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An exhaustive review of the department's finances for the year will be found in the Report of the Third Assistant Postmaster General.

GENERAL POLICY.

The Postal Service of the United States has developed from a crude necessity to a gigantic public business. To meet the complex needs of a highly organized community this service, created by the Continental Congress and operated haphazardly by pony express, boats, and stage coaches, has grown steadily vaster in its scope, more diversified in its services, and more scientific in its methods of operation.

Measured in service to the public the development of the postal system in the United States has been remarkable. Under the rates established in 1792 it cost 17 cents to send a letter 200 to 250 miles, or the distance between Boston and New York. To-day 2 cents will carry a letter to the farthermost limits of the United States, as well as Canada, Mexico, and a number of countries in Central and South America. The Postal Service has steadily extended its activities to meet the needs of commerce. First came the registry system with its efficient safeguards that have reduced loss to a negligible quantity. The City Delivery Service has been extended to all large cities; the intricate system of sorting the mails, begun in an experimental way during the Civil War, has grown to enormous proportions; the special-delivery system for cities came in 1885; and in 1896 there was inaugurated experimentally the present extensive system of rural delivery, which brings the mail facilities of the country daily to the doors of millions of persons living in rural communities.

It has been in the past few years, however, that the postal system has entered upon a still broader service to the people. This expansion consists in the establishment of the postal savings system and the parcel post.

Such is the service rendered by the Post Office Department to-day. It is not sheer volume of business alone, but it is the diversity and complexity of its activities, as well as the magnitude of its operations in intimate contact with a large population, that calls for the exercise of business and administrative ability of a high order.

The efforts of the department have been steadfastly directed toward rational and economical administration for the purpose of obtaining for the public the most efficient service possible. The measure of efficiency is not determined solely by the amount of money spent, but by the results obtained from the expenditures made. The economy program to which the department is adhering strictly seeks to obtain for the public a constantly improved service through the introduction everywhere of modern business methods, and the

exercise of that degree of courage, faithfulness and intelligence which the public has a right to expect of those who are selected to conduct its affairs.

EXTENSIONS.

The reports of the four Assistant Postmasters General, to which attention is invited, will show, in detail, all extensions and enlargements of the service which have been made during the last fiscal

year.

FOREIGN MAIL SERVICE.

Although of less concern to the average citizen than the domestic service, because of its more limited use, the Foreign Mail Service is of the utmost importance to a great many of our people, including an increasing number of business men interested in the development of our foreign trade. New demands growing out of the rapid expansion of American export trade were successfully met, notwithstanding the adverse conditions occasioned by the war during the last fiscal year. The Post Office Department has been active to assist the movement toward closer trade relations between the United States and the Latin-American countries, and no effort has been spared or will be spared to improve and expand mail facilities in this field to the fullest extent practicable.

In the last annual report of this department announcement was made of the submission of proposals to each of the 33 countries and colonies of the Western Hemisphere with which we did not have such arrangements for reciprocal domestic letter rates of postage between those countries and the United States. Conventions have been concluded with the Bahamas, Barbados, British Honduras, Leeward Islands, and Dutch West Indies and are now in effect. In view of the great advantages resulting from the reduced rates the proposals to the remaining 28 countries and colonies have been urgently renewed and will be pressed for consideration in the hope that eventually the reduced rate for letters will apply between the United States and every other country of the Western Hemisphere.

For many years the need of a parcel-post convention with Argentina, one of the largest of the South American Republics, has been apparent. Negotiations with Argentina for such a convention were vigorously pushed during the year, with the result that an agreement was reached and parcel-post service with this important country became operative October 15, 1915. Other extensions were made in international parcel-post service, namely, with Liberia on July 1, 1914; with French Guiana on November 1, 1914; and with the British colony of Gibraltar February 1, 1915. Negotiations are in progress for conventions with Cuba, China, Portugal, Russia, Spain,

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Switzerland, and the French colonies of Society Islands and St. Pierre and Miquelon, with prospects of favorable results. All of our parcel-post conventions are receiving careful attention, with the view of eliminating, as far as possible, customs restrictions and other hindrances to prompt and satisfactory service.

We now have parcel-post service with 52 countries and colonies. As a rule, the parcel-post conventions, as originally agreed to, excluded from the mails liquids, pastes, and all substances easily liquefiable. Investigation showed that the transmission of such articles is practicable and safe provided they are properly packed, and negotiations were recently undertaken to induce all countries with which we have parcel-post service to admit these substances to the parcel mails. In consequence, liquids and substances easily liquefiable may now be sent in the mails to some 30 countries, and it is probable that eventually all the other countries concerned will consent to the department's proposals.

Special attention is being given to the short-paid postage evil. Under the regulations of the Universal Postal Convention, which governs the exchange of international mails other than parcel post, letters may be dispatched whether fully prepaid or not, double the amount of the deficient postage being collectible from the addressees. Nothing is more disadvantageous to those conducting business correspondence with persons abroad than having those persons subjected to heavy postage charges when the correspondence is delivered to them. In these circumstances it was deemed advisable to take every possible step to insure the full prepayment of foreign postage; hence orders were issued to postmasters requiring them whenever practicable to notify the senders of short-paid letters and give them an opportunity of fully prepaying the postage.

