STRATFORD, ONTARIO -- Thirty-five years after British theater legend Sir Tyrone Guthrie raised a tent over a stage here, the Stratford Festival celebrates its most ambitious season and tries to put its money-losing days behind it.

North America's largest summer theater festival is performing more shows than ever this year -- 14 plays, including five Shakespearean works. Several of the dramas chosen this year also stress an antiwar theme.

But when artistic director John Neville was asked about the festival's future, his answer addressed the problem of how to cut the burdensome deficit while maintaining artistic standards worthy of Guthrie's legacy.

In his two years at the helm, he has cut the shortfall dramatically -- from $3.38 million to $555,000. But the strain of being a budget-cutter, administrator, artistic diplomat, actor and director took a toll on him.

"It's a terrible pity artistic directors have to think about money, but it's necessary," he said wryly.

Neville recently announced he would not return after 1988, the third and final year of his contract. But the move caused consternation in the festival ranks, and he reconsidered, saying he would extend his contract for one additional year.

A British-born actor and director trained in the classics, Neville has sharply cut back the staff but increased the number of productions in the May-to-November season.

This year, he also selected several theatrical works wrapped around antiwar themes, which he said naturally followed his decision to stage Brecht's "Mother Courage," the story of a woman peddler during the Thirty Years War.

"I also thought of 'Troilus and Cressida,' which is a savage satire on the futility of war," Neville said.

"Cabaret," with its warning about the rise of Nazism, and two plays that mourn the slaughter of World War I -- "Journey's End" and "Not About Heroes" -- are also among this year's productions.

Critical reception this year has been mixed. The critics threw verbal vegetables at director David William's "Troilus," which updated the Trojan War by dressing ancient Greek warriors in khaki shorts and Achilles' guards in biker boots and black leather.

However, Brian Macdonald's glittering production of "Cabaret" is proving successful with critics as well as the audiences that come to this town of 26,500 in the farm country of southwestern Ontario.

The festival draws about half its audience from Toronto, about 90 miles to the northeast. And many Americans drive from Buffalo or Detroit for theater weekends.

It all began as the idea of a local journalist who wanted to boost the area's economy and thought that a town named Stratford, with an Avon River and a neighboring hamlet called Shakespeare, should have a theater festival.

The festival has built a solid ensemble of American, British and Canadian talent. The most well-known performer this season was probably Howard E. Rollins Jr., who starred in the film "Ragtime" and played the title role in Stratford's "Othello" until he was forced to withdraw because of illness.

Even without big-name stars, the box office has been robust. As of early July, ticket sales were $4.72 million, up from $4.41 million at the same time last season.

In 1986, Neville managed to achieve an operating surplus of nearly $500,000, helping to reduce the shortfall.

But he said, "I'm not sure we can clear the last bit of the deficit this year. We've made so many trimmings of the bureaucracy that grew in a previous administration that we could damage the integrity of what we're trying to do (on stage)."

Bureaucracy was not the only legacy of his predecessors. By several accounts, the four-year tenure of Neville's predecessor John Hirsch was not a happy one and Neville has tried to mend strained relationships.

When he isn't working as an administrator, Neville, who is 63, is directing "Othello," playing Anton Chekhov in a new work about the playwright called "Intimate Admiration" and directing "Mother Courage."

"I like my job very much," he added, "but it's very exhausting."