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letters and printed matter for written postal cards and unsealed circu.

It is probable, however, that sufficient time bas elapsed for the public to become fully informed of the advantages of sealed matter over postal cards, and that the demand for the latter ias reached a minimum. If so, the issue of cards must be expected to increase in the future; and, indeed, the present revival of business may lead to a large augmentation for the purposes of trade. It is deemed prudent, therefore, to estimate for an increase of 4 per cent. for the present over the last fiscal year, and for an increase of 12 per cent. for the next over the present year. At these rates the cards issued for the year ending June 30, 1886, would amount to 352,993,160, costing at the present contract price $168,413.04, and for the year ending June 30, 1887, to 395,352,339 cards, costing $183,622.60. The estimate is placed in an even amount at $188,600. This amount is $3,899.13 more than the ex. penditure for the last fiscal year, and $50,400 less than the appropriation for the current year.

REGISTERED-PACKAGE,TAG, OFFICIAL,AND DEAD-LETTER ENVELOPES.

The cost of registered-package, tag, official, and dead-Jetter envelopes for the last fiscal year was $90,097.26; but tbis expenditure affords no clew to the needs of the service, inasmuch as on the one band there was an exceedingly unfavorable contract during the greater portion of the year, and, on the other hand, because of the excessive prices the issues were largely curtailed, with the effect of reducing the stock in postoffices. The circumstances of the late contract will be referred to somewhat fully in my forthcoming annual report, to which a copy of this letter will be appended, and they are detailed still more at length in Ex. Doc. No. 264, House of Representatives, second session Forty-eighth Congress. It will be sufficient here to say that this office was not responsible for the contract.

The present contract was awarded on the basis of the number of envelopes issued for the year ended March 31, 1885, amounting, at the lowest bid offered and accepted, to $55,667.80, a reduction of $12,437.25, as compared to the cost of like numbers of envelopes at the prices in the late contract.

This amount, however, does not fully represent the real saving by the new contract, the issues of the year upon which the award was made having, as already explained, been reduced in consequence of ex. cessive prices. The cost of envelopes issued for the quarter ended September 30, 1885, under the new contract, was $15,858.71, wbile the cost of like numbers at the prices in the late contract would amount to $29,148.85. At this rate the expenditure for the present fiscal year would amount to $63,434.84, and the saving under the present contract to $53,160.56, or 45.5 per cent., as compared to the late contract. Uu. less there should be au unfavorable change in the paper market, there is no reason to anticipate an increase of prices, though no appreciable reduction is at all probable under a new contract for the forthcoming year. Allowing for an increase of 6 per cent. upon the estimated cost of envelopes for the present year, to represent a probable increase in the quantities needed, would give $67,210.93 as the amount of the appropriation required for the next fiscal year. The estimate is placed in even figures at $67,200. This amount is $22,897.26 less than the expenditure for tbe last fiscal year, and $72,800 less than the appropriation for the current fiscal year.

POSTAGE-STAMP, STAMPED-ENVELOPE, AND POSTAL-CARD AGENCIES.

The estimates for the several agencies for the inspection and distribution of postage stamps, stamped envelopes, and postal cards are placed at the same amounts ($8,100, $16,000, and $7,300, respectively) as the appropriations for the current fiscal year. Indeed, there has been no increase in the appropriation for the postage-stamp and stamped. envelope agencies since the 1st July, 1878, and none in the postal-card agency since the 1st July, 1879. The expenditure for the postage-stamp agency during the last fiscal year was $5,745.86; for the stamped-envelope agency, $15,886.10; and for the postal-card agency, $7,005.82. The large unexpended balance of $2,354.14 in the postage-stamp agency was due to the fact that the position of agent in charge was allowed to go unfilled for the greater portion of the year, the duties having been performed in the interim by the principal clerk. The unexpended balance in the stamped-envelope agency was $113.90, and in the postal-card agency $294.18.

SHIP, STEAMBOAT, AND WAY LETTERS.

By law (sections 3913, 3976, 3977, 3978 Revised Statutes), this appropriation is necessary for the payment to masters or owners of vessels, not regularly engaged in the transportation of the mails, for letters brought and delivered to post offices on arrival in port for transmis. sion to destination. The parties receiving the letters are required to pay, in addition to the regular postage, the amount paid to said master or owner, which amounts are consequently refunded to the Department. The estimate for this purpose is placed at the same amount ($2,000) as the appropriation for the present fiscal year. The expenditure for the last fiscal year was $1,801.11.

ENGRAVING, PRINTING, AND BINDING DRAFTS AND WARRANTS.

This appropriation is for the purchase of drafts and warrants used for payments to creditors, transfers of funds to and from postmasters, and collections of balances due the Department. The drafts and warrants are prepared and furnished by the Bureau of Engraving and Printing of the Treasury Department, and the expenditure on this account for the last fiscal year was $2,081.22. The appropriation for the present fiscal year is $2,000, and the estimate for the next year is placed at the same amount.

MISCELLANEOUS.

The estimate for miscellaneous expenditures is left at the same amount ($1,000) as the appropriation for the present fiscal year. The amount expended under this head during the last fiscal year was $901.48, the items appearing in detail in the report of the Auditor. A large share of the expenditure was in connection with the late contract for official envelopes, and this office was not responsible for incurring it. amount paid F. B. Conger, postmaster at Washington, was for postage stamps to prepay official correspondence of the Department to foreign countries under Article 8 of the Convention of the Universal Postal Union, the stock of stamps on hand and purchased out of the appropriation for that purpose having been unwittingly destroyed by direction of the person in whose custody they had been placed. The miscellaneous expenditures for the year ended June 30, 1884, were $201.05; for the year

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ended June 30, 1883, $228; and for the year ended June 30, 1882, $292.22 the appropriation having been $1,000 in each case.

