r>.—2

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Island main-line; system, and are largely responsible for the failure of the system to pay the policy rate of interest on. capital.

Another factor that cemtributed very materially to the; difference in the returns obtained in the South Island and North Island respectively was competition by road. The South Island, by reason of its superior roads and topographical features, lends itself more readily to road transport than the North Island. The problem of dealing with tho traffic em these branch linos with a vie;w to securing a more remunerative return has for some time been engaging the attention of the Department, and it is hoped that the experiments which it is proposed to undertake in connection with rail-motor transport may provide at least a partial solution to tho problem. I have, &c, R. W. McVilly, Tho Hon. tho Minister of Railways. General Manager.

Branch. Not Loss on . , ,.' Revenue. Working. "JJf | Branch. Net Revenue. Loss on Working. Loss, including Interest. Waiuku . . Waitara .. Toko £ £ £ £ £ 7,151 3,120 28,748 2,441 5,358 14,502 8,582 20,896 2,497 13,650 381 5,088 • 10,119 £ £ £ Greytown Eskdale .. Cheviot . . Oxford-Eyreton Little River White Cliffs Mount Somers Pairlie Waimate .. 38 .. 7,151 2,184 3,120 2,098 28,748 2,184 2,098 2,064 1,029 1,366 2,901 16,801 1,561 11,336 Ngapara .. Waiheino . . Otago Central Lawrence .. Tapanui Waikaka .. Switzers Glenliaiu .. Seaward Bush Forest Hill Mararoa .. .. 12,028 3,343 2,395 816 2,241 4,690 761 2,056 4,053 8,648 2,064 11,779 13,655 9,344 3,322 4,058 7,134 3,599 2,254 1,728 4,988 1,383 701 3,190 5,062 Totals .. 20,395 68,688 220,118 K urow