his support by the railroad, which is thus far unmolested, and shall endeavor to co-operate with him by every measure consistent with the development of circumstances.

Some hours before daybreak this morning the navy gun-boat Underwriter, which had been placed, at my suggestion, in an advanced position in the Upper Neuse, was boarded by several armed boats' crews, numbering about 200, and after a brief resistance taken possession of. So soon as the fact was made known by some of the crew, who swam ashore, all our guns that could be brought to bear opened upon her, and in a short time she was discovered to be aground and in flames, though whether fired by the rebels or by our own shells is unknown. She is totally destroyed, and, without venturing to fix the responsibility for her capture, I may say that it appears to me utterly inexcusable. By her loss we are left with but two inferior navy boats, the Commodore Hull and the Lockwood, although I have endeavored to supply the deficiency in some measure by arming and manning the dispatch-boat Allison and ferry-boat Eagle, placing two guns upon each.

I. N. PALMER,

Brigadier-General.

Major R. S. DAVIS.

Assistant Adjutant-General.

NEW BERNE, N. C., February 2, 1864

GENERAL: Yesterday, at 3 a. m., the enemy attacked our outposts in large force, and forced them to retire with some loss. At the same time an attack all along the line of the railroad from here to Morehead was commenced, and I have just heard of the fall of Newport, and that the enemy is in possession of the railroad. The attacking force is large, said to be Pickett's division and Hoke's brigade of Early's division, besides a great proportion of cavalry and artillery in all probably four or five times our force here. Last night the Underwriter was boarded, captured, and burned in the Neuse River, opposite Fort Anderson. I am now cut off from the coast and liable to have batteries established on the river at any hour, and thus cut off altogether. My force here is in good heart and all within the intrenchments, and we can make a good fight, but we must have all the force I can get without detriment to other portions of the command. If, therefore, you are not fearful of any disaster to your own command you are directed to send me to this place the two regiments of Connecticut troops lately sent to you, and you are directed to request Captain Flusser, or the senior naval officer at Plymouth, to send one or two large gun-boats here to assist in keeping the river open. General Butler has been apprised of all this matter, and I presume he will take some measures to relieve me and to re-establish our old lines. I can hardly think that you can be distributed by any large force while the enemy is working here, and I think that a portion of your force can be directed to this point. The furlough-men will be obliged to wait until this present press is over. We are engaged all around the lines all the time. I expect to make a stout resistance and to succeed in thwarting the enemy. If you think it advisable to send me a thousand of the furlough-men in lieu of the two Connecticut regiments I will let them go (if I remain in