RECAPITULATION.

The decrease of the estimates for the next fiscal year from the expend. itures for the last tiscal year is shown by the following table :

Comparative statement of expenditures for year ended June 30, 1885, and estimates of ap

propriations for year ending June 30, 1887.

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The decrease of the estimates for the next fiscal year from the appropriations for the present fiscal year will appear in the following: Comparative statement of appropriations for year ended June 30, 1886, and estimates of

appropriations for year ending June 30, 1887.

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It will be observed that the estimates for the year ending June 30, 1887, are $79,738.75, or 7.4 per cent., less than the actual expenditures for the year ended June 30, 1885, notwithstanding that there is a contemplated increase of 13.8 per cent. in the number of the various arti. cles of postal supplies. The estimates are also $342,000, or 25.6 per cent., less than the appropriations for the current year, founded upon estimates made a year since. The appropriations are now shown to be much in excess of actual requirements, for two reasons: First, because of the unexpectedly large reductions in the new contract prices of supplies; and, second, because the issues have failed to show the increase that was anticipated. Under the present estimates the expenditures for the year are approximated at $1,027,596.10, which would leave an unexpended balance of $306,803.90, or 22.9 per cent., of the appropriations. The estimated expenditures for the next fiscal year are $992, 100, or 3.4 per cent., less than the present estimate of expenditures for the current fiscal year.

SAVING BY NEW CONTRACTS.

Attention has been called to the reductions effected by the contracts recently entered into for the manufacture of postage stamps, postal cards, registereil package, tag, official, and dead-letter envelopes. The saving for the present fiscal year by the new contracts will appear in the following: Comparative statement of cost at late and present contract prices of the estimated issues o postage-stamps, postal cards and registered-package, registered-tag, official, and dead-letter envelopes, for year ended June 30, 1886.

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These figures place the saving for the present year at a minimum amount, since the actual issues are likely to be in excess of the esti. mates, and the real saving will be in proportion to the increased num. ber called for. For postage-stamps, stamped envelopes, and postal cards, the contracts for which are for four years, the amounts saved will be largely augmented to correspond with the increased issues dur. ing the later years of the contract term. The new contracts will be dwelt upon at some length in my annual report, the preparation of which will be commenced at once.

The present great saving is the more conspicuous in view of the fact that it follows a steady and large reduction in cost during the past few years, the prices in the late contracts for adhesive postage-stamps and postal cards, and in the present contract for stamped envelopes and newspaper wrappers, having been considered very low when the contracts were made.

To show how great the past reductions had been, the total number of postage-stamps, stamped envelopes, newspaper wrappers, and postal cards issued during the year ended June 30, 1877, was 1,060,253,919, at a cost of $783,283.36, while the total number furnishellluring the year endell Juve 30, 1885, was 2,142,678,890, costing $946,925.39, an increase of 1,082,424,971, or 102 per cent., in the number of articles, and an increase of only $163,642.02, or 20.8 per cent., in cost.

The total number of postage stamps, stamped envelopes, newspaper wrappers, postal cards, registered-package, tag, official, and dead-letter

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envelopes issued during the year ended June 30, 1877, was 1,075,564,619, at a cost of manufacture of $834,757.47. The total number of the various articles to be furnished during the year ending June 30, 1887, as contemplated by the foregoing estimates, is 2,476,103,852, at an estimated cost of manufacture of $956,000, being an increase of 1,400,539,233, or 130.2 per cent., in the number of articles, and an increase of cost of manufacture of only $121,242.53, or 14.5 per cent. The decrease is therefore a little more than one-half of the cost in the contracts of 1877 for like quantities.

The total appropriations for the service of this office for the year commencing July 1, 1877, amounted to $1,151,150, or 3.3 per cent. of the amount ($34,622,577.54) of the appropriations for the entire postal serv. ice for that year, while the estimates ($992,400) for this office for the fiscal year ending June 30, 1887, represent only 1.8 per cent. of the total amount ($54,986,166.89) estimated as the cost of conducting the postal service for the same period. I have the honor to be, very respectfully, &c.,

A. D. HAZEN,

Third Assistant Postmaster-General. Hon. WILLIAM F. VILAS,

Postmaster: General.

APPENDIX L.

Post-OFFICE DEPARTMENT,

OFFICE OF FOREIGN MAILS,

Washington, D. C., October 19, 1885. Sir: In reply to your letter of the 14th instant, I have the honor to inform you that the amounts estimated as required to be appropriated for the foreign mail service for the fiscal year ending June 30, 1887, are as follows: For the transportation of mails, including railway transit across the Isth

inus of Panama, calculated at the rate heretofore paid for said service... $350,000 For balances due foreign countries, including the United States' portion of

the expenses of the International Bureau of the Universal Postal Union, and the subscription of the Department for the monthly journal (l'Union Postale) of that Bureau

100,000 Total .....

450,000 If it should be decided to pay to vessels of United States register, for the transportation of mails to foreign countries, the whole amount of the postage collected on the mails conveyed (calculated at the Postal Union rates of postage, viz, 5 cents per half ounce, or $1.60 per pound, of letters and post cards, and 1 cent per 2 ounces, or 8 cents per pound, of other articles), the above estimate for “the transportation of mails, &c.," would be increased from $350,000 to $425,000, and the total from $425,000 to $525,000.

The following is an explanation of the estimate submitted by me for the foreign mail service for the fiscal year to end June 30, 1887:

The cost of the ocean service for this past six years was as follows, viz: 1880

$196, 684 08 1801

236, 602 11 1882

280, 163 98 1883

316, 358 15 1884

332, 221 21 1885

331, 903 33

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