On account of the newer main lines running through thinly populated territory, and the terminals being located where no previous settlement existed, it has been necessary to build cottages for our employes, notably, Napadogan, N.B., Parent, Que., Capreol, Hornepayne, and Atikokan, Ont., Kamloops and Boston Bar, B.C. No further large expenditures in this connection are anticipated, except at Edson, Alta., on account of the Canadian Northern and Grand Trunk Pacific consolidation. On account of rapid development of lumbering and mining north and west of Sudbury, the lack of accommodation for unmarried employees at Capreol became acute. Adopting the practice of the Grand Trunk and Canadian Pacific Railway, a building was erected at that point and turned over to the Railway Y.M.C.A. to operate. This institution has been of great benefit to the employees, and has undoubtedly resulted in improved morale and better service. Several other points on the System greatly need some facility of this kind. WATER SUPPLIES:--East of Winnipeg good water is so abundant that the only work required was to ensure the regular supply, or in a few instances, to provide new supplies to facilitate traffic movement, or to substitute gravity or hydraulic ram operation instead of pumping to reduce the cost. This applies also to western Alberta and all of British Columbia. Between Winnipeg and Edmonton, or Calgary, the situation is entirely different. Rivers are few and far between and the difficulty of securing adequate supplies of water at proper intervals is very great. Much of the water obtainable from wells or small lakes is so heavily charged with suspended matter or salts in solution that it produces scale on the interior of boilers, causing them to leak so seriously as frequently to result in complete failure on the road, and greatly to increase the consumption of fuel and boiler maintenance costs. There are many stretches between water tanks of such length that locomotives could not pull fully loaded trains with the water carried in their own tenders and had to draw one or more water cars behind them. Until recently, it was at times necessary to employ from one hundred and fifty to two hundred water cars simultaneously. This practice is very expensive, as each car usually displaces a revenue load, its maintenance cost is very high, and the trouble and delay at terminals incidental to their use are very great. On a single G.T.R. subdivision of less than a hundred miles, during a period of heavy traffic, water cars on trains, cost $10,000 per month.