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piained by the fact that au nyusual delay last year in the settlement of the money order accounts compelled the use by the Department of fig. ure: (itterwards ascertained to be incorrect), obtained from the Auditor in advance of his formal report, which was not finally rendered until some time after the Postmaster General had completed and submitted bis annual report.

In Table No. 3, appended to this report, will be found a comparative statement of the receipts and expenditures, by quarters, for the years ended June 30, 1884 and 1885, respectively. The expenditures included thirty-six distinct items, covered by as many different objects of appropriation.

The total appropriations for the service of the year ended June 30, 1885, amounted to $50,147,400, corering thirty-seven separate objects of expenditure. Under one item of appropriation, amounting to $4,500, no expenditure has yet been reported. In two items only did the ex penditure to September 30 exceed the appropriations, and the objects and amounts are as follows: For compensation of postmasters, $243,848.94, and for ship, steamboat, and way letters, $301.11, making a total of $244,150.05, for which deficiency appropriations should be provided. In both cases the expenditure is regulated by law, and is not directly controlled by the Department. In thirty-five items of appropriation there were unexpended balances amounting to $1,074,361.64, which are still available for the service of the year. The net excess of appropriations over expenditures was therefore $830,--11.59. Deducting from this latter amount that of the estimated outstanding liabilities ($285,000), would leave the appropriations $545,211.59, or 1 per cent., in excess of the total expenditures, actual and estimated.

SUSPENSE ACCOUNTS AND BAD DEBTS. From the report of the Auditor it will be seen that the amounts comprehended in · bad debts” and “ suspense accounts” are as follows: Amount credited to suspense accounts ...

$9, 151 97 Amount charged to bad debts and compromise accounts

5, 170 81 Gain by suspense..

3,981 61 The Post Office Department is accountable for the postal revenues as soon as they are realized at the post offices, and they are entered into the accounts as reported quarterly by postmasters, the system differing

this respect from that of the general Treasury, which acknowledges only revenue that has actually been deposited. Out of this feature of the postal system grow bad debts, compromise and suspense accounts. To bad debts are charged balances due by late postmasters and uncol. lectible, resulting of course in a reduction of the amount of revenue reported. A like result follows in the case of suspended accounts, in which the balances due the Government are found too small (usually less than $1) to justify unusual efforts for collection after failure by the ordinary means. On the other hand, the Gorernment derives the benefit from small balances (also usually lt ss than $1) found due late postmasters and not paid to them. Compromise accounts, of course, always result in a loss to the Government. The effects in all these cases are felt upon the revenues for the year in which the accounts are closed. As will be observed, the general balance of these three accounts during the last year was in favor of the Government.

AMOUNTS DRAWN FROM THE TREASURY. In addition to the receipts referred to in table No. 3, there were drawa from the general Treasury within the year the following amounts on account of special and deficiency appropriations, viz:

For deficiency in postal revenues for the year ended June 30, 1881, and

prior years (under act approved July 7, 1884, Stat., vol. 23, chap. 334, pages 259 and 262)

$95, 476 99 For salaries of late postmasters readjusted under act of March 3, 1583

(act approved July 7, 1884, Stat., vol. 23, chap. 334, page 248).. 45, 213 80 For deficiency in postal revenues, 1882 and prior years (act approved March 3, 1885, Stat., vol. 23, chap. 359, page 476)..

20,949 60 For salaries of late postmasters readjusted under act of March 3, 1883

(act approved March 3, 1885, Stat., vol. 23, chap. 359, page 476).. 178,481 23 Amount drawn during the fiscal year on account of deficiency in postal

revenue for the year ended June 30, 1885 (under act approved July 5, 1884, Stat., vol. 23, chap. 234, page 157)....

3, 680, 718 96 Total drawn during the fiscal year.....

4,020,840 58 The amount drawn from the Treasury, as shown by the report of the Auditor, was $6,066,473, or $2,045,632.42 more than the amount of the foregoing. The explanation in brief is that the Auditor's report for the year ended June 30, 1884, included amounts that were not drawn until after July 1, 1884, and 'bis report for the year ended June 30, 1885, includes amounts that were not drawn until after the last-mentioned date.

The discrepancy is reconciled by the following statement of account: Amount reported by the Auditor as having been drawn to September 30, 1885

$6,066, 473 00 Add amounts in first two items of foregoing statement,

which amounts ($95,476.99 and $45, 213.80) were included in the report of the Auditor for the year ended June 30, 1884, and do not appear in his report for the present year

140, 690 79

$6, 207, 163 79 Deduct amount drawn July 15, 1883, on account of defi

ciency in postal revenue for the year ended June 30, 1885 (act of July 5, 1884), and included in the Auditor's report for 1885

1, 665, 553 21 Also amount drawn July 1, 1885, on account of deficien

cies in postal revenue for year ended June 30, 1883 (act of May 4, 1882), and included in Auditor's report for 1085

520,770 00

2, 186, 323 21

Leaves balance to agree with total amount in foregoing statement.... 4,020, 840 58

This was the amount actually drawn from the Treasury from July 1, 1884, to June 30, 1885, both dates inclusive.

