Tlip following ate Üio materul portions of tlie nnmtal report of ihe SccKiaf-y d' tlie Navv: Sir: The report fram tlu's departmeni under dato of 4th Jnly last, exhihited tlic comliiion ortbeNavy, the adminiglra'.ive mpsfires tiken to nugment ts efficiency) mul the gencial comse of ts operations up to the comiincernont of tho late special "espión of Cnngress. The cnlarged pslirnntps of pxpendilure for the naval service Ihen mibmitted contemplated, especial lyi ihree different lines of naval opentions, iipon an extended scle, na demandad by the situation of the country. These wero: 1 . Thp clcsinjr of all the insurgnn t porti along a coast line of nearlv three thoustind miles, in the fortn and under the exactiflg reguiation of nn international blockfvde,iuHuiüng tlic naval occupation and dofonne of ihe Potoinac river, from ils mouth bo llie Federal Capital, as the boundaiv line belweon Maryland aud Virginia, find Ist tlie main commercial avenue to the principal Im3ü of our mili'.ary oporalions. 2. Tlie orgnnizatioii of combinad naval and military expeditions to opérate against anous poiuts of the Somber co;ist. letideiing efficiënt naval co operaiion witli the position aud movements of siich expedíIÍO118 when landed, and including alsonll needfnl naval aid to the arniy in cultirg ofl' inlercommtinicalion wiüf the rebel and in ils operalions on the Mississipp and its tributarles; and, 3. The active ptirsiiii of the pirática! cruiseis whicli might escape the vigilatice of the blockading foice and put lo sea from the rebel ports. These were dnties which the Navy was oalled npon at the same time to prepnre for mul perform, and they constiluted a triple task more arduous, it ia believed, in some respecis, thHti bus befurebeen demanded from the marine of anv government. I procecd to report briefly the efforts which have been made for its accoujplishment. The limited number of slu'pa and men at command when tlie proclaraation nnnnuncing the b'ockade of the ports of the inurgent States was sued, and the inadequate ineans provided by the hst Congress for the emergeney, devolved upon the department the necessity f.r caüing into immediato service not only all the naval forces, bu! vessels from the commercial marine. Parebases were accordingly made and charters hastily oxecuted for the exigency, and orders peremptorily isfued to fortlnviih equip and prepare for servies the public vessels tbat were dismantled and in ordinary at the eeVeral yaids. The force thus hastily g-ithorfd was placed along our coast and diviiled into two squadrons, one of which, dpsiersted as the Atlantic Blockading pqnadron, had for its fiold of operation the whole ooast, extending from the easternmost lino of Virginia to Cape Florida, anrl wa under lbo command of Flag Offiwr Silas H. Slringham. The other, or Gnlf squadron, opérating from Cape Florida wcstWará to tlipR io Grande, was pommanded by FlagOfücer Wiliiam Mervine. These officers repaiied to their stations and were reinforced from time to time by the arriva! of sucb vesseli as were di-ppatched to llieir command?, and under their pnpervifiion and direction all the pnrts upon their s'ations were sul 'jected lo a blockade as rigid and ffl'ctive as the peculiar nature of our mantime f'rontier, which bas through a Inrgü portioo of ts entire oxtent a doublu coas?, inner and outer, would admit. Our principal naval vessels are not, from their great draft öf water, adaptad to blokkade service on our fballow coast, which bas been guarded with ex! reme difRculty. The ports of Noitb Carolina especially, situated within the interior shallow waters of their sounds and inlots, afforded peculiar faeilities to a class of small vessels, aided by fraudulenl papen and foreign flags, to elude the vigilance of the sentinel sbips wbose special duty it was to interdict eommerce with the insurgrtnts. TUK POTOMAC FLOTILLA. It became necessary at ad early pariod to place a flotilla on the Lower Potomac. A variety of circumstances combined to render this one of the most erabarraasiog dnties on tho wholc insurgciUfronlier, and it was early foreseen by the dopartinent tbat without he active co-operation of the armv it would be impossible to prevent Ihe navipation of the river from being obsLructed by batteiies on the Virginia side. For several