It is no doubt, as the Indians say,t here is a very large number in the Indian camp who would come in if they could, but the hostile Indians will not let them. I have heard this from many sources. They can leave, it is true, but only as beggars. Their horses and all their property will be taken from them, and I have not the means at my disposal to hold out any inducement to them to do so. I would not propose to support all Indians who come in at Government expense, but to assist them, feed their families a short time, give them a few blankets,a nd lend them a few horses, if they were without them, so that the men could go out an hunt. This country is filled with game, and in a short time they could make enough to support themselves.

If a war of extermination is called for, it will be necessary to shoot everything that wears a blanket; but it would be very expensive, and I know such is not the wish of the Government. The cheapest and easiest way to exterminate the wild Indian is to bring him into a civilized country in contact with the whites (the women would soon become prostitutes and the men drunkards).

Already I have 300 lodges of these Sioux. I do not include Two Bears, fifty lodges. They have taken no part int he troubles, and are looked upon by the hostile nations in the same light as the whites. I sent a small party of them against some few of their own nation who had stolen some of my horses. They pursued them, brought in two scalps and one horse. I mention this to show their sincerity. I have with them two white men as interpreters. I pay them $40 each per month. They live with the Indians and report to me all their actions. Out of this band I have organized a company of fifty soldiers, who remain with the band to keep order in camp. I have issued to them a small amount of clothing-damaged clothing- when I could find it, and some ammunition, and have directed the commanding officers of posts to issue them a few days' rations when they visit their posts. i have fifty soldiers in the same way among the Yanktons, who have been of very good service to the Government this year. I have directed the band of friendly Yanktonais to furnish me fifty more man as soldiers, who, with their squaws, will move to Fort Rice and regiment here this winter. They will report to the commanding officer, and be used by him as pickets and scouts. T hey will erect a stockade outside the fort in which they will pitch their lodges. i have directed that two rations be issued each soldier, and a small amount of ammunition, only when they require it. These Indian soldiers, besides being of great use to give information in case hostile Indians are near, will serve well as a nucleus or place of refuge for such of the friendly Sioux as escape fromthe hostile camp, and I have no doubt before spring it will be found that a very large number have come in, a sufficient number to force the hostile ones to make peace on any terms; at least I think it worth the trial. All of this will require some expenditure, but not much; certainly much less than keeping large bodies of troops up in this country.

I am not in favor of the establishing for Indian agencies. They are very expensive. Ten times the good could be done with half the expense of any agency I have seen. I would propose that a small party of friendly Indians int his way be maintained at each military post in this district, composed of the tribes who inhabit the section of the country where the post is located. It would not do to exact of them the same discipline as is required of our soldiers; that could be done after a few years, after they become accustomed to the ways of the whites; and, moreover, after they felt themselves somewhat depended on by the garrison. After this there would be no difficulty in the matter,