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ployees. These are needed in the Division of Money Orders for the resumption of the International Money Order Service, placing it on a prewar basis; in the Philatelic Agency, where during the first 7 months of 1946 the number of orders received increased 87 percent; and in the Division of Postal Savings, where deposits have increased over 75 percent in 2 years. The present force is inadequate to maintain current service and to catch up on an arrearage which on January 31 amounted to 34,872 hours, the equivalent of 17 employees for 1 year.

Change page 32, line 20, salaries, Office of the Fourth Assistant Postmaster General, from "$630,000” to “$659,800.” A restoration of $29,800 is requested in this estimate. The estimates for 1947 provide for 15 new positions in the Office of the Fourth Assistant Postmaster General. The funds approved by the House Committee on Appropriations will provide for only four of these positions, three of which will be filled by employees who are absent on military leave and under existing law must be returned to their former positions. These positions were reverted in 1942 because of the curtailment of the Federal building program during the war. Notwithstanding the possible decrease in postal receipts, the work of this Bureau will and has steadily increased to the point that it is impossible without the use of expensive time and one-half overtime to keep the work reasonably current. The increase in work is due in part to the requirements of Public Law 134.

Change page 32, line 22, salaries, Office of the Solicitor for the Post Office Department from “$147,500” to “$170,000.” The present work load in the Solicitor's office is far above the 1945 level and beyond the physical capacity of the Solicitor's present staff. The amount approved by the House Committee on Appropriations, which was a cut of $23,500 in the estimate, will provide for the employment of 39 persons, whereas there was used in 1945 an average of 43 persons. The fraud case work load during the first 6 months of the present fiscal year was five times greater than the corresponding period in 1945. Of the $22,500 cut by the House committee $12,660 is required to restore the personnel to the 1945 level and $9,840 is necessary for additional positions to cope with the increasing work load. The additional positions needed are a hearing officer and trial attorney, with necessary stenographic help.

Change page 32, line 23, salaries, Office of the Chief Inspector, from “$368,000" to "$393,000.” This amount is necessary to provide for an authorized force and make promotions required by law for 129 employees, whose annual salaries will amount to $397,000 per annum. It will not be possible to save the $25,000 cut from the estimates through personnel turn-over in addition to other savings contemplated in the 1947 estimates.

Change page 32, line 25, salaries, Bureau of Accounts, from "$500,000" to "$544,000.” The First Supplemental Appropriation Act, 1945, included $31,269 for 31 additional employees, due to the increase in the volume of business and the work incident to the Penalty Mail Act, for a period of 6 months ending June 30, 1945. The 1946 estimates, which included funds to pay the full annual rate of these employees, were reduced by $30,860 and a corresponding reduction was made in the number of authorized positions requested. Funds for the restoration of these employees were not included in the 1947 estimates. Expenditures for work incident to the Penalty Mail Act in 1946 are being made at the rate of $6,800 and this sum was included in the estimates for 1947.

The report of the committee states that $85,200 of the $500,000 recommended is to provide for 62 temporary employees for about 9 months of the year to complete the retirement records of the employees in the postal service. This leaves the sum of $414,800 for the permanent functions of the Bureau. A further reduction of $44,000 cannot be absorbed in fiscal year 1947 without delaying the examination of postmasters' accounts; the maintenance of retirement records, and other important work of the Bureau.

The present annual rate for 169 employees, including appointment commitments and reinstatement of returning veterans, is $444,290, or $29,490 more than the amount approved by the House for 1947. This is exclusive of three vacancies and eight additional employees requested for 1947, which would increase the present annual rate of $468,040.

There is an increase of 21 percent in the number of reports and accounts to be processed in the Bureau of Accounts in 1946 over 1945 and it is estimated that there will be a further increase of 4 percent in the fiscal year 1947. At the close of business January 31, the work in the Bureau was 26,760 hours in arrears.

Change page 35, lines 1 and 2, post office inspectors, salaries, from “eight hundred inspectors” to “eight hundred and thirty-five inspectors” and “$3,838,000” to "$4,000,000.” This is to restore 35 inspector positions and $162,000 cut from the estimates approved by the Bureau of the Budget. It is estimated that on June 30, 1946, the arrearage of post office inspectors' work will be the equivalent of 289 inspectors working a full year, notwithstanding the fact that they have been working long hours daily, including Sundays. The 35 additional inspectors are needed to permit somewhat shorter hours on Saturdays and Sundays and to prevent a greater increase in the arrearage of working during 1947.

The House Appropriations Committee approved five additional inspectors, but included no funds for their salaries. The report indicates that it is expected that the amount can be absorbed through turn-over, etc. The experience of the Department is that approximately only one-tenth of 1 percent is absorbed in this appropriation through turn-over of personnel. Consequently, it will be impossible to fill the five positions allowed.

