was $1,025,180.98, or $817,673.26 on 40,883,663 pounds at 2 cents per pound, and $207,507.72 on 6,916,924 pounds at 3 cents per pound. The increase in the amount of postage collected over that of the preceding fiscal year was $461.82.

DEAD LETTERS.

There has been no material change in the amount of dead matter received, or in the mode of its treatment in the Dead-Letter Office, since my last annual report.

The whole number of letters and parcels received during the year was 3,186,805, a daily average of 10,181, classified as follows: Ordinary mailed letters, 2,039,101; local or drop, 385,700; foreign, 209,432; mailed in the United States and returned unclaimed from foreign countries, 101,942; addressed to departed guests and returned from hotels, 41,053; held for postage, 304,689; misdirected, 66,007; without address, 7,587; containing unmailable matter, 2,066; registered, 5,660. Of these, 19,145 letters contained $29,995.90 in money; 10,686 contained drafts, checks, money-orders, notes, due-bills, &c., to the value of $1,405,301.12; 629 contained deeds, land warrants, mortgages, leases, pension certificates, railroad tickets, bank-books, wills, &c.; 24,356 contained photographs; 44,644 contained postage-stamps; and 21,816 contained receipts, legal papers, certificates, paid notes, and canceled obligations of all sorts; 38,325 contained jewelry, clothing, books, pictures, music, and merchandise of every conceivable variety.

The amount of money deposited in the Treasury during the year from letters for which no owners could be found was $8,937.01. A portion of this sum, however, was realized by the conversion of money taken from letters in previous years not receivable on deposit in the United States Treasury.

REGISTERED LETTERS.

The total number of registered letters and packages mailed during the year was 4,898,804, of which 4,744,811 were sent to points within the United States and Territories, and 153,993 to foreign countries. The amount of fees collected (in addition to postage) was $414,999.40, an increase over the preceding fiscal year of $47,560.60, or nearly 13 per cent. The number of packages of United States bonds, currency, revenue-stamps, postage-stamps, stamped envelopes, and postal cards transmitted by registered mail for the Treasury and Post-Office Departments, without payment of registry fees, was 404,003, valued at $157,457,794.08. The actual losses during the year were unusually small, averaging one out of every 9,140 letters or packages transmitted. On the 1st October last the registry system was extended to mail matter of the third class, and it is already evident that the extension has not only supplied a great popular want, but that it will result beneficially to the postal revenues.

CONTRACTS.

STATISTICS OF TRANSPORTATION.

There were in the service of the department on the 30th of June, 1878, 5,996 contractors for the transportation of the mails on public routes. There were, at the close of the fiscal year, 1,667 special offices, each with a mail-carrier, whose pay from the department is not allowed to exceed the net postal yield of the office.

Of public mail-routes in operation there were 9,917 (of which 1,000 were railroad routes, being an increase of 42 routes of this class over the previous year), aggregating in length 301,966 miles; in annual transportation, 158,185,375 miles; in annual cost, $16,034,021. Adding the compensation of railway post-office clerks, route-agents, mail-route messengers, local agents, and messengers, amounting to $3,228,400, the aggregate annual cost will be $19,262,421.

The service was divided as follows:

Railroad routes: Length, 77,120 miles; annual transportation, 92,120,395 miles; annual cost, $9,566,595; about 10.38 cents per mile. Steamboat routes: Length, 18,069 miles; annual transportation, 4,629,298 miles; annual cost, $752,483; about 16.25 cents per mile.

Other routes on which the mails are required to be conveyed with celerity, certainty, and security: Length, 206,777 miles; annual transportation, 61,435,682 miles; annual cost, $5,714,943; about 9.30 cents per mile.

There were, at the close of the fiscal year, 4,311 offices supplied by mail-messengers, at an annual cost of $649,387.

There was an increase over the preceding year in length of routes of 9,146 miles; in annual transportation, 10,832,124 miles; and in annual cost, $649,126. Adding the increase in cost for railway post-office clerks, route, local, and other agents, amounting to $84,057, the total increase in cost was $733,183.

READJUSTMENT OF PAYMENTS TO RAILWAY COMPANIES.

The readjustment of pay (Table F, pages 140-165) in the States of Kansas, Nebraska, Arkansas, Louisiana, Texas, Colorado, Nevada, California, and Oregon, and in the Territories of Utah, Dakota, and Washington, for the regular term of four years commencing July 1, 1878, and on certain routes in other States, shows, notwithstanding the abatement of 5 per centum required by act of June 17, 1878, an increase in cost of $371,273.29.

INSUFFICIENT APPROPRIATIONS FOR RAILWAY MAIL SERVICE.

The cost of the railway service on the 30th June, 1878, was at the rate of $9,566,595 per annum, or $316,595 per annum in excess of the appropriation for that year. In this connection attention is particularly in

vited to the explanation showing that, in the usual and regular course of business, it is impracticable, under existing law, to restrict the expenditure for transportation by railway.

The monthly report of the state of the service showed the cost of the railway service on the 30th September, 1878, to be at the rate of $9,360,000 per annum.

To this must be added the cost of new service for three-fourths of the year, which will amount to not less than $100,000, making the annual cost $9,460,000, without any allowance for the usual expansion of the service.

An additional appropriation of not less than $400,000 is therefore required to cover the cost of the service for the current year.

NO DEFICIENCY TO BE CREATED.

As the facts are definitely ascertained, there will be no deficiency created during the current fiscal year, as service may be discontinued from January 1, 1879, on a sufficient number of the least important roads, or the railway postal service may be reduced or discontinued to bring the cost within the $9,100,000 appropriated, if such be the will of Congress.

