Whether the necessities of General Steele's line require this fine body of cavalry, I am not prepared to say, but according to my best information, there can be no force below him which would require this cavalry.

The evident concentration of the rebel forces in Georgia renders this project a thing of assured success, as Davidson has about 7,000 fine cavalry and 20 pieces of artillery.

I submit the proposition to the consideration of the general commanding the army.

I am, colonel, your obedient servant,

S. A. HURLBUT,

Major-General.

HEADQUARTERS SEVENTEENTH ARMY CORPS,
Vicksburg, Miss., December 8, 1863

Major General S. A. HURLBUT,

Comdg. Sixteenth Army Corps, Memphis, Tennessee:

GENERAL: Your in relation to the caution necessary to prevent an accumulation of stores and the consequent carrying on of more or less contraband trade is at hand. I have endeavored, as far as possible to prevent this, and have given very few permits to bring down goods for sale, though repeatedly solicited to do so. I have, however, given a number of permits to persons to purchase in Memphis and other places, subject to the regulations of the Treasury Department, articles for their own family use, chiefly ladies and children's wearing apparel. I do not permit any men's wearing apparel or boots and shoes to go out of the lines. I am satisfied, however, that there is more or less contraband trade carried on along the river, and at least one-half the wood-yards are established with a view to this and to speculate in cotton.

I do not know how much difficulty you are having in Memphis, but I am having considerable in my jurisdiction on the cotton question, and the schemes going on the evade the orders and regulations are numerous. My opinion is that one of the two things should be done, viz: Let the Government take all the cotton and pay to loyal citizens a fair price and allow no private individual to purchase through the country, or else open the doors to honest men as well as rogues, for under any restrictions which may be imposed the latter class thrive the best and have free competition.

The orders of course prohibit the buying of cotton north of Helena in this department, but permit well-disposed persons to ship to New Orleans or Memphis, for sale on their own account, such cotton as they may be the bona fide owners of, &c. Dishonest men take advantage of this to carry on their operations in various ways, one of which is to bring, or rather send, in persons to get permits to ship, who probably do not and never did own a bale of cotton, but who are ready to swear that they own it, and will bring witnesses to testify to the truth of their assertions. I detected two or three such schemes and seized the cotton. I understand Colonel McDowell is coming down as Treasury agent, with full instructions, and I am rejoiced to hear it, for I want to get rid of the business altogether.

Truly, yours,

JAS. B. McPHERSON,

Major-General.