800 rebels, mostly mounted, under command of Colonel Clarkson. The engagement took place about 4 miles below Prestonburg.

The enemy succeeded in capturing the boats, not, however, until after 14 or 15 of them had been killed, and they had killed 2 of the Thirty-ninth. They took away and destroyed from 50 to 100 stand of arms, about 300 suits of fatigue uniforms, 7,000 rounds of ammunition, a small lot of commissaries, 1 tent, and 2 push-boats. A considerable portion of the articles with which the boats were loaded have since been recovered, the enemy in his hurry not taking time to destroy them. The boats were loaded at Catlettsburg by the assistant quartermaster of the Thirty-ninth, by orders of Colonel Dils, without my knowledge or consent. I was not aware that they contained either arms or clothing until since their capture. Learning after they had started that there was a possibility that they might be captured, after they reached this point (which took seven days), I sent a guard with them from here to Peach Orchard, at which point they said Colonel Dils was to send a guard to meet them. I sent a company of cavalry, with instruction to scout the surrounding country, especially toward Logan, Va., to ascertain if there was any danger. I ordered them to guard the boats beyond Peach Orchard, or until they should meet the guards sent by Colonel Dils, which they did, when they returned, and reported no enemy in striking distance.

Information was afterward received that an effort would be made to capture them, which was communicated to the adjutant and quartermaster who were in charge, and they advised to drop back to Peach Orchard, and there await Colonel Dils' arrival; after which they received an order from Colonel Dils, stating to them that he was in daily communication with the country through which they would have to pass; that there was no danger, and for them to press ahead as fast as possible. Owing to the low stage of water, they were unable to make more than 4 or 5 miles per day.

Colonel Dils' regiment, as you are aware, is as yet unorganized. He claims that he is independent, and not subject to any authority, except the military powers of Kentucky.

As soon as I heard of the capture, I started out 350 cavalry to pursue them, if possible to form a junction with the forces of Colonel Dils, and drive them out or give them battle. I have not yet heard from the cavalry, but learn that Colonel Dils, with most of his command, is at Paintsville, and will fall back to Peach Orchard.

Owing to the scarcity of forage and the difficulty of getting supplies, I have yet brought only a part of my force to this point. I have not cavalry sufficient to do that amount of scouting which seems to be necessary in this district.

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

J. CRANOR,

Colonel, Commanding District of Eastern Kentucky.

Major N. H. McLEAN,

Assistant Adjutant-General, Department of the Ohio.

No. 2. Report of Colonel John N. Clarkson, Virginia State Line Cavalry.

HDQRS. FIRST BRIGADE, VIRGINIA STATE LINE,
Camp at Mouth of Pond Creek, Pike Co., Ky., December 7, 1862.

SIR: In obedience to your instructions, I proceeded with my command,