The first of these conditions cannot be secured if the lines are opened to promiscuous intercourse, and the consequences of any failure will not be limited to this command, but will be reflected to a greater or less extent upon General Sherman's operations in Georgia and General Thomas' in Tennessee. If this trade is carried on in the manner and to the extent claimed by the speculators who now control it, its inevitable result, in my judgment, will be to add strength and efficiency to the rebel armies east and west of the Mississippi equivalent to an addition of 50,000 men, and will stimulate into active opposition to the successful prosecution of our operations at least 10,000 men within our own lines. The occupation of the valley of the Mississippi is not so well assured that we can afford to give this aid to the rebel armies. Cotton speculators in the Mississippi Valley have a prospective and hope to have an actual interest in every bale of cotton within the rebel lines; they know that expeditions in the enemy's country are followed by the capture of cotton or its destruction by the rebels to prevent its falling into our hands, hence it is to their interest to give information to the rebels of every contemplated movement. I have not sent an expediting into the enemy's lines without finding agents of this character in communication with the rebels, giving them information regarding our movements, and nearly every expedition has been foiled to some extent in some of its objects by information so communicated. I have now several speculators, who were captured in the enemy's country, awaiting trial under the fifty- seventh Article of War for giving information to the enemy, but the punishment of these men is no compensation for the evil they have occasioned, and will not secure us from future disasters from the same cause. I have in my possession papers in relation to contracts made with English houses in Mobile for the exportation of 200,000 bales by the way of this port. The conditions of the sale require that the payments be made in supplies, in gold, or in foreign exchange. The net profits of these transactions are estimated by the contractors themselves at $10,000, and it is easy to see how much zeal will be evoked by profits of this magnitude. I cite this as one of many instances that have come under my observation and to show the character of these transactions in the Mississippi Valley.
I ask attention to the memorandum printed on page 8 of the inclosed pamphlet, referring to the particular transaction just cited, and indicating clearly the means by which our laws are evaded, and how the amount due the rebel Government is converted into foreign exchange. The rebel armies, east and west of the Mississippi, have been supported mainly during the past twelve months by the unlawful trade carried on on the river. The city of New Orleans, since its occupation by our forces, has contributed more to the support of the rebel armies, more to the purchasing and equipment of privateers that are preying upon our commerce, and more to maintain the credit of the rebel Government in Europe, than any other port in the country, with the single exception of Wilmington. I do not make these statements as conjectured, but from evidence that will prove conclusive to any impartial mind. I know that the restrictions of the law of July 2, 1864, have reduced the rebel armies east and west of the river, and greatly straightened them for supplies essential to their existence. Kirby Smith has officially announced that he can no longer supply his army with clothing, and every rebel paper coming from west of the Mississippi contains appeals to the families and friends of soldiers to contribute clothing. The last Alexandria paper contains a proclamation by the rebel Governor, appealing to the people of Louisiana to furnish clothing to the suffering