Appropriations. 1903. 1904. $20,000.00 25,000.00 For compensation to clerks at division headquarters. The estimate is $48,500. The committee have allowed $46,800, which is the amount of the appropriation for the current year. 1903. 1904. Appropriations. $27, 300.00 46, 800.00 For pay of rural letter carriers, and clerks in charge of substations. The estimate is $15,000,000, from which an allowance of $12,500 is recommended for compensation to clerks in charge of substations of rural service. The amount recommended is $20,180,000, or $5,180,000 more than the estimate, and $8,180,000 more than the appropriation for the current year. For incidental expenses of the rural free-delivery service, including collection boxes, furniture, satchels, straps, badges, maps, etc.-The estimate is $250,000. The committee recommend the sum of $150,000. The appropriations and expenditures for the entire rural free-delivery service, since its inauguration experimentally, have been, including deficiencies Total amount recommended by the committee for the support of the rural free-delivery service for the fiscal year 1905, $20,773,700, EXPENDITURES IN DETAIL, 1903. The expenditures of the postal service for the year are shown, by .items, in the following statement: Transportation of mails on railroads Compensation to postmasters. Free-delivery service Compensation of clerks in post-offices. Railway mail service Rural free delivery. Transportation of the mails on star routes Railway post-office car service...... Transportation of foreign mails... Rent, light, and fuel for first, second, and third class post-offices... offices. Mail-messenger service.... Transportation of mails-regulation, screen, or other wagon service. Manufacture of stamped envelopes. Transportation of mails on steamboats Mail depredations and post-office inspectors... Transportation of the mails, electric and cable cars Manufacture of postage stamps.. Registered package, tag, official, and dead-letter envelopes. $36, 230, 833. 75 21, 631, 724.04 19, 338, 785.46 17, 141, 735.96 11, 229, 135.59 8, 013, 046.50 6,606, 233. 14 5,034, 082.32 2, 430, 003.91 2,363, 589.95 VIEWS OF THE MINORITY. To disagree with other members of the committee in the conclusions reached on an important bill, carrying the necessary supplies for a great Department of the Government, may not be a gracious thing, and is certainly not a pleasant thing to do; but we feel it our duty to call to the attention of the House the circumstances under which, as matters are at present governed in that Department, the supply bill must necessarily be framed, and likewise to call to the specific attention of the House the condition of affairs in the Post-Office Department. Every reasonable and adequate facility that can be secured in the postal service for the benefit of the people under wise and economic administration of the Department should be granted. The administration of the Post-Office Department should be liberal, but not profligate. Congress should not permit the Department to enter upon every new scheme which may be proposed by those designing to make profit from dealing with the Department. Nor, on the other hand, should it prevent the Department from experimenting with new inventions and improved appliances in postal matters, which may result, as has often been proven, of great benefit to the postal service. But such innovations should not be entered upon without due regard to the result alike on revenue and improvement of service. The Department is entirely relied upon for estimates. The committee hears proof from the persons interested in making the estimates, and often on their own showing, as in this particular bill, it becomes necessary to reduce the estimates many thousands of dollars. There seems to be no means of information under the present system except that furnished by those who expend the appropriation. In a great department like this, possessing as it does many different bureaus under different chiefs, we too frequently find a rivalry between the different bureaus as to which can most rapidly increase its importance and obtain the greatest appropriation. For a committee to rely entirely upon estimates furnished by bureau chiefs thus vieing with each other it seems to us is unsafe and unbusinesslike, yet without further knowledge than information obtained exclusively from officials who make the expenditures Congress is compelled practically to abdicate its functions in favor of the Department and become merely clerks to record their decrees. The Department seems to be likewise impressed with the belief that the service can be maintained only by a continual increase of salaries, hidden under the nomenclature of promotion, and an increase of salary in any branch of the service, whatever inequality may be existing there, seems to call immediately for estimates from all other branches for a corresponding raise, thus continually impoverishing funds and absorbing the revenues without commensurate returns. HR-58-2-Vol 4-26 25 It is easy for a member of the House to say that the Department knows best about these things and that we had better leave it to them. It is our business to know why it is that public money should be paid out. We can justify an appropriation on the ground of public good alone. Departmental officers are purely administrative officials and it is their duty to obey the will of the people as expressed by their Representatives in Congress. If we have no discretion and provide no means of information for ourselves, but defer to their will, the wrong is ours. Why should we permit conditions in the Department to exist which make it practically impossible to approximate by many millions the amount that the annual administration of this service should cost? We know what it does cost. We should know just what it ought to cost. The House passed a resolution recently directing the PostmasterGeneral to furnish to this committee at their request the report in the matter of the investigation of the frauds in the several divisions of the Post-Office Department. This report was necessary for the use of the committee in framing the pending appropriation bill. It discloses a startling corruption in the divisions investigated and a method of doing business naturally conducive to fraud. We reproduce the conclusion to this report: CONCLUSIONS. For the purposes of this report, the investigation ordered by you on March 