HOUSTON, TEX., December 16, 1862.

N. CLEMENTS, Esq.:

DEAR SIR: If you will deliver the whole 20,000 stand of arms, as per arrangement, I will allow you a profit of 150 per cent. on the same.

Respectfully,

S. HART,

Major, and Quartermaster, C. S. Army.

Upon which I made the following indorsement:

MONTEREY, MEX., November 22, 1863.

The contract entered into between Mr. Clements and Major S. Hart, quartermaster, C. S. Army, and approved by Major-General Magruder, provides for the payment of 100 per cent. advance on 20,000 stand arms. This contract is dated the same day that above letter was written, and the letter not being approved by the commanding general, I am not authorized to allow a greater advance than specified in the contract, but will refer the matter to Major Hart.

CHARLES RUSSELL,

Major, and Quartermaster.

Had the 20,000 stand of arms been delivered this letter of Major Hart would have entitled Mr. Clements to &30,000 in addition to the amount he had voluntarily proposed to deliver them for, on the same day Major Hart proposed to pay him 150 per cent. in place of 100 per cent., as provided in the contract. It is to be presumed that Major Hart had some good reason, doubtless beneficial to the Government, but as he failed to express it, I did not feel authorized to allow the claim. These arms cost in England, according to invoice rendered, &21 each; the expenses, transportation, &c., together with 100 per cent. advance, would make them cost the Government between &50 and &60. A sample gun, of the same quality precisely, was shown me in Matamoras, which cost but &7 in England.

I mention these instances (and the same proportion is applicable to almost every contract made) to show you that under the contract system we have to pay from 300 to 400 per cent. higher for an inferior article than the same or a better could be purchased for in open market by an officer having no object in view but the discharge of his duty.

I have on several occasions while on duty in Brownsville seen contractors purchasing goods in Matamoras, on a credit based entirely upon the faith of the Government, at enormous prices, upon which they received an advance of 50 to 100 per cent., payable in cotton, with all charges reimbursed, when an officer of the Government could have discharged the same duty, made better selections, and at lower prices, thus saving to the Government the profit paid to speculators. I would, therefore, respectfully suggest, in lieu of the contract system, that a bonded officer, familiar with the wants of the army and the character and quality of supplies required, be assigned to duty at Matamoras, whose duty is shall be to fill all requisitions, as far as practicable, made upon him by the chiefs of the different departments, approved by the department or district commanders, and submitted to the cotton bureau for their revision, or to provide cotton in payment; that he shall be the sole purchasing agent at that place, and act in concert with the cotton bureau. I am satisfied a much better class of goods will be purchased at much lower prices, and delivered with greater certainly. Of course you would require a man of business qualifications and character, who would inspire confidence in his intercourse with merchants. Apply the same rule to the purchase of articles in any other foreign market-that is, send an officer in place of a speculator-and we will receive 100 arms where we do not now receive one.