ing cotton and sugar within the lines was left by me in the hands of a Mr. Davis, an accredited agent of Mr. Dennison, who holds some position in the Treasury Department. So far as I know things went on well enough until Mr. Davis, for some reason unknown to me, was withdrawn. Afterward he appeared again from a day or two, and then disappeared finally. While he was here I allowed him to select the place from which the produce to be hauled, only exacting that the price of hauling should be paid to the post quartermaster, and requiring a compliance with the law requiring those having permits to purchase from loyal owners. After Mr. Davis left, Lieutenant-Colonel Chandler took charge of the same business, and I have no doubt carried it on with entire propriety.

With regard to the persons named by Mr. Flanders, I state that A. Adams, is, I believe an agent of Godwin. I have not heard that he has done any business here. I understand that he resides or stays at Brashear. S. O. Nelson live here. He is known to be disloyal, and I have never heard of his purchasing or selling produce,; on the contrary, I know that his sugar was seized by the United States and shipped to New Orleans. Weed has a Treasury Department permit for enormous guantities of cotton and sugar. I know nothing else about him, except that Godwin has his permit. H. E. Lawrence I know nothing about but I believe that he is connected with Weed. Godwin is, I believe, the person who owns the produce that Weed has a permit to buy. All of these who have been here proper passes and permits.

If mr. Flanders doubts the loyal of these parties and I certainly do not vouch for it, why does he not take the legal means in possession of having the goods seized upon their arrival in New Orleans. That course is entirely in his power, and in my opinion would settle the business. An examination of the railroad manifests will show whether the accusation of monopoly of transportation is true or false.

In conclusion, I report that I have made inquiry, and have found no abuses that it is in my power to correct. I am aware of the fact that no persons are authorized to trade in this department by the military authorities.

The letter of the commanding general was only received to-day.

Very respectfully, your obedient servant,

W. B. FRANKLIN,

Major-General, Commanding.

HEADQUARTERS U. S. FORCES,
Pass Cavallo, Tex., January 4, 1864.

Brigadier General C. P. STONE,

Chief of Staff:

GENERAL: Your favor of the 21st ultimo was only received yesterday.* The steamer Warrior is not sea-worthy, and I am using her as a wharf in discharging boats. The Planter cannot be spared from here, as she is the only boat we can send outside to lighter the heavy-draught vessels. The Matamoras would be very useful if we could obtain soft coal. Transports coming here are returned with the least possible deadly. This is a very had place to discharge

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*See Vol. XXVI, Part I, p. 869.

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2 R R-VOL XXXIV, PT II