lips', who told them that the troops were leaving Decrow's for Indianola as fast as the steamers could transport them. They report heavy firing in the direction of Indianola and a light which they believed to be the burning of Lavaca. It was on Saturday that they met the Yankee, who was buying potatoes. The information forwarded yesterday from Matagorda was to the same effect as to the firing at Indianola and the rapid passage of troops up to Indianola.

I account for these statements by the report of Colonel Duff, dated 15th, in which he informed me of having made a demonstration in front of Indianola for the purpose of ascertaining the strength of the enemy; the firing of cannon was doubtless at that time and it is reasonable that, believing that the force of Colonel Duff was an advance guard, they hurried up re-enforcements; it is also probable that the light seen toward Lavaca was the prairie burning, as I know it is the policy of Colonel Duff to burn it all between the bay and the Guadalupe River. I am satisfied that I should have heard from Duff in anything serious had occurred.

I have completed a personal examination of all the approaches to the fort at Caney, and feel confident that with one week's more work I shall be able to make a defense which will be creditable to our arms. The fort is sufficiently completed for purposes of defense and the laborers, much increased by the voluntary assistance of Colonel Hawkins and other planters, commence to-night on other portions of the defenses. I have ordered a wide ditch to be cut across the first bend of the Caney, above the mouth, which will serve as an advanced work to the defense of the bridge and an effective cover for the infantry. This is the only addition contemplated to the plan of defense contemplated by the major-general commanding. I think it highly probable that the enemy are moving to Indianola with a view to an advance by that route. I renew my suggestion that Colonel Duff be re-enforced.

With great respect, your obedient servant,

H. P. BEE,

Brigadier-General.

DEPARTMENT OF STATE, C. S. A., Richmond, January 19, 1864.

Honorable JAMES A. SEDDON,

Secretary of War:

SIR: I have the honor to inclose herewith, for the information of your Department, copy of a dispatch of the 26th of November last, addressed to me by J. A. Quinterro, esq., confidential agent of the Confederate States at Monterey.

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

J. P. BENJAMIN,

Secretary of State.

[Inclosure.]

MONTEREY, MEXICO, November 26, 1863.

Hon. J. P. BENJAMIN, Richmond:

SIR: Since my dispatch, No. 53, of the 9th instant, I have received reliable information in reference to the occupation of Brownsville by U. S. troops, and the disturbances which subsequently occurred in Matamoras.