You may have been troubled at hearing reports of drunkenness here. There was some after pay-day, but generally all is as quiet and orderly here as possible. I traverse the city every day and night, and assert that Memphis is and has been as orderly a city as Saint Louis, Cincinnati, or New York. Before the city authorities undertook to license saloons there was as much whisky here as now, and it would take all my command as custom-house inspectors to break open all the parcels and packages containing liquor. I can destroy all groggeries and shops where soldiers get liquor just as we would near Saint Louis. Also the newspapers are accusing me of cruelty to the sick-as base a charge as was ever made. I would not let the sanitary committee carry off a boat load of sick because I have no right to. We have good hospitals here, and plenty of them. Our regimental hospitals are in the camps of the men, and the sick do much better there than in the general hospitals; so say my division surgeon and the regimental surgeons. The doctors would, if permitted, take our entire command. General Curtis sends his sick up here, but usually no nurses, and it is not right that nurses should be taken from my command for his sick. I think that when we are endeavoring to raise soldiers and to instruct them it is bad policy to keep them at hospitals as attendants and nurses. I send you Dr. [Nelson R.] Derby's acknowledgment that he gave the leave of absence of which he was charged. I have placed him in arrest, in obedience to General Halleck's orders but Dr. Derby is still in charge of the Overton Hospital, which is not full of patients. The State Hospital also is not full, and I cannot imagine what Dr. Derby wants with the Female Academy out on Vance street. I will see him again and now that he is chief at Overton Hospital I think he will not want the academy; still, if he does, under your orders, I will cause it to be vacated by the children and Sisters of Mercy. They have just made publication for more scholars, and will be sadly disappointed. If,however, this building or any other be needed for a hospital it must be taken; but really in my heart I do not see what possible chance there is under present circumstances of filling with patients the two large hospitals now in use, besides the one asked for. I may, however, be mistaken in the particular building asked for by Dr. Derby, but will go myself and see.

The fort is progressing well, Captain Jenney having arrived. Sixteen heavy guns have arrived, with a large amount of shot and shell, but the platforms are not yet ready; still, if occasion should arise for dispatch, I could put a large force to work; but Captain Prime when here advised that the work proceed regularly under the proper engineer officer and laborers.

I am, &c.,

W. T. SHERMAN,

Major-General, Commanding.

CORINTH, August 26, 1862.

General H. W. HALLECK, Washington, D. C.:

Your dispatch about cotton has been so mutilated in transmission that it is not understood. All cotton seized by Government is sold by quartermaster for the benefit of whom it may concern; names of claimants and amount received kept, so that claims can hereafter be settled by proper tribunals.

U. S. GRANT.

Major-General.