is absolutely necessary because all trains serving Rhode Island are essentially interstate carriers. We cannot afford to leave the solution of the New Haven to piecemeal patchwork remedy of local commuter crises.

It seems to me, too, that within that regional framework, there must be a very explicit understanding among the states as to a realistic sharing of the costs, and I applaud the Pell bill in this regard as well.

Finally, a word about long-range considerations. I am a sponsor in the House of companion legislation to Senator Pell's far-sighted proposal for development of high-speed intercity rail service all along the east coast, and I agree with him completely when he says there is no point in talking about these future developments unless we first preserve the service on the New Haven. We are all pleased that President Johnson has taken the high-speed rail concept as one of the parts of the Great Society, with New England slated as part of the demonstration area. This prospect should fortify our determination to preserve this service on a permanent, regional basis, and it is one more reason why S. 348 deserves favorable consideration. Thank you.

Senator PASTORE. Our first witness this afternoon is the illustrious and distinguished senior Senator from the great State of Massachusetts, Mr. Saltonstall.

Mr. Saltonstall, we are very privileged and honored to have you here. You may now proceed.


Senator SALTONSTALL. Mr. Chairman, I appreciate very much the courtesy and your promptness in carrying out our mutual agreement, to speak at 2 o'clock, and I can only say that I appreciate that introduction. But in Massachusetts we call ourselves the Commonwealth of Massachusetts, rather than a State.

Senator PASTORE. What is the difference?

Senator SALTONSTALL. I don't know what "Providence Plantations" are. If you will tell me that, I will answer you.

Senator PASTORE. I tell you, we started that because you fellows chucked out Roger Williams. [Laughter.]

Senator SALTONSTALL. I thought that subject was concluded with your former colleague, Mr. Green, but if you are going to carry it on, I will be ready to answer.

(Discussion off the record.)

Senator SALTONSTALL. Mr. Chairman, a crisis concerning the preservation of the New Haven's commuter service now appears imminent. The railroad already has petitioned the Interstate Commerce Commission to discontinue its operations to the New York City area. A proposal to abandon all passenger service is expected to be submitted shortly by the railroad to the ICC.

To deal with this situation, the Senate Commerce Committee is presently considering S. 325, S. 348, S. 1234, and S. 1289, which are primarily designed to provide Federal assistance to the New Haven. Massachusetts has an interest in the maintenance of the New Haven commuter operations, particularly in the highly traveled line between Providence and Boston. Other areas in Massachusetts also rely on the road's commuter service.

Unfortunately, the New Haven has been in receivership since 1961. It has incurred a net operating deficit continuously since 1958 in

amounts ranging from $4.3 million in that year to $17.7 million in 1964. If these losses persist, they will significantly curtail the road's freight operations which have potential.

The New Haven believes that the basic hope for reorganizing its bankrupt operations revolves around its inclusion in the pending Pennsylvania Railroad-New York Central merger. Of course, if such a merger should evolve, the other New England railroads hope they will not be put in an untenable situation. The New Haven petitioned the ICC in February 1963 for incorporation in the merger. However, in order to make such an inclusion more feasible, the line's trustees feel they must eliminate those parts of their operations which have accumulated the largest deficit-the commuter runs.

The pending bills have been introduced to help preclude these commuter discontinuances. The basic policy decision involved is who will pay for a service which is essential but which is unprofitable. Should it be solely a Federal or State effort or a combination of the two?

As you know, the New Haven has defaulted on more than $28 million of the $51.6 million it has received in flood and loan guarantee funds. It is, therefore, questionable whether additional Federal aid should be granted unless the States involved are willing to undertake more of the risk.

I believe that any future Federal assistance should be contingent on initiative at the State and local level. One possible proposal in this area which should be explored by the committee is the compact principle whereby States affected by the New Haven's passenger operations would be bound by a compact to make up the annual deficit of the line in proportion to the passenger miles traveled in their borders. Under any type of compact proposal, it may be more practical to have the States establish their own organizational standards rather than have the Federal Government write these terms into any legislation.

