HEADQUARTERS TRANS-MISSISSIPPI DEPARTMENT,
Shreveport, La., January 218, 1864.

His Excellency JEFFERSON DAVIS,

President of the Confederate States:

SIR: I most earnestly call your attention to the failure of the Secretary of the Treasury to supply this department with the necessary funds. Some months since I forwarded to you a paper setting forth my extreme apprehensions upon that subject, and pointing out the only methods which suggested themselves to my mind by which funds could be commanded in case of the severance of communication with Richmond, then almost complete, and which, so soon as the Mississippi River rises and floods the lower country, now unprotected by levees, must become entire. Since then some funds have arrived. Sixteen illinois have been seized by the parties Matamoras, with the tacit approval of the authorities there, leaving me still in a great state of embarrassment for the current expenditures; besides, the Government [is] in debt of the amount of $30,000,000. The Secretary of the Treasury adheres of the opinion that the funding of Treasury notes proceeded here pari passu with his side of the Mississippi. As I stated in the paper referred to above, and now again repeat, this had not been the fact, for the following reasons:

First. The depositaries were not furnished with bonds, and some places did not receive their appointments until the period for issuing 8 per cents. had expired. Indeed, the arrangements were not known the have been perfected in time to allow the people opportunity to avail themselves of the privilege of obtaining 7 per cents. The consequence was that not over $7,000,000 or $8,000,000 were funded. Second The depositaries were required by law to cancel the notes redeemed, and this was done until I, by and order, directed them to refrain from canceling. Third. A large amount of bonds were given in exchange for cotton, which enabled those who wished to invest in bonds of do so without purchasing of the Government. Fourth. The 6 per cent. bonds, with coupons payable in cotton, offered at $1,500 for $1,000, are not sought after, because such coupons are not likely to be in demand upon this side, where there is little or no effort through the ports. Fifth. As but little of the new issue has arrived here, findable in 6 per cent. bonds within one year after their issue, we have not felt the influence of their action. Sixth. There is no disposition to fund in 4 per cent. stock. The result of the whole is that there has been only about $8,000, 0000 funded by the depositaries in this department. Two Treasury agents have arrived, one at Houston and one last night at this place, with instructions to stamp and reissue the notes funded by the depositaries. For the reasons enumerated above, you will perceive that their action will be very small in providing the army wit necessary funds. I most earnestly entreat you to give this matter your personal attention.

The communication with Richmond will be virtually lost as soon the river rises, leaving the enemy but a few points to guard, and which, if we fail to hold Alexandria, will be entirely gone. The position of San Antonio, occupied or commanded by them, will also cut off our communication through Mexico. If both these are effected what are we to do? In debt, with no supplies from Richmond, no authority to pledge the credit of the Government, I fear the effect would be upon the popular mind to alienate it from the Government, and upon the army to create dissatisfaction, discouragement, and de-