The Trading Account and Balance Sheet of each estate have been duly examined by my officers.

No charge for depreciation of buildings appears in the account for the reason, I am informed, that the bulk of the buildings have been, or will be, sold to the small-holders. In the case of the remainder, adjustment will be looked to in future accounts.

Reference to the heavy expenditure incurred on the various schemes of Land Settlement has already been made in paragraph 31 of my Report on the Civil Services Appropriation Accounts, 1921-22 (H.C. 7/1923).

17. As mentioned in paragraph III. of the foreword the Board has temporarily managed farms on certain of the Estates comprised in the Combined Estate Account before the settlement of the small-holders. In view of the varying periods covered by these farming operations, which in many cases terminated before 31 March, 1922, the presentation of a combined Farm Account, and in particular of a combined Farm Balance Sheet, was considered to be impracticable. The aggregate loss on these operations between 1918 and 1921 was £45,818.

18. The Combined Ingoings Account on page 125 relates to Settlements where the Board did not farm the land, and shows the progress made at 31 March, 1922, in clearance of the debits in respect of payments by the Board to outgoing tenants for crops, manures, grass seeds, &c., such payments being in part recoverable from the incoming small-holders.

In some cases charges against the incoming tenants, to a substantial amount, have been outstanding for a considerable period, and I am informed by the Board that the difficulty in settlement is due to the fact that holders took entry at a time when agricultural values were abnormally high and, further, that the position in regard to ingoing obligations cannot be divorced from that arising in connexion with the heavy annual burdens consequent on high building costs, which is under the consideration of the Treasury.

DISPOSAL AND LIQUIDATION COMMISSION.

RAW MATERIALS.

19. Of the eleven Raw Material Accounts presented by the Disposal and Liquidation Commission the following eight : Home Wool, Kips and Raw Hides, Tanning Materials, Leather, Flax and Flax Seed, Raw Jute, Cotton and Cotton Fabric, and Food Containers, show transactions during 1921-22. The accounts for Manila Hemp and Chemicals and Drugs were closed on 31 March, 1921, while the Colonial Wool Account was closed on 31 December, 1920, realization accounts being then opened to record the clearance of the assets and liabilities handed over to the British Australian Wool Realization Association under profit-sharing arrangements. These realization accounts are printed at pages 138 and 139.

The aggregate effect of the transactions during 1921-22 in liquidation of the eight open accounts is that the total profits shown at 31 March, 1921, suffer a net reduction of £63,847.

BORING FOR OIL.

20. Following the decision of the Government to cancel the Agreement with the Petroleum Development Managers, boring operations have been brought to a close, and arrangements made for the disposal of all buildings, plant, etc. The results of the realization will be shown in the account for the year 1922-23, during which the disposal of the assets has been proceeding.

I understand that these credits will probably be insufficient to meet the charges raised for interest on Exchequer Advances and Administrative Expenses, and that the total loss on the undertaking of this experiment will thus exceed £600,000.

NATIONAL WASTE PRODUCTS.

21. The account, on pages 142 and 143, of the voluntary liquidation of National Waste Products, Ltd., is published by direction of the Treasury, but has not been examined by my Department. The accounts published on page 104 of the volume of Trading Accounts for 1919-20 recorded the outcome of the enterprise up to the time when the Company went into liquidation. In paragraph 36 of last year's Report, I explained that the Disposal Board were not then in a position to furnish the liquidator with a certificate accounting for the disposal of all assets transferred to them, and that for this reason the closing of the liquidation accounts was deferred. In the account now furnished it is stated that the buildings on the sites of military camps, and plant and machinery, etc., represented together as assets of a value of £35,347 6s. 10d., were handed over to the War Office and to the Disposal Board. A number of sales have been effected by the Disposal Board, and regarding other properties I have recently inquired as to the present position. Of the balance of £573 10s. Od. shown on the cash account, the sum of £570 has been handed over to the Disposal and Liquidation Commission, and £3 10s. Od. was retained by the Liquidator for closing expenses.

The Commission arranged that the books, accounts, and documents of the Company should not be destroyed, as authorized by the winding-up resolution, but deposited with the Commission, but according to my latest information the documents have not yet been so deposited.

BOARD OF EDUCATION.

SUPPLY OF CASTS.

22. The business of Messrs. D. Brucciani & Co., Ltd., Plaster Cast Modellers, was offered to the Board as a going concern, free of cost, by a patron who desired

(1) to secure for the nation the Company's collection of

type-casts and moulds, and

(2) to safeguard the supply of plaster-cast reproductions of works of Art for Museums, Schools of Art, &c.

The Treasury agreed to the acceptance of the offer, subject to the condition that no burden should be imposed on public funds.

The business was taken over by the Board as from 19 August, 1921, but the valuation of the stock in hand was not made until June, 1922. The valuation figure, £3,200, on this latter date was assumed to be the value of stock in hand on 19 August, 1921, and also on 31 March, 1922.

On this basis, the outcome of the trading for the period 19 August, 1921, to 31 March, 1922, was a loss of £1,121 3s. 11d. No direct loss has, however, resulted to the State as the surplus of assets over liabilities on the taking over of the business by the Department was £4,005 18s. 6d.

