PANAMA RAILROAD-COMPANY. For the Isthmus transit of United States mails for the west coast of Mexico and Central and South America during the fiscal year ended June 30, 1886, $6,561.37. The amount estimated to have been received from foreign countries for the sea transportation beyond the United States of foreign closed mails during the calendar year 1885 is $23,853.98, and as this amount is distributed pro rata among the steamship companies interested, the total amount earned by the steamship companies in conveying mails from the United States to foreign countries during the period under consideration was $381,051.86. The steamship companies employed for the sea conveyance of United States mails for foreign countries having presented claim for compensation for carriage of foreign closed mails from April 1, 1879, and it conclusively appearing from the books and papers of this Department, and the report of the Auditor of the Treasury for this Department, that the payments heretofore made did not embrace this service, that the same remained wholly unpaid, and that upon the basis of the international biennial. statistics this Department had received from foreign countries compensation for such carriage, agreements were entered into with the several steamship companies to accept said statistics as a basis between themselves and the United States for a full and final settlement for the services rendered by said steamship companies, and have been allowed the sums set opposite their names in the following table, the total sum so far allowed being $52,642.58. The Panama Railroad Company also made claim that it had conveyed certain United States mails from Aspinwall to Panama for which it had received no compensation from this Department. An examination of the matter showed that United States mails for the west coast of Mexico, Salvador, Republic of Honduras, Guatemala, Nicaragua, and Costa Rica had been conveyed by said company, as claimed by it, from the date of the entrance to the Postal Union of each of those countries respectively, for which no payments had been made by this Department; that the aggregate net weights of the mails so conveyed from April 1, 1879, to June 30, 1885, amounted to 2,066,705 grams of letters and post cards, and 35,172,467 grams of other articles, and that at the rates fixed by the Universal Postal Union Convention for the transportation of mails by rail across the Isthmus of Panama, viz, 2 francs 50 centimes per kilogram of letters and post cards, and 92 centimes per kilogram of other articles, there was due said company the sum of $7,232.62; and this sum was accordingly allowed and ordered paid. There has, therefore, been allowed during the last fiscal year, over and above the expenses properly chargeable for the transportation of the mails for foreign countries during that period, the sum of $59,875.20, as follows: For the transportation of foreign closed mails.... $52,642 78 7,232 02 The expenditures (chargeable to the foreign mail service) on account of the United States postal agencies at Shanghai, China, and Aspinwall (Colon) and Panama, Republic of Colombia, for office rent, clerkhire, porterage of mails, and other miscellaneous items, amounted dur ing the first three quarters of the year (the last quarter not yet having been reported) to $1,354.11 for the Shanghai agency, $225 for the Aspinwall (Colon) agency, and $840 (for the entire year) for the Panama agency; in all, $2,419.11. From this amount it is proper, however, to deduct the sum of $302 collected as box rents by the Shanghai agent during the first three quarters of the year, and debited him in his accounts with the Department, and $334.07 for United States postagestamps sold by him during the same period, leaving the net cost of the Shanghai and Colon agencies for the first three quarters of the year $943.04. The amounts estimated as necessary to be appropriated for the foreign mail service for the fiscal year ending June 30, 1888, are as follows: For the transportation of mails, including foreign closed and open mails, and the railway transit across the Isthmus of Panama, calculated on the basis of paying the full sea and inland postage for the conveyance of United States mails transported by vessels of United States register..... $165,000 For balances due foreign countries, including the United States portion of the expenses of the International Bureau of the Universal Postal Union and the subscription of the Department to the monthly journal (L'Union Postale) of that Bureau.... Total...... 