[Inclosure.]

(Extract from dispatch of Lieutenant Colonel William Pfaender, commanding Second Sub-District to Captain R. C. Olin, assistant adjutant-general, District of Minnesota, dated fort Ridgely, Minn., January 12, 1865.)

Patrolling over the entire line of outpost is kept up three times a week, and the troops are supplied with rations to the 1st of March. The health of the command is excellent, the number of the sick in hospital at this pot from all the troops in the sub-district ranging from eight to twelve. There are at present seven lodges of Indians (mostly women and children) at and near Yellow Medicine, who have come across from Fort Thompson and beg to be allowed to say until the severe weather is over. A party of Indians who have been trapping on the Big Sioux have left, and there are now only two small parties reported to be this side of the James River, the whereabouts of whom I hope to fine out within a short time, and shall act according to circumstances.

Most respectfully, your obedient servant,

WILLIAM PFAENDER,

Lieutenant-Colonel, Commanding.

WASHINGTON, D. C., January 19, 1865.

(Via Cairo and New York.)

Major-General CANBY,

New Orleans:

It is reported by General Sherman that Beauregard has gone to Mississippi to bring against Sherman the remains of hood's army. If so, you and Thomas can easily operate in Alabama to destroy the railroads and supplies of the enemy. If not, a demonstration on your part may prevent Hood from re-enforcing Charleston. General Grant, therefore, directs that you will prepare all your available forces for a campaign against Selma or Montgomery, moving from Pascagoula, Mobile Bay, Pensacola, or such other point on the Gulf as you may select. Mobile would seem the best, if it can be captured without too much delay. Should you select that point the Navy Department would probably be able to send you such addition vessels and monitors as you might desire. When once started the troops should move light and very rapidly, living as far as possible on the country. It is believed that there are abundant supplies at Selma, Montgomery, Columbus, and in all the adjacent country. If General Thomas cannot move in time to co-operate with you, it is General grant's intention to send you a part of Thomas' troops and leave him on the defensive. I have directed that you be furnished immediately with cavalry remounts. You will send your requisitions to the depot at Saint Louis and also to the bureau in Washington. You will communicate with General Thomas in regard to his co-operation, but General Grant directs that your expedition be organized whether General Thomas gets ready to move or not. The lieutenant-general directs me to say that ho does no regard General Granger or General Hurlbut as proper for the chief command of the expedition.

H. W. HALLECK,

Major-General and Chief of Staff.