D.—2.

The section of line from Eskdale to Putorino had been opened some four months before the date of tiie earthquake. Ihe Board examined the economic position of this line very carefully in connection w lts review of lines under construction as this section of line formed an integral part of the proposed railway from Napier to Gisborne. The Board found that the completion of the line to airoa would not be justified. Its reasons for this finding are fully set out in the report which was presented to Parliament last year, and need not be here repeated. In the present connection the -Board would say that the reasons, which in its opinion justified its recommendation that the line to Wairoa should not be completed, also justify the conclusion that the line between Napier and rutonno was not a sound economic proposition. While the line from Napier to Putorino was open or traffic the Working Railways Department had a through-booking scheme in operation by rail and road linking up the towns between Putorino and Gisborne with all stations on the North Island Railway system. This was done man endeavour to obtain the transport business over that route tor tie railway. Ihe effort was, however, not successful, notwithstanding that quite substantial reductions were made m the rates. The Board could see no reason to believe that another similar fo , kflt an y different result and there is not the slightest doubt in the mind of the tfoard that had the earthquake not occurred the section of the line between Napier and Putorino would have been a case for consideration under section 20 of the Government Railways Amendment Act, 1931, and the Board s conclusion is that the line would ultimately have had to be closed under the provisions of that section. _ The line was very badly damaged by the earthquake, in some places emg completely covered to quite a substantial extent. Inquiries showed that considerable expenditure would be involved m clearing the line and restoring it to a condition for traffic-working. Quite obviouslv if the line were such as to hold little or no promise of continued working if it had. remained undamaged ' ere . couic J n( jt be the slightest justification for incurring the expenditure that would be required for restoring the line when nature had closed it. For these reasons the Board could not see its way to authorize this expenditure, and the line has accordingly not been restored. FINANCIAL. On the 31st March 1932, the capital invested in the lines open for traffic, including the steamers ?rnr?™ 0n ° ther subsidia] 7 services, was £51,424,883, as compared with £0U,04:0,l04: on <31st March, 1931. p lt . additions to the capital account totalled £754,078, and comprised Maintenance Branch £155,521, chiefly m bridge construction; Signals Branch, £30,934, in new telephone lines and extension l 4 ™ control; Public Works Department, £193,981, expended on Tawa Flat deviation- and ±373,642, expended on the construction of new rolling-stock. During the year loan-moneys amounting to £439,190 were repaid to the capital account, and the net addition to capital for the year was £314,888. Ist A T nril mrr^nSnnn 78 ĀCt ' 1931 ' autWed reduction of capital as at Ist April 1931, by £10,400,000, which amount represented the estimated amount of accrued depreciation and losses of capital not otherwise provided for up to that date. The reduction made possible the writing-off of all assets which had at 31st March, 1931, reached the full term of life fixed for the purpose of determining depreciation rates. The financial results of the operations for the year ended 31st March, 1932, were as follow Year ended Year ended 31st March, 31st March, Variation 1932. 1931. Gross revenue .. 6,50!,948 7,571,537 -1,062 589 Gross expenditure 5,670,955 6,882,810 -1 211 855 Net revenue 837,993 688,727 + 149,'266 Interest charges .. .. .. ..2,221,465 2,255,345 - 33,880 Excess of interest charges over net revenue .. 1,383,472 1,566,618 — 183 146 The gross earnings for the year were £6,508,948, a decrease of £1,062,589 (14-03 per cent) sastes w *° d * *—• £u7w6B <214 «»<■> •»*•»* a « i x 1?" ¥ R ™? S were the lowest since the year ended 31st March, 1920, when the revenue totalled £5,752,487. In 1920 the mileage of track operated was 2,996, as compared with 3,315 in the financial year just closed. During the past year the railways suffered severely from the trade depression and the substantial decline m revenue is principally due to this cause. The gross expenditure totalled £5,670,955, a decrease of £1,211,855 (17-61 per cent.) compared 31st MarchTS? & ° f £I'6B1 ' 687 ' 904 (22 ' 9 P er Ceut -) compared with the year ended Interest charges totalled £2,221,465, a decrease of £33,880 compared with the previous year For the years ended 31st March, 1930 and 1931, interest was computed on the total sum expended on the railways less £8,100,000 as provided 111 the Finance Act, 1929. In the year under review the capital account has been reduced by £10,400,000 in terms of subsection (2) of section 23 of the (jovernment Railways Amendment Act, 1931, such amount being inclusive of the sum of £8 100 000 before mentioned. The reduction in interest charges is due to this factor. The accumulated loss which stood 011 the balance-sheet at 31st March 1931 at £1 89? 017 was written off against the depreciation reserve £1,658,253, and the balance—viz., chareed against the general reserve. • b

VII