A tabular statement, exhibiting in detail the operations of the free. delivery service for the past fiscal year, will be found on page 40.

POSTAL MONEY-ORDER SYSTEM.

NUMBER OF DOMESTIC MONEY-ORDER OFFICES.

At the commencement of the last fiscal year the total number of postoffices authorized to issue and pay domestic money-orders was 3,686. During the year 460 new offices were added to the list and 3 were discontinued. On the 30th day of June, 1878, the total number of such offices in operation was 4,143.

ISSUES AND PAYMENTS OF DOMESTIC MONEY-ORDERS.

During the year 5,613,117 domestic money-orders, amounting to $81,442,364.87, were issued, and 5,579,341, amounting to $80,771,455.20, were paid. The amount of such orders repaid during the same period was $508,455.60, which, added to the amount of the orders paid, makes the payments amount to $81,279,910.80. The excess of the issues over the payments was $162,454.07.

The fees received by postmasters for the issue of domestic moneyorders amounted to $715,261.20. The average amount of such orders issued was $14.51, being 27 cents less than the average of the preceding year; and the average fee received for each order was 12.74 cents, being 0.08 greater than the average of the preceding year.

INCREASE IN THE MONEY-ORDER BUSINESS.

By the foregoing statement, when compared with that relating to similar transactions of the previous year, an increase of $8,621,855.17, or 11.84 per cent., is shown in the amount of the orders issued; of $8,323,298.67, or 11.49 per cent., in the amount of the orders paid; and of $91,512.25, or 14.67 per cent., in the amount of fees received.

INDICATIONS OF REVIVING COMMERCE.

This increase is believed to be mainly attributable to an improvement in the commercial condition of the country. The new offices placed upon the list, being of the lowest grade, have added very little to the aggregate business of the system, while in the great commercial centers the increase has been quite distinguishable. For instance, in New York the increase in the aggregate amount of the domestic money orders issued and paid during the last over the preceding year was 9 per cent.; in Chicago, Ill., 10 per cent.; in Boston, Mass., 4 per cent.; in Saint Louis, Mo., 15 per cent.; and in Cincinnati, Ohio, 11 per cent. The proportionate increase in the number of such orders was much greater, but their average amount, as heretofore shown, was less than during the preceding year.

REVENUES AND EXPENSES.

The Auditor has reported the following statement of revenue which accrued from domestic money-order transactions during the fiscal year ended June 30, 1878:

Fees received on domestic money orders issued
Premiums, &c

....

$715,261 20

1,377 78

716,638 98

$474,735 51

35, 380 30

2, 119 80

1,451 00

Net revenue

202, 952 37

716,638 98

The revenue, $202,952.37, from the domestic business is $103,021.18 greater than that of the previous year, being an increase of 113.1 per cent., or, excluding the item of $53,632.87 mentioned in the last annual report as "a loss occasioned by a compromise, made December 29, 1876, with the sureties of James Kelly and Patrick Jones, late postmasters at New York, N. Y.,” an increase of 32.16 per cent. over the revenue properly belonging to the fiscal year ended June 30, 1877.

Allowances for clerk-hire amounting to $175,392 were made during the last year at several of the larger post-offices out of the surplus commissions accruing from their money-order business over and above such amount of commissions as, when added to the postmaster's salary, would make his entire compensation $4,000 per annum, the limit fixed by law. The allowances are made at such offices in lieu of commissions when the exigencies of the service require additional clerical labor, and are included in the foregoing statement of the Auditor, in the item of "Commissions and clerk-hire."

REMITTANCES OF SURPLUS FUNDS.

Postmasters at offices at which the amount received for the sale of orders exceeds the amount of the orders paid are instructed to make daily remittances of the accruing surplus to some designated "moneyorder office of the first-class," certain of the larger post-offices being thus denominated by reason of their having been authorized to receive deposits of surplus money-order funds.

It is required that these remittances be made in registered letters by mail, when it is impossible for them to procure drafts of National Banks or of United States disbursing officers.

At "money-order offices of the first-class" postmasters received on deposit during the year $59,398,358.22 of such remittances, exclusive of the amount of postmasters' drafts paid by the postmaster at New York, N. Y., and of certain sums furnished to postmasters in the Pacific States by the postmasters at San Francisco, Cal., and Portland, Oreg.

TRANSFER OF FUNDS.

In case of money-order offices at which the amount required to pay orders when presented is either habitually or occasionally in excess of the amount received from the sale of orders and from depositing postoffices, postmasters are authorized to make transfers of funds from their postage account to their money-order account to meet the deficiency arising from such excess in the payments.

In cases where the amount of postage funds was insufficient or not available for this purpose, postmasters at offices east of the Rocky Mountains were in each case allowed a definite amount of credit with the postmaster at New York, N. Y., and a limited supply of blank drafts were furnished, to be drawn against such credits, from time to time, as the exigencies of their business might require. Drafts of this description amounting to $7,347,030.80 have been paid by the postmaster at New York, N. Y., during the last fiscal year.

To meet similar requirements in the States and Territories of the Pacific slope, where drafts upon New York are not at all times available, postmasters were furnished with funds, amounting to $116,155, by the postmaster at San Francisco, Cal., and $27,259 by the postmaster at Portland, Oreg.

At certain post-offices, where large sums are required to meet payments of mail-contractors and other creditors of the department, the transfer of funds from the money-order to the postage account is, when necessary, specially authorized by the department.

The transfers from the money-order to the postage account during the last year amounted to $404,669.88, and from the postage to the moneyorder account to $605,832.33, leaving a balance of $201,162.45 to the credit of the postage account.

