WAR DEPARTMENT, Washington City, May 29, 1865.

Honorable EDWIN M. STANTON,

Secretary, &c.:

SIR: I have the honor to report that I have examined the subject of the disposition to be made of the railroads in the States lately in rebellion, referred to me in connection with the report of the Quartermaster-General, and the rules which he has recommended to be established.* The second rule proposed by the Quartermaster-General provides that no charge shall be made against railroad for expense of materials of expense of operation while it has been in the hands of the military authorities of the United States. In other words, he proposes to restore every railroad to its claimants without any special consideration from them for any improvements which the United States may have made upon it. It is true that in his fourth rule he includes past expenditures of defense and repair as an equivalent for the use of the road while it has been in the public service, but in many cases this does not appear to me to be sufficient. Our expenditures upon some of these roads have been very heavy. For instance, we have added to the value of the road from Nashville to Chattanooga at least $1,500,000. When that road was recaptured from the public enemy it was in a very bad state of repair. Its embankments were in many places partially washed away, its iron was what is known as the U-rail, and was laid in the defective old-fashioned manner, upon longitudinal sleepers, without cross- ties. These sleepers were also in a state of partial decay, so that trains could not be run with speed or safety. All these defects have now been remedied. The road bed has been placed in first-rate condition. The iron is now a heavy T-rail, laid upon new this throughout the entire length of the line. Extensive repair shops have also been erected, well furnished with the necessary tools and machinery. I do not conceive that it would be just or advisable to restore this road, with its improved track ad these costly shops, without any equivalent for the great value of these improvements other than the use we have made of it since its recapture. The fact that we have replaced the heavy and expensive bridges over Elk, Duck, and Tennessee Rivers, and over Running Water Creek, should also not be forgotten in deciding this question.

The above general remarks are also applicable to that portion of the Orange and Alexandria Railroad between the Potomac and the Rapidan. Very extensive repair shops have been erected at Alexandria and furnished with costly machinery for the use of this road, and I understand that the iron and the road bed are now much better than when the Government began to use it.

The same is still more the case with the road between City Point and Petersburg. When that road was recaptured from the public enemy not only was the road bed a good deal washed away and damaged, but neither rails nor sound ties were left upon it. Now it is in the best possible condition. Can any one contend that it ought to be restored to its claimants without charge for the new ties and iron?

The case of the railroad from Harper's Ferry to Winchester is no less striking. It was a very poor road before the war and was early demolished by the rebels. Not a pound of iron, not a sound tie, was to be found upon the line when we began its reconstruction in Decem-

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*See May 19, p. 26.

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