FAILING RAILROADS S. 4011, S. 4014, and S. 4016 TO PROVIDE FOR LOAN GUARANTEES TO ASSIST RAIL- CONTENTS Wirtz, Willard; accompanied by George P. Baker, Richard C. Bond, Jervis Langdon, Jr., trustees; William H. Moore, president and chief executive officer of the railroad; John Guest, financial consultant and general partner in Kuhn, Loeb & Co.; S. H. Hillenbrand, vice president- real estate and taxes and president, the Pennsylvania Co.; Robert Page Volpe, Hon. John A., Secretary, Department of Transportation; accom- panied by Hon. James M. Beggs, Under Secretary; J. Thomas Tidd, Esq., deputy counsel; and Carl V. Lyon, Acting Administrator, Federal ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS Burns, Hon. Arthur F., Chairman, Board of Governors, Federal Reserve Lennartson, Nils A., president, Railway Progress Institute, statement.. O'Herron, Jonathan, Penn Central Co., letter of December 22, 1970__. Prouty, Hon. Winston, U.S. Senator from New Hampshire, statement Roche, Charles D., executive vice president, Freight Forwarders Institute, Tate, James H., Mayor, city of Philadelphia, Pa., statement_ Volpe, Hon. John A., Secretary, Department of Transportation, letters of: 767 768 751 FAILING RAILROADS MONDAY, NOVEMBER 23, 1970 U.S. SENATE, COMMITTEE ON COMMERCE, Washington, D.C. The committee met, pursuant to notice, at 10:15 a.m. in room 5110, New Senate Office Building, Senator Vance Hartke presiding. Present: Senators Hartke, Cotton, Prouty, Pearson, and Baker. OPENING STATEMENT BY SENATOR HARTKE Senator HARTKE. Good morning, gentlemen. Although I expect that your presence this morning here means bad news, I am interested to learn what we can about what has happened to the Penn Central in the past few months. Good information and facts have been in rather short supply since this matter began. The administration could not tell us much when it rushed up here with a very broad measure. It would have made $75 million in guarantees available without much restriction, without limitation, without any understanding whatsoever of the potential clients or people who would qualify for such a loan. Although this bill was entitled "The Emergency Transportation Assistance Act," I think a better title would have been "Bank Bailout Bill." Despite Secretary Volpe's assurance that our choice was between the administration's bill or nationalization, and that immediate action was urgent, the Penn Central is still running. We have had some time to study the situation. Things are not as they were represented to be. It was not enough for the old Penn Central management to run a railroad, to get into real estate developments, golf clubs, beauty parlors, amusement parks, pipelines, and even the air carrier business. They said the new nonrailroad acquisitions provided the money to keep the railroads running. But the pipeline sprung leaks; the real estate development company has run out of money; and the airplane venture has resulted in violations of Federal law, the second highest penalty in CAB history and millions of dollars down the drain. The Interstate Commerce Commission has been working for 4 months to try to figure out what happened. Last Thursday, the Commission sent up a letter to the chairman of this committee showing that the subsidiaries had not brought in cash to keep the rail Staff members assigned to these hearings: A. Daniel O'Neal and John Cary. |