New-York tribune., 1907-12-09
RAILWAY HEADS VIEWS
RT4TIVE OPTIMISM.
4. b. Stickney Predicts Increased
Net Earnings NeTt Year.

western Railway Company and a strong advocate
Of the central bank idea as means OF I~relofiiii7
,he currency arrived here last night from his nome
in 81. Paul. When seen at the Wadort-As.ol'd u.
expressed himself as 'conservatively optimlsuc
ON the financial and railroad outlook
Mr.. Stic<ney said he expected TO see the cost o'
labor and the price of raw materials come oo"i
on an average OF - per cent in the next le"
months but he called attention 10 the fact that 'ne
reduced cost OF materials would not be reflected IN
railroad operating expenses for at least ninety Jay
after il went into effect. because all the foaos
were al present loaded Up with supplies ptrchase'
at high prices He said that he believed the ran
roads would make a Better showing during 'he
second half of the present fiscal year January 10
June) than they had made during the first hait-
lie said that net earnings for the fiscal year
ending June J. ICES would undoubtedly show oe-
creases on ali lines but he thought that the pres
ent fiscal year would be the turning point and that
in the next fiscal year O9os-09) largely decreased
operating expenses would enable all the railroads
to show a material increase in net earnings even
if gross earnings fell of somewhat from present
figures. Any ralroad which can live through the
present fiscal year" said Mr.. Suckney. has moth
ing to fear"
Ever since 1900 said the speaker. prices Of all
kinds materials used in operating railroads
well the cost OF labor. have been largely IN
creased. Meanwhile the railroads have been spend
ing large amounts Of money 70 reduce grades ana
buy engines and to increase the effectiveness
OF a days labor. BY this process of Improvement
and b. the consequent increase Of traHc the raii-
roads have been enabled TO Offset the Increased
cost of materials and labor and gain very little
You will find. however. il you trace earnings from
1870 of the advantages derived from this
increased investment Of capital have been offset by
the increased interest account and the increased
of la Dor and materials The balance left over
after paving the increased interest charge has been
very small
Things worked this way until the beginning of
1906. when improvements began be curtaicd-
The cost Of labor and raw materials has increased
since midsummer of 1896 from 10 to % per cent.
and this increase has not been counterbalanced by
increased earnings or increased efficiency due to
improvements. Now have come undoubtedly
to the turning point where the prices of labor and
materials going recede
The labor that increased earliest and has con-
tiuued high s common. unorganized labor. Com
mon labor has gone from 81 10 day in 1900 20
81 - day at present Up sixty days ago IL
was almost impossible TO get enough common
labor. even at these high prices Now much work
has been stopped. the railroads not employ
ing 50 many common Iaborers. and by the of
the year unskilied labor Will be down to 81 p
day. We have already reduced the section hands
on the Chicago Great Western 70 81 25 day.
Organized labor did not advance rapidly.
Most OF these men had contracts for a wear. and IL
was only when the contracts expired that demands
made When these contracts expired this fall
there were demands all along the line for reduced
hours and more pay. Advances of - per cent
were in many asked for Many of these
mands increased the cost of operating railroads
largely without really helping the men who made
them This fall however. these demands OF organ
lied labor were pretty generally refused The ma
chinists and boiler makers the Chicago Great
Western demanded a % per cent Increase We
refused TO grant the demands. and the result has
been a strike for the last months which has
cost the road great deal of money. Now We
have a full complement OF workmen. and the
strikers acknowledge that they beaten
The demands from the railroads for raw ma
terals have fallen off greatly In the last sixty days
and sooner or later The prices for all kinds OF
materials must come down Now. however. all the
railroads have large stocks OF high priced ma
terials on hand. So. If the price drops at
once. it will be three months before the railroads
will begin To show reduced expenses in this line
The reduction in the price of unskiIied labor on
the other hand. will begin TO show In railroad
operating expenses early next year. There will l.,
no decrease in the cost of organized labor. how
ever. Until the contracts now in force run of,.
which means that this item will make a f,-
vorablc showing in the reports of operating ex-
penses for some time.
Now. as to gross earnings The Chicago Great
Western has suffered severely on account OF the
strike of machinisis and BOILER masers. Withou,
the strike. gross earnings up 10 the present time
would have equallcd those of a year ago Owing
to present financial conditions farm products have
not moved nearly as rapidly this fall as usual.
There viii. therefore, be a larger tonnage than is
customary for the railroads 10 handle during the
coming winter and sprins. As rule. earnings are
larger on Western roads from June o December
than from January TO July on account of the heavy
tonnage incident to the moving of the crops and
farm products This year. however unless some
thing unfor, prevents. this order will be re-
versed and both gross and earnings will be
larger in the second half of the fiscal year than IN
the first half
"on the whole. expect net earnings for the
fiscal which L
creases al: lines. This fiscal year however
viii be the turning point. and after this we will
see slightly decreased gross earnings. but largely
Increased operating expenses. Net earnings will
thus be materially moro during the next fiscal year
than for the present fiscal year
Mr.. Stickney said that the country which the
Chicago Great Western served never I'm better
condition. The small banks throughout Iowa he
said. were all paying out all the money that ,he
farmers asked for and at the same time had On
hand money than before. Most of these
banks have built cash reserve of upward OF
40 per cent, and have no intention OF relnquishing
it until times become more settled
Mr. Stickney told story of banker in a small
Iowa town who had $1,000 in cash in his vaults
whereas he usually kept less than 5000 on hand
This banker told him recently that he had bouzbt
a bulldog and hired a watchman to guard the
money. but he intended to have it ready in cas-. il
was called for.
Another banker came into ST. Paul recently from,
small Iowa town and told his correspondent bank
that he had 100000 in cash in his vaults and was
scared TO death for fear it might be stolen When
assured that he could have all the cash he wanted
on demand he sent $4,000 TO the city
Mr. Stickney also told of a farmer In tho I;,,,a
town of Tripo. in Iowa, who o the bank ami
asked if he could borrow $4,000. He was a thrifty
man. and the cashier told him he could have IN.
money. The farmer appeared greatly astonshed
and answered that he thought all the banks wer,
hat