RESOLUTION BY THE BOROUGH OF BOUND BROOK, N. J.

Be it resolved by the mayor and council of the Borough of Bound Brook, That— Whereas the citizens of the Borough of Bound Brook are dependent upon the Central Railroad of New Jersey as their principal means of transportation; and Whereas the Central Railroad of New Jersey is now in bankruptcy and in pursuance of the Federal Bankruptcy Act there has been filed by certain bondholders of the said Central Railroad a plan of reorganization which includes article III providing for the possible curtailment or discontinuance of suburban passenger service; and

Whereas if said plan with article III is adopted the citizens of the Borough of Bound Brook may be deprived of passenger rail service; and

Whereas there has been introduced in the Congress of the United States H. R. 6012 which, if adopted, will nullify the possibility of adoption of said article III in that said act will amend sections 77B and 77F of the Bankruptcy Act, thereby retaining unto the States their existing authority relating to service, operations, and rates; and

Whereas it is the belief of the mayor and council of the Borough of Bound Brook that the best interests of the citizens of the Borough of Bound Brook, of the State of New Jersey, and the United States will be served by the adoption of said amendment to the Bankruptcy Act: Now, therefore, be it

Resolved, That the Congress of the United States is urged to speedily adopt H. R. 6012.

Mr. DREIER. Thank you for your kind attention. Our next witness, sir, will be the mayor of Roselle, N. J., Mr. Louis Lehmann. Mr. REED. Very well, Mayor, we will be glad to hear you.

STATEMENT BY HON. LOUIS C. LEHMANN, JR., MAYOR, ROSELLE,

N. J.

Mr. LEHMANN. Mr. Chairman and members of the committee, I have submitted a statement, and I will not attempt to read what is contained in it, or to repeat what I have in the statement on file with the committee. I do want to mention a few things concerning this proposal of the Central Railroad as it may affect the people of these communities that are along the Central Railroad, particularly my community.

This area is very largely populated by commuters. Back some 50 years ago the Central Railroad invited people and it encouraged people to come there, and it wanted to give them passenger service in that area in order that the communities might be built up. For the last 40 or 45 years there has been a gradual moving of people from New York and from the metropolitan area into these communities in New Jersey, to these small communities along the line of the Central Railroad. For years, the Central has given very excellent commuter service, and as time went on, more and more people moved into the area, with the thought in mind that they could live in a suburban area and still attend to their business affairs in the metropolitan area. However, and gradually, there has been a reduction in the number of trains and station stops for the commuters. The commuters have complained about them, but they have now taken to some extent, although with a grain of salt, the explanation that the railroad makes, and they are somewhat satisfied that they are getting the best that the railroad can give them under the circumstances.

However, any further reduction or any further curtailment of trains or of station stops will be very greatly resented by the communities, and would greatly affect these towns, which depend so greatly upon these commuters. Those people are living in these communities

and we want them to stay and live and pay their taxes, and yet if the railroad curtails their service any further, these people are going to move. They will have to move out of these communities because there is no other means of transportation. As it is now, there are some instances where you will find a load of 500 people on one train going to or coming from one area. Certainly that load cannot be taken up by having the people use their own cars, nor can it be taken up by bus service. As a matter of fact there is no bus service to New York at the times that these people are required to get to New York at the present time, not more than what will take care of more than probably 100 or 200 people.

By reason of the curtailment and the resulting chaos, the people of the communities certainly would be indignant. Many of them are indignant now and are expressing it. Many of the service clubs of which they are members, and other groups, have already shown anxiety as well as indignation over the fact that the railroad is attempting in common parlance, "to pull off a trick," as they are doing under the guise of reorganization, to get away from the control of the public utilities commission and the Interstate Commerce Commission.

I cannot understand, and I am speaking also for other mayorswe have had a number of meetings-how the Interstate Commerce Commission can allow itself to be led into this situation where they at the present time will give the railroad the opportunity for all future time to determine for themselves what they shall do as far as rates, number of trains, station stops, and other service should be. I cannot see how they can, just in order to meet a present financial condition of the railroad, for all future time discard and give up their right of control-because, after all, that was the purpose of the creation of the Interstate Commerce Commission; and, where the lines are purely within a State, the purpose for the creation of the public utilities commissions the purpose being so that there would be a general control.

As has been stated before, we have the Old Colony case. That is a case that they point to as having once been determined under this present and existing Bankruptcy Act as far as railroad reorganizations are concerned. Well, in that case they are still bickering. They know they cannot eliminate that railroad. The State may take it over. I do not know if they will. But, at any rate, it is certain they cannot eliminate that railroad entirely.

As stated before, while the New Jersey Railroad is intending to give up their rights as far as the passenger service is concerned, they are not going to abandon the line. No, they are going to continue that, because they still have a very profitable freight service.

