JOHN H. HEISTAND, of Lancaster, Pennsylvania, was the lowest bidder, at $750,000 per annum; but his bid having been subsequently withdrawn, contracts have been made with BEN. HOLLADAY, of New York. for the service between Atchison, or St. Joseph, and Salt Lake City, at $365,000, and with Wm. B. DINSMORE. President of the Overland Mail Company, also of New York. from Salt Lake City to Folsom City, at $385,000, making an aggregate $750,000 per annum. These parties are believed to be able to fulfill their obligations. The contracts are from October 1, 1864, to September 30, 1868; the trips to be made in sixteen days eight months in the year, and in twenty days the remaining four months; to convey through letter mails only, mail matter prepaid at letter rates, and all local or way mails.

Paper and document mails for the Pacific coast are to be carried by sea, via New York and Panama, temporary arrangements having been made for their conveyance, within the sum named in the law of March 25,1864, viz : $160,000 per annum, making the whole expense of territorial and Pacific mails not over $910.000 per annum, or $90,000 less than under the former contract.

In this connection it is proper to add that, from information which has recently reached me, I am apprehensive that the postal service in the Pacific States is not in as good condition as should be desired; and I may have occasion to communicate with Congress upon the subject during its approaching session.

Inquiry has been made of Lieutenant-General GRANT relative to the existing arrangements for supplying our armies with mails, with the assurance of my earnest purpose to co-operate with him in carrying into effect any desired improvements of that service; and I am gratified to learn, from his reply, that the system of receiving and forwarding mails now in operation is entirely satisfactory; and that "our soldiers receive their mail matter with as much regularity and promptness as is possible for armies in the field, and with perhaps as much celerity and security as the most favored portions of the country.

The aggregate postage (sea, inland, and foreign) upon the correspondence exchanged with Great Britain, Prussia, France, Hamburg, Bremen, and Belgium, amounted to $1.399.605 69, being an increase of $174,930 48, as compared with the last year, and $21,458 37 in excess of the largest amount realized in any previous fiscal year. The collections in this country amounted to $881,730 68, and in Europe to $517,875 01; excess of collections in the United States $363,855 67. This result is significant and gratifying, showing a largely increased correspondence with Europe, notwithstanding the civil troubles agitating the country, and the interruption of postal communications with the Southern States.

The amount paid by this department for mail steamship service to and from Europe was $371,740 44-the steamships employed receiving the sea postage on the mails conveyed as compensation for the service. Of this amount the Liverpool and New York and Philadelphia Steamship Company received $202,914 34 for fifty-two outward and fifty-three inward trips between New York, Queenstown, and Liverpool; the Canadian mail packets, $77,175 30 for fifty-three round trips between Portland and Liverpool and Quebec and Liverpool; the North German Lloyd Steamship Company, $16,149 61 for sixteen outward and fifteen inward trips, and the New York and Hamburg Steamship Company, $15,501 18 for thirteen outward and twelve inward trips, between New York and Southampton.

The total postages on the correspondence exchanged with British North American Provinces during the year amounted to $307,371 39, being an increase of $81,628 09 over the amount reported last year, and $129,618 88 over that for the previous fiscal year.

The total postages on the mails conveyed to and from the West Indies amounted to $59,990 18, and the cost of transporting the same to and from Havana and other West India ports was $40,337 03, being $19,653 15 less than the United States postages on the mails conveyed.

The provisions of the 4th section of the act of June 15, 1860, have not been construed by this department as requiring the Postmaster General to allow the

sea and inland postages on the mails conveyed, to all American vessels, but simply as limiting the compensation in any case to that amount.

The United States postages upon the correspondence exchanged with Central and South America, via Aspinwall and Panama, amounted to $14,208 51, all of which was paid to CORNELIUS VANDERBILT for the sea and Isthmus transportation.

The initiatory steps taken to conclude postal arrangements with the colonies of Vancouver's Island and British Columbia, referred to in the last annual report, have not as yet been attended with the success anticipated.

In conformity with the provisions of the act" to authorize the establishment of ocean mail steamship service between the United States and Brazil," approved May 28, 1864, an advertisement was issued inviting proposals for carrying the mails of the United States by a monthly line of first class American sea-going steamships, between a port of the United States north of the Potomac River, and Rio Janeiro, in Brazil, touching at St. Thomas, in the West Indies, and at Pernambuco and Bahia, in Brazil, for a contract term of ten years, to commence on or before the first day of September, 1865, and to date from the day the first steamship of such line shall leave the United States with the mails for Brazil. Three proposals were received for this service, the lowest and the accepted bid being that of the New York, Nuevitas, and Cuba Steamship Company, with THOMAS ASENCIO & Co. and MANUEL J. MORA, of New York, as guarantors for the performance of the required service, at the sum of $240,000 per annum, to be divided equally between the two governments. The act authorizing the establishment of this line of American steamships was the beginning of a new era in the history of our ocean mail service, which is being performed principally by steamers sailing under foreign flag.