months, however, the navv, without aid, succeeded, more effectnally tban could have been expected, in keeping the river open for commercial purpoees, and reslricting, to a great ex tent, comnninicalion bntween the opposite sliores. In the heroic discharge of this duty, the first commander of the flotilla lost his life; but the navy continuei capture every rebel vesíel which shoWd itself on the Potomac, and to give security and pioteclion to the eommerce of loyal citizeos, until the close of Octobor, when the insurgenls erected batteries al sundry pointa on the Virginia shore, fbereby rendeiing passage on the liver very dangerous. THE SQUADRONS. The duly of guardias the coast and enforcing tha blockade has been one of great labor, as well as ceaseless vigilance and responsibility. Witb thesleadily increasng force that was addcd to the squadrons, th; efibrts of the insurgents to elude our ships were also increased, in order to supplv the pressing necessities that afflieted tho whole of the rebel States. The duties imposed upon the flflgofficers became correspondingly arduous, and eventually more extensive in the operaiion and detail than conld be well executed by one commander. Wbile the subject of a división of the sijuadrons was under eonsideration, Flag Otficer Striogliara, unaware of lbo fnct, made a proposition to relir.quisb his command, which was acceded to, and two squadrons were organized on the At lantic coast. Captain Louis M. Goldeborougb was appointed to guard the shores of Virginia and North Carolina, and raisud his flag on the Minnesota on the 23d of September. The residue ol the soulhern Atlanric coast, commoncing at the line which separates the two Carolinas and extending to Cape Florida, was entrusted to Captain Samuel F. Dupont, wbose flag was raised on the Wababh on the 29lh of October. Flag OIBcer Wiliiam Mervine was relieved from the command of the Guli squadron in September by Captain Win. W. McKean. The necessity ofdividing this squadron, as well as t lint on theAtlantic seaboard, in order that the coasl should be more rigidly guarded, was feit: but tho measure was postponed until a larger foroe could be sent around the península. A vigilant watch has been maintained at the passes of tbo Mississippi, by which the eommerce of Now Orleaos haL been successfully interdicted. The task of blockading tho coast is unattractive and devoid of adventure. Thosc wbo havo engaged in this rebellion havt nejther commerco nor a navy lo reward oi stiinulato to exertion. SISKÏXG VKSSKLS. Ooeruethod of biockading tha ports ol ili! nsurgont Sia'es, aml o'erdicling the coroinuiiiciiiion na weli is to prevent ih erQüs nf triv!iULM v% liich snulii to de pruilati' mi iot cyiniiKüCt! Ims been llit ul'sitikhi' 11 i lic c!i;iri!f! mi-si. Is Inden wiili sltne. 'I iie firl iiinviiinent in l!ii direclioii was ou Üiu N'iith (arolina cmist, nhere there ara puineroua niets to AlbeihhiIó and Pumlico SonhJs, aul other intenor waters, vvliicli iiffjrded facilites tur fludiñ lile blockiide, and l'1i tú ibu privaipt-ts. Kor iliis iii'i.si nelasRof sinall vc-M'l-i wi'rc )iir?litsed ín 1 1 1 i 1 1 1 - (■■. noine nf liicli havo ln.cn 1.iC0 J in O.THcokfc InltO. An i'ilir-i and ii'jim' (tpi!ri tion r essk'h hought in llie EtMciii ni'irket, nrt oí ilicm fiiph a wire ftvrmeily cm pinjed in iIhí v;!i.i!i ('.-!)■; ii-i. Pírese ■ere m-m t.) nl.!riHlt ilic clMrtnehí of Chnrlci-lön hfir'"r and i!ip 8n;inili tiver; nn.l ihis, f rffM'iiii!'y íImic, ttill prove llic mcl ecnnmCAl i:id 8(.-.fscti.ry : inoilioil o I' MitorJicling commerCo at tlioie ' lOÍM'8. VB8SBL8 CAPTBHin). Since llio institnliun bt ihe lilo'kcle ono iMindrcd fid tit'lv-tliree véssílí llave been captiired sailing nii'der vaiioiis Haga, moet of uhioli were sttetnpting io viólale the bliwkMé. Wilh few exceplions, tbM . veísels were in tach condilion whon seized as to aniliorize their beiny; seht ni once to the coarU for : djndicanon and CQiiJeifltia tiou üé piiz'. SEIZL'RE OF SiiUTIIKRN PORTS. A Be Zuro of sume of llie important por.la on tlie cónsl cOtñmándod the c.irh mil i-ai nest Mllenlion of this deparfment. It was found (bat naval stáüons nnd liarbóra üf refiige duiin i!ie tempesluous sensons wonld be iiulispensablo if litistili lies were to de coniiuuoc.l,aud (he stationa : tlnis Btioured coukl