of the past fiscal year, while the constant
demand of our territorial development and growing population for the
extension and increase of mail facilities and machinery necessitates
steady annual advance in outlay, and the careful estimate of a year ago
upon the rates of expenditure then existing contemplated the unavoidable
augmentation of the deficiency in the last fiscal year by nearly
$2,000,000. The anticipated revenue for the last year failed of
realization by about $64,000, but proper measures of economy have so
satisfactorily limited the growth of expenditure that the total
deficiency in fact fell below that of 1885, and at this time the
increase of revenue is in a gaining ratio over the increase of cost,
demonstrating the sufficiency of the present rates of postage ultimately
to sustain the service. This is the more pleasing because our people
enjoy now both cheaper postage proportionably to distances and a vaster
and more costly service than any other upon the globe.

Retrenchment has been effected in the cost of supplies, some
expenditures unwarranted by law have ceased, and the outlays for mail
carriage have been subjected to beneficial scrutiny. At the close of the
last fiscal year the expense of transportation on star routes stood at
an annual rate of cost less by over $560,000 than at the close of the
previous year and steamboat and mail-messenger service at nearly
$200,000 less.

The service has been in the meantime enlarged and extended by the
establishment of new offices, increase of routes of carriage, expansion
of carrier-delivery conveniences, and additions to the railway mail
facilities, in accordance with the growing exigencies of the country and
the long-established policy of the Government.

The Postmaster-General calls attention to the existing law for
compensating railroads and expresses the opinion that a method may be
devised which will prove more just to the carriers and beneficial to the
Government; and the subject appears worthy of your early consideration.

The differences which arose during the year with certain of the ocean
steamship companies have terminated by the acquiescence of all in the
policy of the Government approved by the Congress in the postal
appropriation at its last session, and the Department now enjoys the
utmost service afforded by all vessels which sail from our ports upon
either ocean--a service generally adequate to the needs of our
intercourse. Petitions have,