Mr. BARRETT. Mr. Stephens?

Mr. STEPHENS. Thank you for giving us a clear statement. I was interested in your comments, and I would like to know further about the idea of people being willing to leave their automobiles at home if you provide adequate transportation into the city. I thought that was one of the reasons why we did not have adequate transportation, because so many people were not using mass transportation systems that we have. Do you think that is not really one of the problems? The problem is that they cannot get the accommodations?

Mr. GILHOOLEY. I speak only for the area that I know something about, and that is New York City.

Mr. STEPHENS. I understood that.

Mr. GILHOOLEY. I do believe, sir, if we had the kind of mass transit facilities that I can idealize sitting here, in my mind, a fast, comfortable, air-conditioned mass transit carrier, that we could then persuade people who are, morning after morning, sitting on the Long Island Expressway which is called in New York City the longest parking lot in the world-cars for miles sitting there. We would be able to go to those people and say, "Look, what does it profit you to sit here every morning and every night in the summertime with your engine overheating? Why don't you take this modern mass transit system that we have built for you and provided the buses to get you there at a reasonable cost, air conditioned in the summertime?" I think if we could go to them with a modern system we could persuade them to come back to us. They are leaving us now, because the facilities are intolerable. They are not adequate.

Mr. STEPHENS. Thank you. I wanted to develop that a little further. I had the impression that we did not have the system because we could not have those things.

Mr. GILHOOLEY. I think they will come back to us, because I think we cannot build roads fast enough to give even the automobiles, and I mean the private automobile, the full ambience and scope it could have if there were modern transit systems, too.

Mr. STEPHENS. What you have said makes me feel better about voting for the mass transit bill to begin with, because if what you say is right, 20 years from now we will be able to retool and to reequip the capital investment out of the fares.

Mr. GILHOOLEY. Yes, sir. I may say, that as far as I am concerned, as an observer of the Federal scene, I think the passing of the mass transit bill is one of the most exciting things that has happened in terms of the future of the cities of this Nation.

Mr. BARRETT. Mrs. Dwyer?

Mrs. DWYER. Thank you, Mr. Chairman.

Mr. Gilhooley, I want to thank you for your very constructive and unique statement, particularly as it concerns financing.

My first question to you is: Mass transit is somewhat apart from other housing problems, as you know. It may be even more important a part if we get a Department of Transportation. Would you favor passing, as was done in 1964, a separate mass transit bill?

Mr. GILHOOLEY. I must say to you, Mrs. Dwyer, I don't understand the implication of the question.

Mrs. DWYER. A separate bill from that included in our housing bill this year?

Mr. GILHOOLEY. Yes, I have a feeling that mass transit, if I understand the question, I have the feeling that mass transit is so tremendously important to the future of the great urban areas and smaller urban areas, of the Nation, that it ought to be able to stand on its own feet.

Mrs. DWYER. Thank

you very much.

Because you are familiar with transit problems, I would like to ask you a few more questions. Can commuter mass transportation in major metropolitan areas, New York, New Jersey, and Connecticut, survive much longer without direct public operating subsidies or public ownership?

Mr. GILHOOLEY. I don't like to give a categorical answer to that, because I must say I don't know. I will tell you what I think.

I think that as we have seen in the case of Long Island Railroad, in the taking over by Governor Rockefeller in the State of New York, that in that case it was the only answer, no question about it. Whether that is true of other railroads or not, I don't know. I just don't know that much about it.

As far as operating subsidies are concerned, let me be candid about it. Unless they are carefully controlled, unless there are criteria given for specific purposes, I think I would have to tell you I oppose them. I would oppose open-end subsidies, for example, to the New York City mass transit system. I would oppose it as vigorously as I could. I will tell you why.

Mass transit, such as we have, ought to be run by able, independent, full-time people who run it as a business. After all, our annual budget, it may surprise you to learn, with capital included, is some $500 million a year. This is one of the largest businesses in the country and it ought to be run efficiently. We know from experience that it will not be run efficiently if we can run to the city fathers and say, "Here is our deficit for this year, please pick up the tab." Now, we had this experience during the years 1940 to 1953 when Governor Dewey got fed up. This was constantly being brought up and they were constantly running to the State to bail them out and he said, "Let's take it out of this kind of an operation, let's take away the open-end subsidy and operate out of the fare box." As a result of that, within the next 5 years, we in the transit authority, through good management, were able to knock out 8,000 jobs at an annual saving of $60 million a year, which helped to preserve the 15-cent fare for 13 years.

