The Inter-Municipal Group wholeheartedly supports H. R. 6012.

The communities comprising this association, as well as many other communities in the State of New Jersey, are dependent upon the Central Railroad of New Jersey for their rail transportation. There is no other method of transportation, particularly to the city of New York, available to the inhabitants of these municipalities that could adequately handle the passenger load. Many of the communities came into existence as the result of the Central Railroad, and their development has been closely alined and dependent upon the passenger service supplied by this railroad.

The Inter-Municipal Group intervened in the pending Central Railroad Co. of New Jersey reorganization, and hearings are now being held by the Interstate Commerce Commission. The plan of reorganization as filed by the bondholder groups include article III, a copy of which has been annexed to the report of the Legislative Committee of the Interstate Commerce Commission dated April 22, 1948, which report was addressed to the Honorable Earl C. Michener, chairman of the Committee on the Judiciary. A reading of this article will disclose that under certain circumstances, namely, if there is an out-of-pocket loss in excess of $500,000 annually for two consecutive years, the railroad company may discontinue such portion of the passenger service on its lines and make such rearrangement in said service, including the elimination of stops, the closing of passenger stations, and changes in the type and character of service as it deems necessary to reduce said loss to an amount under $500,000 annually. There has been filed by the proponents of this plan an alternative article III, the substance of which, however, remains the same as in the original article. It should be noted that according to the figures presented by the proponents of this plan, the annual out-of-pocket loss resulting from suburban passenger service is estimated to be several million dollars annually. Assuming the figures given by said proponents to be the correct figure, then if the plan were adopted all that would be necessary would be for the railroad to wait 2 years and then take such action as it deems fit in the curtailing of train service, closing of stations, or, as a matter of fact, completely discontinuing all train service. The company would be in a position of saying to the public either you agree to any increase in fares set by us or we will discontinue service. It seems inconceivable in this day and age that a public utility created for service to the public should be given such a club over the public.

The afore-mentioned report by the Legislative Committee of the Interstate Commerce Commission complains that in two respects H. R. 6012 would impose limitations on the Commission's powers. Taking these complaints in the inverse order, it was never intended nor is it conceded, that the bill as drawn would affect the Commission's rights to order a merger of railroads in the manner set forth in the Commission's report. However, so that there be no question on this score, we respectfully suggest that the bill as drawn be amended and for that purpose offer an amendment, a copy of which is annexed to this statement and a copy of which I would now like to offer. If the amendment now offered is read with the bill as proposed and both adopted, there will be no possible question of restricting any of the powers of the Interstate Commerce Commission under the Interstate Commerce Act.

It is contended that the report referred to clearly shows the necessity for the enactment of H. R. 6012. While on page 3 of the report the second paragraph states "there are two outstanding examples of the first-mentioned situation,' the fact is that the only example is that of the New York, New Haven & Hartford Railroad Co. reorganization and insofar as article III is concerned, referred to as the "Old Colony" case. The second example cited is that of the Central Railroad Co. of New Jersey reorganization on which hearings are still being held and which has not been determined. On page 5 of the report, the Commission states in substance that the inclusion in a plan of reorganization of the provisions such as incorporated in article III of the Central plan is "an extension of the Commission's powers beyond the accepted interpretation of its powers under the Interstate Commerce Act."

The proponents of this bill do not believe that Congress ever intended that section 77 of the Bankruptcy Act should be so interpreted as to permit a railroad in reorganization to avoid its responsibility to the public as a public carrier of passengers. To permit this is to open the door to a railroad to perpetrate upon the public acts which should not be countenanced. To give a specific example, we only have to look at the Central Railroad. The Central Railroad of New Jersey consisted of property and rights-of-way located in the States of New Jersey

