for the examination of accounts and reports, introduce great economy into the service. It has already been the means ridding the service of several unfaithful officers and of removing imputations unjustly cast upon others.

The organization as now established I believe will be sufficient to meet the demands of the most extended war. Higher rank in some of the most important positions is desirable; but this, though proposed to Congress, was not granted.

More clerks are needed, as stated in a former part of this report, for the thorough and efficient organization of the department.

All difficulties in providing a sufficient supply of clothing and material for our increasing Army have disappeared. The manufacturing power of the country has so expanded as to fully meet the demands. Prices have advanced with the increase of fixation and duties, but not to the extend feared. Horse which were bought at the outbreak of the war for $125, cost now $170, a difference not so great as the difference which they are paid for. And in may be said generally that while prices have advanced they have not advanced in proportion to the appreciation of the metallic currency.

RAILROAD TRANSPORTATION.

The arrangement made early in the war with the railroad companies of the United States, assembled at your request in convention in this city, by which a uniform rate of transportation for troops and munitions of war was established, on terms greatly below those charged to private individuals, has continued. The revenue laws have authorized the addition to the agreed rates of the amount of the taxes since imposed; otherwise, the arrangement remains uncharged.

Some few roads have made application for higher rates; but the great majority of railroads, notwithstanding the general advance in prices, and the great increase in the business which crowds upon them, patriotically supporting the Government, have expressed their willingness to continue the tariff then established, and have continued to perform with alacrity and dispatch all service required of them by the Government.

MILITARY RAILROADS.

The general management of the military railroads of the United States- that is, of those which the public exigencies have compelled the War Department to take into its own hands-has been under the direction of Colonel (now Bvt. Brigadier General) D. C. McCallum, U. S. Volunteers. Of his services in connection with the campaign in the West I have spoken in another part of this report.

He had recommended himself for that duty by the order, system, and efficiency which he had established in the management of the railroads in the East.

The roads worked as military railroads are such as, having been captured from the rebels, being located in the rebellious districts, have been of necessity take possession of by the military commanders, and have been repaired, stocked, and operated by the War Department as avenues of supply to our advancing armies. It has not been found necessary to interfere by military power wight any of the railroads in the loyal States. Though, under the special act give