ORDNANCE OFFICE, August 6, 1864.

Honorable E. M. STANTON,

Secretary of War:

SIR: I have the honor to acknowledge your instructions of 28th ultimo directing me to report in regard to gunpowder and saltpeter, and in compliance therewith have to state that the whole amount of gunpowder of all kinds purchased by this department from the 1st of January, 1861, to the 30th of June, 1864, amounts to 185,691 barrels, or 18,568,100 pounds, and the price paid for it was, per pound: For the year 1861, 20 cents; for the first half of 1863, 20 to 22 cents; for the last half of 1863, 24 cents; for the first half of 1864, 24 cents, and the present price is 30 1\2 cents. The amounts of saltpeter now in store at the arsenals is-crude 4,819,648; refined, 4,490,031. Total, 9,309,679 pounds, the cost of which was as follows: That which was purchased in 1865, 1846, and 1847 was refined and delivered at 87 1\2 cents a pound. The stock purchased since that time was procured in 1862. Mr. Sanford purchased in Europe 1,246,625 pounds, which cost Government 16.52 cents a pound in bond, and the Messrs. Du Punt furnished 4,542,127 pounds at 8.475 cents a pound. The former was refined, the latter crude.

The present market value of saltpeter is reported to be 20 to 28 cents for crude and 25 to 28 cents for refined.

In reply to that portion of your instructions which requires me to give an opinion as to whether it is not advisable to increase the stock of saltpeter in the hands of the Government, and if advisable to do so, what measures should be taken for the purpose, and the reason upon which my opinion is based, I have the honor to report that it is my opinion the stock should be increased, perhaps, to the extent of 2,000,000 to 3,000,000 pounds, but the measures to be adopted to that end should be well considered. I am clearly of the opinion that it would be highly detrimental to the public interest for the Government to go into the market at once and buy all the supply of saltpeter upon which powder manufactures rely to supply us with powder. The best plan, in my opinion, would be to negotiate for the future delivery of the supply we require, say in six to eight months from date of agreement. This would not very materially interfere with the supply now in market, and would be in ample time for our wants.

From the previous remarks it will have been observed that we have purchased in the period since the war began 18,659,100 pounds of gunpowder, which is at the rate of 5,305,452 pounds per annum; but we have not consumed all this powder, as most of our fortifications are well supplies with that material, and we have large quantiture of ammunition on hand. Besides this, much of the expenditure of ammunition in the early stages oss waster, which is now in a great degree checked by the present better Grant that he has given to this subject his particular attention. But supposing that we consume powder at the rate of 5,500,000 pounds per annum, our percent stock of saltpeter will make powder for a supply of upward of two years, and if increased as suggested, for very nearly three years. The price of powder has certainly become dear, and will doubtless still increase in value, but it has not increased in a greater proportion that other manufactured articles, and I have no reason to believe that the manufactures of this articles, and I have no reason to believe that the manufacturers of this article have any desire to take advantage of our necessities, as they find it to their advantage