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Expenditures to September 30, 1885..
Estimated outstanding liabilities..

$49, 317, 188 41

285, 000 00

$49 602, 188 41

Estimated cash deficiency

7,041, 344 58 Add amount credited Pacific Railroad companies for transportation during the year

1, 340, 226 83 Total net deficiency (partly estimated)

8,381,571 41 The general result to the public Treasury from the transactions of this Department during the past two years is thus shown to have changed from the receipt of a cash surplus gain of nearly two millions to an outlay of over seven millions surplus of cost; or, reckoning also the amounts credited to the Pacific Railroad companies for mail transportation, the difference in the pecuniary results of the service, realized during the two years, exceeds nine million four hundred thousand dollars.

This difference is due, first, to the decrease of the revenues, which amounts in total only to $2,947,848.78; and, secondly, to an increase of the expenditures to the extent of $6,466,955.80, of which $6,042,439.19 have been in the cash disbursements and $ 124,516.61 in the cost of transportation upon the Pacific railroads. Chiefly, the decrease of revenue has resulted from the diminishment in the rate of letter-postage from three to two cents upon the half ounce, which was the unit of weight during the period, while the increase of expenditures has arisen principally from the natural increase of mails to be carried and the natural extension of the service, although other causes have contributed something to both effects.

The Revenue for the last year being less than for the preceding, while the expenses continued to grow nearly as before, it might hastily be inferred that the rate of postage has been reduced too greatly to justify the expectation that the service will again becoine self-sustaining.

A more attentive examination gives reason to think such a deduction to be erroneous. The reduction of the rate took effect on the 1st day of October, 1883, leaving but nive months of the fiscal year to its operation; and although by anticipation some effect was practically experienced during the antecedent three months in diminished purchases of stamps, yet the sales for that quarter still remained large, and of course yielded for the amount of threecent stamps sold a sum 50 per cent. greater than would have arisen for a two-cent price, while to the extent that purchasers had suspended buying to secure the cheaper rate, the sales immediately following its taking effect were increased in volame. It also appears from the account of sales that there were large purchases of stamps, and especially of stamped envelopes, in that quarter, in anticipation of their use in the next, and preparatory to it. But the full effect of the change has been continuously operative during the entire year recently closed, and has only been counteracted by the same cause, which was at least equally in force, proportionably.

during the year preceding, the steady growth in the public use of the mail service.

A comparison of the loss of receipts severally sustained during each of these years should indicate, in a general way, the pecuniary influence upon the revenue of the natural increase in the public employment of the postal service, and might afford approximate percentages for computation as to the future, if other special causes from recent legislation had not intervened. Such a comparison should be limited to the receipts for postage alone, to be most instructive.

These have been as follows: In the year ending June 30, 1883

$43, 160, 262 93 In the year ending June 30, 1884

40, 856,728 68 In the year ending June 30, 1885

40,056, 226 69 The falling off in this revenue between 1883 and 1884 was therefore $2,303,534.25, or 5.3+ per cent.; while between 1884 and 1885 it was but $800,502.99, or a little below 2 per cent., giving a ratio of improvement which, if otherwise undisturbed, would warrant the expectation of a considerable net increase, instead of further loss, during the current year. The showing for the revenue of the past year is entitled to a further advantage by the amount of $154,270.26, which should be deducted from the revenue of the previous year in instituting comparison, on account of official stamps and stamped envelopes, then credited to revenue, which, during the past year, disappeared by the substitution of the penalty envelopes, and the entire discontinuance of official stamps on the 30th of June, 1884.

The other sources of ordinary postal revenue during the three years in question, mainly box-rents, show a steady gain from year to year during the past three. Thus: In 1883, the total from such sources was ....

$1,936,810 31

1,961,906 32 In 1885..

2,095,683 84 Although not to be accepted as indicating any measure of it, these figures prove the fact of steady progress in gain from growth; corroborative of the inference to be taken from the statistics of the other channels of receipt.

A more decisive evidence of the restored upward tendency of the revenue from postage is to be derived from a comparison of receipts during the several quarter-years of the period under examination. During each of the four quarters of the year ending June 30, 1884, the receipts of this kind were less than during the several corresponding quarters of the preceding year; and during the first two quarter years of the past fiscal year the receipts were less than during the corresponding quarters of the year before, although not to the same extent. But during the third quarter of the last year the receipts exceeded those of the third quarter of the former year by $127,895.79; and during the fourth quarter a further increase was gained, the receipts for post

In 1884....

age exceeding those of the corresponding quarter of the preceding year in the better sum of $252,961.61; indicating that the growth of patronage has reached the point of complete counteraction to the depressing influence of the reduction in the rate, and marking the turn to a restored prospect of increasing revenue.

This event has been doubtless delayed and the postal revenue much diminished by another cause—the unsatisfactory condition of general business throughout the country, which, more or less operative during the preceding, has been especially effective during the past year. Not only has the volume of commercial communications been lessened, but many other uses of the mail, which in prosperous times are freely accepted, have been diminished in extent.

The revenue from the money-order service denotes the condition and the consequences, having fallen off from $519,492.08 in the preceding to but $408,933.30 in the last year, a smaller sum than was realized two years before. Since this service consists of the transmission of small sums of money, its diminished employment is a strong mark of the unfavorable circumstances which have attended the business affairs of the people during the year.

Another similar evidence of the business condition is disclosed in the division of registration, which reports a decrease from the number in the previous year of registered domestic letters and parcels amounting to 296,833, or 3.2 per cent., while for seven years before there had been an increase averaging 16.7 per cent. during the first six, but dropping to 3.3 per cent. in the seventh, the system thus appearing to be a fair barometer of business.

