Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1907-02-04
Head of Great Western System
Sees Danger in Further
I'inkering
PRESENT RATES Low ENOUGH
Question Discussed by Masnate at a
Banquet of Transportation Club
Figures Made to Show Further Tink-
erins by Commission Will Destroy
Profit.

was the subject OF an address delivered
Saturday night at the Ryan hotel be-
fore the Transportation club Of ST.
Paul. by A. B. Stickney, president of
the Chicago Great Western railway.
Mr.. Stckney was the guest of the eve
dinner
Mr.. Stickney said at the outset that
the purpose of his address is to demon
strate that the competitive railway
rates are now so low and the margin
of profits in the competitive railway
business so small that no general re-
duction of rates can be made by law
without doing injustice.
Two well-detined nom competitive
sections. where railway rates are
higher. were named by Mr.. Stickney,
as the far east and the far west. In
New England the railways are DOM
mated by two arrangements. They
pay 4.O9 on bonds and $50 on stock,
yet they pay less than the banks and
much less profit than the manufact-
urers
In the western district, from the
Pacific ocean to Duluth. st. Paul. Min
neapolis, Sioux City, Omaha, Kansas
City, Memphis and New Orleans. the
railroads are under two arrangements.
About 1892 the Northern Pacific, Union
Pacific and Santa Fe roads We're ut
terly bankrupt The Southern Pacific
never paid dividend until 1906. The
Northern Pacific up to 1898 had paid
an average of ~ per cent on the act
ual cash expended on construction. The
Great Northern was not operated to the
coast until 1898.
Mr.. Stickney first traced the history
of the Great Northern road. showing
that it pays approximately Az per cent
on its bonds and I per cent on its
stock. The surplus is invested in im-
provements and does not add a penny
to the income of the stockholders.
Summarizing, the speaker asked: Us
there any other business don't in it's
territory on so narrow a margin Of
profit?"
For comparison Mr. Stickney took
the average rate of interest and divi-
dend payments in the entire country,
which would be naturally higher than
in the competitive section alone. This
is 3.65 per cent interest and 1902 divi-
dends in 1905.
There is no other business in the
country" continues Mr.. Stickney.
which is done on so small a margin
of profit as 3.02 per cent dividends,
and the tonnage carried by the rail-
roads is so large that a reduction of
~, inc a nf OnG-hl1f n
cent hundredweight on a 100-mile
haul. would deprive the stockholders of
railways of all dividends"
In the n-competitive territory
said Mr.. Stickney. "a reduction of j
mill a ton mile would not equal the div
idenGls paid In nom ompetitive New
England where the average haul is
short, and the average rate is, there
fore, apparently large. a reduction OF
96 mills in 1905 would equal the dlvl-
dends paid. A reduction in 1906. the
most prosperous year in their respec-
tive histories, of the average rate of
the Northern Pacific Railway company
of 81 mills. and of the average rate of
the Great Northern Railway company
of 1.6 mills. would have equaled the
dividends paid.
when one realizes the narrowness
Of the margin of profits upon which
railroad business is conducted and how
slight a decrease of rates would de-
stroy all profits. and the persistent eff
fort which is being made by newspaper
and magazine writer's, political speak
ers. legislative bodies and railroad COM
missions to reduce rates. one marvels
that capita1 can be induced to go into
the railroad business. 1t is myrconvic-
ton that if it We're not for the sub
lime imagination of the New York
Stock Exchange, it would be i'm
possible to induce capital to make such
RATES are already so low that it is
impossible to get capital to invest in
new railroad enterprises