In order to fully understand the railway problem, it is very necessary to have a clear idea of the essential difference between reckoning fares and rates on the present and on the proposed system: the vast importance of the difference between these systems is very imperfectly understood. This is not to be wondered at, as, indeed, the issue has only recently been raised. So far as I am aware, the proposal to reckon fares and rates by stages was first made in this city in 1882, and subsequently in 1886 in London by the late Mr. Charles Waring.

Up to quite a recent period the railway men have asserted that their basis of rating was actual "cost of service" per mile, and they contend that charges can only be fairly made at per mile, modified by differential rates, the controllers of railways to have the right to make these differential rates as they please.

Other writers and myself have so mercilessly assailed and exposed this fraudulent system, that we now hear nothing of the pretence of "cost of service," but the railway men openly assert that they have the right to regulate their charges by "what the traffic will bear." In plain English, to take all they can possibly get from the users of railways, the only limit to their impositions being the tear of losing their trade.

I speak of this system as "fraudulent" advisedly, and assert that it was invented for the sole purpose of defrauding the public. That I am justified in speaking thus strongly is proved by the recent severe legislation of England and America against it. In those countries it is now prohibited under very severe penalties.

In March, 1889, the American Senate passed an amendment to their Inter-State Commerce Bill, imposing penalties of any sum up to £1000, and two years' imprisonment for each and every differential rate given. Must not differential rating be worse than fraudulent to draw such an Act from the Americans, of all people in the world?

This then is the system in force on the New Zealand railways, and the real object of the Government Railways Act of 1887 was to give special facilities for working it to the fullest possible extent. Differential rates are now being imposed as fast as possible on some of our branch railways, that is to say, against the poorest and most undeveloped districts, with the inevitable result that these districts must become poorer and poorer every year. Could any policy be more insane.

I am well aware that this was not the intention of Parliament, but I emphatically say, that it was the intention of those who framed and procured the passing of this most disastrous piece of legislation.

The great defect of any mileage system is that it must of necessity, and actually does, force trade, commerce, and imputation back on the great cities, and depopulates the country districts.

What I mean is this: Under the present system, almost invariably, the rate per mile for passenger fares in city and suburban districts is greatly less than the rate per mile in country districts. For 15 miles round Melbourne the rate is only half the country rate. This is also the case in most city arid suburban districts in England, America, and, indeed, almost everywhere.

Now, this system of rating appears to me to be extremely vicious. It is unjust to a degree, its social effects are most disastrous, and it is financially unsound.

It is unjust, because it places country residents and producers under such fearful disadvantages. Its social effects are disastrous, because it is, undoubtedly, the chief cause of the congestion of population in the great cities of the world, and this, again, is the chief producer of disease, poverty, and crime. It is financially unsound, because it preys on its own vitals, by destroying the country districts and towns, and thus, ultimately, crippling the trade of the great cities and seaports.

That thus must be the effect of mileage rating the railway officials themselves have given the most convincing proof.

In Parliamentary paper I.-9, on page 89, will be found a table prepared by Mr. A. C. Fife, the accountant of the Railway Department, and this is what it tells us:—

The total number of passengers that travelled on the Auckland lines during 1885-86, was 424,914, and the gross amount they paid was £39,909.

Of this number 292,949 travelled distances of 10 miles and under, and paid £9596. They represented the city population, and formed 68.8 per cent, of the whole; they, however, paid only 24 per cent, of the revenue.

Travellers of over 10 miles and not ex-ceeding 50 miles numbered 107,202, and they page 5 paid £15,647. They represented the most favoured of the farmer class as regards railway rating, and formed 25.2 percent, of the whole, but they paid 39.2 per cent, of the revenue.

The unfortunates who had to travel over 50 miles numbered only 24,762, and they had to pay £14,666. Thus only 5.8 per cent, of the travellers paid 36.7 per cent, of the whole revenue.

It must be remembered that all goods rates are levied on the same system. Is it any wonder that people crowd down upon the cities? Is it possible for them to do anything else? Can we ever settle the country and develop its resources under such a system?

I commend these facts to the consideration of my country friends. A great effort has been made lately to convince them that they will secure an advantage over the cities if they obtain cheap mileage rates for manures, produce, and stock. Can any such reductions redress the wrong pointed out?

The railways of the colony belong to the whole people. Why then should 292,949 colonists be able to reach their homes and transact their business for a payment of £9596, while another 24,762, or say one-twelfth of the number had to pay £14,666. I am not arguing for the universal fare, but I say that a discrepancy like this is not only a grievous injustice, but as a financial arrangement is as silly and unsound as it can possibly be. As a colony we shall have no real progress until this is altered.

As to a stage system, it must on no account be a system of equal stages, as such a system would, although in a less degree, embrace all the evils of milage rating.

I fully expect to find our Commissioners before long endeavouring to introduce a system of equal stages, and I warn my fellow-colonists to resist to the utmost any such attempt.

The system proposed for New Zealand is one of unequal stages, and the basis of rating is average cost and population. This, I hold, to be the only true basis.

The following letter to the Chairman of the Railways Rates and Charges Committee of 1886, briefly describes this system:—