happened that defaults had imposed losses because the original value of bonds had, through the changes of time, become destroyed. This led to the promulgation of a new regulation, requiring every fourth-class postmaster who shall have been in office for five years after the taking effect of his latest official bond, to give a new bond to secure the faithful performance of his duties. As Presidential postmasters must renew every four years, if reappointed, the renewal once in five years by fourth-class officers is deemed reasonable, and the records of the Department prove it to be a prudent requirement. Some special labor was imposed on the bond division by the order, as it was found to affect about thirty-five percentum of the officers of that class.

Free Delivery Statistics.-The carrier-delivery service has continued to meet with popular favor, and been somewhat extended during the period reported on. Nineteen cities-Jamestown, Lockport, Newburgh, and Saratoga Springs, in New York; Brockton and Fitchburg, in Massachusetts; Norwich and Waterbury, in Connecticut; Eau Claire and La Crosse, in Wisconsin; Decatur and Elgin, in Illinois; Fort Worth, in Texas; Lawrence, in Kansas; Raleigh, in North Carolina; San José, in California; Sedalia, in Missouri; Sioux City, in Iowa; and Salt Lake City, in the territory of Utah-have been added to the number of those which enjoy this convenience, making the total number at the year's end one hundred and seventy-eight.

Four hundred and sixty-eight new carriers have been employed, swelling the gross number in this arm of the service to 4,358. This accounts in part for the increase of expenditure already remarked upon, and the remainder was due to the provision of law increasing the compensation of carriers after certain periods of service, having become applicable to many, whereby the average compensation of carriers increased (by $14.12) to $912.90 each. The regular appropriation of $4,000,000 was augumented during the last session by a further special one of $50,000, and subsequently another of $15,000 in anticipation of a deficiency. The cost of the service proved to be, however, not in excess of the first provision, having reached but $3,985,952.55, because but few new carriers were employed after the first of March.

The postage upon local mail matter at the carrier delivery offices amounted to $5,281,721.10, exceeding the cost of the service by $1,295,768.55. There has been also a general increase in all the usual statistical items because of the additional cities taken into the system. The average cost per piece for handling, 2.3 mills, remains unchanged, however.

The great labor performed by the carriers may be conceived from the fact that 1,744,537,413 pieces were collected and delivered in all, an average to each man of 400,307; an increase of 1.08 per cent. over the preceding year's experience.

Many other facts of interest and importance are shown in the statis

tical tables accompanying the report of the First Assistant PostmasterGeneral on this subject.

The Division of Post-Office Supplies furnishes statistics of the work performed in supplying post-offices with blanks, stationery, twine, wrapping-paper, canceling-ink, letter-balances, scales, stamps, and pads for the conduct of their business and twine and facing slips for the railway mail service. A general notion of the labor of this office may be formed from the reported details. Above 51,000,000 blanks were issued during the year, above 65,000,000 facing slips, 810,000 pounds of twine, over 87,000 record books, and more than 17,000 reams of wrapping paper. The expenditures were $358,308.82, being $53,968.48 less than the appropriation.

The methods pursued in this division by the former superintendent having awakened some suspicion, I appointed, early in April last, a commission, composed of George W. Wells, chief of the Fi nance Division, W. B. Cooley, of the Money Order Office, and H. L. Johnson, of the Contract Office, to investigate the transactions and affairs of the division. The labors imposed proved severe, requiring the time of the commission until late hours of night during several weeks, but the duty was performed faithfully and fearlessly, and the commission well earned the grateful approbation bestowed upon the conclusion of their labors. Their report disclosed that improper practices had been pursued in the purchase of supplies, worthless material bought, contractors suffered to deliver goods manifestly inferior to contract requirements, and many improvident and unnecessary purchases made; and especially that the privilege allowed by law of purchasing supplies in the market, when the exigencies of the service leaves no sufficient time to invite bidders to contract, had been abused. Inasmuch as the supplies so obtained had been mostly sent out to postmasters or railway post-offices, the pecuniary loss sustained by the Government could only be esti mated; but the evidence leaves little moral doubt that it amounted to a large sum. The report of the commission will be found in the appendix, and I invite attention to its statements. Some of the facts given are interestingly illustrative of the methods by which the Government may sometimes suffer. Upon the disclosures of this investigation the superintendent and stationery clerk were removed from office, and changes of methods ordered recommended by the commission.

Salary and Allowance Division.-The responsibility and magnitude of the labors assigned to this division, and the pecuniary consequences of a judicious performance of them, require especial consideration, and I invite careful examination of the statistical information given, of which I can here mention only the general features.

The salaries of all postmasters of the first, second, and third classes are now annually adjusted, and all allowances to such postmasters for clerk hire, rent, fuel, light, furniture, miscellaneous and incidental expenses made in this division; and here box-rent rates are examined

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and fixed. Forty-four offices of the fourth class were assigned to the third class, at salaries aggregating $47,000; 82 adjustments of other Presidential offices added a gross amount to the salaries of the incumbents of $71,000; 134 reductions and discontinuances reduced the total salaries of those offices by $139,300; and, altogether, 2,435 adjustments made involved salaries to an aggregate of $3,701,600.

Of allowances, 3,352 for clerk hire resulted in a charge of $4,924,569.65; 1,690 for rent, fuel, and light secured $463,939.21; 4,709 for miscellaneous items imposed a cost of $64,294.37; 578 for furniture amounted to $23,000.14; while 232 for advertising added $10,314,87; making an aggregate charge to the Government of $5,486,118.24 resulting from the favorable consideration of 10,561 different applications from postmasters scattered over a wide country. Besides those demands which were granted, 4,326 were declined.

