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It is believed that an amount greater than the above stated sum, rather tban less, will be required. The increase is placed at 7 per cent., the same as last year's percentage, as against 8 per cent. for the fiscal year ending June 30, 1881. The estimated increase in mileage is placed at 6,000 miles, anticipating an increased construction in the next fiscal year, which seems justified from the fact that the business outlook is better, and, according to the latest statistics, more than 600 railroads, with an aggregate proposed length of over 44,000 miles, have been projected in the first nine months of 1885, and on about two hundred of these, aggregating over 9,000 miles, work has been in progress. The readjustment of pay for the regular term beginning July 1, 1886, will fall in the fourth sectiou, embracing a number of great trunk lines running east and west, on which it is believed there will be a large increase in the weight of mails, and for which a corresponding increase in compensation will be required.

In addition to this, the reduction of postage on second-class matter to one cent per pound bas caused the dispatch by mail of heavy weights of newspapers that were formerly sent by express, thus increasing the weight and cost whenever a readjustment is made.

The increase on account of readjustment in the eastern section the present year amounted to $139,153, or 11.12 per cent., and it is expected the increase in the fourth section will amount to fully 12 per cent.

The above reasons seem to justify an estimated increase for the fiscal year ending June 30, 1887, over the estimated cost on June 30, 1886, of $1,028,766, or 7 per cent., as stated above, and exclusive of the Pacific roads.

RAILWAY POST-OFFICE CARS. The appropriation for the fiscal year ending June 30, 1886, exclusive of Pacific roads, is $1,765,026.

The present annual rate of expenditure will nearly exhaust this sum, and a deficiency will be needed if urgent requirements for additional service are met. The estimated increase for 1886 over 1885 of 7.811 per cent. being insufficient, it is believed that it will require fully the increase of 7 per cent., as estimated by the General Superintendent of Railway Mail Service, for the next fiscal year over the amount appropriated for the present fiscal year. This will be an increase of $123,551.82, making the amount required for the service, exclusive of the Pacific roads, $1,888,577.82.

RAILWAY POST-OFFICE CLERKS. The appropriation for this item for the current fiscal year is $4,682,300.

For the reasons set forth in the accompanyiug letter of the 9th instant from the General Superintendent of Railway Mail Service, $81,300 of the appropriation will not be expended. It is thought that the remainder, $4,601,000, will be sufficient to cover the expenditure for the

Anticipating the probable demand for additional clerical force on existing lines of railway post office cars and the requirements for the new lines, I estimate the increase will be nearly in the same ratio as the growth of railroad transportation. Therefore I recommend that the appropriation for railway post office clerks be $4,877,000.

current year.

SPECIAL FACILITIES.

The appropriation for special facilities on truuk lines for the fiscal Jear ending June 30, 1836, is $266,764.

The expenditure on account of this fund is as follows:

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This leaves an unexpended balance of $15,038.18, the Charlotte, Co. lumbia and Augusta Railroad Company having declined to perform the special service between Columbia, S. C., and Augusta, Ga. It will require an appropriation of $251,725.82, present rate of expenditure, to maintain this special service during the next fiscal year.

MISCELLANEOUS ITEMS.

I recommend an appropriation of $1,000, being the amount of current appropriation. Very respectfully,

A. LEO KNOTT,

Second Assistant Postmaster-General. Hon. WM. F. VILAS,

Postmaster-General.

APPENDIX K.

POST OFFICE DEPARTMENT,
OFFICE OF THIRD ASSISTANT POSTMASTER-GENERAL,

Washington, D. C., October 15, 1885. SIR: Herewith I have the bonor to submit the following estimates of appropriations required for the service of this office for the fiscal year ending June 30, 1887, to wit: 1. For manufacture of adhesive postage and special delivery stamps... $116,700 00 2. For pay of agent and assistants to distribute stamps and expenses of agency

8, 100 00 3. For manufacture of stamped envelopes, newspaper wrappers, and letter sheets....

583, 500 00 4. For pay of agent and assistants to distribute stamped envelopes,

newspaper wrappers, and letter sheets, and expenses of agency. 16, 000 00 5. For manufacture of postal cards

188, 600 00 6. For pay of agent and assistants to distribute postal cards and expenses of agency

7, 300 00 7. For registered package, tag, official, and dead-letter envelopes. 67, 200 00 8. For ship, steamboat, and way letters..

2,000 00 9. For engraving, printing, and binding drafts and warrants.

2, 900 00 10. For miscellaneous items..