Change page 35, line 17, post office inspectors, travel and miscellaneous expenses, from "$960,000" to "$1,014,000.” This is to restore $54,000 which will be needed for travel expenses for an inspection force of 835 inspectors and 15 inspectors in charge.

Change page 35, lines 21 and 22, post office inspectors, clerks, from “three hundred and eighty-nine clerks” to "three hundred and ninety-four clerks” and “$1,073,500" to "$1,113,500.” This is to restore five clerical positions and the $40,000 cut from the estimates approved by the Bureau of the Budget. The five additional clerical positions are needed incident to 40 additional inspectors. The cost of these positions will be $13,500. The remaining $26,500 of the $40,000 cut is required to pay the full-year cost in 1947 for 22 positions allowed for 1946 in the First Deficiency Appropriation Act, 1946, Public Law 269. It is not possible to save $26,500 through personnel turn-over.

Change, page 37, line 2, “Compensation to assistant postmasters," from $11,440,000” to “$12,011,000.” The services of 200 additional assistant postmasters are vitally needed due to the increased financial transactions and added responsibilities during the past few years. At the present time there are 7,945 first- and second-class post offices. Of this number only 3,423, or 43 percent, have assistant postmasters.

Change, page 42, line 13, “Post-office stationery, equipment, and supplies," from "$6,000,000" to "$6,384,000.” The restoration of the $384,000 is to provide sufficient funds to furnish much-needed supplies and equipment to post offices. As is well known, it was impossible to obtain these items during the war. It is in the interest of the economical operation of the service that the restoration of this amount is requested. Providing clerical employees with modern equipment and sufficient supplies is economical in that it enables them to perform their work better in considerably less time, thus resulting in an over-all savings in clerical time.

Change, page 43, line 15, “Rent, light, power, fuel, and water," from "$12,525,000" to $12,825,000.” The restoration of the $300,000 for this item is necessary to provide sufficient funds for full-year payments on obligations incurred in 1946 for allowances for offices advancing to the third class on July 1, 1946 (fiscal year 1947), for the rental of required new postal quarters and for justified increases in the expenditures for rents and utility services for existing facilities.

Change, page 45, line 13, “Operating force for public buildings," from "$37,000,000” to “$37,620,000.” The restoration of $620,000 requested under this item is necessary to fill vacancies which have existed during the war years and to provide for salaries of veterans returning to their positions, and the salaries of employees, for a period of 30 days, in accordance with the law, whom the veterans are replacing.

Change, page 45, line 18, “Operating supplies for public buildings,” from "$6,650,000” to “$6,797,500.” At the time the estimates for the fiscal year 1946 were prepared the amount requested for that year was predicated on prices paid during the fiscal year 1945. Consequently, the available appropriation for 1946 does not appear to be sufficient to meet the requirements for 1946. There is a continued trend upward of prices, which will increase the cost for 1947. It is estimated that equipment in the sum of $13,500 will be purchased during 1946. The estimates for 1947 included $154,040 for equipment due to the fact that equipment necessary in the operation of Government-owned post-office buildings is worn and needs to be replaced. If this is to be purchased, it will be necessary to restore the $147,500 cut made by the House Appropriations Committee.

All other reductions made by the House of Representatives amounting to $16,691,850 are accepted without appeal, and every effort will be made to operate the service within the amounts allowed. This is in view of the fact that the report indicates that the committee understands that in order to move the mail whenever and wherever it is delivered to post offices, the Postmaster General has approval to appoint employees in such numbers, regardless of the amounts of appropriations, as are required to render the service which the Department is bound under the law to render.

The restorations requested in this letter, in my opinion, are absolutely necessary and most important for the efficient conduct of the Department, and I hope it may be seen clear to allow them. Sincerely yours,

(Signed) ROBERT E. HANNEGAN, Postmaster General.

INCREASE IN REVENUES COMPARED WITH INCREASE IN PERSONNEL

Mr. GARTLAND. I would like to present a statement of the number of officers and the employees on the rolls on June 30 of each year since 1935, which shows that while our personnel have increased in the last 11 years 28.13 percent, our revenues have increased 97 percent.

(The document is as follows:)

Departmental personnel servicesComparison of numbers of employees on rol

June 30, the gross postal revenues and the percentage of increase of positions compared with increase in receipts

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Senator GREEN. Do you imply there is a casual connection between the two?

LOW MANAGEMENT COSTS

Mr. GARTLAND. Indeed, we do, sir. And approximately 100-percent increase in revenues has brought our expenditures up considerably, too, and in Washington we have a very small force of men, comparatively speaking, and it is that force of men who have to watch expenditures of over $1,000,000,000.

For instance, the First Assistant has some $800,000,000 of the entire expenditures, and he handles that with a very small force of men. We made comparisons 2 years ago with one of the largest public utilities in the country which is comparable with the Post Office Department. This public utility employs about the same number of men, has the same amount of revenues, and sells its service in small quantities. We had the help of men in that company to make a comparison with the Post Office Department's management costs, and it was found that ours were less than that great public utility which has to operate on a profit basis, not like the Post Office Department.

