The President’s message of February 22, 1912, reached me a few hours after the closing chapters of this volume had gone to the printers. With it arrived a copy of the Postmaster General’s report for the year ending June 30, 1911; also notice from a Congressman friend that he will have the Hughes Commission’s report on the way shortly. The Man on the Ladder, like Lucy, when selecting her spring bonnet, desires the “very latest creation.” It may not be essentially necessary in a discussion of Federal postal affairs, but even a hurried reading of the President’s message and the report of Postmaster General Hitchcock will furnish abundant evidence that expressed official opinion is somewhat ephemeral and transitory, like the styles in ladies’ headwear. I have never had the pleasure of retaining a lady’s unanimous friendship for any appreciable length of time after giving her my honest opinion of the style of her most recently acquired bonnet, and readers who have followed me thus far in my consideration of government postal affairs will have discovered that my respect for “style” in official oratory and literature needs coaching.

All that aside, however, the point is that I have persuaded my printers to “break galley” just here and permit the insertion of a chapter, having as subject the “very latest” in official postal affairs.
THE PRESIDENT’S MESSAGE.

In his Washington Day effort our smiling President is profusely loyal to the characteristics of his style in composition—plumage and displacement. Mr. Taft, however, should set up no claims of originality of design in Executive messages. Several of his predecessors presented the people of these United States with numerous displays of verbal plumage and trimmings. So our President had many working-models as guides in building the message upon which we shall proceed to comment.

This message, both in architectural specification and in contour or ensemble, is largely but a re-trim of the “block” furnished by Mr.[230] Hitchcock in his report, under date of December 1, 1911. In considering the President’s message and the report of the Postmaster General, we may, then, shorten our task somewhat by treating the two public documents as one. They, of course, differ in phrasing and wording, but the language of the message is only a sort of Executive “Me-too” approval of what Mr. Hitchcock says in his report, save on one point—the taking over of the telegraph companies by the government. That point we will discuss separately, presenting the argument of the president against the proposition and the facts presented by Postmaster General Hitchcock:

“It gives me pleasure to call attention to the fact that the revenues for the fiscal year ending June 30, 1911, amounted to $237,879,823.60 and that the expenditures amounted to $237,660,705.48, making a surplus of $219,118.12. For the year ending June 30, 1909, the postal service was in arrears to the extent of $17,479,770.47.”

Well, yes, certainly. It gives us all pleasure to see a surplus grow where only deficits grew before—gives us great pleasure. Still, Mr. President, you will permit us humbly to say that it has been a distressful winter and that here, the very last of February, the ground is still frozen hard. You, of course, will recall that our Postmaster General, at intervals during the last fiscal year, as opportunity for “interviews” offered, gave us confident assurances that his department was harvesting a surplus, ranging in amount from one to three million dollars. These assurances beyond our expectations—our hopes—led us to an elevation which makes it a far fall to $219,118.12. Of course, it is our fault. We should not have permitted our hopes and expectations to become so altitudinous. But Mr. Hitchcock has a very persuasive delivery and the public press quoted him so numerously and so prolixly that we climbed on and on up—away above the one and some of us well on towards the three million level and—well, as before said, the ground being frozen, a drop to $220,000 jars us some considerable in alighting. Mr. Hitchcock probably framed up his mid-year interviews to fit observed conditions, the best he knew how. Most of us will soon be out of the hospital and in condition to take an inflation for another flight. Some of the less venturesome among us may be over-careful not to soar too high, but our tank capacity remains about the same. So the Postmaster General may meter nearly the same amount of rhetorical gas to us without fear.[231] The President might, however, if he thinks it would not occasion any unseemly discord in rendering the grand symphony entitled “Administrative Policy,” give us folks some information on the following points—points raised by a reading of the Washington Day message and of the 1911 report of the Postmaster General, both of which are before me, as I write. Of course this is the President’s busy season and he may not be able to devote as much time to our enlightenment as he would like to and otherwise would. In that event, he may turn the subject over to Mr. Hitchcock and request him to separate himself from a few interviews to clear these matters up for us.