Furthermore, the people in general do not know, for example, whether there is mismanagement on the part of the Central Railroad, nor do they know the facts as to the interlocking relationship, and not knowing the facts, they cannot know whether the Reading and the Baltimore & Ohio are or are not paying their fair share of the cost of operating the terminal; and whether they are permitting the Reading to do some of the repair work in the Reading shops at much greater cost than that work could be done at the Central shops at Elizabeth. Nor do they know whether or not the action on the part of the Reading Railroad in condemning a number of freight cars and then having the Central use their freight cars-they do not know if that is or is not the proper thing to do.

Those things are observable by the general public, and they cannot understand why a railroad that makes considerable money on its freight and has a very fine line, should allow two other railroads to come in. And they are not complaining about any loss in their operations over the Central Railroad. Why that should be done, I do not know. It may be we are looking at this thing in the wrong light. Maybe it is a plan of reorganization to protect the creditors and to devise a plan of reorganization which will cut down the losses of the railroad and give them a better opportunity to make more money. Maybe it is such a plan. But it is not a plan that will help the people. It will eliminate the people from the service of the railroad who are the so-called customers. Ordinarily, the customers are the ones that support the railroad, and the creditors are the ones that have to take somewhat of a loss. But, in this case, they want to reverse the situation and say, "We do not want any more customers, but we are still going to show a profit." I don't know how that is going to be done.

I believe that this amendment to the Bankruptcy Act is to the best interest of the public generally, and I think also that after it is passed, even the Interstate Commerce Commission will come to feel that it is to the best interest, after all, and I think they will come to realize that; because I feel they are very wrong on this, that they are somewhat short-sighted, and although I know they are very interested in maintaining uniform rates and services in interstate commerce they have still given an audience to the railroad in its efforts to avoid their control and I don't know how they could.

I do not believe they really want it. As I said before, I do not know how they were tricked into saying, in effect, "You can go ahead and adopt this plan and in future we will have nothing to say or any control." I cannot understand that.

I do want to say that this is a matter that I and all these mayors in these municipalities are very much concerned about, because, after all if there are no railroads to serve the people in those towns, then the people will have to move out. The towns were built up through the encouragement of the railroads, inducing the people to move into these these communities and after the people came in, then the industries came in, and those industries of course are there and they are the freight business. I do not see why the railroad should be permitted to disregard what they themselves have built up.

Furthermore, if this is done, then they could go further. It would be just another step they could take, and that is this. They could say, "We will now divide the Jersey Corporation into the Terminal Corporation, and the other into the rolling, main line." That would show a great loss in the terminal, if they divided it that way. So, what could they do about that? Then they could not eliminate the terminal if they showed there was a loss, because they need a terminal in order to operate the rest of the railroad.

I believe this bill ought to be passed, and I respectfully urge your consideration in order that it may be passed and so prevent chaos in these communities. That is all I have to say, unless there are questions.

Mr. REED. Are there any questions?

(No response.)

Mr. REED. Thank you, Mayor.

PREPARED STATEMENT OF LOUIS C. LEHMANN, JR., MAYOR of the Borough of ROSELLE, N. J.

My name is Louis C. Lehmann, Jr., and I am mayor of the borough of Roselle, N. J. In addition to speaking for myself as mayor of the borough of Roselle, I am speaking for the 14 mayors of the communities along the line of the Central Railroad Co. of New Jersey between Somerville, N. J., and Elizabeth, N. J.

While all of the towns that are members of the Inter-Municipal Group for Better Rail Service have a large commuting public, towns such as Westfield, Fanwood, Garwood, Cranford, Roselle Park, and Roselle, were built up because of the commuter service offered by the Central Railroad of New Jersey between the aformentioned towns and Elizabeth, Jersey City, and New York. For the past 40 or 45 years, these towns have increased considerably in population by reason of residents of New York and vicinity, as well as Jersey City and vicinity, knowing that they could enjoy the benefits of suburban residence and still be able to reach their places of employment in the large cities because of what has been, up until recently, excellent commuter service offered by the Central Railroad of New Jersey.

Any reduction in the number of trains now in operation for commuter service or any elimination of station stops would greatly inconvenience the residents of these communities that are dependent almost entirely upon the Central Railroad of New Jersey. In addition to the general service to New York, these towns must depend on special commuter service to certain large industrial plants such as the Western Electric Co. in Kearny, Singer Manufacturing Co. in Elizabeth, and Diehl Manufacturing Co. in Finderne. The use of private automobiles is not feasible even if every employee that worked in large plants could use his own car since the parking facilities would not be adequate, and, furthermore, the road congestion would be such that it would take hours to go a few miles. As far as the Western Electric plant in Kearny is concerned, there is no direct bus route and if one were to travel by bus it would take 11⁄2 hours to reach the plant. One trainload alone in the morning for the Western Electric has over 500 people on it and certainly no bus facilities could cope with even this fraction of the number that depend on the Central Railroad of New Jersey to get to the Western Electric plant.

