I have heard of the affair at Cape Fear. It has turned out as you will remember I expected.

I have furnished General Easton a copy of the dispatch from the Secretary of War. He will retain possession of all cotton here, and ship it as fast as vessels can be had to New York.

I shall immediately send the Seventeenth Corps over to Port Royal, by boats, to be furnished by Admiral Dahlgren and General Foster (without interfering with General Easton's vessels), to make a lodgment on the railroad at Pocotaligo.

General Barnard will remain with me a few days, and I send this by a staff-officer, who can return on one of the vessels of the supply-fleet. I suppose that, now that General Butler has got through with them, you can spare them to us.

My report of recent operations is nearly ready, and will be sent you in a day or two, as soon as some farther subordinate reports come in.

I am, with great respect, very truly, your friend,

W. T. SHERMAN, Major-General.

[Entirely confidential]

PROJET FOR JANUARY.

1. Right wing to move men and artillery by transports to head of Broad River and Beaufort; reestablish Port Royal Ferry, and mass the wing at or in the neighborhood of Pocotaligo.