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quence of your letters of the 31st of July and the 1st of August last, which were to the effect that he should seize the gun-boat No. 290, iu case she should put into Nassau.
It is, therefore, for his lordship’s consideration whether any further or different instructions should be forwarded to him by the mail of the 27th instant.
I am, &c.,
(Inclosure 1 in No. 36.)
Governor Bayley to the Duke of Newcastle.
GOVERNMENT HOUSE, Nassau, August 11, 1862. MY LORD DUKE: Adverting to my dispatch of 21st June, I have now the honor to
inforın your grace that on the 2d of August the judge of the vice-admi. Report from Gox ralty court decreed the restoration of the Oreto, but at the same time Liberation of the adjudged each of the parties to the suit to pay their own costs. This videre could adjudication was made on the ground that there were circumstances of
suspicion strong enough to justify Captain Hickley in seizing the Oreto as a vessel intending to arm in the service of a foreign belligerent power.
2. The liberation of this vessel suggests the probability of certain contingencies against which it is expedient to provide.
3. I do not think it likely that we shall ever obtain stronger proof against any vessel than was produced against the Oreto of an intention to arm as a belligerent. Therefore we may assunie that no prosecution of the same kind will be instituted, or if any b+ instituted that it will fail. The natural consequence will be that many vessels will leave England partly equipped as men-of-war or privateers, and intending to complete their equipment here. But the notoriety of this practice will induce Federal men-ofwar to frequent these waters, and virtually blockade these islands, in greater force than they have hitherto done; and when they are assembled in numbers it will be vain to reckon on their observing any respect for territorial jurisdiction or international usage. I should neither be surprised to see Federal ships waiting off the harbor to seize these confederate vessels, nor to see the confederate ships engaging with Federal men-of-war within g-shot of the shore. The only means of preserving the peace and the neutrality of these waters will be afforded by the presence of an adequate naval force. I imagine that two small armed vessels, mounting from twelve to sixteen guns each, would be sufficient for the purpose. It present we have only one in harbor, the Petrel, of eleven gims.
4. There are loud and general complaints among the colonists of the manner in which, as they express themselves, parts of these islands are blockatled. Certainly, it
is impossible to imagine a stricter principle of interpretation than that which, in  these days *of Armstrong guns, contines the right of territorial sovereignty to
three miles from the shore, and makes no distinction between the outward or seaward islands and those which form the inner belt of a large group like the Balia
So long as the Americans regard the three miles' distance from the shore of any of our islands as the extent of our sovereignty, so long will these seas, which belong to a British colony, be virtually blockaded by their squadron. And there is this peculiar unfairness in this mode of computation: The Americans, I am informed, assert that their own territorial sovereignty extends twenty miles beyond the extreme capes and headlands of their coast. If this be true, we are placed on a footing of signal disadvantage in all questions of international rights which may arise between the two nations at critical times like the present; and this disadvantage is most sensibly felt in this part of the world.
5. However, this part of the subject is of wider scope than that on which I dommenced this dispatch, and will doubtless engage the attention of Her Majesty's gorernment.
6. Meanwhile I solicit from your grace such instructions as your grace may conceive necessary to meet the more ininediate consequences of the Oreto's liberation.
I have, &c.,
C. J. BAYLEY. P. S.- August 18.—Since the first part of this dispatch was written, yellow fever, which had previously shown itself among several sailors belonging to merchantmen in the barbor, has extended to Her Majesty's steamer Petrel.
One officer and two seamen of that ship have died, and five or six are now sick in hospital. Speaking to me on the subject, Captain Watson remarked that no vessel mounting fewer than sixteen guns ought to be sent to this port during the hot season of the year, on account of the ventilation necessary for preserving the health of the men. During the cool season this is not au object of paramount importance.
C. J. B.
(Inclosure 2 in No. 36./
Governor Bayley to the Duke of Newcastle.