1,000 00

As will be observed, the principal items in the foregoing estimates are for the manufacture of adhesive postage and special-delivery stampsstamped envelopes and newspaper wrappers, postal cards, registered, package, tag, official, and dead letter envelopes.

These articles are issued upon the requisitions of postmasters, and are furnished under contract, the contracts for postage stamps, stamped en. velopes, newspaper wrappers, and postal cards being for a period of four years under special enactment (joint resolution, March 24, 1874), and the contract for registered package, tag, official, and dead-letter envel. opes being for one year, under the law relating to stationery supplies (R. S., sec. 3735). New contracts were entered into, after public advertisement, in March and April last, to take effect on the 1st July, 1885, for postage stamps and postal cards, respectively, and the estimates for these two items may, therefore, be based upon existing prices. The present contract for stamped envelopes will expire on the 30th September, 1886, and new contract prices will accordingly prevail during nine months of the fiscal year for which these estimates are made. So, too, the contract for registered package, tag, official and dead-letter envelopes being a yearly one, present prices afford no absolute criterion of cost under a new coutract for the next fiscal year.

An element of uncertainty is, of course, to be found in the quantities that willbe required. Anincrease is naturally to be expected, to keep pace with the generał growth of the service, but past experience bas shown a great irregularity in the issues, one item not increasing in the same proportion as another, and the general ratio of increase varying greatly at different periods. These fluctuations are due to a variety of causes, but principally to the changing conditions of the business industries of the country, by which the demands are, to a large extent, regulated. Thus, in numbers, the aggregate issues of the past fiscal year were nearly 1 per cent. less than those of the year ended June 30, 1884, while those of the latter year were 16.35 per cent, more than the issues for the year immediately preceding. The abnormal increase for the year ended June 30, 1881, was due to the uvusual quantities of 2-cent and 4-cent stamps and stamped envelopes required to meet the reduction of letter postage to 2 cents, wbich went into effect on the 1st October, 1883. The average annual increase in the aggregate of all the items for the seven years ended June 30, 1885, was at the rate of 9.3 per cent. The decrease of the past year, in the face of the stimulus of a lower rate of letter postage, was owing, undoubtedly, to the extreme depression in the business interests of the country. While the issues to the 30th of Septeinber exhibited but a slight increase over those of the corresponding quarter of the previous year, the sigus since the 1st of October point to a considerable augmen. tation in the near future to meet the revival of business prosperity. While an increase of only 4 per «ent. will be assumed for the present year, it must be remembered, in view or the slight increase for the first quarter, that this is equivalent to more than 5 per cent. for the year as a whole. The estimates for the next year will be on a more liberal scale, assuming an increase of 8 per cent. in adhesive postage stam;)s, and of 12 per cent. in postal cards, stamped en velopes, and newspaper wrappers, respectively, on the estimated issues of the current year. The appro. priations for tbe present year are already made, and under the reduced prices in the new contracts they will be much in excess of actual require. ments, however great the same may be. The estiinates for the present year are therefore important, only as they constitute a base on which to estimate for the next year. Furthermore, sbould the iudications at the time seem to require it, the needs of the vext year in the way of postagestamps and postal cards may be anticipated to some extent by unusually liberal supplies to the post-offices towards the close of the present year. As the prices will be the same during both years, such an anticipation will lead to no increase of cost. In no event will the expenditures be beyond actual necessities; and as the articles for which mainly the appropriations are asked underlie the foundations of the postal revenue, it will be true economy to provide the means for furnishing all the supplies that may be needed in any contingency.

The several items are considered in detail as follows:

ADHESIVE POSTAGE AND SPECIAL-DELIVERY STAMPS.

As already stated, a new contract for adhesive postage and specialdelivery stamps for the four years beginning July 1, 1885, is now under. going execution. The following are the prices in the new contract, viz:

For ordinary postage stamps, 6.99 cents per 1,000.
For newspaper and periodical stamps, 18 cents per 1,000.
For postage due stamps, 8.49 cents per 1,000.
For special-delivery stamps, 18 cents per 1,000.