There are other ocean routes besides the one to Brazil, which can be safely and profitably occupied by American lines of mail steamers, among which the route between San Francisco, Japan, and China, at present unoccupied by foreign mail packets, is perhaps the most important in a commercial point of view.

Various considerations render it important that the Pacific routes properly belonging to us, should be occupied by American mail steamers, the profits of which with the addition of a small subsidy for the mail service, would justify the establishment of one or more steamship lines, which would be remunerative to the proprietors.

The number of dead letters of every description received and examined during the year was 3,508,825, being an increase of 958,409 over the preceding year, attributable mainly to the return of large numbers of army and navy letters which it was found impracticable to deliver.

During the year there were registered and remailed to their respective owners, as containing money, 25,752 letters, containing an aggregate of $131,611 24, of which number 20,059 containing $104,665 84, were delivered; 4,412 letters, containing $20,485 49, were returned to the department, being addressed chiefly to soldiers and sailors, and persons transiently at places of mailing or address.

NAVAL ORDNANCE.

The Chief of the Bureau of Ordnance (H. A. WISE) makes an elaborate report to the Secretary of the Navy, setting forth in detail the results of the year and the experiments made with new inventions. The growing demands of the navy have been fully supplied; 1,522 guus of different calibres having been manufactured during the year. The present aggregate is not stated in the report. In the rifled ordnance adopted, no changes have been made, except in the introduction of a 60-pounder among the Parrotts. This, as an intermediate between the 30 and 100-pounder, has been found of great service as a chase gun, fully supplying the place of the 50 pounder of Admiral DAHLGREN'S system. It is gener

ally used as a pivot gun, and, as its bore corresponds with that of the army smooth bore 18-pounder, the round projectile of the latter is always available where high velocities are needed at close range.

Bronze howitzers and rifles have been introduced, as the special arınament of many transports of the War Department. As a special gun for long range in chase, the 20-pounder three grooved rifle is preferred, and it now occupies a prominent place in the armament of the double-ender vessels.

ARMAMENTS OF SHIPS OF WAR.

The governing rule in arming our ships of war is to furnish batteries of the very heaviest guns they can bear with safety. Nine-inco guns are generally used for broadside; 10 and 11-inch guns and Parrott rifles on pivot; 15-inch guns for monitors; and bronze howitzers and rifles for boat and deck service in shore. A few of our ships continue to be armed with the 32-pounder and 8-inch gun of the old system, but these will probably give way to the modified guns of similar classes.

The battery of a first-rate ship of war is forty eight cannon and four howitzers, one of the guns being a rifled 150-pounder; that of a second-rate is twentyfour guns, including two rifled 100-pounders and two howitzers; of a third-rate ten guns, including two rifled 100 pounders; of a fourth-rate four guns, including one rifled 20-pounder. The development of the power of ships named in the report as representatives of the several rates is as follows:

These figures express the weight of metal thrown for breaching purposes by the guns at a single broadside in solid shot or shells. Conjoined with these, however, are the destructive agencies of grape, canister, and shrapnel, available at all times in the general course of naval warfare, but especially when used against uncovered masses of men. The effective power of a ship is therefore increased in a very great degree by these auxiliaries, which are common to both rifle and smooth bores, excepting grape, which is not used in the rifles.

PIVOT GUNS.

The decisive power of the heavy pivot gun, strikingly exemplified in the fight between the Kearsarge and Alabama, is dwelt upon in the report, and the following comment is added:

There can be no question with regard to the superiority of the 11-inch guns over the Blakely 120 pounder and the 68-pounder of the English pivot system, either in penetration, smashing effect of the shot, or explosive power of the shells. Hence, although the vessels were nearly equally matched as to tonnage, motive power, and number of men and guns, yet the prepondering influence of calibre, properly disposed in pivot, and coolly and deliberately handled by American seamen, was sufficient to settle the question briefly and most conclu

sively. For the Alabama was sunk in a little more than an hour after the Kearsarge began firing, and the English and French navies were thus taught a lesson in practical gunnery and seamanship, which they will not soon forget.

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The result of this action may therefore be taken as proving, beyond doubt, the wisdom of arming our ships with a mixed battery of pivot and broadside guns, taking due care to place on board of each ship the heaviest and most powerful guns that she can safely carry and manage with ease in all weathers."

