ADDITIONAL ARTICLES, LETTERS, AND STATEMENTS Page ICC Finance Docket No. 25932, Pennsylvania Co. Debentures... 176 172 Penn Central Investigation (Docket No. 35291), Interstate Commerce 163 Pennsylvania Co. perspectus-.. 101 Review and Outlook-Bailing Out the Penn Central, article from the Wall 296 Statistical summary for Loan Guaranties to Railroads under Part V of the The Case For-and Against-Nationalization, article from Time maga- 338 293 FAILING RAILROADS THURSDAY, JUNE 25, 1970 U.S. SENATE, COMMITTEE ON COMMERCE, The committee met, at 11:15 a.m. in room 5110, New Senate Office Building, Hon. Warren G. Magnuson (chairman of the committee), presiding.. Present: Senators Magnuson, Pastore, Hartke, Moss, Spong, Cotton, Prouty, Baker, and Čook. The CHAIRMAN. The committee will come to order. The Chairman has a very short statement before the Secretary testifies. These hearings are for the purpose of opening this committee's examination of various measures designed to provide railroads with financial assistance in the form of loan guarantees. We have now before us three bills, one commonly known as the administration bill, which Senator Cotton introduced by request, a bill which the Chairman introduced by request, which revives title V of the old 1958 act, and then a bill submitted by Senator Javits, cosponsored in the House by Congressman Reid, I understand, which is a little different approach to this problem. These hearings have been scheduled not necessarily at the request of the administration, but scheduled because all of us, after some preliminary meetings, have become acutely aware of the seriousness of this problem. And so we are happy to honor the request, too, of the administration that we take a look at this matter to see what role the Congress should take in trying to solve the problem. I hope it will be possible to thoroughly discuss the various proposals. It will be necessary to have adequate justification of the need for action. It will also be necessary to show that the bill, a particular bill, or a combination of these bills, fulfills the need may exists. It is my desire to have answers to these questions in particular. Transportation is the responsibility of this committee in the Senate, as it is of the House Interstate and Foreign Commerce Committee, and we are deeply concerned about anything that may adversely affect the transportation pattern of these United States. If there is any way that Congress can act and be helpful to avoid any drastic disruption in our transportation system or some catastrophe, we are perfectly willing to entertain these ideas. In 1958 we had a similar Staff members assigned to these hearings: A. Daniel O'Neal and John Cary. situation. It mainly involved the New England railroads, particularly the New Haven and other railroads and we put in the 1958 Transportation Act what is known as title V which guaranteed loans for equipment and rolling stock for these railroads on the theory that if they did that, their business would increase and, therefore, they would be able to be in a better financial position. It turned out under title V, I think there were 11 requests for guaranteed loans and they were made. The largest one was for the New Haven and there were smaller ones for other roads. They have all been paid back, but two, and those two were 15-year loans that will not come due until 1973. We have no indication that they will not be paid also. But title V was for 5 years and it expired in 1963 because there was no indication then that the railroad business wanted to apply for any more loans. So we are coming back a little bit to what we talked about in 1958. (The bills, agency comments, and Congressional Record article follow :) 91ST CONGRESS 2D SESSION S. 4011 IN THE SENATE OF THE UNITED STATES JUNE 23, 1970 Mr. COTTON introduced the following bill; which was read twice and referred to the Committee on Commerce A BILL To assure performance by railroads engaged in interstate commerce of transportation services necessary to the maintenance of a national transportation system, and for other purposes. 1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the "Emergency Transportation 4 Assistance Act of 1970". 6 SEC. 2. It is the purpose of this Act to provide for emer 7 gency financial assistance to rail carriers to aid them to meet 8 temporary and urgent financial requirements which, if not 9 met, might seriously impair their ability to perform those 10 transportation services necessary to the maintenance of a na 2 1 tional transportation system adequate to meet the needs of the 2 commerce of the United States, the postal service, and the 3 national defense. 4 5 6 7 8 9 10 11 12 DEFINITIONS SEC. 3. For the purposes of this Act (1) the term "Secretary" means the Secretary of Transportation; (2) the term "rail carrier" means any common carrier by railroad subject to part I of the Interstate Commerce Act (49 U.S.C. 1-27). GUARANTEES SEC. 4. (a) To carry out the purpose of this Act, the 13 Secretary is authorized to guarantee, in whole or in part, pay 14 ment of principal and interest on loans made to rail carriers. 15 Before making a guarantee under this section, the Secretary 16 17 18 19 20 21 2225 must find, in writing, that (1) the loan is necessary to carry out the purposes of this Act; (2) the loan is not otherwise available on reason able terms and conditions; and (3) the general financial condition of the rail car rier, upon obtaining the loan to be guaranteed, would be such as to hold out a reasonable assurance of its 24 ability to repay the loan within the time fixed therefor 25 and afford reasonable protection to the United States. |