The award was made on the basis of the numbers of the several kinds issued during the year ended December 31, 1881, amounting, at the prices specitied, to $103,959.61, a reduction of $30,924.57, or 22.9 per cent., from the cost of like numbers under the old contract. The expenditure for the manufacture of adhesive postage stamps for the year ended June 30, 1885, under the old contract was $137,753.47, and at the prices in the present contract the cost of the stamps issued would have amounted to $103,976.96. The average annual rate of increase in the number of postage stamps issued for the past seven years was 10.4 per cent., while for the last year alone the increase over the preceding year was less than 1 per cent. The issue for the quarter ended September 30, 1885, just closed, exhibits a very slight decrease as compared with the corresponding quarter of the preceding year. In view of this result for the first quarter of the year, it will probably be entirely safe to allow for an increase of 4 per cent. for the entire year, making the expendi. ture for the current year, on the figures previously shown (the cost of the issues for last year at present contract prices), $108,136.04. ing for an increase of 8 per cent. in the issues for the next over the present fiscal year would give $116,780.92 as the amount required for the manufacture of stamps for the ensuing year. I have placed the estimate, in even figures, at $116,700. This estimate is $21,053.47 less than the expenditure for the last fiscal year, and $57,300 less than the appropriation for the current fiscal year.

STAMPED ENVELOPES, NEWSPAPER WRAPPERS, AND LETTER SHEETS.

Wbile for several years past “letter sheets” (a letter sheet and envelope combined) have been included with the appropriation for stamped envelopes and newspaper wrappers, the Department has thus far failed to take advantage of the law authorizing the issue of such sheets, and the expenditure has accordingly been for the two former items only. The increase in the number of stamped envelopes and newspaper wrappers issued during the last over the previous fiscal year was less than 1 per cent., while the average annual increase for the past seven years was 8.7 per cent. The increase for the quarter ended September 30, 1885, was a little more than 3 per cent. over the corresponding quarter of 1884.

As previously stated, the present contract will expire on the 30th September, 1886. Should the present condition of the paper market continue, a great reduction of prices may be expected. The present contract was let more than three years ago, and since that time there has been a considerable falling off in the price of paper-stock. More. over, I am satisfied from a careful examination of the subject, that such a readjustment of the standards may be made as will tend still further to reduce the cost under the new contract. While I believe that the reduction will reach as much as 30 per cent., the more prudent and safer course for present objects is to allow for a lower rate. The estimate of appropriation will accordingly be based upon a reduction of only 20 per cent. in prices.

The expenditure for stamped envelopes and newspaper wrappers for the year ended June 30, 1885, was $626,165.51. Assuming an increase of 4 per cent. in the issues would give the cost for the present year at $651,212.18. Allowing for an increase of 12 per cent. for the next over the present fiscal year, would give the cost for the next year, at present contract prices, at $729,357.64. Reducing this amount by 20 per cent., to correspond with the estimated reduction in prices, would leave the estimated amount required at $583,486.11, which may be placed in even figures at $583,500. This estimate is $42,665.56 less than the expenditure for the last fiscal year, and $161,500 less than the appropriation for the current fiscal year. It will be noticed that the deduction of 20 per cent. in prices has been made on the estimated issues for the entire year, although the present contract runs for one quarter of the year; but it is to be observed that the requisitions for that quarter should be largely curtailed, with the view of exhausting the stock in post-offices anterior to the expected reduction of prices to the public. The allowance of an increase of 12 per cent. in the issues for the next year, while somewhat above the average of the past several years, is not unreasonable, considering the enhanced sales that may be expected to follow a reduction of prices.

POSTAL CARDS.

Postal cards were first introduced under the act of June 8, 1872, the issue beginning on the 1st May, 1873, and amounting, for the months of May and June of that year, to 31,094,000 cards. The number of cards issued during the year ended June 30, 1874, was 91,079,000, and for the succeeding year (1875), 107,616,000, an increase of 16,537,000, or 18.15 per cent. The increase for the year ended June 30, 1876, over the preceding year was at the rate of 40 per cent.; for 1877 over 1876, 12.73 per cent.; for 1878 over 1877, 18 per cent.; for 1879 over 1878, 10.55 per cent.; for 1880 over 1879, 22.80 per cent.; for 1881 over 1880, 13.20 per cent.; for 1882 over 1881, 13.90 per cent.; and for 1883 over 1882, 7.97 per cent. The average annual rate of increase for the nine years to June 30, 1883, was 17.47 per cent., and the issues for the year ended on that date amounted to 379,516,750 cards. Since then, however, there has been a steady reduction; the issue for the year ended June 30, 1884, amounting to only 362,876,750, a decrease of 16,640,000, or 4.38 per cent., and for the year ended June 30, 1885, to 339,416,500 cards, a decrease of 23,460,250, or 6.46 per cent. This decrease was due in part to the depression in business, but very much more largely to the reduction on the 1st of October, 1883, in the letter rate of postage to 2 cents, leading to the substitution, to a considerable extent, of sealed

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