and Pennsylvania. Recently the Central Railroad formed a corporation known as the Central Railroad of Pennsylvania and the assets of the original company lying in Pennsylvania together with a portion of the rolling stock was transferred to the Pennsylvania company. The railroad now operates as two companies, the Central of New Jersey and the Central of Pennsylvania. As a result of the division of assets between the two companies, the most expensive operation, namely, terminal costs, remain with the New Jersey company. The most recent figures available on these two companies show that for the month of March 1948 the New Jersey company had a net deficit of $63,354 on a gross of $3,799,405 while the Pennsylvania company had a net income of $488,675 on a gross of $1,835,907. If article III were permitted to become operative, profits made by the Pennsylvania company as well as profits made by the New Jersey company on its freight or other business could not be taken into consideration in determining the out-of-pocket loss attributable to passenger service. It is believed that when so serious a question affecting the public welfare as the discontinuance of passenger service which discontinuance would without doubt result in disrupting the economic welfare of the communities affected, that the operations and profits and loss of the system, as a whole, should be considered.

In passing, it is to be noted that over the tracks of this particular railroad, the Central of New Jersey, run the trains of the Reading Railroad and the Baltimore & Ohio Railroad, each of which have available to them the terminal facilities of the Central Railroad. The Reading Railroad gives very little passenger service between New York and the communities I represent, while the Baltimore & Ohio Railroad gives no service whatsoever to these communities to or from New York City. It is also interesting to note that the majority stockholder of the Central Railroad is the Reading Railroad Co. and the largest single stockholder of the Reading Railroad Co. is the Baltimore & Ohio Railroad. It has been stated at the Interstate Commerce Commission hearings that the approval of article III and curtailment or discontinuance of train service by the Central would have no effect on the Reading or Baltimore & Ohio. These two railroads would continue to operate in their accustomed manner.

The report of the Commission refers to the Old Colony case where the right to discontinue service was approved. As a result of this action it was recently announced by the New York, New Haven & Hartford Railroad that on October 1 all passenger service would be abandoned on the Old Colony division. Affected thereby are some 750,000 persons in 75 communities. The resultant chaos to the area is apparent. We do not want this to happen to us. It is to prevent a recurrence of such a condition in the State of New Jersey and in any other State in which a similar proposition is promoted that the passage of H. R. 6012 is urged. If the reorganization of the Central Railroad is consummated with article III incorporated therein an incentive will be dangled before the other railroads in the United States to go into bankruptcy with the hope of reorganizing under the Bankruptcy Act and being permitted to do away with any particular service that was not profitable and retaining other services on which a substantial profit was made. This procedure is not in accordance with the American way.

The adoption of H. R. 6012 does not take away from the railroad any of the rights which it now has. If for a legitimate reason a particular service or certain trains should be discontinued or fares increased, the avenue is open by applying to either the utility commission within the State or the Interstate Commerce Commission, or both. If the petition is justified there is no question but that the State utility commission and the Interstate Commerce Commission will accede thereto and grant the request. However, unless it is required that the necessity of the request be proven, then there is given unto the railroad absolute power to do as it sees fit, when it sees fit, and to whom it sees fit.

The enactment of H. R. 6012 will be a vote of confidence in the utility commissions of the various States as well as in the Interstate Commerce Commission, for the enactment retains unto these bodies the authority existing insofar as services, operations, and rates are concerned. The rejection of H. R. 6012 would in effect say that there is not sufficient confidence in the ability of the utility commissions of the various States and the Interstate Commerce Commission properly and adequately to meet the issues with reference to services, operations, and rates of railroads as and when an issue or problem arises. It is contended that if this bill is not adopted and the Interstate Commerce Commission is permitted to give the railroads complete control of services, operations, and rates without check or review by any authority, then the entire theory which caused the establishment of utility commissions and the Interstate Commerce Commission is contradicted. It is likewise inconceivable that the Interstate Commerce Commission or the utility commissions should be divested for all time in the

future of all of their power over a railroad by the inclusion of an article such as article III in the Central Railroad plan.

