REPORT OF THE POSTMASTER GENERAL. : POST OFFICE DEPARTMENT, SIR The condition and operations of this department, for the fiscal year ended June 30, 1862, are shown in the following report. I also suggest therein some modifications of the existing postal laws for the improvement of the service. FINANCIAL CONDITION. It gives me much pleasure to report a great improvement in its financial condition, as compared with several preceding years. The gross revenue for the year ending June 30, 1861, was $8,349, 296 40, which embraced the revenue from all the southern States for a large portion of that year. Notwithstanding the cessation of revenue from the so-called seceded States during the last fiscal year, the increase of correspondence of the loyal States has been such as to produce a gross revenue of $8,299,820 90, or only $49,475 50 less than was derived from all the States of the Union in the previous year. The expenditures show a still more favorable result. In the fiscal year 1861 the gross amount expended was $13,606,759 11. In the fiscal year 1862 the expenditures amount to $11,125,364 13, showing a decrease of $2,481,394 98 in the expenses as compared with the last year, and of $3,749,408 76 as compared with the fiscal year 1860. The deficiency in the department for the fiscal year 1861 was $4,551,966 98. The deficiency for the fiscal year 1862 is reduced to $2,112,814 57, including among the receipts in both cases the standing treasury credit of $700,000 for free mail matter. APPOINTMENT OFFICE. DUTIES. The appointment office not only has supervision of the appointment and regulation of all postmasters, and the establishment and discon tinuance of post offices, but also the distribution of blanks, wrapping paper, and twine to all post offices; the supervision of pay of clerks in post offices; of allowances for furniture of post offices; of extra allowances to postmasters under the acts of Congress; of the appointment and pay of special agents, route agents, local agents, and blank agents; and of baggage-masters in charge of mails; of the foreign mail transportation and foreign correspondence, together with some other miscellaneous duties. NUMBER OF POST OFFICES. The whole number of post offices remaining established on the 30th June, 1862, including the suspended offices in the insurrectionary States, was 28,875, showing an increase, as compared with the preceding year, of 289. Of these, 426 have the rank of presidential appointment, and 28,449 are filled by appointments of the Postmaster General. Their classification by States is shown in the appendix, (No. 1.) CHANGES IN 1862. The whole number of cases acted upon during the last fiscal year is 7,785; and the number of postmasters changed, from all causes, during the year, is 7, 102. The number of resignations has been unusually large, owing to the patriotic disposition of these officers to engage personally in the military service of the country. Further information touching the classification and location of post offices, and the changes made in different States and Territories, will be found in the tables (Nos. 2, 3, 4,) appended to this report. POSTAL AGENCIES. At the close of the preceding fiscal year, 1861, the number of special agents employed regularly in the service was 16, whose salaries amounted to $26,500. At the close of the fiscal year 1862 the number was 15, reducing the amount of salaries to $24,900. I have since discontinued another agency, reducing the number to 14. But I also employed, under the late act of Congress, three temporary agents, at a salary of $1,200 each, only two of whom continue in the service. They are appointed from time to time for short periods, and to meet special exigencies of the service. My last annual report stated the number of route agents in 1861 at 392. The number on the 30th June, 1862, was 377. That branch of expenditure has been thoroughly revised, resulting in a reduction from the preceding year of $22,026. The number of baggage-masters appointed in charge of mails has been increased from 50 to 74; but owing to a revision and equalization of their pay, the total expense has, at the same time, been reduced from $6, 180 to $4,815. The total reduction in rates of pay of the several classes of mail agencies, as compared with the rates of the previous year, appears to be $25,663. The details of these changes appear in an exhibit appended to this report, (No. 5.) FOREIGN MAILS. The civil troubles agitating this country have caused a large reduction in the amount of foreign postages accruing during the last fiscal year. The table (No. 6) appended to this report shows the details of the service between this and the several foreign postal departments. The total reduction in receipts from foreign postages is $217,940 88. PAYMENT OF FOREIGN BALANCES. Under existing arrangements the payment of balances is made at the cost of the remitting country. A more just arrangement would require the department receiving payment to pay the exchange, if any, as a charge of remittance, the collecting country standing rather as an agent collecting the balance to be remitted at the cost of, and in the manner directed by, the beneficiary. I have directed a correspondence upon this subject for the purpose of establishing that principle of adjustment. Under the present system this department suffers a net deduction from its own domestic revenues to defray the cost of its remittances to foreign departments of the balances due to them. I trust a more equitable arrangement may be established by a mutual effort for a just principle of settlement. It is also apparent that the prevailing arrangement operates to the detriment of the prepaying country, wherever postmasters and post office expenses are paid by commissions upon the amount collected; for our estimated commission of 40 per cent. goes to cover expenses in this country, while we remit the entire amount to the creditor country, which, so far as it has the same system, makes the entire collection without any of the expense it would incur if the collection was made at home. It thus renders the post payment of postage of pecuniary advantage to each country having the system of defraying expenses by commissions. In effect, it costs this department (approximately) $40,000, besides the premium for exchange, to collect and remit every $100,000 of balances due to foreign countries. To correct the inequality of this system, I am ready to adopt the rule of absolute prepayment of all foreign postages, where such prepayment is practicable; or, in the alternative, to agree upon a precise abatement of a percentage upon the ascertained balances, as the estimated equivalent of the cost of collection. I am also willing to adopt the general rule of remitting balances under direction and at the cost of the creditor department. STATISTICS OF THE FOREIGN SERVICE. The total cost of the United States transatlantic mail steamship service during the year was $319, 393 94. Of this amount $33,509 701 was earned by American steamers, performing five outward and seven inward passages, for the sea and United States inland postages; and 285,831 23 by foreign steamers, performing 138 outward and 135 inward passages, for the sea postage only. The aggregate amount of postage on the mails exchanged with the British North American provinces during the year, was $177,753 51; of which $95,123 33 was collected in the British provinces, and $82,630 18 in the United States. Excess in favor of the British provinces, $12,493 15. The United States postages on the West India mails amounted during the year to $50,956 60; of which sum $41,546 28 have been paid to the owners of the steamers performing the service to and from Havana and other West India ports. The mails have also been conveyed by steamships to Key West and New Orleans for the postages, as compensation for the service; four outward and two inward trips having been performed between New York and New Orleans from May 28 to June 30, 1862, at a cost of $1,304 21; and one inward and three outward passages between New York and Key West, from May 31 to June 30, 1862, at a cost of $942 40. The mails to and from Mexico having been forwarded and received by way of Havana, the United States postages thereon are embraced in the amounts reported for the West India mails. The correspondence between the United States and Central and South America, including also Acapulco, Mexico, has been regularly conveyed by the California line of steamers via Panama, under an arrangement made with Cornelius Vanderbilt, esq., he receiving the United States postages thereon as compensation for the service. The cost of this service amounted during the year to the sum of $17,912 91. POSTAL TREATIES. Postal conventions have been concluded with the governments of Mexico and Guatemala, respectively, copies of which are annexed, (Nos. 7 and 8.) MEXICO. The convention with Mexico was negotiated by our minister to that country, approved by the Senate, and finally proclaimed by the President. Its provisions are very simple, establishing a sea rate of postage between the two countries, both for letters and printed matter, to be collected and retained by the country despatching the mails, in addition to its regular domestic rates, and the country receiving the mails is to levy and collect its regular domestic rates on delivery, thus avoiding any postage accounts between the respective post office departments. It makes no provision, however, for establishing and maintaining a line of packets for the regular transportation of the mails between the two countries. GUATEMALA. The convention with Guatemala was negotiated and concluded between this department and the postal authorities of that repub |