No Haven

"In a way," sighed silver-maned Boston Lawyer George Alpert, 63, last week, "the campaign that I have been conducting for the past five years is a crusade. I have learned to my sorrow that the road of the crusader is not exactly a path of roses." No one else thought that "crusader" was the appropriate word for Alpert. as he announced that the New York. New Haven & Hartford Railroad, of which he has been president since 1956. was filing for reorganization under Section 77 of the Bankruptcy Act.

Short Hauls, Long Debts. The New Haven's dubious distinction is to rank as the greatest commuter carrier among interstate railroads; it draws 33% of its revenue from passengers (v. the New York Central's 9%), loses upwards of $6,000.000 on them every year. Geography also hurts. A short-haul line, the New Haven meanders through 1,762 miles of a New England that has been losing many of its base industries to the low-wage South. Furthermore, trucks have proven faster and more flexible to service the new lighter industries of New England. Result: the New Haven's freight revenues have been falling steadily, are off some 13% so far this year.

But trouble is an old story on the New Haven. The line went into Section 77 bankruptcy in 1935 and was still heavy with Depression-incurred debt when it emerged in 1947. At the throttle then was ironhanded Frederic C. Dumaine. who had a simple method of cutting costs: he sacked the bulk of top-salaried employees --which left the New Haven with a chronic shortage of competent executives. In 1954, after a debilitating proxy war, rambunctious Patrick B. McGinnis came in as president; he spent millions to develop futuristic trains and passed out lavish dividends on New Haven preferred stock. When McGinnis departed for the Boston & Maine, he left to his successor and onetime ally, George Alpert, a long-term debt of $200 million.

A Federal Case. "Alpert has been accused of far more incompetence than he deserves," says one of Wall Street's leading railroad analysts. "Very few men could have done a better job, given the circumstances."

At first, up-from-the-roundhouse railroaders grumbled that Lawyer Alpert did not know a trestle from a tort--but none could question his zeal. Repeatedly, Alpert has argued that i) commuter travel is necessary, 2) the commuters cannot be expected to bear all the costs of the rail service they require and 3) somebody has to pay for it.

George Alpert thought that the government should be that somebody. While Alpert pleaded his case, he increased commuter fares by a jarring 87 1/2%--which only drove away more commuters and further diminished New Haven revenues.

As the line sank deeper into debt, maintenance and repairs were neglected.

Last Lurch. Last year the New Haven rolled $14.5 million into the red. In one final lurch toward solvency, Alpert persuaded the Governors of New York, Connecticut, Rhode Island and Massachusetts to push through tax reductions totaling $6,000,000 on New Haven property. He hoped to save another $6,000,000 by economies in labor and management and by repeal of the 10% federal excise tax. But the state tax reductions did not go into effect until a fortnight ago, the federal tax was not repealed, and the labor-management savings never came about.

In desperation, the New Haven appealed for a $5,500,000 emergency loan from the Office of Civil and Defense Mobilization on the ground that the line's survival was essential to the defense of the nation. Last week, when OCDM turned down the New Haven, George Alpert came to the end of the line.

For the second time in 26 years, the U.S. District Court in New Haven took charge of the railroad. Federal Judge Robert P. Anderson was empowered to name trustees to operate the road. It was unlikely that Alpert would be among them. Alpert openly doubted that commuter service could be continued beyond this month without emergency Government aid. But nobody really thought that ICC would permit the New Haven to throw 30,000 more commuters onto the overcrowded highways into Manhattan.

"My first task," deadpanned Judge Anderson, "will be to determine in some detail what problems the railroad has." The first problem is that there is only $4,300,000 in the New Haven's till to meet a weekly payroll of $1,500,000. The second one is that over the next six months the New Haven expects to take in little more than $9,000,000 to meet $335 million in expenses and obligations.

By permitting the New Haven to postpone paying its taxes and its bonded interest, bankruptcy should get the road past its immediate crisis. But bankruptcy will not solve the New Haven's root problem--which is to find a way of maintaining a service that everyone agrees is vital and should be put on a businesslike basis.

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