Refer to Tables C, D, And E.

These tables give more in detail the working of our three chief sections of railway. It will be seen that the capital said to be invested in the Auckland Section, increased during the six years, £643,659, and the mileage 32 miles, or at the rate of £20,114 per mile. We have the curious statement made that in 1900 the mileage of this section Decreased 5 Miles. The small percentage figures in columns 5 and 6, show the percentage of the votes for "Additions to Open Lines" which each section received. I must explain that while we are told the amount spent on each section out of this vote on the permanent way, we are not told what each section obtained in rolling stock, but we may make sure that the South got quite as large a percentage of that as she did of the Permanent way expenditure. These percentages are worked out to round figures only.

It will be seen how unfairly Auckland has been treated. The effect, of course, has been to make it appear that this section earned the lowest rate of interest, because she has been made to pay a larger share of her renewals out of revenue, Auckland having only about 6 per cent, of the loan money, and the South from 40 to 55 per cent.

The increase of loss on this section rose from £2,999 in 1897 over 1896 to £39,580 in 1902 over that of 1901, and for the six years £98,267. The increase in the number of employees was 345, and the Government state that the cost of earning each £100 rose from £64 11s. to £64 17s. 2½d.

On the Wellington Section we have this fact revealed that during the last four years—four years only—its capital was increased £692,800. but not one single mile was added to its length. As a matter of fact, the whole amount was used to help up the revenue, page 12 said to be earned, and was treated as so much capital [unclear: invested] in this section. During the five years the increase in capita! [unclear: was] £852,546, and in mileage 25 miles, which is at the rate of [unclear: £33,050] per mile. During the five years the number of employees was [unclear: creased] by 954, and during the last four years 730, although [unclear: not] one single mile was added to the section. What was found for them to do is a puzzle. The increase in working expenses for [unclear: the] five years was £224,898, and the increase of loss rose from [unclear: £91,418] in 1898 to £438,462 in 1902, and the total increased loss—please [unclear: remember] the increase only—not total, for the five years was [unclear: £760,568] and the cost of earning each £100 rose from £68 11s 5d. to [unclear: £7] 16s. 5d.

On the favoured Hurunui-Bluff Section, the increase of [unclear: capital] was £1,400,130, as compared with £643.659 in Auckland, [unclear: and] £852,546 in Wellington. The increase in the cost of keeping [unclear: the] section open was £1,035,220, as compared with £182,180 in [unclear: Auckland], and £1,037,767 in Wellington. Deducting the increase of gross revenue from these figures leaves the actual Increase [unclear: on] Loss which fell on the public at £98,267 [unclear: in] Auckland, £760,262 Wellington, and £762,049 in Canterbury and Otago.

On this section the increase in working expenses for the [unclear: six] years was £230,609. The increase in mileage was 66 miles, and [unclear: the] increase in the number of employees 1,205. Yes, 1,205 for [unclear: this] section only, which means 4,251 men to work 1,198 miles of [unclear: not] half employed railways. It will be seen that the two least [unclear: progres]sive provinces in the whole colony were largely favoured at [unclear: the] expense of the rest who pay by far the largest portion of [unclear: the] revenue.

Table F will perhaps bring out this unfair expenditure of [unclear: the] public funds a little more clearly. It will be seen that between the censuses of 1897 and 1901, Auckland increased its population [unclear: 5,986] more than the united provinces of Canterbury and Otago did, [unclear: and] within 5,192 of the three provinces of Wellington, Taranaki, [unclear: and] Hawke's Bay. When it is remembered that the Government [unclear: has] made gigantic efforts to attract population to the South by a [unclear: levels] expenditure of public funds, in buying and subdividing large [unclear: estates] there, it is easy to see that Auckland is not only the [unclear: most] progressive district in the colony, but also that it is the [unclear: worst] treated by the Government. Refer to Table F.

