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I am satisfied that she took no such stores on board, and indeed it is stated, though I know not on what authority, that her armament was conveyed in another vessel to Nassau. The board will, therefore, perceive that the evidence to be obtained from this port will all go to prove that she left Liverpool altogether unarmed, and that while here she had in no way violated the law.

S. PRICE EDWARDS.

Statement of Mr. Ed. Morgan, surveyor in her Majesty's custom-house at the

port of Liverpool. I am one of the surveyors of customs at this port. Pursuant to instructions I received from the collector on the 21st of February, in the present year, and at subsequent dates, I visited the steamer Oreto, at various times, when she was being fitted out in the dock close to the yard of Messrs. Miller & Sons, the builders of the vessel. I continued this inspection, from time to time, until she left the dock, and I am certain that when she went into the river she had no warlike stores of any kind whatever on board.

After she went into the river she was constantly watched by the boarding officers, who were direc.ed to report to me whenever any goods were taken on board; but in reply to my frequent inquiries they stated nothing was put in the ship but coal.

ED. MORGAN, Surveyor,

Statement of Mr. Henry Lloyd, examining officer in her Majesty's customs at

the port of Liverpool. In consequence of instructions received from Mr. Morgan, surveyor, I, in conjunction with the other three surveyors of the river, kept watch on the proceedings of the vessel Oreto from the time she left the Toxteth dock, on the 4th March last, till the day she sailed, the 22d of the same month. On one occasion I was alongside of her, and spoke to her, Parry, the pilot, and the chief mate. Neither I nor any of the other river surveyors saw at any time any arms or warlike ammunition of any kind taken on board, and we are perfectly satisfied that none such was taken on board during her stay in the river.

H. LLOYD, Examining Officer.

Statement, on oath, of Mr. Wm. Parry, master pilot in No. 10 boat in the port

of Liverpool, taken by the collector of customs. I was the pilot in charge of the ship Oreto when she left the Toxteth dock on the 4th of March, 1862. I continued on board to the day of her sailing, wbich was the 22d of the same month, and never left her save on Sunday, when all work was suspended. I saw the ship before the coals and provisions were taken into her. There were no munitions of war in her—that is to say, she had no guns, carriages, shot, shell, or powder. Had there been any on board I must have seen it. I piloted the ship out of the Mersey to Point Lynas, off Anglesea, where I left her, and she proceeded down channel, since when she has not returned. From the time the vessel left the river until I left her she had no communication with the shore or with any other vessel for the purpose of receiving anything like a cargo on board. I frequently saw Mr. Lloyd, the tide surveyor, alongside the ship while in the river.

WM. PARRY. Sworn before me at the custom-house, Liverpool, this 23d day, 1862.

S. PRICE EDWARDS, Collector.

Mr. Seward to Mr. Adams.

No. 336.]

DEPARTMENT OF State,

Washington, September 8, 1862. Sir: I have the honor to acknowledge the receipt of your despatch of August 22, No. 208.

Mr. Stuart read to me, in due time, the note which Earl Russell had addressed to him on the 28th day of July, commenting upon the despatch No. 260, which I wrote to you so long ago as the 28th day of May last, and which you so properly and promptly put into his hands on the 20th of June last. But Mr. Stuart seemed not to have been instructed to leave a copy with me, and for obvious reasons I did not solicit one.

His lordship's proceedings in leaving the paper submitted to him unnoticed until all expectation of special attention to it was given up, and in then taking it up, under a supposed change of affairs in this country, and making it the basis of instruction to Mr. Stuart here, in vindication of the British government, instead of giving an answer through you to the appeal contained in the paper, was indeed extraordinary. It did not, however, seem necessary for any national interest of ours to take special notice of these proceedings. They were at the time attributed by this government to some new political domestic pressure upon the ministry of Great Britain, and I am happy to learn that, according to the best information which we have been able to obtain, such was the case. I shall add only, that however necessary Earl Russell's course in the matter may have been in regard to British interests at home, and however beneficial it may have been to them, it has not made a favorable impression in this country, or produced a conviction here of the friendly feelings and dispositions towards us on the part of Great Britain, which his lordship has so generously, and doubtless with entire sincerity, avowed.

