March 7, Monday. Called yesterday to see Admiral Dahlgren. While there the President and Secretary of War came in with a telegram from General Butler, announcing that his son, Colonel Dahlgren, was alive and well with a force of about one hundred at King and Queen. Of course we were all gratified. The President was much affected.
To-day I have, or rather Fox, who has special charge of the matter, had, word from Olcott, the employé of the War Department, stating he had found evidence of enormous frauds by Scofield, Savage, and Raymond, and wanted the whole of them arrested, or he had them arrested. Wished a guard detailed to seize Savage’s store, etc. When Fox brought me the papers, I said to him that the whole subject had been committed to him, and I could not undertake, with my other duties, to enter upon the details of frauds by these contractors. Besides I doubted the rightfulness of seizing men and their papers and valuables on mere suspicion. Advised him to consult legal gentlemen at the War Department, Olcott being a detective assigned by the Secretary of War.
A long letter from Chase in relation to permits and trade regulations, explaining his position, and showing not only some sensitiveness but a little irritation. His letter is based on a reply to two communications made by me on the 18th ult. in regard to the Ann Hamilton and the Princeton. I think him wrong in his conclusions as regards these vessels, and also mistaken as to the course and position of others. In the matter of the embargo first, and subsequently in that of communication and traffic in the Rebel regions, he took ground with me, but failed me and slid in with the others when action became necessary. I disliked the scheme of trade regulations, but it was concluded to have them, on the permits of the Treasury, War, and Navy Departments. Soon he deputed the subject of clearances to others, and Stanton deputed authority to grant permits to his officers, and abuse and demoralization followed.