In each annual report of the Postoffice Department I have at hand (1907 to 1911 inclusive), there appears an item which reads, “Expenditures on account of previous years.” For the years indicated, the figures on this item of expenditures are as follows:
1907     $  303,045.55
1908     823,664.64
1909     586,404.69
1910     6,786,394.11
1911     7,132,112.23

As figures are always more or less of a serious nature, we will here drop the personal element in discussing these points on which information is desired, and much needed, if public press notices can be at all depended upon as informative. Of course “figures do not lie.” Still, it is generally known that, however truthful they may be in correct calculations, they sometimes appear very peculiar, if not queer, in tabulations. Some persons have even gone so far as to assert that “official figures” have frequently been so arranged and manipulated as to “conceal the facts.” Now, the figures for that item, “Expenditures on account of previous years” may conceal no facts which the public has any right to know. Still, there is something about them which irritates one’s bump of curiosity; that is, if one’s bump is not abnormally dwarfed or stunted. At any rate, it appears from press comment that those figures have sand-papered or otherwise frictioned several bumps of curiosity into a state of irritation. It is the hope of securing some official light that will act as a linitive or demulcent to my own and other bumps that persuaded those figures into evidence here.

What do those figures mean? Are they of any real informative value or merely convenient things to have around when building the[232] sub and superstructures of a department annual reports, like the figures of the postal deficits? A glance at the sums named in the table shows a variableness that amounts almost to a waywardness in totaling bills or accounts payable. The federal fiscal year ends June 30th. The annual reports of the Postoffice Department bear date December 1st—full four months after the close of the fiscal year. Surely four months is sufficient time to gather into account the bills payable or carried-over obligations of a previous year, is it not? Of course the business of the department is a large business—over $237,000,000 last year and about $260,000,000 is asked for this year in the appropriation bill recently passed by the House. But that is no reason whatever for failure to account for amounts ranging from $300,000 to $6,200,000 of unpaid bills of the business year in which the obligations were created; especially not, when publication of the accounting is made four months after the close of the year.

This item of “expenditures on account of previous years” becomes no more understandable, if indeed it does not become more suggestive of purposeful manipulation, when one looks over the itemized or segregated expenditures of the year. The items of expenditure are all of the conventional character used in business accounting—operation and maintenance—such as service salaries, transportation of the mails, rents, light, fuel, supplies, repairs, etc. And these are all set down as expenditures of and for the fiscal year’s business covered by the report, there being not even a suggestion that any part or portion of the total is an expenditure of the previous year—of any previous year.

So much for the detail of expenditures as published in the reports. From the summaries of receipts and expenditures one gathers no additional light. In the reports of the Third Assistant Postmaster General (division of accounts), one finds only the bald item, “Expenditures on account of previous years,” down to the report of Third Assistant, James J. Britt, for the year ended June 30, 1910. For that year Mr. Britt segregates the item as follows:
Services for the fiscal year, 1909     $6,721,058.52
Services for the fiscal year, 1908     53,814.12
Services for the fiscal year, 1907     108.97
Claims, fiscal year, 1907 and prior years     11,605.44
Claims, fiscal year, 1906 and prior years     25.00
Total for prior years     $6,786,394.11

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Anyone taking the trouble to add the five amounts given above, will discover an error of $217.94 in the total. While that error is only a trifle, its appearance, however, in the addition of but five items is not highly commendatory of the ability of Mr. Britt’s expert accountants. The making of such an error in totaling only five entries has a tendency to arouse doubt or suspicion as to the reliability or dependability, not only of the footings given for the longer tabulations published in the report, but also of the footings which must necessarily have been made to secure the totals which are entered as items in such tabulations. Be this as it may, very few persons, aside from clerks paid for doing the work (and, possibly, an official or two whose duty it is or should be to see that the work is done accurately), will go to the trouble to verify even the footings of the published tabulations. So the errors, if any have been made, are not likely to become subject matter for much adverse criticism.

