[First indorsement.]

AUGUST 1, 1864. Secretary of War, for special attention.

Examples should be made of those officers who have, as set forth within, violated personal rights, the laws of the land, and the instructions of the War Department. The many and glaring abuses set forth are in accordance with statements which led me to order this special inspection by General Hodge. Reports of existence of the Fraudulent practice of discounting claims was brought to the notice of General J. E. Johnston some time in the last fall, with copies of the public notices given to claimants. He ordered an investigation. The result is unknown to me. This report shows nothing in relation to that investigation, but notices a reduction as made on bills rendered.

JEFFERSON DAVIS.

Sixteen accompanying papers.

J. D.

[Second indorsement.]

ADJUTANT-GENERAL:

The material statements in this report have been communicated to Lieutenant-General Taylor, with instructions to him. The irregularities disclosed were not only without any sanction from this Department, but contrary to general orders, but also in many cases in the face of explicit instructions communicated in correspodence.

By order:

J. A. CAMPBELL,

Assistant Secretary.

[Inclosures. Numbers 6.]

LIBERTY, MISS., June 26, 1864.

Brigadier-General HODGE:

In accordance with your desire, I beg to lay before you the following facts in relation to the condition of this district and my understanding with Lieutenant-General Polk when ordered to this command. To prevent the unnecessary delay and speedy execution of his orders I was advised to report direct to him, that the immediate necessities and requirements of the country that had suffered so severely might be more readily attended to. It was an explicit understanding that all contracts were soon annulled and referred to department headquarters. Lieutenant-General Polk having been ordered to another command, some few of the various contracts were renewed and are now executed to no better purpose. Another public demoralized and greater profiter by the cotton trade is that species of Government agent who is battering cotton for exchange at 15 cents per pound when I am satisfied 30 or 40 cents is obtained in gold. Should such a trade be essential for the public