aleo be Diada Üm poiuts of military operflHons. Sliorlly afler tlio ntteotion of tlie Goveniment was drnwn to t lis su.ljec(,a boa ni was convencí u ticít-r l!ie aipices of lijo N;ivy Deparunenf, cunsisting i,f Captain Samuel F. JJupout aii.l Ciiüiii's [I. Davis, of tbe Nay; Mi'jif John (J. B.inurd, of t lie Ariny, and íroTísífr Alc.riinler I'aclie, of (hu (Joast Survej, to w.lntn a thoiougb investigation of" t he coasl und liarborè, their acces3 aii'l defenses, w ís comniilted. - Sarúrívl i'laborste aml valnable reporta of great ii'lcrííst, exliibitiog in minute dalaij ihe posfii.in, advantages and topographical peculiaihies ol" nlmost everv eligible point on tlio coíist, wére llio results of this importar t oommission. ]n viéw of llie dala tlms presented, tno cogibined iüiVKI arhl mililary expfidition? liÜVe been (irnanizd and put in action. S Lt c 1 1 co.Diieralion ml concert of action botiveeri tbe two ftflDS of t lie public B#rvice wcre indispensable; for, tliongh tbe navy aluno milit aasail and capture batterien in soma posiücns, il was not ffitliin its province or power to relain or garrison iLem. ' Aftér fome delfljs, an oxpe;!iiion to Ilatteris Ii]k't,on thecoaslof Norlli ("arolina, wliero practical depreda! iotis bad ba coirc exircmely annoying was utuleitakon. Flag Ofticcr Stringhara edmmanded in person tbe naval lotee on this occasion, and Msjor üpiieral Butler bad command oí' tbe small military detaclmient of about eiglit. hundred miin wbicb co-operate wiib tbe navy. Tlio expedí! ion was emitiently siiccessful in tbe atiack npon and capture of Foite Halteras and Cl.uk. Tbe enlire garrisoii, uuJer tbe command of Samuel BarrÓB, recently aiul for peárlv filty years an oílicer ol' tbe navy, suireiulered afler sustaining great Ijss, wbile nut a lile was sacriRced nor nu adivijual ol' tbe Union forecs wounded. -i.It was intended tbat tbe success at Halteras sbould havo been followed in Seploiiiber by i more formidable expedítion, and tbu BsigVn ( a inore, important posilioii farlher South. Owing to various causee, independent of tbe Nary Department or tiie Condilion of tbe navy, tbis movement was unavoidably postponed until tbe 28th of Oclober, when a fleel of fortj-eight sail, ioctndiog tranoport, a larger Bqnaorcn than ever before assembied under onr ílaa;. left Hamplon Roads. Captain Samuel F. Dupont, ihen rooeniiy appointc-d rtig oflkor, an odicer of great skill and experionce, and po'.sessing tbe cutiré confidencG of tbe departmenl, was selected lo command tbis expedition. In addition to bis general professional abilily lie bad tbrougb earéful sludy and investi galion, as chaiiman of tbe boaid wbiob liml been ordered in June, speoial (juslificalious and lliorough preparation for tbe bighly iin;oitant and responsibU position assigned to bini. Informcd of tbe policj and views ot' tbe goveniment in regard to the expedition, prompt to excite its wishes, and baving made bimself familiar witb every eligible port ou Üio southern Atlantic coat, be, as comenander of llie expedilion, was inirusted witb the seleclion, wiihin preacriUed limits, of tbe place nhere t lie first nssault should be made. After encountering the severest storm that has visiied tbe coasl during the present seaeon, wbich paitiallv dispeised the squadron, causing lbo wreek of seveial of tbe trasporta, and com pelling even some of tbe smaller vessels of tbe navy to put back, tbc Heet, by tbe merci ful iutorposi tion of Provideace, wns preserved, and appeared before Port lïoyal, one of tbe best though neolected barbors on our Koniliprn const. on tbe ñtb íIíiv ff ber. So soon as the cbannel could be buoyed oui, and otlier preümioary measures accomplshe!, assaults were'matleon the well-built aiul thoroughly nrined foits Beauiogard luid Walker. Consummate naval strategie ekill and the most admirable gunnery were exhibited in the attack, which mis of such lieniendous effect thíit Genetal Drayton anti the rebel army Surrendered their Btrongbctlds, and fled from the coast with precipitaüoo, leaviiig tbeifl property, arniametil and papers ; wliilo our naval forces took and still hold quiet possession of one of tlio finesl harboi'8 on the Atlantic seaboard. A demoostratíon since ordered by Fl-ip; Officer Diipont on Tybeo Island, at the moutli of the Savancah ]liver, wlijch