I call attention to the charges for the transit of goods [unclear: and] passengers on the various sections. I fail to see why [unclear: Auckland] should be called upon to pay 2s. 0¾d. per ton, and Wellington [unclear: 3d] 10d. per ton more for the transport of their goods than [unclear: Canterbury] and Otago do. I say this is due to gross favouritism to the [unclear: same] districts. When I called attention to this some time ago, I [unclear: was] told that it was due to the fact that goods travelled shorter [unclear: distances] in the South than in Auckland, but if this is so, I want [unclear: a] know how it is that the average passenger fare is higher in [unclear: the] page 10 South than it is in Auckland. I am quite sure it is not because be charge per mile is less in Auckland. Goods almost invariably ravel longer distances than passengers, and for this reason: In the suburbs of cities very little of the goods traffic is done by rail, It is nearly all done by horse traction; while, on the contrary, the rail carries enormous numbers of suburban passengers at very low fares, which pull down the general average fare paid. I am therefore certain that the difference in charge is due to favouritism. "Fishplate," too, distinctly says:—"Certain individuals and corporations pay less than standard rates—a circumstance suggestive of undue preference." Undue preference is declared illegal all the world over. On the Wellington Section, it is probable that both passengers and goods do travel longer distances than on the other sections, but not sufficient to account for the difference in charge.

It is not alone as to the revenue earned by our railways that the public is being deceived; it is also misled as to the work being done on them. Page IV. of the Railways Statement, 1902, is a new introduction. The more desperate the position of our railway investment, the greater is the blow made, and the louder the boast of "phenomenal results." On this page, in big black type, it is asserted that the "Net Profit on Working" was £622,349, as compared with £599,388 in 1901, an increase of profit according to their statement of £22,961; the fact being that in 1902 our Railways Lost £1,007,095, as against £493,344 in 1901, or an Increase of Loss in this one year of £513,751, instead of an increase of profit of £22,961. To talk about "Profit" earned by our railways is gross deception. They have never paid one penny of profit, not even the interest they cost us, by a very long way.

Return No. 8, in Railway Statement of 1902, is instructive. It is the first of its kind. It shows that a sum of £71,593, for services said to be rendered to other Departments, has been treated as so much revenue actually earned. As I have before said, this was never done until 1896. Of this amount £34,449 was for passenger and £25,933 goods traffic. If the number of passengers and tons carried these sums represent were deducted as they ought to be, it would greatly reduce the boasted "phenomenal development." To me, considering the large increase of population, of capital invested, the new mileage opened, the development appears to have been very small, and nothing like what it might be under proper administration.

I want again to draw forcible attention to the loss inflicted on the New Zealand public, and the wrong done, more particularly to the Auckland, Nelson, and Blenheim provinces, by the unwarrantable favouritism that has been shown to the provinces south of Auckland, and more particularly to Canterbury, Otago, and Westland. The Wellington-Taranaki and Hawke's Bay and Hurunui-Bluff Sections have long since reached what railway men are pleased to term "Paying Points." Wellington has been joined to page 14 Napier on the East Coast and to New Plymouth on the [unclear: West] Christchurch has been joined to Dunedin, Invercargill, and [unclear: the] Bluff, and both these sections touch numerous prosperous [unclear: towar] between the "paying points" named. The Auckland [unclear: Section] touches no "paying point," but one town of 4,000 [unclear: inhabitant] (Thames), and another of 1,250, and then a few villages. Yet, [unclear: what] do we find? The loss made on both the Southern Sections [unclear: during] the last six years was more than seven and three-quarter (7¾) [unclear: times] the loss made on the Auckland Section. What becomes of [unclear: the] "paying points," which are to be made use of as a further [unclear: excuse] for squandering more money at the south end of the South [unclear: Island]

What is the cause of this deplorable and rapidly-[unclear: increasing] loss? The tables attached prove conclusively that the more [unclear: capit]al we invest, the more miles we open, the more goods and [unclear: passengers] we carry, the more the population and trade of the [unclear: colony] increase, the more disastrous is the loss inflicted on the [unclear: county] by its railways, and I again ask, why?

