authority to lay taxes, this fund forms my only means of carrying on the government. The necessity of employing these officers, and of paying them the full salaries authorized by law under the existing state of affairs, is too obvious to require comment. I have pledged myself to pay these salaries from the "civil fund," unless forbidden to do so by direct orders from Washington; and that pledge will be fulfilled. This "civil fund" was commenced in the early part of 1847, and has been formed and used in the manner pointed out in the early instructions to the governor of the Territory. This money has been collected and disbursed by the "Governor of California" and by those appointed by him in virtue of his office. He is, therefore, the person responsible for this money, both to the government and to the parties from whom it is collected, and it can be expended only on his orders. None of the military departments of the army, nor any army officer simply in virtue of his commission, can have any control, direct or indirect, over it. It is true that some of this money has, from time to time, as the wants of the service required, been transferred to the different military departments; but this transfer was in the form of a _loan_, and the money so transferred will be returned to the "civil fund" as soon as arrangements can be made for that purpose. The increased expenditures for the support of the existing government will soon render the restoration absolutely necessary; especially as the transfer of the custom-houses to the regular collectors appointed by the general government, will now cut off all further means of supplying the civil treasury. These collectors have not yet arrived, but are daily expected. Very respectfully, your obedient servant, BENNET RILEY, _Brevet Brig. Gen. U.S. Army, and Governor of California_. Major-General R. JONES, _Adjutant-General of the Army, Washington, D.C._ APPENDIX E. The following official despatch of General Persifor F. Smith, contains an opinion of the position of San Francisco totally different from that of the numerous California tourists. It is a valuable opinion, nevertheless, and led to the selection of the town of Benicia, on the Straits of Karquinez, as a military and naval station. HEADQUARTERS THIRD DIVISION, _San Francisco, April 5, 1849_. GENERAL:--Since my last communication no troops have arrived to change the strength of the force here; but the steam transport Edith arrived on the 21st of March, and reports that the transports Iowa and Massachusetts, the former having General Riley with a part of the 2d infantry, and the latter having the command of artillery for Oregon on board, left Valparaiso about the 8th of February. The former is expected here every day, and the Edith is held in readiness to convey the troops south to the position they are to occupy.