The Legislature of the State of New Jersey has adopted a resolution urging the Congress to pass legislation of a type set forth in H. R. 6012. The various municipalities comprising the Inter-Muncipal Group have likewise passed resolutions urging the adoption of this bill. I have annexed to this statement copies of the various resolutions and at this time would like to offer copies thereof for the record.

H. R. 6012 is a good bill in the best interests of the public and its enactment is respectfully urged."

PROPOSED AMENDMENTS TO H. R. 6012

Amend section 1 by eliminating the quotation mark at the end thereof and adding the following:

"This proviso shall not be construed as restricting any of the powers of the Interstate Commerce Commission under the Interstate Commerce Act."

Amend section 2 to read as follows:

"SEC. 2. That section 77 (f) of said act is hereby amended by adding at the end of the second sentence thereof the following: 'Provided however, That such plan of reorganization shall not affect the existing authority of any State or State regulatory agency relating to service, operations, or rates. This proviso shall not be construed as restricting any of the powers of the Interstate Commerce Commission under the Interstate Commerce Act'."

JOINT RESOLUTION OF THE SENATE AND GENERAL ASSEMBLY OF THE STATE OF NEW JERSEY

A joint resolution memorializing the Congress of the United States to adopt legislation which will retain unto the States control over service, operations, and rates of any railroad which has been reorganized under the Bankruptcy Act: Whereas the Central Railroad Co. of New Jersey is in bankruptcy; and Whereas certain bondholder groups of said railroad have filed a plan of reorganization included in which is article III which provides that the charter of the New Jersey company shall be amended or deemed to be amended and its franchises and statutory obligations shall be amended or superseded so that under certain conditions the said railroad would be under no obligation to operate suburban passenger service; and

Whereas the curtailment or discontinuance of suburban passenger service on said railroad would work a severe handicap upon the municipalities thereby affected and such curtailment or discontinuance would be adverse to the public interest and would further be a breach of the intended obligations of said railroad when it received its charter from the State of New Jersey; therefore be it Resolved by the Senate and General Assembly of the State of New Jersey:

1. The Congress of the United States is urged to adopt legislation amending the Bankruptcy Act to the extent that upon the approval of a plan of reorganization of any railroad under said Bankruptcy Act such approval shall not affect the existing authority of any State or State regulatory agency relating to service, operations, or rates.

2. The secretary of state is directed to transmit, immediately following the passage of this resolution, a copy thereof properly authenticated to the Secretary of the Senate of the United States, the Clerk of the House of Representatives, and to each Member of the Senate and House of Representatives from the State of New Jersey.

3. This joint resolution shall take effect immediately.

RESOLUTION BY THE CITY OF PLAINFIELD, N. J.

Be it resolved by the common council of the city of Plainfield that: Whereas the citizens of the city of Plainfield 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 bondholder groups of said railroad a plan of reorganizing, article 3 of which provides for the possible curtailment or discontinuance of suburban passenger service; and

Whereas if said plan with article 3 is adopted, the citizens of Plainfield 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, would nullify the legal effect of said article 3 by amending sections 77B and 77F of the Bankruptcy Act, to the end that the States shall retain their existing authority relating to service, operation, and rates; and

Whereas it is the belief of the common council of the city of Plainfield that the best interest of the citizens of Plainfield, of the State of New Jersey, and the United States, will be served by the adoption of the said amendment to the Bankruptcy Act; Now, therefore, be it

Resolved, That the Congress of the United States is urged speedily to adopt H. R. 6012 and that a copy of this resolution be forwarded to Congressman Case.

RESOLUTION BY THE BOROUGH OF ROSELLE, N. J.

Resolved, That the mayor and council of the Borough of Roselle do memorialize the Eightieth Congress of the United States and request that they enact into law H. R. 6012, a bill presented by Mr. Case of New Jersey to amend section 77 of the Bankruptcy Act, and that in so doing there shall be reserved to the States their separately existing authorities relating to service, operations, and rates; and be it further

Resolved, That a copy hereof be forwarded to the Speaker of the House of Representatives, the President of the Senate, and to Congressman Case.

