Senator EAGLETON. Has the Commission thought of other ways of increasing revenues or decreasing costs other than a subsidy or rate increase? Advertising on the buses, and so forth?

Mr. AVERY. Yes. I talked earlier about our efforts to get service improvements and give a lot of time and attention to that. We are trying to do better in that regard.

The advertising point you brought up is a very good one. It is something that I have talked a lot about to the officers of the company. I think it is a failing of this company and I think every other transit company in the country that they don't market their product.

Those buses are running out there. It is very difficult to find out where you can buy your product and when you can buy it. The transit companies generally ought to do better in getting the word out to the people spending money. On getting word out to the people on where the buses go and when they run.

Senator EAGLETON. I was referring to bringing in more revenue to the company. You are talking about selling the product.

Mr. AVERY. If they can market their product better they get more riders.

Senator EAGLETON. I am talking about advertising on the outside of buses.

Mr. AVERY. That is a matter which lies within the province of the City Council. That has been up before them and they have refused to do it on a number of occasions. I understand the Fine Arts Commission opposes that.

Senator EAGLETON. I wanted to get that on the record. Is D.C. Transit also in the sightseeing and charter-bus business?

Mr. AVERY. Yes.

Senator EAGLETON. Is that end of the business a profitable entity? Mr. AVERY. They have revenues about $2 million a year from charter and sightseeing.

Senator EAGLETON. Is it in competition with other lines?

Mr. AVERY. Yes. The sight-seeing and charter-bus business is quite a competitive business.

Senator EAGLETON. If we go the route of the subsidy-Is it fair and equitable to subsidize one company that is in the sightseeing business, competing with another company in the same business, which is not subsidized?

Mr. AVERY. The subsidy, in the way we propose, would merely give him what he would get out of the fare box if we don't subsidize. He will have the same amount of revenues or profit whether you subsidize him or don't subsidize him.

I don't see how you get any competitive advantage out of the fact that some of the money would be coming from Government sources rather than out of the fare box.

Senator EAGLETON. Will you take into account, in the total overall profit picture of the company, the sightseeing business and what have you?

Mr. AVERY. It is vitally important.

Senator EAGLETON. It would not be necessary, as you view it, then to require them, as a condition of receiving the subsidy, to discourage their interest in sightseeing and charter bus service?

Mr. AVERY. Not if you agree with my analysis of the fact that they are not really getting competitive advantage because they have the same amount of money without a subsidy, only out of the fare box.

Senator EAGLETON. You mentioned earlier that Mr. Chalk testified before the House that some of his nonoperating properties are available to help out the company in its current dilemma.

Mr. AVERY. Yes, sir.

Senator EAGLETON. Do you view that statement of his to be a gratuitous one or do you view it that he is legally obliged to so do?

Mr. AVERY. This is a question we went into before. Do you mean legally obliged in terms of the power of the Commission to make him? I would say the answer to that is "No."

Senator SPONG. Mr. Avery, did I understand you to say that Mr. Chalk had told you that in the event either a rate increase is granted or the subsidy is enacted, that he would immediately pay off the debt?

Mr. AVERY. Yes. He has said in those circumstances he would be able to raise additional capital which would be used to attract working capital to take care of these outstanding obligations.

Senator SPONG. Immediately?

Mr. AVERY. As soon as he gets the money, yes.

Senator SPONG. Are you aware of the letter of April 9 that Mr. Chalk wrote to Mr. Apperson?

Mr. AVERY. Yes, to the union.

Senator SPONG. Did he forward a copy to Mayor Washington in which he said it would be 2 years before these obligations were paid

off?

Mr. AVERY. That is if they were paid out of what would otherwise be earnings. I am sure it is in that letter he would try to raise additional capital and pay immediately.

Senator SPONG. I think he would if the subsidy were granted. But insofar as the rate increase or fare increase, as I read it, he said it would be 2 years before it would be paid off.

Mr. AVERY. I don't have the letter in front of me. I don't remember exactly what it says. If that is what he said in the letter it is not consistent with what he said to me in conversation.

Senator SPONG. That was my impression in listening to your reply. Thank you.

Mr. AVERY. He said to me that in the event of a fare increase he thinks he could get additional capital.