My purpose in presenting the showing of the 1910 report on that item of “expenditure on account of previous years” is to make the statement that, so far as I have been able to look up the matter, it is a first weak attempt to make public in the annual report the accounts and claims carried over from a previous year or years and published as expenditures of the year to which they are carried. I desire the reader to note, also, that of the total of “expenditures on account of previous years” ($6,786,612.05 as above corrected), all but $65,553.53 is set down as expenditures for the year immediately prior—for 1909.

Now, the business of the Postoffice Department is a cash business—wholly so in the matter of receipts and nearly so, or should be, in the matter of expenditures. This being the case, that item entered in the published annual reports as “expenditures on account of previous years” must consist largely of payments made on account of the year immediately preceding the year covered by the report. As just shown by the published analysis of the item in the 1910 report, the expenditures on account of prior years other than the one just preceding are so small (only $65,553.53 in a total of $6,786,612.05), that they may be ignored in the attempt I am shortly to make, to show that the item we have been considering—“expenditures on account of previous years”—has such dominance in the department’s method of accounting, as evidenced in its annual reports, as to materially affect the deficit or surplus showing.

[234]

First, however, I desire to call attention to another point or two relating to this item of expenditure.

A glance at the tabulation made of this item shows a huge jump in its amount for the year 1910 of $6,200,000, round figures. Next, it appears that the necessities of business, or the emergency needs of those building the report, forced this item still upward in the showing for 1911 as made December last—upward by $345,718.12, making its total $7,132,112.23. In the report before me, no analysis of that large carried-over payment on account of prior years is given. The Third Assistant Postmaster General may furnish information as to the year or years of its origin. His report has not reached me yet, so I cannot say. The bald statement is there, however, that 1911 paid over seven million dollars on account of 1910 and prior bills. It is also in evidence that no information whatever is published which enlightens the public as to the amount of unpaid 1911 bills that are carried forward to 1912 account.

Whether adverse criticism is justifiable or not, such cloaking of accounts in giving them publicity most certainly warrants it. It is just this cloaking that has subjected Mr. Hitchcock’s little vest-pocket surplus for 1911 to much and merited criticism, doubt and question. Mr. Urban A. Waters, in testifying before the House Committee on Civil Service Reform harpooned the Postoffice Department with an accusation that it had permitted a million dollars to waste, evaporate, be misapplied or stolen, in connection with a deal for sanitary and safety appliances to railway mail cars.

If Mr. Waters’ charges are grounded in fact, then is provoked and invited the question: Is it designed or intended to carry that million into the accounting of 1912—or into that of some future year—as an “Expenditure on account of previous years?”

Mr. Waters is publisher of the Denver Harpoon. He can say things and is generally recognized as a man who makes a practice of gathering the facts to back up what he says before he says it. In his testimony, so far as I know, Mr. Waters made no statement or suggestion that the evaporated million he spoke of would be, or could be, very securely cacheted or “fenced” in this “account of previous years.” It is The Man on the Ladder who points out—who says—that such loose accounting as carries to account of a subsequent year the[235] expenditures made or incurred in a previous year can very readily be made to cloak a steal of one or more millions of dollars.

Then, there are those rural carriers who refused to do as Mr. DeGraw, Fourth Assistant Postmaster General, told them to do. You read the papers of course, and—you believe them, of course, though most of you say, “Of course, I don’t believe ’em.” Well, it was broadly published that the Rural Free Delivery News had the temerity to publish—not merely to insinuate, mind you—that Mr. Hitchcock’s showing of a little $220,000 surplus for the year ended June 30, 1911, was made possible only by the failure of the Postoffice Department to make a plain, valid charge of $7,201,149.64 expenditures for that same fiscal year of 1911!