BOARD OF TRADE (FOOD DEPARTMENT).

23. The Balance Sheet shows that, at 31 March, 1922, the assets exceeded the liabilities by £6,741,376. As explained in the note on page 151, however, this net profit is still subject to considerable outstanding claims, notably on behalf of the American packers, but it is hoped that these will be finally adjusted in the course of the financial year 1923-24.

Loss on re-control Bacon purchased after the Requsition Period (August, 1919).

24. In addition to the loss on the Requisition Bacon account referred to in paragraph 23 of my Report last year, which at 31 March, 1922, stood at £6,314,328, there were further losses incurred on the Ministry's own contracts which are embodied in the sectional Re-Control Trading Account. On this account the net loss at 31 March, 1922, amounted to £3,532,671, or about 4.5 per cent. on the re-control purchases between August, 1919, and March, 1921. This loss is attributable largely to exceptional trade conditions. Before the stocks could be liquidated the depression in trade became general, and this affected all markets during the latter half of 1920 and throughout 1921. There were various contributory causes, but the loss was practically accounted for by the drastic cut in prices necessary to effect clearance of stocks, which would otherwise have been unsaleable, after the discontinuance of control in March, 1921.

Chinese Bacon and Lard.

25. Reference was made in paragraph 24 of my Report last year to the fact that, by an oversight, large over-advances had been made to a certain firm of importers, and that steps were being taken to recover the approximate amount of the excess payment.

It appears that, in consequence of the deadlock which occurred in the protracted negotiations with the firm in question, the Board of Trade asked the Treasury to approve a settlement by the acceptance of a sum of £100,000 instead of having recourse to arbitration entailing heavy legal expenses.

In acquiescing in this settlement, the Treasury and the Board of Trade were influenced (a) by the fact that the Board's position had been prejudiced by the unduly high provisional payments per box made to the firm, (b) by the heavy losses incurred by the firm at a later period, for which, however, the Board disclaimed direct responsibility, and (c), in particular, by the fact that, in the event of the arbitrator awarding the Government an amount in excess of £100,000, there would be a very serious risk that the firm would be forced into liquidation.

This sum of £100,000 has since been paid to the Board in full settlement of the account.

Defalcations by a Temporary Official of the Scottish Live Stock

Fund.

26. The statement on page 155 of Losses written off with Treasury sanction includes a loss of £326 2s. Od. due to defalcations by a temporary official of the Scottish Live Stock Fund. This official's superior officer, in view of his necessarily frequent and sometimes prolonged absences from the office at Edinburgh, appears to have signed cheques in blank in order that his assistant could fill them in for any sum required.

Criminal proceedings were taken against the official defrauding, and he was sentenced to twenty months' imprisonment.

The Treasury noted with much concern that the loss had been incurred as the result of the adoption by the officer in charge of the very undesirable practice of leaving signed blank cheques to be filled in by his assistant, and it was with considerable reluctance that Their Lordships deferred to the legal advice given to concur in the waiver of proceedings in relief against him.

DEPARTMENT OF BUILDING MATERIALS SUPPLY.

27. General observations on the transactions of the Department are contained in paragraphs 87-90 of my Report on the Appropriation Accounts of Civil Services for 1921-22.

Outcome of the Account: Deficiency £882,510.

The circumstances which led to this deficiency are fully stated in the Memorandum printed at page 162.

Final Trading Accounts.

28. The complete liquidation of commitments was in sight at 31 March, 1922, and the Treasury have therefore decided that no

further Trading Accounts need be prepared, and that any adjustments necessary in regard to transactions not completed by 31 March, 1922, should be made in a final liquidation account.

DEPARTMENT OF OVERSEAS TRADE.

BRITISH INDUSTRIES FAIR, 1922.

29. The Account for the year under review shows a profit of £4,455 128. 8d., and it will be seen from the Balance Sheet that the financial result of the three Fairs held in 1920, 1921, and 1922 is a net profit of £889 13s. 10d.

The question of provision for overhead charges, to which reference was made in paragraph 37 of my Report last year, has now been settled by arrangement between the Treasury and the Department of Overseas Trade.

STATIONERY OFFICE.

FOREIGN OFFICE PRESS.

30. The compensation payable to the previous owners for loss of profits upon the acquisition of this Press in 1918, amounting to £12,171 17s. 11d. at 31 March, 1921, and shown in the Balance Sheet of that date as a temporary asset, was based upon payment at the rate of £5,075 19s. 5d. a year from the date of acquisition until the legal termination of the War, fixed by Order in Council as 31 August, 1921. A final instalment was paid by the Stationery Office in 1921-22, and the total compensation amounted to £14,282 5s. 1d.

This item has been eliminated from the current Balance Sheet as it was considered to be an expense pertinent to the Stationery Office Vote and not to the Foreign Office Press as a trading

concern.

I have inquired as to the reasons for adopting the new procedure and have asked whether the concurrence of the Treasury had been obtained.

HARE STREET PRINTING WORKS.

31. For the first time, the accounts of this undertaking show a net loss on the year's trading. The total profit realized by the establishment in previous years amounted to £65,568 19s. 6d., but this is reduced to £52,087 10s. 1d. by the net loss of £13,481 9s. 5d. incurred in the year under review.