rior officers, were forwarded to me, as one of the purchasing agents of the department, with instructions to make a contract upon the basis indicated if I deemed it advisable. I declined contracting, upon the grounds that in my judgment no just and corresponding equivalent for privileges granted and wealth disposed of were offered to the Government.

The contract, as based upon the use of cotton and the conditions and the results flowing therefrom, may properly be presented as follows: The contractor proposes to buy within the district of Arkansas, with his own means, 2,000 bales of cotton if the Confederate States will allow and assist him to export it beyond its limits, this privilege to be granted in order to give him a capital on which to operate. For these 2,000 bales of cotton he will pay our citizens, in Confederate money, $ 100 per bale, or $ 200,000, and for these 2,000 bales of cotton, if sold in New York or New Orleans, he will receive $ 400 per bale in U. S. money, now the current prices in those cities, or $ 800,000. But if he concludes not to trade with the Yankees and to export the cotton to Europe he will receive in gold $ 300 per bale, now the current price in Liverpool, or $ 600,000. This done (that is, the cotton being sold in New York or New Orleans), he proposes to invest the proceeds in army supplies, to be delivered within the Confederate States lines in the Trans-Mississippi Department, upon conditions of his receiving a profit of 65 per cent. on the amount expended. Thus -

He expends for supplies ................................ $ 800,000

Upon which he receives a profit of 65 per cent ......... 520,000

Making the amount due by Government upon delivery of the

supplies ............................................... 1,320,000

To be paid in cotton, at the rate of 25 cents per pound or $ 100 per bale, requiring of the Government 13,200 bales of cotton, which are to be delivered to the contractor at some navigable point. This large amount of cotton he receives on an investment of only $ 200,000 in Confederate money.

Let us now see what would be the contractor's profits, which may be thus shown:

First. He takes out of the Confederate States 2,000 bales

of cotton, worth in New York or New Orleans ............. $ 800,000

Second. He receives in payment for supplies brought into

the Confederate States 13,200 bales of cotton, worth in

New York or New Orleans ................................. 5,280,000

Showing the total worth of the 15,200 bales of cotton

thus taken out of the Confederate States to be .......... 6,080,000

Deducting his expenditures, which are -

First. For the purchase of 2,000 bales of cotton, paid in

C. S. money to our citizens ............................. 200,000

For expenses of transportation on this amount of cotton

from place of purchase to New York or New Orleans, at the

rate of $ 10 per bale, U. S. money ...................... 20,000

Second. For purchase of army supplies, paid in U. S. money

to Yankees .............................................. 800,000

Third. For expenses of transportation on the 13,200 bales

of cotton received in payment to New York or New Orleans,

paid in U. S. money, at $ 10 per bale ................... 132,000

Making his total expenditures ........................... 1,152,000

Thus giving him a gain or profit in U. S. money of ...... 4,928,000