As I have before remarked, the holding of that country is regarded by the President and Secretary of War of the very greatest importance, both in a political and military point of view, and no effort must be spared to accomplish that object. While we hold Chattanooga (and it is supposed that place will be rendered impregnable during the winter) and the passes of the mountain range which separates East Tennessee from Georgia and North Carolina, the enemy cannot moles Kentucky or Tennessee, except by wide flank marches thought Alabama or Mississippi and by the valley of Virginia which would give us very great strategic advantage by enabling us to move on central and interior lines. Again, if we resume the offensive we shall have the advantage of operation from a central position against their long line of defense and of selecting our point of attack. I fully agree with you in the great importance of being able in the next campaign to select our theater of operations and fields of battle instead of having them forced on us by the rebels; but we cannot do this unless we have control of East Tennessee.

I also fully agree with you that our greatest difficulty at present is to supply our troops in that country. Every possible effort should be made to increase the supplies at Chattanooga and to open and protect the line from that place to Knoxville. The project of General Burnside, adopted in part I junderstand by General Foster, to build a new railroad and to open new lines of communication with Kentucky across the mountains, does not seem to me to be feasible, at least it will not obviate the difficulty, oft these roads cannot be built and opened in time to be any use in this campaign ot the next.

General Thomas seems to fully appreciate the importance of increasing the means of transportation between Nashville and Chattanooga and thence to Knoxville, and Colonel McCallum has full powers from the Secretary of War to repair and improve these lines and to increase the rolling-stock.

The matter will also, no doubt, receive your personal attention.

Very respectfully, your obedient servant.

H. W. HALLECK,

General-in-Chief.

KNOXVILLE, January 18, 1864.

Major General U. S. GRANT:

Your telegram received. Generals Parke and Granger have been forced to fall back from Dandridge before Longstreet. I shall concentrate on this place. It is impossible to retire farther toward General Thomas, without sacrificing one-half of our artillery and forces; besides I look this point as of too much value to be abandoned without a desperate fight. If we are besieged here a relieving force can advance up the Tennessee, and be well supplied all the way to london by steam-boats on that river. We have a rumor that John Morgan is advancing toward Maryville. I have ordered General Sturgis to meet him at the crossing of the Little Tennessee.

J. G. FOSTER,

Major-General.