ing separately both for weight and for space by an arbitrary and rather procrustean standard, affords very strong and pregnant presumption in favor of the adoption of such a rule. No one familiar with the practi cal operations of the railway mail service can, I think, doubt the fact that such a basis of compensation is more in accordance with the neces sities and requirements of the service, and would be, it is confidently believed, more satisfactory to the Department and to the railroad companies as being both more equitable in its application and more economical in its results.

The questions involved in the problem of ascertaining the proper basis for the compensation of railroads for mail transportation were as fully and as thoroughly examined as time would allow, and with the aid of the light furnished by those who have gone before us in the same field of investigation. It will be seen that the report concurs with all previous investigations that the service has outgrown the present system of pay. Experience and the growth of the railway mail service have furnished additional proof of its incongruities and inequalities, and the time has come either for a very thorough and radical revision of the present system or for the substitution of an entirely new one, if we wish to keep the rate of expenditure for the service within the limits of any reasonable control. This report, however, it is proper to say, is not by any means submitted as the last expression on this important and interesting subject. It claims no such high prerogative. But the scheme which it suggests is recommended as the best temporary expedient for the present, suitable to the service, proceeding on the lines of the present arrangement, without departing too much therefrom-which departure, if made in the light of present information, might justly be regarded as too experimental-and enabling the Department to better control the rate of annual expenditure until provision shall be made, as you sug gested in your last report in regard to this question, for "the most particular, yet comprehensive and judicious inquiry into all the circumstances and elements which affect that subject."

An inquiry of this exhaustive nature, however, would necessarily be a protracted one. In the mean time the rate of expenditure for this branch of mail transportation, keeping pace with the growth of the popu lation, the spread of intelligence, the extension of railroads, and the development of the railway post-office system, is steadily increasing; and if, pending such an inquiry-should it be entered on-a plan sufliciently authenticated to your approval and that of Congress as a safe, conservative, and an economical one could be adopted, it is greatly to be desired. The plan submitted is recommended as possessing such features. While providing a new rule for adjusting compensation this rule is so closely related to the present one as to admit of ready application to the existing service, and while reducing the present rate of expenditure, and keeping that rate in future within more economical limits, it does not so seriously affect the pay of the railroads as to form a disturbing element in the relations between them and the Department. The pay of railroads carrying small weights of mail is not appreciably reduced. The greatest reductions effected by it will fall on railroads carrying heavy weights of mail and receiving large remuneration. These reduc tions, however, will be so distributed as not to affect seriously any par ticular road, and they will, it is believed, be more than compensated for by the satisfactory results flowing from the establishment of a basis of pay more intelligible and equitable than the present one, and less liable to invite those arbitrary methods of abatement of which so much complaint is now made by the railroad companies.

For the purpose of more conveniently comparing the present with the proposed rates of railroad pay, the following tables are here given. Table 1 shows the present rates; table 2, the rates under the proposed plan, and table 3 shows the difference between them, up to a weight of 5,000 pounds.

TABLE 3.-Present rate and proposed rate of pay contrasted.

For all intermediate space between these fixed grades a pro rata pay would be allowed, as is now the practice in regard to intermediate weights, as shown in last column of Table 1.

The additional space above 45 feet, when required, is to be deter mined by the Postmaster-General, and is to be paid for at the uniform rate of $2.70 per linear foot. The linear foot refers to an inside meas. urement, with the minimum car width of 8 feet 6 inches, or its equiv alent, in floor space. It is to be further remarked that these rates cover the entire cost of the whole railroad service, all postal cars to be properly equipped, warmed, and lighted, fitted up with furniture, tixtures suitable and convenient for the transportation and distribution of the mails and the transportation of postal clerks and other post-office officials designated by the Postmaster-General.

It may be here said that this plan is liable to the same objection which is urged against the present system of pay, namely, that the cost of it will increase in proportion to space required just as the cost of the present system increases in proportion to increase of weight. But the difference between the two methods is this: Under the existing law, if any weighing shows an increase of weight on any particular road, that road is entitled to claim an increase of pay according to the ratio of pay to weight, as fixed by the law. Under the proposed plan, although a weighing should result in an increase of weight, it would not increase the pay unless additional space was thereby rendered necessary.

That an increase of weight does not necessarily require an proportional increase of space is shown by the following facts:

Under the last quadrennial weighing in the first or eastern section, in 1885, the increase in the weights resulted in an increase of $439,158, or of 11.12 per cent. per annum on the previous rate of compensation of railroads in that section. But the increase in railway post-office car space in that section has been only 20 feet, costing $5,867. In the western or fourth section the adjustment made this year shows an increase of $404,672, or 12.91 per cent., caused by increase of weight, while there has been no increase of railway post-office car space as yet ordered. Applications are pending, it is true, for additional railway post-office cars in this section; but if all these applications should be granted-and it is not likely they all will be-the additional cost would be very small in comparison with the amount of the increase in cost just stated as resulting from the increase in weight of mail matter.

The total annual rate of cost for railroad service on October 31, 1885, was $17,130,827.80. The scheme proposed was applied to a large number of railroads, the aggregate of whose pay, as ascertained, amounted to $16,215,797.80 of this total sum, being 95 per cent. of the entire railroad service of the whole country. Assuming that the rate of reduction would remain uniform for the amount of service not computed, viz, $911,830, the result of the application of the committee's plan was a reduction of about $850,000 in the total rate of expenditure for railroad service as that expenditure stood on the last-mentioned date.

