RICHMOND, VA., January 16, 1862.

General MANSFIELD LOVELL,

New Orleans, La.:

One hundred and ninety-five thousand dollars will be placed to your credit to-morrow in Treasury notes for completing the contract for the 75 tons of powder. Make the contract for delivery as soon as possible, and let it be all cannon powder.

J. P. BENJAMIN,

Secretary of War.

HEADQUARTERS DEPARTMENT NO.1,
New Orleans, La., January 16, 1862.

Honorable J. P. BENJAMIN,

Secretary of War:

SIR: In compliance with your telegram, I took possession yesterday of the following steamers, viz: Mexico, Texas, Orizaba, Charles Morgan, Florida, Arizona, William Heines, Atlantic, Austin, Magnolia, Matagorda, William H. Webb, Anglo Saxon, and Anglo Norman-fourteen in all. Captain Huger, of the Navy, who accompanied the party that took possession of the ships, thinks the Atlantic will hardly answer as a war vessel, and I telegraphed yesterday to know whether I should substitute the Galveston for her. After the ships were seized I asked Commodore Hollins to take charge of them until further orders.

In this connection permit me to call attention to Captain Higgins, who lately resigned with a view of fitting out some of these vessels for war purposes under State authority. This seizure puts an end to his business. He is an officer of the old Navy, of experience, skill, and high reputation as a bold and efficient officer. His services would be of great value in assisting to fit out a fleet here and in fighting it afterwards.

I see various reports about the occupation of Biloxi by the enemy. This is a mistake. Some 60 men landed there last week, remained for a few hours, doing no damage, and returned to the fleet. They have no footing on the main shore as yet.

We have here about 500 prisoners of war, who are a serious nuisance. Is there a prospect of exchanging them?

Respectfully, sir, your obedient servant,

M. LOVELL,

Major-General, Commanding.

HDQRS. DEPARTMENT ALABAMA AND WEST FLORIDA,
Near Pensacola, January 17, 1862.

Honorable J. P. BENJAMIN,

Secretary of War Richmond, Va.:

SIR: I inclose you a copy of a letter from an agent in Mobile, who is keeping up pretty constant communication with Ship Island.

No doubt the enemy gain information from our employes, but as they get the same anyhow in spite of us, we lose nothing by employing even doubtful agents.

The first report of the enemy's strength was no doubt exaggerated, and it may be a portion of their force is on some marauding expedition.

Should Burnside's force join them a demonstration may be made