COST OF RAILWAY SERVICE.

The cost of railway service on the 30th June, 1877, was $9,053,936. The cost on the 30th June, 1878, was $9,566,595, which is an increase for 1878 over 1877 of $512,659, or 5.66 per cent. The cost of the service for the current fiscal year, as shown by facts and estimates, will not be less than $9,500,000.

In estimating the cost for 1880, it is believed that a larger estimate should be made for the item of service on newly constructed roads than has been made for several years past, because of the rapid settlement of the undeveloped country west of the Mississippi River.

Accepting $9,500,000, the estimated cost for 1879, as the basis, and fixing the rate of increase at about 8 per cent. (7.89), the cost for 1880 will be $10,250,000.

DISSATISFACTION OF RAILWAY COMPANIES.

The reduction directed in the act of June 19, 1878, of 5 per centum in the compensation allowable to railway companies for weight of mails has been the occasion of much dissatisfaction and complaint. Most of the leading companies have entered formal protest against this reduction; and some have stated that they only continued to perform the service temporarily lest their refusal to do so might occasion serious inconvenience to the public.

TRANSFER OF MAILS FROM DEPOTS TO POST-OFFICES.

In the last annual report attention was called to the service rendered by railway companies in carrying the mails between stations and postoffices.

As the question of revising the rates of compensation for railway mail transportation is now before Congress, I deem it proper to again invite attention to the subject. The laws and regulations under which this service is now performed are too indefinite to be with propriety continued as a part of the proposed new law.

The delivery of mails from stations to post-offices should either be made an element of the basis of compensation, to be paid for according to the work done on each route, or the railway companies should be relieved from this duty. An unpaid service is always a source of dissatisfaction. Attention is again called to the insufficiency of the compensation allowable under the law for service on many short routes.

THE PROPER BASIS OF COMPENSATION TO RAILROADS.

During the last session of Congress, bills were presented to amend the law regulating the compensation to railway companies for carrying the mails, so as to base the rates of pay upon the items of " space, speed, and frequency." It is suggested that the space to be paid for on each route should be limited to a specified amount for a certain weight of mails. Otherwise, the compensation of all railroads, and consequently the expenditure of more than $9,000,000 annually, would be left to the discretion of the Postmaster-General; and it is clear that this should not be done.

THE RAILWAY MAIL COMMISSION.

The reports to the Forty-fifth Congress of the special commission on railway mail transportation contained some statements, which, without explanation, might imply that the laws regulating the rates of pay to railway companies for carrying the mails had not been faithfully executed. It is stated on page 8 of the minority report, and page 4 of the majority report, that one road carrying an average weight of mails of "69,554 pounds per day, making 98 trips per week, was paid $839.30 per mile per annum; while another road, making 9 trips per week, carried 15,596 pounds, and was paid $885.62 per mile." The allowance on the route carrying 15,596 pounds per day was $349.42 per mile, and not $885.62 per mile as stated in the reports.

NO DISCRIMINATION AGAINST SOUTHERN RAILWAYS.

On page 32 of the minority report, in connection with the aggregate payments for mail service, it is said that, "the South had more than her proportion in 1860, and less in 1876." From this it might be inferred that there had been unjust discrimination against the southern roads in the adjustment of pay for carrying the mails, but such is not the The rates of pay are the same on all roads on which the amount and character of the service are similar. It is true that greater rates of pay are allowed elsewhere than in the South, because the service is greater. On one route from New York City the average daily weight

case.

of mails is 36 tons, while no road south of Maryland carries more than 6 tons of mail a day, and the same disproportion exists between nearly all northern and southern railroads.

COST OF TRANSPORTATION NOW AND IN 1854.

A statement will be found on page 64 which shows that notwithstanding the great increase in the weight of mails and the additional facilities furnished for their care and distribution in transit, the rate per mile of annual transportation in 1877 was but nine mills greater than in 1854.

UNIFORMS FOR POSTAL EMPLOYÉS.

The experiment of uniforming the railway postal employés has resulted in greatly improving the efficiency of that branch of the service. It is suggested that the Postmaster-General be authorized by law to designate a uniform to be worn by any or all employés of the postal service, and that a penalty be fixed for the wearing of the same by unauthorized persons.

CLASSIFICATION OF EMPLOYÉS IN THE RAILWAY MAIL-SERVICE.

At present there are four designations by which the employés of the railway mail-service are known, viz, railway post-office clerks, routeagents, mail-route messengers, and local agents, and a separate appropriation is made for each class. As their duties are similar, all of these employés should be classed as railway postal clerks, with graduated salaries not to exceed the following rates per annum: First class, $800; second class, $900; third class, $1,000; fourth class, $1,200; and the fifth class $1,400. If this suggestion be adopted one appropriation can be made to cover the cost of the entire service.

TEMPORARY CONTRACTS.

The present law limiting the period for which temporary contracts may be made without advertisement to six months, has occasioned much embarrassment to the department, and rendered it necessary to issue two miscellaneous advertisements each year instead of one as formerly. The expense of establishing service is thereby considerably increased, and much additional labor is imposed upon the department, with no advantage to the government or the public. If temporary contracts could be made for one year, as formerly, the service would be benefited.

FINES AND DEDUCTIONS.

The amount of fines imposed upon contractors, and deductions made from their pay for failures and other delinquencies for the fiscal year ending June 30, 1878, was $99,077.08, and the amount remitted for the same period was $16,502.78, leaving the net amount of fines and deductions $82,574.30, against a net deduction of $64,282.14 for 1877.