In the letter before mentioned, I did myself the honor to observe, that I expected the future expenditures would be greatly curtailed. This has happened, but I also observed, that the most rigid economy had its bounds, and could not exist without the punctual performance of those engagements, on which the first steps towards it must depend. I have not yet reached those bounds, for reasons I have already stated, and how long it will be before I arrive at them, must depend on the ability to perform the engagements I have made; and surely it is unnecessary to add, that this ability must depend on the exertions of the States. I mentioned also, that I should shortly advertise for contracts, as the most effectual means of husbanding our resources. With respect to this matter of contracts, I have some reason to believe that it has been misunderstood, and, therefore, I shall take the liberty, of giving some little information on the subject. When I was called into office, I had a thorough conviction, that supplying by contracts was the most effectual and most economical, but I had no money, and credit was at so low an ebb, that most people doubted whether any one would contract. At that time, the State of Pennsylvania gave me assurances of hard money to procure the articles of specific supplies due from that State on the requisition of Congress. I immediately purchased a part of those supplies on my private and personal credit and assurances, and I advertised for a contract to supply rations at Philadelphia. By degrees I extended the contracts throughout Pennsylvania; whereas, if I had advertised for them at once, I might, probably, have failed in obtaining proposals; or if not, those who inclined to risk it would have made the public pay dear for the credit reposed in the Minister. The contracts of Pennsylvania were paid out of moneys granted for furnishing the supplies, and the articles are carried to account on the requisitions. Having reason to expect support from the middle and eastern States, I have extended the contracts for supplies through all the country northward and eastward of Potomac river; and in order that you may judge of the effect, I will mention, that, on application for pay to the department of the issuing Commissary, I required a return of them, and of their monthly pay; which being made, I found that within that district it amounted to ten thousand five hundred and twentyfive dollars; which is annually for the salary alone, exclusive of all other expenses, one hundred and twenty six thousand dollars.