reeu'led in the capture ol'that islani and tlie Btrong Marteilo fower and batlery that virtually command Fort Piilaski. Our naval forces have poBsessjon of that sland, , apart af the South American squadron is at anchor in tbe haibor, and the 11 ag of the Union is still unfurled in Georgia. Without épeoifying in detail ons moritoiious achieveinents which have, durir.g the year, done honor to the naval service, I append ditpstches of tlie ! mandors, communioaliDg tlio bravo and heroic condiict which lias been displayod by our navai oilicers, siilora and marines, whose intrepidity, courage and loyalty wero never more maiked lliau in this rebellion. TItE MISSISSIPPI RiVER. ' A naval force, nuxillary to and eonnected with the army movements on the Mississipni and its tributaries, bas been organized, and is umler the command of i Flag Oñker Andrew H. Foole, who s renderfng efKcient service in that quarter. The steainers which hnvo been built or ; purebased lor this servica by tho War Dopartment nro of a formidable character, ' and manned bya class of superior seamen and western boatinen, w!io, in the preliminaiy skirnushes aheady, have done r good service, and ill, I am conGdtnt, arqtiil theinselvta vvitb great credit i the l'uiurc. PUHSUIT OF riSIVATUEHS. It as natural lHatr.]jjreIiensionashHild preval! in regard lo arinej cuisers eominissioiie I c xi'iessly by Llie reb?l leaders 1" , depredóte tipon ourcommerce. 1 bery of merchants ;incl othens engaged in peaceful irod lanfnl pürsuits bv piraiical ; cruisen is not inconsisteut wiih the general eonduct of iho-m who havo vinlxled law and moral dbligntiotis In gralify inordinate ambition. Uur extended oonymerpe ■ sented ndupemenli for piral cal warfitre, ' vet bul few A our misgiiided comiirymen havo pru8tituted ihemaelvta to ilie ■ poses of plunder, tliough thcrclo invited. and tliosu few havo beun-in ootiMant flight to efcape llip avenging power of om vigi lanl nava! forcea. SucJ) of Iheee cmiders as eluded tlio blocknde nnd capture were ; Boon wri'oked, benched or snnk, wilh the exceplion of one, the atcamer Sumter, whicb, by soma faiality, was pcrmitted to j pass lbo Biooldyn, tlien blockading ooe of the piuwea of tlie Miasiseippi, uur!, after H brief and feeble chnse by tlie latler, was allo wed to procêd on her pirática] voysge . # RBBKL BMI88AIUES. Captain Cliiirles VVilkee, in command of llie San Jacinto, wliile soarching in the West índice fur llie Sumter, receivi d in.formalion tliat.hunes M. Muon and John Slidcll, (üsloyal cilizem and leading conspiratois, uore to cinbark f ruin Havana in tbe Euglish steaniur Trent, on tlieir way to Eiire]e to promote llie canse of (lio insurgenls. Crui.sing in the I3ali3ina Chani'o! lie inlerci'pied tlio Tient on tfae 8lh ol November, and took frorn her I líese dangerous men, whom lie brought to tlie id S'átes. llis vessel having been ordered to refit fdr service at Cbarlestówn, the prisoners were retftined on board and eonveved lo Fort Warren, wliera tliey ere committed to the custody of Col. Dirnmick, in co nniand of ttiat fortress. Tlie prompt and decisive action ofCapt. Wükes on this occasion mèriled and received tho empbálic approval of the departnieni, and ii' n (oo generous forbearance was exhiblled by hiin in not capturing the vessel wbicb had these rebol emisearics on board, 't may, in view of the special ciieumstances.jind of 18 ■patrio ■ tic motives, be excused; bul it musí by no means be permiíted lo constituís a precedent herenfler for Ihe ireotmtnt of any case of similar infrudion of neutral oh ligations by foreign vessels engaged in coinmeree or the carrying trade. THI! N'AVAI, FORCÉ AND ITS INCREASE. There was a total, as statod in the last report, of 42 véasela, carrying 555 guns anti about 7,000 men, in cornmissioti o;i the 4th of March last. Mhon tbe vessels now building and purchaed, of every class, ars armed, eqnipped and ready for service the condilioo of the navy will be as follows: OLD KAVT. Nomber of vessels. önns. Tonnagp. (i Siiips-of-line, Ö01 ]G,0'J4 7 Frates, 350 12,101 17 Sloops, 312 16,031 2 Brigs, 12 530 3 ütoresliips, 7 3 12 6 Rcccivins .ships, &c, 106 6,340 6 Scre.v frigates, 222 21,460 6 Fiist-clasg screw sloops, 100 11,963 4 First-class side-wlieel steani sloops, 46 8,093 8 class screw sloops 45 7,5!io 6 Tliird-cluss screw sloops, 28 2,405 4 Th'ird-class siilc-wbeel stpariK'is, 8 1 .808 2 Slcam tenders, 4 ;V.)9 7G 1,783 105,271 PBBCHASED ?B8gEtS. Guns. Tons. 36 Sido-wheel steamers, 160 2G.080 48 ScreW sleamers, 175 20,403 18 Bhips. 