WAR DEPARTMENT, Washington City, April 15, 1864.

Honorable GIDEON WELLES,

Secretary of the Navy, Washington, D. C.:

SIR: In reply to your communication of the 8th instant, informing this Department that Lieutenant-Commander Williams and Ensign Porter have been released from irons, I am instructed by the Secretary of War to state that the matter has been referred to Major-General Butler, commanding at Fortress Monroe, with directions to suspend all retaliatory measures.

I have the honor to be, very respectfully, your obedient servant,

C. A. DANA,

Assistant Secretary of War.

WASHINGTON, D. C., April 15, 1864.

Lieutenant General U. S. GRANT, General-in-Chief:

GENERAL: I have the honor to inclose herewith the statement, signed by Colonel Hoffman, which was directed to be prepared by the Secretary of War in your presence last evening, and beg leave to explain that the last formal declaration of exchange of prisoners, which was agreed to by both of the agents, was dated June 8, 1863, and was published in General Orders, Numbers 167.

At that time Colonel Ludlow was our agent of exchange, and the declaration left us indebted to the rebels, officers and men reduced to privates by rates agreed upon in the cartel, 12,794 men. Since the date of that declaration the rebels have delivered to us 18,485 men, making our total indebtedness 31,279. Since the declaration referred to, and soon after it, the tables were turned by the capture of Vicksburg and Port Hudson, which brought the rebels largely indebted to us; in addition to which there had been delivered rebel prisoners by us, up to July 25, 1863, 8,359 men. And after that date, 7, 1901, which, added to the Vicksburg and Port Hudson prisoners, makes a total of 65,182.

Some time in July, 1863, Mr. Ould, without any conference or agreement with our agent, Colonel Ludlow, announced a declaration of exchange in favor of Lieutenant-General Pemberton and a few other officials of high rank, which Colonel Ludlow protested against and refused to recognize because it was contrary to usage, and because we had no rebel officers of equivalent grades in our hands to be exchanged for them, and it was supposed that Mr. Ould acquiesced in the protest, but the subsequently reaffirmed this declaration. Colonel Ludlow was relieved from duty as agent of exchange, and was succeeded by General Meredith. Not long after Mr. Ould renewed his mode of action, without any conference or agreement with General Meredith, and made an arbitrary declaration of exchange in favor of a considerable portion of the Vicksburg prisoners, without stating any definite number, but defining them by certain commanders and corps, which we ascertained included a large excess over the number of Federal troops who had been captured by the rebels, had been returned to us, and were on parole waiting to be exchanged.

Notwithstanding the irregularity of this proceeding on the part of Mr. Ould, his conduct left us no alternative but to make a declaration of exchange in favor of a portion of the Federal paroled prisoners in our hands, and a declaration was made extending to 23,056. We were then in hopes that irregular declarations would not be repeated by Mr. Ould, but we were disappointed. He made several declarations of