The success of an enterprise is, in a large measure, dependent upon a strict adherence to the policy of promotion of staff by merit and ability only.

Promotion by merit and ability is the basis of the system now in operation in the Railway. From the business viewpoint, who is there to argue against this being right.

It is more advantageous to increase total profits by reducing prices to the consumer, at the same time maintaining or improving quality, with a consequent increase in the volume of sales than by attempting to maintain or raise prices.

Increasing Profits by Reducing Prices and Doing more Business.—In the Railway Service the whole country are our shareholders. If we can produce more, at the same cost, in any of our shops; if any office or depot can be run more efficiently; if in any way, service can be bettered or cheapened, our customers—the public—and our shareholders—also the public—are entitled to that extra profit, whether in the form of better service or reduced tariffs.

Rapidity of turnover makes for comparatively small requirements of both funded and working capital, i.e., the capital required for shop space (including equipment) and the finance of work in progress.

Rapidity of Turnover.—We are reorganising and rebuilding our workshops in order to assist in rapidity of turnover. We are scheduling and planning work in order to hold our expensive rolling stock a minimum of time out of service while under repairs. Idle equipment costs money, in whatever form it is, either human or material.

The productive capacity per capita of labour can be increased without limit, depending upon the progress made in time and trouble-saving appliances.

Use of Labour Saving Appliances.—The Department, in conjunction with its reorganisation scheme, is installing modern machinery and appliances to replace the old and obsolete methods.

It is better that labour should be rewarded by wages bearing some relation to output rather than by a fixed wage, the amount of the wages earned by any one man being in no way limited. Contrary to the general belief in Europe, high wages do not necessarily mean a high level of prices. It is to the advantage of the community that the policy of industrial management should be directed towards raising wages and reducing prices.

Payment by Results.—The Premium Bonus System proposed for the Department's workshops is the most extensively used modern system of payment by results.

A free exchange of ideas between competing firms should be advocated.

Exchange of Ideas.—The Department is sending its officers abroad to exchange ideas, with other countries. It is a curious fact that railways, even in competition with each other for business, are not in competition with regard to details of operation, and there is an unseen Railway Brotherhood in the world that “opens like a book” to any that seek information. There are, therefore, no secret processes to guard, and likewise no reason “not to know.”

Elimination of waste is an essential factor in the attainment of national prosperity.

Waste Elimination.—In our new workshops there is a “Reclaim Department” provided for, to solve the waste material problem. The Stores reorganisation work is designed to cut down waste stocks. The Workshops reorganisation is designed to reduce waste labour.

It is important that every possible attention be paid to the welfare of employees.

Welfare of Employees.—Our new workshops contain “Welfare” apparatus, in the form of better sanitary, washing and drinking and feeding facilities; also social, library, instruction and committee rooms. That Workshop Committees should take a hand in all these things is part of the scheme.

Research and experimental work are of prime importance to progress.

Research and Experimental Work.—The Government has just established a Department of Scientific Research, which is the beginning of a development to which the only limit is ourselves.