Mr. McGURTY. I know it would be an advantage in so far as the expedition of the mail is concerned.

The CHAIRMAN. If the cost does not count?

Mr. McGURTY. Yes; if the cost does not count.

The CHAIRMAN. But cost must count. Does not everybody in the Post Office Department realize that the revenues of the Post Office Department are falling behind every day. That is, they have not increased any above the last year.

Mr. McGURTY. To my knowledge, everybody in the post office is staying up at night trying to decrease the cost.

The CHAIRMAN. They are increasing instead of decreasing.

Mr. McGURTY. The volume of mail is increasing.

The CHAIRMAN. The volume can not increase without the revenues increasing, and the revenues are decreasing instead of increasing.

Mr. McGURTY. Our revenues at New York show a steady increase by months.

The CHAIRMAN. How many months?

Mr. McGURTY. Every month this year.

The CHAIRMAN. The revenues of New York are just about onehalf of 1 per cent less, or more; I do not know which.

Mr. McGURTY. I think you will find some increase.

The CHAIRMAN. And yet we are asked every day-we were asked for 100 inspectors a few days ago in this bill, at a cost of four or five million dollars a year. We got along with the inspectors we had when we had about 12 or 13 per cent more income than now. This end of the table has got to think about the man that is cleaning the street out here some place, the man who is digging sewers, the man who is plowing the field, working every day from 5 o'clock in the morning until 9 o'clock at night trying to make a living for his children, and who can not get on the pension roll when he gets through. They have to be watched, gentlemen. If you could bring us a case where we were going to save any money we would be the happiest lot of fellows.

Mr. BYRNS. Would not the fact that there has been an increase in the volume of mail answer the argument that has been made that you would have saved money by the reinstallation of the tube service, as shown by the fact that you put on more clerks. In other words, that there has been a natural increase in clerks on account of the increase of volume, which would have been under any circumstances?

Mr. McGURTY. Not to the same extent.

The CHAIRMAN. There is a general increase in the United States post office of 3,000 a year and the same increase in the carriers every year, three or four thousand. There are generally about 4,000 authorized. They always say that they need them all. So, gradually, the inspection business calls for a constantly increasing number, notwithstanding the fact that the volume of business has not increased, which must be determined by the revenue. There are many suggestions for increased expenses, but we are here to guard the Treasury as well as the business and to do justice, of course, to everything connected with the whole business.

ACTUAL COST TO OPERATE TUBES-AMOUNT NECESSARY TO PUT TUBES IN OPERATION.

Mr. McGURTY. Mr. Chairman, I should like to submit this statement?

The CHAIRMAN. I will pass on whether it goes into the record. We do not want to encumber the record with a mass of statements. This is just a repetition of what the counsel recommended?

Mr. McGURTY. It is just a full statement.

The CHAIRMAN. I will pass on whether it goes in or not. We do not want to repeat a lot of material.

Mr. PERKINS. This is just a memorandum which I prepared at the suggestion of the Postmaster General of what he had in mind in making this recommendatiaon. I can also explain how the $19.500 was arrived at, if it would be of interest to the committee.

The CHAIRMAN. They wanted a certain amount of earning on their investment?

Mr. PERKINS. No.

The CHAIRMAN. What was it?

Mr. PERKINS. The tubes cost the tube company $16,100 a mile to operate. Those figures were submitted to us in detail by the tube company. We submitted them to the New York post office to check over the figures and see whether or not the cost of each item was justified. The New York post office reported to us that as far as they could tell those figures were perfectly all right. There is an item of $150,000 which the tube company would have to have to put their tubes in operation. It was a question of how they could raise that money. The tube company has no money in its treasury, and they will have to secure the money from the banks.

The CHAIRMAN. We are going to furnish them capital?

Mr. PERKINS. No.

The CHAIRMAN. That is equivalent.

Mr. PERKINS. We are going to furnish them with margin. The only asset they would have is the contract.

The CHAIRMAN. They have not that?

Mr. PERKINS. No.

The CHAIRMAN. If we are going to take into account the amount of money necessary to restore the tubes-how much is it?

