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to approve them only if Government were prepared to give an undertaking to make up any deficit incurred as
a result. I found it impossible to give a blank cheque
to the Directors in that way particularly as such
arrangement must eventually deprive them of any
incentive to increase voluntary subscriptions which
still form a substantial part of the income of the
hospitals. It was recognised, however, that a
substantial increase in Government assistance would
be necessary if the hospitals were to maintain the improvements effected in them. After prolonged discussion I agreed with the advice of my Executive
Council and subject to your approval to the Government grant in respect of 1939 being increased from $121,000 to $320,000 and to the reimbursement by Government of
any special expenditure actually incurred as provided in the draft estimates up to a maximum of $80,000 as
stated above. In addition it was recognised that the
Government was morally committed to the reimbursement of
the whole or substantially the whole of the deficit
actually incurred during 1938 for which it was understood
during the negotiations last year for the reorganization
of the hospital that Government would assume liability.
That deficit amounted to $106,000. I have therefore
agreed also subject to your approval to an additional grant in respect of the year 1938 of $100,000.
5.
It is proposed that payment should be made
as follows:-
An immediate payment of the sum of $100,000
in respect of 1938 deficit will be made.
A further $199,000 will be due in respect of
1939 in addition to the $121,000 provided in the
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