GOVERNMENT HOUSE, Nassau, August 14, 1862. MY LORD DUKE: Reverting to my dispatch of the 11th instant, I now have the honor to inclose two copies of the admiralty judge's decree in the case of the Oreto, which Mr. Lees informs me are quite correct.
I have, &c. (Signed)
C. J. BAYLEY.
(Inclosure 3 in No 36.)
In the vice-admiralty court of the Bahamas. Our Sovereign Lady the Queen vs. The British Steamship or Vessel Oreto, (whereof
James Alexander Duguid is, or lately was, master,) her tackle, &c., &c. I, Joshua Anderson Brook, registrar of the vice-admiralty court of the Bahamas, do hereby certify that the annexed contains a true copy of the decree pronounced by the worshipful the Honorable John Campbell Lees, judge and commissary of the said court, in the above case, on the 2d day of August, in the year of our Lord 1862, as remains of record in the registry of this honorable court.
Given at the city of Nassau, in the island of New Providence, under the seal of the suid court, this 13th day of August, anno Domini 1871, and of our reign the thirty-fifth.
J. A. BROOK, Registrar.
In the vice-admiralty court of the Bahamas. Our Sovereign Lady the Queen v8. The British Steamship or Vessel Oreto. The British steamship Oreto has been seized by the commander of Her Majesty's ship Greyhound, on the alleged ground, as appears by the libel, that James Alexander Duguid, now or lately master of the said ship, and others exercising authority over
ber, have, without leave of Her Majesty the Queen, and within the jurisdiction of  *the Bahamas, attempted to equip, furnish, and fit out the said steamship Oreto,
with intent that she should be employed in the service of certain persons exereising, or assuming to exercise, the powers of government in certain States claiming to be designated and known as the Confederated States of America, to cruise and commit hostilities against the citzens of the United States of America, Her Majesty the Queen being, at the time, at peace with the said United States, and have třereby acted in violation of the provisions of the act 59 Geo. III, cap. 69, commonly known as the foreign-enlistment act.
Now, to support the libel, it is necessary that proof should be givenIst. That the aforesaid parties having charge of the Oreto, while the vessel was within the jurisdiction of the vice-admiralty court of the Bahamas, attempted to equip, furnish, and fit her out as a vossel of war.
2d1y. That such attempt was made with the intent that she should be employed in the service of the Confederated States of America; and,
3dly. That such service was to cruise and commit hostilities against the citizens of the United States of America. Witnesses have accordingly been produced to prove that the Oreto is constructed for and fitted as a war-tessel; that acts have been done in her, since she canie to Nassau, which constitute an attempt to equip, fit, and arm her as a vessel of war. That from certain conversations which were overheard between the master of the vessel and a person who came out passenger in her, and from certain acts done by this person, there is proof that she was intended for the service of the Confederated States of America, and to cruise against the citizens of the United
H. Ex. 282—18
It has been contended by the proctor for the respondents that proof ought also to have been given that Her Majesty the Queen was at peace with the United States of America, as the court cannot take judicial notice of that fact. That it ought to have been proved that there is such a place as the Confederated States of America, and that proof should have been given that no leave had been obtained to fit the Oreto as a vessel of war. Without entering further into the subject, I will dismiss these points by stating my opinion, that the court is bound to take judical notice of Her Majesty's proclamations, and that in the proclamation of the 13th May, 1862, the Confederated States of America are named, and it is also alleged that Her Majesty is at peace with the United States of America, and that as the allegation in the libel, that there was no license from Her Majesty to fit the Oreto as a vessel of war, has not been traversed, the court has a right to assume that it is admitted.
A responsive plea has been put in by the defendants
1st. Denying that there was any agent of the owners or persons interested in the Oreto, of the name of John Lowe, on board of her, as affirmed in the libel; that the said Lowe was merely a passenger, and never exercised avy power or control over the vessel.
2dly. Denying that James Alexander Duguid, the captain, or any person exercising authority over the said steamship, attempted to equip, furnish, or fit out the said ship, with inteut that she should be employed in the service of the Confederated States of America, to cruise and commit hostilities against the citizens of the United States.
