MUNITIONS AND SUPPLIES DEPARTMENT. REPORT BY THE MINISTER IN CHARGE.

Appendix to the Journals of the House of Representatives, 1918 Session I-II, H-24

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Session 11. 1918. NEW ZEAL A N D.

MUNITIONS AND SUPPLIES DEPARTMENT. REPORT BY THE MINISTER IN CHARGE.

Laid on the Table of the House of Representatives by Leave.

OUTLINE OF REPORT. 1. General conditions which have prevailed are' first dealt with. Then the work erf each branch is shortly illustrated. 2. Buying operations : (a) Extent and variety ; (b) storage accommodation ; (c) high quality of goods maintained; (d) inspections of deliveries; (c) estimates for 1919; (/') canteens; (g) Defence Commission; (h) centralizing buying. 3. Coal control: (a) Recognition of committees and their honorary work-; (l>) all activities kept, going ; (c) deliveries interrupted by gales of unusual violence ; (d) prices question referred to Board of Trade; (c) policy for coming summer; (/) war outputs and importations; (g) this year's position so far ; (h) coal stock census ; (/) stimulation of New Zealand output. 4. Petrol control : (a) Origin ; (6) objects ; (c) nature; (d) recognition of assistance. 5. Priority permits: (a) Development-; (b) volume dealt with ; (c) results achieved. (i. Shipping-space inwards to Nkvv Zealand: (a) Cause of shortage; (b) arrangements made to meet position ; (c) tonnage' capacity now available' as compared with pre-war. 7. Conclusion: (a) Recognition of honorary services; (b) recognition of staff; (c) end of the war in sight.

REPORT. GENERAL CONDITIONS. I. During the fifteen months which haver elapsed since my last report was submitted to Parliament the activities of my Department have extended in volume anel variety, corresponding to the general conditions prevailing in New Zealand, as a result erf the war, Twer factors firstly, difficulty in procuring imported articles, due to restricted manufacture abroad, and, secondly, reduced inward tonnage available— have had the effect of increasing the business offering for the Dominion's manufacturing industries. This opportunity has presented itself-at a time when a scarcity of requisite materials and depleted skilled labour have placed manufacturers in a disadvantageous position to cope with an increased volume of business. However, experience has shown that those enterprises faced with these obstacles have not only satisfied extensive military orders, but have t3 a marked degree contributed to meeting the domestic needs of the Dominion. In this connection it may now be interesting to report that military stocks and present requirements are such as to justify a substantial reduction in contracts for stores and supplies. It is hoped that this will have the effect of enabling manufacturers concerned to devote increased attention to civilian orders. Broadly speaking, I express the hope that the finished articles produced by our manufacturers will by their quality command the permanent patronage erf the New Zealand people. If can, I think, be safely stated that the bulk of the' citizens in the Dominion are inclined to recognize the importance of firmly establishing and developing our manufacturing productiveness. It is to be hoped, therefore, that articles of satisfactory quality will continue to be marketed by enterprising concerns, anel thus promote much to our national welfare. 2. The shortage of tonnage inwards to New Zealand has created a necessity for regulating the consumption of the two cardinal power-producing fuels -namely, coal and petrol and has also had the effect erf restricting imports from India, Australia, and the United State's erf America, where goods readily saleable in Nerw Zealand could haver lre<>n procured but for the' lack erf sufficient tonnage. The; position as regards tonnage inwards from tire United Kingdom to New Zealand has fluctuated considerably ; sometimes it has been in excess erf the goods available for shipment, and at other times short erf accumulations. Then again,, commercial enterprises in the United Kingdom have been on many occasions awkwardly situated erwirrg to tin' necessity for a rigid compliance by shipowners with Admiralty instructions, which have' frequently not lent themselves to encouraging a concentration of such good's as may have' been ready for shipment to the Dominion, 11- will Ire borne irr mind that the essential goods most needed in the- Dominion are, in most cases, the' most difficult to secure from the United Kingdom, on account of direct anel indirect war' necessities, anel thus it is not difficult to appreciate the circumstances under which a ship may have been, partially laden at a Homer port with a cargo consisting of merchandise of a kind not the most needed in the 1 Dominion. Under these conditions it will, I think. Ire conceded as more advantageous for a ship so situated to bring something