5'2 9,998 24 Bchooners, 1J9 E 824 18 Baiks, 78 8,432 2 Brigs, 4 460 136 518 71,297 VRSSHLS CONSTRUCTED. Guns. Toni. 11 Screw sloops, Ü8 16,789 28 Oufi boats, 92 11,661 12. Side wfeafil steamers, 43 8,400 3 Iron-clad stoaincrs, 13 4,600 62 256 '11,118 Mak ing a total of 204 vessele, 2,557 gun., and 2l8,01C tons. The aggregate rtiinber of suamen in tho service on the 4th of March last was 7,000. The tmrnber is uo.w not less than 22,000. CONSÏilUCTION OF NEW VESSELS. Most of the public armed vessels being of Siich sizá and dranght of water tbat they oould rendei on!y itnperfect blockading service, immediale measuies vvere laken by tl'e depnrtment to carry into eö'ect the policy of tho Govcrcment, in ajlvance ('f the special session ofCongress, by contracling for the construction of uvonlvthieo stoamers, tvhich sho'ild be of l'gbt drauglit, but heavy armament. CohgreBB, al tho regular session, had au thorized tho building of seven screw steain cis, iind as ibero ware four yaids, in each of which two roiglit be built, the dep'irtnient, in the existing emergency, and in aiLici i;ition of the aetion of Congres when it should convonc, directed the construction of oight, dividiog tliem inlo two classes of about one thousand and fourteen luinJred tons, tep6ctively. At the special sos'ion, CongresR not only fanctioned the action of llie department in the coihitniction of lliese tkirtione sleamers, but it authorized the furlher construclion of twclve side wlieel steamers of ligld draught, and ofsix of larger cnpacilij,lo be modelled and built specially f or speed. Many of those fitst ordered are ulready in curmiiission, and tlie otliers ;ire in rapid progresa tówareh completion. If, with those abova emimeraled, we include three iron-clad, or annor steamers, which are being built, tliere II lio under these seveial arraogsmenla an addilion, when they aro completod, of fifty-two new ateamers, peculiarly adapted to tlio required blockada or coast guard duty, ackled to tito narj. No sailing vesselc have lieen ordoiod lo Le built, tbr steam, as well as heavy ord nance j bas becoine an indispensable clement of the mosleflicient naval power. PUROHASB OF VESSKT.S. The public vessels and the public yards, in thcir capacity of constructions and repair, were, however, totally iuadcquate to the demanda that aro now pressing on this branch of the Government, and t lic departmont was eompelled to resort to the commercial marine to makë good tho deücicncy. It was manifest irom the first that the dcpnrtment, eharged auddenly with the organimtioo and supurintendence of ncw and arduous naval opcrations on a largo scale, in ;iddition to its curren t business, could not possibly itself devote to tho numcrous details of cach case of purchase the time and attention needful fully to protectthe intcrests of the üovermnent. It was equally olear that the boards of oflieers, actiug in a mere mercan tile capacity, new to thein, and for whieh they had ueither been praoticallj trained nor professionally commissioued, would be subjocted togrcat cuibarrassmcnt and disadvantage in thcir dealinga with soliere of ships and professional snip-brokers, in a luarket suddenly pvessed by a heavy and peremptory dciuand. Yct the deparfcmout could rely, and it did rely with tho fullest coníidence, upon the profesBÍonal judgmcnt and ibilily of itts n.ince officers, naval constructora andengincers, :ill aoting under tho Fsponiúbiltv of thoir coinmis.sions, to investígate md determine the whále question of the ndaptation i:i ;ill respect of eacb sliip ofifcrcd, nut of its capacity to be by alJ taration fully adapted to perforiu tho particular service required by tlie Gov ermnent. Thia work, with tho corresponding authority of selection and rejection of all véasela, was therofore oxolusivcly committed to boards coasUting each of an oxpericnced naial constructor and engincer'and an ordnapca oflicer, copvencd and stationed.for that purposc at New York, and the otíier principal citicH. Tlic mere mercantile part of the busirfess - the inaking of'tlio bost bar':':ii'is ii:r tlie