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Sub-enclosure 2 in No. 1. The Auditor to the Treasury, London, to the Secretary to the Treasury. London. Sir, Treasury Chambers, 25th September, 1914. I have the honour to report that [ have audited the accounts of the Pacific Cable Board, for the year ended 31st March, L914, in accordance with the instructions conveyed in their Lordships' minute of the 17th April, 1902, and have found them correct. The annual expenses of the cable, as defined in section 3 (2) of the Pacific Cable Act, 1901, and extended by section I of the Pacific Cable Act, 191 1. so far as they were not met out of the receipts arising in connection with the cable, amounted in the year to £19,950 Bs. lid. There is, therefore, recoverable from the contributing Dominion Governments a sum of £14,408 13s. 2d. representing thirteenth-eighteenths of the net expenditure, viz. £ s. (1. Australia (six-eighteenths) .. .. .. .. .. 6,650 3 0 Canada (five-eighteenths) .. .. .. .. 5,541 15 10 New Zealand (two-eighteenths) .. .. .. .. 2,216 M 1 £14,408 13 2 T beg to submit that the accompanying account, which has been duly certified, be presented to Parliament in compliance with section 7 of the Pacific Cable Act, 1901. T have, &c. The Secretary to the Treasury. G. H. Hunt, Auditor. Enclosure in Sub-enclosure 2 in No. 1. The CHAIRMAN, Pacific Cable Board, London, to the Lords Commissioners of His Majesty's Treasury, Loudon. The Pacific Cable Board, Queen Anne's Chambers, S.W., My Lords, - sth September, 1914. T have the honour, on behalf of the Pacific Cable Board, to submit, in the form hitherto adopted, the following accounts:---(I.) The sum issued out of the Consolidated Fund, and the expenditure of the Board on Capital Account; (IL) The money borrowed and the securities created ; (III.) The aggregate amount of capital expenditure up to the 31st March, 1914 ; (TV.) The expenses of the cable in the year ending 31st March, 1911 ; (V.) The acoount of the Provident Fund ; and (VI.) The account of the Reserve and General Renewal Fund. 2. The results of the year's working are set forth in the following statement :— RnvuNUE Account. Receipts. £ h, d. Expenditure, £ s. d. Traffic receipts .. .. .. ll((i,0i"J4 II) 7 Head office (salaries and expenses, canvasBank interest (less cost of advance sing, engineers' fees and royalties) .. 8.742 8 10 remittances) .. ~ .. 492 0 4 Cable-stations (salaries and expenses) .. 77,082 Hi 8 yßefund tolls and dues .. ~ 665 Ki 4 Ship's salaries and expenses .. .. 13,244 10 8 Sale of furniture .. .. .. 385 0 0 Provident Fund .. .. .. 2,126 15 II Rent of leased buildings .. , .. 24!) 17 II Renewal Account .. .. .. .'IO,OOO 0 0 Excess of receipts over expenditure .. (in,65! 2 I £197,847 14 2 £197,847 14 2 Net Rbvhntjb Account. By excess of receipts over expenditure £ s. d. To National Debt Commissioners (interest £ s. d. from Revenue Account above .. 66,651 2 1 and sinking fund on £2,000,000 advanced Balance to be provided by Imperial and for capital expenditure on Pacific cable) 77,fj4'4 18 0 Dominion Parliaments .. .. 19,950 811 Renewal Fund (Interest and sinking fund nn moneys provided for Sydney-Auck-land and Doubtless Bay-Auckland cables) .. .. .. .. 9,056 13 0 £86,601. II 0 j £86,601 II 0 The excess of receipts over expenditure is greater by £21,376 Is. (id. than the corresponding figure in the previous year ; and the deficit, to be provided by the Imperial and Dominion Parliaments is £12,319 Bs. 6d. less than the deficit of the previous year. 3. The net traffic receipts as shown in the accounts exceeded those of 1912-13 by £30,028, and were more by £11,055 than was originally estimated by the Board. It will, be seen from the figures given in paragraph 22 of the report that there is a rapid and satisfactory increase in the deferred and week-end traffic, showing that the reduced rates, are appreciated by the public. At the same time, it, must be noted that the traffic at full rates is less than it was in 1911-12, whereas in the three years ending 191112 the full-rate traffic had increased on the average bv about 10 per cent, per annum. This makes it, evident that, as was to be expected, the reduced-rate traffic has, in part, been diverted from the full-rate. 4. The expenditure shows an increase over that, of. 1912 -13 of £8,571. This was due, mainly to the normal increases under the incremental scheme of salaries, to an improvement in the scale of

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