I reply that the primary cause is the utter rottenness of [unclear: our] railway administration. Surely the wretched old "No-System [unclear: of] Railways" has been long enough upon its trial, and again I [unclear: say] Why not try the new system? It could not by any possibility [unclear: give] worse results than we obtain now.

But why is the result so much worse South of Auckland? [unclear: In] again reply that the more capital there is invested, and the [unclear: most] work there is done, on a vicious system, The Greater Must be [unclear: you] Loss, and the general result of our railway working proves [unclear: that] this is so. As regards Wellington, this section appears to [unclear: me] suffer also from political favouritism. Its mileage is but 110 [unclear: miles] more than Auckland's, yet it has 1,327 more men to work them, [unclear: or] nearly two and a-half times as many as Auckland. The [unclear: Hurun] Bluff has three and a-half times the mileage of the Auckland [unclear: Section], and it takes nearly four and three-quarter times as many [unclear: men] to work it. It ought to be apparent to any business man that [unclear: the] further our railways are extended into the thinly-populated [unclear: dis]tricts, the less number of men per mile ought to be required [unclear: to] work them, but the contrary is the case here. For my part I [unclear: am] convinced the railways are overmanned by men who have [unclear: been] taken on to avoid the Cry of the Unemployed, and make it [unclear: appear] that the labour legislation has been a success.

I hope my Canterbury, Otago, and Westland friends [unclear: will] think that. I am seeking to injure them. The day will come [unclear: when] they will recognise that I am one of their best friends. I [unclear: give] them friendly warning, and say without any fear that the [unclear: resa] will belie the prediction; that if some great alteration in [unclear: administration] is not speedily made, the next few years will see the [unclear: Midland], the Otago Central, and many other of their branch [unclear: lines] closed up. This has had to be done on similar lines in [unclear: Victoria] and it will certainly have to be done here. It would have [unclear: been] page 15 greatly to the advantage of Canterbury and Otago if the Midland and Otago Central had never been commenced. They are merely a drag on the rest of the Hurunui-Bluff Section. If the counties they are supposed to serve cannot take them over, and work them, they certainly will have to be closed if the present loss is maintained. It is not likely that the rest of the colony will consent to support them.

A reference to Table F, column 14, will show that out of every £100 spent from first to last in railway construction, Auckland received £16 14s 7d., Wellington, Taranaki, and Hawke's Bay £23 14s. 10d., Otago and Canterbury, £51 5s. 5d., and Canterbury, Otago. and Westland, which constitute the south end of the South Island, had between them £53 9s. 2½d., leaving but £46 10s. 9½d. for the whole of the rest of New Zealand. I say that it is impossible to believe that such a distribution of the public expenditure can have been made in the interests of the whole colony, and yet we see that the present Government has largely increased the wrong done, to say nothing of its folly, and they evidently intend to go further still in this direction.

Columns 12 and 13 show the relative proportion of rolling stock to mileage in 1888 and 1902 respectively. During this period of 14 years, according to the official records, we have spent on maintaining and renewing our rolling stock no less than £3,264,245. This is probably £50,000 under the real figure, for during their term of office the Commissioners spent £67,270 on "Additions to Open lines," but did not condescend to tell us how they apportioned it. For this huge outlay what have we obtained? Practically nothing but a somewhat improved type of rolling stock. Of the above amount, £2,002,902 was charged against revenue earned, and, £1,261,343 to capital account.

I have searched the records of India and find that there, as soon as a railway loan is placed, railway revenue is at once charged with interest, on the whole amount, whether it is expended or not. They also provide for all renewals out of revenue.

In Africa they reckon interest on open lines only, but they pay for all renewals out of revenue.