You will have learned, before this despatch shall reach you, that our late campaign in Virginia has failed; that the insurgent forces, escaping our armies, have returned to the occupation of Northern Virginia; and have even crossed the upper Potomac and taken up a position at Frederick, in Maryland, where they seem to be threatening alike Washington, Baltimore, and Harrisburgh. In a correspondence like this, which, however confidential in its character, still wears an aspect of being addressed to foreign governments, it would be indiscreet and injudicious to attempt to explain the causes of this very serious reverse. I must be content, therefore, with saying that it seems to have resulted from the fact that our two reunited armies in Virginia were only partially combined and not at all consolidated. There has been, at least, military error somewhere, and an inquiry has been instituted to ascertain where it lies, and with whom the responsibility for the reverse belongs.

Our information from the west is that the insurgents are equally bold and adventurous in that quarter, and that although no great disaster has occur. red there, new energies of the government are necessary to save the States of Tennessee and Kentucky for the Union, if not to prevent inroads into Ohio.

It is not deemed necessary or even practicable, in an emergency where every hour may bring reasons for changes of measures before adopted, to attempt to give you a programme of intended military operations. I confine myself, therefore, to the statement, in general terms, that our armies in Virginia are at last fully consolidated, and that they are already in the positions deemed most advantageous for the restoration of the fortunes of the war. The same is true of our forces elsewhere. The three hundred thousand volunteers called for by the President have already been mustered in the service, and near half of them are in the field. Recruiting still goes on with the utmost spirit, and a considerable portion of the three hundred thousand men expected to be raised by draft are already coming forward as volunteers. The draft will fill up the complement without great delay. Nowhere, neither on the part of the army, nor of the people, does there appear the least sign of indecision or of despondency, although, of course, the country is, for the moment, filled with deep anxiety.

We hear, officially and unofficially, of great naval preparations which are on foot in British and other foreign ports, under cover of neutrality, to give to the insurgents a naval force. Among these reports is one that a naval armament is fitting out in England to lay New York under contribution. I think that the vigor of our naval department in building a navy upon a sudden emergency can hardly be surpassed; nevertheless, its progress seems slow to us, under the circumstances. In addition to the Monitor and other iron vessels, already known to you, we have the Ironsides now ready for duty, and a new Monitor is expected to be put into service within the next ten days. Others will soon follow, and we are doing what we can to be prepared for every possible adverse contingency that can affect the situation of the country either at home or abroad. We cannot but regret that the course of administration in Great Britain in such as to render our relations with that country a source of constant and serious apprehension. But it is not perceived here what more can be done than we are doing to preserve an international peace, which, perhaps, cannot be sufficiently valued until, without fault on our part, it shall have been broken. I am, sir, your obedient servant,

WILLIAM H. SEWARD. CHARLES Francis Adams, Esq., &c., fc., fc.

Mr. Adams to Mr. Seward.

[Extracts.] No. 221.]

LEGATION OF THE UNITED STATES,

London, September 12, 1862. Sir: I have to acknowledge the reception of despatches numbered 328 to 334, both inclusive; likewise of printed circular No. 21, respecting aid to be rendered to the New York Geographical Society, and two copies of the United States Statutes at Large for the year 1861–62. The information furpished of the progress of the war is valuable, and the exposition of the views of the government in its foreign relations is of a most interesting character, and cannot fail to inspire unity of thought and action among the agents of the country abroad, wherever they may be. Nothing bas occurred daring the past week to vary the aspect of things in this country. There are announcements of increasing distress among the operatives, as the growing scarcity of cotton has the effect of closing more of the mills. On the other hand the rapid advance in price bas so far stimulated the search for the article as to justify the expectation of a considerable addition to the supply from India. I am therefore inclined to believe that we are at the crisis of the difficulty, and from this time things will rather mend than grow worse. Thus far it has not been possible to give a political direction to the uneasiness which exists. A good deal has been done both by public and private assistance to alleviate the suffering of the poorer classes. The anxiety about the crops has been quieted, partly by the prevalence of fine weather during the harvest, and partly by the extensive importation of breadstuffs from America, which puts an end to the apprehension of famine prices. In the general trade of the country there seems to be increased activity, which, to a corresponding extent, neutralizes the unfavorable influence from America.

