I inclose a report upon the expediency of selling a part of the Gunpowder, to which you will be so good as to subjoin your approbation.1

My friend Col. Johnstone spares no one, on the subject of Ward and Taylors contract.2 The truth is that by his assiduity, during the session of Congress, they fared much better than any other Contractors. They have actually received near 500,000 Dollars on their old Contract; and I have just given them a warrant for 10,000 Dollars on their new Contract, in advance. Their Accounts are not settled; and the apparent balance of their account for their old Contract is about 50,000 Dollars; liable, however, to an augmentation, upon additional vouchers. One of the New-York Contractor has a balance of more than 500,000 Dollars due to him. But, in point of fact, Mr. Ward himself was with me a day, or two, ago; and was perfectly satisfied with my arrangements: And, in point of law, the appropriation for Subsistence is exhausted, and unless we can reemit it from the Ordonance fund, we shall be obliged to suspend all payments until Congress meets.

I sent a copy of Genl. McArthur’s letter to Genl. Brown as soon as I received it; and I will write, to the Commanding officer at Fort Wayne, to make himself secure at that place.3 I think you will find it necessary to hold a distinct Treaty with the Indians, to whom the General’s letter relates. Govr. Clarkes commission is to treat with the Indians west of the Illinois river and Lake Michigan, merely for peace in pursuance of our Treaty with England.4 But the Indians of whom Genl. McArthur speaks inhabit east of the Illinois river and Lake Michigan, in Michigan territory &c &c. and are principally the very Indians with whom Govr. Cass & Genl Harrison concluded the Treaty of the 2d. July 1814.5 As a Treaty is certainly better than a war, I submit to you the appointment of Govr. Worthington, Genl. Wilkinson, and Mr. John Graham (who, in a letter to his Brother from Chilicothe expresses a wilingness to serve) as the pacific negotiators. In the meantime, I will write to Gov. Worthington merely to draw his attention to the subject; and to request his good offices in preserving harmony. Gov. Cass will, also, be instructed to use his best endeavours to prevent, or to repel, hostilities.

As it is probable that I shall see you in a few days, the important objects connected with our Indian country, the posts at Malden and Mackinaw, and the arbitration articles of our Treaty, will be reviewed. But do you not think it would be adviseable to appoint, at once, our Arbitrators under each Article of the Treaty, and to notify the appointment to the British Government?6 The English interest is all on the side of delay; our interest is all on the side of decision; and the moment is favorable to enforce a settlement. I am always afraid of allowing rights, or claims, to assume the character of being obsolete. I am, Dear Sir, most respectfully & faithfully, Yrs.

I inclose Mr. Graham’s letter.7 Provision had been long ago made to pay the Troops, which he mentions, as wanting their pay.

I have just received a letter from Mr. Stickney, dated at St Marys.8 It contains very unpleasant accounts; and, I am afraid, our white men provoke much of the hostility manifested by the Indians. Perhaps, you will think it right to send an admonitory Proclamation into the several regions of new settlements.

[Enclosure}

The Acting secretary of War has the honor to report to the President of the United states,

That during the late War, contracts were made by the Ordnance Department for procuring among other munitions of War very large supplies of Gun powder, in addition to a considerable quantity previously deposited in the public magazines. That on the proclamation of peace, immediate measures were taken, under the authority of this Department, to cancel some of those contracts, or to suspend the execution of them, so as to spare the heavy disbursments which they required at the Treasury, and to render the appropriations for the War Department more adequate to the essential objects of public service. That the measures thus taken have not, however, been successful; there has been received into the public magazines the quantity of  9 of Gun-powder; and there yet remains to be received under the existing contracts a quantity of  10 making together the gross quantity of  11 far exceeding any probable demand for a considerable period of time, during which the Gun-powder will be exposed to various accidents.

And the Acting secretary of War has the honor further to report, that several of the specific appropriations for the War Department are nearly exhausted, without accomplishing the objects for which they were made. That the public credit, as well as the public service, requires that the appropriations should be so marshalled, under the authority of the act of the third of march 1809, as to supply the deficiency of some of them, from the excess of others. And that; in particular, the appropriation for the Ordnance branch of service, may be made to contribute, with great advantage, to the expenditures for subsistence, Pay, and the Quarter Masters Department.

And the Acting secretary of War has the honor further to report, that the market price of Gun-powder is higher, than the Contract price, at which the Gun-powder has been delivered at the public magazines; that a Sale of  12 weight may be made with great public utility and convenience; and that, therefore, he prays the authority of the President of the United States for making such sale, passing the proceeds to the credit of the appropriations for the Ordnance Department. All which is respectfully submitted.