Major General N. P. Banks on the subject, and as the reply from headquarters of the department is favorable I would suggest that all the excess of paroled men now in your possession be moved toward some favorable point for delivery.

I am instructed to inform you that Major General N. P. Banks, has appointed a commissioner on his part to agree upon a cartel and agreement for paroling of the balance of all prisoners in hands of Major General R. Taylor. Will you please appoint the time and place at which you will meet the said commissioner and notify Major General W. B. Franklin two or three days in advance.

I am, major, very respectfully, your obedient servant,

E. L. MOLINEUX,

Commissioner for Exchange of Prisoners on behalf of

Major General W. B. Franklin, U. S. Army.

I have to request you to state whether it is agreeable to you to exchange Mr. H. P. Fenner, civil clerk in commissary department, for Mr. Stockton, assistant engineer steamboat Webb, taken when not in commission. I shall bring Mr. Stockton up at the exchange, hoping to have a favorable answer.

[Inclosure No. 1.]

NEW IBERIA, December 13, 1863.

Brigadier General C. P. STONE,

Chief of Staff, New Orleans, La.:

The exchange of prisoners, officer for officer and man for man, is progressing. General Taylor offers to place the excess of prisoners in his hands in our possession on these terms, viz:

1. Their paroles to be recognized by the U. S. authorities, and if they are not so recognized the prisoners to be returned to General Taylor.

2. All prisoners from the forces under General Taylor's command to be exchanged for these paroled prisoner, including those taken at Fort Butler or elsewhere.

3. The agreement thus entered into is not to be affected by the action of the Government of either party; but if any general exchange be agreed upon by the two Governments, the excess of prisoners is not to be included in that agreement until formal notice has been given to one party by the other to include them in that exchange. Also, ten days' notice must be given of the cessation of exchange before any change in the cartel shall be into effect.

General Taylor wishes an acceptance of these terms by the department commander.

W. B. FRANKLIN,

Major-General, Commanding.

[Inclosure No. 2.]

DEPARTMENT OF THE GULF, New Orleans, December 14, 1863.

Major-General FRANKLIN,

Commanding Troops in Western Louisiana, New Iberia:

The major-general commanding department will approve the acceptance by you of the terms proposed by General Taylor, as by your dispatch of yesterday, just received.

C. P. STONE,

Brigadier-General, Chief of Staff.