If you have an open-end subsidy you don't have the psychological whip as an administrator over yourself and your people to do an efficient, businesslike job. So unless there is some basis for it, some controlled program, or some criteria which would keep it from getting out of hand, let me state that I am simply opposed to open-end subsidy, absolutely opposed.

Mr. BARRETT. Thank you, Mr. Gilhooley. Thank you for your very fine statement this morning. We appreciate your coming. You have been very helpful.

Mr. GILHOOLEY. Thank you, Mr. Chairman.

Mr. BARRETT. Our next witness is Mr. John D. Morris, assistant vice president, Pennsylvania Railroad.

Please come forward and be seated at the witness table. We are very glad to have you here this morning. We want you to feel at home.

If you desire, Mr. Morris, to complete your statement in full, we may then ask you some questions after you terminate your statement. You may start.

STATEMENT OF JOHN D. MORRIS, ASSISTANT VICE PRESIDENT, SPECIAL SERVICES, PENNSYLVANIA RAILROAD CO.

Mr. MORRIS. I do feel very much at home since we are from Philadephia, and I also maintain a residence in New Jersey.

Mr. Chairman and members of the subcommittee, I appreciate this opportunity to appear before your committee to express our views on H.R. 12946. We believe this legislation will go a long way in carrying out the intent of the bill to provide incentives to the communities of our Nation.

The section of this legislation with which we are particularly concerned and upon which I am best qualified to speak is Title III-Urban Mass Transportation. This calls for an additional 1-year authorization for the urban mass transportation program by specifically amending section 301 (a) and section 4(b) of the Urban Mass Transportstion Act of 1964. It provides that grants may be authorized up to $95 million for fiscal 1968. It also amends the present act by increasing the research demonstration grants from $30 million for July 1, 1966, to $40 million for July 1, 1967.

The Pennsylvania Railroad has one of the largest suburban railroad operations in the United States. We have 150 suburban trains per day operating in the New York metropolitan area of northern New Jersey and 400 suburban trains operating in the Philadelphia metropolitan area of southeastern Pennsylvania, which also includes the State of Delaware. We also have suburban services in the Chicago, Baltimore, and Washington areas.

While the ridership on these trains amounts to about 115,000 daily passengers, or 30 millions passengers per year, the operation of these services is a losing proposition for the railroad. Even after receiving certain limited local contract payments, our losses in 1965 on a fullcost basis amounted to $13.6 million. While this was a slight reduction from previous years, due principally to the fact that the city of Philadelphia has purchased for our use 38 of the most modern, highperformance, air-conditioned, suburban rail cars in the world which will be paid for by the railroad through lease rentals, it was still a very substantial sum that railroad freight shippers should not be expected to subsidize.

The cost of this public service could be further reduced if additional capital expenditures could be made to provide more new equip ment, parking lots, modern maintenance shops, and so forth. More important, however, for the economy and welfare of our urban communities, these capital improvements in addition to improving service for the public would eliminate the very definite possibility of abandonment of many of these important services. Such abandonments have already occurred in many parts of the country. Less than 2 years ago, in the absence of local financial assistance, we were forced

to abandon all suburban rail service in the Pittsburgh area, where we once operated more trains than we now do in the New York metropolitan area.

Up to the present time, no grants for capital improvements have been applied to any project intended to benefit communities served by the Pennsylvania Railroad. We hope, in the public interest, that such assistance will soon be forthcoming. We are confident that such improvements will be of material help in retaining essential rail services for the benefit of the communities which we serve.

A program to provide a fleet of new suburban railroad cars, sponsored by the State of New Jersey, is dependent upon these matching grants. Under this program, the State proposes to replace our antiquated fleet of suburban cars with the finest high-performance modern cars that can be obtained. This will be of substantial benefit to the State in helping it to cope with the problem of highway congestion in its metropolitan areas and will further enhance the economy and living conditions of the State's metropolitan areas.