As already shown by the results, and as appears from the reports of the greater number of pieces handled by postal clerks, the increase in the number of commnnications and articles transmitted by the mails has, notwitstanding, been considerable, although beyond question thus greatly retarded; but it can only be a matter of interesting conjecture to attempt to estimate the diminution of revenue which the service has suffered. It is a subject of congratulation to the country that the depressing stricture upon industry and enterprise has now begun to relax, as is so significantly indicated by the improving condition of the postal revenue during the last quarter of the year under review.

Expenditures.-0f the total increase of expenditures for postal service made and estimated, as before given, for the two last years, aside from that arising from transportation of mails on the Pacific railroads, the sum of $3,481,911.68 occurred in the year ending June 30, 1884, and but $2,560,527.51 during the past year; or about 8 per cent. during the former to 54 during the latter. The difference in apparent favor of last year is due chiefly to the same cause which has diminished the income—the reduction in the rate of letter postage. Its effect has been marked upon the compensation of postmasters; although possibly in some small degree contributed to by the act of 1883, which directed their salaries to be reckoned upon cancellations instead of sales; and the lessened amount of that item of the cost of the service more than accounts for the difference in the total expenses of the two years. In the year ending June 30, 1883, the increase in this item alone was $1,350,717.74, and in the year ending June 30, 1884, it amounted to $968,436.41, while during the past year there was an actual decrease of $39,981.93. There has also been a less increase in the compensation of clerks in post-offices—but $138,794.77 during the last to $367,979.01 during the preceding year.

The total cash expenditure for transportation of the mails has risen by the sum of $1,936,891.32, or about 10 per cent., as against an increase during the preceding year of $1,472,184.84, or a little more than 8 per cent. This has been due entirely to increased and promptes payments to railroads, there having been a less increase in the cost of star service than during the preceding year, and a decrease in the cost of steamboat service of $24,642.82.

The increase in the item of compensation to postal clerks has been $274,852.31, as contrasted with an increase during the preceding year in the same item of $283,324.42.

The increased expenditures for free delivery have been during the year $481,746.03, as against $330,900.01 increase the year before.

These figures show the most marked changes in the debit column which have occurred during the fiscal year under discussion. The tables which accompany the reports of the Third Assistant PostmasterGeneral and the Auditor exhibit the details of the receipts and expenditures, arranged by quarter-years, and contrast the totals of the several items respectively with like amounts disbursed in former years.

The sum total of the cost of the service for the year figures $50,942,415.24, including the estimated unpaid liabilities, or, setting to one side the cost of transportation on the Pacific railroads, $49,602,188.41. For this the appropriations, made in thirty-seven items, were $50,147,400. None of these items have been exceeded, except the one for compensation to postmasters, which fell short $243,848.94, and the one for ship, steamboat, and way letters, which lacked $301.11 of the expenditure. Both are beyond control of the Department, being governed by law, postmasters paying themselves.

For these items deficiency appropriations will be necessary in order to close the accounts.

In the remaining thirty-five items there remains unexpended yet a total of $1,074,361.64 available, against which are the estimated liabilities of $285,000.

On account of previous years there has been disbursed during the past year the sum of $729,046.80, the greater part of which was for the unpaid liabilities of 1884 and for readjusted salaries of postmasters pursuant to special appropriations therefor.

Some further account of the transactions of the past year may be profitably summarized from the accompanying reports of the Bureau officers, and their suggestions noted.

The First Assistant Postmaster-General's Report gives a detailed exhibit of the work accomplished during the year in the six general divisions of his heavy laden bureau. His care is of postmasters

. and post offices, and his statistics cover the establishments and discontinuances of post-offices, appointments and removals, deaths aud resignations, of postmasters; the particulars of the labors which attended the changes among those officers, the procuring of bonds to secure performance of their duties, and the correspondence necessary for their instruction and general public information; the details of the allowånces made for clerks and other expenses of post-offices, with interesting matter concerning the adjustment of salaries; a general account of the nature, amount, and cost of supplies furnished for post-offices; together with a complete résumé of the carrier-delivery business in those cities where the system is established; and in the course of his report he has made some recommendations of importance, to which I shall invite special attention in a later paragraph.

Two thousand and twenty one offices were newly established and 886 discontinued during the year, leaving at its close the total number to be 51,252; of which 2,233 were Presidential and 49,019 fourth class. Both establishments and appointments were considerably less in number than during the preceding year. More new offices were created in the Southern States than in any other section, as was the case during the year before; and it is interesting to note that of these, Virginia required more than any other state-one hundred. In every state and territory the number of post-offices was increased, save only in Nevada, in which discontinuances exceeded new establishments.

The number of appointments of postmasters during the year was 11,203, less by 2,638 than during the year preceding. The decrease arises from the fact that comparatively few offices were established or appointments made during the incumbency of Postmaster-General Hatton, who left it to the incoming administration to fill vacancies to the number of two thousand and upwards occurring during his period of service. The number of removals during the year was 810, exceeding by 297 those made in the preceding twelve months. The vacancies caused by death were 412; less by 65.

Bonds.-Not long after taking this office, when considering certain losses sustained through the failure of postmasters to discharge their obligations, my attention was directed to the want of any regulation for the renewal of postmasters' bonds, unless specific information affecting the sureties was brought to the Department. In many cases postmasters bad held office for so long as twenty years, while no security for their obligations to the Government had been furnished except the bond executed when they were commissioned; and it had sometimes

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