7 has been completed. In the preparation of cases for trial where indictments have been found information may be secured which will necessitate further investigation and possibly involve persons not now implicated. More than 40 inspectors have been employed upon this work, some of them continuously every day since the investigation began. The records of a thousand postoffices have been examined and the files of many divisions of the Department, covering a period of from six to ten years, scrutinized. The system of organized corruption that has been disclosed began in 1893 and continued until stopped by this investigation. The amount of money secured by the corrupt officials and their confederates is small as compared with the total loss to the Government. To illustrate: There is no evidence that Louis received any compensation from Ault & Wiborg, yet during the first year of his administration the expenditures for canceling ink increased over $10,000. It does not appear that Kempner received money from the manifold company, yet the cost of manifold supplies increased more than $40,000 a year. Barrett received but $6,000 from Arnold, yet that company defrauded the people out of over $3,000,000. Machen probably did not receive more than $26,000 from the Groff fastener. Yet the Government has paid approximately $130,000 for that device, which represents a net loss, since the Department continued, by the terms of the contract for letter boxes, to pay for the original fasteners. Beavers and his associates received less than $20,000 from the automatic cashier. Yet the Department expended $74,275 for this wholly unneccessary machine. The total amount that the perpetrators of these frauds themselves received can not be definitely learned, but it will aggregate between $300,000 and $400,000; while the loss to the Government, considering the unneccessary supplies that have been purchased and the inferior quality of those furnished by fraudulent contractors can not be estimated with any degree of accuracy. As the gross abuses have been brought to light they have been promptly corrected by the proper departmental officers. Contracts, where fraud has been discovered, have been annulled. As a result of the investigation, four officers and employees of the Department have resigned and thirteen have been removed. Forty-four indictments have been found, involving thirty-one persons, ten of whom have been connected with the postal service. Attached to this report is a list of those who have been separated from the service by resignation and removal; also a complete list of the indictments and the persons involved. I can not speak in too high praise of the industry and intelligence of the inspectors and their loyalty to the interests of the service. The success of the investigation is largely due to them. They have sought the truth with eagerness and skill. No accounts have been too intricate for them to unravel, no labor too burdensome to undertake. Under the immediate charge of Chief Inspector William E. Cochran they have worked in perfect accord. A list of the inspectors who have been employed on the investigation is attached to this report. The results of the investigation demonstrate that all traveling agents of the Department, such as assistant superintendents of salaries and allowances, of the free delivery service, the railway-mail service, and the registry system, and inspectors should be placed under one organization. A number of changes should be made in the organization of the Department in order to provide a more perfect check on the operations of various divisions, and some restrictive legislation affecting the divisions of salaries and allowances, of rural free delivery, and possibly others, may be necessary. What the service most needs, however, is honest, intelligent, and vigorous administration. The corruption disclosed is not due to lax laws, but to the dishonesty of those who have been charged with the responsibility of administering them. In closing, permit me to express my most sincere appreciation of the cordial support I have received from you during the progress of the investigation. The hearty Cooperation of First Assistant Postmaster-General Wynne, whose Bureau has been so largely involved, and of Assistant Attorney-General Robb has been of great value. Respectfully submitted. The POSTMASTER-General. J. L. BRISTOW, Fourth Assistant Postmaster-General. This investigation was confined largely to one division of the PostOffice Department. It is impossible to say whether or not the same corrupt methods obtain in the other divisions. The business intercourse between the divisions of the Post-Office Department, all under one head, make it probable that the fraud and corruption confessedly attached to one of the divisions exists in some measure in other divisions of the same service. Whether this be true or not, some system of checks as between the divisions should be devised, so that fraud could not so easily be accomplished. In view of the interesting report mentioned, and of the hearings, and of the detailed proof furnished by the Department to the committee of improper conduct of post-office officials, and of the charges against other divisions of the Department, and the imperfect methods of obtaining facts as to the conduct of affairs in that office, it would seem to be the part of wisdom that the House should proceed to a full and complete investigation of the Post-Office Department in all of its branches, for the betterment of the service, the prevention of fraud, and the general protection of the public interest. Bad systems and public plunderers too often afflict the administration of public affairs. To their eradication no one should object. So far as frauds committed and disclosed are concerned, their investigation for the most part is now a matter for the courts of justice to consider. We are concerned alone in devising means to prevent the repetition of similar frauds and ascertaining the extent of the weakness of our postal system and providing an adequate remedy against it. Impressed with the justice of these general views as applicable to existing conditions in the PostOffice Department, they are submitted for your consideration, with the recommendation that there be a full and complete investigation of the affairs of the Post-Office Department under a committee of Congress. JOHN A. MOON, J. M. GRIGGS, THEO. F. KLUTTZ. |