mending the measure, in which it is urged that the present building, as regards its dimensions, accessibility by the public, and accommodations in general, is inadequate for the proper management of the large and constantly increasing postal business centring at New York. The sanitary condition of the building and post office employés is also reported by the medical officer as bad, owing to the want of sufficient room to accommodate the clerical force employed, and the impossibility of obtaining proper ventilation. If the proposed improvement can be made upon terms just to the government and the citizens of New York, this department has no hesitation in commending the measure to the favor of Congress.

DEAD LETTERS.

The number of dead letters received, examined, and disposed of was 4,368,087, an increase of 859,262 over the previous year.

The number containing money, and remailed to owners, was 42,154, with enclosures amounting to $244,373 97. Of these, 35,268, containing $210,954 90, were delivered, leaving 6,886 undelivered, with enclosures of the value of $33,419 07. The number containing sums less than one dollar was 16,709, amounting to $4,647 23, of which 12,698, containing $3,577 62, were delivered to the writers.

The number of registered letters and packages was 3,966.

The number of letters containing checks, bills of exchange, deeds, and other papers of value, was 15,304, with a nominal value of $3,329,888, of which 13,746, containing $3,246,149, were delivered, leaving unclaimed 1,558, of the value of $83,739.

The number containing photographs, jewelry, and miscellaneous articles was 69,902. Of these, 41,600 were delivered, and 28,302 remain for disposal, or, being worthless, have been destroyed. The number of valuable letters sent out was 107,979; an increase of 38,792 over previous year.

There were returned to public offices, including franked letters, 28,677.

The number containing stamps and articles of small value was 8,289; and of unpaid and misdirected letters 166,215.

The number of ordinary dead letters returned to the writers was 1,188,599, and the number not delivered was 297,304, being about 23 per cent. of the whole. Of those not delivered, less than 4 per cent. were refused by the writers.

The number of foreign letters returned was 167,449, and the number received from foreign countries was 88,361. For additional particulars see Appendix.

In the last report the attention of Congress was called to the expediency of restoring prepaid letters to the owners free of postage. The measure is again commended, with the additional suggestion that letters be forwarded, at the request of the party addressed, from one post office to another without extra charge.

The number of letters conveyed in the mails during 1865 is estimated at 467,591,600. Of these, 4,368,087 were returned to the Dead Letter office, including 566,097 army and navy letters, the non-deliverd of which was not

chargeable to the postal service, they having passed beyond its control into the custody of the military and naval authorities. Deducting 1,156,401 letters returned to writers, or held as valuable, the total number lost or destroyed was 2,352,424, or one in every two hundred mailed for transmission and delivery. Fully three-fourths of the letters returned as dead fail to reach the parties addressed through faults of the writers, so that the actual losses from irregularities of service and casualties, ordinary and incidental to the war, did not exceed one in every eight hundred of the estimated number intrusted to the mails.

The returns of dead letters from cities are largely in excess of proportions based upon population. To them special efforts have been directed to secure the most efficient service, and it is believed improvements in operation, chiefly that of free delivery, will diminish the number of undelivered letters at offices in densely populated districts.

The number of applications for missing letters was 8,664, an increase of 3,552 over previous year. A misapprehension prevails in regarding the Dead Letter office as a depository for the safe-keeping of undelivered letters, and not as the agent for their final disposal; to correct which the regulations are appended.

The amount deposited in the treasury under act of 3d of March last were— On account of sales of waste paper Unclaimed dead-letter money...

$9,420 67

7,722 70

17, 143 37

Less than 25 per cent. of advertised letters are delivered. In some of the larger offices the proportion does not exceed 15 per cent. The payment of two cents for each letter advertised involves a yearly expenditure of about $60,000 for letters returned as dead to the department. Measures have been adopted to reduce the expense, and the advertising is now secured at one-half the rate allowed by law. An obstacle to this economy is found in the law requiring the list of letters to be published in newspapers of largest circulation, which should be repealed, and the mode of advertising left to the discretion of the Postmaster General.

POSTAL MONEY-ORDER SYSTEM.

The number of offices is 419, including those in the Pacific States and Territories, and some of the principal offices in the southern States. Orders have been issued for putting into operation fifty-five additional offices. The number of money orders issued during the year was 74,277, of the value of.....

The number paid was 70,573, of the value of $1, 291, 792 22
Add amount repaid to purchasers. . . . .

$1,360, 122 52

Amount outstanding

21, 784 86

1, 313, 577 08

46, 545, 44

The number of duplicate orders was 422. Of these, 355 were issued to replace originals lost in the mails; 63 invalidated by age; and 3 by illegal indorsements.

This deficiency has been provided for by the appropriation of $100,000 of May last, leaving unexpended $92,952 03 applicable to any deficiency of the current year; and as the proceeds of the system will hardly equal the expendi tures until it is more generally established, it is recommended that any balance remaining at the close of the present may be applied to the deficiency of the next fiscal year.

The maximum amount of money orders is $30, which may be judiciously increased to $50, and the restriction to sums not less than one dollar removed, retaining the present minimum fee.