3dly. That while the Oreto lay in the river Mersey, immediately previous to her sailing for this port, British men-of-war frequently passed and repassed her, and that she was at all times in a conspicuous and public position without having been seized or arrested, or subjected to detention, and that she quitted Liverpool in the open day without any manner of baste or secrecy; that the master, while she was so lying in the Mersey waiting instructions from the owner, directed the mate to employ the crew during their leisure hours in doing ordinary ship's work, fitting gear, stroppiug blocks, &c., during which time, as well as after she sailed, certain spare blocks which were then on board and which were intended solely for the use of the ship as part and parcel of her rigging, and not in any way whatever as blocks for gun-tackles or as art of the furniture of guns, were stropped by the said crew, and the said blocks were never known or called as gun-tackle blocks, until a certain Edward Jones, a man of infamous and abandoned character, who had been shipped on board in the capacity of boatswain, called them gun-tackle blocks. That neither the said Alexander Duguid, nor any person whosoever, having autiority over the said steamship during the time she was at the port of Nassau, ever gave any orders or directions to strop blocks as gun-tackle blocks, or to strop any blocks whatever. But any blocks which may have been stropped on board the said ship were done by the seamen of the Oreto in their ordinary avocations, and is always done on board merchant-ships in order that they might have employment on board, and not for the purpose of fitting the Oreto as a vessel of war. 4thly. That no faith or credit ought to be given to the depositions of Charles Ward,
à witness for the party proponent; that he is a man of abandoned character, and  is actuated by malicious and vindictive feelings against the said James Ver
ander Duguid, and has sworn falsely for the purpose of carrying out an arowed intention of doing an injury to the said J. A. Dnguid.
On the evidence given in support of this plea, I shall remark as I proceed.
The evidence which has been produced in support of the prosecution may be classed in two parts :
1st. That which relates to circumstances which occurred before the vessel arrived within the jurisdiction of the admiralty court of this colony; and,
2dly. That which applies to facts done subsequently to such arrival.
To the first division belong the construction and fitting of the vessel before she left England, the flags or other materials which she had on board when she sailed, and the conversations or remarks of the parties in charge of her while on her passage from England.
To the second division belong the proceedings on board the vessel after her arrival within the jurisdiction of the Bahamas vice-admiralty court.
From the evidence appertaining to the first division I abstract the following, which is all that I think in any degree material:
Mr. Wynne Fitzjames Duggan, the chief mate of the Oreto, says: I am chief officer of the Oreto. The number of men all told on board was fifty-two or fifty-three. I believe that was an ordinary crew. We had not too maiiy. We had no cargo. The Oreto was fitted (when she left England) as she is now. All vessels are not fitted alike. I have seen some ships fitted with regard to bolts in ports as she is. I have seen vessels intended to carry cargo fitted as she is. Some of Green's and Wigram's ships are so fitted. There was a passenger on board whose name was Lowe. He did not, to my knowledge, exercise any authority over the ship.
In the cross-examivation, Mr. Duggan says: I bad access to every part of the ship Oreto. I have gone right through the vessel. I have never seen any implements of war or any ammunition on board of her. The shot-boxes were full of cabbages, turnips, and potatoes.
William Porter, a seaman of the Oreto, deposes that the vessel had no stowage-room for cargo. She was not fitted as mercbant-vessels usually are. She had a magazine. He says, I believe there were shell-rooms. I was in a room where shells were stowed. She had light-rooms. They are not usual in merchant-vessels. She had boxes for shot. She bad two gigs, a life-boat, pinnace, and dingey. I took her to be a gun-boat. We bad a passenger named Lowe on board. As far as I could see, Mr. Lowe had a little authority on board. On one of the mess kids being broken, I heard Mr. Lowe say to Captain Duguid he ought to take better care of the things. Mr. Lowe had given ine different orders, and told me to steer different courses when I was at the helm.
Cross-examined. I cannot say whether Captain Duguid knew it. I might have been · reprimanded if he had.
