There has been quite a trade in contraband stores from this point to the country west of "the swamps," and much of it to Arkansas.

On the 4th instant I stopped several teams bound to Gainesville, Ark., and each carrying from two to four barrels of salt. I am informed that certain parties have made regular trips. This state of affairs could only have occurred through the connivance of the commander of the post, or at least through great negligence.

I have appointed First Lieutenant A. Converse, of Thirty-second Iowa, provost-marshal for this place. I have no fears that contraband trade will be carried on under his eye.

I learn that the rebels are now preparing to carry off large numbers of fat hogs from the counties of Stoddard and Dunklin. If I had 100 mounted men, I could send an infantry force as a nucleus, and could gather in much of this stock, thus distressing our enemy and obtaining supplies for the Government. I will perhaps do so, or attempt it, as it is, at the earliest practicable moment.

It strikes me that an active force could occupy a central position near Chalk Bluff, on the Saint Francis, and save the counties of Stoddard, Scott, Mississippi, New Madrid, Cape Girardeau, and nearly all of Dunklin and Pemiscot from the ravages of the rebels. An important advantage would be that they would draw most of their subsistence from disloyal men.

It is said that Jeff. Thompson was at Four Mile, Dunklin County, eight days since, and made a speech to his followers. He is represented as being now without a command, and on a stealing expedition.

As far as I can learn, the settlers out through and beyond the swamp are more of them loyal than in this section.

This statement embodies the material facts in my possession. I might add that, only for the delay in removing the troops from this place to Numbers 10, the rebels would most likely have been in possession. I learn that they were counting on such a state of facts.

Very respectfully, your most obedient servant,

JOHN SCOTT,

Colonel Thirty-second Iowa Infantry, Commanding Post.

HEADQUARTERS DISTRICT OF MINNESOTA,
Madison, December 6, 1862.

Brigadier-General ELLIOTT,

Commanding Department:

About 11 o'clock on the night of the 4th instant, the guard around the Indian prisoners at Camp Lincoln were assaulted by nearly 200 men, who attempted to reach the prisoners, with the avowed intention of murdering the condemned prisoners. Colonel Miller, commanding, warned previously of the design, surrounded the assailants and took them prisoners, but subsequently released them. Colonel Miller informs me that large numbers of citizens are assembling, and he fears a serious collision. I have authorized him to declare martial law, if necessary, and call to his assistance all the troops within his reach. He thinks it will require 1,000 true men to protect the prisoners against all organized popular outbreak. He will have nearly or quite that number, but it is doubtful if they can be relied on in the last resort.

Please telegraph the facts to the President, and ask instructions.

Any hour may witness a sad conflict, if it has not already occurred.

H. H. SIBLEY,

Brigadier-General, Commanding.