40. As total revenues for the fiscal year 194142 have been estimated at 11,481,285,000 and total expenditures at SI,894,966,000, the estimated over-all deficit (or increase in net debt) for the year is 8413,681,000. In the preceding fiscal year a comparable deficit was 1377,432,000.

41. In addition to the expenditures for the year, as already outlined, the Dominion has made disbursements for the acquisition of investments which are treated as active assets in the Public Accounts. These active assets are deducted from the total direct debt in arriving at the figure of net debt. The net increase in active loans and investments during the fiscal year 1941-42 is estimated at $616,147,000 as compared with $362,370,000 in 1940-41. This increase is fully itemized in the table under section 56.

42. As was shown in the Public Accounts for the fiscal year ended March 31, 1941, loans made to the Western Provinces under authority of the annual Relief Acts and outstanding at the close of that year totalled. $157,492,294.23. No loans have since been made and during the year under review repayments were received from the Provinces of Saskatchewan and Alberta in the amounts of $171,272.74 and $46,000 respectively. These repayments left the net amount outstanding as of March 31, 1942, at $157,275,021.49, divided by Provinces as follows: Manitoba $ 25.217.214 18 Saskatchewan 71.341.419 95Alberta 25.972,000 00British Columbia 34,744,387 30Total $157,275,021 4943. The following table shows the net loans made to each Province during each fiscal year:

- Manitoba Saskat- chewan Alberta British Columbia Totals $ S $ $1931-32 2.788,812 10,934,341 4,097.740 4,813,124 22.634,0171932-33 5,171,904 7,578,556 1.902,041 912.636 15,565,1371933-34 2,273.233 5.469.240 4.050.743 1,321.761 13,115,0271934-35 2.874,631 10,141,014 1,926.476 7.966,714 22.908,8351935-36 2.396,226 14.245,478 13,104,000 12,558,445 42.304,1491936-37 4,626.000 6.058,879 805,198 3,972.400 15.462.4771937-38 2,959,188 11.604,787 193,000 1,541.636 16,298,6111938-39 1,405,499 13.708,847 - -129,506 14,984,8401939-40 1,882,493 9,190,681 -53,698 1,546.552 12.566,0281940-41 -355.924 1,637,007 -7,500 240,625 1,514,2081941-42 - -171,272 -46.000 - -217,27226,022,112 90,397,558 25,972,000 34,744,387 177,136,057Less Write-off as provided by votes 392 and 393 of further supplementary estimates, 18,487,0551936-37 804,897 17,682,158 - - Less Write-off Saskatchewan Treasury Bills re 1934-35 Drought Area relief assumed by Dominion. (Principal $1.250,000: Accrued interest 1,373,980previous years $123,979.81).. - 1.373,980 - - 25,217,215 71,341,420 25,972,000 34,744,387 157,275,022 The Budget-Appendix

Canadian National Railways 44. During the fiscal year ended March 31, the Canadian National Railways in the amount 1942, the Government made net advances to of $251,721,580, classified as follows: Advances- Under Canadian National Railways Financing and Guarantee Act, 1941-for capital expenditures and retirement of miscellaneous obligations Under The War Appropriation (United Kingdom Financing) Act, 1942-" Purchase of securities Under The War Appropriation Act, 1941-Temporary ' Loan' for Working Capital " Under Canadian National Railways Financing and Guarantee' Act,'"i940- Purchase of Grand Trunk Railway Company of Canada 4 per cent Pernetual Consolidated 1) benture Stock Under the Canadian National Railways Refunding Act, 1938-Retirement of maturing issues

Total Advances Repayments- Temporary Loan on account of interim deficit Application of 1941 Surplus- Advances-Financing and Guarantee Act, 1938 Advances-Financing and Guarantee Act, 1939 Advances-Senneterre-Rouyn Branch Line Construction Advances-Trans-Canada Air Lines

Total Repayments

Net Advances

Under the authority of The War Appropriation Act 1941 and The War Measures Act the Dominion purchased $1,027,426 of railway equipment which is being leased to the Cana-diant National Railways under the terms of a hire-purchase agreement. The Railway Company repaid instalments aggregating SI,509,-141 under the terms of hire-purchase agreements relating to equipment purchased by the Government in the fiscal years 1935-36 and 1936-37; 1939-40 and 1940-41. Canadian Pacific Railway Company 45. Loans to the Canadian Pacific Railway Company made in previous years for relief purposes were completely liquidated by repayments aggregating $981,000. In addition, the Railway paid the fifth instalment of $441,000 under the terms of a hire-purchase agreement relating to certain equipment purchased by the Government in the fiscal years 1935-36, 1936-37 and 1937-38 at a cost of $5,730,000 and leased to the Railway Company. The Railway also paid the first instalment of $663,000 under the terms of a hire-purchase agreement relating to equipment purchased by the Government in the fiscal years 1939-40 and 1940-41 at a cost of $9,951,000 and leased to the Railway Company.

