The purchase of cavalry horses for some months past has been under the direction of the Cavalry Bureau. Since the passage of the law of the 4th of July, 1864, for the better organization of the Quartermaster's Department, the purchase of all animals for the department has been placed under the direction of the chief of the division of this office specially charged with the supply of horses and mules. The result is a more regular system a better control of supply, and greater uniformity and greater skill in the inspection of all these animals.

There were purchases, according to reports received at this office, during the fiscal year ending June 30, 1864, 188,718 horses, 82,320 mules; and there were captured from the enemy in the same time, as reported, 20,308 horses, 9,013 mules.

Between the 1st of January and 30th of June, 1864, the Cavalry Bureau purchased and supplied to the Army 48,719 cavalry horses. From 1st of July to 30th of September, 1864, it purchased 39,106 horses. The supply averages about 500 per day, which is also the measure of the destruction of these animals in service.

During the first eight months of the year 1864 the cavalry of the Army of the Potomac was supplied with two remounts, nearly 40,000 horses.

To the army of General Sherman there were issued through the Nashville depot, between the 1st of November, 1863, and 14th of September, 1864, 41,122 horses.

The inspection now enforced procures good, serviceable horses. The waste in active service is still too great; but as the cavalry has improved in discipline and knowledge, it is believed that the horses last longer.

The supply of fresh horses to the army of General Sheridan during his late campaign in the Valley of the Shenandoah has been at the rate of 150 per day.

The broken-down horses and mules able to bear transportation are sent to the rear, where, at the depots, they are carefully examined and divided into classes.

Those affected with glanders or other fatal and contagious diseases are shot. Those which there is reason to believe can in a reasonable time, by care and food, be made fit for cavalry, artillery, or ambulance service are placed in comfortable stables, carefully tended, and fed upon proper and nourishing food.

The others are sold at auction in different parts of the country.

Many of them die, but many of them also recover, so as to make good work horses, and supplying, to some extent, the wants of the farmer, they release and equal number of horses from agricultural labor to be sold to the Government for the use of the military service.

I estimate that about 50 per cent. of the horses which reach the depots disabled and broken down are returned ultimately to the military service.

OCEAN TRANSPORTATION.

The operations of this department have required the constant employment of a large fleet of ocean steamers and sail vessels.

Early in the war the charter of these vessels was attended with many abuses. Experience was wanting in the offices called into the service, and charters were made in some cases at extravagant rates.

The ownership of the steam vessels absolutely required for military