In fact, Clarence D. Martin, Jr., Under Secretary of Commerce for Transportation, said in a speech last month before the Traffic Club of Baltimore that he, too, believes commuter assistance is primarily a local and State responsibility.

An excellent example of State and local initiative in the commuter area can be found in Massachusetts where, in 1964, a comprehensive mass transportation program, including commuting by rail, was first established on a statewide basis. The State passed legislation which created the Massachusetts Bay Transportation Authority to administer the new program. Among its responsibilities, the MBTA was authorized to contract with commuter railroads and to provide shortterm assistance until December 31, 1967. The net cost of the service will be met in part by the communities involved and in part from the State cigarette tax.

Since the MBTA has been in operation, it has negotiated a contract with the Boston & Maine Railroad to subsidize its passenger service. The railroad commuter service has been expanded by the addition of 120 trains and a 69 percent increase in frequency. In addition, arrangements have either been made or are in the process of being made to bring certain other communities into the new program.

It is my understanding that the MBTA now is negotiating with the New Haven with respect to subsidizing the operation of the New Haven's five commuter lines in Massachusetts. Also, the Governors

of New York and Connecticut last week announced that they would undertake immediate exploration of the feasibility of having their respective States enter into a commuter service contract with the New York Central Railroad and the trustees of the New Haven. Such efforts at the local and State level are encouraging and I hope they will continue.

The commuter question, of course, is just one aspect of railroad operations which involve the commuter runs, long-distance passenger service, and frieight service. These are all complex problems which are interrelated and which could be dealt with separately. However, any solution for one should not be approved without consideration of its effect on the other areas involved.

Basically, I hope that if the committee does decide to report a railroad commuter bill, emphasis will be placed on State and local initiative and the sharing of the costs involved. Legislation also should take into account the unique position of the MBTA and enable this body to participate in any Federal program.

Mr. Chairman, I appreciate being given the opportunity to comment on the New Haven issue, and I hope that these views may be helpful to the committee. I thank the chairman very much for the opportunity to be heard.

Senator PASTORE. Thank you very much, Mr. Saltonstall.

The committee will be in short recess, pending the arrival of Mr. Robert Kennedy.



Senator PASTORE. Our next witness is the distinguished junior Senator from New York, Mr. Robert Kennedy. Mr. Kennedy, we are privileged and honored to have you here and we anticipate with a great deal of anxiety and pleasure your thoughts on this subject of the New Haven Railroad. You may now proceed in any way you like.

Senator KENNEDY. Thank you, Mr. Chairman. I am pleased to be here this afternoon to talk about pending legislation on commuter and other passenger problems. I might say that even though we are all here talking today, this is not really the time for more talk. Studies of the railroads in general and of the New Haven Railroad in particular are legion.

Yet the plight of these carriers continues; the deficits keep climbing. And with all the studies and all the statistics we must not forget the real reason why we are here-the commuter who relies on the railroads to get to work. What we need now, particularly for the New Haven, is action.

There are, as we all know, four bills before this committee. I have stated on a number of occasions that I prefer the bill that has been offered by Senator Pell. Commuter services must be maintained and it is clear to all of us that they cannot continue to be maintained under present circumstances.

Purely Federal aid would be neither practical nor fair. Further private financing simply is not available. At the same time, there can be no longrun solution to commuter and railroad passenger problems which does not occur within the context of a comprehensive

plan. I think that bringing together representatives of the States concerned into one agency is the ideal basis for carrying out such a comprehensive plan, which would involve a total look at service and modernization on the one hand and costs on the other. Therefore, the Pell approach seems to me to be a feasible one.

There are, undoubtedly, aspects of the Pell bill which can be improved. I know this committee, with the wisdom it gains from these hearings, will be in a position to make such changes. I think, for instance, the committee may wish to consider changing the basis of State participation in the plan, so that the States, instead of being committed to the open ended underwriting of deficits, can have more advance control over what service is to be provided, what equipment used, and what expenses incurred.

