The fact that immense frands upon the Governments were being, as it was represented to me, accomplished by these various contractors, together with the evil effects of the system both upon the citizens and soldiers of my department, induced me to issue an order to my several district commander abolishing all existing contracts and permits for cotton to pass the lines until further orders; and to further remove the temptations to engage in this traffic, ordered all cotton to be burned in the event of a retreat which would be likely to fall into the enemy's hands. I also ordered a vigorous and implicit obedience to General Orders, Numbers 43. (See inclosure marked A. *) In lieu of all heretofore existing contracts for army supplies, I have established a system of exchange of cotton at 50 cents per point for any supplies at invoice cost, with 15 per cent, added. (See inclosure marked B. +) The advantages of this system are:

FIRST. All supplies will be carefully inspected, and everything but strictly army supplied rejected any cotton is turned over. All goods brought in, not strictly army supplies, will be confiscated according to law. thereby preventing frands in character of goods introduced and preserving the spirit of the law on the subject.

SECOND. The whole system will be under the control of one reliable officers, selected by me on account of his known integrity and capacity, who will attend the inspection of supplies, send reports to me, and make requisitions for cotton required to pay for each delivery.

THIRD. No cotton can go out until I have seen the reports, approved them, and given the permit, which permit will be in the shape of an order to a suitable officer to accompany the cotton through the lines, thus preventing all opportunity for frands in taking out private cotton or more Government cotton than had been earned by delivery of its equivalent in army supplies.

FOURTH. The certainly of prompt and fair settlements under this system will induce partied of means 's lines to embark in the business, get concessions in the enemy's trade regulations, make large deliveries at a time, and break up the petty deliveries os supplies which have heretofore characterized the business.

In this connection I would remark that much of the demoralization referred to had been caused by the fact that contractors for army supplies have made sub-contracts with the old men, women, and children of the country for the introduction of supplies. These parties, attracted by the large profits of the business, dodge the (our) pickets, go into Memphis or Vicksburg, get permits from the enemy to buy small lots of household or plantation supplies, and smuggle them out for the contractors. One or two successful trips tempt their neighbors to engage in the same traffic, either for the Government contractor, or perhaps on private account. Thus in a short time whole communities near the borders have been induced to forget their duty to their country and engage in traffic with the enemy. I consider it a great calamity that the necessities of the army and limited resources of the country render any system of exchanges necessary, and would heartily rejoice in stopping the system I have adopted if supplies can be otherwise obtained. I beg to add that whan I had the honor of meeting the President during his recent visit to the West, I advised him of my action in this reference, both as to stopping all existing permits or contracts for cotton and the system I had determined upon, and it received his approval. As regards impressments, I beg leave to state that I have a

& See Bullock to Forrest, Maury, &c., September 10, Part II, p. 827.

+ Not found.