CHAP. XI.] CORRESPONDENCE, ETC.-UNION.

HEADQUARTERS DEPARTMENT OF NEW MEXICO, Santa Fe, N. Mex., November 18, 1861.

PAYMASTER-GENERAL U. S. ARMY, Washington, D. C.:

SIR: The military operations in this department have for several mouths past been greatly embarrassed, and are now almost entirely paralyzed, by the want of funds in the pay department. Many of the regular troops have not been paid for more than twelve months, and the volunteers not at all. This has occasioned a great deal of suffering and some dissatisfaction in both classes, and has almost effectually put an end to the raising of volunteers. This condition of affairs, so far as it then existed, was officially reported by me some months since (June 13, 1861), and has since repeatedly, by reports, and estimates, been brought to the notice of the proper authorities.

An unsuccessful attempt was made some time since to borrow money for the Government, and a recent attempt has been made, which promises to be partially successful; but to insure this success, the chief quartermaster and chief commissary have united with me in promising that this money shall be repaid in Treasury notes, bearing 7.3 per cent. interest from the dated of the loan; or, failing in this arrangement, I have personally pledged myself for the interest.

I have the honor to to request that arrangements may be made by your department to redeem this promise. In making this arrangement many of the leading merchants and capitalists of the Territory have pledged their credit for the repayment of the loan.

This arrangement has been made mainly through the instrumentality of the chief quartermaster, Major Donaldson, and but for the confidence reposed in him by the community generally it could not have been made. In addition to this $60,000 have been loaned by the quartermaster to the pay department.

Very respectfully, sir, your obedient servant,

ED. R. S. CANBY, Colonel Nineteenth Infantry, Commanding Department.

HEADQUARTERS DEPARTMENT OF NEW MEXICO, Santa Fe, N. Mex.:

SIR: I have the honor to state, for the information of your excellency, that arrangements are now being made to separate the Navajoes who are known to be friendly and to have acted in good faith from the remainder of that nation, and to establish them in communities where they can be isolated and protected from the consequences of war made upon the rest of the nation. Care will be taken in the selection of these, and in posting troops in their neighborhood, that these communities shall not leave places of refuge for the ladrones. As soon as practicable, troops will be established at the points that are best calculated to watch the approaches from the Navajo country and protect the inhabitants of New Mexico from the depredations of these Indians. By these arrangements and the active vigilance of the troops, it is believed that the persons and property of the inhabitants can be rendered secure until the necessary dispositions can be made for the effectual punishment of this and other Indian tribes now at war with the people of New Mexico.