Railroads: The Bleeding New Haven

As the Senate considered a bill for massive federal aid for the nation’s hard-pressed commuter lines, Connecticut’s Republican Senator Prescott Bush took the floor last week to warn that it would take more than money to save the ailing New York, New Haven & Hartford Railroad, one of the nation’s largest commuter lines. “The New Haven is bleeding to death,” he said. “The only chance of saving its life is to apply the tourniquet of bankruptcy.”

Bush is not the first to suggest such drastic action. Bankruptcy has been recommended by the New England Council and by a counsel of the Interstate Commerce Commission as the best way for the New Haven to shake off the management of President George Alpert and straighten out its towering debts. But Gardner A. Caverly, executive vice president of the council, conceded that in a bankruptcy proceeding, New Haven stockholders might lose their holdings. As expected, Alpert roundly damned the proposals, predicted that bankruptcy would also mean the end of the New Haven’s commuter service. All the talk about bankruptcy, said Alpert, was confusing the situation just at a time when it appeared that the New Haven was finally going to receive substantial state and federal aid. To try to save the New Haven, New York and Connecticut have passed bills granting state tax relief. In Rhode Island and Massachusetts similar bills are pending.

After the New Haven lost $15 million in 1960. Alpert has kept it running with the aid of private loans that are guaranteed by ICC. Since last November he has borrowed $11.5 million. If ICC tires of backing Alpert’s loans, he may be forced to declare the New Haven bankrupt whether he likes it or not.