Under the law, the owner of a lost certificate, to obtain a duplicate, must furnish a statement, under oath or affirmation, of its loss or destruction, and proeure from the postmaster by whom it was payable a certificate that the order has not and will not be paid. These requirements work a hardship to the party in that they compel him to pay the customary fee to the officer administering the oath, the cost of a revenue stamp affixed to that oath, and the payment of a second fee for the duplicate order. The loss of orders is seldom chargeable to any neglect of the owners, and postmasters should be authorized to administer oaths in cases of loss, and issue duplicate orders without charge.

The law would be further improved by extending the time within which the order may be paid to six months, the period now allowed, of ninety days, being too limited for the necessary correspondence between distant points.

Losses have occurred to the amount of $645 by reason of the carelessness of remitters, the burning of steamers, and other causes, not chargeable to the system.

MISCELLANEOUS.

It will be seen by reference to the accompanying report of the Auditor of the Treasury for this department, to which the special attention of Congress is invited, that the estimated amount of claims of contractors and others residing in the southern States, chiefly those lately in insurrection, for services rendered previous to the rebellion, is not less than one million of dollars. Many of these claims have been presented, but none paid, under a rule adopted early in the war, of not paying claims to parties known to be engaged in aiding the rebellion. The questions connected with this subject applying alike to this and other executive branches of the government, they are respectfully referred to the determination of Congress.

Balances were due from southern postmasters at the outbreak of the rebellion amounting to $369,027 87, few of which have been paid. Means are being employed, through courts and other agencies, to collect the amounts due to the government.

The closing of the war brought with it the necessity of restoring the postal service in the southern States. No time was lost in offering to the citizens of those States all the facilities which they were in condition to accept. Special agents were appointed to assist in the work of restoration. The provisional governors were notified of the readiness of the department to appoint postmasters upon their recommendation. They were also advised of its desire to put the mails on all the railroads within their respective States as soon as informed by them that the roads were ready to carry them, and the companies proper parties to intrust with their transportation. All applications for carrying the mails on land and water routes have been considered, and the service ordered at such rates of compensation as could be agreed upon.

Anticipating that the revenues from mail service in the south would be for some time considerably less than they were previous to the war, the necessity of reduced rates of compensation, and in many instances of reduced service, was obvious. This required new classifications of rates of payment to rail and water, and modifications of pay and service on land routes. Considerable reductions have been made in the maximum compensation to the first two classes of service, as the tables hereto appended exhibit. The reasonableness of these reductions has been generally appreciated by the contractors, and the mails are being transported by rail under contracts till the expiration of the current fiscal year, and by water till the 30th of June, 1869.

Greater difficulties have been encountered on the land routes, although the maximum rates adjusted by the amount of service to be performed are equal to the average of compensation allowed previous to the rebellion, except on certain routes where the former pay was excessive, and has been reduced.

Although the service has been restored in each of the southern States, it is not so general as the department has desired and the wants of the citizens require, because of the difficulty of procuring contractors and postmasters who

can take the oath prescribed by the acts of July 2, 1862, and March 3, 1863, requiring uniform loyalty to the government during the rebellion as the condition of holding office and for the conveying of the mails.

Appended hereto is a circular letter, addressed to the special agents of the department, embodying the principles on which the postal service is being restored in the south.

The Post Office Department was established on the principle of defraying its expenses out of its revenues. Its financial history shows that its annual receipts have rarely equalled its expenditures. During the last year there was a surplus of revenue, a result the more gratifying because no part of the appropriation for franked matter has been drawn upon. But so favorable a result cannot be anticipated for the current year, in consequence of the expenditures, incident to restoring the service in the southern States, which promise proportionately small receipts, because of the confused condition of the commercial and industrial interests within those States. It is hoped, however, that this unhappy condition will be but temporary, and that under their improved auspicies as free communities, their contributions to the postal revenues will soon exceed any in their past history.

Although, in view of the financial wants of the government and the large demand for postal expenditures in the southern States, this department could but deem unwise any present reduction of domestic postage, it appreciates the duty of the government to lessen all postage rates to the minimum of not preventing the department to support itself from its revenues, and it perceives no reason why, in a few years, with our rapidly increasing prosperity, aided by judicious legislation, a reduction may not be made to the maximum letter rate adopted by Great Britain with such beneficent results. Moreover, the hope is indulged that the experience of European governments will concur with that of this, in favor of an early reduction of the present high rates of international postage, which are greatly disproportioned to the necessary cost of the intermediate land and ocean transportation, and serious obstacles to postal intercourse, commercial and social, between this country and all parts of Europe.

Among the many remarkable facts illustrating the progress of the people of the loyal States during the rebellion, in almost every department of material development and social advancement, having no precedent in history, and confounding the predictions of all having little faith in the vitality of free institutions and the resources of a free people, that of the increase of postal correspondence, as shown by the postal revenues, is not the least interesting and suggestive. The maximum annual receipts of this department previous to the rebellion from all the States was $8,518,067 40, which was exceeded in the sum of $6,038,091 30 by the receipts of the last year from the loyal States alone. The revenues during the past four years amounted to $46,458,022 97, an average of $11,614,505 74 per annum. Compared with the receipts of the four years immediately preceding, which amounted to $32,322,640 73, the annual average increase of revenue was $3,533 845 56, which has not resulted from any considerable additions to