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that they may be able to help this industry, and so obviate the necessity of importing so much from England. WOBKING BAIL WAYS. I now come to the subject of working railways. Honourable members will remember that on the 31st March, 1885, there were 1,477 miles of railway open for traffic, having cost the colony £11,810,194; and on the 31st March, 1886, there were 1,613 miles of railway open for traffic, having cost the colony .£12,472,814. In this latter result is included 77 miles of railway purchased by the Government from various district railway companies at a cost of £283,349. The total revenue from all sources was £1,047,418, and the expenditure amounted to £690,340, leaving a net profit of £357,078. Taking the cost of the opened railways at the average for the whole year, in view of the dates at which the several sections of new railways were opened for traffic (namely, £12,243,295), this represents a profit of £2 18s. 6d. per cent, on the cost as thus deduced, or, if the total cost of all the lines opened at the end of the year be taken as prevailing throughout the whole year, which is scarcely a fair way of looking at it, then the percentage earned would be £2 17s. 3d. The total expenditure on railways opened and unopened up to the 31st March, 1886, including expenditure by Government on Greymouth and Westport harbour works, has been £13,726,166, and the profit earned by the opened lines gives £2 12s. Od. per cent, on this gross outlay. Last year, with 1,477 miles of open railways, we had a revenue of £1,045,712 and an expenditure of £690,026; this year, with 1,613 miles open, we have a revenue of £1,047,418 and an expenditure of £690,340 ; and at the end of the year we have outstanding accounts amounting to considerably less than at the end of the previous year. We have also during the year made many reductions in the rates of carriage of goods, all in the direction of helping local productions, which, had our rates remained unaltered, would have produced fully £50,000 more revenue without increasing the cost of working. This amount represents the benefit derived by the general public using the railways. It will therefore be seen that, although we have had to provide for the maintenance of and work 136 miles more railway, we have so curtailed the expenditure that it has only amounted to £314 in excess of that of last year. It should also be remembered that the railways do not get credit for the large amount of work done for the other departments of the Government, the carriage of mails representing a very large sum. The facilities given to the Education Department also are very great; and if full credit were given for all these services it would make a very perceptible addition to the railway revenue. On the whole, the proportion of expenditure to revenue has been slightly reduced during the year, having been 65*91 against 65*99 the previous year. I think honourable members, when they realize these facts, will admit that the result is a favourable one. The rates of profit have, as in previous years, varied very much on the different lines, having amounted on the Greymouth section to £5 9s. 3d. percent., on the Napier section to £4 18s. 9d., on the Hurunui-Bluff section to £3 ss. 9d., on the Wellington-Masterton section to £2 11s. 2d., on the Auckland section to £2 9s. Id., and. on the Wanganui section to £0 12s. lOd. It has been my constant endeavour to resist as far as possible the continued demand for fresh stations on the several lines, each new one being a source of additional expenditure, and have only granted them in cases where there appeared a reasonable prospect of increasing the traffic. The total number of passengers carried on the railways was — For the year 1883-84 .... .... .... 3,272,644 For the year 1884-85 .... .... .... 3,232,886 For the year 1885-86 .... .... .... 3,362,266 —showing an increase over last year of 129,380. 2—D. 1.