RESOURCES FOR 1885.

The means from which the expenditures for the year ended June 30, 1885, were provided, are as follows: 1. Surplus postal revenue of former years remaining on hand at com. mencement of fiscal year.

$226,835 73 2. Gross postal revenues for the year ended June 30, 1885.

42, 560, 843 83 3. Grants from the Treasury to supply deficiencies in postal revenue

drawn up to September 30, on account of the year ended June 30,

1885, under act of July 5, 1884 (Stat., vol. 23, chap. 234, page 157).. 5,346, 272 17 4. Net gaip by suspense carried to revenue account for 1885..

3,981 16

48, 137,932 89 Amount expended to September 30, 1885, for service of the year ended June 30, 1885....

49, 317, 188 41 Amount of ascertained deficiency for which accounts have been stated

against the Treasury since September 30, 1885, under act of July 5, 1684

1, 179, 255 52

By this statement the Department is made to appear as having ox. pended $1,179,255.52 more than its resources, but the explanation is easily made. Postmasters at offices where the various sub-treasuries are located deposit their surplus funds daily, and those at the remaining Presidential offices deposit monthly or semi-monthly. A large fund is thus accumulating on account of the revenues of the new fiscal year, adding to the balance left on hand at the close of the preceding year. The use of this fund is anticipated in part, the balances in the hands of the Treasurer aud Assistant Treasurers being replenished by draft on the general Treasury only as the funds are needed to meet payments to creditors. The balance on hand subject to check on the 30th September, 1884, was $3,563,961.47 ; and on the 30th September, 1885, it was $2,875,362.86, a decrease of $688,598.61 in the reserve.

The accounts for the quarter ended June 30 are in process of adjustment by the Auditor during the quarter ended September 30, and the deficiency of revenue to be supplied out of the Treasury for the preced. ing fiscal year is accordingly not ascertained until after the date last mentioned. Accounts have been stated against the general Treasury to provide for the restoration of the funds anticipated out of the postal revenues for the current fiscal year.

The foregoing will be found more in detail in the report of the Au. ditor.

TRANSACTIONS AT TREASURY DEPOSITORIES.

Balance subject to draft July 1, 1884.

$6,057, 142 07 Outstanding warrants July 1, 1884

75, 469 94 Deposits, year endled June 30, 1885, on account of the postal revenues

($17,600,961.03) and from grants upon the Treasury ($4,020,840.58).. 21,621, 801 61

Deduct erroneous deposit made in second quarter 1884 ....

27,754,413 62

182 75

Total
Warrants paid during the year ended June 30, 1885

27,754, 230 87 24,638, 380 76

3, 115, 850 11 Add deposit made in quarter ended June 30, 1885, and counter entered in quarter ended September 30, 1885...

22 70 Balanco at depositories June 30, 1885.

3, 115, 872 81 Outstanding warrants June 30, 1885

78,937 40 Balance subject to draft June 30, 1885..

3,036, 935 41 Reduction of amount in Treasury depositories made during year ended June 30, 1885

3,020, 206 66 Of the $17,600,961.03 of postal revenue $61,161.68 was deposited through the national bank depositories, which were used as the medium of transferring the funds into the hands of the Treasurer and the As. sistant Treasurers of the United States, upon whom only are warrants drawn to pay the creditors of the Department.

The balance on hand in the national bank depositories on the 1st July, 1884, was $51,437.76, and on the 30th June, 1885, it was $45,138.04, a decrease of $6,299.72.

The trausactions with the Treasury and sub-treasuries of the United States and with the national bank depositories will be found in Table No. 4 attached to this report.

REVENUE EXHIBITS AND ESTIMATES. The new and uncertain elements entering into the consideration of the question make it unusually hard at this time to estimate with a near approach to accuracy the postal revenues for the ensuing fiscal year.

In the first place, the disturbance in the conditions of busi. pess within the past two or three years renders it difficult to estima'e the natural effects immediately resulting from the reduction to 2 cents in the letter rate of postage, which went into operation on the 1st of October, 1883. While it may be practicable to ascertain approximately, at least, the proportionate loss to the revenues incurred by the change in this class of matter, the extent to which the whole volume of the postal business has suffered by the general stagnation of trade is not so easy to determine. Under such circumstances, the ratios of increase exbibited under pormal conditions of business cannot be applied in the calculations. The strong probability, amounting almost to a certainty, of an established revival of business, adds to the complexity of the situation. Moreover, changes other than that of the letter rate have recently been made in the factors entering into the postal revenues, and a proper time has not been afforded to correctly show the ivfluence of these changes. The introduction of the special delivery system, the increase of the unit of weight of letters, and the reduction of the rate of postage from 2 cents to 1 cent per pound on second-class matter, all bave an important bearing upon the revenues of the De. partment. These subjects are referred to more fully under their appropriate beads, as follows:

SPECIAL DELIVERY SYSTEM.

