At the date when this report begins, the situation of the contending forces was about as follows: The Mississippi River was strongly garrisoned by Federal troops, from St. Louis, Missouri, to its mouth. The line of the Arkansas was also held, thus giving us armed possession of all west of the Mississippi, north of that stream. A few points in Southern Louisiana, not remote from the river, were held by us, together with a small garrison at and near the mouth of the Rio Grande. All the balance of the vast territory of Arkansas, Louisiana, and Texas was in the almost undisputed possession of the enemy, with an army of probably not less than eighty thousand effective men, that could have been brought into the field had there been sufficient opposition to have brought them out. The let-alone policy had demoralized this force so that probably but little more than one-half of it was ever present in garrison at any one time. But the one-half, or forty thousand men, with the bands of guerillas scattered through Missouri, Arkansas, and along the Mississippi River, and the disloyal character of much of the population, compelled the use of a large number of troops to keep navigation open on the river, and to protect the loyal people to the west of it. To the east of the Mississippi we held substantially with the line of the Tennessee and Holston rivers, running eastward to include nearly all of the State of Tennessee. South of Chattanooga, a small foothold had been obtained in Georgia, sufficient to protect East Tennessee from incursions from the enemy's force at Dalton, Georgia. West Virginia was substantially within our lines. Virginia, with the exception of the northern border, the Potomac River, a small area about the mouth of James River, covered by the troops at Norfolk and Fort Monroe, and the territory covered by the Army of the Potomac lying along the Rapidan, was in the possession of the enemy. Along the sea-coast footholds had been obtained at Plymouth, Washington, and New Bern, in North Carolina; Beaufort, Folly and Morris Islands, Hilton Head, Fort Pulaski, and Port Royal, in South Carolina; Fernandina and St. Augustine, in Florida. Key West and Pensacola were also in our possession, while all the important ports were blockaded by the navy. The accompanying map, a copy of which was sent to General Sherman and other commanders in March, 1864, shows by red lines the territory occupied by us at the beginning of the rebellion, and at the opening of the campaign of 1864, while those in blue are the lines which it was proposed to occupy.