Those are not the exact words used in giving publicity to the asserted fact by the Rural Free Delivery News, but that is the meat in the nut the publication cracked. It appears that the published statement was closely contiguous to the facts. At any rate, its nestling juxtaposition to the truth was such that it appears to have neither looked nor listened well to the department. There is a presidential campaign on the speedway at this time, with all its usual concomitants of cackle, clack, cluck and other atmospheric disturbances. Such a published truth—if truth it is, and it certainly displays a marked resemblance in both form and feature to that article so extremely rare in campaign clutter—the appearance of such a truth on the speedway has a tendency to “blanket” some candidate or jockey him into the fence. With a view no doubt, to guarding against such possibility, that machine so much used in recent years to smooth down the rough places in administration roadways was turned onto the track. A hostile opposition, always somewhat harsh and careless in its language, calls it “the steam roller.” So the steam roller, with Fourth Assistant Postmaster General DeGraw at the wheel and manipulating the levers, rolled out among the rural carriers.

But it appears that it did not roll over them. There are forty-odd thousand rural carriers and, of course, it would have to be some “steam roller” to mutilate or seriously dent the ranks of so numerous a body of men; especially of men who travel about with the fragrance of the clover blossom and the corn bloom in their nostrils. They just wouldn’t be rolled and, it is reported they so informed Mr. DeGraw in very polite and easily understood language. They would[236] not demand of the publisher of their association organ that he retract and, to date, the Rural Free Delivery News has, so far as I have seen, shown no sign of either intention or inclination to back away from or in any way modify its charge which, in effect, was that the showing of a surplus—of even a little “runabout” surplus of $220,000 for the fiscal year of 1911—is a “faked” showing—a showing made possible only by carrying $7,201,149.64 of 1911 expenditures over to 1912 account.

May the Rural Free Delivery News live long in the land and flourish.

In a letter just received from Mr. W. D. Brown, editor of the R. F. D. News, he says: “When the Postoffice Committee submitted its report on March 6, it contained the statement that instead of a surplus in the postal revenues there was, up to that time, a deficit of more than $600,000.00 and I am satisfied that the amount will be greatly increased before the end of the current fiscal year.”

In the News of January 27, the issue to which Mr. DeGraw took exception, Editor Brown publishes a letter he wrote under date of January 11, 1912, to Mr. Charles A. Kram, Auditor of the Postoffice Department. He also publishes Mr. Kram’s reply. In comment on the reply, Mr. Brown says: “Auditor Kram’s reply throws very little light upon the subject, except to establish the fact that it is impossible to say at any time, whether the Postoffice Department is being conducted at a profit or a loss.”

Next comes Congressman Moon, an admitted authority on postal affairs and Chairman of the House Committee of Postoffices and Post-Roads.

I see by a press notice that Mr. Moon, in speaking to the question before his committee recently, stated that there was a “deficit of $627,845 for the fiscal year of 1911” in the Postoffice Department, instead of a surplus of $219,118.12, as published in its report, and over which Mr. Hitchcock and President Taft display so much luxuriant jubilation.

We have probably presented sufficient testimony to evidence the fact that the figures presented by our Postoffice Department are numerously, if not unanimously, doubted among people who take upon themselves the trouble and the labor of looking into them. True, the three or four witnesses we have introduced do not agree[237] as to the amount or magnitude of the shortages or discrepancies they have found, nor have they said, just where in the loose, bungled accounting they found the discrepancies. However, my purpose here is to show only that publicity of such bungled accounting does not enlighten or inform the public and that the practice of charging the expenditures of one year to account of the next may easily be made to cloak and cover up much wasteful if, indeed, not dishonest expenditure. That being the case, the disagreement of our witnesses as to the amount of dollars and cents they severally have found to be mislaid, or not properly accounted for, can make little difference in the conclusion forced by their testimony on any fair, inquiring mind.

But, it may be argued by apologists for such misleading practice in accounting or by persons who would plead extenuating conditions for Mr. Hitchcock and others charged with administering federal postoffice affairs, that this loose, fraud-inviting practice is of long standing, that the present administration has not had time to correct and remedy the faulty practice and that the published showing of current years is correct, because it is made on the same basis as was the accounting for many previous years.

All very well said, but it does not answer. Hoary-headed age in loose, falsifying methods of accounting neither commands respect nor can stand as reason or excuse for continuing such methods. It most certainly has no warrant as argument in extenuation for the continuance of such methods by the present administration.