66

The wide field of usefulness already occupied by the postal service was further broadened in contemplation by the act of March 3, 1885, providing for the immediate delivery, by special messengers. of letters addressed to certain of the larger post offices, and bearing, in addition to the regular postage, a special 10 cent stamp to represent the cost of such immediate delivery. The sections of the act relating to the question will be found in full hereafter. Although the act was not mandatory, the ends sought to be accomplished were regarded as of such high public utility that it was early determined by yourself to put the system into operation at the speediest practicable moment, under such auspices as to fairly test its merits. To afford the widest scope to the test, it was decided to apply the system to all the post-offices at which it was authorized by law; that is to say, at every city, town, or village containing a population of 4,000 or over according to the Federal cen. sus."

A strong desire had been expressed for the establishment of the system at a number of offices which did not appear to be entitled to it under a proper interpretation of the law. Among these offices were some at places where the population had passed the boundary of 4,000 since the census returus of 1880 were made, and others where the population of two or more contiguous towns or villages comprehended in the delivery of one post office amounted in the aggregate to more than 4,000, though separately stated at less in the Report of the Superintendent of Census. The claim was urgently made also at places in certain sections of the country, by postmasters and otber persons interested, that in construing the law such meaning should be given the word “town" as to make it conform to the local application of the term by establish ing the system at one or more offices within a township which contained a population of 4,000 or over. These questions were duly considered in connection with a careful examination of the census returns of 1880 in making up the list of special delivery oflices for final publication. Although letters could be specially delivered only at the prescribed offices, they could be mailed to such offices by any post office in the country, and it therefore became necessary to prepare instructions for all the post offices in the country with regard to the conditions for mailing letters intended for special delivery offices. It was necessary also that all the offices should be furnished with a list of the special-delivery offices and with the special stamps needed to insure immediate delivery. The following was accordingly issued on the 11th of August, the 1st of October having been found the earliest date at which it would be practicable to put the system into operation, viz:

IMMEDIATE-DELIVERY SYSTEM.

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Post-OFFICE DEPARTMENT,

Washington, D. C., August 11, 1885. Section 3 of the Post Office appropriation act approved March 3, 1885, provides that “A special stamp of the face valuation of ten cents may be provided and issued whenever deemed advisable or expedient, in such form and bearing such device as may meet the approval of the Postmaster-General, which, when attached to a letter, in addition to the lawful postage thereon, tbe delivery of which is to be at a freedelivery office, or at any city, town, or village containing a population of four thousand or over, according to the Federal census, shall be regarded as entitling such letter to immediate delivery within the carrier limit of any free delivery office which may be designated by the Postmaster-General as a special-delivery office, or within one mile of the post oftice at any other office coming within the provisions of this section which may in like manner be designated as a special-delivery ottice."

It has accordingly been decided to introduce the special-delivery system on the first of October, 1885, at all the post-offices at which it is permitted by the law, viz: Tboso at which the free-delivery system is in operation, and those in cities and towns baving a population of 4,000 or over, as shown by the last Federal census. A list of the special-delivery offices is appended to this circular. *

The following is a description of the special-delivery stamp prepared to carry out the law, viz: A line engraving on steel, oblong in form; dimensions 13 by 1,76 inches; color, dark blue. Design: Ou the left an arched panel bearing the figure of a mail messenger boy on a run,

and surmounted by the words “ United States;" on the right, an oblong tablet, ornamented with a wreath of oak and laurel surrounding the words “Secures immediate delivery at a special-delivery office.” Across the top of the tablet is the legend “Special Postal Delivery,” and at the bottom the words "Ten cents," separated by a small shield bearing the numeral “10."

Suitable supplies of these special-delivery stamps will be sent to any post-office in the couutry which may make requisition for them, and wben received they are to be taken up by the postmaster in his account current and accounted for quarterly in the same manner as postage stamps are accounted for.

They are to be sold by postmasters in any required amount, and to any person who may apply for them, but they can be used only for the purpose of securing the immecliate delivery of letters addressed to and received in the mails at any of the offices designated as special-delivery offices. Under no circumstances are they to be used in the payment of postages of any description or of the registry fee, nor can any other stamps be employed to secure special delivery except the special-delivery stamp. The special-delivery stamp must be in addition to the lawful postage, and letters not prepaid with at least one full rate of postage, in accordance with the law and regulaiions, must be treated as held for postage, even though bearing a special-delivery stamp.

Registered letters will be entitled to immediato delivery, the same as ordinary letters, when bearing a special-delivery stamp in addition to the full postage and registry fee required by the law and the regulations.

The special-delivery stamps must be effectually canceled at the office of mailing in the same way as ordinary postage-stamps.

A letter bearing a special-delivery stamp, in addition to the lawful postage, may be mailed at any post-office in the country, but it will not be entitled to an immediato delivery by a messenger when addressed to a post-oftice to which the special-delivery Nystem has not been extended.

Special-delivery letters will be delivered by messenger within the carrier limits of a free-delivery office, and within a radius of one mile from the post-oflice at all other special-delivery offices.

See list appended to this report, page 754.

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