Milford chronicle. [volume] (Milford, Del.) 1878-1974, 1924-02-01
RECAPTURE CLAUSE GETS LEGAL
SANCTION

This is a very clear explanation of
the National Railroad Law, etc.:
by its decision unfolding the re-
capture clause of the TRANSFORMATION
Act the United States Supreme Court
mas given the approval of legal sane
ZION to feature of the Transportation
law which already had the approval of
common sense" says the Republican
Publicity Association, through it's
President, Hon. Jonathan Bourne, Jr.
AS a result of this decision the Unit
ed States now has the best legal regu-
latlon of interstate commerce in our
/ history.
For the information of those who
are not familiar with it's provisions it
is worth while to quote this feature
OF the Esch-Cummins TRANSFORMATION
Act. 1t reads as follows:
If, under the provisions of this
section, any carrier receives for anv
year net railway operating income
IN excess Of per cent of the value
OF the railway property held for and
USED by 1t in the service of transpor-
tatlon, one-half of such excess shall
De placed in reserve fund establish
ed and maintained by such carrier.
and the remaining One-half thereon
shall, within the first four months
following the close of the period for
which such computation is made he
recovered by and paid to the commits
sIOH LOT the purpose Of establishing
ana maintaining a general railroad
contingent fund as hereinafter de-
scribed.' Ne
ANY student of TRANSFORMATION
problems will readily perceive that If
IS impossible to establish Uniform
rates without making |
II possible for some railroads to make |
d considerable profit while other conn
peLlng roads between the same noi11ts
nusI operate at an Inadequate return
OF at a loss. For example. there NAV
De TWO railroads between the Mississ-
lppl valley and the Pacific Coast ono
Vi winch has a route over the Rocky
mountains with easy grades and
ABUNDANT local traffic and relatively
low operating cost. A rival road serv-
,lS the same terminals may cross the
Mountains at high altitude through
region providing little local traffic
ana with relatively high operatino-
costs. 1t is obvious that the same
rates must apply to bOtb
roads, for they carry goods be+wee7
ne same points. If one road were ner-
nltted to carry at a lesser rate than
ne OLher the one road would get all
ne business. Yet the uniform rate in
3vItaDIy gives one road an excessive
'rOHI Whlle 1t is giving the other a
easonaDle profit. No method of cor
ectlng this inequality had been devils
ID until the Esch-Cummins law incor-
'orated what is known as the RECAP
ure cause quoted above, which
axes from the railroad receiving an
Excessive profit portion of that OK I
ess to be used for the benefit of the /
weaker and less favorably located
lines. t
Those who have criticized the
Act have falsely mis- '
epresented it as guaranteeing a GER {
ain profit to the railroads. The false t
ess@of this representation is demon I
trated by the records which show '
nat many railroad is not now ear n
ing a reasonable profit either on it's
apital or on the valuation of it's tang
lie property used in railroad trans
The people of the country
Mould keep in mind two highly i'm
ortant facts, that the Transportation /
ct requires the Interstate Commerce q
to fix rates which will af- y
I'D the railroads, on the whole, a a
'asonable return, if possible, and, on "
e other hand, provides that rail- II
'ads which earn an excessive profit
TALL be required to pay~half of that 81
cess to the Government for the aid w
the weaker roads. ", w
mo man has yet arisen to suggest ~,
more just, more equitable and more r,
actical plan" ~