than 8 per cent. was gained last year, as much as 10 per cent. may be expected during this; and that since the clerical charges of the money order business are no longer taken directly from the receipts on that account, but are paid from the appropriation for post-office clerks pur. suant to the act of June 29, 1886, the receipts to be turned into the Treasury as revenue, although diminished from the past year by the reduction in fees under the other act of June 29, 1886, will yet amount to $630,000. The revenue for the current year is therefore thus esti. mated: Taking the last year's ordinary postal revenue, less that for second The appropriations for the year exclusive of the cost of the special. delivery service exceed this sum by $7,053,152.42. But, with wise provi dence for the service, the Congress placed the amount of each of the thirty-six items beyond the probable expenditure, except as has been above indicated, and it cannot but result that the total expenditures will be less than the total appropriations. After a review of these items the prediction may be, I think, prudently ventured that the cash deficiency will be shrunk below $6,000,000 if no change in the rule of payment to Pacific railroads occurs, and in view of a not improbably greater revenue than the estimated sum, and with continued economy of expenditure, a sensible lessening of even that figure may be hoped for. The Estimate for the Coming Year, beginning July 1, 1887, becomes much more a matter of conjecture, as respects the revenue, and can be submitted but with many qualifications. Assuming the probable continuance of flood tide in commercial and business prosperity, generally of more than two years' duration hitherto, the same ratio of increase in ordinary postal revenue may be fairly expected; the volume of second-class matter may probably advance S per cent., and the money-order business to yield somewhat more. Upon this basis the estimate was transmitted to the Secretary of the Treasury according to law, computed as follows: The ordinary postal revenue of the current year, exclusive of receipts from second-class matter, as above estimated.... With the addition of 7 per cent...... The current year's revenue from second-class matter, as above estimated..... Increased by 8 per cent... Money-order revenue...... Estimated revenue for 1888.... $45, 473, 122 35 3, 183, 118 56 $1,209,583 48 96,767 07 1,306,355 55 650,000 00 50,612, 596 46 The expenditures for the next year have a more trustworthy basis of estimation, being almost calculable in some particulars; and care has been taken to present the best judgment of the officers of the Department for such aid as may be thus afforded the Congress in determining the proper provision for the year. The total probable disbursements are estimated at $55,342,150.15; a sum exceeding the estimated rev. enue by $4,729,553.69, exclusive of the Pacific railroads' transportation service. The purpose has been to limit these conjectures within prudent bounds, and with the hope that the revenues may be greater, the expenditures restrained, and the deficiency less. Whether the realization shall be pleasing, must await events. The Details of the Financial Transactions during the past year are so elaborately described and explained in the accompanying reports of the Third Assistant and the Auditor, as to render nothing further necessary. Attention is invited to the results secured by the methods pursued in making the contracts for supplies of adhesive stamps, postal cards, and envelopes, which were so fully discussed in the last annual report. There was manufactured and issued to postmasters a quantity of adhesive stamps exceeding by 10.2 per cent. the quantity of the previous year, but the actual cost was $22,784.38, or 16.5 per cent., less than the expenditure of that year. The number of postal cards increased, on the like comparison, by 16,231,500, or 4.78 per cent., while the total cost thereof decreased by $15,874.81, or 8.5 per cent. The registered package, tag, and official envelopes, manufactured and issued, increased by 32.7 per cent., but the sum of cost fell off $17,731.05, or 19.6 per cent. Computing the difference in cost upon the quantities issued, the actual saving effected during the last year in these three articles of supply, was as follows: Adhesive postage-stamps.. Registered package, tag, and official envelopes...... $35,076 84 or 23. 3 per cent. 24, 672 05 or 12.7 per cent. 55, 337 01 or 43. 3 per cent. Total...... 115,085 90 A substantial reduction in the appropriations for the current year was warranted, and made accordingly The Contract for Stamped Envelopes, which has been in force four years, expired on the 30th day of September, 1886, and the making of another for a like period required and received much time and consideration, in order to secure the fittest envelopes for the public convenience, of the best materials, yet at the lowest prices attainable, and adequately to protect the Government in the various points of interest and risk affected. The Third Assistant has detailed the various steps taken and the governing reasons therefor with particularity, as not only presently interesting but of possible future value. Active competition resulted in the making of a new contract, which is thought to be well guarded, with the former contractors at greatly reduced rates of cost, varying from a diminution of 11.1 per cent. for newspaper wrappers to 38 per cent. for third quality envelopes, the average lessened rate for envelopes being 27.2 per cent. The Third Assistant computes the saving in cost upon the probable issues during the contract term at $942,298.19. This advantage does not accrue to the Department or the service, but to the public who purchase the stamped envelopes. Pursuant to the statute, a reduced price-list has been prepared, under which issues have been made since the first of October. The immediate demand has been great, overtaxing the capacity of the manufactories; a satisfactory mark of the general popular approval of the work. Indirectly, the service is benefited in various ways by the use of stamped envelopes, and their extensive employment is desirable. The contract for registered-package, tag, and official envelopes endures for but one year under the statutes. New proposals were invited at the same time with those for the stamped-envelope contract. But one bid was received, and I therefore ordered a new advertisement for proposals on another day. Four bids by other parties were proffered in response, each lower than the single one made upon the first adver tisement, and the contract was let at a gain over it of $8,836.57, or 10.1 per cent. The price is, however, at a marked advance over the contract of last year, owing, it is supposed, to rise in the price of material. Letter-Sheet Envelopes have long been authorized by statute, and Postmaster-General Howe attempted their introduction in 1882 by making a contract with the owner of one of the many patents. The contractor failed to perform, and no further steps were taken to provide them until last year. A contract