march after Longstreet. Granger will probably be removed and Sheridan assigned to succeed him, subject to approval of Government. Granger is certainly unfit to command.

[C. A. DANA.]

Hon. E. M. STANTON, Secretary of War.

CHATTANOOGA, December 12, 1863-10.30 a.m.

Elliott was heard from yesterday. He was at Crossville on the 9th instant, moving with a forage train, though ordered to pursue Longstreet. Sherman was ordered back to Bellefonte yesterday with view to a demonstration against Rome, by one column starting from Bellefonte and one from Chattanooga, the object being destruction of railroad bridge over the Oostenaula and removing enemy farther south than Dalton, his present position. Winter rains, which now threaten to set in, may prevent this movement.

[C. A. DANA.]

Honorable E. M. STANTON, Secretary of War.

No. 2.

Report of Lieutenant Colonel James H. Wilson, Assistant Inspector-General, U. S. Army.

KNOXVILLE, November 13, 1863. [Received 14th.]

GENERAL: Since the arrival of Mr. Dana and myself here, General Burnside, in a complete discussion of the situation in East Tennessee and its relation to the general campaign, has given us his views clearly and in detail, and requested me to communicate them to you without delay. He assumes that it is of the first importance to hold East Tennesse, because doing so he draws an ample supply of bread, meat, and forage from the rich country between the Clinch River, Rogersville, and the great the rich country between the Clinch River, Rogersville, and the great Smoky Mountains, for his entire force protects and encourages a large population of loyal people, and deprives the enemy of a source of supplies of the greatest necessity to him. It simply becomes a question of how this can best be done, of how his forces can be most advantageously posted with that object in view, or in case he is compelled to give up the country entirely, to have for his selection such lines of retreat as will lead him in directions upon which he can reach supplies, and at the same time leave him most advantageously situated to assist the main body of your troops in future operations.

The instruction of the General-in-Chief seems to have no other object in view in furtherance of this; therefore he thinks Knoxville the point to be held and around which he must operate. For this point he has the use of the railroad from Lenoir's to Greenville, and rolling stock sufficient to bring in such supplies as may be accumulated at various points along it. The Holston, French Broad, and tributary streams may be also used for flats when the road becomes too bad for wagons. Knoxville is in the region of supplies, and has mills in running order to turn out 150 barrels of flour per day, and can receive the product of other mills able to grind another hundred; contains shops capable of keeping the major part of the material in good order; is susceptible of vigorous defense, and