The S. R. Spaulding, with General Burnside on board, next passed through, but the remainder of the transports were detained about two hours. The rebel gunboats could now be seen close in shore, evidently under the guns of batteries on shore. As the fleet passed into the sound, a signal was fired from one of the rebel gunboats, to announce its approach. This was about half-past ten o’clock. At half-past eleven the first gun was fired from the flag-ship, and was replied to by the rebels. The Flag-officer hoisted the signal: “This day our country expects that every man will do his duty.” The effect was electric. The men worked their guns with unflagging energy, determined that their country should have nothing to complain of in relation to them. As the Federal vessels came within shorter range, the fire became more rapid, but the regular fire did not commence until noon, when the flag-ship displayed the signal for close action. The number of the rebel gunboats visible in the early part of the engagement was seven. As the vessels came into closer action, they moved to the northward, with the design of drawing the Union fleet after them, and bring them under the guns of their batteries on the island. At twelve o’clock the engagement became general, between the retreating gunboats of the rebels and the Union fleet, varied by an occasional shot from a battery on shore. The firing was exceedingly brisk for some time, but the distance was evidently too great for destructive effect. The one hundred-pound Parrott gun on board the Southfield, to which the Flag-Officer transferred his flag, boomed forth terrific explosions, followed by the roar and crash of flying shells. The puff of smoke in the air was almost simultaneous with the splash of fragments in the water. The rebel gunboats kept up a steady fire in reply. Their fire was varied at times by the louder report of a hundred-pound Parrott gun on board one of their vessels. The Sawyer gun on board the Fanny, which was captured by the enemy at Hatteras Inlet, was the most annoying in its effects, as the range was long and very accurate. The fire from the fort indicated a weak force working the guns. The rebel gunboats retired steadily a considerable distance up the sound. A line of piles driven into the bed across the principal channel, obstructed the progress of the Union vessels in the pursuit of the retreating rebels, who occupied an inner channel under the guns of their battery. The Union fleet now turned their attention to the fort, which kept up a steady and rapid fire.