Notwithstanding disarrangements in the trans-Atlantic steamship schedules caused by the war, frequent mail service to each of the various European countries was maintained throughout the year. The mails for belligerent countries were so routed as not to require transit through any country with which such countries were at war. The only mails for trans-Atlantic countries which failed to reach the country of destination were those dispatched by the steamer Lusitania, which was sunk off the coast of Ireland on the 7th of May. The weight of this lost mail was 1,595 pounds. The total weight of the mail for trans-Atlantic destinations dispatched during the year was 12,163,384 pounds. Notwithstanding the world-wide business depression, the volume of mail, including parcel post, dispatched by sea to foreign countries during the fiscal year 1915 was only 12.6 per cent less than that dispatched during the previous year.

At the commencement of the war the parcel-post service with Germany, Austria, Hungary, Belgium, and France was suspended, owing

to the inability of those countries to conduct the service on their side. The service with France was resumed on the 13th of November, 1914; the service with Germany, Austria, and Hungary was resumed on the 30th of the same month; and the service with Italy, which was suspended on the 24th of May, 1915, was resumed on the 8th of June, 1915; so that at the end of the fiscal year Belgium was the only one of the countries with which we have parcel-post conventions to which the service was not in operation.

Notwithstanding the temporary suspension of parcel-post service to the countries above mentioned and the business depression caused by the war, the weight of the parcel-post mails dispatched from the United States to foreign countries during the fiscal year 1915 shows a decrease of less than one-half of 1 per cent from the weight of the parcel-post mails dispatched during the fiscal year 1914. That there was practically no decrease in the volume of the parcel mail dispatched despite the unusual conditions existing is gratifying evidence of the usefulness of the service and of the growing appreciation among American merchants of the advantages which it affords.

A convention relating to the transmission in the mails of printed matter for the blind was concluded with Great Britain and put in effect on the 1st of July, 1915, under the terms of which a material reduction was made in the postage rate on books printed for the blind.

Contract ocean mail service under the provision of the ocean mail act of 1891 was in operation on five routes, namely, from New York to Puerto Cabello, Venezuela; from New York to Maracaibo, Venezuela; from New York to Vera Cruz, Mexico; from New York to Southampton or Liverpool, England; and from San Francisco to Sydney, Australia. All mails not carried under the ocean mail act of 1891 on the mileage basis are carried by noncontract vessels on the weight basis. The total cost of the contract service for the fiscal year 1915 was $1,096,209.93.

Mention was made in the report for last year that the fiscal year 1914 was the first year in the more than 20 years of service under the act of 1891 that the contract steamers were used to such an extent that the conveyance of the mails dispatched by them would have cost more at the pound rates allowed to noncontract steamers than the pay received by the contract steamers at the mileage rates. During the fiscal year 1914 the net cost of the contract service was $55,155.51 less than it would have been if the steamers performing it had not been under contract and had conveyed the same mails and received pay on the weight basis. During the fiscal year 1915 the net cost of the contract service was $236,468.71 less than the American steamers performing it would have received for the same service on the weight basis, or $381,371 more than foreign steamers would have received

for the same service on the weight basis. As all mail not dispatched by the contract steamers must be dispatched by noncontract steamers and its conveyance paid for on the weight basis, and as the increased weight of the mail dispatched by the contract steamers does not increase their pay, which is on the mileage basis, the economy effected by utilizing to the fullest extent possible the steamers that are under contract is plainly evident.

PARCEL POST.

Notwithstanding the adverse business conditions resulting from the war, the year just ended records desirable and gratifying growth of the parcel post. In operation less than three years, this service has become a transportation agency of the greatest importance.

To enable the department to ascertain the growth of the service as well as its revenues and costs, periodical counts have been made and detailed information obtained at all first and second class offices and at a number of representative third and fourth class offices of the number of parcels handled, the amount of postage thereon, and the costs of the service. Statistics in the minutest detail are compiled from these data for the 50 largest offices, which represent approximately one-half of the entire postal business. The latest count, from October 1 to 15, 1915, shows that 30,939,730 parcels were mailed at these offices, on which the postage amounted to $1,856,602.82, and the total weight aggregated 41,815,452 pounds.

These statistics indicate that the Postal Service is now handling 1,000,000,000 parcels annually. When it is considered that prior to the establishment of the parcel post not more than one-fourth of that number were handled, the immense popularity and growth of the service is at once apparent. It is also highly gratifying that by the adoption of more efficient methods, predicated upon experience gained since the establishment of the service, the department has been able to greatly reduce the average cost of handling parcels. In connection with the transportation and handling of this immense volume of mail many difficult problems have arisen. However, they have been successfully solved, and notwithstanding the tremendous growth of the service, which has exceeded all expectations, the parcel post has been handled expeditiously and without delay to other mail. Even during the holiday seasons, when the number of parcels at many offices was several times the usual number, deliveries were made promptly and no congestion resulted. While a still greater volume is anticipated during the coming Christmas period and the service no doubt will be taxed to its utmost, no difficulty is anticipated as preparations have already been made to handle the traffic without delay.

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