W. T. SHERMAN,
First Lieut. 3d Artillery A.A.A. General.

Appendix I.

The following despatch from Governor Mason, gives an account of the state of affairs in Upper California, in October, 1847:

Headquarters Tenth Military Department,

Monterey, California, October 7, 1847.

Sir: I returned from San Francisco yesterday, and found here Mr. Toler, with despatches from Washington, the receipt of which I have the honor to acknowledge. I am also informed by Commodore Shubrick that the sloop-of-war Preble is ready to sail for Panama, with Passed Midshipman Wilson as bearer of despatches for the United States. I therefore avail myself of the opportunity to send you my letter of the 18th of September, with its several packages, and now have to communicate the result of my visit to San Francisco.

I found the town flourishing and prosperous, with a busy, industrious population of Americans, and refer you to the copies of my military correspondence for the steps adopted to give them a good town government. The Bay of San Francisco, you are well aware, is a spacious, elegant harbor, susceptible of the most perfect defence; but as yet nothing has been done towards fortifying it, or even placing any of the heavy guns in position at the old fort. It is found almost impossible to get much work out of the volunteers; and all that I can now expect of the two companies of Major Hardie's command will be to improve their quarters at the old presidio. This they are at present engaged upon, using lumber made at the horse saw-mill, under direction of the assistant quartermaster, Captain Folsom. All this labor is done by the volunteers, so that the improvements will be made at very little expense to the government. The price of lumber at San Francisco is $50 per M.; but Captain Folsom says that he has it sawed and delivered, by the labor of the volunteers and his own machinery, at about $16. The mill is placed in the timber known as the Red Woods, near the mission of San Rafael, on the west and north sides of the bay, where any amount can be had. If the government design to erect permanent structures to any extent in this country, it would be advisable to send out a steam engine, with all the necessary frames and iron-work to adapt it to immediate use in connexion with the saw and grist mills now in possession of the quartermaster's department here. The site at present selected by Captain Folsom is well adapted, as easy water communication is had with the San Joaquin and Sacramento Rivers as well as the parts of the country south of San Francisco.

At San Francisco I found all the powder, arms, accoutrements, and perishable ordnance property well stored in a building prepared for the purpose at the presidio barracks; but the guns, mortars, carriages, shot, and shells are in the town in the open air, protected by paint alone. The great difficulty of hauling such articles over the rugged hills between the town and presidio will prevent their being hauled to the latter place this season.

I did design to continue my tour of inspection to Sonoma and the Sacramento River, but was recalled by hearing of the arrival of the bearer of despatches at Monterey.