D.—2.

PUBLICITY BRANCH. The Publicity Branch has had a year of extended activity in publicizing the numerous improvements in rail transport and related services associated with the upward trend of traffic and the progressive policy applied to the provision of modern railway facilities, as well as in keeping the public informed regarding the many ways in which the Department can be useful to them, and in extending knowledge of the general operations and purposes of the railways. In following the policy of using only sound and proven media for its advertising activities the Branch made few extensions to the publicity arrangements found most suitable for its purposes by practical experience. Newspaper advertising, which has remained the principal factor in the various campaigns, has been well supported by the publication of a series of interesting and informative articles on every phase of railway operation in most of the country's leading journals. The readiness with which this material has been published provides evidence not only of a full appreciation of the " Back to the Bail " movement, but also of the Branch's continued good relations with the press. Response to radio advertising was carefully checked, and results were so encouraging that the Branch's use of broadcasting commercially has been considerably extended with complete justification. With the publication and display of the Department's new set of six pictorial posters, travel publicity by this method reached a new standard for New Zealand. Many complimentary references to the excellence of these posters, in both design and printing, have been received. Their general attractiveness and interest-creating qualities have drawn favourable comment by overseas visitors especially. Bearing in mind the fact that, under a reciprocal arrangement, posters issued by the Branch are prominently displayed on the railways of most of the principal countries of the world, the set recently released should be appreciably helpful in inducing tourists to visit the Dominion, especially during the Centennial year. The Photographic and Plan Printing Section is keeping abreast of improvements in its sphere and is now regarded as one of the best-equipped and most efficiently operated organizations of its kind in the country. Numerous illustration blocks, reproduced from the Department's copyright photographs, were lent on request for publication in various newspapers and magazines. The use of photographs in arousing interest in New Zealand's attractions among people in many other countries has been extensive, particularly in Australia, where coloured enlargements, supplied by the Branch, were featured in special displays at the New Zealand Government's various tourist bureaux. On the plan-printing side the work undertaken and also the revenue earned have easily constituted a record. Several new publications were issued during the year. The most important of these was " The Case for the Railways," a booklet review of the Department's activities. Other literature included second editions of New Zealand Railways Illustrated and of the booklet New Zealand Railway Station Names and Their Meanings, for both of which there has been a very strong demand. Souvenir time-tables were prepared for the opening of the Wellington-Johnsonville line for electric multiple-unit passenger-services, and for the opening of the Napier-Wairoa section of the Napier-Gisborne Railway. A further series of the popular " See New Zealand by Rail " folders was also produced. The Branch is always ready for co-operation with public and private organizations in campaigns for the promotion of tourist traffic in various districts, and considerable work of this kind has been done during the year. COMMERCIAL BRANCH. One of the most important matters that has received attention during the year has been a general revision of the scales of charges with the objective that fares and freights should be brought into line with present-day requirements. An essential feature of the operations of a national transport organization such as the railways is that the system of charges should be governed by such principles as establish, conditions of stability and equality in its application. Unfortunately, the conditions obtaining during the past decade have precluded of this requirement being fully met, due to the fact that the relationship of the various scales of charges lias had to be adjusted from time to time so as to counteract the effect on the railway financial position of the progressive attrition of higher-rated traffic resulting from the continued development of road competition. The effect of this trend is reflected in a lack of balance as between the transport costs which different communities are required to meet, due to the existence of a multiplicity of " local" or differential rates introduced to safeguard rail-borne traffic. In many cases trading interests have benefited by what has been, in effect, a fortuitous reduction in transport costs. Whilst the position thus created was quite acceptable to those favourably affected, opposing interests in other areas which, in the absence of road competition, did not enjoy the advantage of reduced freight rates complained with sone justification of being deprived of the natural advantage which they claimed they should rightly enjoy by virtue of their closer proximity to the common market. There are many instances of this nature where the trading relationship between different communities which had developed under stabilized conditions has been subjected to disturbance by the operation of differential freight rates. The measures which have recently been adopted with the object of giving effect to the Government's policy of co-ordinating the existing services of transport on the principal routes throughout the Dominion and eliminating redundant units have resulted in a marked amelioration of the past competitive conditions and so paved the way for a general reconstruction of the rates structure along the lines previously indicated. As a major step in this direction provision has been made for the merging of the two highest merchandise rate classes (A and B) in the third highest class (C). Consequent on this adjustment those commodities at present chargeable under Classes A and B will enjoy a much lower freight standard.

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