HDQRS. DISTRICT OF INDIANA NORTHERN DEPARTMENT,
Indianapolis, Ind., August 16, 1864.

Captain C. H. POTTER,

Assistant Adjutant-General, Columbus, Ohio:

CAPTAIN: I have the honor to make report of the condition of affairs in this district:

1. THE BORDER.

On Saturday Colonel Johnson seized three steamers loaded with Government cattle, and crossed a portion of his command into Illinois, between Shawneetown and Mount Vernon, Ind. Sunday following, I sent the Forty-sixth Indiana by the first train, and upon the dispatches of General James Hughes, commanding the militia of Southwestern Indiana, I made requisition upon Governor Morton for 2,500 militia, and sent the Forty-sixth Indiana to Evansville and Mount Vernon. On the 15th I sent the Thirty-second Indiana (just returned from the front), having still ten days to serve; interdicted all communication with the Kentucky shore, between Evansville and Louisville, without permission of the commandants of those posts, and shall send the Forty-ninth Indiana as soon as rendezvoused, if the danger continues. Meanwhile, I advised Governor Yates, Generals Burbridge and Ewing. General Hobson has moved from the line of the Louisville and Nashville Railroad. General Paine starts to-day from Paducah. For two days no steamers have passed up without being fired upon; but the main purpose is to crush their organized forces, and take care of the guerrillas afterward. The Forty-sixth started by steamer from Mount Vernon, under convoy of a small gun-boat, to rescue the steamers. I have just received a telegram that there was heavy firing near Mount Vernon yesterday, and that the steamers were turned over to their owners for $1,000 ransom money. This may be premature, but is from General Hughes. I have no official report from Colonel Bringhurst, commanding Forty-sixth Indiana, since he left Mount Vernon.

2. LOCAL MATTERS.

This day was selected as the day to seize the arsenals here and liberate prisoners. The trains last night were all larger than usual, with many rough men upon them. Nineteen wagons started from Anderson to travel by night, and others from other towns within FIFTY miles of the city. I was advised of every movement, and had such patrols in the country that no surprise could be effected. This afternoon prominent Democrats, property-holders, assure the State officials and myself that the Sons of Liberty will certainly make the attempt to-night or within a few days. The property- holders are alarmed, and promise to aid in their exposure. The course of the State Sentinel is so incendiary that law-abiding Democrats dare to defy it. The leading Democrat who called to-day, long a prominent member of Congress, Mr. William H. English, though requesting that his name be unknown in the matter, informs me that the arrest of a few of the leaders would soon quiet the whole matter. Governor Morton will be back to-morrow night, I think, and I will advise with him. There would be some local excitement, perhaps riot, but as will be seen from my letter already mailed this morning as to the draft, that there can be no relaxation of the vigilance and omnipresent grasp of the Government, if trouble is to be avoided. Here everything is quiet, the large number of strangers being at the out-