Los Angeles herald., 1910-08-31
Santa Fe President, Witness in
Rate Hearing, Gives PeSsi-
mistic View of Future
ADMITS DIVIDENDS ARE BIG
Holds Gloomy Outlook and In
creased Expenses as Rea-
sons for Higher Rates

ChlCAGO, Aug. S0-PreS1dent E. +.
Ripley of tho Santa Fe, on the witness
stand today before Special Examiner
Brown of the interstate commerce
commission, in support of the conten-
ton OF the railroads that higher rates
are right and just, declared wages
paid by railroads have increased
largely, making operating expenses a
greater burden.
He also declared the outlook for next
year is not good, and that general
conditions are so considered in the
Judgment Of merchants and those fami-
liar with the trend Of events.
Mr.. Ripley said he thought 1t not
improbable that next year the earn
ings of the road may shrink SO that
they would no more than pay the divi-
dends.
The pessimistic views of the presi-
dent of the road came out in the di-
rect examination by Attorney Frank
Lyon, counsel for the commission, and
followed questions concerning what
proportion of each dollar earned by
the road was returned to the public
in the shape of wages for labor, and
in operating expenses
I'VE are likely to see a decrease in
our gross earnings in the next twelve
what do you attribute that tor"
asked Mr.. Lyon.
81 attribute 1t to general conditions
of business" was the reply.
"Are the general conditions of busi-
ness bad?"
BUSINESS NOT GOOD
IT would not say they are bad they
are not as good as they were a year
ago." said Mr.. Ripley.
What is the trouble? Have you any
idea?p
well, I am not a professor of poll
tical economy, and I do not care to
venture an opinion" was the response.
"I do not care to venture an opinion
as to what the trouble is. but 1 think
the consensus among the merchants
and others in this room is that condi-
tions are not as good as they were a
year ago, and do not expect to see as
large earnings as we had last year"
Reverting to the subject later in the
hearing, under cross examination by
Attorney Clifford Thorne, represent
ing live stock shippers in Iowa, Mr..
Ripley admitted that for ten years the
Santa Fe had paid dividends.
II have nothing to prove they viii
not be paid next year, or that we shall
default on our interest" said Mr.. Rip
ley. "This last year, which was the
largest in gross earnings we ever had,
we kept up the property and earned
S8 per cent on cur capital stock, but
1 can see expenses ahead of me for
this coming year enough to warrant me
in the belief that we will not earn any
more than our dividends"
CLAIMS. EXPENSES INCREASED
Ripley explained that by increased
expenses he referred to Improvements,
and Mr. ThOrne commented:
$50, reduced to its ultimate analy-
sis. you think you are entitled to In
creased rates in order to build up
these facilities, is that correct?"
"In order to keep up with the times
and do what the public expects of us"
replied Mr.. Ripley.
"And make improvements above what
you did last year?" asked the cross
examiner.
certainly; any railroad that fails
to do that is bound for the slide."
Mr.. Thorne: "You think that ought
to be paid out Of the operating ex-
penses?"
Mr.. Ripley: "Most certainly I do"
Special Examiner Brown shut off
Nouestions touching the bond issue for
the Kansas City depot by saying:
1.-THE question of the Kansas City
depot has nothing to do with this gem
eral proposition"
In the course of the hearing the rail-
road introduced a tabulatiop of the
interest on the stock after payment OF
bond interest for 1896 to 1910.
Gross expenses, operating expenses
and net earnings for the years from
1901 to 1910 were shown in one exhibit.
Taking the year 1901 asa standard at.
100 per cent, with gross earnings or
$3S, 900, 900, operating expenses or $lo,-
800 900 and net earnings of 100000 in
round numbers, Mr.. Peabody declared
that 1910 showed an increase in gross
earnings to 1865 per cent, at S5S, 100000;
operating expenses to 2O9.6 per cent at
$39, SOC, 900, and net earnings TO 11I.o per
cent, at $19,300,O00.
PROBE r.. r. AFFAIRS
In cross-examlnation Attorney John
H. Atwood of Kansas City, represent
ing a group of shippers, took up the
discussion of some of the exhibits OF
fered by the railroad and called atten-
ton to an item of $70S,000 appropri-
ated for fuel reserve in 1910. Mr.. At
wood compared the amount with much
smaller figures for a similar charge
in other years.
Mr.. Atwood: LET me ask you if
this disposition of funds, more than
three times that of the good year
1909, to this fuel reserve was done be-
cause there was in the mind of the
management the idea 1t would help TO
make this lean showing, to be en-
ployed as an argument before the
commission now?"
Mr.. Ripley: "I do not think 1t had
any influence. 1t certainly did not
with me-"
President Ripley was questioned re-
garding the capitalization of the sub
sidiary lines of the Santa Fe which,
he said was included in the estimate
of S579, 900 that would be required
to reproduce the system properties.
From the figures at his command,
President Ripley declared he was un-
able to say whether the Santa Fe
makes or loses in the operation Of
most of the subsidiary roads.
W. e. Bailey general auditor of the
system, was the next witness, and he
at once plunged into an array of fig