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to New Zealand, rather than to shut out such cargo as may have been on offer, merely because other more urgently needed cargo erould not be procured. In this connection, however, I desire to state that the Permits Branch of the Department has, in co-operation with the High Commissioner's Office, made every reasonable representation possible to the authorities in the hope of securing the release and shipment of essential goods required in the Dominion, and which have been prohibited from export on account of the war. BUYING OPERATIONS I. The purchases made by tin' Department during the last fifteen months have again demonstrated the advantages to be derived from a centralization of this important work. I have pleasure' in recording the fact that my honorary advisers and expert executives have, during their third year of office', largely contributed to the- successful working erf this branch of the Department. Since my last report the sum of £1,096,338 has been expended as follows :— £ (a.) Stores .. .. .. .. .. 469,348 (h.) Supplies .. .. .. .. .. 615,906 (c.) Drugs .. . . . . .. . . II .081 Total .. .. .. .. £1,090,338 while the business has been spread throughout the Dominion as under:— £ (a.) Auckland .. .. .. .. .. 155,201 (/>.) Wellington .. .. .. ... 578,637 (c.) Canterbury.. .. .. .. .. 169.(i(il (d.) Otago .. .. .. .. .. 192,839 £1,096,338 This expenditure combined with that previously reported brings the total buying conducted since the inception of the Department up lei £4,350,000, representing 89,700,000 articles which have been handed over to my colleague the Hon. Minister of Defence and his officers for military use. Personal Equipment foe Infantry. 2. Tin' position in regard to the' variety and nature of this supply has not altered since' my hisl report. The following table', however, will no doubt be of interest:

Number of Article. Each issued per Man. Cost of Issue per Man. 1915. 101«. 1917. 1918. Personal Equipment. £ s. el. L 18 6 I 3 I 0 4 o 1 10 0 0 0 2 0 4 2 0 3 3 1 4 0 0 1 3 1 10 10 0 8 0 0 12 0 0 8 0 0 0 9 0 8 0 o :; o 0 1 2 o 0 1.1 o ti 4 0 5 0 0 0 10 0 I 0 o o li, o I 6 0 8 9 12 5 7* £ s. el. £ H. el. £ s. el. 2 9 9 2 11 1 3 0 I 1 7 5.1 I 13 0 1 13 7 0 5 li 0 0 5 0 0 0 2 2 5| 2 S 0 2 12 5 0 5 0.', 0 9 K.', 0 9 K.i 0 1 3" .. .0 5 Id" 0 3 3 J 0 1 ()}, 0 4 O.i, 10 0 2 5 0 2 5 0 0 I 0. 1 , 0 I I .I 0 I 3 1 18 ()" I 19 o" 2 2 10 0 10 0 0 12 0 0 12 0 o li o o lo o o in o 0 9 10 0 12 0 0 12 0 0 0 0 0 10 5 0 II I I 0 S 8 0 8 9 0 I I 8" 0 'I Of I 0 4 4.1 0 1 4i 0 2 1 0 2 3" 0 2 3 0 0 5J 0 0 3 0 (I .", o 0 2? o 0 O.i o o i;t 0 5 0 0 7 0 0 7 0 0 0. 0 0 10 0 12 0 10 0 1 0.1 0 I OJ o o 4.1 o o r>i o o r.i 0 I 5" 0 2 2" 0 2 2 0 8 5 0 9 0 0 9 0 13 10 «i* 10 9 li* 17 12 9i* Tunics . . ... . . .. 2 Trousers . . . . . . . . 2 Putties . . . . . . I Greatcoat .. I Hat and pugaree . . .'. .. 1 Cap .. .. .. I Kit-bag .. .. .. .. 1 Blankets Braces . . . . .. .. I Boots .. .. .. .. 2 Drawers . . . . . . . . 2 Shirts, working . . .. . . 2 Shirts, under .. .. .. 2 Shoes . . . . . . . . I Suits, denim .. .. .. I Socks Cholera belts . . . . . . I Holdall .. .. .. .. I Sea-kit . . . . . . . . I Jersey .. . . .. .. I Housewife; . . . . . . 1 Knife, fork, and spoon . . . . I Plate anel mug . . . . . . I Towels .. .. . . .. 2 Sheet, waterproof . . . . . . I * The percentages of increases are—1916, 12-f>7 per oei cent, over 1915; 1918, 7'I per cent, over 1917, 27'5 per een regard to lire general upward tendency of all prioes, improv difficulties met by manufacturers in obtaining ami retainin anel sal.isfni-teiry in view of further advances which have ta be borne in mind that most extensive quantities of e'epii|in for 1917, anil to a certain degree 1918, were corresponding] in 1915 by myself anel advisers to arrange fur extensive economy to the country, rr it v »! a in 5l rnt. river 1915; it, ever 1916, ill veil quality, larj rg suitable assis a ken place since merit were purel >ly reduced; it i deliveries thro 1917, 19 per cent, over 191(1 and 34 per ml 43-6 per cent, ever 1915 prices. Having cger sizes in some artioles, anil the increased istance, I regard the increases as reasonable ■e our eeiirtraets were let. However, it must rhased during 1916, so that the requirements - is therefore dear that tiro decision eome to oughout 1916 has resulted in a substantial

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Personal Equipment for Infantry-continued.