100,000 565, 600 I estimate $465,000 as necessary for the transportation of the mails, for the following reasons, viz: The average annual increase in the weight of the mails conveyed during the past four years was 6 per cent. The weight of the mails carried in the year ending June 30, 1886, to ports to which American vessels do not ply was 210,592,500 grams of letters and post cards, and 875,654,154 grams of other articles; estimated increase as stated, at 63 per cent. on letters and post cards and other articles for the fiscal year ended June 30, 1887, will be 224,281,012 grams letters and post cards, and 932,571,670 grams of other articles; estimated increase on the above amount, at 6 per cent., will be for the fiscal year ending June 30, 1888, 238,869,277 grams of letters and post cards, and 993,188,819 grams of other articles. The cost of conveying the above amount of mail, at 5 francs per kilogram for letters and 50 centimes per kilogram of printed matter, will make the total cost for the service $230,503.05 for letters and post cards, and $95,842.52 for other articles, the total being $326,351.57. The weight of mails conveyed during the fiscal year ended June 30, 1886, to ports to which American vessels carry mails, actual and estimated, was: Letters...... Printed matter.... Grams. 18,612, 239 192, 458, 598 At the estimated increase of 6 per cent. on letters and printed matter, the weights for the fiscal year ending June 30, 1887, will give: Letters..... Printed matter... Grams. 19,822, 032 205, 268, 400 The estimated increase on the above amount, at 6 per cent. for the fiscal year ending June 30, 1888, will give: Letters... Printed matter.. Grams. 20,090, 472 218, 610, 846 The cost of conveying the above amount of mail at the sea and inland postage ($1.60 a pound for letters, and 8 cents a pound for printed matter) will make the total cost of the service: For letters... For printed matter.. Total........ $66,968 25 43,722 17 110,690 42 Add the two amounts, viz, that for conveyance of mails to ports to which American vessels do not ply, $326,351.57, and that for the conveyance of mails to ports to which they ply, $110,690.42; contingencies, $2.958.01; total, $440,000. To this amount must be added the amount necessary for the transportation of the foreign closed mails, viz, $25,000, and the aggregate cost of the conveyance of mails to foreign countries will be $465,000. The item of $25,000 for the transportation of the foreign closed mails will not, however, be a charge against this Department, as it will be recovered from the foreign countries in which said mails originated, upon the settlement of the transit accounts between this Department and those countries. TRANSIT CHARGES AND POSTAGE RATES. Article 1 of the Univeral Postal Union Convention of June 1, 1878, declares that "the countries between which the present convention is concluded, as well as those which may join it hereafter, form, under the title of Universal Postal Union, a single postal territory for the reciprocal exchange of correspondence between their post-offices." It may be well to explain in this connection that the exchange of correspondence between foreign countries is effected through the medium of certain post-offices of each of the countries, which are designated by mutual agreement of the countries interested, and which alone are au thorized to receive and dispatch the correspondence, and are known as "offices of exchange." The exchanges between any two countries may be effected by means of "closed mails," or the correspondence originat ing in any country may be forwarded in "open mail" to any other conntry as an intermediary, to be forwarded by the latter country to destination. If sent in "open mail" the matter, on its receipt in the intermediary country, is treated, so far as its forwarding is concerned, precisely as if it originated in that country, and is forwarded with matter for the same destination mailed in the intermediary country, and in fact becomes a part of the mails of that country, which country pays for its conveyance beyond, but recovers from the country of origin the estimated cost of its transit by means of statistics taken for that purpose every three years, in accordance with the provisions of article 4 of the Universal Postal Union Convention. If "closed mails" are exchanged between any two countries, the correspondence from one country for the other is inclosed in sacks or packages made up under seal in the country of origin, addressed to the dif ferent exchange offices of the country of destination, and forwarded either direct or, when necessary, to an intervening country, which must act as an intermediary, and forward said closed mails intact, without breaking the seals or inspecting the contents of the packages, to destination by the most expeditious route. The expense of this transit be ing recovered in the same manner as in the case of open-mail matter. When a closed mail received by an intermediary country requires to be transported across the territory of the intermediary country and then forwarded by sea to destination (as for instance closed mails from Europe for Cuba, received at New York, sent by rail to Tampa, and thence by sea to Havana), the intermediary country is entitled to receive from the country of origin of such closed mails pay for the territorial as well as for the sea transit; but if closed mails are dispatched