CONFEDERATE STATES,
Navy Department, Richmond, August 16, 1862.

SIR: I have the honor to report to you the operations of this department since the 27th of February last, the date of my last report.

The military necessity of abandoning a large portion of the sea and river shores of our country to the enemy has entailed upon us serious naval losses and interfered to a great extent with our efforts at construction.
The destruction of the Virginia in Hampton Roads, and of many vessels in course of construction upon the rivers of Virginia, North Carolina, and Florida, resulted from the withdrawal of our protecting forces.
In the defense of the Mississippi River against the combined attack of the enemy on the 24th of April, 1862, the naval force at the command of the senior officer participated, and though the results were disastrous to our arms, the conduct of the officers and men of our squadron in the river against overwhelming forces exhibited the highest evidence of patriotic devotion and professional ability and daring.
The conduct of the officers and crew of the McRae in these respects has rarely been surpassed in the annals of naval warfare. Exposed to the terrific fire of many heavy ships, all greatly superior to her in force, torn to pieces by their broadsides, her commanding officer, Huger, mortally wounded, and a large portion of her crew killed or wounded, they refused to surrender as long as they could keep her afloat, and she went down without having passing into the enemy's hands.
The Louisiana contended also with the enemy's heaviest vessels at close quarters and in actual contact. Her commanding officer, McIntosh, was mortally wounded, and when she could no longer be defended she was destroyed by her crew.
The Manassas, under Lieutenant Commanding Warley, was handled with remarkable coolness and skill, and inflicted much injury upon the enemy before she went down. The reports(*) of Commander Mitchell, of the Louisiana, of Lieutenant Warley, of the Manassas, and of Lieutenant Read, of the McRae, marked "A," "B," and "C," are appended.

A naval force of five gunboats and a floating battery under Captain Hollins participated in the defense of Island No. 10 and did good service.

Upon the fall of New Orleans the three gunboats, Bienville, Pamlico, and Carondelet, on Lake Pontchartrain, were destroyed by their officers. A court of inquiry has reported upon this transaction and expressed an opinion which justifies their destruction. The senior officer has, however, been sent before a court-martial for trial.
Upon the abandonment of Island No. 10 Commander Pinkney, the senior naval officer in command, sent to the Arkansas and White Rivers the steamers Maurepas and Pontchartrain, under the command of Lieutenants Fry and Dunnington, and carried with him the Livingston and Polk into the Yazoo River, where, on the 26th of June, upon the approach of the enemy, he destroyed them. This officer has also been sent before a court-martial for trial.

The abandonment of Memphis rendered the completion of the ironclad steamer Tennessee impracticable, but the work upon the sloop of war Arkansas being further advanced, she was carried to the Yazoo and there completed. On the 14th [15th] day of July this vessel, raider the command of Lieutenant Isaac N. Brown, left her position in the Yazoo for Vicksburg, where she arrived safely after an engagement of several hours with 17 of the enemy's ships. Naval history records few deeds of greater heroism or higher pro-regional ability than this achievement of the Arkansas.
Commander Brown's report(+) of the engagement, marked "D," is appended.
Her machinery was new, and sufficient time for its reliable adjustment had not been afforded when she was sent to cooperate in the attack upon Baton Rouge on the 7th instant. On the following day, in the face of a greatly superior force, when within 5 miles of her destination, some derangement of her machinery occurred, when she was at once attacked by a large force of the enemy and, hopeless of escape, her crew destroyed her.

A court of inquiry, to report upon the facts involved in the destruction of the Virginia, by the order of her commanding officer, Flag-Officer Tattnall, and which court he asked for, having expressed an opinion against the necessity of such destruction, I had charges preferred against him therefor, and he was tried by a court-martial, which he also applied for. Upon a full examination of the case the court granted him an honorable acquittal.
The same court was ordered to report upon the facts involved in the destruction of the Mississippi, and expressed the opinion "that the destruction was necessary to prevent her from falling into the hands of the enemy." 

