War of the Rebellion: Serial 026 Page 0419 Chapter XXX. CORRESPONDENCE, ETC. - UNION.

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letter to Major-General Halleck of the 27th. There is this difference, however, that their sufferings for want of the necessaries of life are constantly and rapidly increasing. A fortnight ago flour was $ 16 a barrel; it is now $ 25. We have shut them out from the sources of supply both North and South.

The Treasury Department, on the 28th of August last, prescribed "Regulations concerning commercial intercourse with insurrectionary States and sections." The Secretaries of War and navy by separate orders called on the officers of the Army and Navy to respect and carry out these regulations. On the other hand the Secretary of the Navy, notwithstanding this direction to naval officers, has instructed Admiral Lee to allow no traffic whatever.

It is not impossible that this conflict in the Secretary's own orders has arisen from the construction given by him to regulation 3, which forbids any "clearance or permit whatsoever to any port, place, or section affected by the existing blockade except for military purposes." If it be so, he is in conflict with the Secretary of the Treasury and the Secretary of War, who are jointly (the former at the request of the latter) granting such permits for traffic with Norfolk, though to an extent too limited to meet the wants of the people.

I desire, in the first place, to suggest that Norfolk and Portsmouth are not blockaded ports; that they lack the fundamental condition of a blockade - hostile possession. That this is the view taken by the Treasury and War Departments I cannot doubt, for they would otherwise have been restrained by regulation 3 from granting any permits or clearances. The fact that they are granting such permits and clearances shows conclusively that they do not regard them as blockaded. The laws of blockade, therefore, have no application to them. I have insisted uniformly that it is a case of military occupation, and that those places are governed by the commander of the military forces under the laws of war; that it is his province to allow so much commercial intercourse as is necessary for the comfort of the troops and of the inhabitants, subject to such restrictions as the Government should think proper to impose on him, and that neutral nations can raise no question in regard to such intercourse under the laws of blockade.

The Secretary of the Navy has also instructed Admiral Lee to allow no return cargo to be cleared from Norfolk in the vessels sent there with supplies for the people. These instructions are also in direct conflict with those of the Secretary of the Treasury. On application to the latter a few days since he authorized the schooner Marblehead to be cleared from Norfolk with a cargo of staves and headings, and in the same paper the right to the military commander to clear vessels on the return voyage was distinctly recognized and conceded. It is respectfully submitted that any other rule would be a mockery. The inhabitants of Norfolk and Portsmouth have no money - nothing, at all events, which importers from the loyal States will take - and a denial of the privilege of giving in exchange and sending away the products of their own labor is equivalent to a denial of all supplies. I therefore respectfully ask the decision of the Government on the following points:

1st. Is Norfolk a blockaded port, or is it a place held by military occupation and governed by the laws of war?

2nd. Is it not open to the traffic provided for in the regulations of the Secretary of the Treasury of the 28th August?

3rd. When supplies under the authority of the proper departments are sent to Norfolk is not the military commander at liberty to grant clearances to the vessels carrying such supplies with a return cargo of