out cancellation, the notes in their hands until further instructions are received from you. Should you adopt the above suggestions or any similar plan, you will recognize, I trust, the great importance of sending to this point an officer of the Treasury of tried integrity and experience, invested with full authority and instructions to regulate the operations of your department on this side of the river.

I feel a special solicitude that the credit of the Government should be sustained in this department, and I believe it highly important to the interest of the Confederate States that it be so.

This is a country of vast resources, heretofore only partially developed, but, with an ample supply of means in the hands of disbursing officers, I am satisfied the arrangement I have made will result in so full a development that it will become self-sustaining in all the material of war.

I have the honor to be, sir, your obedient servant,

E. KIRBY SMITH,

Lieutenant-General.

SHREVEPORT, LA., June 4, 1863.

Gov. THOMAS C. REYNOLDS, Camden, Ark.:

MY DEAR SIR: Your communications Nos. 1 and 2 have both been received.* I should have written sooner, but for ten days I have been threatened with a bilious attack. Thanks to quinine, blue-mass, and quiet, I have warded it off, and now feel quite well again. The suggestion in your note from Washington [Ark.] is in accordance with my previous determination. General H. [Holmes] was written to May 16:

I do not like to give up the valley of the Arkansas, and the hope of entering Missouri when the events of the war justify, nor will it be ordered except in extreme necessity. You will, however, so make your dispositions that, should the necessity arise, you can move to my assistance with as little delay as possible.

As regards the foundry at Camden, it must be the property of private parties. Major Rhett is expected here daily. When he arrives, the matter will be submitted to him. My policy is to develop and concentrate only at safe points the means for making the department self-sustaining.

I have written to the Secretary of the Treasury in regard to our wants west of the Mississippi. The canceling by depositaries of the notes funded, I find to be a regulation of the Treasury Department. They can, therefore, be reissued instead by orders of the Secretary. I have suggested to him the expediency of having an officer of the Treasury Department at headquarters with extraordinary powers, who shall be at the head of the department west of the Mississippi, and urged the immediate appointing of the necessary officers to carry out the provisions of the tax bill.

General Holmes has been written to by me that "the effects of the partisan and guerrilla warfare now waged in Missouri is only to entail new persecution and misery on our friends there, without advancing the cause one jot or tittle." Both General Price and himself agree with me in this policy.

Our news from the eastern bank of the Mississippi exceeds our most sanguine expectations. General Taylor's position, with Walker's division opposite Vicksburg, cuts off Grant's retreat, and completes the destruction of his command, I hope.

* Not found.