The abandonment of Norfolk stripped us not only of a vast amount of valuable property and building material, but deprived us of our only dry dock and of tools which are not found and can not be replaced or made in the Confederacy.
Upon the destruction of the Virginia, her officers and crew were placed at Drewry's Bluff, under the command of Commander Farrand, and the defenses at that point were committed to him. Aided by a small military force, and the able assistance of the Engineer Corps, the river was obstructed and batteries of heavy navy guns were established.
On the 15th of May this position was attacked by the enemy's two ironclad sloops of war, Galena and Monitor, and two steam gunboats, within a distance of about 400 yards. After a severe contest of two hours, the enemy's ships slipped their cables and ran down the river, the Galena on fire and with 17 shot through her iron armor. The conduct of the officers and men in this gallant affair justified the confidence of the country and sustained the honor of the service. Commander Farrand's report,(*) marked E, is appended.

In June Lieutenant Commanding Joseph Fry, in the gunboat Maurepas, sunk his vessel in White River near St. Charles, to obstruct the passage of the enemy's vessels and placed his battery on shore. In this position he was attacked on the 19th of June by two ironclad gunboats, and after a severe action of two hours he beat them off and destroyed the largest of the enemy's ships, the Mound City, and a great portion of her crew. He was then attacked by a land force of 1,500 men and his battery was captured. Lieutenant Fry, who behaved with great gallantry, was severely wounded and made prisoner, and no official report has yet been received from him.
On the 25th of March the gunboat Pamlico, Lieutenant Commanding Dozier, engaged the U. S. gunboat New London, and on the 4th of April, the Carondelet, Lieutenant Commanding Gwathmey, with the aid of the Oregon and Pamlico, engaged three of the enemy's gunboats. Both engagements occurred near Pass Christian and were without material results.

Cruising ships, constructed in Europe, are now in commission, and heavy ironclad vessels are being constructed at home and abroad, and all the means available for this purpose are employed.

The want of expert workmen is felt in every workshop, public and private, some of which have had to discontinue operations, while others are employing only a third or a half their productive capacity.
The want of expert mechanics and of iron and the absence of tools and workshops for such work as heavy ironclad ships require, greatly curtail the ability of the Confederacy in the construction of this class of vessels.
From the want of mechanics, contractors with this department for steam machinery, ordnance, and ordnance stores, and the hulls of vessels and for lumber and iron, fail to fulfill their engagements.
The scarcity of mechanics is attributable to the fact that a large portion of those employed in the Confederacy were Northern men or foreigners, who have, in consequence of the war, left the country, while our own mechanics are generally in the Army. 
The embarrassments arising from this condition of things are pointed out by the report of Chief Engineer Williamson, which report, marked "F," is appended, and I will only add as an illustration, that the day after Congress passed the bill appropriating $500,000 for the defenses of the Cumberland River, Lieutenant Commanding Isaac N. Brown, of the Navy, whose instructions are appended, was charged with the duty of getting gunboats afloat upon this river, at the earliest moment and entered at once upon the duty; but found it impossible either to have the necessary work done by contract or to obtain a sufficient number of mechanics to execute it within any reasonable time; and from this cause the three boats which he had purchased and was fitting out, two for the Cumberland and one for the Tennessee River, were lost when Nashville fell.

For want of mechanics at Memphis, the work upon the Arkansas was retarded at least six months, and the sister ship Tennessee, at the same place, had, upon its abandonment, to be destroyed. An appeal was made to the commanding general at Memphis when these ships were commenced to detail mechanics to work upon them, but without effect.
Certain patriotic citizens of Georgia having constructed a floating battery sheathed with railroad iron for service in the Savannah River, and tendered her to this Government, she has been received, armed, manned, and equipped by this department.
The river steamer Baltic has been purchased by the State of Alabama, prepared for gunboat service, and turned over to the Confederate States. We have armed, manned, and equipped the vessel and she is in service at Mobile.

