[Inclosure.]

MEMORANDUM OF CONVERSATION WITH A PRACTICAL OBSERVER.

First, the Confederate ram just launched at Montgomery is a poor affair. Second, a small torpedo steamer built upon the latest and most approved plan very recently left Selma for Mobile. She makes eleven knots an hour, sinks with great facility, and is intended to act upon the blockading squadron. Third, they speak confidently of an attack on the squadron. Fourth, they are building a number of these torpedo boats at Charleston and Selma. Fifth, the opinion prevails all over the Confederacy that an armed insurrection will take place in Ohio, Indiana, Illinois, and Kentucky; Southern agents with commissions from Richmond swarm in Canada and the Western States; the postponement of the Chicago Convention was recommended from Richmond. Sixth, it has been determined to burn all the cotton-gins and sugar-houses in Louisiana and along the Mississippi River if possible; the plan is now maturing. Seventh, the impression is general that the French (rebel) rams may be looked for every day, and that they will first appear off Mobile. Eighth, Lee's and Johnston's armies are both better fed than at any time previous since the war. Ninth, corn crops everywhere fine, wheat abundant, but injured by wet weather; pork more than last year by one-quarter. Tenth, guerrilla warfare to be organized on a large scale and encouraged in every possible way. Eleventh, desperate men, convicts, &c., at the North to be employed by rebel agents to burn steamers, ships, cities, &c. Twelfth, the defeat of Lee and Johnston to be followed by a general war of ambush and conflagration.

[Indorsement.]

HEADQUARTERS DEPARTMENT OF THE GULF,
July 11, 1864.

Respectfully forwarded to Major-General Canby, commanding Division of West Mississippi. The writer is a gentleman of entire reliability, who has the best opportunity for obtaining correct information within the rebel lines.

N. P. BANKS,

Major-General, Commanding.

SPECIAL ORDERS,
HDQRS. DEPARTMENT OF THE GULF, Numbers 179.
New Orleans, July 7, 1864.

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10. Company C, First Indiana Cavalry, is hereby relieved from duty in this department, and will proceed without delay to rejoin its regiment, now serving in the Army of the Potomac. The quartermaster's department will furnish the necessary transportation.

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22. The commanding officer Ninety-seventh Illinois Volunteers will at once report to Major General Joseph J. Reynolds, U. S. Volunteers, New Orleans, for orders.

23. The Twenty-ninth Wisconsin Volunteers, now at Kennersville, will proceed at once to New Orleans, when the commanding officer will report immediately upon arrival to Major General J. J. Reynolds for orders. The quartermaster's department will furnish the necessary transportation.