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Extract from the report of the Secretary of the Interior. The administration of the business of the Indian bureau has been attended with unusual difficulties during the past year. Most of the Indian tribes with which treaties have been made (excepting the tribes in Kansas) have manifested a restless and turbulent spirit, developed, in many instances, into open hostilities.

The Indian country south of Kansas, inhabited by the Cherokees, Chickasaws, Choctaws, and Seminoles, was occupied by the insurgents very soon after the commencement of the war. The Indians, overawed by a strong military force in their midst, and seeing no prospect of aid or protection from the troops of the United States, renounced their allegiance to the federal government, and made treaties with the insurgent government. By those treaties that government agreed to pay them the same amount of annuities which they had previously received from the United States, and there is good reason to believe that one or more of the instalments have been paid. A large number of the Indians were organized into regiments and placed in the insurgent army. A portion of them, who refused to. participate in this insurrectionary movement, attempted to resist it by force, but after two or three engagements were driven from the country.

About seven thousand, including women and children, fled to Kansas. They were driven out during the last winter, and having no shelter to protect them from the weather, and being very indifferently supplied with clothing, they were exposed to extreme suffering, and many of them perished from cold. They were destitute of food, and must have died from starvation if subsistence had not been furnished to them by the Indian bureau. During the last spring three regiments of the refugee Indians were organized under the directions of the War Department, with the expectation that they would be sent to the Indian country, and be aided by such additional forces as would be sufficient to protect them in their homes. They have since been detailed for military duties in some other portion of the country. In the meantime the women and children still remain in Kansas, and are subsisted from the annuities due to the insurrectionary tribes, under treaty stipulations.

The principal chief of the Cherokees has visited Washington for the purpose of endeavoring to restore the former relation of the nation to the United States. He insists that they have been guilty of no voluntary disloyalty, and that what they have done they did under the pressure of superior force, which they were unable to resist. The future relations of these tribes to the government should be determined by Congress.

In the month of August last the Sioux Indians in Minnesota most unexpectedly commenced hostilities against the white settlers in their vicinity, and prosecuted them with a degree of cruelty and barbarity scarcely paralleled by any acts of Indian warfare since the first settlement of this country. Men, women, and helpless children were indiscriminately slaughtered. Women were violated in the presence of their husbands and parents, and subsequently murdered; houses were burned, and every species of property destroyed or stolen. A large extent of country, in an advanced stage of improvement, was rendered utterly desolate. It is estimated that the number of lives destroyed by the savages is not less than 800. This outbreak was so sudden and unexpected that the settlers were taken by surprise, and were found without the means of resistance or defence. No effectual check could be given to the Indians until a force of two thousand men, under the command of General H. H. Sibley, was sent from St. Paul, the capital of the State. The Indians were defeated by General Sibley, in two or three engagements, and finally dispersed.

The Sioux Indians are connected with kindred tribes, extending from the Mississippi river, and bordering upon the British possessions, to the Rocky mountains. The various tribes, united, can bring into the field ten thousand warriors. They are supplied with arms and ammunition to a considerable extent. They have it in their power to inflict great injury upon the white settlements throughout that whole region; and, without the presence of a large military force, may entirely destroy them. Their proximity to the British possessions would enable them to escape pursuit by crossing the line, where our troops could not follow them.

The press has announced that the Indian war is ended. It is true that active warfare, in the field, has ceased, and the Indians are unable to resist the organized troops of the government; but they have it in their power to break up all the white settlements and depopulate an extensive region of country, unless a large military force shall be kept there.

The causes of the Indian hostilities in Minnesota have been a subject of much discussion. After a careful examination of all the data which the Indian bureau bas been able to obtain, bearing upon the causes which produced the immediate outbreak, I am satisfied that the chief cause is to be found in the insurrection of the southern States.

On the 29th of August, 1862, honorable J. R. Giddings, United States consul general in Canada, addressed a letter to the Secretary of State, in which he said: "There is little doubt that the recent outbreak of the Chippewa Indians in the northwest has resulted from the efforts of secession agents, operating through Canadian Indians and fur traders. To what extent citizens of Canada are involved I am unable to say."

This statement is confirmed by information obtained from other sources.

As early as the 5th of August last, the superintendent of Indian affairs in Utah wrote to the Commissioner of Indian Affairs that several prominent chiefs were endeavoring to effect a general rising of the tribes in that region, to exterminate the white settlers.

On the 26th of August the agent of the overland mail company telegraphed the Postmaster General that “general war with nearly all the tribes of Indians east of the Missouri river is close at hand.''

The evidence of a general hostile disposition on the part of the Indians was so strong that this department considered it proper to instruct the Commissioner of Indian Affairs to publish an advertisement, warning the public of the dangers likely to be encountered on the overland route to the Pacific.

Rev. P. J. De Smet, an intelligent Catholic priest, in a letter to the Commissioner of Indian Affairs, dated September 5th, stated: " Whilst in the upper plains of the Missouri river last June and July, at Fort Barthold, among the Gros Ventres, the Ricarees and Mandans, at Fort Union, among the Assinaboines, and at Fort Benton, among the Blackfeet Indians, I heard it frequently stated by American traders that the Indians of the plains had been greatly tampered with by the English traders along the boundary line, and expected to assist them in the then expected war between Great Britain and the United States. This excitement took place when the news reached the upper country of the difficulties created between the two countries by the arrest of Slidell and Mason. A great number of Indians of the various tribes had been induced to come and trade their furs on the British side of the line, and were promised that they would be provided, in due time, with all that was necessary to expel the Americans from their Indian country.”

It is alleged by persons who were present at the attack upon Fort Ridgely by the Sioux that orders were heard distinctly given in English, and repeated in the Sioux language. The movements and attacks of the Indians, it is said, indicated the presence and guidance of persons familiar with the mode of civilized warfare.

For some time previous to the commencement of hostilities emissaries were sent through the several tribes, with the wampum, to incite them to a general attack upon the white settlements. It is a significant fact that United States soldiers, who were made prisoners by the confederate forces, were compelled to sign a parole, containing a stipulation that they should not engage in service against Indiaps.

Many of the Indians were dissatisfied with the treaties by which they had agreed to part with their lands. They complained that they had been deprived of their hunting grounds and of the means of subsistence. They also complained of alleged frauds on the part of Indian agents and traders, some of which may have been well founded, but many were doubtless groundless. These complaints were aggravated and increased by insidious and false representations made by traders whose licenses had been revoked, and who were smarting under the deprivation of the profits they had been accus. tomed to make from their traffic with the idians. These causes combined had for some time tended to produce a spirit of discontent and insubordination in the Indians.

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