Peter Benson, a seaman of the Oreto, says: The Oreto (meaning when she sailed from England) was fitted just as she is at the present time. I have not been in steamboats before. I have been in sailing-vessels. Î bave never been on board of ope fitted like the Oreto. There is no place for cargo.
Walter Irving, a fireman of the Oreto, states: I have served on board steanıships before; I have been so serving six or seven years. The Oreto was not fitted like the steamships I have been serving in before; they were merchant-ships and passenger vessels. I did not see any cargo on board the Oreto; there were shot and shell boxes, and a place which the crew called a magazine. I know a flag they call the confederate fag; I saw one on board the Oreto. I saw it on the quarter-deck before we came in here; I saw it among other flags. There was an American and a French flag.
There was a passenger on board named Mr. Lowe; he seemed to have great interest in the ship.
With respect to the flag mentioned by this man, I will observe that had there been a confederate flag on board the Oreto, I should not consider it as very powerful evidence, inasmuch as it was with American, French, and other flags, and might have been sent on board with a general assortment of tags, which many merchant-vessels lave. But it will be seen that Captain Dugnid, in his examination, swears that there was no confederate flag on board. He states that when the flags were sent on board the ship at Liverpool they were wrapped up in separate papers, and marked with their respective names; that seeing one marked " confederate flag,” he immediately sent it ashore, fearing that the possession of such a flag might involve them in some trouble, should they be boarded by an American vessel of war. Drawing niy conclusions from
the manner in which bis evidence was given, and all the accompanying circum stances, I *cannot but be of opinion that there was no confederate tag on board
after the ship left Liverpool, and consequently that the witness Walter Irving and the man Ward, who gives evidence to the same effect, have stated, as far as regards the confederate flag, what is not true.
Thomas Robinson, a fireman of the Oreto, states : I have served on board of ocean steamers; in the Great Britain and Great Eastern steamships, and in the Cunard line of boats; there was a great difference in the fitting of the Oreto.
John Quinn, a fireman of the Oreto, says: I have been to sea ten years; I have been employed in merchant steamboats, in passenger vessels, and vessels carrying troops. I bave never served on board a steam-vessel in the merchant service fitted out like the Oreto.
Charles Ward, the steward of the Oreto, says: The Oreto had not the appearance of such merchant-vessels as I bave been in before. There were shot-lockers and magazine, and the kegs were marked Magazine," Gun-room," "Shell-room," &c.
Mr. Lowe was a passenger in her; four or five days after we sailed ho came to me and told me to be careful and keep an account of everything, as it would be saving a good deal of trouble when the crew would be leaving, and her guns and ammunition pat on board, and a new crew shipped, and very likely everything would be done in a hurry, and he said he would reward me handsomely. I have heard him repeatedly tell the captain to get things done as he wanted them done in the ship, and he was guided by Mr. Lowe on the voyage in the working of the ship and getting things done; this has happened several times. I heard the captain, Mr. Lowe, and the chief engineer speak with regard to the ship. I always understood them to say she was titted for the southern government as a gun-boat, whether for the government or a private gentleman I carnot say—they were conversing in the cabin.
There was a flag in the captain's cabin ; it had one white stripo and two red ones on each side of the white, and in the corner there was blue with stars in it. I do not know the secession flag. I heard Mr. Lowe told the captain that he treated the slaves on his plantation better than he (the captain) treated the men. Mr. Lowe stated that he would make a different arrangement when he came to port, and he did.
I heard Mr. Lowe tell Captaiu Dugnid to get those gun-tackle blocks shipped and
put them away, not to be used for any purpose at present. This was before we came here.