Foodstuffs for Training-camps. 3. The following table indicates the cost per man per day for food in the two important training-camps. I'ValhiTstou Trcrilhani Camp. Camp. 1917. s. d. s. el. June .. .. .. .. .. ..1 7838 I 7-354 July .. .. .. .. .. ..I 8073 1 0-703 August .. .. .. ~ 1 7-001 1 0-320 September .. . . .. . . .. 1 7-140 I. 0-500 October .. .. .. .. .. .. 1 7-312 I 0-103 November .. .. .. .. .. 1 7-430 1 0-043 December .. .. .. .. .. 1 7-140 1 5-044 1918. January .. .. .. .. .. .. 1 7-447 1 7-858 February .. .. .. .. .. 1 7-370 J 0-359 March .. .. .. .. .. .. 1 7-107 1 0-781 April .. . . .. .. . . .. 1 4-842 I 1-800 May . . .. .. .. ... I 5-673 I 1-750 J urre .. .. .. .. .. ..I 4-589 1 4-720 July .. .. .. .. .. .. 1 5-382 I 1-040 August .. .. .. .. .. ..1- 5618 I 5-790 September .. .. .. .. ..I 5-233 1 5-530 In regard to the above', table, showing the' cost of rations, if will please be 1 noted that the figures up to 31st March, 191.8, include the cost of rations, fuel, light, and straw used or consumed up to the point of time when they werrv delivered to the military storekeepers in the camps mentioned. From Ist April, 1918, the cost is ferr foodstuffs consumer! only, the cost of same being based on all charges incurred in delivering the goods to the camp storekeeper's concerned. The actual cost of distributing rations from the storekeepers to the', men has not been worked out by the military authorities. It is clear, however, that the' cost per day per man for food has been kept steady, notwithstanding the increased cost erf foodstuffs; the results therefore reflect cri'elit on I In- management of tin- military authorities concerned. 1. If being found under ruling conditions advantageous to establish a bulk store for the reception of necessary merchandise when suitable: opportunities occur for purchasing same, an arrangement accordingly was made with the Wellington Harbour Board unele'r which their "X" shed, is now used as a military bulk store on reasonable terms. From this store' the main Expeditionary Force camps have lately been largely supplied, and, as a, result erf the' close' surveillance exercised by the Director of Supplies anel Transport, marry supplies lor outlying camps, sanatoria, and. District Headquarters haver also been despatched therefrom more economically than they could have been procured by accepting prices tendered locally. The same comment is equally applicable to the' distribution of stores which come under the control of the Director of Equipment anel Ordnance Stores, who has throughout brought a practical mind to bear in effecting and suggesting economies in similar directions.

Article. Number of Eaob issued per Man. (lost of issue per Man. I 1915. 1916. 1917. I i I 0 0 I 0 0 I "ii I 3 1 3 5 10 0 5 13 0 0 10 0 8 3 0 12 0 | 0 2 5 0 0 10 | ■ ' 0 0 I 0 0 ' 5 0 0 (i o o 3| o o lo o o o o 0 (i 10 5 III 9 I 12 0 0 2 7 0 2 10 0 2 10 0 I 2 o I I , , 0 0 Ij 0 0 0 I 0 3 10 0 3 U Q 3 9 i 1918. 0 " I 5 13 6 ti | (i 1 (1 o 0 0 6 0 o 0 0 0 (i 1 12 0 0 3 In (I I 9 0 3 9 Accoutrements. Identity-discs ... Rifle. Slings, ride;, web Bayonet Scabbard Pull-through Oil-lrotllc Protector, P.S. Wi'lr equipment, pattern 1908 Water-bottle Implements, entrenching, heads Implements, entrenching, helves Mess-tins complete 5 10 0 8 9 ll|" 8 10 11 8 17 II I

