to the next lowest responsible bidder, if not deemed too high by the Postmaster General, and so on until the required contract is executed; and such next lowest bidder shall be required to fulfill every stipulation embraced herein as if he were the original party to whom the contract was awarded. The contract will also provide that if at any time during its continuance the sureties, or either of them, shall die, or become irresponsib e, the Postmaster-General shall have the right to require additional and sufficient sureties, which the contractor shall furnish to the acceptance of the Postmaster-General within ten days after notice; and in default thereof the contract may be annulled.

The Postmaster-General reserves the right to reject any and all bids if, in his judgment, the interest of the Government shall require it; also the right to annul the contract if, in his opinion, there shall be a failure at any time to perform faithfully any of its stipulations, or in case of a willful attempt to impose upon the Department stamps inferior to those required by the contract.

Upon opening the proposals at the time appointed for the purpose, it was found that three bidders had competed for the contract, viz: The Secretary of the Treasury, on behalf of the Bureau of Engraving and Printing of the Treasury Department, and the Franklin and the American Bank Note Companies, both of New York. The bid of the Secretary of the Treasury, under class No. 1 (for printing on hand-roller presses), amounted to $132,545.49; under class No. 2 (for printing partly by steam and partly by hand), to $114,136.39; and under class No. 4 (for same kind of printing as in No. 2, with the right reserved to the Postmaster-General to require the work to be done on hand-roller presses), to $132,545.49, being the same amount as the bid under class No. 1.

The bid of the Franklin Bank Note Company was under class No. 1 only, and amounted to $135,724.78.

The American Bank Note Company bid under classes Nos. 1, 3, and 5; the bid under classes 3 and 5, however, being only for the ordinary stamps, the bidder proposing in any event to print the other stamps, of which comparatively insignificant numbers are required, by means of hand-roller presses at the prices in the bid under class No. 1. The amount of the American Bank Note Company's bid under class No. 1 was $125,744.34; under class No. 3, $103,959.61; and under class No. 5, $121,532.63.

Under class No. 1, the bid of the American Bank Note Company was $6,801.15 less than that of the Secretary of the Treasury, and $9,980.44 less than that of the Franklin Bank Note Company.

For steam printing absolute, the bid of the American Bank Note Company under class No. 3 was $10,176.78 less than the bid of the Secretary of the Treasury under class No. 2; and for steam printing, upon condition, the bid of the American Bank Note Company was $11,012.86 lower under class No. 5 than the bid of the Secretary of the Treasury under class No. 4. As will be observed, the American Bank Note Company was the lowest bidder throughout; and its bid under class No. 3 was $21,784.73 less than under class No. 1, and $17,573.02 less than under class No. 5.

The large difference shown between the bids under classes Nos. 2 and 3 and classes Nos. 1, 4, and 5, led to a careful investigation as to whether suitable printing could be done by either or both of the two different methods of steam-power printing. The result was satisfactory in both cases; sample sheets of stamps submitted by the American Bank Note Company, and showing the quality of the printing proposed to be done, appearing to be fully equal, if not superior, to the stamps being furnished by the company under its contract then near a close. Moreover, it was proposed by the Bank Note Company, as a condition of the award, to attach these sheets to the contract, to be made a part thereof, and to serve as the standard of inspection of the stamps to be offered

for acceptance during the contract term. The contract was accordingly awarded upon the lowest bid, that of the American Bank Note Company, for the ordinary stamps under class No. 3, and for the remainder of the stamps under class No. 1.

The contract was duly executed, and is now being satisfactorily fulfilled, the printing on the stamps furnished having never been surpassed in quality under any former contract.

The prices per thousand of each of the several kinds of stamps, including everything required to be done and furnished under the contract, are as follows:

For ordinary postage-stamps, per thousand

For newspaper and periodical stamps, per thousand.
For postage-due stamps, per thousand

For special-delivery stamps, per thousand.

6.99 cents. 18

18

66

8.49 "6

66

The cost of the stamps issued during the year ended December 31, 1884, under the late contract, was $134,884.18, while the new award, made upon the basis of the number issued during that year, amounted, as already stated, to $103,959.61, a reduction of $30,924.57, or 22.9 per cent. The saving under the new contract for the current year, based upon the estimated issues, would amount to $33,365.28. The price per thousand for the ordinary stamps in the late contract was 9.19 cents; in the contract for the four years ended April 30 (and extended by order of the Postmaster General to June 30), 1881, it was 9.98 cents, and in the contract for the four years ended April 30, 1877, it was 14.99 cents. The cost per thousand of procuring the stamps has thus been reduced more than one half within the past nine years.

For printing by hand roller presses in the late competition, the price bid by the American Bank Note Company for the ordinary stamps was 8.49 cents per thousand; by the Secretary of the Treasury, 9 cents per thousand; and by the Franklin Bank Note Company, 9.17 cents per thousand.

The stamps are manufactured in New York City, the regular place of business of the American Bank Note Company; and the point selected for the delivery of the stamps, under the options in the contract, is the post-office in that city, the stamps being put up by the contractor ready for mailing to postmasters.