In applying this scheme it is to be remembered that the mails carried and worked in post-office cars were alone considered. Table C of the Postmaster-General's report of 1885 shows that a large amount of mail is carried in bulk, and is paid for according to weight, at the rates stated in table 1 above, the least weight taken into account being 200 pounds, at $42.75 per mile of road. Now, for this closed mail the same allowance of space would not be given as is allotted in table 2 to the same weight of mails worked or distributed in railway post-office cars. The best authorities give one linear foot of a railroad car of the standard width of 8 feet 6 inches as sufficient space for 500 pounds of ordinary mail matter carried in bulk, that is, 2 linear feet for every 1,000 pounds, which at $2.70 per foot would be $5.40; the same weight of worked mail would require 10 feet, at $2.70 per foot ($13.50), making a difference of $8.10 per mile of road for every 1,000 pounds of mail carried in bulk. This would increase considerably the above amount of $850,000, which, it is believed, would be saved by the establishment of the space gauge of pay. The discrimination between closed and worked mails is intended to apply only to railroads carrying more than 5,000 pounds. Its application to roads carrying less than 5,000 pounds is deemed unadvisable, as it would reduce too much the compensation of roads carrying small weights. The report proposes payment for car space required in actual transit only, and it is to be noted that it differs in its recommendations from those which have preceded it on the same subject in two important particulars. It omits to recommend, first, any change in the performance of side service by the railroads, requiring them still to perform it, and, secondly, any additional pay for increase of frequency in trips or of speed. Speed and frequency are conceded to be very important factors in the question, and the omission of their consideration seems to require an explanation. It is believed that the Department can safely depend for the securing of these two elements upon the competition between railroads for the immense passenger traffic of the country. This it does now, and generally with satisfactory results to the public and to the Department, and without any injustice to the railroads. For the rates proposed to be paid under the plan submitted would entitle the Department to require that the mails should be carried on the fastest trains and as often as trains run. A greater rate of speed, and greater frequency than would be thus furnished, would seem to be hardly attainable, or even necessary, regard being had to the service in its entirety.

If on certain great through routes of railroad communication it might at any time be deemed necessary to expedite the service on schedules faster than those of the regular passenger trains thereon, that object could be attained, as at present, by special appropriations, or special arrangements with companies accumulating the mail on such routes, and then requiring more space, at the fixed additional pay therefor.

Were a general provision authorizing the Postmaster-General to pay special rates for special speed and frequency incorporated in the law,

its application would sooner or later have to be made uniform and universal, in which cases the cost of the service would be augmented immensely, or it would only be made in exceptional cases, in which contingency such provision would defeat its purpose and be of compara tively little value to the service considered as a whole, as what would be gained in these particulars on one road would be lost on another. In making such a partial exercise of the power thus conferred the De partment would constantly incur, however just and reasonable might be the grounds of discrimination, the charge of favoritism, and a sense of injustice would be thus engendered, inconsistent with those harmonious relations which, for the good of the service, it is at all times desirable, should subsist between the railroads and the Department. It would open the door to those inequalities and incongruities in the pay and service of the roads which it is eminently desirable to remove and abolish, as they are the main causes of whatever friction and difficulty the Post-Office encounters in its transactions with railroad companies. Large as is the sum paid out annually by the Government to railway companies for mail transportation and post-office cars, being in amount nearly equal to 9 per cent. of their total gross earnings from passenger traffic, and in the case of some few companies forming a much larger per centage according to the statistics of railroad earnings in 1885, yet it is doubtful if any of the more important railroads, links in great lines of intercommunication, whose time-tables are made up solely with reference to their large and valuable passenger traffic and their connection with other lines, would accept the special rates for these special facili ties under the conditions it would be necessary to impose to secure the performance of the expedited service, unless the rates were far larger than any which have been heretofore suggested, and any which the Department ought to give. On the other hand, roads with a small number of passengers, running through sections of the country sparsely inhabited and carrying small amounts of mail, would be frequent and urgent solicitors for increase of speed and frequency when and where they were least needed, to eke out their slender revenues.

For these reasons, and others which might be suggested did time and space allow, taking the whole mass of the railroad mail service into consideration, and seeking a rule for adjusting pay, simple, uniform, and general in its application, I concluded to eliminate from the problem space and speed as distinct and independent factors entitled to special and additional compensation.

Without consuming more time in the exposition of the advantages of the proposed system of space gauge over weight gauge as a basis of railway mail compensation, of its simplicity, its uniformity, and its economy in results, I respectfully submit for your consideration the annexed report and its recommendations.

In concluding this report it is my duty, and I take pleasure in discharging it, to bear testimony to the faithful and satisfactory manuer in which the chief clerk of this Bureau and the heads of divisions have performed their important and responsible duties. To the whole clerical force of the office my acknowledgments are due in like manner. I append a statement (Exhibit 1) of the work of the office during the last fiscal year.

Very respectfully,

Hon. WILLIAM F. VILAS,

A. LEO KNOTT, Second Assistant Postmaster-General

Postmaster-General.