The National Railways are the originating lines for a large volume of the classes of traffic referred to. As it was generally impossible to secure a sufficient number of American-owned cars to move the products enumerated above, the volume of which had grown enormously during the war, we were faced with the alternatives of supplying cars for the export of commodities referred to, thereby incurring the risk of losing some of their equipment for an indefinite length of time, or by refusing to furnish their cars for this business, to deprive the paper and lumbering interests of Canada of the means of exporting their products, thus causing serious injury to the business of the country, and tending to aggravate the already serious exchange situation. The policy adopted by the Canadian National Railways under these conditions was to make every effort to secure American-owned equipment for this traffic, and make up the deficiency as far as possible with system-owned cars. It was the only sound policy, but it deprived the National Railways of a considerable number of their cars, particularly during 1919 and 1920. The National ownership of locomotives, freight cars, and passenger cars, was relatively below that of the other principal Canadian railways. If all had been available it would have been totally inadequate to meet traffic requirements. The public demand for additional train service, and car supply was most insistent and the actual need of additional equipment very great, so that many new locomotives, freight and passenger cars were ordered in 1918, 1919 and 1920, delivery being generally from six to twelve months after each order was placed. LOCOMOTIVES:--As it was highly desirable to employ the most powerful locomotives in order to handle the maximum tonnage per train, the policy was adopted of only purchasing heavy engines, placing them upon lines with the greatest density of traffic and with suitable track and bridge conditions. Besides the ordinary repair work a certain amount of locomotive improvements, such as heaters, brick arches, etc., to increase capacity and reduce fuel consumption, which had been commenced some years before, was continued, and is still being carried on. During the first eight months of 1921, through shrinkage in traffic, several locomotives were out of service, but all engines were employed during the Fall. This extra motive power available on September first, made it possible to increase the volume of grain handled from the Prairies to the head of Lakes during the past four months, as compared with previous years.