[Application of Major [N. B.] Pearce for exemption of cotton in favor of Contractor Jacobs.]

HEADQUARTERS COTTON BUREAU,
Shreveport, La., September 19, 1863.

All goods contracted for by competent officers for Government purposes, payment of which is to be made in cotton, permit to export will be given after delivery of goods in payment of export duty. No permits are being issued in advance of delivery of goods contracted for.

W. A. BROADWELL,

Lieutenant-Colonel, and Chief of Cotton Bureau.

HEADQUARTERS TRANS-MISSISSIPPI DEPARTMENT,
Office of the Cotton Bureau, Shreveport, La., January 19, 1864.

Major J. P. JOHNSON,

Assistant Inspector-General:

MAJOR: I am unable to make you any very satisfactory report as to the working of this bureau. It is governed by no specific law, and ignored in the Army Regulations.

The Texas office is chartered by an army order, setting forth the fundamental principles by which it is governed, but the functions the cotton bureau is expected to perform and the extent of the power vested in me have never been made known. Some legislation would seem necessary to remedy evils which you cannot fail to have discovered in your inspection of the department. You have herewith copy of my late report to Mr. Memminger, which contains about all the information I can give in addition to what has been verbally expressed.

Some allusions to the practical workings of the contract system may not be improper. I believe that if this subject was properly understood by Congress, the export duty would be raised by the Government, if necessary, to 25 cents per pound, in order to prevent the great wealth of the nation from leaving the Confederacy without any equivalent return. To illustrate my views on this particular subject, I submit a review of certain contracts entered into in this department, wherein the contractor is permitted to export 2,000 bales of cotton in advance of the introduction of supplies, and is to be allowed 65 per cent. profit on the proceeds invested, payable in cotton at 25 cents per pound. The contractor purchases from our people 2,000 bales, at &100 per bale, &200,000; for which, if sold in New York or New Orleans, he will receive &400 per bale in greenbacks, at the current price, 83 cents per pound, &800,000; but if he concludes not to trade with the Yankees, and ships the cotton to Europe, he will receive &600,000 (&300 per bale in gold, at the current price in Liverpool, 60 cents per pound). For this amount invested and returned in supplies he receives the original cost and 65 per cent. profit in addition to expenses, say &1,320,000, which, paid for in cotton at 25 cents per pound, would give the contractor over 12,000 bales of our cotton, which he has permission to ship to Liverpool, where it will sell, at the current price, for &300 per bale, &3,600,000; worth in our currency at the present gauge over &70,000,000 in Confederate money.

You will observe that this estimate is based upon the supposition that everything is done on the part of the contractor which he obligates himself to do, but experience has proven that contractors rarely ever comply with their engagements if permitted to export our staple in advance of the introduction of the supplies, in which case the contractor is enriched

37 R R-VOL XXVI, PT II