Senator SPONG. We will have an opportunity to clarify it. Thank

you.

Senator EAGLETON. Thank you, Mr. Avery.

Mr. AVERY. Thank you, Mr. Chairman.

Senator EAGLETON. Mr. O. Roy Chalk, president of the D.C. Transit System, Inc.

For the record, Mr. Chalk, do you wish to identify your two associates with you and perhaps some of the questions will go to them?

STATEMENT OF 0. ROY CHALK, PRESIDENT AND CHAIRMAN OF THE BOARD OF DIRECTORS OF D.C. TRANSIT SYSTEM, INC.; ACCOMPANIED BY HARVEY M. SPEAR, COUNSEL, AND SAMUEL 0. HATFIELD, CONTROLLER

Mr. CHALK. Mr. Harvey Spear, counsel, and Mr. Samuel Hatfield, controller.

Senator EAGLETON. Mr. Chalk, you have kindly submitted to us, and we appreciate it, your 31-page statement with an attachment, which is, as I have read through it, and our staff has read through it, virtually unchanged or almost identical to the presentation you made before the House a few days ago. Is that correct?

Mr. CHALK. That is substantially correct.

Senator EAGLETON. In the interest of your time and ours, would you feel free to capsulize your observations and to add any new thoughts, or additions, that were not included before the House? We will have combined access to the testimony of both bodies.

Mr. CHALK. I would be delighted to, sir. With your permission, I have prepared a synopsis which refers to the testimony which has been submitted to you, which I would like to skim through. I don't think my entire presentation would take more than 10 or 12 minutes. It does relate to the other and some additional thoughts that I would like to submit to you.

Senator EAGLETON. You may proceed.

(The prepared statement follows:)

PREPARED STATEMENT OF O. ROY CHALK, PRESIDENT AND CHAIRMAN OF THE BOARD OF DIRECTORS OF D.C. TRANSIT SYSTEM, INC.

Mr. Chairman and distinguished members of the Committee on the District of Columbia of the Senate; my name is O. Roy Chalk. I wish to express my gratitude for the privilege of appearing before you in my capacity as President and Chairman of the Board of Directors of D.C. Transit System, Inc.

On April 18 and on April 25, 1969, I testified before the District Committee of the House of Representatives on H.R. 9686, the companion bill to S. 1813, testimony on which is being taken by the Committee, along with S. 1814, here today.

Effective August 15, 1956, the Transit System was granted a franchise by Congress (S. 3073, Public Law 757, Chapter 669, 84th Congress, Approved July 24, 1956, 70 Stat. 598) to operate a mass transportation system to convey passengers for hire within the District of Columbia and between the District of Columbia and points within the Metropolitan District.

I have carefully examined the statement and testimony of Mr. George A. Avery, Chairman of the Washington Metropolitan Area Transit Commission, before the House District Committee on April 3, 1969, on H.R. 9686, the companion bill to S. 1813. I concur with his analysis in presenting some of the basic problems of the mass transportation system in Washington. I also concur with his proposal that a public subsidy would be a practical means of dealing with these problems and the most palatable solution to the existing dilemma. This dilemma not only faces the Washington Metropolitan Area Transit Commission, the Municipal Government, and the Transit System and its employees, but it now presents itself to the public and to the Congress of the United States. It is an urban problem of national proportions. The proposed solution may well have far-reaching social and economic consequences. Mr. Avery has explained very well the problem of spiraling costs with particular emphasis on labor and the futile race to keep fares abreast of constantly increasing expenses. It is a treadmill operation with no end and no progress in sight.

The Company does not favor a subsidy any more than the great majority of our citizens; however, it is squeezed in the vise of public opposition to high fares on one side and a rise in expenses which it can do nothing to keep down on the other side.

There is very little that D.C. Transit can add to the statement of Chairman Avery in this respect, except to fill in the background history of our Company and to recite the events which have led to the current crisis with the Union. We are confident that a solution will be found in the public interest to the full satisfaction of all concerned.

Following a crippling 52-day transit strike in July and August of 1955, upon the expiration of the collective bargaining agreement between the Capital Transit Company and National Capital Local Division 689 of the Transit Union, the