I think, too, it would be useful to consider amending the Pell bill to include a modification of Senator Javits' idea about a two-State agency. New York and Connecticut would certainly be key participants, and if the agency could go into operation as soon as those two States have ratified it, valuable time might be saved.

Crucial to any such changes, however, would be some incentive to the other States to join in later, if the agency goes into operation initially on a bistate basis. I hope no one will think me unduly parochial if I say that I do not think Connecticut and New York should end up footing the bill for services which directly or indirectly benefit other States.

The Pell bill should, in my judgment, be amended to name New Jersey specifically as a potential participant. The commuter lines which run through northern New Jersey into the New York City area the Jersey Central and the Erie-Lackawanna-eventually will have to participate in any overall plan for commuter transportation in the New York City area. Therefore, I would hope that we could change our ultimate sights right now from a four-State agency to a five-State agency.

Let me comment briefly about two other items in Senator Javits' bill which are different from the Pell bill. I am not opposed to amending the Pell bill to include the proposal for a one-third Federal participation in the underwriting of operating deficits.

I would, however, limit this Federal participation in time, since I regard it as only a pump-priming device to encourage the State to enter the picture. I would have preferred that there be no Federal participation in underwriting operating deficits, since I regard this to be basically a State and local responsibility, but I am not firmly opposed to a small fractional contribution by the Federal Government on a short-term basis.

The other feature of Senator Javits' bill which could easily be added to the Pell bill is the provision for State guarantees of bonds, along with the Federal Government. I would, of course, welcome such State participation.

My only concern is that the States and the Federal Government might each be unduly deferential to the other's generosity, so that essential funding might be delayed or even defeated. I think, therefore, that any provision for State and Federal guarantee of bonds should spell out some formula of participation, so that the plan does not break down altogether.

I think we are all aware that interstate cooperation in solving these problems does not have to await congressional authorization. The States of New York and Connecticut, for example, are already working together toward taking over the New Haven's commuter service into New York City.

Assuming that the States do not make unreasonable demands upon the bankruptcy court now overseeing the New Haven's operations, this cooperation on an expanded basis offers some hope for the embattled commuter within a relatively short time.

I think we should all be fully aware, however, that a relatively short time may not be short enough. I would hope that, in addition, the States would commit themselves to contribute whatever cash is needed to keep the trains running until a contract can be negotiated with the New Haven and New York Central management. The terrible inconvenience and chaos for thousands and thousands of commuters which would result if the New Haven service were suspended, even for 1 day, just cannot be allowed to occur.

I think, Mr. Chairman, I might add here that with a large snowstorm in the Connecticut-New York area, that might be just what might result.

I assume, from what I have said, that it is clear that I have some reservations about the bills offered by my distinguished colleagues from Connecticut. Both bills are designed to place Federal funds at the disposal of the New Haven and other commuter roads that are in financial trouble.

But the experience of the Federal Government as a creditor of the New Haven to the extent of more than $361⁄2 million suggests to me the danger of pouring more money into a rapidly increasing operating deficit without a firm guarantee that the funds will be used for modernization and improved service--in other words, for improvements that will benefit the carrier over the long pull and offer some hope of reversing the downward spiral.

Without an overall plan for economical operation, the expenditure of public funds is fruitless. As I read the bills of my colleagues from Connecticut, they are not tied to such standards and do not require such a plan.

Therefore, although their object is admirable, and although I am certainly not opposed to a carefully designed program of Federal aid to meet the mass transit demands of the future, I do have the reservations I have expressed.

There is just one other item. We must be aware at all times that we are dealing with two kinds of passenger traffic-commuter and intercity or long haul. I think, that the first line of approach for the future of the long haul operation is to require the Pennsylvania and New York Central Railroads to run it, should their merger be approved and should they take the New Haven's freight operatons into their system.

I might say in connection with that, Mr. Chairman, that while I was Attorney General, the Department of Justice opposed the merging of the New York Central and the Pennsylvania Railroad. Prior to the time I left as Attorney General, I wrote a letter to my successor and left it in the files that it was my recommendation that opposition to the Pennsylvania and New York Central merger should be withdrawn

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