Embarrassment to creditors has also arisen in New Orleans from the following circumstances: Captain Hollins, without the knowledge or authority of the Department, without acquainting it with his actions, and when no appropriation existed for meeting the payment, made contract for ordnance and ordnance stores amounting to about $500,000. The amount of these contracts was for a long time unknown to the Department, and information of their extent was first acquired through the contractors themselves. The navy agent and an officer sent especially for the purpose were instructed to ascertain their amount, and an estimate was submitted to Congress and an appropriation obtained to pay them at the earliest possible moment thereafter, and on the very day I received the act of Congress I made a requisition for the funds, and they have been placed in New Orleans to meet all demands which have come to hand.

The statement of the Committee of Safety as to the amount of indebtedness is totally incorrect. No such amount as from $600,000 to $ 800,000 has been outstanding, and if the Treasury Department has sent to the disbursing of this Department the money for its requisition of March 1 for $300,000 they have funds in hand more than sufficient to meet every cent due by the Department and of which it has any knowledge. I annex copies of my letters to the Treasury Department,* and herewith return the communication of the Committee of Safety.

I am, respectfully, your obedient servant,

S. R. MALLORY,

Secretary of War.

RICHMOND, VA., March 6, 1862.

A copy of the foregoing report was forwarded to the Committee of Safety, by the President's direction, by his private secretary, as soon as received.

BURTON N. HARRISON,

Private Secretary.

HDQRS. DEPARTMENT ALABAMA AND WEST FLORIDA,
Pensacola, Fla., March 8, 1862.

Captain THOMAS W. BRENT, C. S. N.,

Pensacola, Fla.:

SIR: The naval storekeeper in Pensacola was informed on the 4th instant, by my direction, that the naval stores in Pensacola should be removed to the interior and those now 15 miles out of town could remain where they are for the present. All the transportation at my disposal has been for some days and is now required to move troops and military stores to points where they are needed. I suggest, therefore, that you put such naval stores now in Pensacola as you can on the steamer Time. They can be placed on her while she is at the wharf in Pensacola, and continue to perform the service she is now engaged in. If it becomes necessary to evacuate this place (and I trust no such necessity will arrive), the captain of the Time has been ordered to run his boat as far up the Escambia as possible. At present and for some weeks it is believed that he can run her to within a few miles of the State line, to a point within a mile or two of the railroad. From that point the naval stores could be moved to the railroad for transportation elsewhere if necessary. The stores 15 miles from Pensacola should be moved

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* Not found.

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