“Why?” Well, there are several reasons. Mr. Hitchcock, it appears, has been aware for some two years or more that the practice we are here discussing was a questionable one, even if he was not fully informed as to the dangers—the waste, the fraud, the crookedness—which that practice might easily be made to cloak. Yet he has not only continued the practice, but, it would appear has further indulged or encouraged its growth. Let us look at the published evidence on this point.

A reduced deficit in the showing of the Postoffice Department for the year 1910 was somewhat evidently desired. To that end, the practice we are criticising charges 1910 with $6,786,394.11 for expenditures “on account of previous years,” all of which, save $65,553.53, as previously shown, were expenditures made on account of the year 1909.

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Now, in a footnote to page 278 of the 1910 report, Third Assistant Postmaster General Britt presents a somewhat confusing, if not confused explanation of his showing of the “Revenues and expenditures” for the year. One statement in the explanation, however, is resonantly loud in its clearness.

“On the other hand,” says Mr. Britt, “expenditures made in the first three months of the fiscal year, 1911 on account of the fiscal year 1910 and prior years are not included in the reported deficit for the year 1910. The amounts are approximately equal.”

I italicize that last statement. Let’s see: 1910 was made to pay (in accounting only, of course), $6,786,394.11 of 1909 and prior expenditures and, in an exchange, as simple as swapping Barlows, $7,132,112.23 of 1910 expenditures are shunted onto the year 1911!

“The amounts are approximately equal,” says Mr. Britt.

Well, the difference is only $345,718.12—a mere trifle, of course, in a shuffle of millions. But if that trifle had been added to the 1910 expenditures, where it rightly belonged, the 1910 deficit would have shown up a trifle over instead of a trifle under six million dollars, as given in the published report—a very important matter along in the closing days of 1910.

Then, too, when our President and his Postmaster General so warm up to a surplus of $220,000, it is possible, if not probable, that a trifle like $345,000 might have been a convenience as a deficit reducer in December, 1910.

On page 19 of Mr. Hitchcock’s report, he presents the following as one of thirty “Improvements in Organization and Methods” accomplished by the Postoffice Department during the year ended June 30, 1911:

A change in the financial system whereby the surplus receipts of postoffices throughout the country are promptly centralized at convenient points for the purpose of meeting other postal expenditures incurred during the period in which the surplus receipts accrued, thus paying the expenses of the service from current receipts and obviating the necessity of applying to the Treasury for a grant to meet an apparent deficiency in postal revenues when, as has happened in many instances, no actual deficiency exists.

Now, that is certainly an “improvement” worthy of all commendation. If, as stated, it provides for “Meeting other postal expenditures incurred during the period in which the surplus receipts accrued”[239] it certainly should prevent “an apparent deficiency … when … no actual deficiency exists.”

But why, then, is it reported that over $7,000,000 of expenditures for the year ended June 30, 1910, are charged to the fiscal year 1911? The report bears date December 1st, 1911—four months after the fiscal year 1911 closed. If the receipts of postoffices throughout the country are “promptly centralized” for the purpose of meeting current expenditures, it would require super, if indeed not supple, expertness in accounting to figure out a surplus of $220,000 for a year’s business which assumes over seven millions in unpaid bills of a previous year without, apparently, knowing what amount of unpaid bills can be shunted onto the next year.

But, it may be argued, there is nothing inconsistent in Mr. Hitchcock’s claim as just quoted, of an improvement in the department’s system or methods of accounting which makes, or should make, unnecessary the carrying over to 1911 so large a sum for expenditures made in or an account of the year 1910. While the improved methods have been introduced, it may be argued that insufficient time has elapsed, even to December 1st, to admit of their application in making up the fiscal report for the year 1911. In short, that the improved methods were introduced so late in the fiscal year 1910 that the resulting betterments in the system of accounting could not be shown in the report for 1910-11.

Yes, that possibly might be of some weight in considering this claimed improvement in the accounting methods of the department. There is, however, one serious objection to its acceptance as evidence in this case—evidence in proof that there was not sufficient time to make the improved methods operative in the showing for the fiscal year 1911:

(5) The adoption of improved methods of accounting by which the surplus or deficiency in the postal revenues is approximately determined within three weeks from the close of each quarter, instead of three months thereafter, on the completion of the audit of postmasters’ accounts.

