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APPENDIX.

New Zealand Government Eailways, Sib,— Head Office, Wellington, 24th July, 1901. With reference to your letter of the 22nd instant, forwarding petition from Mr. Samuel Vaile, No. 198 (returned herewith), I have the honour to inform you that on the 19th October, 1900, Mr. Vaile was offered a trial of his system on condition that he or the persons interested therein deposited an amount sufficient to indemnify the department against any loss as a result of the trial. (Vide Hansard No. 20, pages 309 to 311, 29th August, 1900.) This offer was. declined. I have nothing to add to my report (copy attached) on a similar petition in 1895. I have, &c, T. Eonayne, General Manager. The Chairman, Eailways Committee, House of Eepresentatives.

Enclosure. New Zealand Government Railways, Sib,— Head Office, Wellington, 19th July, 1895. With reference to your letter of the 12th instant, enclosing copy of a petition from Mr. S. Vaile (herewith returned), I beg to state that the Vaile system is well known to the officers of the department, who are of opinion that it is quite unsuitable for the New Zealand railways, and that its introduction would involve a very serious loss of revenue. I am of opinion that no good purpose would be effected by giving this system a trial, but should the Government desire to give it a trial on any isolated section, I strongly recommend that, the revenue of the department be protected from any loss which such trial might involve. I have, &c, T. Eonayne, General Manager. The Chairman, Eailways Committee, House of Eepresentatives.

New Zealand Government Eailways, Head Office, Sib,— Wellington, 11th October, 1901. I have the honour to report as follows on the petition of Mr. Samuel Vaile : — It is represented by the petitioner that the financial results of the Hungarian zone system have been such as to justify the adoption of his stage system. Although statistics are furnished by the petitioner showing a large increase of business and a relatively much lower increase of the earnings, no reliable information is available with regard to the expenditure incurred in working the increased traffic: without this information the statements made with regard to the extraordinary success of the Hungarian system are valueless. From the fact that the Hungarian zone system has been altered in the direction of increasing the fares twice since its inauguration in 1889, it may be assumed that the increased business has been unprofitable, and that the revenue is being gradually absorbed in the increased cost of working. It is doubtless in view of this increased expenditure that the increase of rates was determined upon. Although the department has no figures available to show the increased expenditure in working the Hungarian system, a reliable basis is available on which the cost of working such an increased business in this country may be arrived at. This basis is the actual expenditure incurred in working the increase of traffic in 1901 over the traffic in 1885. Mr. Vaile's proposal is to apply his stage-system first to the passenger traffic, then to the parcels and other items of coaching, and finally to the goods traffic. The passenger fares and the maximum goods rates which are proposed to be charged are supplied on page 26 of Mr. Vaile's " Social Problems," the goods rates being in many cases less than one-third of our existing rates. It is stated by Mr. Vaile in his evidence that if three-fourths more passengers travelled at his proposed fares the same passenger revenue would be obtained as at present. The goods rates being on an average not more than half the existing rates, it would require at least double the volume of goods traffic to produce the same goods revenue. Assuming, therefore, that the fares and rates proposed by Mr. Vaile were adopted, and that the increased business resulted as predicted, that is, three-fourths more passenger and double the goods traffic required to produce the same revenue, then the expenditure which would be required to work this increased traffic can be readily arrived at, the basis being the actual cost of working a similar increase of traffic, that is the increase of traffic in 1901 over the traffic of 1885. The table attached shows this increased passenger and goods traffic (producing the same revenue as at present), and the expenditure, computed on the basis before mentioned, the actual cost of working a similar increase of traffic. From this table it will be seen that the expenditure for working this increased business, which on account of the lower rates produces no additional revenue, amounts to £816,112, and that the total expenditure is £1,943,959, being £216,723 in excess of the total revenue. It follows, therefore, that the business at the excessively low fares and rates proposed would be carried on at less than the actual cost, and that the greater the increase of business at these unremunerative fares and rates the greater would be the loss.