NAVY DEPARTMENT,

Richmond, March 31, 1863.

Hon. JAMES A. SEDDON,

Secretary of War:

SIR: I have the honor to inform you that all the naval officers have this day been detached from the Harriet Lane, and Lieutenant Commander J. N. Barney has been directed to turn over that vessel to General J. Bankhead Magruder. You will please instruct General Magruder to receive the vessel.

I am, respectfully, your obedient servant,

S. R. MALLORY,

Secretary of the Navy.

HDQRS. DIST. OF TEXAS, NEW MEXICO, AND ARIZONA,
San Antonio, March 31, 1863.

General S. COOPER,

Adjutant and Inspector General C. S. Army:

SIR: I am here en route to the Rio Grande, where affairs have assumed a threatening aspect, as you will perceive from the inclosed correspondence between Brigadier-General Bee at Brownsville and Governor Lopez at Matamoras.*

I have this moment received a copy of a letter from the Secretary of War, dated January 20 [or 10], 1863, to Lieutenant-General Holmes, countermanding the order of the letter in relation to the restrictions on the cotton trade, and of course repealing my orders on the same subject, printed copies of which were sent by me about a mouth since to Richmond. These instructions from the War Department may take it necessary for me to fall back from the Rio Grande and give up that frontier to the enemy from the difficulty of supplying the troops there except through the means of cotton. I feel assured that this result could not have been contemplated by the honorable Secretary of War, and I therefore hasten to Brownsville to examine into the state of affairs personally before taking steps which may lead to such disastrous results. The loss of the entire trade would be the immediate consequence of the withdrawal of the troops from the Rio Grande.

Col. E. J. Davis, of the Federal Army, a Texas renegade, arrived at the mouth of the Rio Grande with 300 or 400 men and landed on the Mexican side. I have reason to believe that he brought with him some 2,500 saddles and bridles, and intended raising the border people and occupying the frontier. I was enabled to anticipate this movement and to defeat it only by the excellent arrangements for supplies made by Major Hart, quartermaster and Government agent for the purchase of supplies by means of cotton. He had pledged the faith of the Government for he payment of these supplies, and if this pledge is not redeemed these supplies will not be forthcoming. I could not have maintained my position there but for him. The price of cotton at Houston has gone up 10 cents, as I am informed, since the rumor has gone abroad of these instructions, and the Confederate notes will be so far depreciated that a fear I cannot depend upon cotton brought with our money to bring me supplies for my troops on the Rio Grande. I will of course seize cotton of individuals on the Rio Grande and use it

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*The Letters-Received Book, Adjutant-General's Office, indicates that there were twenty inclosure, but they be identified.

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