DEPARTMENT NOT OPERATED ON PROFIT BASIS Senator GREEN. The Post Office Department is operating on a profit basis, too?

Mr. GARTLAND. No, Senator; we do not wish to operate on a profit basis. When we have surpluses in the Post Office Department, it has been the policy of the Deparment and of the Congress to increase postal salaries. The management costs of the Post Office Department in Washington is only 8.4 mills for every dollar expended, which we feel is a very excellent record, especially when private concerns cannot do any better than we do.

Senator GREEN. Would you repeat what you said about profit—what you did with profits when you had unexpected profits?

Mr. GARTLAND. Profits usually go into increased salaries, which at the present time account for approximately 74.70 percent of our expenditures.

Senator GREEN. Then, conversely, if there is a loss, do they come out of the salaries?

Mr. GARTLAND. No; we cannot say that. In 1932, however, when there was a postal deficit of $205,000,000, furloughs were had of postal employees, which brought considerable savings. Then, of course, when our expenditures are low and our revenues high, there is always talk about decreasing postal rates.

ESTIMATED DEFICIT FOR FISCAL YEAR 1946

Senator McCARRAN. Have you a surplus now?

Mr. GARTLAND. During this current fiscal year, 1946, we are estimating a deficit of $55,300,000.

Senator McCARRAN. That is a deficit?
Mr. GARTLAND. Yes, sir.
Senator McKELLAR. How much is it up to date?

Mr. GARTLAND. It is approximately $37,000,000 for the first 7 months.

AMOUNT OF FRANKED AND PENALTY MAIL

Senator GREEN. But there has been much more free mail, has there not?

Mr. GARTLAND. The amount of franked mail, which is the mail sent out by Congress, is negligible. The penalty mail decreased in 1945, 287,000,000 pieces.

Senator GREEN. I was referring to the armed forces.
Mr. GARTLAND. Yes; that is decreasing, of course.
Senator MAYBANK. How about the bureaus?

Senator GREEN. Let us take up the armed forces, if you do not mind.

AMOUNT OF MAIL SENT TO AND BY ARMED FORCES

Mr. GARTLAND. For the armed forces, it was found that they were sending out approximately six pieces per man a week, and they received approximately six pieces per man a week.

Senator GREEN. You mean no mail was lost in transit?

Mr. GARTLAND. Yes; there were many heavy losses in transit, ship sinkings, and other casualties,

Senator GREEN. If that were true, they would not receive as many as we sent.

Mr. GARTLAND. That is true.

COMPARISON OF INCREASE IN REVENUES AND DEPARTMENTAL PERSONNEL

Senator McKELLAR. Let me ask you—pardon the interruptionyou made a statement that something had increased 28 percent and then 97 percent.

Mr. GARTLAND. Our revenues have increased 97 percent since 1935, and the number of people employed in the Department has increased 28 percent.

Senator McKELLAR. The number of people increased 28 percent?
Mr. GARTLAND. That is right.
Senator McKELLAR. And your revenue increased 97.96 percent?
Mr. GARTLAND. That is right.

Senator McKELLAR. Then that did not mean that your profits increased. You worked on a deficit in 1945 ?

Mr. GARTLAND. No. We had a surplus of $162,000,000.

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REASON FOR DEFICIT IN REVENUE FOR 1946

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Senator McKELLAR. Now, you figure a deficit in 1946?
Mr. GARTLAND. Yes; of $55,300,000.
Senator McKELLAR. Why was that, please?

Mr. GARTLAND. The close of the war, of course, brought about a great decrease in mails for our armed services.

Senator GREEN. But those were franked.

Mr. GARTLAND. There was a portion of it franked—I do not recall the exact figures now of the amount that was franked—but we estimated as nearly as we could that we were receiving revenues of approximately $200,000,000 on mail to and from the armed forces.

Senator GREEN. But it cost you a great deal more, because so much of it was franked.

Mr. GARTLAND. If we had received the postage for the franked soldier mail, it would have amounted to $17,900,000.

Senator McCARRAN. Mail going to the armed forces was not franked,

Mr. GARTLAND. Not unless it was mailed by a member of the armed forces.

Senator McCARRAN. But the bulk of it was not franked ?
Mr. GARTLAND. That is right.

Senator McCARRAN. But the mail coming in from the forces was franked ?

Mr. GARTLAND. Yes; with this exception: We found out in their desire to get the mail back to the United States quickly, air-mail stamps were used extensively.

was it?

EFFECT OF PAY BILL INCREASES ON DEFICIT

Senator MCKELLAR. The recent pay bill applied to the Post Office Department had something to do with this increased deficit, did it not?

Mr. GARTLAND. That is right, Mr. Chairman.

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