In Victoria, railway revenue is charged with interest, on the whole of the loans. They provide for all renewals and repairs from revenue, and they do not treat services to other Departments, which in 1902 represented £145,000, as revenue earned.

Unfortunately I have none of the latest records of the other Australian States by me, but I can safely say this:—That I know of no other place in the world where the railway account is so dishonestly dealt with as it is in New Zealand. I use the word dishonestly, because I fail to find any other which fittingly describes the way in which the public is systematically deceived as to the earnings and real position of our railways. I am con- page 16 stantly told that my statements cannot be true, because we [unclear: have] the Ministerial Assurance that they earn a Profit of £3 8s. [unclear: 6d] per cent.

According to the "Railway Statements," in 1902 the net [unclear: revenue] earned by the Auckland Section increased over that of [unclear: 1960] by £17,172. The net revenue of the Wellington Section [unclear: increased] only £3,991, and the net revenue of the great Hurunui-[unclear: Bluff] Section Decreased, yes, notwithstanding all the money [unclear: lavished] on it, positively decreased £11,765; in other words, gave a [unclear: worst] result by £28,937 for its investment of £9,765,000 than [unclear: Auckland] did for its, investment of only £2,596,000. This, surely, is [unclear: another] convincing proof of the truth of my oft-repeated statement [unclear: that] under the present "no-system" of administration, the greater [unclear: the] capital invested and the larger the trade done, the worse the [unclear: financial] result. What is the use of further pursuing such a system?

When the present Government took office in [unclear: 1893] we had 1881 miles of Working Railways. These with their equipments cost [unclear: on] an average £7,270 per mile. After nine years of their [unclear: administration] we had 2,233 miles, and these cost, an average of £8,130, [unclear: or] £760 per mile added to the cost of the whole 2,235 miles under [unclear: the] present management. This certainly is a "phenomenal [unclear: result] but one on which the Government need not pride themselves, [unclear: and] of which the country will certainly not approve.

The fact that the Hungarians have raised their "Zone" [unclear: fares] has been brought forward by the Department as a proof that [unclear: the] Stage System would fail also. I claim that what has occurred [unclear: is] Hungary is the best proof that has yet been given of the [unclear: soundness] of my views on railway administration. I have no wish to [unclear: boast] but it is as well that I should recall what occurred fourteen [unclear: years] ago.

In June, 1889, a relative in London sent me a small [unclear: clipping] from the London "Standard." This informed me that on the [unclear: 1st] of August following the Hungarians would start their Zone [unclear: System] and gave a brief description of it. I immediately saw the [unclear: wear] spots in their method of arranging the Zones or Stages, and [unclear: wrote] thus to the "Herald" (see New Zealand Herald." 20th July, [unclear: 1883] After describing the system as it was then stated to be, I said:-"The effect will be to still further concentrate population [unclear: and] capital in the chief city, and the social effects will be [unclear: disastrous] As to the financial outcome, for some years, probably many, it [unclear: will] be a great success, but owing to the concentration in one [unclear: centre] it will gradually wear itself out and A Better Stage System [unclear: will] Take its Place." Please remember that this was published [unclear: in] Auckland eleven days before they began work in Hungary. If [unclear: is] were written now it could not more accurately describe what has actually taken place as regards the financial and social effects.

Shortly after I received more correct information and [unclear: again] wrote (see "New Zealand Herald," 22nd August, 1889):—"In" [unclear: as] page 17 ranging the fares, there is an evident clinging to old traditions. The great centre of population is favoured. It will be observed that the fares for the 11th, 12th, and 13th zones of 15½ miles each, are exactly double that of the 15½-mile zone round the capital. This I believe to be a serious defect, and one that will militate against financial success and trade development. It should be borne in mind that the sole object aimed at in this arrangement is to "get revenue" and that it does not deal with the vital question of the distribution of population." Please note that this also was published only twenty-two days after the Zone System was running, and long before any results from actual working could be known here.