QUALITY OF GUNS.

The report claims that it is no idle boast that the cannon of our navy, made exclusively from American iron, are not surpassed by those of any other nation; and this, it is added, "will continue to be the case so long as the enterprise of our citizens is left untrammeled, and full opportunities are afforded for the exercise of their skill in this most important art"

The Fort Pitt foundry, and two others, in South Boston, and Reading. Pennsylvania, have taken contracts for making 15-inch guns. Several other foundries are engaged in making guns of lighter calibre.

EXPERIMENTS.

During the past year experiments have been systematically made, with both shells and shot, from smooth bores and rifles, of all the heavier calibres. The power of the guns belonging to our navy, and in common use in the batteries of our ships, have been fairly tested against both solid and built up plates, and the conclusion reached is wholly in favor of the guns and their solid projectiles--the spherical shot for smooth bores being, however, immeasurably superior to the elongated rifle shot in every form. No manner or thickness of iron or steel armor that could be carried on the hulls of sea-going ships will resist the impact of solid spherical shot, fired from the heaviest calibres of the navy, at close range, with appropriate charges of cannon powder. It was generally accepted an an established fact that it was impossible to cast a spherical shot of large diameter which would be solid throughout. It is now known, however, that it is easy to cast a 15-inch or 20-inch shell which will be perfectly sound and solid from circumference to center of figure, and one of the former has resisted, without breaking, two hundred and twenty-two continuous blows of an eight ton steam hammer.

GUNPOWDER AND NITRE.

The consumption of gunpowder by our squadrons in service, and for experimental practice during the year, required a supply of 1,325,000 pounds of powder and 575 tons of nitre, 500 tons of the latter being domestic, and supplied entirely from the New Haven Chemical Works, the only establishment that has yet undertaken its manufacture for the navy.

The number of mills engaged in the fabrication of powder for the navy has been diminished by one since the last report, so that the only present sources of supply are the works of Messrs. DUPONT and those of the Schaghticoke, Hazard and Union Powder companies. Their product has been quite sufficient to supply the demand, although frequent explosions have occurred to retard their opera tions.

Congress is earnestly urged to make special provision for the encouragement of the production of nitre.

The establishment and maintenance of a thoroughly organized gunnery ship, for the training of officers and men in all the details of gunnery, is earnestly recommended by the bureau.

COMMERCIAL REGULATIONS.

DECISIONS OF THE TREASURY DEPARTMENT UNDER THE TARIFF ACTS. THE following decisions have been made by the Secretary of the Treasury, of questions arising upon appeals by importers from the decisions of collectors, relating to the proper classification, under the tariff acts, of certain articles of foreign manufacture and production, entered at the ports of New York, Boston, &c.:

SIR:

ORGANZINE SILK, NOT IN THE GUM.

Treasury Department, October 5, 1864.

Your appeal, dated September 20, 1864, (No. 2,369.) from the decision of the collector at New York, assessing duty, at the rate of 50 per cent ad valorem, on certain organzine silk imported by you, is received.

You claim

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that the article is subject to only 35 per cent duty ad valorem, as being an unmanufactured article." The organzine silk in question has been washed only, and is in nowise a manufactured article."

The experts of the customs report, in substance, as follows: The article referred to is organzine silk not in the gum; it is a manufacture of silk, and is therefore properly classified as a manufacture of silk not otherwise provided for, and liable, under the 8th section of the act of June 30, 1864, to 50 per cent ad valorem duty.

The decision of the collector is hereby affirmed.
I am, very respectfully,

W. P. FESSENDEN. Secretary of the Treasury.

SIR:

KRUPT'S CAST-STEEL TIRES, AXLES, SHAFTS, &c.

Treasury Department, October 6, 1864.

Messrs. THOMAS PROSSER & SON have appealed from your decision assessing duty, at the rate of 45 per cent ad valorem, under the 43d subdivision of section 3 of the act approved June 30. 1864, on certain articles designated as "Krupt's cast-steel tires, axles, shafts, and other fogings in the rough."

The appellants claim to enter them as "steel in any form, not otherwise provided for, thirty per cent ad valorem," as provided for by the 33d subdivision of section 3. act approved June 30, 1864.

For the reasons given in the decision of this Department under date of Decem ber 23, 1863, on the appeal of Messrs. PAGE, RICHARDSON & Co., I am of the opinion that your decision in assessing duty on the importation of Krupt's caststeel tires, &c., at the rate of 45 per cent, was proper, and it is hereby affirmed. I am, very respectfully,

TO SIMEON DRAPER, EsJ.,

Collector, New York.

W. P. FESSENDEN, Secretary of the Treasury.