HEADQUARTERS DEPARTMENT OF PENNSYLVANIA,
Fort McHenry, Md., August 8, 1861.

Honorable S. P. CHASE,

Secretary of Treasury:

SIR: I have the honor to acknowledge the receipt of your letter of the 5th instant in regard to a larger force of small steamers in the Chesapeake Bay to break up the illicit commercial intercourse between this State and Virginia. In making the suggestion in my letter of the 29th ultimo I was governed by two considerations: First, that a system of examination at the port of embarkation in regard to goods destined to Virginia could not be made efficient without serious obstruction to legitimate trade between different portions of this State, and under the most favorable circumstances would leave room for evasion, and, second, that an examination of vessels and cargoes near the point of destination would be attended with much less inconvenience on the one hand and much more certainty on the other. I do not propose to dispense with the examination here. It should be continued under the direction of the officers of the revenue service; but the military visitation which I have caused to me made at this port, and in several instances with success, may be discontinued if there is a proper force of small armed steamers in the bay. The Severn is sufficiently guarded by the revenue cutter Forward and her tender, and I hope in the course of ten days to relieve her from that service, as I think the illicith trade carried on from that river will be effectually suppressed. I assume that the shores from Fortress Monroe to the Potomac and the mouth of that river are guarded by Commodore Stringham. In that case, four armed steamers would take care of the Patuxent, the shore between that river and the Potomac, and the Eastern Shore of Maryland. The principal route by which goods and military stores are supposed to be conveyed to Virginia is from Benedict, on the Patuxenamers of one line stop at night, to Port Tobacco, by land, and thence by water to Mathias Point. By looking at the map you will see the facilities it affords. I think the steamers should each have one 32-pounder carronade, and if possible two small rifled cannon; or in lieu of the latter a couple of howitzers, and they should be from 300 to 400 tons burden. I have advices this evening that two vessels of considerable size are lying inside of Kent Island, ipposite Annapolis, receiving supplies of provisions and probably men for Virginia. They cannot be reached by the Forward, as she draws too much water. With a couple of small armed steamers they could be easily captured. The necessity for such service is constant.

I am, very respectfully, your obedient servant,

JOHN A. DIX,

Major-General, Commanding.

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SPECIAL ORDERS,
HDQRS. DEPT. OF THE SHENANDOAH, Numbers 168.
Sandy Hook, August 8, 1861.

I. Colonel C. S. Hamilton, Third Wisconsin Volunteers, is assigned to command Third Brigade, Brigadier General C. P. Stone having been relieved from duty with this column.

II. The First [Pennsylvania] Rifle Regiment, Colonel Charles J. Biddle commanding, is assigned to the First Brigade, Colonel George H. Thomas commanding.

By order of Major-General Banks:

F. J. PORTER,
Acting Assistant Adjutant-General.

[5.]