The mayors of these communities along the line of the Central Railroad of New Jersey strenuously object to any action which would permit the railroad, in its discretion, without any control of the Interstate Commerce Commission or the State public utilities commission when certain losses are incurred, to create a situation which, to say the least, would be disastrous to these communities. It would seem that the purpose of a reorganization should not be to relieve a railroad of its obligations and the requirements of law in the future in order to assist them in settling their financial difficulties of the present.

Perhaps better management, a proper allocation of the costs of the Jersey City Terminal operations between the Reading, Baltimore & Ohio, and the Central and the absorption by the freight business of both the Pennsylvania and New Jersey corporations of some of the losses by reason of the general passenger serv ice as a whole, the picture as far as the Central Railroad of New Jersey is concerned would look much better.

Many incidents as far as repairing of equipment and as far as use of freight cars have shown that the Reading Co. receives advantages over the Central Railroad far beyond the cost to them. So in turn does the Baltimore & Ohio. The Reading, you know, owns approximately 52 to 56 percent of the Central Railroad common stock and the Baltimore & Ohio, in turn, own about 30 to 35 percent of the Reading stock. It is not unnatural for subsidiary companies in big business to make larger profits for their parent corporation at the sacrifice of bondholders and minority stockholders in the subsidiary corporations. We believe this matter should be thoroughly investigated before permitting the Central Railroad to take advantage of the Bankruptcy Act as it now stands interpreted.

We most urgently and respectfully request the passage of H. R. 6012. It will prevent extreme chaos as far as the commuting public is concerned. It will not jeopardize what has already been built up in the last 40 or 45 years in these suburban communities that are dependent on their commuter public to carry the expense of Government. We do not feel that H. R. 6012 will in any way interfere with the jurisdiction of the Interstate Commerce Commission nor State public utilities commission over railroads and in fact believe that the passage of the resolution will strengthen and give added weight to the authority of these commissions.

Mr. REED. Now, I would like to ask you remaining gentlemen who wish to testify here, since we are rather pressed for time, to give me an estimate of how long it will take you to make your statements. Mr. See is here; how long will you take?

Mr. SEE. I have a very brief statement, Mr. Chairman. I would be glad to file it with the committee and then make just a very short oral statement, in addition to my prepared statement.

Mr. REED. And how much time will you take?

Mr. SEE. Two or three minutes.

Mr. REED. Mr. Edgar E. Harrison is here. How long will you take? Mr. EDGAR HARRISON. Not more than 10 minutes, and possibly less.

Mr. REED. Mr. Joseph Harrison.

Mr. JOSEPH HARRISON. I would say about 10 minutes, and possibly less.

Mr. REED. Mr. Parker?

Mr. PARKER. I will try to hold myself down to 10 minutes.

Mr. REED. Mr. Hamley?

Mr. HAMLEY. Five to ten minutes.

Mr. REED. Mr. Homire?

Mr. HOMIRE. Five minutes is all I shall need.

Mr. REED. Thank you, gentlemen. Thank you, Mr. Lehmann, for your views. We will have our next witness now.

STATEMENT OF HARRY SEE, NATIONAL LEGISLATIVE REPRESENTATIVE, BROTHERHOOD OF RAILROAD TRAINMEN

Mr. SEE. My name is Harry See, and I am legislative representative for the Brotherhood of Railroad Trainmen. In addition to the statement I have already furnished to the clerk of the committee, I would like to state to this committee that all over the United States these railroad brotherhoods have started and they have now been working for some time in an intensive campaign in the railroads with respect to the increases in relationship to the train services and the man-hours which have increased. In that connection many of the States have adopted regulations which we think will be very beneficial to our people in providing facilities, places of work, and regarding conditions over which the Interstate Commerce Commission has no jurisdiction.

Many of the States have set up regulations now providing for proper clearance between equipment and construction; proper clearances between center lines and parallel tracks; proper overhead clearances; and many other things which are not under the jurisdiction of the Interstate Commerce Commission.

Now, without this amendment to the act, we are very fearful that as far as concerns the railroads in bankruptcy and that are going to reorganize, they could ignore the actions of these commissions because of the bankruptcy and because of the reorganization.

Because of that reason and because of the fear of our people as well as the public over this lack of authority over the railroad in reorganization that might result if the situation is not corrected, lack of authority to have the railroad provide adequate train schedules or adequate service, we urge that this committee and the Congress adopt this