Evening star., 1932-06-12
Problem of the Recapture Fund
BY FREDERIC j. HASKIN.

On top OF the tax dilemma, the deficit,
the bonus and the thousand other
problems staring a busy Congress In the
lace In an election year, the particularly
vexed problem Of what to do about the
recapture clause Of the interstate COM
merce act Is coming to a head. Con-
sress Is being pressed to decide whether
70 make gift Of some $3.50, 900 900 to
part OF the common carriers Of the
United States and deluge Of litigation
tnereoy invited; to give the railroads
Tree rein In the amount of profits they
may make, or to reach compromise
Inc recapture clause rose out of the
turmcll OF railroad finance, created In
large part by the wartime assumption
OF tne carriers by the Government. The
oo0,000,000 revolving fund which had
neen created by Congress resulted in
nuge cash loans being advanced and
the railroads owed the Government a
GOOD deal on account of additions and
Detterments to railroad property while
IN Government hands. In the hope OF
ultimately balancing the books, the act
10 regulate commerce was amended to
INCLUDE what has since been called the
recapture clause. This provided that in
case Z railroad made net earnings of
more than per cent it should divide
the excess above that percentage with
the Treasury OF the United States.
Nothing seems to be more technical
than railroad law, especially as it ap-
plies TO finance. The opportunities for
ntlgatlon are numberlesS. There has
been good deal up to the present, but
under certain circumstances 1t is ex-
pected that . new flood OF law suits will
follow action on the recapture clause.
The amount paid into this fund by
railroads which have earned more than
9 per cent since 1920, when the pro-
vision took effect, is not large. It
amounts to only Sl0,68l 900 and nearly
all OF this has been paid under pro-
test Less than $4,000 has actually
oeen turned over by railroads without
any strings attached
Money Not Available.
1t Is stated that this huge sum hax
accrued, but is not In hand, because 0.
refusal OF the railroads to turn over
the money. InJunctions preventing
collections have been obtained and the
propriety OF the collection OF these ex-
cess earnings Is q question before TIE
courts. The laws delay Is so fruitful
OF postponements that the business haA
been held up for years. Each year the
sum grows. Even the $40 .00o. 900 which
mas been pAid In has been pala under
protest and therefore canot be used 10
make loans to distressed roads, q pur-
pose OF Congress IN originally prov!d-
ing for the fund. The $3.50 900. 900 ac-
crued has, in some cases, actually been
set aside in railroad reserves and is in
tact, en- escrow in a manner, while.
In other cases, il Is merely book
charge. In any event. the Government
has not been able TO lay hands on the
money
Meantime two plans are pending to
settle the whole question. The first plan
calls for the straight repeal Of the re-
capture clause. A bill offered by Repre-
sentative Rayburn Of Texas, providing
for repeal, wiping of the whole original
legislation now is before Congress. The
Interstate Commerce Commission has
gone on record as favoring the repeal,
some members being in favor OF making
the repeal retroactive: others merely
being willing to have its operation 60
no farther than 1t has gone, with no
future collections or accrualS
The objection to repeal OF the recap
ture clause which has been voiced Is
that IL made retroactive, it would con-
stitute gift Of $3.50 900 600 to the rail-