Government ín each case, with the care of averting all intervention of th i rd pártiea] which might embarréis the altainment of that. rcsult - was considered by the Government to be placed most properly n the hands of a mercantile agfeiicy of a high and establisriod charactcrforintcgrity, cxpcricnce, and capacity. The expendkurc In fittínp for sea service the vcsscls at the different navy yafds, and rcp;iiring and equipping thosa return ing from our foreign squadrons, has been ]arc;c. Kloven tlinusaml mechanica and laborera have been in the daily employ of the Government at the different navy yads in building rtnd repairing veesels, and equipping and arming them for the service ;_ buf, this large forcé lias been unable to dispatch the work with the rapidity demandcd, and the department has been cotnpelled in oonseqnence to resort . to private shipyards and outsidu labor. IXCIÏEASING TIIP! EFFICIENCY OF TUF, NAVY. The efficiency of the navy may unquestionably bo largely inereased by creatina more grades, and I would reco'mmend tliat. the permanent OTganization of t)ie line officers be as follows : Fias officer - to command sqnadrena. Cai(ain, Commandor, To comtnaiK] Lieutënaht Commander, ) single sliips. Lleulenant, fns!er, Pnsíéfl raiásliipman, Mulsliipman, Cadet. The Lieutenant Commanders, a grade used daring the revolution, may be cmployed as First Lieutenants, and in the command of the smaller class of nayal vcsscls. The present rate of pay may bc so apportioned among the diilicrcnt grades that in the atrpreíraf.e thore shall be no inerease. Let no officer be advaneod to any grado above that of passrd midshipman except upon nomination by the President andconfirmation by the Scnatc, aftera board of officers shall hive pronounced him morally, physically and professionally competent to perform all bis dutics, both asliore and afloat. The public service would algo be promoted wotg somc limit of age fixed by law for active service. I won'd, therefore, respectfully suggest that Hncoffieers be rctired after having been forty-five years in the navy, excepting when called into active service by spicial appointinent from the Preeidénb. A generous pecu niary provisión should be made for those who are rctired after long and faithful service. To satisfy the iinmediate demands of the public service, I rccommend that a grade to be designated flag officers be cstablished, and that the President, by selection from the present list of captains and commanders, appoint a nnmber not execeding sevcn, who shall each have rommand, irrespoctive of seniority or rank, of the squadron to which ho may be as'signed, and the appointment shall ccase vrhen the offiper hauls down bis flac;, unloss for distinguished and meritorious eonrluct in battle, as flng ofBcer, he receivfs. upon recommenrlation of the President, the thanks of Congrcss. JlETIíftxr. r.OAED. Under the provisions of an act authorizing a naval retiring board, entitled, " An act proviiünfr for the botter ization or the military establishment npproved August .3, 1861, a board lias boen assemblee!, and composed of Commodore Ooorcrf W. Storer, President; Commodore Chris. II. Ball, Captain J). Cï. Farragut, Surgcons diarios Chase and L. B lïunter, inembers ; and Philip Tlamilton, Esq., jndre advocate. The Board conveoed at Brooldyn on the 18th of Octobcr last, and is still prosecuting its duties. ACTING APPOINTMENTS. Tn my report at the commencoment of th? special seasion, I made mention of the fact tliat the appointment of acting lioutenants had been conferred on certain gentleman whö had retirad from the navy in pcaccful times, but who, vlion their.flag was assailed, promptly tendcred their services in its defense. - It was not in the power of the departmént to restore these gentlemen to the line of promotion, but they were placed in the posilion of, and asgigned to duty as, acting lietitcnants, wherc they rendered good service, and proved themsclres worthy of thcir profession whenever tliey had an opportunity, oithcr at Ilattcras, Port Koyal, the Gulf, or clsevlicrc. There are fiftcen of those formerly naval officers who have received . the appointment of acting lieutenants. ! The question of f uil restoration to these gallant ofiicers, wliose names areuntarnishcd, and who havo acquittod themsolvcs