road stations and between railroad stations-would have been attended with great difficulties and annoying delays in the transfer of mails. This consideration led the Department many years ago to establish this branch of the service known as the regulation wagon mail service.

The following statement shows its present condition, the rate of ex penditure, and the cities in which it has been established:

Annual rate of expenditure for regulation, mail messenger, mail station, and transfer service, in operation August 31, 1886.

This service is awarded by contract as star-route service, and is estimated for in the appropriation for that branch of the service and paid for out of that appropriation.

STEAMBOAT SERVICE.

The annual rate of cost of this class of service on June 30, 1885, was $563,002; on July 1, 1885, $554,078; on June 30, 1886, $446,419, showing a reduction of $116,583 since June 30, 1885, and $107,659 since July 1, 1885.

The cost of steamboat service has been reduced in a greater ratio than that of any other class of service. This has been owing to two causes First, the completion of new railroads on which postal service has been ordered in whole or in part; secondly, the greatly reduced price at which this service has been obtained by negotiations with the parties engaged in performing it.

The contracts for this class of service in the fourth section going into effect July 1, 1886, were made at an aggregate annual rate of $50,923.44 less than the contracts superseded.

This sum represents an aggregate saving of $203,693.76 during the contract term of 4 years, beginning July 1, 1886.

The appropriation for the current fiscal year is $575,000; the annual rate of expenditure on August 31, 1886, was $442,398; the sum deemed necessary for the current fiscal year is $467,398; leaving an unexpended balance at the close of present year of $107,602.

The amount deemed necessary for the next fiscal year is $490,000, being 14.78 per cent. less than the appropriation for the current year.

INLAND AND FOREIGN STEAMBOAT MAIL SERVICE.

In the act of Congress approved March 3, 1885, making appropriations for the Post Office Department, the Postmaster General is authorized to contract "for inland and foreign steamboat mail service when

it can be combined in one route, where the foreign office or offices are not more than two hundred miles distant from the domestic office, on the same terms and conditions as inland steamboat service, and pay for the same out of the appropriation for inland steamboat service."

Under and in pursuance of the power thus conferred this Department issued, on the 6th of October, 1885, proposals for carrying the mails of the United States, and such foreign mails as might be ordered, in safe and suitable steamships, from Tampa, by Key West, Fla., to Havana, Cuba, twice a week and back, from January 1, 1886, to June 30, 1888, on a schedule of 25 hours for the outward trip, and not exceeding 27 hours for the return trip. Under this advertisement two proposals only were submitted, but the amounts of the bids were deemed too high, and were declined by the Postmaster-General.

The commercial intercourse between the United States and Cuba, and the vexatious delays to which postal service between that island and the United States was subjected by reason of the inadequate character of the vessels engaged in its performance, induced the Postmaster-General in July last to contract with the owners of the steamer Mascotte and her consort for the establishment of a line of postal communication between Tampa, via Key West, to Havana, and return, beginning August 1, 1886, and terminating on the 30th of June, 1887, on schedules satisfactory to the Postmaster-General. By the schedules ordered under this contract this service is to be performed between Tampa, via Key West, to Havana, twice a week from August 1, 1886, to November 1, 1886, and three times a week from November 1, 1886, to May 1, 1887, and twice a week for the remainder of the contract term, with a running time of twenty-five hours, and is to be performed in close connection with the existing fast mail service from New York to Jacksonville and back, which fast mail service has, by recent legislation of Congress and by orders of the Postmaster-General, been extended to Tampa to make prompt connection with this new line of inland and foreign postal communication.

The establishment of this new line, furnishing, as it does, greatly increased facilities, will, it is believed, have a very beneficial effect upon commercial intercourse between this country and the island of Cuba. Heretofore the mails from any part of the United States to Cuba had first to be transported to New York and thence by steamship to Havana. This method entailed great delay in the transmission of intelligence. Through the agency of the fast line running from New York to Tampa the mails from any point in the United States can be concentrated on it and carried to Tampa, whence they will be dispatched via Key West to Cuba. The amount paid for this service for the contract term is $54,456; but as an offset to this it is to be remembered that the Department, by the establishment of this new line, has been enabled to discontinue the steamboat route from Tampa to Key West, which was maintained at an annual cost of $22,565.74, and also a foreign-mail route from Key West to Havana, which, as I am informed by the Superintendent of the Foreign Mail Service, cost, at the sea-postage rate, during the last fiscal year $8,504.96. This makes the net cost of this new and important service only $23,379.30. The performance of service on the two lines thus dispensed with was unsatisfactory both to the Department and to the public.

MAIL-MESSENGER SERVICE.

The annual rate of expenditure for mail-messenger service on June 30, 1886, was $834,860.

Compared with the last annual report, there has been an increase of twenty routes, and a decrease of $44,357 in annual rate of cost.

The cost of this service depends on the growth of railway mail serv ice, and keeps a certain ratio to it. It is ascertained that that ratio in expenditure is about $8 to every mile of railway service.

The appropriation for the current year is ....

The sum deemed necessary for the current year is......

Which will leave an unexpended balance at the close of the year of ......