With respect to this evidence, I will here observe that Charles Ward had been put in prison by Captain Duguid for some alleged misconduct ; that he gave his evidence evidently under feelings of resentinent. Now, when the meaning of any conversation or remark he may have heard depends so much on the ipsissima verba which were spoken, the inferences which he may draw from them may be such as their import did not justify, and this evidence must, therefore, be received with great cantion. The slightest difference in the words made use of in a conversation or observation, or the occasion which caused it, may give such conversatiou or remark an entirely different meaning from that which the speaker intended to convey; and it does appear to me rather likely that conversation or remarks of this nature should have taken place in the presence of the steward, or in the immediate vicinity of a place, within hearing distance, where he would be very likely to be.
Captain Dugnid has sworn that no such conversation as Ward describes took place. Captain Duguid's statement is worth at least as much as Mr. Ward's. I shall, therefore, not consider these conversations to have been proved. It is true, as was stated by the advocate general, that Captain Duguid may be an interested witness; to what extent he may be so I do not know; but if the evidence of an interested witness may legally be given, although it should be received with caution, it certainly cannot be invalidated on that account. Captaid Dugnid, in his evidence, states that Ward threateneil when he came out of jail to fix him and the ship too. Ward denies baving used this threat, but I am inclined to believe that he did. However, let one assertion be placed against the other; yet I must say that I did not feel at all satisfied with the manner in which Ward gave his evidence. He says, “ Mr. Lowe told me to be careful and keep an account of everything, is it would be saving a good deal o tronble when the crew would be leaving, and the gups and ammunition put on board and a new crew shipped.”
Now, allowing that there could be any connection between the things which a stew. ard would bave charge of and the leaving of a crew, which I do not see, what possible connection could they have with the shipping of gums and ammunition ! I cannot but think it highly improbable that Mr. Lowe would have made so uncalled for, so irrelevant, and, to a stranger as this steward was to him, so imprudent a speech. Again, he says Captain Duguid was guided by Mr. Lowe during the voyage in the working of
the ship. Can anything be more improbable than this? He says in another  part of his evidence, *“I heard Mr. Lowe tell Captain Duguid to get those gun
tackle blocks stropped, and to put them away, not to be used for any purpose at present. This was before we came here."
This Captain Duguid denies, and, as I said before, Captain Duguid's oath is certainly as much to be relied on as Mr. Ward's.
The observations which I made respecting the confederate flag when commenting on the evidence of Walter Irving apply equally to the evidence of Ward. I will only add that I think it very wonderful that he should have been so long both in Liverpool and here, and not know a confederate flag.
Captain Hickley, after stating certain motives which induced him to go on board the Oreto to examine her, gives the following evidence:
At noon, on the 10th June, I went on board the Oreto with some officers and men for the purpose of thoroughly examining her, and I found her discharging what I supposed to be shell at the time of going on board. I should have followed out my intention of thoroughly searching the vessel, but as she was clearing at the time, and the consignee assured me that she had cleared in ballast for the Havana, and as I actually thought this was the case-this testimony being strengthened by that of the reveune officer, I thought further interference on my part unnecessary, and so I quitted the ship. After some few details, to which I do not think it necessary to advert, he goes on to say:
I quitted the ship with the understanding that I was to again visit her previous to her leaving ; some days elapsed, and being convinced in my own mind that the vessel was not acting in good faith, I determined, before leaving, to make a thorough overhaul. Accordingly, on the 13th day of June, I proceeded on board with the officers and men chosen, on its being reported to me that the vessel had cleared in ballast by the consignee. On my first going over her side, the captain informed me that the crew had refused to get the anchor up unless they got a guarantee from myself or the governor as to where she was going; and on the captain calling the creir aft, and requesting them to state their grievances to me, the men did so in what I considered an orderly and proper manner, and in no mutinous spirit whatever, as far as I am capable of judging. I then proceeded to examine the vessel, and found herin every respect fitted as a war-vessel, precisely the same as vessels of a similar class in Her Majesty's navy. She has a magazine, and light-rooms forward, handing-rooms, and landing-scuttles for powder as in war vessels, shell-rooms aft fitted as in men-ofwar, a regular lower deck, withi hammock-hooks, iness-shelves, &c., as in onr own warvessels; her cabin accommodations and fittings generally being those as fitted in ves