admiral opposite Bayou Sara, with the Hartford, the Albatross, and the ram Switzerland, all well; that the Yazoo expedition was reported as abandoned; that our troops had left the immediate vicinity of Vicksburg and gone to some point above; that the Lake Providence Canal had proved a success, and that General Grant would co-operate with me opposite Bayou Sara with 20,000 men about the 1st proximo. This force he tells me is to come though the Tensas, black, and Red Rivers. I have sent Mr. Gabaudan back third morning with a dispatch to General Grant, of which I have the honor to inclose a copy for your information, and which I have requested him to commit to memory and destroy. General Augur will send a cavalry force across the river to facilitate Mr. Gabaudan's return.

If the iron-clads now reported to be engaged in the reduction of charleston are sent here after the termination of that affair, as they may well be, I think in any event we will take Mobile. If Grant sends me 20,000 men we will take Port Hudson.

I received this morning at extract from Special Orders, No. 123, of the 16th ultimo, from the Adjutant-General's Office, transferring Key West and the Tortugas to this department. By the Fulton, leaving New Orleans on the 14th, I shall send an officer to Key West to communicate with the commanding officer there and obtain information as to the condition of affairs in that district. Brigadier-General Woodbury has not yet reported to me.

I would respectfully request that the postmaster at New York may be instructed to make up the ail for my headquarters in a separate bag, so as to avoid the delay, sometimes of two or three days, incident to its distribution in New Orleans; and that these bags may be sent by the regular steamers instead of by Government transports, which stop at New Berne, Pot Royal, Key West, and other points, and are delayed attach. A week or ten days' delay more than counterbalances any pecuniary saving that may be involved in sending our dispatches by public transports.

I respectfully ask attention to a matter that will soon become of great importance to the interests of he Government in this Department. The terms of our nine-months' men begin to expire in May. In August all will have expired. We shall thus lose twenty-two regiments of infantry. this will leave us, in the whole department, exclusive of Key West, concerning which I know nothing as yet, and of the negroes, but thirty-six regiments of infantry, and an effective force reporting for duty less than 20,000 men of all arms. With this force we can hold New Orleans and the La Fourche - possibly Baton Rouge - but we cannot move an inch or even hold any success that we may gain by our present operations. Not an hour should be lost in forwarding to this department the men who are to replace the nine-months' levies.

I respectfully suggest that a copy of this dispatch and its inclosure be sent to Major-General Grant by a special messenger, and that I may be informed of the purport of the latest advices from him.

I have the honor to be, general, very respectfully, your obedient servant,

N. P. BANKS,

Major-General, Commanding.

Major General H. W. HALLECK,

General-in-Chief U. S. Army, Washington, D. C.