by the intermediary country from the same port at which they are received, the intermediary country is entitled to recover only pay for their sea transit, as fixed by article 4 of the Universal Postal Union Convention. Closed mails from one country to another which do not pass through an intermediary country are known as "direct mails," even though they pass through other post-offices in transit between origin and destination, as for example, mails made up at San Francisco for London, which pass through the United States post-office at New York, and the British post-office at Queenstown or Southampton, en route to London. In such cases these mails are transported at the cost of the country of origin only to the first post-office of the country of destination which they reach, their transportation from that post-office to the post-office to which they are addressed being at the cost of the country of destina tion. Hence this Department defrays the expense of transporting from New York to destination all mails made up in Europe addressed to the exchange oflices of Boston, Philadelphia, Baltimore, Chicago, Saint Louis, or San Francisco, which are conveyed by steamers arriving at New York; Great Britain bears the expense of conveying from Queens town or Southampton to destination all mails from the United States arriving at those ports addressed to the British post-offices of London, Liverpool, Manchester, Dublin, Glasgow, or others; and Brazil could, if it were deemed advisable to raise the question, be required to pay for the transportation from Para of all mails from the United States delivered at that port for other Brazilian ports beyond Para. It was felt that the primary object of the Universal Postal Union Convention the formation of a single universal postal territory-would never be fully accomplished as long as the present rates of transit are maintained, viz, for territorial conveyance, 2 francs per kilogram of letters and post-cards and 25 centimes per kilogram of other articles; for maritime conveyance, 15 francs per kilogram of letters and post-cards and 1 franc per kilogram of other articles. Propositions were, therefore, submitted to the postal congress of Lisbon tending to reduce to a minimum, or abolish entirely, the territorial transit charges, and to considerably modify the maritime transit charges. The principal countries in favor of entirely abolishing all territorial transit charges were the Argentine Republic, Japan, Hawaii, Turkey, Spain, Portugal, Greece, Germany, Austria, Sweden, Norway, Denmark. At the deliberations on this question in the committee of the Postal Congress to which this subject had been assigned, Portugal led the discussion, and strongly insisted on the entire suppression of all territorial transit charges, stating that it had taken the first step in this direction by concluding a convention with Spain by which the two countries grant to each other freedom of transit; and that this matter should not be considered from a purely financial point of view, as those countries which would consent to make this sacrifice would soon find ample compensation in the increase of their postal traffic. The principal opponents of the freedom of territorial transit and the reduction of the maritime transit were Great Britain, France, Italy, Belgium, and British India. When the vote was taken in the committee, eighteen members voted in favor of maintaining the present transit rates, and three were against it. This vote was confirmed in the full session of the Congress. The only transit charges which should be maintained are those which are caused by the extraordinary services involving special expenses, mentioned in article 4 of the Postal Union Convention, and in article 3 of the Postal Union Regulations, as amended, viz: 65 (1) Those which are maintained for the accelerated territorial conveyance of the mail called Indian," London to Bombay, via France, Italy, and Egypt, a distance of about 5,000 miles, the time of transit being eighteen days, special fast trains being employed to convey the mails from Calais, France, to Brindisi, Italy, and from Alexandria to Suez, Egypt. (2) "That which the postal administration of the United States maintains upon its territory for the conveyance of closed mails between the Atlantic Ocean and the Pacific Ocean," New York to San Francisco, time occupied in transit five days fourteen hours and ten minutes, a distance of 3,350 miles, a service which may well be termed a model of regularity, promptness, and safety. (3) That which is established for the conveyance of mails by railroad between Colon and Panama," in the Republic of Colombia, a distance of 47 miles; the reason for this short service, involving special expenses, being the fact that the Panama Railroad is in the hands of a private corporation, the Government of the Republic of Colombia having no control over it whatever." The idea of treedom of territorial transit is not a new one, as it is |