LOST REMITTANCES.

In the last annual report it was stated that twenty cases, amounting to $4,894, of remittances alleged to have been lost in the mails remained unsettled June 30, 1877. During the succeeding year twenty-six additional cases, amounting to $5,899, were reported, making an aggregate of forty-six cases, amounting to $10,793.

In one case the amount, $534, was afterward received at the depository; in fourteen cases the amount, $2,112, was allowed to the postmasters by whom the remittances were made; in one case $22, being 16.5 per cent. of the amount lost; in another $390, being 60.9 per cent.; and in another $261, being 60.1 per cent., were so allowed, making a total of $2,785 allowed.

In eight cases the amount, $2,067, was recovered by special agents of this department; in one case, $111, being 83.5 per cent. of the amount lost; in another, $250, being 39.1 per cent., and in another, $173, being 39.9 per cent., were so recovered; a total of $2,601 recovered.

In eleven cases the amount, $3,553, was charged to the remitting postmasters, it having been ascertained that the losses occurred through their negligence; and nine cases, amounting to $1,320, remain unsettled at the close of the year.

A discrepancy of $665.20 appears between the amount, $2,785, reported above as allowed to postmasters on account of remittances lost in the mails, and the amount, $2,119.80, reported by the Auditor as so allowed. This discrepancy is caused as follows, viz: A credit of $51.80 was authorized by this department during the year ended June 30, 1877, which was not settled by the Auditor until after the commencement of the succeeding year, and another credit of $775 was so allowed during the last year, which has not been as yet reported by the Auditor. The difference between these allowances, $723.20, when added to the amount reported by the Auditor, makes $2,843. From this sum deduct $58, afterward recovered and disallowed, but not yet settled by the Auditor, and the sum of $2,785 appears as above reported.

MONEY-ORDERS ERRONEOUSLY PAID.

In the last annual report it is stated that claims for reimbursement on account of the alleged erroneous payment of fifty-six money-orders, amounting to $1,768.27, remained unsettled at the close of the year. One of these cases involved the issue of another order, for which reason the number therein reported as unsettled should read fifty-seven instead of fifty-six. Since the publication of that report additional cases of twenty-one orders, amounting to $555.13, alleged to have been erroneously paid prior to July 1, 1877, have been brought to the notice of the department.

Twenty-eight orders, amounting to $566.33, were alleged to have been erroneously paid during the year, being at the rate of one erroneous payment in 199,262 orders paid, making a total of 106 alleged erroneous payments, amounting to $2,889.73, under investigation during the year.

By means of forging the signatures of the payees, or of their indorsees or agents, or by other unlawful or irregular means, it was claimed that certain persons, fraudulently representing themselves to be such payees, indorsees, or agents, were enabled to obtain payment of the orders in question. Four of these orders, amounting to $72, were afterward ascertained to have been paid to the proper person; in case of twenty-five orders the whole amount, $713.77, was recovered by special agents of this department, and in the case of three others, $69.43, being 57.1 per cent. of the amount, was so recovered, making $783.20 recovered. In case of nine others, amounting to $348.50, the loss was assumed by the department; the amount of one order, $50, was charged to the issuing postmaster; the amount of twenty-six orders, $821.68, was charged to the paying postmaster, or through him to the clerk in his office through whose negligence the error occurred; in case of three orders, the remitter was required to lose $11.60, being 42.9 per cent. of

the amount; in case of four orders the remitter was required to sustain the loss of $75, being one-half the amount, making a total of $86.60 charged to remitters. In case of five orders the payee was required to sustain the loss, $140.60, and the cases of thirty-one orders, amounting to $587.15, remained unsettled on the 30th of June, 1878.

DUPLICATE MONEY-ORDERS.

The total number of duplicate money-orders issued was 16,576. Of this number 14,061 were issued in lieu of orders lost in the mails, or which, by reason of imperfect address, or change of residence, or from some unknown cause, had failed to reach the payee; 628 were issued in lieu of orders alleged to have been lost through the negligence or misfortune of the payees or indorsees; 775 were issued to remitters in lieu of orders payment of which had been prohibited in pursuance of the provisions of section 3929 of the Revised Statutes of the United States, because drawn in favor of the proprietors or agents of fraudulent lotteries, gift enterprises, or other "schemes or devices for obtaining money through the mails by means of false or fraudulent pretenses, representations, or promises"; 95 in lieu of orders which had become invalid by reason of having received more than one indorsement; 280 in lieu of orders invalidated because not presented for payment within one year after the date of their issue; 10 in lieu of orders supposed to have been burned in the mails, and 43 in lieu of orders mutilated or rendered illegi ble while in the hands of remitters, payees, or indorsees.

INTERNATIONAL MONEY-ORDER BUSINESS-REVENUES AND EXPENSES.

The Auditor has not reached a final adjustment of the accounts of the last quarter of the fiscal year, required to be made with the proper accounting officers of the several foreign countries with which moneyorder conventions are in force; for which reason he is unable, at this time, to furnish an exact statement of the revenue for the year derived from the exchange of money-orders with those countries. It is estimated at $9,000.

The revenue and expenses for the year ended June 30, 1877, as stated by the Auditor in the case of each of the foreign countries named, are given below under the appropriate heading.

EXCHANGE OF MONEY-ORDERS WITH SWITZERLAND.

At the commencement of the last fiscal year 176 money-order offices were in operation authorized to issue orders payable in Switzerland, and to pay orders drawn in that country. Four offices were added to the list during the year, making a total of 180 in operation at its close.

The number of such orders issued in the United States during the year was 4,593, amounting to $92,280.74, of which amount $320.56 was after