HDQRS. DEPT. OF VIRGINIA, SEVENTH ARMY CORPS,
Fort Monroe, Va., October 22, 1862.

Honorable E. M. STANTON,

Secretary of War:

SIR: I received yesterday Mr. Watson's letter of the 17th instant inclosing a copy of a communication of the Secretary of the Navy of the 16th concerning the carrying of merchandise in the mail steamers plying between this post and Baltimore in one direction and Norfolk in the other. The Secretary says he is informed by Admiral Lee that considerable quantities of merchandise are carried on these steamers, and suggesting as a partial remedy that Generals Wool and Dix should be ordered not to allow any merchandise or articles for traffic to be shipped on these steamers, and as an effectual remedy that they should be put under navy control.

If Admiral Lee intends to intimate that merchandise is illicitly carried on these steamers and in violation of any law, either of revenue or blockade, I take it upon myself to say that he is laboring under a very great error; that every article which is brought here from Baltimore is examined, and if it has not the proper custom-house permit is sent back or detained; that every article put on board the mail steamer for Norfolk comes within one of the two classes, of supplies for the army or merchandise, usually in very small quantities passed regularly through the custom-house at Baltimore with permits for Norfolk, and if there is any violation of established regulations the fault is with the Treasury Department, and this I will not presume. The captain of the port here keeps a register of every packet and its contents coming from Baltimore or going to Norfolk, with the name of the party receiving it, and everything is carefully examined. Every possible precaution is taken to prevent abuse, and, as I believe it can be shown, with entire success.

The officers under my command, as well as those belonging to the revenue department placed here by the Secretary of the Treasury, are as anxious as those of the navy to arrest all illicit traffic and intercourse with the insurgents, and I believe they have performed, and will continue to perform, their duty with quite as much faithfulness and efficiency. I see no reason on this score for putting these mail steamers under navy control, and on every other there are insuperable objections to such an arrangement. They are employed by the Quartermaster's Department. Those which run between this post and Baltimore under a contract with that Department are specially designed to carry troops and supplies for the army in addition to the mails, and I see no more propriety in putting them under navy control than in placing a naval transport under army control. The Secretary of the Navy has not in his communication approved this suggestion of Admiral Lee; but I deem it nevertheless my duty to my command to state to you my objections to it.

In regard to orders to General Wool and myself I take it for granted the Government does not object to the transportation by the mail steamers of merchandise for this post of Norfolk under the customary sanctions of the Treasury Department. There are several persons in addition to the subtler who have permission to trade with the garrison and with the people in this vicinity. Such an order would compel them to employ a sailing vessel every time they had a small quantity of necessaries to bring here. This morning some ice, flour, and other articles came down by the mail steamer, having gone through the regular custom-house formalities, for our subtler, Mr. Moody; for Mr. Kimberly, who supplies the hospital, and some other persons. Every article is subjected to the most rigid scrutiny. If it is intended to interfere with the trans