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5. It is satisfactory to state that the; volume of varied, business, representing an expenditure of over £1,000,000 for 1918, has so far been conducted without litigation. Throughout the period a close and careful inspection erve't all deliveries made lo lire military authorities has been exercised, and sue'h differences as arerse' have, under my control, been, promptly adjusted on a business basis satisfactory to the Department and reasonable to the supplier. 0. At the time erf writing the' military authorities have just completed estimates of their stores and supplies required ferr the calendar year 1919. As far as they can be costed at the moment, they will, if purchased, equal in value a total expenditure erf £950,000, against estimates of £1,300,000 for 1918, £1,400,000 for 1917, and £1,548,000 for- 1910. The purchases estimated lor 1919 comprise- £ Stores .. .. .. .. .. .. 200,761 Supplies.. .. .. .. .. ..581,034 Forage anel fuel .. . . .. . . . . 70,718 Drug's .. .. .. .. .. .. 18,000 Contingencies .. .. .. .. .. 79,487 making a. total of .. .. .. .. .. .. £950,000, which, as indicated in the general remarks above, shows a reduction on the operations of previous years. 7. In accordance with the desire of the' Hon. Minister of Defence, my Department has made purchases for the' military dry canteen at Featherston since it was taken over from the contractors. The purchases ser made have been arranged for on the same lines as for official purchases —namely, the Canteen Committee is in a position to stipulate what class and quantity of goerels it prefers, and to requisition my Department to purchase accordingly. Under this arrangement orders to the value of £61,000 have been placead through my Department, the, total expenditure by the canteen for supplies being £74,275, according to a report which the committee has been good enough to furnish me. At the time of writing arrangements are being niader for a military dry canteen to be inn at Trenthani on the; same lines as at Fcatherston, and I trust with equal success. 8. The Defence Expenditure Commission terminated its report by a statement reflecting favourably on my Department-as well as to the military establishment. The' Commission stated— (I.) £40,000,000 spent and no frauds. (2.) An Army of 100,000 men excellently and full;/ equipped, and carried Or the erthcr emd of the' world. (3.) Supplies hare been purchased well, and, although lire actual purchasing has been done outside the Defence Department, military officers have- been responsible that quantities have been sufficient and not excessive. The only remark made by the Commission by way of suggesting improvement was referred to my Department by Defence Headquarters on the 7th August last for nrv comments. The remark of the Commission was "At present the' name erf the successful tenderer is published only if he consents. It weruld seem almost wiser to encourage competition—that in all cases name's erf successful tenderers, with prices and conditions of supply, should be published. The question is now under consideration of having a business man representative of this Supplies Board acting with each of the four District Headquarters erf the Defence Department." I accordingly requested my advisers ter again review the policy 1 have pursued in these matters, and after consideration my chief executive officer was directed ter forward the following reply : " In replying to your memorandum of the 7th instant (73/10/ A.G.) I have to advise that action has been taken lo appoint local representatives of the .Minister at Dunedin, Christchurch, and Auckland, 'fire gentlemen appointed are as follows: G. J. Miller-, Esq., commercial broker, Auckland ; W. R. Gordon, Esq., erare erf Messrs. Neill and Co., Dunedin ; and J. I. Royds, Esq., care e>f Messrs. Royds Bros, and Kirk, Christchurch ; and they as occasion arises confer with District Headquarters, particularly with the Assistant Directors erf Supplies anel Transport. "As regards the question of publishing the names of tenderers, &c, the Minister in Charge made an announcement to Parliament in. his report dated Kith June, 1917, as follows : ' During flic currency of the business under review 1 have frequently been requested ter giver information to unsuccessful tenderers; anel in this connection 1 have ter report that my advisers, at my request, went, fully into this matter, with the result that I decided— («) To giver tire' price only, quoted by successful tenderers, to any unsuccessful tenderers for the same- supply : (b) not to disclose the price quoted by an unsuccessful tenderer; (c') not to disclose; the' name of any successful tenderer without his consent. ' The reason for acting as indicated in (v) above' is to satisfy unsuccessful tenderers that their quotations were not the lowest. It has apparently been the; practice of the Government Departments for some year's past to give this information, although it is not the' practice of mercantile houses to do ser. '' The reason for (b) above—namely, not giving the prices quoted by unsuccessful tenderers—-is that such information would, possibly reveal to successful tenderers opportunities for quoting higher prices the next time they were invited ter tender for similar supplies.

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' The' reason for (c) is that direct importers who, for business and patriotic reasons, desire to quote for military supplies hesitate ter do so in competition with their wholesale customers, and consequently in such cases heavy loss can be sustained by the Government unless the most economical purchase is made' by the Department. Them again, a successful tenderer is ofttimes in a better position to e-erneluct his buying operations if his rivals in trade are not aware of the fact that he is a successful tenderer ferr military supplies. This protection to tenderers has had the effect of encouraging business houses to tender more freely, anel has been much appreciated by contractors. " ' In cases where quotations are made on samples submitted or direct purchases effected by the Department, the office system inaugurated enables me to at any time look into particular cases with a view to justifying the action taken before orders are- confirmed by me." " In considering this method of dealing with the business as has been suggested by the, Commission, the Board has advised the Minister that they see no reason for departing from the principles on which we conduct our business in this respect; us a matter of fact our experience during the last twelve months in particular confirms the Board in its opinion, in which the Minister in Charge' concurs, and therefore it is not proposed to make any adjustment." 9. As a result erf a visit, paiel ter the Department by the Public Service Commissioner and, his colleague, the' Commissioner requested an outline of the procedure and methods adopted in regard to conducting the buying operations, with which the' Commissioner expressed satisfaction. During June last I tererk an opportunity erf forwarding a copy <>l the outline to my colleague the Hon. Minister of Internal Affairs; under ererver of the following letter, dated Bth June, 1918, which is now receiving his attention : "Since you were good enough to address me on the 15th November, 19.10, in regard to suggestions then made to you concerning the' personnel of the Public Service Stores Tender Board, 1 understand that no action in this connection has vet brum taken, although it wertild now appeal' advisable for' the methods erf buying ter lie wholly or partially reviewed. " It will, I think', be readily conceded that the' matter erf buying supplies advantageously in these peculiar times requires handling by competent men possessing mercantile experience, and consequently I have ncr hesitation in bringing this matter forward for reconsideration in a form which now may enable you to deal with it. " The Public Service Commissioner, having paiel a visit of inspection to my Department, requested my chief executive officrer to address a, memorandum to him in confirmation of a conversation which took place as a result of the Commissioner's observations. For your information 1 attach a copy erf this memorandum, ft will be gathered therefrom that the forces of change as regards markets for all goods are visibly at work, and it would appear to rest with us whether we will allow the' present methods of conducting business to continue, or direct the management erf buying operations into better-defined channels. " In the' light of information before rue I am erf the opinion that the' time is opportune ter make a beginning, anel that considerable loss may follow postponement erf this matter until the termination erf the war, as was considered best some two years ago." . » CONTROLLED DISTRIBUTION OK COAL. I. 'flic work connected with controlling the distribution of e-eral ter the best advantage from a national point of view has been creditably performed by my honorary representatives in the' four main centres, who have' all devoted much time anil attention to cerping with tire steady volume of business, anel in assisting irrer to solve' the' perplexities which have confronted the Department. Reduced output erf bituminous coal and curtailed importations of the same class erf fuel constitute (her cardinal obstacles erf those who have associated themselves with mc in this important work. Notwithstanding (recurrences and circumstances which have developed these two factors, it is satisfactory to ree-errel the fact that ncr activity has throughout the period under review ceased lei operate for lack of fuel, although at, times certain industrial consumers have had occasion to ccer.noinize pending the receipt of deliveries. The Department, in anticipation of the possibility of having to continue with a reduced quantity of steam-raising coal being available, prudently made arrangements to as far as possible meet the- expected position, but found its calculations disturbed by the; violence of the' storms which for- protracted periods during the winter prevented coal-laden ships conveying their much-needed cargoes at times when coal lor household use was in greatest demand. Throughout these periods the Wellington Coal Trade Committee in particular daily devoted themselves ter devising means of specially supplying many necessitous cases, such as those of sickness arid (her like, which were reported to the Department. In referring to this matter I desire to pay a tribute to the' patriotic manner in which the citizens acted on these occasions. In only one or two isolated cases was any action taken which aggravated the situation. A contention as to prices was put forward by a number of people, but this was in no way a reflection on the fairness of I he distribution, and being a matter separate anel aparl from distribution it was promptly referred to the' Board of Trade and dealt with. During the coining summer it is my desire to sec sufficient coal made available to enable the larger and important coal-consumers to lay in relatively reasonable stocks, so that when the following winter sets in it will be an easier matter for those in the trade ter give satisfactory attention to householders' needs.

