But the point of view he wished to bring out so far as the passenger business went was its commercial aspect. The position was well in hand, and the commercial competition with the railways in New Zealand was not growing to any material extent. The Department had instituted cheap excursions, which had saved the situation from the point of view of the railway passenger returns. It was almost a wholly new traffic, and the result had been that the passenger traffic had now assumed more substantial dimensions. It was certainly a “bread and butter” line, but from the point of view of service to the community it stood very high indeed. It was found to-day that the people whose pecuniary position was not strong and who were to a large extent crowded together in cities were now able, through the railways, to get out and have a breath of fresh air at a rate that was within their means and could not be given by any competitive form of transport. This was something for which the Department was entitled to credit, a credit that was by no means directly represented by the figures in the revenue account.—Mr. H. H. Sterling.

How Ledger Could Be Balanced.

It would be seen that those goods represented, approximately, 86 per cent. of the total that the railways carried. The revenue from these goods was £3,798,953, out of a total goods revenue of £4,898,391, or less than 78 per cent, of the total, so that while those low-rated goods represented 86 per cent, of the tonnage the revenue got from them represented 78 per cent, of the revenue. It would be clear to the members, therefore, that the other 14 per cent, should carry a margin on the rates which would enable the railways to catch up on the low-rate goods. The main point was this: that inasmuch as the low-rate goods represented such a large proportion of the total tonnage it would not be an impossible matter for the Railway Department to square its ledger by increasing the rate on those low - rate goods.

Reasons for Hesitation.

Why, then, did the Department hesitate? It hesitated for two reasons. The first was that, if it increased those rates to an extent that would balance the ledger, it would be collecting from the users of the railways more than a private company would collect—from this point of view: that inasmuch as the community was receiving a benefit through the developmental rates from the railway expenditure, the community as a whole and not the users of the railways, should pay for that. The community enjoyed the benefit and should pay something for that benefit, and the Department should not require to obtain more in the way of revenue from the customers than a private railway would do.

The second point was that the Department might find that an increase on those low-rate goods would not be in the best interests of the community.

The Equitable Course.

If a man was not willing to give the page 20 railways the capacity, by conveying his high-rate goods as they had done in the past, to continue carrying those low-rate goods, he was not entitled to stand in with his neighbour and enjoy the same rates on his low-rate goods as his neighbour. A great deal of reflection had led him to the conclusion that that was not only equitable as between individuals, but the best way in which the railway position could, apart from legislative action, be guided in this country along the lines of stopping the increase in the difference on account of revenue and expenditure.

The Matter of Expenditure.

When members of a Chamber of Commerce were considering, as taxpayers, or as shareholders of the railway concern, the question as to whether that deficit should be there or not, they, as business men, said: “Well, if the expenditure were less or the revenue more, that would mean at least that the deficit, to the extent that it is affected by either of these factors, would be lessened.”

They wished to know was the expenditure down where it ought to be and were the railways getting as much business as they ought to get by such methods as it was within the scope of the Department's authority to adopt. He could assure his hearers that the railways were being run as economically as the circumstances permitted. He had gone into this matter at considerable length in his last Annual Statement and he had placed definite costing figures before the public. He gave the statistics of railway operation which were there on record for perusal by anyone who might care to analyse them, and he had made an honest endeavour to give such explanations as would make the significance of the statistics manifest and enable anyone interested to get an intelligent grasp of them. endeavour to give such explanations as would make the significance of the statistics manifest and enable anyone interested to get an intelligent grasp of them.