D.—2.

General. At Frankton Junction the increased demand and consumption of electric power for railway purposes necessitated the replacement of the existing 35 kVA. local transformer feeding the services with one of 50 kVA. capacity. During the year the station and yard electrical installation at Maungaturoto was connected with the local Power Board's supply, thus releasing for service elsewhere a Diesel electric lighting plant which the Department had installed and maintained at that station. The lighting-plant, removed from Maungaturoto was installed at National Park, where the Diesel-lighting plant in use was unable to cope with the demand made upon it. An electric-lighting plant was required for Whangamomona, and advantage was taken of this arrangement to transfer the original National Park plant to Whangamomona, where a lighting system was installed. Special arrangements were completed during the year for the supply of electric power for railway use at Pigeon Bush and Cross Creek. An additional floodlight-tower has been erected in the Wellington Station yard, and the remaining two towers to be erected will be completed shortly. Tkack, Plant, and Rolling Stock. The track, bridges, structures, signalling-appliances, rolling-stock, locomotives, and other plant are in good order and efficient for the work required of them. ACCIDENT TO SPECIAL EXCURSION PASSENGER TRAIN NEAR RATANA. A regrettable happening, fortunately rare in the annals of the Department, occurred in the early morning hours of Saturday, 26th March, 1938, when a special passenger-excursion train en route from Wellington to New Plymouth became derailed at a point just north of Ratana Station, the locomotive and five of the six carriages on the train leaving the rails. Six passengers and the fireman of the train were killed outright or died of injuries received at the time of the disaster. The engine-driver sustained serious injuries, as did several passengers, while other passengers received minor injuries. A Board of Inquiry set up under section 63 of the Government Railways Act, 1926, made investigations regarding the cause of the derailment. The conclusion at which this Board arrived after close investigation and most exhaustive inquiry was that the accident resulted from the overturning of the engine, due to it entering a curve of 6'4 chains radius at a speed of approximately 50 miles per hour. A special speed-restriction to 20 miles per hour is applicable to the particular sector of the line where the mishap occurred, and the failure to reduce speed to within the limits prescribed was found by the Board to have been due to an honest error of judgment on the part of the engine-driver in calculating his speed and location, to which error of judgment the presence of haze and fog contributed. It was clearly established in evidence adduced before the Board that unremitting vigilance and a high degree of care are exercised by the Department in the operation of its services, and that a high standard of maintenance is observed in respect of locomotives, rolling-stock, and permanent-way. This is an appropriate place to reiterate the expressions of appreciation which have been voiced on behalf of the Department of the assistance rendered by the medical profession and hospital staff at Wanganui, passengers on the train, police, and ambulance officers, and numerous other willing helpers who gave ready and effective assistance in connection with the accident. The Department also recognizes, and appreciates, the promptitude and energy displayed by the railway staff in meeting the emergency. The manner and rapidity with which relief was organized and despatched to the scene ot the disaster reflected credit on all concerned, and the work of the staff in that connection has been generally recognized and appreciated by passengers and others. STAFF. The total number of staff employed at the 31st March, 1938, including those on works chargeable to capital, was 22,963, as compared with 20,729 for the previous year. The average number actually at work throughout the year was 21,954, as compared with 19,115 the previous year. Of the average number of staff at work during the year 14,482 were permanent and 7,472 were casual employees. The average number of men engaged on works chargeable to capital was 1,816, as compared with 1,366 during the previous year. During the year 210 members of the permanent staff resigned, 127 retired on superannuation, 56 died, and 32 were dismissed or paid off. Employees to the number of 1,664 were engaged. Sixty-eight members of the Second Division were promoted to the First Division. A total of £48,150 was paid under the Workers' Compensation Act during the year to members of the Second Division who suffered injury in the course of their employment. In conclusion, I desire to place on record my appreciation of the loyal service rendered by the staff and of their co-operation with the management in carrying on the services of the Department. ft General Manager.

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