From first to last I have contended that if railway working is to be a social and financial success the location of population must be part of the basis of rating. That is to say, the distribution of population must be considered in fixing the fares and rates, Instead of the rating being, as it is now, made Permanently in favour of the great centres, it must be made Temporarily in favour of the smaller and weaker districts. The effect of this would and must be to Distribute, not Concentrate, population, and if you distribute population you must create numerous small trading centres, and thus make work for your railways, and also go a long way towards the solution of the great problem—the mora equal distribution of wealth. The more population is concentrated the more railway work must fall off, because in the great cities the passenger traffic is more and more performed by tramways, and the goods traffic by horse traction, and now motor traction is coming in, and you have a less proportion of people in the country to trade with. Often I have said that if a railway has any mission it is as a long-distance machine, and this truth is becoming daily more apparent.

Most writers are now agreed that the railways are responsible for the congestion of the great cities, and I say this must go on so long as railways are worked by Even Stages; whether of a mile, or five, or ten, or more miles, the evil will be only different in degree. The Stage System is the exact reverse of the present system and of all other existing systems, and its effects must be the reverse, Under it the stages would be of Unequal Lengths, these lengths being determined by the density of the population of the various districts the stages serve. The Hungarians have, to a large extent, failed, and it is because in adapting the New Zealand Stage System they failed to grasp its great underlying principle of fixing the transit charges through the various districts in proportion to the ability of those districts to bear the strain. If this had been done, both the financial and social results would have been greatly better, They, however, avowedly arranged their rating so as to "encourage people to visit the capital." Their ambition was to build up a great city They have had their wish. Years ago the population page 18 of Buda Pesth had increased over 50 per cent.; most of [unclear: these] people left the country districts, and flocked into the big city, [unclear: and] lately they have had great trouble there.

Naturally, I thought that when the Hungarians saw the [unclear: good] financial results obtainable from working by stages, they [unclear: would] improve on their stage system, but, instead of doing so, they [unclear: are] gradually reverting to the old system, and they will find out [unclear: that] they are making a serious mistake.

As our railways have so much to do with our financial [unclear: position] I should like to call attention to

Our Imaginary Annual Surpluses of the [unclear: colony] a general revenue, as proclaimed by the Premier. [unclear: When] the attempt was made in London to float the [unclear: last] million loan, our Agent-General, Mr. W. P. Reeves, [unclear: published] manifesto in which, among other things, in order to show [unclear: they] wealth and prosperity of the colony, he gave a list of the [unclear: alleg] surpluses of revenue over expenditure for the 11 years, [unclear: 1891]-2 to 1901-2 inclusive, but the following table will show that these [unclear: pluses] were to a large extent simply manufactured by [unclear: manipulating] the railway account, and if the railway account, why not the [unclear: La] account, the Education account, the Public Works account, [unclear: and] other accounts?

Year.	Alleged surplus as stated by Mr. Reeves.	Amount wrongly charged to Railway Capital Account, Additions to open lines, and Interest on unopened lines.	Real Surplus.	Real Deficiency
	£	£	£
1891-1892	151,008	67,331	84,277
1892-1893	318,206	53,948	264,258
1893-1894	256,459	40,245	216,214
1894-1895	139,794	50,878	88,916
1895-1896	185,534	36,126*	149,407
1896-1897	288,728	103,020	185,708
1897-1898	466,858	191,856	275,002
1898-1899	399,717	211,407	188,310
1899-1900	559,490	252,372	307,118
1900-1901	427,213	365,940	61,273
1901-1902	237,921	831,022		£593,101

I have now shown as faithfully as I can the present [unclear: unsat] factory and unsafe position of our railways. The policy [unclear: pursu] seems to me to be so utterly devoid of common sense that I [unclear: son] times ask myself if it is part of a scheme to compel the sale [unclear: of] the national railways to a private company. One thing is quite [unclear: certai] page 19 unless some change is made, this must sooner or later be done. What then is The Remedy? First, I say Parliament ought to peremptorily insist on the railway account being brought under the control of the Auditor-General. Then Parliament should insist on the cessation of all further expenditure on the unprofitable lines at the south end of the South Island. It is monstrous that large sums should be expended on useless lines like the Midland and Otago Central, while lines like the Whangarei line, which pays the country £4 15s per cent., and the Kaihu line, which pays £6 3s 3d per cent., are utterly neglected.

