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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.