NEW MARKET, December 26, 1862.

General S. COOPER, Adjutant and Inspector-General:

Please retain Major Withers, Tenth [West] Virginia (Federal) Regiment, until I can send you copies of orders recently issued by General Milroy.

W. E. JONES,

Brigadier-General, Commanding.

WAR DEPARTMENT, Richmond, December 27, 1862.

His Excellency Z. B. VANCE, Governor of North Carolina.

SIR: In the absence of the President now on a visit to the armies of the West of South your letter of the 24th instant communicating a preamble and resolution of the General Assembly of North Carolina relative to the seizure and transportation from the State of R. J. Graves, a citizen of Orange County, and making in conformity with the resolution a demand for the return of the said R. J. Graves to the State and his delivery to the authorities there for examination and if sufficient cause appear for commitment and trial, has been handed by A. C. Cowles, esq., to me as Secretary of War for my action thereon. It will doubtless be matter of regret to you and the General Assembly of your State as it certainly is to me that the matter cannot receive the more satisfactory consideration and determination of the President, and as the subject shall on his return be promptly submitted to his revision it is not improbable that he may deem it worthy of further special communication from himself.

Still the imposing source of the application and the gravity of the subject demanding from its nature prompt action in my estimation impose on me the responsibility of exercising my imperfect judgment in rendering a decision. Some brief statement of the connection of the department with the detention of Mr. Graves and of the circumstances of his case will naturally and appropriately precede and explain both the action heretofore taken and the conclusion arrived at in his case.

Only some few days since was I informed as head of this Department of the detention of Mr. Graves in one of the military prisons of the city to which he had been consigned by the order of Brigadier-General Winder, military commandant of the district and acting provost-marshal of the city. When apprised of the fact I inquired briefly as to the ground of charge and was assured by General Winder that he was charged and held as a spy and that he did not consider it safe that he should be dismissed. I then directed that he should be examined by the commissioner, Mr. Sydney S. Baxter, a lawyer of high repute, charged with the duty of inquiring into the cases of prisoners in the military prison and of either discharging them or hading them over to their proper tribunals for trial. A day or two afterwards on the application of the Reverend Mr. Brown, of North Carolina, learning that the examination had not been had I reiterated the order, and being informed that the cause of delay had been the absence of a soldier and officer in the army who were wanted as witnesses I immediately directed that they should be ordered from the field here. Thus the matter stood to-day on the delivery of your letter.

On the fuller investigation immediately made of the circumstances of the arrest and of the grounds on which it was based I learn from General Winder that on the 6th of November last there appeared in the Richmond Enquirer a long letter written by the Rev. R. J. Graves proffered