Then our System of Administration must be changed. The present no-system has been on its trial in this country for more than thirty years, and it shows a yearly increasing loss. The Hungarian adaptation of the New Zealand Stage System, which the Russians and others have adopted, already shows signs of the failure which must surely come. There remains, therefore, only our Stage System to try; and I again say, why should it not be tried?

In October, 1901, Mr. J. Ronayne, our General Manager—I am tempted to write General Mismanager—informed Parliament that to try the Stage System for one year as applied to every branch of traffic would cost the country £216,723. Whether it was done by carelessness or with a view to damage the Stage System I cannot tell, but in arriving at these figures he over-stated the number of passengers carried in 1901 by One Million Fares. I accepted Mr. Ronayne's figures in good faith, and it was only a few days ago that I discovered this error, which throws his calculation out by £83,000, and reduces his estimated loss to £133,723. (See Parliamentary Paper I.—6B, page 23). What is this estimated loss, carelessly made by a prejudiced man, compared with the ascertained loss of £2,873,000, which was made under the management of this same man during six years, and to which we must now add about another £1,000,000 for the year just, closed. Has Mr. Ronayne shown such skill as would entitle him to be the judge in this important matter.

We want a much simpler system, both of working and accounting which everyone could understand. This the Stage System would give us. It is so exceedingly simple that any ordinary boy or girl of fifteen could easily understand the whole passenger and goods tariff.

I feel quite certain that under the Stage System the present traffic could be carried on for two-thirds if not one-half of the present "Working Expenses," and I am equally certain that the expansion of traffic would be so great that our railways would soon employ a far larger number of men than they do now.

Let me again earnestly impress upon my readers the fact that we can never hope to make our railways a success until we devise some plan whereby we can bring them within the page 10 beneficial use of the whole population; some plan whereby we [unclear: can] make them act as distributors and not as concentrators of [unclear: popula]tion and wealth.

I say that there is not the slightest need for the present [unclear: loss] It is absurd to suppose that a virtual monopoly of the [unclear: inha] carrying trade of this country cannot be made to pay even [unclear: working] expenses. I repeat the assertion I made more than eighteen years ago, and I say again after these [unclear: years] of close observation [unclear: and] study of railway working here and elsewhere, that [unclear: another] £1,000,000 per annum could be easily added to our railway [unclear: revenue] and that not only could we pay full interest on our railway [unclear: loan] working expenses, and "Additions to Open Lines" out of [unclear: revenue] but that we could also have a large sum over for constructing [unclear: new] lines.

Let my Closing words be these: Successful [unclear: finar] probably ought to be the least important [unclear: object] railway administration. There are far greater [unclear: object] to be gained by their right use. The [unclear: paramount] question of modern civilisation is how to bring about a more [unclear: eqr] distribution of wealth and opportunities. A life study of [unclear: that] question has led me to the conclusion that the only way is [unclear: the] more evenly Distribute Population. This I say can be [unclear: done] through our railways, by adopting the Stage System as I have [unclear: laid] it down, but not as altered by the Hungarians and others. It [unclear: is] knowing this that has induced me to spend so much time [unclear: and] money on it. It is for my fellow-citizens to say whether this [unclear: expenditure] is to be lost. Of the complete and miserable failure of [unclear: the] present system there can be no doubt, and it is equally [unclear: certain] that to try the new system on the Auckland section for a [unclear: years] could not possibly cost one-quarter what continuing the old [unclear: system] is now costing the country.