In addition to these items of regular work, there have been filed 32,440 applications for the readjustment of salaries in former years, under the act of March 3, 1883, of which 16,521 have been reviewed, 10,621 found below the 10 per cent. requirement, and 5,900 allowed, whereby the Government is already held liable to an aggregate for back pay of postmasters of nearly $380,000, with but about half of the filed claims considered, while probably many are yet to be filed.

It needs not to be added that transactions involving so much of pecuniary consequence and judicious business judgment demand a very high degree of ability, care, and fidelity for their safe supervision.

The result of the latest annual readjustment of salaries was to fix the number of Presidential offices on the 1st of July, 1885, at 2,233; of the former list, 134 being relegated to fourth class, and but 14 then advanced from the fourth to the third class. This effect is to be mainly attributed to the reduction of letter postage.

The aggregate salaries of the Presidential postmasters as so adjusted are $3,630,600, while the gross receipts from the same offices during the four quarters ending March 31, 1885, which formed the basis for the adjustment, amounted to $31,792,220.55; the salaries being 11.42 per cent. of the revenue. Shortly and approximately stated, the Presidential offices collect three-fourths of the revenue and fourthclass offices receive over two-thirds of the salaries.

A detailed showing of the progress of the work of reviewing the former adjustments of postmasters' salaries during the ten years from June 30, 1864, to June 30, 1874, pursuant to the act of 1883, is given. The gross amount of allowed claims of this description to the time of the report is $378,922.96. Of this sum the act of July 7, 1884, appropriated $45,213.85, and the act of March 3, 1885, $178,481.23 more; both of which appropriations have been disbursed. No appropriation has yet been made for the remaining $155,227.88, and this balance will enlarge as the work further progresses.

After the passage of the readjustment act of 1883, Postmaster-General Gresham, himself a jurist of high rank, decided, substantially, that its correct interpretation requires of the Department simply to review the salaries in question and proceed biennially to readjust them prospectively, in those cases in which it failed of being done, in the same manner and upon the same rules by which the adjustment should have been made from time to time under authority of the former laws. The Attorney-General, Hon. B. H. Brewster, in a written opinion given in February, 1884, sustained this construction, and it has been the rule of the Department in administration of the act of 1883.

An urgent appeal, pressed with much persistence and argument, has been addressed to me in behalf of claimants to adopt a different interpretation; it being contended, in substance, that any postmaster who could show by his quarterly returns for any quarter that his compensation under the act of 1864 was 10 per cent. less than it would have been under the former act of 1854 is entitled to have his salary reviewed and readjusted, to take effect at the beginning of the next quarter. Even if I had entered upon the unnecessary inquiry, however, the settled decision which had become a rule of the administration could not have been rightfully changed; and readjustments have proceeded accordingly.

Another demand from the same claimants has been presented to me, to direct payment of the unpaid amounts found due to former postmasters to be made from the unexpended balance of the regular appropriation for compensation to postmasters during the past year. This was also denied, because that appropriation was not made for the purpose, but for the service of the year, and because it appears clearly to have been the design of the Congress, manifested by its having twice made special grants to the extent of the unpaid amounts adjusted to the time, and by the debates and proceedings accompanying their passage, to reserve the opportunity to further scrutinize these claims upon report of the readjustments made by the Department before their payment. Unless, therefore, another direction shall be given by the legis lature, it will be the rule of the Department to pay no money on this account until an express appropriation of it for the purpose shall have been made.

The Second Assistant Postmaster-General is charged with the duty of providing and governing the transportation of all domestic mails and adjusting the accounts for the cost of this service.

The expenditures made through his office exceed those of any other, and nearly equal all the other offices.

The disproportionate increase of disbursements for railway service during the past year has been mentioned. It is accounted for in his report by the fact that, at the close of each of the three preceding years, there remained a large unadjusted balance of liabilities in this service for the year, the cost of which was not counted in the report of expenses;

while during the past year special effort has been made to adjust and settle all these accounts, and thus leave the unadjusted liabilities at the minimum sum possible. That this has been largely effected will appear by a comparison of the estimated outstanding liabilities shown by the Auditor's report for the past year, with the like estimates in previous years; the total amount of all being but $285,000 now, as against $877,471.04 a year ago, and $775,000 two years ago, a difference chiefly due to this item. The effect is to enlarge the apparent showing of expenditure for the year. A reweighing of the mails on the two fast mail lines from Chicago to the West and Northwest, required by their contracts, added also the sum of $50,000 to the cost of transportation this year. Allowing for these circumstances, the ratio of increase during the past year has not otherwise gained over the preceding.

Notwithstanding, attention is arrested by the fact shown that not only does the number of miles of railroad service yearly increase, but, under the operation of the present law, the average rate of pay per mile also continually and strongly increases. He tabulates this fact in compact form for the past six years, thus:

The constant increase shown by these figures challenges careful examination of the present method and serious inquiry whether it does not work somewhere excessive compensation for the service returned. The disproportionate jump in the rate per mile for the last year, as disclosed by the statement, is due partly to the fact just mentioned, that the service has been more closely paid and that the computation of rate has been annually made on the actual payments of the year reported instead of the full cost. That practice has operated to exhibit a less increase in the rate per mile during previous years than was in truth attained, and it is one of the benefits of the more prompt adjustment of accounts that such information is more accurate.

The actual increase in railroad service during the year was 48 routes, 3,872 miles, and $1,615,380 in annual cost.

The cost of the railway post-offices for the year, in addition to the mileage compensation, has been $1,869,488, an increase of $115,830, or 6.6 + per centum over the previous year.

An examination of the details of this expenditure has shown me that, during some years, payments have been made to some railroad companies for the use of apartments in other than railway postal cars, and apartments less than forty feet in length. I can find no warrant of