Mr. PERKINS. $150,000.

The CHAIRMAN. That we propose to advance them?
Mr. PERKINS. No: to enable them to borrow it.

The CHAIRMAN. I think that is an outrage. It will never go through Congress if I have anything to say about it. That is not a business proposition.

Mr. PERKINS. Of course, you can not have the tubes on any other basis.

The CHAIRMAN. Why?

Mr. PERKINS. Because they can not raise the money. The Postmaster General felt that the tubes were necessary.

The CHAIRMAN. The Postmaster General does not determine all these questions.

Mr. PERKINS. I was explaining his recommendation.

The CHAIRMAN. Congress has something to say about that as well as the Postmaster General. He is one of the instrumentalities through which the Government functions. We make the laws.

Mr. BYRNS. That raises a question in my mind. It has been nearly four years since the tubes were discontinued. Whether they are now in condition so that they could be operated and used in the same way as before is a question. I understand that it will require, I think you said, $150,000 to put them in condition?

Mr. PERKINS. That is necessary, due to several stations which were removed and the machinery taken out by order of Mr. Burleson. Mr. GALLIVAN. Mr. Burleson started to scrap them.

The CHAIRMAN. They were taken out by order of the Committee on Post Offices and Post Roads. Mr. Burleson was authorized to do that. They were stored. Now they want to take them out and have us pay an increased rate. Not with my consent, never.

Mr. GALLIVAN. They were scrapped by the Government.

Mr. BYRNS. What portion of this $19,000 represents the cost? Mr. PERKINS. The actual cost of operating the tubes is about $16.100 a mile. The rate which we suggest is $18,500 a mile.

The CHAIRMAN. Of course, they have to have a profit. That is a part of their business, to invest their money.

Mr PERKINS. Yes, sir; they must have a profit. They must have some assurance that there will be some profit.

Mr. BYRNS. Under the present situation, otherwise they can not operate?

Mr. PERKINS. No, sir.

The CHAIRMAN. They are not going to get any of that if the House knows about it, and it will know. Why did you ask for this as a deficiency?

Mr. PERKINS. That is the recommendation of the Director of the Budget.

The CHAIRMAN. What authority have you to come here, to come for this as a deficiency?

Mr. PERKINS. I would rather have Mr. Edwards answer that. The CHAIRMAN. You are one of the administrators?

Mr. PERKINS. No; I am just Mr. Hays's secretary. I happened to be familiar with the details.

The CHAIRMAN. Well, Mr. Hays is not here?

Mr. PERKINS. Mr. Edwards is the solicitor for Mr. Hays and he will speak on the legal aspects.

The CHAIRMAN. There are no legal aspects. Is this a deficiency? This is not an activity that is in existence.

Mr. PERKINS. We made a request to the Director of the Budget for the total amount and the Director of the Budget instructed us to put in part of it as a deficiency and part of it as an appropriation. The CHAIRMAN. You do not consider it a deficiency?

Mr. PERKINS. I am not saying yes or no on that; I have no opinion.

Mr. GALLIVAN. You have not had any experience; you do not know?

Mr. PERKINS. No, sir.

The CHAIRMAN. Mr. Edwards, what do you say?

Mr. EDWARDS. If you want a direct answer as to what I think about it, I think it is not a deficiency.

The CHAIRMAN. That settles it. That is what we think, exactly. You agree with us. We have one agreement; it is absolutely not a deficiency.

Mr. EDWARDS. I do not see how you could have a deficiency. The CHAIRMAN. I do not think there is any authority of law. Mr. EDWARDS. The idea of asking for an appropriation was that there would be a gross amount asked of which a certain part should be available this current year.

The CHAIRMAN. Of course, we could not do that. The question is whether there is an existing deficiency; that is the question. Mr. EDWARDS. I gave you my answer frankly.

WEDNESDAY, FEBRUARY 15, 1922.

OFFICE OF THE FOURTH ASSISTANT POSTMASTER GENERAL.

STATEMENT OF MR. GEORGE L. WOOD, SUPERINTENDENT
DIVISION OF RURAL MAILS.

