From every source of information, it is certain, that the cotton in the exposed district is in the most deplorable condition. Large plantations are abandoned everywhere, and the cotton has been left in sheds. These tumble down or are blown down. Stray cattle destroy the cotton; soldiers, particularly cavalry, strip it of the ropes and bagging, or make use of it for beds, scattering it in every direction; fires are of frequent occurence per accident or incendiarism; the poor of the county take away as much as they can make use of; runaway negroes devastate; thieves, with whom the country abounds, carry off the cotton by wholesale, trading it to the Yankees, or hiding it in inaccessible places—they do it at night, or even in broad daylight, as there is little law in the county. Even those who have sold their cotton to the Government, in their desperate fortunes, regarding themselves as beyond the protection or reach of the Confederacy, sell it again to the Yankees, upon the pretext that they will replace it out of the next crop, or out of cotton in other quarters. They justify the act by their necessities. There is reason to fear that the soldiery are sometimes implicated in the guilt. Parties visit the section with forged powers, represent themselves as Government agents, and take away the cotton using force, if necessary. General demoralization prevails throughout much of the entire section, reaching to every class. Trade with the enemy is universal. The temptations to fraud are overwhelming. Even our own agents, are often charged with complicity. I have endeavored to procure men familiar with the country, and the best recommended. They report it to be impracticable to prevent the depredations.

From the reports of agents, I estimate that there are about ten thousand bales of cotton, owned by Government, remaining in the district. It cost the Government from eight to fifteen cents in its depreciated issue, and is yet capable of reimbursing us for all losses in the district. The cotton, for reasons above, is generally in miserable condition. Even when best protected and guarded, the bagging and rope will burst after several years. Most of the representations made to Richmond, and to which the Secretary has frequently called my attention, have reference to these cottons. Those in other parts of the State are receiving constant supervision from my agents. The owners being on the estates, makes the matter practicable. Large quantities of cotton; owned by private parties, who reside out of the State, being greatly neglected, are frequently reported to be Government cotton.

This has been accomplished in the wildest and most irrational manner. Under the influence of panic, thousands and ten thousands of bales have been burned, which the enemy could not possibly have reached. Even in presence of mere cavalry raids the torch has been frequently used. The most incompetent persons are often employed. The greatest possible irregularities occur. Whilst the cotton of some parties is burned, that of others is spared. The charge of collusion is frequently made; certain it is, that no general principle has been observed. Cotton is burned and no receipt given. It is burned at times with the gin-house. It is ordered to be turned out for burning,and after being stripped for the purpose, is left unburned, to be destroyed by the weather or cattle, or to be carried away. It is burned ruthlessly and madly, in places remote from danger, whilst entire districts, contiguous to the enemy, are spared. The commanding General (Johnston,) admitted this, in conversation with me, and deplored it. Thus, the most intense heart-burnings are engendered, and much of the demoralization among the people, frequently referred to, is the result. In one county, (Wilkinson,) the cavalry burned public cotton only, leaving the private cotton untouched. Private parties and holders will not burn, fearing retaliation from the enemy.

Frequent orders from Richmond have come to remove the cotton from the exposed districts, and a large organization was set on foot by me for the purpose. Responsible and competent persons were sent into the district with ample means and authority. After an experiment of nearly six months, the whole may be regarded a failure. In that time eight hundred bales were brought out from the south-western counties, at an expense equal to nearly the original cost, and sent to Enterprise to be stored. This was regarded a most eligible point, but it reached there on in time to be largely used up by the Sherman expedition, which destroyed also such as was en route. Had the cotton remained on the plantations, it would have escaped. Thirteen hundred bales were removed out in north-western Mississippi, and stored in the vicinity of Goodman, to await transportation on the Central railroad. More than half of it was immediately afterwards fired by incendiaries and destroyed. This, too, though a guard had been ordered over it. I caused all the cotton to be brought out of Panola county. It no sooner reached points on the railroad, than it was all destroyed by the military. Six thousand bales were used in Fort Pemberton. I was in the act of having it re-bailed and brought away, when the cavalry dashed in and destroyed it. General Pemberton advised me to remove all our cotton from the Yazoo and Tallahatchie. I asked him to fix a place for them, which he would regard secure. He named points on the Southern road, between Morton and Meridian. Had I adopted this course, every bale would have been lost. Four thousand bales were removed by me from north-eastern Mississippi; I carried it, to be stored, near the eastern border of the State, on the Tombigbee, but the rough handling received from the wagon and the railroad has put much of it out of order, and extensive repairs are being now conducted. This cotton was, however, saved by removal; but it is exposed to accident from fire by such large aggregation, and I have sent an agent to procure other warehouses, so as to divide the risk in several parts. It is almost impossible to get storehouses or warehouses. Mobile would be an unsafe point to store. I cannot often build stores on account of the great scarcity of materials and labor. They are absorbed by the army. There is another great difficulty in the way of removal. The planters have no transportation, and there is little in the country. Horses, mules and wagons have been taken away by one or the other army, or by the enemy. Where there are teams, the parties will not accept Confederate money. They cannot use it. I have been compelled to pay for transportation in sugar and salt, bought for the purpose. The necessities of the crops, in general, require all the teams that remain. To impress them would intensify the discontent and increase the demoralization, thus effecting more harm than good. The cotton is, besides, in no condition for transportation for any distance.

I have the means at any time of sending agents into Memphis or New Orleans to transact with foreigners or their consuls. Citizens of high character are in communication with me, wishing to undertake the business. I enclose some of their letters. The policy of such exchange is almost universally maintained in the State to be the true one for the Government. I have received assurances, almost official, from Yankee authorities at Vicksburg, Memphis, New Orleans, &c., that no interference would be had in the matter.

The War Department has several contracts embracing the delivery of Mississippi cotton. One of collossal character is given to Mr. Pollard. Thus the Administration's virtual control of the cotton will be taken out of the Treasury. I have the evidence that Mr. Pollard is giving out sub-contracts, and their numbers may be indefinite; each petty sub-contractor having military protection to take out the cotton and bring stores. Parties that I know to be irresponsible, have likewise obtained contracts at Richmond, I have the lists of articles needed by the War Department, and the price they are paying, and can have a responsible agent in each county to deliver cotton in all cases of purchase, and turn over the stores to the nearest quartermaster, obtaining his voucher for the same. Under the Pollard contract, the military authorities are now hauling our cotton to the vicinity of the river, to await the arrival of stores, and if there is any failure of such arrival, the cotton will inevitably be lost, either by act of the enemy or of marauders, with whom the country abounds. This, too, whilst I have been expending large sums upon the very opposite policy, indicated in your telegram of December 8th, of bringing away the cotton from such localities.

Whatever is done must be done speedily. On the most intelligent and reliable testimony, if the cotton in the exposed district be not parted with in the next few months, it is irredeemably lost to the Government. Now is the time to move. Everything favors action. The occasion may not happen again. Better to part with the property, even for treasury notes, than to incur the total loss. It can be sold for them at from eight to ten times what it cost the Government.