was made in October with the United States Sealed Postal-Card Company, the owner of a patent covering at least as good an envelope as any submitted to the Department, by which that company undertook to furnish, under provisions stipulating every security essential, such envelopes as the Department should require, wholly at the risk of the company, so that the Department receives them without cost, pays only for such as are sold, and sells at a price sufficient to return the full cost and all clerical service in addition to the face value of the stamp. The contractors are required to sustain the cost of transportation from the manufactory to the selling post-office. Issues began in August and the envelope appears to find popular favor. The earlier manufactures were defective in the quality of paper and in the gumming, but the later articles are more satisfactory. The demand appears to increase, and the issues to the 1st of November instant amount to nearly three millions in number. It appeared obvious that for certain uses this form of communication would be esteemed desirable, by the business public especially; that they might to some extent supersede postal cards and unsealed circu lars, and thus benefit the revenue, at the same time being lighter and more conveniently handled in the mails; and the existing contract, which is terminable at pleasure, was entered into experimentally, to prove the propositions by actual trial. Except by special authority of Congress a patented article of this kind cannot be purchased, but if, after sufficient further trial, the demand should prove considerable and the public convenience augmented by them, it would appear fairly obligatory, as well as expedient, to provide for supplies of letter-sheet envelopes, like stamped envelopes of other kinds. This would probably secure somewhat diminished cost, which would stimulate their use as well as cheapen them to the patrons of the service. To pursue that course it will be requisite to secure some one of the many patents in existence, if, indeed, it should not be found that a proper article for manufacture is unprotected, as is not improbable. The purchase price might be limited to a moderate figure, in view of certain competition, and the amount paid can soon be regained by assessment on the selling price of the envelopes. It was imposed as a condition on the present contractors that the Government should be at any time entitled to their patents at a price to be fixed by the Department, and the contract contains such a covenant. Longer experiment, however, would appear desirable before permanent action, especially in view of the favorable terms under which the supplies are now furnished. The novelty of them may have caused the demand heretofore, and present favor fail to endure. The Registration Business marked the gaining prosperity and business activity of the year by an increase in the number of domestic letters registered of 340,467, or 4.3 per cent.; of 36,070, or 3.6 per cent., of domestic parcels; of 26,917, or 5.6 per cent., in foreign dispatched letters; of 7,089, or 19.8 per cent., of foreign dispatched parcels; and of 194,428, or 11 per cent., in Government dispatches sent free; with an increase of $41,054.70 in fees collected, a gain of 4.2 per cent. The registration service has been improved by the new system adopted during the year of placing a number of registered packages to be transmitted to the same post-office in a small sack, properly locked, and sent as one registered article, whereby unnecessary handling is avoided and greater security obtained. The Dead-Letter Office continued during the last fiscal year the Division of Dead Letters under the third assistant, and its transactions for that period constitute one subject of his report. Separate provision, however, having been made by the Congress for this office, as recommended in the last report, it was accordingly established on the 30th day of July last as an independent Bureau of the Department under the above designation, and the efficient chief of the division appointed superintendent. The performance of the functions of this division under that officer has been satisfactory. Improvement in methods has found place, the large arrearages of letters awaiting treatment have been cleared away, and daily treatment of the daily receipts has become the rule. The appended report contains many figures so classified as readily to exhibit the work of the office. Its magnitude appears in the total number, 5,023,745, of pieces of mail matter treated during the year; an increase since the previous year of five per cent. Letters and parcels were delivered to the proper parties unopened to the number of 186,448; and 366,379 foreign pieces were returned to the. country of origin. Of the letters opened, about one-half were destroyed as undeliverable and valueless, and the residue delivered or filed to await reclamation. Letters to the number of 12,138 containing money aggregating $21,732, besides 18,105 letters containing drafts, checks, or other instruments for the payment of money of the total face value of $1,121,154.74 were delivered to the owners. The revenue derived from dead letters which could not be restored to owners, and from auction sale of unclaimed parcels, amounted to $8,879.29. Magazines, pamphlets, illustrated papers, picture cards, and the like, incapable of return, to the number of 16,164 pieces, were distributed to hospitals, asylums, and charitable institutions in the District of Colum. bia for the use of their inmates. It is regarded as a testimony to improved condition and increased efficiency of the service that the ratio of increase in the volume of matter received at the Dead-Letter Office falls markedly below the ratio of increase in the volume of matter transported in the mails. Thus the statistical counts indicate an increase of 10 to 15 per cent. at least in the number of pieces of domestic matter mailed, to but 5 per cent. in that received at this office; and of foreign matter, an increase of 13 per cent. mailed, and a decrease of 7 per cent. in the number of pieces sent to the Dead-Letter Office for want of delivery. Domestic registered matter gained over 4 per cent., as has been seen, but the undelivered quantity decreased 2 per cent., and the undelivered foreign matter fell off over 9 per cent. A comparison between our figures of last year and those of Great Britain affords a similar indication of the efficiency of our service. The number of undelivered letters turned into the British returned-letter offices (excluding such as bore the cards of senders and were returned direct) was 4,880,173; to the United States Dead-Letter Office, 4,680,669. Yet, as shown in the beginning of this report, the volume of our mails greatly exceeded the mails of great Britain. THE INSPECTION SERVICE. The extent of territory, the number of officials and employés, the complex machinery, and the magnitude of the interests of the postal service render the agencies by which information is secured for the management of its affairs and the enforcement of its discipline of the |