$900,000 860, 000

40, 000

The sum deemed necessary for the next fiscal year is $900,000, the same amount as the appropriation for the current year.

Reduction in cost of mail-messenger service effected by orders from July 1, 1885, to June 30, 1886, was $14,484.

RAILROAD TRANSPORTATION.

The annual rate of expenditure for railroad transportation on all adjusted service on June 30, 1886, was $15,520,191, as against $14,758,495 on June 30, 1885. The increase in the annual rate of cost during the past fiscal year was $761,696, or 5.16 per cent., while the increase for the previous year was $1,484,889, or 11.18 per cent. The increase for the past year is, therefore, but little more than one-half as much as the increase for the year preceding it. The increase in the annual rate of expenditure for transportation and railway post-office cars, taken together, during the past seven years, is shown as follows:

It will be seen from the above statement that the increase in cost for these two large items of expenditure for the past year is considerably less than the increase for any year covered by the period named. This marked comparative reduction in the annual increase in cost is not attributable, as might be supposed, to a decrease in weight of mails carried, as the regular quadrennial readjustment weighing, which took effect in the past fiscal year, occurred in the first or eastern section, and showed the fair average increase of 11.12 per cent. of service in that section. Nor is it attributable to the fact, as the above table shows, that the increase in length of miles of railroad routes is less than any of the preceding years set down in the table, as that increase only falls short of the increase of the previous year, 1885, by 971 miles, and this decrease of mileage, and consequent decrease in rate of cost, is more than counterbalanced by the fact that there has been a closer adjustment of the compensation for railway mail transportation than has been known in the history of the Department.

The explanation of this reduction, it is confidently believed, is to be found, first, in the fact that during the past fiscal year there were no special weighings outside of the regular quadrennial weighings, although numerous applications were made by railroad companies for such special weighings, which were declined, the Department not perceiving their justice or their necessity. These special weighings necessarily result in an increase of cost. Secondly, in the fact, which will bereafter be more particularly alluded to, of the discontinuance of payment for apartment-car service, which payment had been made, although contrary to law, and the reductions in the pay of certain land-grant railroads which had not heretofore been known or treated by the Department as land-grant roads.

The policy of keeping the service as closely adjusted as possible, to which reference was made in the last annual report, has been adhered to, and with good results. On June 30, 1886, there were only 1,593 miles of unadjusted service on the books of the Department, as against 2,945 miles on June 30, 1885, 9,026 miles on June 30, 1884, 7,234 miles on June 30, 1883, and 8,449 miles June 30, 1882. This policy of keeping the adjusted service up to the actual service as nearly as possible necessarily results in an increase of the actual ascertained cost at the closo of the fiscal year ended June 30, 1886, but it is in accordance with the sound maxim of public and private economy, "Pay as you go," and has also enabled the Department to state with greater accuracy its liabili ties for railroad transportation at the end of the fiscal year.

The following table showsthe average rate of cost per mile per annum for railroad transportation, based on the aggregate length of routes:

The increase, $3.28 per mile, above shown is attributable in part to the reason before referred to, the closer adjustment of the service throughout the country, and to the quadrennial weighing in the eastern section, which resulted in an increase of $439,158, or 11.12 per cent., on the cost of the service in that section on the preceding weighing.

REQUIREMENTS FOR THE CURRENT YEAR.

The appropriation for the curent year for railroad transportation is $15,595,432. This is for the service exclusive of the Pacific roads, and will probably be more than will be required for the current year.

ESTIMATE FOR 1888.

It is estimated that $15,867,962 will be required for the transportation of the mails on railroads for the fiscal year ending June 30, 1888, being an increase over the apprporiation of the present fiscal year of only $272,530. The reasons in support of this estimate are fully set forth in the estimates furnished to the Postmaster-General under date of September 29, 1886.

RAILWAY POSTAL CARS.

There was an unexpended balance on June 30, 1886, of the appropria tion for railway postal cars of $73,578.20. This resulted from a discontinuance of allowance for postal apartment cars, a full statement of which will hereafter be given. The amount allowable under the act ap proved August 4, 1886, authorizing the Postmaster-General to allow compensation to such railroad companies as had furnished apartments in pursuance of an agreement or understanding that special compensation should be allowed for the time unpaid for, up to the date when the company was notified by the Department that such payment could not be made, because not warranted by the present law, aggregating $18,403.57, will be paid from this unexpended balance.

The appropriation for the current year is $1,808,000, and it is believed that this amount will be sufficient. It is estimated that $1,934,560 will be required for this service for the next fiscal year, as stated in the estimate submitted to the Postmaster-General.

At the close of the fiscal year there were in operation two hundred and sixty-three lines of railway post-office cars, 40 feet in length and upwards, and for which additional pay is allowed, distributed as follows: Ninety-nine lines of 40 feet, ten lines of 45 feet, seventy lines of 50 feet, and seventy-three lines of 60 feet cars. A full and detailed statement of this important branch of the postal service is given in Table I of this Report.

The following statement shows the annual rate of increase or decrease in cost of railway post-office cars.

The appropriation for special facilities on trunk lines for the fiscal year ending June 30, 1887, is $291,000. The current expenditure on account of this fund is as follows: