D —2 (

XIII

Past and Present Transport Developments. A summarized survey of the past in relation to New Zealand's internal transport and the actions taken in regard thereto for the protection of public interests, supplemented by a statement of the position as it now stands, will help to clear the way for consideration of what requires to be done in the future. Prior to 1914 motor competition had not seriously affected the Railways. They were carrying out a developmental programme largely on " departmental" lines, with fares and freights generally set at rates which produced a return to capital lower than was necessary to make them self-supporting in the business sense. They had no provision for the replacement of wasting assets, no endowments, no reserves, no betterment funds, and no commercial balance-sheet to reveal to the public the actual financial position in which they stood. This position, too, was acquiesed in by the majority of New-Zealanders, for it was recognized that although not credited with the increased values to land and benefits to settlers which their coming conferred, they did actually assist the country, from a colonizing aspect, far more than their direct earnings revealed. There was a feeling, too, that competitive business methods were unsuited to a Government Department. In the Department itself, owing to the absence of the necessary incentive usually arising from competitive conditions, there did not exist, nor had there, indeed, been required, a commercial sense or business-getting side to its operations, this position being, moreover, quite in keeping with, and natural to, the then stage of the country's transport development. The general idea prevailing was to carry what was offered, under certain unbending regulations, many of which were of long standing and proved particularly irksome to traders in view of the general conditions then existing outside in the business world. The Hiley report of 1914 gave promise of something constructive in the way of progressive development in opening new lines and improving existing ones, but the war cut across all normal industrial developments in the Railways as well as elsewhere ; and after the war the post-war problems of staffing, high prices, and general stringency tended to delay adjustment in line with modern requirements. All the time, however, improvements in the motor-vehicle field were being made most rapidly, and by the time (in 1923) that the Railways were placed under my control heavy inroads were being made on the Department's passenger and goods traffic by privately-owned motor-propelled vehicles. My first business was to make a complete tour of the railway system in both Islands, with a view to becoming personally acquainted with the internal working of the Department. This disclosed the fact that the railways were an efficient transportation organization on the technical side, hut; requiring (in keeping with the changed times) such changes as would develop them along reasonable commercial lines without sacrificing their utility as a developmental asset to the country. By 1925 considerable progress had been made, and I was able to make announcement of policy in regard to tariff, finance, the interrelation of Departments, assistance to primary and secondary industries, improved services and equipment, level crossings and grade-easements, station improvements and other increased facilities, use of New Zealand coal, commercial methods, the keeping in touch with world standards, excursion-traffic projects, staff organization, transport co-ordina-tion, &c. All of these matters have had my personal attention, and in regard to each of them the position has already been changed materially for the better. Then financial reorganization, time-table improvements, workshops reconstruction, stores reorganization, and tariff revision have all assisted to make the Railway Department a much more efficient business organization than it was some years ago. It does give good services ; its outlook is much broader, and satisfies the requirements of passengers and shippers to a much greater extent and with a more accommodating spirit; commercial relations are much easier ; and greater keenness regarding business progress and opportunities for development is everywhere evident amongst a staff where merit is now the main test of promotion. All these things are well, but they have not succeeded in providing the Department with an adequate proportion of increased business comparable with the expansion which has taken place in population, and in our export, import, and internal trade.