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2. It may be erf interest ter lierte the following comparative figures '.—

It will be observed from the above schedule that the. figures for 1917 show a, decrease of 191,075 tons when compared with the same period lor 1916. Coal produced within the Dominion is responsible for 188,716 tons of this shortage, and the importations 2,359 tons.

Comparison of (Actual) Outputs and Importations for First Nine Months of 1917 and 1918 respectively.

Census os Coal Stocks by Government Statistician. s Tons. As at 30th April, 1917 ... .. .. .. .. .. 183,280 As at 31st, July, 1917 .. .. .. .. .. ..218,907 As at, 31st October, 1917 .. .. .. .. .. ..191.219 As at 31st January, 1918 .. .-. ... .. .. .. 178.192 As at 30th April, 1918 .. .. .. .. .. .. 151,866 As at 31st July. 1918 * .. .. .. .. .. .. 178,301 To me it is a matter for regret that Nerw Zealand does not- under war conditions produce sufficien coal ter meet its needs, anel so release from employment the' valuable tonnage', used in bringing over extensive quantities from Newcastle. Ther beneficial results which would (low ter the Dominion from such a release would, in my opinion, constitute a permanent advantage to our. people. Facilities for, handling Coal-supplies at the Four Main Ports in New Zealand, 3. On the 23rd August, 1917, 1 addressed my colleague the Hon. Minister for Public Works, as follows : "(I.) Attention having been directed ter the loss ol time and the expense incurred in handling coal-supplies at main centres, it has occurred to me as advisable to cerllect information in regard to labour-saving appliances, with a vierw to obtaining a comprehensive report from serine competent source in regard to the matter generally. " (2.) 1 shall be obliged,, therefore, if you can find it convenient to depute' erne of your officers, or to request your Department, to investigate, the position and furnish me; with a full report in regard to the matter.

Coal produoed in Dominion. year. Bituminous. I Coal imported. Total. Other Kinds. 1917 1916 1915 1914 Tons. I,247,989 I .122,071 1,404,400 1,491,313 Tons. 820,130 835,061 804,221 781,280 Tons. 291,597 293,956 353,471 518,070 'Pons. 2,360,016 2,551,09! 2,562,095 2,793,663

