CAIRO, ILL., November 27, 1861.

Captain J. C. KELTON:

The rebels are fortifying New Madrid; have 500 negroes at work. A party of our cavalry was yesterday in Belmont. No enemy found on the Missouri side.

U. S. GRANT.

SAINT LOUIS, November 27, 1861.

Quartermaster-General M. C. MEIGS,

Washington, D. C.:

SIR: I have received your letter of the 15th [21st] instant, and am pleased to find that you commend my system of accountability, although objecting particularly to the grade or name of paymaster.

Allow me in regard to this subject to state that Commodore Rodgers, I believe with your concurrence, appointed three captains' clerks and acting paymasters for the three gunboats under his command. These appointments were, is accordance with the usage in the gunboat and transport service, at a salary of $1,200 per annum, and a responsible bond given by each of these men so appointed, with two good bondsmen, in the sum of $5,000, certified to by the United States district attorney. This plan prevailed under Commodiore Rodgers, and I adopted a similar one, and appointed good men for these positions, with responsible bondsmen, to act under the authority and direction of their respective commanders and myself in their various disbursement.

Your are aware that you gave ne the authority by which I appointed Mr. Wise as a kind of an assistant to me at a salary of $200 per month.

On my arrival at Saint Louis and after consulting with Commodore Rodgers we both saw the necessity of finding a person with attainments and business capacity, not only to assist me personally in my various duties, but a man with naval experience in all needed matters in the difficult task of organizing a navy in he West.

Commodore Rodgers and myself immediately secured the service of Mr. S. Henriques for this purpose, who we both have sailed with in the Navy, and in whom we both knew, from personal experience, that we would find the needed and requisite qualities. He has been in the service of the Government for upwards of twenty years, and his services have been and are indispensable to me.

Not knowing what to do with Mr. Wise, who was not fully qualified for my purposes in this respect, and finding, according to your letters to me, that you intended to sent me the money for disbursement, I applied to you for a quartermaster, and thus relieve myself from any direct money disbursement, as my time would necessarily have been occupied by many detailed matters of less importance. I also informed Mr. Wise to apply for the position, not imagining for an instant that the appointment of Mr. Wise would debar me of the more useful services of Mr. Henriques, the former of which could not efficiently take charge of all the disbursing agent on board the gunboats.

In view of these circumstances, and to get up a system and supervision of all matters in the flotilla connected with my arduous duties, and after a due consultation with Commodore Rodgers, who strenuously urged me, for the good of the service, to secure the service of Mr. Henriques, I appointed him paymaster-in-chief of the naval flotilla under my command, and I have given him the lowest pay of a paymaster