Step to Nationalization

On the eve of adjournment last week, Congress belatedly shouted its approval of a costly federal rescue for the tottering passenger railroads. The House and Senate approved emergency legislation creating a National Railroad Passenger Corp. to take over and run intercity passenger trains. Commuter service is unaffected.*

If President Nixon signs the measure as expected, the new corporation, to be known as "Railpax," will begin operations by May 1 as a semipublic but government-controlled body. Railroads will have until then to sign contracts transferring their passenger runs to the corporation. The railroads, however, will have to buy designated amounts of Railpax common stock, either with cash or by contributing equipment. The legislation authorizes not only a $40 million federal grant to assist Railpax to get started but also up to $100 million in Government loan guarantees to help the corporation buy rolling stock and improve roadbeds and up to $200 million in loan guarantees to enable private railroads to finance their required Railpax investment.

As TIME Correspondent Mark Sullivan reported: "This is quasi nationalization of the nation's rail system. It will most likely lead to more Government participation as time goes on. The U.S. until now has been the only industrialized country in the world with a totally private rail system. The Penn Central debacle, if not turned around quickly, will hasten the day that this private system becomes another arm of the Government."

No Miracles. Undoubtedly, railroads will waste no time choosing to turn their unwanted intercity trains over to Railpax. By their own computations, U.S. lines are losing $200 million a year on passenger operations. In a direct form of pressure, the legislation would force any railroad that remains outside of Railpax to continue running all its present passenger trains for at least two years.

Railpax seems likely to save some passenger trains from becoming extinct, but it will hardly work miracles in restoring long-haul service, which attracts mainly sightseers. Few passengers are still willing to spend three days traveling coast to coast, or two days from the Northeast to Texas. The legislation empowers Transportation Secretary John Volpe to decide what routes Railpax must serve at the outset. He will probably order continued service over heavily traveled corridors, particularly between Boston and Washington. Some long runs that draw varying amounts of patronage--for example, the Northeast to Florida, Chicago to New Orleans, and New York to Chicago --would presumably be continued. But a substantial number of the nation's 383 intercity trains are likely to die, including such little-used ones as the thrice-weekly Harrisburg-Buffalo run, or the Salt Lake City-Butte, Mont., runs.

Hope of Profits. Theoretically, the new rail corporation is supposed to earn a profit, like Comsat. Private railroaders consider this idea ludicrous, and predict that Railpax will be forced to turn to Congress for more subsidy within a year or two. Even if their freight operations are included, the much-admired nationalized railroads of Western Europe and Japan run deeply in the red. Railpax backers count on managerial innovations to entice more riders aboard trains. The average passenger may find conditions much the same for a considerable time. Railpax will pay the private railroads to operate its trains; they will run over the same bumpy tracks and be manned by the same surly crews that have made train travel a trauma instead of a treat.

* Under a separate law signed last week by President Nixon, federal authorities can spend $80 million this fiscal year and as much as $10 billion over the next twelve years for new and improved bus-and rail-transit systems in urban areas. The Government will pay up to two-thirds of project costs.

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