the functions it is expected to perform are exhibited in the letters of Lieutenant-General Smith to me, and instructions over my signature in pursuance thereto, also transmitted herewith.* Some correspondence is inclosed to show the difficulties and delays incident to the formation of the Texas board.* The programme adopted by the Texas board of exempting from impressment the same quantity of cotton purchased by it was not approved by me. I think the Government should control all the cotton, ad allow none exported, except for her own account, to supply the military necessities of the country and preserve our credit. I see no reason why Texas is entitled to more consideration than other Confederate States who furnished the Government with cotton. It is difficult to imagine any character or combination of circumstances that would have benefited the State of Texas more than the absolute results produced by this war.

Among other steps that were taken by Lieutenant-General Smith to correct abuses alleged to exist in the article of cotton in Texas, an investigating committed was appointed, composed of three officers, instructed to examine closely into cotton affairs on the Rio Grande, and elsewhere in the State; but that report has not yet been made. It would be difficult for me to enumerate the causes which have complicated the cotton affairs in Texas. The policy pursued has been vacillating and the general management exceedingly bad; a variety of agents and numberless contractors appearing in the market at one time brought the Government in competition with itself, and prices were in consequence rapidly advanced; speculation was rife, and great eagerness manifested to invest the currency in an article by which the money could be converted into a sounder character of funds. Selling cotton for gold, buying up Confederate paper at its depreciation, and reinvesting in our cotton, which could be again sent to Mexico, was ascertained to be a profitable business, and led to swindling and bad faith. A system of bogus Government contracts was inaugurated by which the fortunate few obtained permits giving them freedom from molestation. The cotton was invariably carried out, frequently with the use of conscripts as teamsters and other assistance from the Government, the contracts rarely ever filled. The bonds that had been given for their faithful performance had no validity in law, and would have been forfeited if this were not the case. The public service was embarrassed by a failure to receive what the officers were led to expect, and the necessities of the Government compelled the impressment of the cotton of those who appeared on the Rio Grande, without military protection. A species of favoritism was established, which created great dissatisfaction, and continued conflict grew out of the various military orders, which appeared necessary from time to time. To place the whole business under the control of one responsible head, who would control properly, administer impartially, and manage with firmness and decision the whole cotton business of Texas, seemed to be a desideratum.

It is expected that the board composing the Texas cotton office will not be interfered with by military orders; that their policy will be permanent-something which the people can understand and work up to. It is believed that their operations will better supply the army, and remove all ground for fears or complaints from the cotton-growers of the country. The character of the men forming the Texas board is a satisfactory guarantee that the cotton passing through their hands will not only be honestly applied, but judiciously used. Whilst I differ with

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*No inclosure found.

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