Many other programs of capital improvements are needed, not just to reduce the cost of providing this service to the public, but to improve it and to help carry peak rush hour loads that would otherwise have to be carried on already overburdened highways. We believe that the Federal Government has a direct interest in this program because of its involvement, not only in the matching grants provided for the primary and secondary highway systems, but also because of the extent to which the Interstate Highway System, with its 90-10 matching grants, is used to carry thousands of commuters relative short distances over sections of these interstate highways. To many farsighted officials, it seems sensible to use the suburban rail lines to alleviate this load by carrying large volumes of people along high density travel corridors by rail. Until the inception of the Mass Transportation Act of 1964, the States and local communities had to do this job without any Federal help if they wanted to use the more efficient rail systems to carry some of these loads rather than trying to do the job completely by highways. On the other hand, all they had to do was put up 10 percent of the cost and the Federal Government. would provide the other 90 percent if they chose to solve the problem solely by using the Interstate Highway System regardless of how much more costly the additional highway lanes needed primarily for peak hour commuter loads might have been.

Quite properly, the administrators of the Housing and Home Finance Agency have moved very cautiously and carefully in authorizing capital grants under the present legislation. The fact that only $320 million of the present $375 million authorization has been appropriated is no indication of the lack of the need for further grants. The need of our communities for facilities necessary to preserve the present level of service, much less to improve and expand it to meet the requirements of the future, is far greater than that embraced in even the $375 million program. Previous studies indicated that this real need ran into the billions. Just in the two major metropolitan areas in which we operate the greatest amount of our suburban services, the needs to preserve and improve the suburban rail services for the communities we serve runs into the hundreds of millions of dollars.

The center city connection project in Philadelphia connecting two downtown rail terminals and comprising a vital link in the redevelopment of the center city is a project which will cost about $45 million. The two railroads serving this area also need new equipment costing over $40 million, plus improvements to stations, parking facilities and facilities to improve the service and make it more efficient in a total program costing upwards of $200 million for this one metropolitan area alone

Turning to north Jersey, to meet the needs of the public in just the area served by the Pennsylvania Railroad, the equipment program will cost about $30 million, plus another $20 million for electrification and improvement of facilities on one of the main routes, plus another $20 million for station improvements. This gives you some small idea of the great need that exists in portions of one or two of our major metropolitan areas.

It is evident that the need is great, not only in the area we serve, but throughout the Nation. Local communities and the States have seen the value of preserving and improving these suburban rail services and other public transportation operations to meet their transportation needs. Until the Urban Mass Transportation Act of 1964, there was no alternative but to avail themselves of the 90-10 Federal matching grants for the Interstate Highway System in the desperate, but somewhat futile, attempt to solve this problem solely by highways. Now, there is an opportunity for a rational, balanced solution to the problems of our major metropolitan areas.

I respectfully urge passage of this legislation. In view of the urgent need for these funds and the fact that the $95 million program level proposed for fiscal 1968 seems hardly adequate. I would even have the temerity to suggest that (1) in view of the 90-10 matching funds obtainable by local communities for using interstate highways to carry commuting loads that this honorable committee take a good look at the possibility of increasing the proposed 2-to-1 ratio of grants; and that (2) since the Philadelphia area alone should have several hundred million dollars, a much larger figure be substituted for the proposed $95 million additional appropriation. In these circumstances, these appropriations should be extended above the $150 million annual rate for the next few years.

Subsequent to this Senator Javits and Mr. Widnall introduced bills to which I certainly and heartily subscribe.

Thank you, Mr. Chairman.

Mr. BARRETT. Thank you, Mr. Morris.

The president of the Japanese National Railway Corp., Mr. Reisuke Ishida, sat in on a briefing with us in the early part of December. Of course, he is quite proud of this new railroad system they have over there. He indicated that he can take a glass of water, fill it to the brim and there is not enough vibration at any rate of speed to cause the water to even show a ripple on it, let alone spill. I asked him the question: Is it possible that in the far-distant future we might better build our short-run transit systems below the surface even if more costly. His answer indicated to me that he felt under the surface might be the proper approach in the far-distant future. What is your concept?