The gross revenues of the Department for the fiscal year ending June 30, 1850, amounted to $5,552,971.48, including the annual appropriation of $200,000 for the franked matter of the Departments and excluding the foreign postages collected for and payable to the British Government. The expenditures for the same period were $5,212,953.43, leaving a balance of revenue over expenditures of $340,018.05. I am happy to find that the fiscal condition of the Department is such as to justify the Postmaster-General in recommending the reduction of our inland letter postage to 3 cents the single letter when prepaid and 5 cents when not prepaid. He also recommends that the prepaid rate shall be reduced to 2 cents whenever the revenues of the Department, after the reduction, shall exceed its expenditures by more than 5 per cent for two consecutive years; that the postage upon California and other letters sent by our ocean steamers shall be much reduced, and that the rates of postage on newspapers, pamphlets, periodicals, and other printed matter shall be modified and some reduction thereon made. It can not be doubted that the proposed reductions will for the present diminish the revenues of the Department. It is believed that the deficiency, after the surplus already accumulated shall be exhausted, may be almost wholly met either by abolishing the existing privileges of sending free matter through the mails or by paying out of the Treasury to the Post-Office Department a sum equivalent to the postage of which it is deprived by such privileges. The last is supposed to be the preferable mode, and will, if not entirely, so nearly supply that deficiency as to make any further appropriation that may be found necessary so inconsiderable as to form no obstacle to the proposed reductions.