IRON AND COAL.
The appended report, marked "G," of the officer in charge of ordnance will exhibit the contracts and advances made by this department for iron and coal. Favorable representations having been made of iron and coal deposits in Cass and Harrison Counties, Texas, an agent has been dispatched there empowered to make such contracts as will encourage their development, and the manufacture of iron plates and ordnance.
In addition to these contracts, in conjunction with the War Department, the following have been made:
F. B. Deane, jr., & Son, of Lynchburg, Va., for 4,000 tons of shot and shell, to be delivered within two years.
J. R. Anderson & Co., of Richmond, Va., for cannon, shot, shell, bolt, bar, rod, plate, and boiler iron, to the amount of $2,000,000 annually, for two years.
Messrs. Quinby and Robinson, Etowah Works, Georgia, for cannon, shot, shell, bolt, bar, rod, plate, boiler, and railroad iron and car springs to the amount of $1,500,000 annually for two years.
The report of the officer in charge of ordnance, showing the progress and condition of the ordnance work shops at Richmond, [Va.], Charlotte, N. C., and Atlanta, Ga., and the powder mill at Columbia, S. C., is also appended, marked "H."

SEAMEN.
The fifth section of the act of Congress entitled "An act to further provides for the public defense," approved the 16th of April, 1862, provides that "all seamen and ordinary seamen in the land forces of the Confederate States enrolled under the provisions of this act may, on application of the Secretary of the Navy, be transferred from the land forces to the naval service." Application having been made under this section for transfers of seamen from the military to the naval service, the Secretary of War, under existing exigencies, finds it impossible to make them.
I respectfully recommend such legislation as may, without impairing the efficiency of the Army, secure the services of seamen or watermen for the Navy, and it may be advisable to provide that officers enrolling conscripts shall enroll this class separately for the naval service. They are methodically and thoroughly drilled by skillful and well-trained officers, and the conduct of officers and men of the Navy in shore batteries at Aquia Creek, Evansport, St. Charles, [Ark.], and Drewry's Bluff proves how thoroughly their discipline, efficiency, and devotion may be relied upon [on] shore or afloat.

PRIZE MONEY.
I recommend for the consideration of Congress the expediency of granting prize money to the officers and men of Flag-Officer Buchanan's squadron for the destruction of the enemy's ships in Hampton Roads in the engagement of the 8th of March last.

MARINE CORPS.
The recommendations of the Chief of the Marine Corps, Colonel Lloyd J. Beall, are appended and approved, marked "I."
The services of this command, unlike those of a regiment of infantry, are usually rendered by small detachments, and hence it requires a larger proportion of noncommissioned officers and musicians than other military organizations. He suggests such an amendment of the act organizing this Corps, approved May 20, 1861, as will allow 60 sergeants, 60 corporals, 20 drummers, 20 fifers, and 2 principal musicians, the principal musicians to receive each the pay of a sergeant-major.
The provisions of the act of Congress approved April 16, 1862, entitled "An act to further provide for the public defense," have defeated attempts to recruit for this corps. Its present condition and organization and the skill and character of its officers give assurance that if full it would be the best-disciplined and one of the most efficient regiments in the service, and I recommend such legislation as will remove the difficulties in the way of recruiting for it.

MEDICAL CORPS
The act of Congress, approved April 21, 1862, entitled "An act to amend an act to provide for the organization of the Navy," pro-rides for the grade of past assistant surgeon, but does not provide any pay for it, and I recommend that the pay of this grade be determined.

ENGINEER IN CHIEF.
The act just referred to also provides for the appointment of an engineer in chief and I recommend that the pay of this officer be determined. 

PRODUCTION OF IRON.
The want of iron is severely felt throughout the Confederacy, and the means of increasing its production demand, in my judgment, the prompt consideration of Congress.
The Government has outstanding contracts amounting to millions of dollars, but the iron is not forthcoming to meet the increasing public wants.
Scrap iron of all classes is being industriously collected by agents of the Government, and we are now rolling railroad iron into plates for covering ships, while the condition of the roads admonish us that they will soon require extensive supplies. The freight upon imported rails at this time, independent of all risks, exceeds three times its original cost.
Under the joint resolution of Congress authorizing the President to contract for the construction in Europe of six ironclad vessels, approved April 19, 1862, a contract has been entered into with George N. Sanders for their construction.
I submit the estimates of the amount required by the department for the month of December, 1862.
I have the honor to be, very respectfully, your obedient servant,
 S. R. MALLORY,
Secretary of the Navy.

To:  The PRESIDENT.
 
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