REPORT OF THE SECOND ASSISTANT POSTMASTER-GENERAL. POST-OFFICE DEPARTMENT, OFFICE OF THE SECOND ASSISTANT POSTMASTER-GENERAL, Washington, D. C., October 24, 1883. SIR: The cost of inland transportation on the 30th day of June, 1883, was: For 1,513 railroad routes, aggregating 110,208 miles Total cost... $13, 887, 800 607,621 4,739, 478 19, 234, 899 Comparison with the last annual statement shows, for the railroad service, an increase of 124 routes, of 9,645 miles, and of $1,134,616 in annual cost; for the steamboat service an increase of 6 routes, of 659 miles, and of $33,602 in annual cost; for the star service, an increase of 530 routes, a decrease of 754 miles, and of $814,371 in annual cost. This statement is based upon contract prices and annual salaries, irrespective of fines and deductions; the amounts actually disbursed appear in the report of the Auditor. The number of contracts drawn in duplicate during the year ended June 30, 1883, was 5,000. STAR SERVICE. The rate of expenditure for the star service on June 30, 1883, was $4,739,478, a decrease of $814,371 compared with the cost on June 30, 1882. This rate was increased from July 1, 1883, $252,692, which amount represents the cost of new service that went into operation on that date, and also the increased cost of the service that was relet in Michigan, Wisconsin, Illinois, Iowa, and Minnesota under new contracts from that date. This leaves a net decrease since June 30, 1882, of $561,679. I have thought it necessary here to present, for permanent record, a comparative statement showing the work of this office affecting the cost of the star service during the latter part of the fiscal year ended June 30, 1881, and during the years ended June 30, 1882, and June 30, 1883, as thereby a large reduction of expense was effected without in any manner curtailing needed mail facilities. The extension of railroad service contributed temporarily to a portion of the reduction, but this decrease in cost was in great measure 121 counteracted by the establishment of the new lateral service which became immediately necessary; the result, however, stands as follows: Increase in mileage for 1883 over 1880, 1,927,787 miles. This statement is the more necessary at this time in view of the fact that, having regard to postal requirements, the cost of the star service has reached the lowest point attainable, and that henceforth increased expense is inevitable by reason of the continuous growth of the country and the very rapid settlement of the Western States and Territories. Complaints have been numerous in relation to the equipment used in the performance of service on the small routes, the means employed being inadequate to secure the proper facilities. These complaints have their origin primarily from the methods employed to secure profits by subletting mail contracts, the margin allowed by the contractor to the subcontractor or carrier being so small that an inferior grade of service naturally results. Restrictions have accordingly been placed upon subletting by means of a form of subcontract, prescribed by regulation, which will, to some extent, increase the cost, obtaining at the same time a much-needed improvement of the service. Under the present laws relating to subcontracts a few contractors have, by certain objectionable practices, seriously interfered with the regular transaction of the business of this office, and in many instances have succeeded in evading their obligations to subcontractors. While these practices need not be designated here, as they are well known, the new subcontract will to some extent prevent them, and aid in the enforcement of the statutes, giving thereby greater security to subcontractors. It is anticipated that such service as may be readvertised within the next eighteen months will be relet at an increase in cost, for the reason that the present rate is regarded as too low. To provide for this increase, and also for an expected larger percentage of new service which will be made necessary during the period indicated, for reasons heretofore stated, I recommend that the sum of $5,600,000 be appropriated for the star service for the fiscal year ending June 30, 1885. STEAMBOAT SERVICE. The rate of expenditure for the steamboat service for the year ended June 30, 1883, was $607,621. As in the star service, I present here for permanent record a statement of the reduction of the cost of this service since June 30, 1880: Making a net decrease from about May 1, 1881, to June 30, 1883, of $279,600. I think that for the fiscal year ending June 30, 1885, the sum of $625,000 should be appropriated in order to provide for any new and permanent service that may be found necessary, and to meet any emergencies that may temporarily arise from the overflow of rivers in the Southern States. LEGISLATION. The recommendations of this office that sections 3953 and 3961 of the Revised Statutes, and the proviso of the second section of the act of April 7, 1880, should be repealed have not been acted upon by Congress. The first section requires the deposit of certified checks with proposals for carrying the mails. This section operates to restrict competition, and at the same time affords but little additional security. The second section and the proviso of the act of April 7, 1880, prescribe an impracticable and, as has been demonstrated, an unsafe method for determining the allowances for expedition in carrying the mails on star routes. I have urged a substitute for the latter statutes that directs read vertisement in the very few cases that require expedition. These recommendations are renewed, and I desire further to invite your attention to the necessity for additional legislation respecting the disqualification of bidders for mail service. The only statutes now in force disqualifying bidders are sections 3949 and 3950 of the Revised Statutes, the first permitting the rejection of the proposal of a bidder who has willfully or negligently failed to perform a former contract; the second excluding any person for five years for the first offense of entering into a combination to prevent the making of any bid, and for the second a continuous disqualification. To these offenses should be added, within the discretion of the Postmaster-General according to the evidence before him, disqualification for imposing or aiding to impose upon the Post-Office Department insufficient bonds upon any proposal or contract for carrying the mail, or for making a false statement to any postmaster to secure a certificate to the sufficiency of the sureties upon any such proposal or contract, or for making or filing, or aiding in making or filing, any false statement in relation to any post-route, or service thereon, with the intent thereby to defraud or cause loss to the United States. MAIL MESSENGERS. The estimate for mail messengers for the fiscal year ended June 30, 1883, made in my report for the year 1882, was $800,000, and this sum was appropriated. The rate of expenditure on June 30, 1883, was $803,338, reduced, however, to an amount within the appropriation by deductions of pay for lapses and failures in a number of cases. By the reduction of the rate of letter postage, and the simultaneous increase of compensation of postmasters at post-offices of the fourth class, and the consequent inability of the larger number of postmasters to pay these employés monthly out of the proceeds of their offices, an order was made to pay them quarterly by warrants upon the Treasury. The change from monthly to quarterly payments precipitated a large number of resignations, and a compulsory readvertisement of the service, thereby causing increased expense. This method of payment increases the cost in nearly every case, as the messengers are unwilling to wait three months for their earnings without greater compensation. The rapid growth of the railway service has added largely to the expense of this service, so that the average cost of new service during the |