5

D.—2

Zone-system. Touching the question of the Hungarian zone-system referred to m the last annual report, it was there pointed out that the advantage which had accompanied the zone-system —namely, the great reduction m fares—was independent of it. In reply to inquiries from the Government m November last, we drew attention to some particulars mentioned by the Minister of Finance m BudaPesth, showing that the Hungarian State Eailways, during the first six months of 1891, showed a deficiency as compared with the corresponding period in 1890, chiefly due to the great increase in expenses of working The Hungarian authorities have during the current year published an official report on the results of the zone tariff, of which we have received a copy from the AgentGeneral. It deals chiefly with comparison between the working results of the years 1888 and 1890, and is expressive of satisfaction with the results of the system, but it does not give the more recent experiences with regard to expenditure referred to by the Hungarian Finance Minister It is as yet premature to expect to get data from which final conclusions can be drawn as to the working of the system. The fares previous to the change were about the highest'in Europe, while the average earnings of the people were among the lowest The report is interesting, as giving an indication of the effect of bringing a large portion of the passenger-fares more easily within the reach of the mass of the population. The consideration of the rate of fare in such a country as Hungary, where the hours of labour and pay of unskilled workers are such that the rate of wages is not one-fourth of what it is here, is not of much value to us. Moreover, Hungary, with its population of seventeen millions, had only about one passenger journey per head of population per annum on the State railways under the zonetariff in 1890, while, computing upon the same basis, in New Zealand there are more than eight passenger journeys per head of population per annum in 1892, so that New Zealand traffic is relatively very far in advance. It should, however, be remarked that a very large percentage of the New Zealand suburban passengers are carried at lower fares than the Hungarian zone-tariff gives. Hungary, however, is only a part of the Austrian Empire, and is contiguous to other thickly-populated countries. Buda-Pesth, the chief city, with over 300,000 people, is only about 150 miles from Vienna with nearly 900,000 , and results in Hungary under these circumstances could be no guide for New Zealand. On the Hungarian railways, comparing 1888 with 1890, the number of passenger journeys increased by over eleven millions , but more than ten millions of the increase fell within the first zone (15J miles) The great reduction in fares between the first and fourteenth zones (15J miles and 140 miles) produced very little augmentation in traffic, the chief effect over these distances was to transfer the passengers from the slow trains to the fast trains. Evidently the economy gained by travelling m the cheaper slow tram was not valued. The effect of the lower fares has thus turned out to be different to what was expected. Attached hereto will be found the reports of the Locomotive Superintendent and the Chief Engineer for Working Eailways, which give additional particulars of the operations and improvements carried on m their respective departments. We have the honour to be, Sir, Your most obedient servants, James McKerrow, J P Maxwell, W M. Hannay, Eailway Commissioners. ,