RESOLUTION BY THE BOROUGH OF ROSELLE PARK, N. J.

Whereas Congressman Clifford Case has introduced a bill in the House of Representatives known as H. R. 6012 to amend section 77 of the Bankruptcy Act; and

Whereas the purpose of said amendment is to retain unto the States their existing authority relating to service, operations, and rates: Now, therefore, be it Resolved, That the mayor and council of the Borough of Roselle Park, N. J., earnestly urge the passage of H. R. 6012 or any similar legislation which will preserve existing State authority; and be it further

Resolved, That a certified copy of this resolution be forwarded to Congressman Case and to our United States Senators.

RESOLUTION BY THE TOWNSHIP OF CRANFord, N. J.

Resolved, That the township committee of the township of Cranford, the governing body of a municipality in Union County, N. J., hereby records itself in favor of the adoption of H. R. 6012, or similar legislation, retaining the existing authority of State regulatory agencies relating to service, operations, and rates of carriers unimpaired by any provisions of the Bankruptcy Act.

RESOLUTION BY THE BOROUGH OF GARFIELD, N. J.

Whereas Congressman Clifford P. Case has introduced a bill in Congress known as H. R. 6012 amending the National Bankruptcy Act, which bill contains needed revisions to the present law so as to give added protection to the various States in retaining their existing authority relating to service, operations, and rates applying to railroads: therefore be it

Resolved by the mayor and council of the Borough of Garwood, That Congressman Case be commended for his efforts in this connection and that he be urged to continue the support of this legislation to the end that it shall become law.

RESOLUTION BY THE BOROUGH OF FANWOOD, N. J.

Whereas the present Bankruptcy Act makes it possible to override the existing Federal and State authorities relating to service, operation, and rates, leaving the citizens entirely without recourse:

Now, therefore, we, the mayor and council of the Borough of Fanwood, N. J., respectfully request our Senators and Representatives to bend every effort to accomplish the passage of a bill to amend section 77 of the Bankruptcy Act, introduced by Hon. Clifford P. Case of New Jersey and known as H. R. 6012.

RESOLUTION BY THE BOROUGH of North PLAINFIELD, N. J.

Be it resolved by the mayor and council of the Borough of North Plainfield, ThatWhereas the citizens of the Borough of North Plainfield 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 North Plainfield 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 77 (b) and 77 (f) 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 North Plainfield that the best interests of the citizens of the Borough of North Plainfield, 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.

RESOLUTION BY THE BOROUGH OF WATCHUNG, N. J.

Be it resolved by the mayor and council of the Borough of Watchung, ThatWhereas there has been introduced in the House of Representatives bill No. 6012, to amend section 77 (b) and 77 (f) of the Bankruptcy Act; and

Whereas such amendment, in connection with the pending proceedings relative to the services of the Central Railroad of New Jersey would be an effective measure and in the interest of the citizens of the Borough of Watchung: Now, therefore, be it

Resolved, That the House of Representatives be urged to act with dispatch upon said amendment and to pass the same; be it further

Resolved, That the desires of the mayor and council of the Borough of Watchung be conveyed to the Members of the House of Representatives and the Senate and the respective committees thereof.

RESOLUTION BT THE BOROUGH OF DUNELLEN, N. J.

Whereas there has been introduced in the House of Representatives at Washington, D. C., by Congressman Clifford P. Case, a certain bill known as H. R. 6012, which seeks to amend sections 77 (b) and 77 (f) of the Bankruptcy Act in such a manner that, if adopted, the several States will retain their existing authority relating to service, operations, and rates; and

Whereas it is the opinion of the mayor and Council of the Borough of Dunellen, N. J., that this amendment should be enacted into law: Now, therefore, be it Resolved, That the mayor and council of the Borough of Dunellen, N. J., do hereby strongly urge the immediate adoption of this bill H. R. 6012; and be it further

Resolved, That copies of this resolution be forwarded to our Representatives at Washington for that purpose.