HDQRS. DEPT. MISSISSIPPI, EAST LOUISIANA, &C., Jackson, January 22, 1863.

Hon. JAMES A. SEDDON,
Secretary of War:

SIR: Having conversed with His Excellency the President of the Confederate States during his recent visit to this department in regard to the effect of permitting cotton to be traded foned from points in possession of the enemy, and finding that his views in general sustained my opinion as department commander of the evils resulting from such trade, I addressed him the following telegram:

JACKSON, January 13, 1863.

JEFFERSON DAVIS,

President:

I propose to withdraw all authority to trade for salt or other articles with New Orleans or Memphis, if it meets your approbation. I consider that it is producing a bad effect. Please answer.

J. C. PEMBERTON,

Lieutenant-General, commanding.

In reply I had the honor to receive the following:

RICHMOND, January 14, 1863.

General J. C. PEMBERTON:

I have given no authority to trade with New Orleans or Memphis, unless it be that given to Governor of Mississippi to obtain salt. Contracts of the War Department, if fulfilled, might involve the evil to which you refer. To correct any error report fully the case to the Secretary of War. In the meantime proceed as you propose to stop the trade, except as to articles which have been delivered under contract and for which payment is due.

JEFF'N DAVIS.

Experience has proved to me the utter impracticability of preventing illicit trade, when the authorities granting permits have not absolute and undisputed control. It is a matter of deep regret, it is nevertheless true, that pecuniary interest has shown itself to be the very first consideration with a large proportion of those to whom the fortune of war has given opportunities to dispose of the great staple. The military force at my disposal has not been adequate to the suppression of this trade. I have, however, issued orders for the arrest of all persons against whom there is undoubted proof, and if the civil courts will carry out the spirit of the law, a stop may be put to this crying evil. The operation of contracts is to open a wide door to all speculators. It is impossible to prevent the passage of cotton by those not duly authoritized when to fil a large contract so many small purchases must be permitted. In reference to the contract made by the Quartermaster-General with Mr. S. P. Walker, of Memphis, I have, therefore, under the authority of the President, addressed to him the communication of which the accompanying is a copy, and have further directed that all authority to ship cotton is annulled, except in cases where the articles have been in part delivered under agreement, for which deliveries they shall be paid according to the terms, and in those of the Governor of Mississippi and Mr. Hatch, authorized by yourself to obtain salt for the District of East Louisiana, and to parties connected with the matter of Mr. Hiriart's purposes, of which you are fully informed. So far as this department is concerned I am satisfied that I can as heretofore supply its wants from within the limits of the command.

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

J. C. PEMBERTON,

Lieutenant-Colonel, commanding.