D.—2.

In the passenger section the new measure providing for the issue of bulk travel vouchers has already established itself in public favour in. the comparatively short time that has elapsed since the revised scales of charges were issued. The vouchers represent the application of an entirely new principle to passenger travel in New Zealand in that they contemplate the sale of travel by rail and departmental road services on a bulk basis according to the individual requirements of purchasers. In the goods section of the new scales, which was mainly affected by the revision, the measures taken to achieve a more equitable distribution of the incidence of the freight rates, as they had developed during a period of intense road competition, have been well received by all sections of the community. The lowering of the rate standard resulting from the elimination of the two highest-rate classes, synchronizing as it did with a period of marked industrial development, has been particularly beneficial to manufacturers by facilitating usage of the railways for the wide-range distribution of their products. Already there is abundant evidence that the modified merchandise freight rates have been instrumental in attracting to rail important lines of traffic, particularly of a long-distance character which did not have the capacity to bear the higher freight rates previously ruling. Calculated on the basis of the established tonnage handled at the time the decision to adopt the lower freight standard was taken, the estimated revenue loss incidental to the adjustment amounted to a substantial sum. It is therefore satisfactory that the present trend in the direction of increased rail usage should indicate that the position will shortly be reached where the revenue return from the greater volume of goods carried will exceed the previous level by a considerable margin. The complications which in normal circumstances could be expected to arise during the process of transition from an established method of charging to one incorporating fundamental alterations have been greatly minimized by the measures of simplification which are incorporated in the revised tariff. The substitution of standard charges for the many differential local rates previously in operation and the reduction in the number of standard rate classes are the more important features which have resulted in a marked simplification of the process of calculating freight charges, while the adoption of a modified and universal small-lots scale has also met with very general approval. The services of the Department's Business Agents have been made freely available to the trading aud industrial community to assist and advise them on any matters arising from the change-over, and it is due largely to this personal contact that the interests mainly affected have so readily and smoothly adapted themselves to the new conditions. Inter-Island Traffic. The acceptance of goods and parcels for transport by rail and sea between any two points in the North and South Islands has become a well-established feature of the Department's operations, and the volume of parcels and small packages handled under this inter-Island service has shown a progressive growth since the system was established. In order to cater more efficiently for the business, provision was made during the year for sufficient hampers to be made available to accommodate all through-booked parcels for the sea portion of the journey between Lyttelton and Wellington. With the co-operation of the shipping company and the Harbour Boards concerned, the system of hampering parcels traffic has been successfully established. As a consequence the risk of loss or damage arising from the many handlings of individual packages involved under the old conditions has been reduced to negligible proportions. New Zealand Centennial Exhibition. The special facilities provided by the Department for the conveyance of passengers from all parts of New Zealand during the Exhibition period provided opportunity for all sections of the community to visit the Exhibition at a cost commensurate with their individual circumstances. Parties of school-children, in particular, received favoured treatment in the matter of cheap fares and special train services, with the result that approximately 10,000 pupils and teachers from more distant points were conveyed by train to Wellington for extended visits, in addition to many thousands making shorter one-day trips. During the month of February, when special concession fares were made available to the public, a total of 17,500 ordinary passengers, excluding school parties, was carried to Wellington. This number represents an increase of over 11,000 passengers as compared with normal bookings. The Department's Business Agents were successful in organizing a large number of parties comprising members of various organizations to visit Wellington for the purpose of viewing the Centennial Exhibition. Bulk Tonnage Rates. The term " bulk tonnage rates " has been applied to a system of charging recently introduced primarily as a measure of co-ordination of rail and road services. The elimination of competitive road services, arising from their acquisition by the Government, or their temporary suspension on account of the restriction placed on petrol-consumption, has provided opportunity on routes where the conditions are favourable for the established organizations of the operators concerned, working in association with the rail, to be retained for the purpose of providing a complete door-to-door service of transport between the points which they previously served. Under the arrangements concluded in respect of those routes where the bulk tonnage system has been introduced, the operators are required to furnish a minimum quantity of goods per week and to load wagons up to a prescribed minimum standard. The loading and unloading of goods to and from railway wagons is performed by the operators, who are also responsible for delivering the goods to the consignees in the same good, order in which they accepted them at the point of origin. The rail rate charged to the operator is based on the standard rate for general merchandise goods, less allowances to compensate him for his services in providing a door-to-door service and as a set-off against the savings effected by the Department in being relieved of all handling costs.

28