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specialised in the matter of manufacturing locomotives, and is devoted to that purpose. They were obtained six years ago —before the Addington "A " compounds were built —and from a country in which labour-conditions are better from a manufacturer's point of view than New Zealand, and from-the largest railway locomotive manufacturing shops in the world, specially equipped with all the latest appliances for the rapid manufacture of locomotives. The "Q " engine, moreover, is a "simple" engine, while the "A" is a "compound," and the "Q" does not compare with the New-Zealand-manufactured locomotive either in class of workmanship or the material used therein. A comparison of the Class "Q " locomotive with the "A" is therefore valueless for the purpose for which it has been introduced. Dealing next with the Class " B " locomotives, again the Board's figures have been obtained by including labour as well as material on the assumption of the 33J-per-cent. basis for the purposes of making a comparison with the Sharp-Stewart engines. The latter were obtained in the year 1900. The Addington locomotives were built subsequent to 1903. Here, again, the labourconditions have militated against New Zealand from the point of view of the manufacturer of the locomotives. The firm of Sharp-Stewart, being largely engaged in locomotive-manufacturing work, have a further advantage in the matter of equipment of their shops. The same remarks apply to the comparison instituted between the nine " U " locomotives built at Addington and the six " Uα " locomotives built by Sharp-Stewart and the ten " Uc " locomotives built by the same firm in 1901, and the ten "Uβ " locomotives obtained from the Baldwin Company. In every single instance in which the Board has made comparisons it has entirely failed to appreciate the widely divergent conditions that exist in respect to labour and facilities in New Zealand, and the conditions existing in countries such as the United Kingdom and the United States of America. It has, moreover, assumed, without having any evidence to support the fact, that the charges for the locomotives include a 33J-per-cent. commission based on both labour and material. It was, however, recognised that, in so far as imported locomotives were concerned, the labour-conditions and the fact that the locomotive-manufacturers specialised in that particular work, enable contracts to be let abroad at a cheaper rate than the engines could be manufactured in the Railway workshops. With respect to the comparison of the ten locomotives built at Addington and those built at Hillside and by Price Bros., it must be borne in mind that all the experimental work in connection with this class of engine was undertaken at Addington, a considerable proportion of the work being done under stress of circumstances and at overtime rates. Hillside had the benefit of tlfe patterns made at Addington, and, as the work was done under ordinary circumstances, the engines were built at a cheaper rate per ton than the Addington lot, and, taking the figures as a basis, the Hillside locomotives were built at a much lower rate per ton than the contract for locomotives of the same class let to Messrs. Price Bros. In nearly every case in which the building of a new type of locomotive has been undertaken in the Dominion, the experimental work has been done at Addingtou, and this has naturally increased the cost of production at that shop to some considerable extent. I do not concur in the Board's views respecting the difference in cost of the locomotives built in the Railway Workshops at Addington and those manufactured elsewhere, and, as I have already pointed out, in my opinion the loading of the locomotives built in the Railway workshops with a heavy percentage on the cost of material and labour is not justifiable. The effect of the Board's methods is plainly seen in their comparison between the cost of the " Wf " locomotives manufactured by Price Bros, and by the Railway Department. Messrs. Price Bros.' rate per ton works out at £86 19s. Bd.; the Railway figures give a rate of £77 15s. 7d. per ton at Hillside, and at Addington, where the experimental work was done, £89 6s. sd. The Board, by fixing a higher rate of commission than charged under any other railway system referred to above, in a double sense increases the cost at Hillside by nearly £13 per ton, and at AddiqgiM by £14 per ton. The same methods have been adopted in respect to other comparisons; and the fact that wages in England and America are very much lower than the rates ruling in New Zealand has been ignored. Instead of the rate per ton for " Wi<' " locomotives of Messrs. Price Bros, being lower than those built in the Railway workshops, they are actually £9 per ton higher than at Hillside and £2 per ton lower than at Addington. With respect to the " A " locomotives, the question of the rate at which Messrs. Price Bros, are paid being remunerative or otherwise can, I think, easily be determined by comparing the price per ton of the Class "A " compound with that of Class " Wf." The contract for the latter was let in 1905, at a tonnage-rate of £86 19s. Bd. ; the "A "s were let in 1906 and 1909, at a rate which works out at £73 16s. 4d. per ton. In the meantime the Arbitration Court had increased the wages of the tradesmen, thus raising the expenses of the firm. As the contract rates for the " Wf "s were regarded as a reasonable rate, it is apparent that the firm's statement that they are losing money on the "A"s is correct. The Board has followed the same method of arriving at the cost of castings as it has at the cost of locomotives, and by increasing the commission arrived at the rates stated. Notwithstanding this, the fact remains that the Department can supply to its own shops castings at the rate of £12 10s. per ton, and this rate is less than the rate at which outside firms tendered to supply the Government's requirements. At Christchurch the rate for castings up to 71b. in weight was £16 per ton: over 71b. and up to 1001b., £14 per ton; castings over 1001b., £13 10s. per ton; special castings, £16 per ton. The Railway Department's rates are £15 per ton for castings under 71b., and £12 10s. per ton for castings over 71b., the average all-round rate being £12 10s. per ton. With respect to the manufacture of points and crossings, the only point at issue is the amount that should be charged as commission. The Board considers 33J per cent., while the Department is of opinion that 15 per cent, is sufficient to add to work that is being carried on for its own purposes.