1 17. 1918. Produoed in Dominion. Produced in Dominion, Total. Month. Coal imported. Total. Coal „ ,., , Other imported. Hard Coal, ,,. , Kinds. Hard Oral, j gjjg* January March April May June July August September Toils. 89,049 84,104 97,816 25,484 110.007 .103,254 109.682 110,882 99,126 Tons. 58.581 52.517 59,394 43.793 67.115 02.370 09,430 75,523 71,866 Tons. 14,722 29.958 90,682 7,804 56,191 29,654 27.071 11,995 548 ' Tons. 162,352 106,579 247,892 77.081 231,273 195,284 200,183 198,400 171,540 'tons. Tons. Tons. 76,816 07.533 15,925 90,090 03.108 18,500 75,963 07,453 18,793 82,420 73.545 20,733 97.991 i 85.007 36.497 90.489 ' 74.427 22,093 93,537 ! 80,581 24.727 09,709 : 82.741 25.991 85,221 | 79,865 30,628 Tons, 70,816 90,696 75,963 82.420 97.991 90.489 93,537 09,709 85,221 Tons. 160,271 172,364 162,209 176,698 220,095 193,009 204,845 178,441 195,714 Grand totals 830,064 560,595 268,925 1,659,584 708,842 j 080,860 213,947 708.842 1,663,649

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" (3.) I elesire in particular to be advised on the following heads :- " (a.) Whether the facilities now commonly used can be improved, and, if so, in what directions. " (6.) What steps must necessarily be taken ter give effect to suggested improvements, and the cost involved. " (c.) On whom the, burden of the necessary expense should rest. " (d.) The advantages and disadvantages erf carrying into effect any suggestions which might be submitted for consideration. " (4.) If you can accede to my wishes in this connection, will you kindly direct your officers to approach Mr. Adams, of my Department, from whom all my papers and particulars in regard to this matter can be obtained." Following this request, a comprehensive and valuable report, em the subject was submitteel by the Bngineer-in-Chief of the Public Works Department, and as a result the desirability of making a commencement at Wellington was clearly demonstrated. 'This being so, those in authority arranged for a serries of conferences between the Wellington City Engineer, Chief Engineer erf the Kail way Department, Engineer-in-Ohief of the Public Works Department, anel the, Engineer to the Wellington Harbour Board to take place. The last communication I have received is a copy memorandum elated the 28th June last, submitted by the; Engineer-in-Chief of the Public Works Department, addressed to his Minister, which reads,- — " Thorndon Reclamation and Coal-handling Facilities. " Regarding the combined report of Messrs. Marchbanks, Morton, Mac Lean, and myself, desired by lion. Minister of Munitions, upon the best means for the development of coalhandling plant in Wellington, I have to report that a meeting of the above-named gentlemen tererk place yesterday, when the questions referred were considered, and it was decided ter answer both in the affirmative. The' questions are' as follows : " (I.) The' advisability of proceeding with the. greater reclamation scheme at Thorndon ; and " (2.) The advisability of providing facilities for unloading anel bunkering coal at Thorndon Reclamation. " The barer statement in ther affirmative is, however, erf little value until the' committee has fully explained ther position; and this cannot be' elerne until the' Railway Department has completed the plan of what are' considered to be the; requirements with regard to the station-yard for Wellington, anel, further, until that plan has been fully considered by the General Manager and definitely adopted as the plan lor the yard. It is anticipated that it will take not less than oner month for the .Railway Department ter consider this matter." On the return of the; Engineer ter the Wellington Harbour Board, who is now inspecting coalhandling facilities in America, it is trusted that this important matter will be; further developed. I may mention in passing that the Auckland Harbour Board have- also taken similar commendable action with a view to developing their port in this respect. PETROL CONTROL. 1. The National Efficiency Board having recommended the Government to assume control over the distribution of petrol-supplies, the proposal was submitteel to my personal advisers, the; Munitions and Supplies Board, who, in view of the; question of prices being involved, suggested that the matter be controlled by me as Minister erf Supplies, in accordance with such aelviere; as might be tendered by the. Board erf Trade. The; Board erf Trade was therefore requested by their President ter formulaic a suitable scheme. After consultation with those' interested and with my Department this was duly done, and embodied in the regulations published on the 12th July last. The; main objects of control are; firstly, to protect the consumer as to prices ; secondly, in the' event erf shortage, to take; timely action to provide for essential consumers' requirements in preference to those erf non-essential users ; thirdly, ter assist importers as far as possible' in the matter of securing adequate supplies ferr the; reasonable nee;els erf tire Dominion. In the' first, case, the prices have; been fixed and published lor the information of all interested parties ; in the' second place, a satisfactory arrangement has been come ter with the recognized importers and distributors whereby this provision is assured ; thirdly, I am pleased ter note from the confidential visible-supply statement placed before' me at the beginning erf each month that the' position is somewhat better than prior to publication of the regulations, and I trust this will be maintained. However, i.n tic e've'iit of a falling-oil' in prospective importations being revealed, the departmental system under which: the business is conducted will enable me to take early action with a vievw to improving the, prospects. 2. I desire fir recognize the hearty co-operation erf the Motor-garage Proprietors' Association of New Zealand, anel others assisting my officers in matters connected with distribution, and to acknowledge llic service's of Ihe'Berare! of Trade, who have; been ably supported by an honorary committee consisting of the following gentlemen: Messrs. A. G, Gate, G W. ShirtcliiV J. T. Martin, I. .1. Ryan, J. T<\ Cousins, anil W. Preedy. PRIORITY PERMITS. I. The hardening of the world's markets under war conditions is reflected in the work- which this branch of the Department is called upon to perform. In the early stages of the war it was necessary only to support certain particular order's on Great Britain, The need for' supporting almost, all orders