While the cost of the stamps was much reduced by the adoption of steam printing, the bid of the Secretary of the Treasury for the Bureau of Engraving and Printing, in response to an invitation published in the specifications, may have had no small influence in securing low prices, as it was undoubtedly calculated to insure close competition by private bidders. The advantages of having the Bureau compete for the work under this and other contracts were the subject of a correspondence with the Treasury Department last winter; and the papers were transmitted to the Speaker of the House of Representatives by letter of the Postmaster General, dated February 7, 1885, recommending legislation to carry out the purpose. (Ex. Doc. No. 202, House of Representatives, second session, Forty-eighth Congress.) Although favorably acted upon by the House, the proposed measure failed to become a law. The expediency of renewing the recommendation is respectfully submitted for your consideration.

CONTRACT FOR POSTAL CARDS.

The old contract for postal cards expiring by limitation on the 30th June, 1885, preparations were begun early in March for a new contract for the four years commencing on the 1st July. The cards then in use

not being entirely satisfactory, it was decided to replace them with others of better quality, and the selection of a suitable standard became a matter of nice consideration. It is essential that the cards should be of such texture and finish as to be well suited to writing with either pen or pencil, the qualities favoring the one condition militating against the other. The failure to attain always a proper medium had been the subject of much complaint. Moreover, a due regard for the postal revenue would not admit of the adoption of any of the finer and more expensive card-boards in commercial use, the cost of manufacturing postal cards being included with the postage in the low charge at which they are sold to the public, differing in this respect from stamped envelopes, the expense of procuring which is added to the postage and therefore reimbursed directly by the consumer.

As a preliminary to the adoption of a new standard, the aid of a leading paper manufacturer, of high reputation and acknowledged skill, was solicited in the production of a paper that would meet the just demands of the public at a minimum of expense to the Govern ment. The invitation met with a willing response, and as the result of much thought and frequent experiments, he furnished samples in various grades and weights from which he thought a selection might safely be made. Each lot of samples was accompanied with a statement giving a list of the ingredients, the mode of manufacture, and the estimated market cost.

The different samples were carefully examined to determine their utility and comparative advantages. A choice was made, aud upon being submitted, with the ready assent of the manufacturer, to a number of other leading paper manufacturers, it was warmly and unanimously approved, their judgment being based upon an inspection not only of the samples, but of the formulas from which they had been made. They also strongly commended the idea of inserting the formula in the specifications to bidders, as tending to more clearly establish the standard of the paper to be furnished under the contract. The idea was carried out, and new samples complying with the literal requirements of the formula were prepared for the use of bidders, under the supervision of an agent of the Department, by the manufacturer of the original samples. To the credit of this gentleman it should be mentioned that his entire work in connection with devising and furnishing the samples was done without charge to the Government.

The new samples were much superior to the standard under the old contract. The paper is well and compactly made, is clear and unspotted, showing cleanness and even distribution of fiber. It has a smooth, finely finished surface, and, besides being equally well adapted to the use of pencil and pen, it admits of press copy without blurring or defacing the handwriting. Notwithstanding its lighter weight (the old cards weighing 64 pounds per 1,000), the new paper is of nearly double the tensile strength of the standard under the okl contract.

The following is the formula for making the new paper, as contained in the specifications to bidders, viz:

The cards must be 3 by 5 inches in dimensions, and must weigh 54 pounds per thousand finished cards, exclusive of bands and wrappers. The paper from which the cards are to be manufactured must be composed in the proportion of 25 per cent. of chemical wood-pulp, and 75 per cent. of rag stock made from what are known as “No. 2 country rags," composed of about one-half soiled whites and one-half blues (except that other rags of an equivalent character and quality may be used instead, after having been approved by the Postmaster-General in writing before being used), excluding all other material except the necessary coloring matter. The rags must be washed and beaten in the washing and beating engines not less than a total of

fourteen hours. The paper must be made on a Fourdrinier machine, and be sized by being run through a tub of animal sizing of the best quality, and it may be dried on the machine or in loft at the option of the contractor. The paper must also be clean and free from imperfections, run and calendered to a uniform weight and thickness, and finished on both sides suitable for printing and for writing with ink or pencil, and the same in color, quality, material, tensile strength, and in all other respects as the sample furnished to bidders, and to be made a part of the contract. The paper may also be required to be water-marked with such design as may be approved by the Postmaster-General. The right is also reserved to the Postmaster-General to change the color of the paper at any time during the existence of the contract. All paper furnished or used shall be subject to the supervision and approval of the Postmaster-General or his authorized agent before and after being printed.

The Postmaster General reserves the right to increase or diminish the standard weight of the cards at any time during the contract term, upon the condition that he shall pay to the contractor a proportionate increase or decrease of price, to be determined upon the actual cost to the contractor of the paper in use at the time of the change.