46. In the fiscal year ended March 31, 1942, the Government purchased an additional $25,- 000 of the capital stock of the Canadian Farm Loan Board. Capital Stock in the amount of $10,000 was cancelled and written off. The Board repurchased out of surplus funds from the Government $1,000,000 of its 3± per cent Bonds. At the close of the fiscal year the Government's investment in the Canadian Farm Loan Board was $36,537,000. 47. The Canadian Broadcasting Corporation repaid $283,000 on account of loans made by the Government during the fiscal years 1937-38 and 1939-40. 48. The Canadian Government Merchant Marine, Limited, repaid loans aggregating $750,000 made in the fiscal year 1940-41 in order to provide the Company with working capital. 49. There was advanced to the Foreign Exchange Control Board in the fiscal year 1941-42 an amount of $400,000,000 in order to provide the Board with capital to carry on its foreign exchange transactions. 50. Loans totalling $230,000 were made to the National Harbours Board during the year for capital construction purposes at the ports of Montreal and Vancouver. In the same period, loans made in previous years were reduced by $1,210,000, leaving a net credit on this account of $980,000. 51. Investments in Sinking Funds amounted to $486,000 during the fiscal year under review. This amount together with the amount held at The Budget-Appendix March 31, 1941, viz., $5,233,000, was written off to Redemption of Debt, as the 4 per cent Loan of 1953-58, the 3i per cent Loan of 1950-55 and the 31 per cent Loan of 1958-63 were vested by the Government of the United Kingdom in August 1941. In turn these three sterling issues were purchased by the Government of Canada and cancelled. 52. In the fiscal year under review the Provinces of Manitoba, British Columbia and Nova Scotia reduced by $740,000 loans made to them by the Dominion Government for house construction in the period following the first Great War. 53. Loans for Soldier and General Land Settlement were reduced by payments of $1,521,000, and, in addition $271,000 was written off and charged to Consolidated Fund. 54. In the period April 1, 1941, to March 31, 1942, 4,309 loans were approved under the National Housing Act for an amount of $13,541,415, bringing the total approvals to March 31, 1942, to $76,784,145. During the fiscal year, the Dominion's share of loans actually paid out, less repayments by borrowers, totalled $2,644,165. The net amount of loans under the authority of the National Housing Act and the Dominion Housing Act, outstanding on the books of the Dominion at March 31, 1942, was $16,254,095. Loans under the authority of the National Housing Act are made jointly by the Government and approved lending institutions and are secured by first mortgage or hypothec, running jointly to the Government and an approved lending institution. Loans are normally made not in excess of 80 per cent of the cost or appraised value of the completed property, whichever is the lesser. However, in the case of owner-occupied houses where the lending value does not exceed $2,500, a loan may be made up to 90 per cent of the said lending value. Since January 1, 1940, new applications for loans are received only in respect of the construction of houses containing one self-contained dwelling place and where the loan does not exceed $4,000. 55. Under the Municipal Improvements Assistance Act, 1938, no further loans were approved during the fiscal year ended March 31, 1942. From the inception of the Act to March 31, 1942, total loans approved totalled $7,801,000. During the said fiscal year, the amount actually paid out by the Government, less repayments, was $331,000. These loans bear interest at the rate of 2 per cent per annum and are amortized over a period not longer than the estimated useful life of the project. The province in which the municipality is situated is required to guarantee the payments for interest on and amortization of each loan. 56. The following statement shows in summary form the net changes in active investments during the last fiscal year together with comparable figures for the four preceding years: LOANS AND INVESTMENTS, ACTIVE (000 omitted) - 1937-38 1938-39 1939-40 1940-41* Estimated* 1941-42 t $ $ $ $Sinking Funds 3,843 4,336 Cr. 2,798 Cr. 61.963 Cr. 5,233Canadian National Railways Cr. 27,429 3,841 21,479 105,573 251,722Canadian Pacific Railway Cr. 211 Cr. 211 Cr. 211 Cr. 211 Cr. 981Canadian Farm Loan Board 3,848 2,834 2,288 838 Cr. 974Dominion and National Housing Acts- Loans 1,678 2,657 4,393 3,805 2,644Municipal Improvements Assistance Act, 1938-Loans - 815 3,111 1,718 331National Harbours Board 1,890 692 947 Cr. 333 Cr. 980Province of Sask. Power Commission... - 58 Cr. 4Provinces-under relief legislation 16,299 14,985 12,566 1,514 Cr. 217Provinces-Housing Loans, 1919 Cr. 1,422 Cr. 105 Cr. 699 Cr. 1,634 Cr. 740Railway Equipment purchased 89 Cr. 1,399 8.135 14,781 Cr. 1,586Soldier and general land settlement 505 Cr. 749 Cr. 1,116 Cr. 1.139 1,521Roumanian Government 359 Bank of Canada Capital Stock - 820 Central Mortgage Bank-Capital Stock - - 250 _Canadian Broadcasting Corporation 500 Cr. 50 700 Cr. 364 Cr. 283Canadian National .'West Indies) Steam- ships 450 - - Canadian Government Merchant Marine. - - - 750 Cr. 750Foreign Exchange Control Board - - - 325,000 400,000Net Advances 399 28,466 49,045 388,393 641,428 The Budget-Appendix