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on that, country was demonstrated shortly afterwards. Since; that development either countries from which New Zealand is largely supplied have alser found it necessary to request official comment in regard ter orders placeel on them by New Zealand purchasers, and as a result to-day the' Department is in correspondence with the recognized authorities in the United Kingdom, Canada, United States erf America, India, anel Australia. Irr many cases the representations made have beem instrumental in establishing the desirability from a national point of view of releasing the' various goods required. The range- erf the business is well illustrated by the following table 1 , from which it will Ire observed that orders to the' value erf £4,553,049 have, been dealt with up to date.

2. As a result erf v chrse adherence to the directions in regard to supplies given in the early stage's of the' war by tic Imperial authorities, New Zealand to-day is by no means favourably situated for many important commodities required for its national industries, such as wire' ropes, pig iron, terneplate, canvas, anel a number of other lines. The attention of the authorities concerned in the United Kingdom has recently of necessity been forcibly directed to this situation and its cause. Suitable representations through the High Commissioner have also been made, and latest advices indicate this action will produce profitable results to the Dominion. SHIPPING-SPACE INWARDS TO NEW ZEALAND AMI) COASTWISE. 1. The shortage of tonnage, which constitutes an ever-present problem to all interested in exports, similarly perplexes those concerned in the conveyance of merchandise inwards ter New Zealand and coastwise along its shores. 2. (a.) A review of the regular steamer service's shows the following ;—

(b.) As regards intercolonial and coastal coa] and cargo vessels, the Union Steamship Company (Limited) advise rue that, lor the year August, 1913, to July, 1911. they operated thirty-erne steamers, with a, tonnage; capacity equivalent to 87,101 tons, us against tire year August, 1917, to July, 1918, twenty-four steamers, with a capacity of 50,250 tons. Included in the; twenty-four vessels operating during 1917-18 there' are three steamers purchased by the Union Company which are not, included in the thirty-one operating in pre-war days, although sue-h vesseds were employed on the' Ne-w Zealand coast anel in intercolonial trades. (c.) As a further bearing on the intercolonial tonnage position, investigation shows the following Newcistle-e-oal importations by vessels other than those belonging to the Union Company: August, 1913, to July, 1911 .. .. .. .. 141,523 tons of coal. August, 1917, to July, 1918 .. .. .. .. 50,541 tons of coal. It is considered advisable to set out this information, because it shows that a number of vessels which came ter Nerw Zealand in pre-war days have either been retained on the Australian const or have been diverted by their owners, probably in more remunerative directions. 3. Where trips are shown in the table in paragraph 2 above', the outward voyage' is treated as one trip anel the homeward voyage as one trip. This is mentioned in order to make it clear that where live trips are' shown it; may mean three outward and two inward voyages, or vice versa. I. (a.) As regards the Vancouver service, the withdrawal of tire " Mamma " for national service was met by an express service; run by the " Niagara " and " Mnkura," under which these vessels are

i Received, i Signed. Under Clerical | Under Action. | Consideration. Value. United Kingdom .. j United State's of America Canada .. Australia India 1 7,455 7.309 1,043 1,010 103 99 509 189 8 7 23 22 2 8 03 11 2 12 I £ 3,059,717 1,050,278 02,606 371,458 8,990 Totals .. I 9,118 8,974 55 89 1.553,049

Service. Vancouver mail Sirir Francisco mail Trans-Pacific cargo Intercolonial mail and passenger Calcutta August, 1913, to drily, 1914. August, 1917. ti .Ships. | Trips. Capacity. Ships. Trips. Tons. 28 83,200 2 25 4 20 62.500 2 19 17 120.050 .. 25 13 270 099.400 7 151 2 5 45,050 2 5 1,010.800 July, 191K. Capacity. Tons. 88,loo 32,500 87.420 352.200 31,500 Totals 589.720 i !