with honor to their professiön, is ong of interest to tliemselves and the country. In pursuance of the policy indicatcd by Congrcss at the extra session, there have been appointed from the commercial marine twenty-five acting volunteer lieutenants. Therc liave also bccu pointed for active service in the navy, independent of officers of the line, four . hundred and thirty-three acting masters, and two hundred and nine niasters' j mates. The officers thus selected are, with scarcelyan exeeption, hihly meritorious, and would be a credit to any service. Composcd as they are of the best material of the best commercial marino on the jlolie, the spirit and zeal with which they surfender their more pcaceful pursuits for the severo and rigid discipline of the navy, does honor to their country and thonisclwa. The assistant paymasters authorized to bc appointed by the act of -Tul}' last have been selected, but the increase of thirtysix was iusufficient for the service with the largo addition of vessels and erews that have been ordered. I have thcreforc been corapcllcd tomake further appointiueuts of acting assislant paymasters, of whom there are now sixty one on duty. Acting appointments of engincers and assistant engincers and of assislant surgcons have necéssarily been made, in oddilioo to the regular corps, to meet the ncw and eitraordinarv deroaride of tlie service. Tliero luis been nn nggregate of nine hundred and nintj-thiee actin üf appointmenls for lemponiry service made by the cUpartment since llie piefent difliculliös cominuiiced. In some instanees men possessing high and 'excellent tinits in other rc-specis have been found aildicled to inlemperaiico. Tbis is h ilifq'ialifica'.ini] n anv pfficer, md vvlierever lilis hábil lias been deletcted, Uirre luis been no lieaiutio') in revukiiiiz ut ouce thu ajppointineut. MARINE CORPS. Tlio repcitof ilie commandnnt of llie marine corps is Iierowill) UansiniÜed. - tfndsr llie provisions of the acL of Marcb 3d, 1849, vfifli tour approval, order weia given in April iml May lo enljst .1,162, additional noii-cmnmissioned officeta and i privates to meet the requireinenis of the , crvieo. A Urge class were voiy readily obtrtined, and llie incronwd demand for guards for verséis has reodered aecvssary ti additional ncrease of five t.nndred prívales, witri tlio necessary non comtnisfioned otlicor?, whieh nuinber yöO have receiitly atithorized to be euïïgted. NAVAL SCHOOL. Ternporary aeeommodations for t!ie Naval School have been,provided, od the efiicers and sludeots made comfortable at Newporl, wheie the nstitulion was located upon its rempval t'roin Annapolis, ui - li) Congres shfill take sonie order on the sul'jijct of its future permanent loCntioD. MmoIi of tlie public property appertaining to the school was hastily removed, bu t inaiiy conveniencia and tnnch that is easential were lcfl at Annnpoüs, where tliev stil! remain ifl charge ofa person towhose iciistody they were commitied. No leg lation was consurnated al lio extra es l.jon townrds lilling up the school to its '. l'ull complement in consequence o!' disa greeinent botweeu the two housea is to the inethod of appointment, allhough : eaeh brsnch expreased an opinión tlial. the defkiéncy öuglit to.be snpplied. i would reapectfiilly raaew ihn reco"imendalione and iniggsationi made in my fiirmer report, not onlv that the déficifney. stiould lio Qpplied, bnt that fora priod, I at least, the nuniber should be 'argclv eieased. In regard to tho sélection of, Btudenta vvhen representatives neglfiCt or ■■ to make DomJnati&DS, or when a distriot omita to elect a repiefentalive, it ia suggesled that tlie Presidnt or the of the Navy he authorized lo perforo) ibat dnty. EMPLOYMENT OF FU0ITIVE8. In ths eoüshi-iso and blockadiog dpliés of the ilavy, it. Ins been not uiifiequent tlint fugitivea from insarroctionary places have sought our ellips for refugc r.ni pro lecWnn, and our naval commanders li.tvct apj)lied to me for instrnctions is to the proper dispoaitiön which ehonld be made of such reïbgëes My an.swer bat been that, f insurgenlp, they should be handed over to the Government; but if, on the contrary, thsy were free from any volun tary participation in the rebellion and soiight the shelter and piotection of onr flag, then they 8)löuld bo cared for and