loans and investments active-Concluded (000 omitted) - 1937-38 1938-39 1939-40 1940-41* Estimated* 1941-42Less write-offs- Soldier and general land settlement % $ $ $ %loans [DOT] [DOT] Canadian Farm Loan Board-Capital -750 -895 -1,643 -1,011 -271Stock Loans to Province of Saskatchewan- -10 -14 -11 -12 - 10Drought Area Relief, 1934-35 Reserve for possible losses on ultimate - -1,374 " realization of active loans and advances - - - -25,000 -25,000Net change in active investments Cr. 361 27,557 46,017 362,370 616,147 *Does not include advances by the Department of Munitions and Supply to commodity and other corporations described in section 25 (pages 22-23).

57. During the fiscal year ended March 31, 1942 the Government issued obligations in the amount of $2,457,464,570 (including the increase in Treasury Bills outstanding but not the total amount of recurring issues of Treasury Bills made to refund outstanding Treasury Bills). With the exception of one $10,000,000 issue sold in New York, all issues were sold in the Canadian market. During the same period Dominion obligations in the amount of $964,335,201 were paid off out of the proceeds of the new issues. The remainder of the proceeds, namely, $1,493,129,369, less cost of flotation, provided cash for direct and indirect outlays on war account. 58. The following table gives details of the amounts and terms of the new issues, including the prices at which they were sold:

Price Yield at Issue Date Maturity Date Interest Rate Where Payable To Public To Govern- ment Public Price Price to Government Amount Issued1941 May 1 May 1, 1942 % 1 Canada i $ 100-00 % % 100 $ 250,000,000May 1 May 1, 1943 2i New York - 100-00 - 2 25 10.000.000June 15 Dec. 15, 1946 2 Canada 99-00 97-98 2-19 2-40 193,286.000June 15 June 15, 1951 3 Canada 100-00 98-95 3-09 3-21 643.534,250July 1 July 1, 1942 4 Canada - 100.00 - 4-00 33,293,471Oct. 16 Oct. 16, 1944 14 (School Lands) Canada - 99-27 - 1-75 200,000,0001942 Mar. 1 Sept. 1, 1944 14 Canada 100-00 (x) 1-50 w (a) 57,169,000Mar. 1 Mar. 1, 1948 24 Canada 100-00 (x) 2-25 (X) (a)268.924.000Mar. 1 Mar. 1, 1954 3 Canada 100-00 (*) 3-07 (x) (a)671,410,300Various June 15, 1945 Non-In terest Canada 100-00 100-00 Nil Nil 4,553,219Bearing Certificates. War Savings Certificates. War Savings Stamps Treasury Bills. 3-00t 3-00t 84,333,840Various Increas e in short-term Canada - - Nil Nil 960.490 2,417.464.570 40.000.000 2,457.464,570 (a) Preliminary figures. (x) Final costs for Second Victory Loan not yet available. (t) Yield to investor if held to maturity, seven and one-half years after issue. The Budget-Appendix It will be noted that both the first and second Victory Loans were sold during the fiscal year under review. Each was an outstanding success. In the case of the first Victory Loan, total subscriptions amounted to $836,820,250 and the total number of subscribers was 968,259. The second Victory Loan offered in February last resulted in total subscriptions of $997,503,300 and the total number of subscribers was no less than 1,681,525. 59. The following table gives the details of Dominion of Canada bond redemptions during the fiscal year under review.