On investigation I believed that Captain Reynolds could do this work of construction cheaper under his contracts on account of the quartermaster's department than I could under separate contracts on account of the prison fund, and hence authorized the arrangement. On the 1st of April, when estimates had been made by Captain Reynolds for work done and materials furnished on account of the prison hospital and the tree works of the variola hospitals built by him, I first learned that he would not advance quartermaster's funds, but only proposed to do the work as quartermaster, and required the appropriation of $4,000 monthly to be paid the contractors pro rata on their monthly estimates. The contractors objected to waiting on the prison fund, and claim that Captain Reynolds had agreed to be responsible to them as quartermaster, under their contract with him, and that they had furnished the material and done the work on account of the quartermaster, and not on account of the prison fund, and that nothing otherwise had ever been understood between them and Captain Reynolds. Captain Reynolds, however, refused to advance quartermaster's funds in payment of this indebtedness unless especially authorized so to do by the Quartermaster-General, hence my letter to you of the 16th ultimo. The work done and being done on account of the prison fund by Captain Raynolds, assistant quartermaster, is a rebel hospital complete (having kitchen building, covered way, fence, and sentry walk) and three wards, the wash and bath house, one building for dispensary, &c., and one dead-house of the variola hospital. All these improvements have been authorized to be made on account of the prison fund, and, as stated in my letter of the 16th ultimo, will cost in the neighborhood of $30,000. When fully completed the rebel hospital alone was estimated by Captain Reynolds to cost $24,225. Its actual cost, I think, will not very much from that amount. The other improvements made by Captain Reynolds and mentioned in my letter of the 16th ultimo swells the amount to "in neighborhood of $30,000. " The amount due contractors on account of work done and materials furnished during the month of March, according to Captain Reynolds' estimate, was $16,000, and the appropriation of $4,000 from the prison fund was paid them pro rata; $4,000 for the month of March is all that has been paid for work done and materials furnished by Captain Reynolds. On the 1st of April the three variola wards built by Captain Reynolds were completed and the rebel hospital was under way. Nothing had been said as to the monthly appropriation of the prison fund to liquidate the indebtedness created by Captain Reynolds in the construction of the variola buildings. When he agreed to build the rebel hospital he insisted that a specified sum should be appropriated monthly, and $4,000 was agreed upon as the largest amount that I could pay out of the prison fund and leave enough remaining to meet the other charges and necessary incidental expenses against it. I have applied to Captain Reynolds, assistant quartermaster, for the statement required in your letter of the 21st ultimo, and so soon as his reply is received I will forward the same to you. My letter of the 16th ultimo was suggested by the statement of Captain Reynolds that he would willingly advance quartermaster funds if I would refund $4,000 monthly, provided authority was obtained from the Quartermaster-General. As this was a matter affecting the prison fund I did not see any impropriety in your calling the attention of the quartermaster to the facts, Captain Reynolds having indicated such a course as proper.

Very respectfully, your obedient servant,

A. J. JOHNSON,

Colonel Fourth Regiment Veteran Reserve Corps, Commanding Post.