(6) The adoption of an accounting plan that insures the prompt deposit in the Treasury of postal funds not immediately required for disbursement at postoffices, thus making available for use by the department several millions of dollars that, under the old practice, would be tied up in postoffices.

In his 1909-10 report, Mr. Hitchcock sets forth fifty “improvements” in methods of handling and conducting the business of the[240] Postoffice Department—improvements made prior to June 30, 1910, mind you. Well, the foregoing quotation presents numbers 5 and 6 of the enumerated 50 “improvements” that were set up as having already been instituted—instituted prior to June 30, 1910. Beyond saying that the department has certainly had ample time to install and make operative the improvements in methods of handling its business and of accounting, which its published reports claim to have been made, comment is unnecessary. If the improvements, as twice claimed in the two annual reports from which I have quoted have been made, then, it is pertinent to ask: Why was over seven millions of 1909-10 expenditures carried to 1910-11 account?

Such a showing excuses another question—excuses it because it invites the question:

What amount—how many millions of dollars—of 1910-11 unpaid bills and claims was carried over to become a charge against the fiscal year 1911-12?

Oh, yes, I am fully aware that this may be all readily explained by saying that the claimed improvements as set forth have nothing whatever to do with the practice of carrying forward unpaid bills of one fiscal year and making them a charge against the receipts of the next or some subsequent fiscal year.

Such an explanation is easily understood, because it does not explain. That is, it is an explanation which, to be believably understood, requires more explaining than do the faults and crooks in the method of accounting it attempts to explain.

That the “fumbling” of this carrying-over practice needs correction—needs abolishment—will be seen from a glance at the two following tabulations. That the practice also makes the departments’ annual showing of the results of the business of the year—any year—almost valueless is also made evident—that is, valueless so far as real, dependable information is concerned as to whether the postal service is conducted at a loss or at a profit.

The first tabulation following shows the published figures for the fiscal year’s expenses as given in the departmental reports. It also shows what the expenses of the fiscal years indicated really were, when their unpaid bills (as shown by the next annual report of the department) are charged against them.

The whole charge, “On Account of Previous Years” in each report[241] is treated as a charge against the immediately preceding year. It has been shown that payments on “account of previous years,” as given in the published reports, include for years other than the first or immediately preceding, amounts so small that they may be, for purposes of comparison, ignored.[8]

At any rate, the figures in the following tabulations of expenditures and deficits—accepting the department’s published statements of receipts as correct—are far more enlightening to the general public as to the results of each year’s business, for the five years here covered, than are the statements made in the annual reports of the department for the years named.

The second table shows the “deficits,” or balances for each of the five years as compared with the deficits shown in the annual reports of the department, the corrected figures being subject, of course, to any trifling reduction which may have resulted from the payment of bills carried into the account from some other than the immediately preceding year:

ANNUAL EXPENDITURES OF THE POSTOFFICE DEPARTMENT.
    Expenditures as published.     Expenditures as corrected.
1907     $190,238,288.34     $190,758,907.43
1908     208,351,886.15     208,114,626.20
1909     221,004,102.89     227,204,092.31
1910     229,977,224.50     230,322,942.62
1911     237,648,926.68     230,516,814.45

From the foregoing it will be seen that the corrected figures show a range of variance from the published figures, of over $6,400,000. That is, the corrected figures are some $230,000 below for the year 1908 and more than $6,200,000 above for the year 1910, the showing in the departments published reports.

A similar correction for the year 1911 cannot be made until the department chooses to enlighten the public as to the amount of 1910-11 unpaid bills it has carried forward to become a charge against the receipts of the year 1911-12.

As the account for the year stands above, the surplus for the year[242] 1910-11 is $7,363,009.15—not the comparatively trifling amount of $219,118.12, as published. Of course, if the report shows that 1912 pays $7,363,009.15 of 1911 expenditures, then the paltry surplus for the last-named year may stand as given i............