ernployed in some useful manner and might be enlisted to serve on our public veseels or ia onr nnvy yards, receiving wüges for their labor. If such employment could not be furnishedlo U by the itavy, they might be referred tolhc army, andif no employ ment could be fónndfór Iketn in tlie public service, they shouïd be allowed to proceed freehj ud peaceably without restraint to seck a livelihood in any loyal portibn of the country. This 1 have considered to be the whole reqcjr ed duty, in the ptomisès, of our naval olrlccrs. NAVAL DEPOT ON THE LAKES. I have been dosjred to invite attention to the füd that there ia no naval depot on the lakef, Dotwilhslanding the vastatnonn' of tonnagö on that frontier, and to state that if there were one and the ability lo arm the inerchant marine, our riglits on the lakes would be made secure. CAPTURE OF SLAVKK. There has been but one vessel seized by the Afrfcan pquadrooforbeing engsged n the ílave tr-ide since those mentioned in the last report of this departinent, the American brig Triton, by the United 8tates ship Cönstellation, in the Congo river, on the 20lh of May last. She arrived at New York on the lOlh of Jiily, in eliarge of Midshipman, G. A. Borchert, and was turned ojer lo the Uuited States Marshal. ESTIUATES AND ArPK0PBIATIN9. The Braount appropriated at the lasl rogular session of Congres for the naval service for the currentyear was $13,168,675 80. To tl is wm addod at the special session in July bist 9S0.4 16,875 91 - making for the fiscal year ending June 30, 1862, annggregateof 843,015,551 11. This sum will not be sufricient, however, for the purpose, and therefore, additional Rppropnatiooa wül be neccfesary. There will be reqirired to pay for vossels pur chased. nnd for necessary alterntions incarred in fitting (hem for naval purposea, the eum of 2,530,000; and for the conBtruCtioD and coinpletion of twenty ironclad vessels, $12,000,000 - making n total of $16,530,000. This sum is independent of the eslimates submitted for the iii'xt fiscal year, and being equired for currenl expensts as wel] as objects of immediate imporUnee, it isdesirable should reoeive early attention "rom Congres. The esiirnate submitted by this departmenl for the fiscal year emling June 30, 1863, amount to 44,625,005 02, viz: For tlie navy proper, $41,096.530,25 For the marine corps, 1,105,056,77 For navy yards, bospitals, magazines, and miscellaiieoua object?, 2,123,478,00 The reports of the chiefs of the bureaus and the commandant of the marine corps, with thtir accompanying estitnates, exhiliii in detail the dbjecls for which tho approprialioriB are required. I would also refer to these reports as containing informalioii nnd stitrcstions in regaad to matters pertaining to the several departments of the naval .service. CONCLUSIÓN. In concludinir this report, it giv?s me pleasure to ncknowledge tho important aid I have received in the adminatratioo of the department from the zealous and eflicient coHppération of the Assistaut Sec! retary and the clerical forcé of the departj ment proper, and from the chiefs of the i several bureaus, and lboSe peifnining i iiiblic duty under their immediate superintendance and direction. ïo the patriotic oflicers of the navy, and the brave n en v. ho, in various scones of naval action have serrad nader them, i the department and tho Governmont just ly owc an aoknowledglDOnt even more ! earnest and emphaiic; Gèurage, ability, uflfal tering fulelity, and devotion to ihe cause of their country, have been the genoral characteristice of their conditct in the arduous nnd important service with which they have been entrüstsd. T state with all confidence that in their hands the historie renown of the American navy has been elevaíed and augmentad. In lliis convillsive crisis of our country the duties of this deparlment havo boon new and heavy, and its responsibilitics great. I havo met them all wilh entire honesty of pulpóse, nnd have labored assiduonsly and faithfully to discharge them. The ree u 1 1 of my Inbors I respectfully submit to yon, and llirougll you to the judgment of Gongress and the country. GIDEON WELLS. Secretary of the Navy, To tho President. [3P Ex-Minister, Faulkncr, released from Fort Warren on parole, has gone to llichmond to endeavor to exebange himself for Mr. Ely.