FORT CHIPPEWAY, from whence my last letter was dated, is a small stockaded fort, situated on the borders of a creek of the same name, about two hundred yards distant from Niagara River. Had it been built immediately on the latter stream, its situation would have been much more convenient; for the water of the creek is so bad that it cannot be drank, and the garrison is obliged to draw water daily from the river. The fort, which occupies about one rood of ground only, consists of a small block house, inclosed by a stockade of cedar posts about twelve feet high, which is merely sufficient to defend the garrison against musquet shot. Adjoining to the fort there are about seven or eight farm houses, and some large stone houses, where goods are deposited preparatory to their being conveyed up the river in bateaux, or across the portage in carts, to Queenstown. It is said that it would be practicable to cut a canal from hence to Queenstown, by means of which the troublesome and expensive process of unlading the bateaux and transporting the goods in carts along the portage would be avoided. Such a canal will in all probability be undertaken one day or other; but whenever that shall be the case, there is reason to think that it will be cut on the New York side of the river for two reasons; first, because the ground on that side is much more favourable for such an undertaking; and, secondly, because the state of New York is much more populous, and far better enabled to advance the large sums of money that would be requisite for cutting a canal through such rugged ground as borders upon the river, than the province of Upper Canada either is at present, or appears likely to be. [Sidenote: FORT CHIPPEWAY.] About fifteen men, under the command of a lieutenant, are usually quartered at Fort Chippeway, who are mostly employed in conducting, in bateaux from thence to Fort Erie, the stores for the troops in the upper country, and the presents for the Indians.