The condition of matters on the continent is still regarded with not a Jittle inquietude. The suppression of the indiscreet outbreak of Garibaldi has not been attended by the restoration of confidence in the established order of things in Italy. There is an obvious increase of the popular pressure upon the Emperor of France for the withdrawal of his force at Rome, which has not been thus far attended by any symptoms of yielding on his side. * * * * * *

The breaking out of the insurrection has brought to light the existence of national feelings (in England] towards them, (the United States, the strength of which had scarcely been suspected in America. As the struggle has gone on, the nature and extent of them has become so clear and unmistakeable as to defy all disavowal. Having their root in the same apprehensions of the force of a foreign state which exists in the case of France, they take the same direction towards efforts to curtail, if not to neutralize, its energies. The popular sentiment of Great Britain, as now developed, should be a warning to the statesmen of America by which to regulato their action, at least for two generations. It dictates the necessity of union at home far more imperatively even than the wretchedness which now fills the country with grief from end to end. It ought to open the eyes of all the honest but deluded citizens who have imagined that in resisting the authority of the federal government they are only endeavoring to substitute oue kind of domestic sovereignty for another. The fact is that they are ignorantly conducing to the interposition of a wholly foreign and opposite influence, which has no sympathy in common with America, and which seeks only to base its own interests more firmly upon the decay of those of other nations. To attempt to counteract this policy by angry remonstrance or a resort to violence would be idle, if not worse. The true remedy would be to effect the restoration of peace and harmony, the revival of our habits of productive industry, and the return of vigor to the action of one government over all, inspiring confidence at home and a salutary fear as well as respect among the malevolent abroad.

But if it should turn out that the malignant spirits among us prove to have so far confirmed their authority among their countrymen in some quarters as to render these results impracticable, then does the manifestation of these British proclivities open a still further question for the consideration of America. They point significantly to the future encouragement of a social organization approximated to us as closely as possible, which, because animated by the bitterest hostility to us may hence become a ready instrument to effect the object of finally annulling our influence. Thus hemmed in between the north and the south, both almost equally guided by British policy, the United States may cease to inspire that dread of their future expansion which seems to haunt the minds of their statesmen of the present day. The mode of counteracting these dangerous tendencies is

deserving of most careful consideration. To permit the establishment of any such authority to the south of us as that indicated seems to be out of the question. It would be far wiser to determine that rather than this the social basis upon which it is designed to maintain it should be, once for all, removed. Whatever might be the hesitation to act whilst the question remained confined within purely domestic considerations, it will cease the moment that any extraneous element of foreign agency shall be introduced. Great Britain, after wielding the moral considerations of the slave question for many years for the purpose of stimulating our domestic dissensions, cannot be allowed to complete her work by upholding a slaveborn authority as a perpetual check upon our prosperity. All the considerations of our safety in the distant future forbid the idea. The whole case changes its character the moment we come to look at it in this new light. Its moral become not less momentous than its political aspects. The position of the two nations is thus made antagonistic on a great issue of principle, and the protection of the great idea of human liberty becomes more than ever before the bounden duty of the United States.

I have been led into this course of reflection insensibly by the incidental exposition of the gradually spreading antipathy to us among the people of this city and kingdom, as it has been shown by the reception of General Pope's announcement that we have gained a victory. Here it is viewed in the light of a disaster, and great efforts are made to discredit it. I have the honor to be, sir, your obedient servant,

CHARLES FRANCIS ADAMS. Hon. WILLIAM H. SEWARD,

Secretary of State, Washington, D. C.

Mr. Seward to Mr. Adams. No. 340.]

DEPARTMENT OF STATE,

Washington, September 13, 1862. Sie: Mr. Morse, our indefatigable consul at London, has transmitted to this department an intercepted letter written by S. H. Mallory, who is the pretended secretary of the navy to the insurrectionary party in the south, and addressed to James H. North, who is called a commander in that navy. The letter shows that at least two steamers, the Oreto and the Florida, have been actually built, fitted up in England for the insurgents, and despatched with armaments and military stores from British ports to make war upon the United States. Mr. Morse has informed me that he intended to submit the letter to you, and it is probable that you will have taken a copy of it. For greater certainty, however, a copy is sent you with this despatch. It is thought expedient that you give a copy of it to Earl Russell. Hitherto the British authorities have failed to prevent such transactions, assigning as the reason a want of authentic evidence of the illegal character and purposes of the vessels which you have denounced. It will perhaps be useful to give the government this unquestionable evidence of the infraction of the neutrality laws, in the very two cases of which you have already complained without success. Although these two vessels are now beyond the reach of British authority, the evidence which shows that they ought to have been detained may possibly lend some probability to new complaints in regard to other vessels of a similar character now being built in England. I am, sir, your obedient servant,

WILLIAM H. SEWARD. CHARLES FRANCIS Adaus, Esq., foc., sc., fc.

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