Banks has not sufficient number of troops to defend Louisiana and the places he now holds in Texas, much less to drive the rebels from the portions of these States still in their possession. Unless the policy already adopted in regard to military operations west of the Mississippi be now abandoned, the army these must be largely re-enforced, and if so re-enforced, it is hoped that the Texas campaign will be terminated in time for other operations in the spring. It must also be borne in mind that all the armies in the field will be very seriously reduced in numbers during the next two or three months by furloughs given to those who re-enlist. If, in this condition of our forces, we attempt to accomplish too many things at the same time, we shall probably fail in all.

The reduction of Fort Caswell alone will not secure to us the harbor of Smithville or close to the rebels and blockade-runners access to Wilmington. To accomplish these objects we must also capture the work on Smith's Island and those which command to New Inlet, a task not less difficult or requiring less time, even at a favorable season, than the reduction of Fort Sumter and the works on Morris Island.

It is the opinion of officers who have examined this question and are well acquainted with the localities and the obstacles to be overcome that Cape Fear River can be most easily secured by a force landing at Shandy Hill Inlet or New River Inlet and marching against Wilmington. This plan was agreed upon last veer, but the forces intended for the expedition were diverted to Morris Island co-operate with the proposed naval attack upon Charles. Since then the defense of Wilmington and Cape Fear River have been greatly strengthened and it will now require a large force and probably a long time to effect their reduction. To attempt his in the present condition of our armies will involve the suspension of other and more important operations. Under these circumstance I respectfully advise against the proposed expedition at the present time.

Very respectfully, your obedient servant,

H. W. HALLECK,

General-in-Chief.

HEADQUARTERS DEPARTMENT OF THE GULF,
New Orleans, La., January 6, 1864.

ADJUTANT-GENERAL OF THE ARMY,

Washington, D. C.:

GENERAL: My attention has been called to Special Orders, Numbers 537, of December 3, 1863, from the headquarters of the Army, in which the following occurs:

Brigadier General C. P. Stone will be relieved from all command at New Orleans, and directed to report in person to General Banks.

As I have never held any command in New Orleans, but on the contrary have been constantly on duty at these headquarters since my arrival in the Gulf, on 30th May, 1863, I prehension of facts, since it relieves me from a position which I have newer held, and assigns me to one which I was at the date of the order and had been for many months previously occupying.

Very respectfully, I am, general, your most obedient servant,

CHAS. P. STONE,

Brigadier-General, Chief of Staff.