Our Post Office deficit has now increased to over $80,000,000 a year, of
which perhaps $14,000,000 is due to losses on ocean mail and air mail
contracts. The department is making an exhaustive study of the sources of
the deficit with view to later recommendation to Congress in respect to
it.
The Post Office quarters are provided in part by the Federal construction,
in part by various forms of rent and lease arrangements. The practice has
grown up in recent years of contracting long term leases under which both
rent and amortization principal cost of buildings is included. I am advised
that fully 40 per cent could be saved from many such rent and lease
agreements even after allowing interest on the capital required at the
normal Government rate. There are also many objectionable features to some
of these practices. The provision of adequate quarters for the Post Office
should be put on a sound basis.
A revision of air mail rates upon a more systematic and permanent footing
is necessary. The subject is under study, and if legislation should prove
necessary the subject will be presented to the Congress. In the meantime I
recommend that the Congress should consider the desirability of authorizing
further expansion of the South American services.