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and circumstances peculiar to its system ; consequently no comparison could be made as between the railways of one' country and those of another without a full practical knowledge of the local circumstances and conditions and the extent to which the administration is controlled by a general policy. The purpose of the table is merely to indicate in a general way that the operations of all have been more or less affected in common by the war and post-war conditions which have prevailed from 1914 to date, and that, when the results in the various countries are considered together, it cannot but be concluded that those achieved in New Zealand aro certainly not less satisfactory than those obtained elsewhere. The railways are the centre of many —and often conflicting- interests. No problem of economic life is at the present time of more vital concern to the community than that involved in the question of transportation. It is a recognized principle in all businesses that definite knowledge of the influences likely to operate in favour of, or against, the enterprise, is essential. Without such a knowledge successful achievement is unlikely. The administration of any large concern such as the Railway Department may be very seriously handicapped by the misdirected efforts of well-intentioned but uninformed persons, and by endeavours to make personal or local interests in which such people are concerned of paramount importance. Unfortunately, the public, seem prone to give quite undue weight to the statements of such persons, and to look with suspicion upon those made by the persons charged with the administration of the railways. The management of the Railway Department in New Zealand is, as I have frequently pointed out, in the position of a trustee for the general public, and must make the public interest paramount in the consideration of all requests involving concessions or increased expenditure. Demands for reductions in rates and increased train services and facilities are strongly pressed by various sections of the public ; the one involves reduction of the revenue— the other an increase in expenditure. One section of the public demands a speeding-up of trains ; another section opposes this and demands an increase in the stopping-places of the expresses- -this is but one example of the sharp conflict between the general and the purely local interests, and when the matter is considered in this light—as, indeed, the Department must consider it —there is no room for doubt as to the proper decision to be made thereon. It is not an uncommon assertion that the railways should bo worked on business lines. What is meant by this is not always obvious. Sometimes the suggestion appears to be no more than that the railways should be worked economically, while at other times it seems to be more in the direction of what may be called the literal meaning of the words. If the first is meant I claim that, notwithstanding the strong opposition that is always manifested to every attempt to curtail train services in the interests of economy, the results of the year's operations furnish the most convincing evidence of economical working. If the latter is meant, then I say that an institution such as the railways in New Zealand cannot be so worked. Businesses as such are conducted for profit, and for that alone, and profit cannot be the sole determining factor in the settlement of the railway policy. There are public necessities which must be met, but when this has been done and. services arc asked for additional to those required as a matter of absolute necessity, then the policy of tho Department must be to require a reasonable financial return for such services. Every service has to be paid for, and if the revenue received from the persons to whom it is rendered is insufficient to meet the expense of providing it the loss has to be met by the general taxpayer. Common justice as well as the dictates of sound business principles requires that services should be kept strictly within the limits of actual necessity, and. if by working the railways on business lines is meant that as far as possible and subject to the necessities of the case the users of the, railways should pay for the services rendered them at a rate sufficient to meet the expenditure, and that applicants for additional services should bo required to justify their requests on financial grounds or on grounds of absolute necessity, then I bog to record my agreement with the principle. Without doubt, the Department could, under a policy having for its only object tho obtaining of the best financial results, earn profits which would give a much higher rate of interest on the capital outlay than is at present obtained. This would, however, entail the abandonment of the longsettled policy that the railways should be used as a means to promote settlement, increase the productiveness of the country, and foster local industry. Hitherto the benefits accruing to the Dominion from this latter policy have been considered to far outweigh any financial advantages that might be obtained by a departure therefrom. Since the foregoing note regarding level crossings was written I have had an opportunity of perusing a report recently made to the New Zealand Automobile Union and to the Wellington Automobile Club by Mr. C. M. Banks, president of both the union and the club. This report has been published in the newspapers, and, as it constitutes a very thoughtful and valuable contribution from a motorist's point of view to the discussions regarding accidents, I attach a copy thereof as an appendix to my report. It will be seen that Mr. Banks arrives at the same final conclusion as that to which I have given expression herein. I have, &c, R. W. McVilly, The Hon. the Minister of Railways. General Manager.

iii—D. 2.

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