WAR DEPARTMENT, ADJUTANT-GENERAL'S OFFICE,

Washington, December 3, 1863.

Honorable EDWIN M. STANTON,

Secretary of War:

SIR: I have the honor to make the following report of this department:

During most of the past year the Adjutant-General of the Army has been employed, under special directions from the Secretary of War, in a responsible sphere of duties at the Southwest. The character of business transacted in the Adjutant-General's Office was described in the last annual report. As was anticipated it has increased in extent with the continuance of the war, and will still more increase. Two new branches have been added to the office- one by the establishment of a "Bureau for Colored Troops:" and the other, an incident to the draft, for regulating the distribution of drafted men to regiments after they are delivered at the principal rendezvous by the provost-marshals. Thus each new branch of the military service as it arises, although it may be immediately conducted under another department, adds proportionally to the labors of this office. But no pains will be spared fully and promptly to meet all the varied demands which may be made upon it.

Much solicitude is felt in regard to the reduced ranks of the Regular Army. Comparatively few recruits are now enlisted for it, partly because of the greater bounties paid to volunteers by States, counties, and associations, and partly owing to the term of service being five years instead of three. The official reports of battles have invariably spoken in high terms of the good conduct of the regulars wherever they have participated, and their thinned ranks after each encounter bear testimony that they are in no wise behind our gallant volunteers in steadiness and unyielding bravery under fire. It is earnestly recommend that such inducements as may be deemed effective and proper may be offered by Congress for enlistments in the regular regiments, and, among others, that the term be fixed for three years for all enlistments made during the present war. The fifth section, act approved July 29, 1861, establishing the term of three years, expired by limitation January 1, 1863.

Attention is respectfully asked to the ninth section, act approved July 17, 1862, regulating the pay of chaplains, in these words:

That hereafter the compensation of all chaplains in the regular or volunteer service or army hospitals shall be one hundred dollars per month and two rations per day when on duty.

A strict construction of this act entirely deprives a chaplain of pay when not on duty: but it is supposed the intention of the law really was only to stop the two rations. Such intention would have been expressed so as to leave no doubt on the subject by a transposition of words, as follows: "one hundred dollars per month; and, when on duty, two rations a day." Under the thirty- first section, act approved March 3, 1863, chaplains would then, like all other officers, receive half their pay when absent on leave for other cause than wounds or sickness, and full pay, without rations, when absent from those causes.

A serious evil arising from the absence of officers from duty has in the past year been in great part remedied. Two boards are in session-one at Annapolis, the other at Cincinnati-before one of which all officers who have left their commands in consequence of ill-health