In all other essential particulars the specifications were equally minute with those furnished to bidders for the contract for adhesive postagestamps previously referred to. The penalty imposed upon the guarantors for the failure of the successful bidder to enter into contract was fixed at $25,000, and in the bond to secure faithful performance of the contract at $200,000. The basis fixed for the award was the issue for the year ended March 31, 1885, consisting of 333,629,500 of the one cent cards for domestic use and.68,750 two-cent cards for international use. The advertisement for proposals was issued under date of April 9, 1885, the proposals to be received until noon of May 13. Nine bidders competed for the contract. The lowest bid was that of Calvin C. Woolworth, of Albany, N. Y., at 47.71 cents per thousand for the one-cent and 40 cents per thousand for the two cent cards, the next lowest bid being 57.40 cents per thousand cards, irrespective of denomination-the former bid amounting to $159,202.13, and the latter to $191,542.79, a difference of $32,340.66 on the issues for the year ended March 31, 1885, and of nearly $200,000 on the estimated issues for the period covered by the contract. The bid was therefore to be regarded as a most advantageous one to the Government.

The contract was awarded to Mr. Woolworth, the cards to be delivered at Castleton, N. Y., the place of manufacture. The cost of the estimated issues for the current year, at the new contract prices, will amount to $168,413.04, while the cost of a like number of cards under the late contract would amount to $192,134.17, a saving of $23,721.13, or 12.3 per cent., by the new contract. The price paid under the late contract was 54.43 cents per thousand cards; under the contract for the four years ended June 30, 1881, it was 69.56 cents; and under the contract or the four years ended April 30 (and extended to June 30), 1877, it was $1.397, postal cards having been first introduced in May, 1873. The present rate is, therefore, scarcely more than one-third of the orig inal one.

NEW CONTRACT FOR REGISTERED-PACKAGE AND OFFICIAL ENVELOPES.

The contract for registered package, registered tag, official, and dead letter envelopes is for one year only. Two contracts were in force during the last fiscal year. The first of these was awarded, after public advertisement, on May 31, 1884, to begin on July 1. There were six bids for all the envelopes called for, and two bids for a portion of them only. The contract prices were favorable to the Government, the successful bid amounting, on the issues for the year ended March 31, 1884,

to $24,909.27, or 23.4 per cent., less than the amount of the next lowest bid, and $26,195.76, or 24.3 per cent., less than the cost at the prices in the preceding contract.

Before the close of July, however, it was discovered that the official and dead-letter envelopes being furnished did not conform to the standard of the contract. Though equal in weight and general appearance, they were inferior in point of tensile strength, the deficiency having been detected by means of a paper-testing machine then newly invented. No defects were found to exist in the registered package and registered tag envelopes, which constituted more than one-half of the amount of the contract. The contractor offered to replace the defective envelopes with others that should comply with the terms of the contract, and to allow the Department to arrange for the paper at his expense. The offer was declined, and the contract was annulled. In settling the account of the contractor a deduction of $337.77 was made to recompense the Government for the damage.

After some delay, arrangements were proceeded with for a new contract for the remainder of the fiscal year, pending which there was some embarrassment for the want of a supply of envelopes. In some instances temporary supplies were purchased in open market at somewhat expensive prices, and, as it has since appeared, were paid for out of appropriations other than those especially provided for envelopes of this kind. A change was made in the character of the contract samples for the official and dead letter envelopes. The paper in the new samples was the same in quality as that used for the first quality of stamped envelopes furnished to the public, and 20 per cent. heavier in weight. Slight changes were made in the sizes of some of the envelopes. The registered package and registered tag envelopes were left unchanged, the bidders' samples being taken from the lot prepared for the previous contract. The same basis of award was adopted as in the former letting the issues for the year ended March 31, 1884.

In response to the call for proposals, published on the 22d of August, two bids were received on the 15th of September, for all the envelopes named by the schedule. The lesser bid, upon which the contract was awarded on the following day, amounted to $116,013.81, an increase of $34,495.05, or 42.3 per cent., over the amount of the former award. The increase in the official and dead letter envelopes was $23,566.12, or 60.7 per cent., and in the registered package and registered tag envelopes $10,929.93, or 25.5 per cent. The new contractors had held the contract for the year ended June 30, 1884 (and for some years prior), and it was discovered that the envelopes furnished during the latter portion of that year had the same fault as those which led to the abrogation of the suc ceeding contract. The damages in their case had been measured at $2,928, which amount was deducted in the settlement of their final account. The deduction was based on the official envelopes alone, though the dead letter envelopes had been found equally defective, the failure to deduct in this case having probably been due to a misapprehension arising from a difference in the colors of the envelopes.

These contracts were inquired into by the House of Representatives under formal resolution of February 19, 1885, and the facts with relation to them appear fully in the reply of the Postmaster-General dated March 2, 1885, and the papers accompanying the same. (Ex. Doc. No. 264, House of Representatives, second session, Forty-eighth Congress.) In view of the fact that the matter comes within the subordinate jurisdiction of this office, I deem it only due to myself to disavow all responsibility in connection with the late contract. The arrangements