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pushed at a high speed, with extremely short time at terminals. It is considered highly creditable to the management that these two vessels have maintained a northward and southward trip in. two months instead of in three months as in pre-war days. The carrying-capacity by this means achieved is actually more for the war year than in the pre-war year above mentioned. (b.) As regards the San Francisco service, this shows a very considerable diminution, due to the smaller vessels employed. (c.) Trans-Pacific cargo service : The withdrawal for national requirements of ships most suitable for this service has considerably restricted the tonnage capacity available. (d.) As regards the Calcutta service, it will be observed that the same number of trips have been maintained, the difference in tonnage being due to the smaller vessels employed. In this instance, the " Aparima," which in pre-war days was employed in this service, and since lost by enemy action, was approximately 50 per cent, larger than the vessel now doing her running. 5. From the foregoing it will be seen that the shortage of tonnage has created very considerable difficulties, and othe;r factors arising out of the war have had. a similar effect. For instance : — («.) In pre-war days when any extraordinary development occurred it was always possible to charter tonnage, and for some years previous to the war several New Zealand interests invariably had large cargo-vessels chartered to them. At the present time it is impossible' to charter any tonnage, and it is therefore extremely difficult for those interested to deal with any variation causing an increase of ordinary business. (6.) It must be borne in mind also that the almost entire cessation of shipments of fertilizers from Europe, Egypt, and the United Kingdom has augmented shipments from Australia to the Dominion. This comment also applies to salt now coming from Australia and from the, Pacific Coast. (c.) So far as the Pacific Coast trade is concerned, early in the war the cargo-steamers which were in the habit of loading for New Zealand from the eastern ports of Canada and New York, and other eastern American ports, have almost entirely disappeared. This increased to a very considerable extent the quantities of cargo, such as paper and oils, from Vancouver and San Francisco. (d.) As an illustration of a development which did not exist in pre-war days and which absorbs considerable tonnage, it h desirable to refer to the necessity for drawing large supplies of wheat from Australia. For the next eighteen, months the importations of wheat will be greater even than those which eventuated last year, and the tonnage to be set aside for this purpose has to be drawn from the t educed fleet of cargo-steamers now operating. (c.) The changing conditions due to the war have not tended ter facilitate the despatch erf steamers. It is manifest that labour on the waterfront is gradually becoming scarcer, and, further, the limitation of railway services on port lines has at times restricted the rapid despatch of vessels other than overseas ships. Further, the necessity of navigating Cook Strait in daylight now prevents quick coal trips to the West Coast. In addition, there have been interruptions in the' work at the mines, and a smaller output has naturally accentuated the demand for coal. (/.) When the war commenced it was not generally anticipated it would last as long as it has, and during the first two years everything possible in connection with repairs to vessels that were not absolutely essential was set aside, but owing to the long period of the war it is now found absolutely necessary to undertake overhauls to various vessels, although at the present time, only absolutely essential work is being carried out. 0, In view of the above it is not difficult to comprehend the reasons for frequent delays in finding freight opportunities both coastwise and inwards to New Zealand. The commodities which have probably suffered most through lack of transport have been light produce, such as chaff, straw, hay, <fee, which in times past, when ample space was offering, were accepted as " fill-up " cargo at reasonable rates. As a result of the e;xtreme pressure in every direction it has been difficult ter make' as satisfactory arrangements for this as obtained in pre-war days, but notwithstanding this 1 think it can be submitted that all requirements have been reasonably catered for, in view of the difficult conditions prevailing, and it is satisfactory to record that no industry has been stopped, although inconvenience at times may have arisen. Probably New Zealand has so far suffered less than any other British possession through the shortage of shipping during the period of this devastating war, which has now continued for more than four years. 7. To meet the situation which has arisen owing to the shortage of tonnage coming under this head, an arrangement has been come to between my Department and the shipping companies concerned whereby in special cases regard will be had to my views on such applications for space as are considered entitled to preference. By this means the; ordinary commercial procedure of applying for space is is not disturbed, but those awkwardly situated are able, if they wish, to request further consideration from an independent e.[uarter. 8. Looking to the future it is difficult to see how conditions will be immediately ameliorated on the cessation of hostilities, but I have no doubt that a gradual improvement can be confidently expected when the imperative need for vigorously prosecuting the' war has ceased ter demand the fullest attention of all interests and activities. CONCLUSION. On this occasion it is desirable to mention that those gentlemen who associated themselves with me at the inception of the Department have, since my last report, completed over three years of valuable and gratuitous service in acting with me in various capacities. It will be; recognized that the character of the business dealt with in this report is such as to afford a field where their respective' talents can be very advantageously utilized from a national standpoint. Such service they have readily afforded, and I therefore acknowledge the great assistance' they have been in their respective

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spheres. This especially applies to my advisors the Munitions and Supplies Board. The following have been associated with the Department in honorary capacities : — The Munitions and Supplies Board, consisting of A. H. Miles, Esq., 0.8. E. (Chairman), Alexander Macintosh, Esq., and George Wilson, Esq. Sidney Kirkcaldie, Esq. and J. L. Morrison, Esq. (soft-goods experts). James Marchbanks, Esq. (engineer). W. H. Morton, Esq. (engineer). M. P. Cameron, Esq. (hardware-buyer). A. W. Blair, Esq. (solicitor). I trust that the great conflict which has caused these gentlemen anel others to especially associate themselves with the Government will at an early date exhibit reliable indications of terminating successfully to the allied arms.. Under such conditions they will, I am sure, derive satisfaction in reflecting on what has been done, but until then we are, in honour bound to in no way relax our efforts, nor to take action likely to increase the difficulties of the Imperial authorities in meeting the heavy demands which the war has made on the resources of the Empire. Throughout the period under review the staff of the Department (controlled by my Chief Executive Officer, Mr. A. M. Adams), has rendered creditable and satisfactory service under conditions of continuous pressure. Arthur M. Myers, 30th September, 1918. Minister in Charge of Munitions and Supplies.

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