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Mr. Hatch : Mr. Vaile, just now, in replying to a question, you mentioned " political railways." How is it possible to settle the people on the land between Christchurch and the West Coast if you do not make such a line as this ? Mr. Vaile : I say it is not possible. ■ The only way you can possibly settle the country is by giving cheap fares and freights in country districts : that is the main object of the whole of my plan. I should like to be allowed to state that I did not use the term "political railways " in ,an offensive sense ; neither have I ever been an opponent of the railway from Christchurch to the West Coast. Mr. Walker: Mr. Vaile admits that his information is not sufficient to enable him to put down the stages accurately. On the Christchurch line here in the diagram he has missed out stages ; and every stage left out on the diagram of course adds to the total fare : so it is absurd to say that Mr. Vaile is bound to make his fare across the Island 3s. Mr. Vaile : I should like to supplement what Mr. Walker has said by remarking that I have been most careful in all my calculations not to take any advantage to myself. I believe what Mr. Walker says is correct, and that if the matter was worked out the through-fare would be found to come out more than I have put down. Hon. Mr. Richardson: Following up what Mr. Walker has said, I would say that I asked Mr. Vaile what his fare would be, taking the figures I gave him. My object in putting it in that way was simply to carry out the argument laid down by Mr. Vaile when he contends that a mile of railway is a mile anywhere, irrespective of what it may cost to work it. I took the two stages to Eolleston Junction, and probably two short stages beyond that, and then there comes ninetyfive miles where there is no settlement at all: I simply asked what his fare under those circumstances would be. Ido not think it was an unfair position to put Mr. Vaile in. Mr. Vaile : In reply to what Mr. Eichardson has said, I think his question was quite fair, and that the reason why I did not give a direct answer to it was that I did not know what settlement was at the other end ; but I say this advisedly : that it will be for the advantage of the colony to carry people on that line at merely nominal rates, and that, whether we like it or not, we shall have to do it for the purpose of settling the country. The Chairman : Do not you think, Mr. Vaile, that carrying passengers on that line to Hokitika or Greymouth for 3s. will bring down the average very much ? Mr. Vaile : The more of these lines you open up the more it will bring down the average, unless you increase the travelling very largely. The question will be how many through-fares you will get. The same law applies to that as to the other lines—if you double or treble your traffic you will get more money. You clearly will never make that line pay by charging a high rate. 491. The Chairman (to Mr. Hudson).] Do you think, if Mr. Vaile's system of charging fares by stage were adopted, that the net revenue earned would be as much as under the present system? —I am quite certain that financially it would be a disastrous loss. Mr. Hatch : How long would it be necessary to try the scheme in order to give it a test ? Hon. Major Atkinson : It would not do to give it less than two or three years. Mr. Vaile : I base my claim for success largely on the settlement of the country. If you wish to do that you must make it the policy of the country. People will not go to settle where the system is on trial for only six months or a year.

Fbiday, 25th June, 1886. Mr. Hannay, Assistant General Manager, N.Z.E., examined. 491 a. The Chairman.] Mr. Hannay, we have asked you to come before the Committee to give us your idea of Mr. Vaile's railway system ? —I have read Mr. Vaile's proposals from time to time, and I think I know the manner in which he proposes to charge. As I understand it, instead of computing the rates and fares by the ordinary unit of a mile, he proposes to make four seven-mile stages from each town of six thousand or upwards, and in country districts stages of about fifty miles; when a town of two thousand intervenes, he will place one seven-mile stage on either side; if four thousand, two seven-mile stages on either side : the passenger-fare for each stage being, firstclass 6d., and second-class 4d.; and that the rate for goods shall also be by the stage. He also claims for his scheme that it would abolish differential rating, that it would have the effect of largely increasing the traffic (in the case of passengers, variously stated two, to ten-fold), that if passengers were trebled they would be carried without additional cost, that the average fare could not fall below Is., and that the net result would be an immense increase in our revenue. Ido not agree that his proposal abolishes differential rating: indeed, it appears to establish differential rating of the very worst kind. The proposal seems to come to this : a very large reduction in all fares and rates. And the question to be considered is, whether this enormous reduction (for it is that with regard to all long-distance rates and fares) would be more than counterbalanced by the increased business, and whether the net results from a financial point of view would be satisfactory. lam of opinion that our passengers would not be doubled; I do not think the average fare would be Is.; and, further, should there be double the passengers there would be considerably-increased cost in working. Twenty per cent, of passengers (that is, five miles and under) are not reduced, ■while passengers between five and ten miles are mostly carried to and from chief towns—AucklandOnehunga, Wellington-Hutt, Christchurch-Lyttelton, and Dunedin-Port Chalmers. If seven miles is fixed as the stage, Onehunga, Port Chalmers, and Hutt will pay as now, and number of passengers cannot be increased. If they are included in first stage, then this first stage will practically include half of all the passengers now travelling. The average rate for all this traffic cannot be more than sd. This will very much reduce the. supposed average for all passengers. Then, passengers over ten miles would have to be enormously increased to give same gross result; the

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