On 24th one brigade of cavalry started to march toward Grenada. Same day cavalry at Panola marched northward. Railroad bridge over Pearl River being reconstructed; trains on Meridian road run to Brandon and the river; on Mississippi Central, Grenada to 12 miles of Jackson. Bridge over Yallabusha not being rebuilt, and one locomotive north running between Panola and Grenada. Force under Pold probably be sent to Georgia; infantry, estimated, 5,000; Hardee's effective, 32,000; Johnston to assume command. Three or four light batteries, breech-loading 3-pounders, to fire incendiary shell, to operate along river about Austin. Steam-boat burners under J. W. Tucker, Mobile; agents all over the river; principal disbursing agent, Major Pleasants, at Senatobia. Drafts and checks to pay-agents paid in Memphis and Saint Louis. At latter point man named Hedenberg, in Homeyer's commission house, concerned somehow. Informer, an old dealer named Prescott, went out Christmas week to Elam's, 12 miles on Holly Ford road, probably on this business. parties concerned frequently come near the lines of Memphis and return south. Cotton brought into Memphis to raise funds for secret agents. Gaines one of the burners, and probably Loudon. Forrest to be maintained north of Memphis and Charleston Railroad if possible; if not, to operate on Mississippi River below. Headquarters Chalmers' brigade always to be Oxford; Ferguson's, Verona or Okolona. A regiment for picket kept at Coldwater depot and crossing. Detached commands and new organizations to form at Panola. Kentucky Faulkner has 1,200 men (three regiments), one-third only armed and equipped. Forrest's force, fairly estimated, 3,000, inclusive of Faulkner. Logan's cavalry, of Jackson's division, to operate on the New Orleans and Jackson Railroad. A large side-wheeler, the Nashville, at Mobile; has engines in and is being plated; wheels protected by compressed cotton; will be the finest of the fleet when completed.

MEMPHIS, January 2, 1864.

Major General W. T. SHERMAN,

Commanding Army and Department of the Tennessee:

GENERAL: You will before this reaches you have received my corps returns. I am wholly at a loss to know where to obtain the infantry force which you require. Forrest, having crossed from West Tennessee into Mississippi, has effected a junction with Chalmers and now lies along the Tallahatchie with about 6,000 men. With this force lying in my front and threatening a movement either on the city or the railroad, I can scarcely reduce the force while I am condemned to keeping up the road. My cavalry is wearing out from hard service and I cannot procure a remount, although the estimates were sent on in October. I have 1,800 men dismounted. I have not heard a word from A. J. Smith, and do not know where he is since December 21. He should have moved his cavalry down here, scattering the bands of guerrillas above. A regiment or two of infantry can be taken from Columbus, the Fifty-second Indiana from Fort Pillow, and the balance drawn from the railroad. I inclose you a copy of the telegram* from W. Sooy Smith and my reply.

Your obedient servant,

S. A. HURLBUT,

Major-General.

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*Not found.

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