War of the Rebellion: Serial 021 Page 0424 W. FLA., S. ALA., S. MISS., TEX., N. MEX. Chapter XXVII.

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Colonel McMillan, of the Twenty-first Indiana Regiment, on Monday last, in a little creek leading out of Berwick Bay, some 80 miles from here, succeeded with an ox-cartincutting out the rebel steamer Fox, loaded with 15 tons of powder and a large quantity of quicksilver, medicines, and stores. The steamer was formerly the G. W. Whitman, of New York, and has succeeded in running the blockade four times.

Colonel McMillan is now engaged in scouring the bayous and lagoons through which the rebels have been supplied with ammunition, causing large quantities to be destroyed and capturing some where the pursuit is wick enough. In no other way the same amount of distress be brought upon the rebel army, as they are much in want of ammunition, and we are intercepting all supplies. A very large amount of ordnance and ordnance stores have been captured here and are now being cared for and inventoried.

Large numbers of Union men - Americans, Germans, and French - have desired to enlist in our service. I have directed the regiments to fill themselves up with these recruits. I can enlist a regiment or more here, of the Department think it desirable, of true and loyal men. I do not think, however, that Government Moore would commission the officers. Such a corps being desirable, would it not be possible to have an independent organization, with commissions from the President. These troops would be very useful in manning the forts at Pontchartrain and down the river, which are fearfully unhealthy. they might have a company or two of Northern soldiers for instructions and for fear of possible accident.

I shall have the transportation ready for a movement on Mobile as soon as the flag-officer returns from up the river. I am engaged in arranging for it. I will get the transportation, so as to go across the lake by the inside route.

I have endeavored in several ways to get communication with General Buell, so as to co-operate with him, but as yet have failed. Although I am not by the terms of my instructions enjoined to penetrate the interior, yet I shall do so at once, if the public service can be aided.

General Lovell, when we retreated from this city, took with him to Camp Moore between 8,000 and 9,000 men. He is 80 miles away, and such is the height of the water that it is nearly impossible to march, he having gone on the railroad and taken all his rolling stock with him. More than one-half of that army has left him, and perhaps one-third has returned to this city, put on citizens clothes, and are quiet. I think General Lovell is doing as well as he can for the present. A defeat could hardly disorganize his forces more rapidly.

I trust my requisitions will be promptly forwarded, especially for food and mosquito-nets, which are a prime necessity.

The city council have endeavored to excite the French population here and to act by resolution upon the arrival of the French was steamer Catina as to induce the belief that there was some understanding between themselves and the French Government.

I append copy of letter to the council upon that subject, marked L; also copy of letter to the French consul as to spoliation at Kenner, marked M.

I have the honor to be, very respectfully, your obedient servant,

BENJ. F. BUTLER,

Major-General, Commanding.