FOR INLAND TRANSPORTATION BY STAR ROUTE SERVICE.

The CHAIRMAN. For inland transportation by star routes, etc., you are asking a deficiency appropriation of $55,000.

Mr. WOOD. This is a deficiency appropriation for the fiscal year 1921. The appropriation was $11,000,000, and we got a deficiency appropriation of $1,363,000.. We underestimated the amount that we would require in the deficiency appropriation, and the actual expenditures have been a trifle over $54,000 in excess of the amount appropriated.

The CHAIRMAN. Why do you ask for $55,000 if the real amount is a trifle over $54,000?

Mr. WOOD. There are a few bills outstanding, and we look for them to come in.

The CHAIRMAN. How does it happen that you do not get your bills sooner?

Mr. WOOD. The explanation of that is that it is a bookkeeping mistake, which has been corrected, and will not happen again. In explanation of this deficiency, I will read an extract from the letter that we wrote to the comptroller of the Post Office Department, or the budget officer, as follows:

In explanation as to why this deficiency was not reported earlier, especially in view of circular No. 38, from the Director of the Budget, it may be stated that a considerable amount of temporary or emergency service was authorized under the provisions of section 1448, Postal Laws and Regulations, which provides for contracting for such service for not to exceed one year without advertising. On a portion of these routes the service was authorized at an indefinite rate and the statistician charged the payments to the appropriations when bills were submitted and ordered paid, while on others a formal contract was made at a specific annual rate, and through a misunderstanding the statis tician failed to charge those against the appropriation, when authorized, as should have been done, with the result that when the statement was made in response to the request in circular No. 38, the records did not indicate a deficiency, and it was only when your office called attention to the fact that the appropriation was exhausted, that a research was made and the deficiency and the cause thereof was discovered.

The postmasters employed the services in some instances at the lowest rates obtainable, and because of that bookkeeping error the records did not indicate a deficiency.

The CHAIRMAN. That was for 1921?

Mr. WOOD. Yes, sir. That is something that will not happen again.

Mr. MADDEN. I do not know what we can do except to allow a thing like that.

Mr. WOOD. We ask for $55,000 because they say there are probably a few outstanding bills. There are some that we have already discovered. It amounts now to a trifle over $54,000.

The CHAIRMAN. Is it not possible to get these accounts adjusted without this long delay?

Mr. WOOD. We have taken steps to avoid this in the future. The cost of the star route service, I might say for your information, is on the way down.

Mr. SISSON. It might be well to explain how this bookkeeping error occurred, because we might be asked that question on the floor.

Mr. WOOD. The bookkeeping error occurred through the failure of the bookkeeper or statistician to take into account those payments that had been made and that were to be made at the lowest obtainable rate. The postmasters would not report them at the end of the month and they would run on for three or four months, or even five or six months. They would not report those things, and we could not charge them until the postmasters did report them.

Mr. SISSON. These amounts accumulated with the postmasters? Mr. WOOD. Yes, sir.

Mr. SISSON. They were perfectly legitimate allowances and perfectly legitimate expenditures?

Mr. WOOD. Yes, sir.

Mr. SISSON. And by reason of their failure to report them in time you expended the money without knowing at the time what the deficiency was, and when the accounts came in you did not have money enough to pay them?

Mr. WOOD. That is true.

SATURDAY, FEBRUARY 18, 1922.

DEPARTMENT OF STATE.

STATEMENT OF MR. WILBUR J. CARR, DIRECTOR OF THE CONSULAR SERVICE.

SALARIES, CHARGÉS D'AFFAIRES, AD INTERIM.

The CHAIRMAN. I notice that you have a request here on page 97 of the bill for $8,000 for the salaries of chargés d'affaires, ad interim, in addition to the appropriation that has already been made for this class of service for the current fiscal year. How do you happen to increase the expenses under that item?

Mr. CARR. If you will permit me at this point to say it, most of the State Department items in this bill have arisen by operation of law, and with the exception of the $5,000,000 which we have estimated here for Colombia, a payment under a treaty about to be ratified, all of the amounts estimated herein will be equaled by corresponding savings in other appropriations, so that if you appropriate all

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