Mr. Seward to Lord Lyons.

My Lord: I have now the honor to communicate to your lordship the facts relating to the arrest of James McHugh, referred to in your note of the 26th ultimo, with the views of that case which are taken by this government.

James McHugh claims that he was born in Ireland, and is, therefore, a subject of the Queen of Great Britain. He was domiciled, residing, and pursuing a mercantile business in Savannah when the insurrection broke out; and, at the time of his arrest, he was a clerk in the service of John Treanor, an insurgent, residing in Savannah. It is not known, nor does it appear, that McHugh, since coming to this country, has manifested or entertained any intention of returning to Great Britain, and renewing his alleged native allegiance. It is not known to this government whether or not he has been naturalized, or has made the preliminary legal declaration of an intention to become a citizen of the United States. He left Savannah after the war began, but at what time is not known to this government, and, by running the blockade, proceeded to Ireland. In pursuance of instructions from his employer in Savannah, he purchased in some British port merchandise, to be shipped and run through the blockade to Savannah. The merchandise was of the value of between seventeen thousand and eighteen thousand dollars. It was shipped at Liverpool, on board of the Bermuda, which claimed—whether truly or not this government is not informed—to be a British vessel, and which bore the British flag. She carried, besides the freight, drugs, gunpowder, and canvas before named. The shipping-agents were Fraser, Trenholm & Company, agents at Liverpool of the insurgents at Richmond. The captain of the Bermuda was an insurgent citizen of the United States, born in Charleston, and residing there or in some other part of the region now in insurrection. [Page 492] The vessel was cleared for Bermuda, and no other port, and arrived at that port—McHugh being on board, together with the aforesaid freight. After some stay there the Bermuda proceeded to sea, under a pretence of going to Nassau, but really intending to run the blockade. She was captured; her captain destroyed his papers. The prisoner was found on board; and he admits that he was proceeding to reach Savannah through the blockade. The Bermuda was taken into Philadelphia, when the prisoner’s examination was taken, and then he was discharged from custody, under a belief that he was a neutral subject of a foreign power.

In the month of December last this government found it necessary to institute a search of vessels and papers departing from the port of New York, in order to prevent piracy in our waters and on the high seas. McHugh was found on board of the steamship City of Washington, then about to leave New York. On his person was found a collection of pictures, illustrative of his devotion to and habitual association with the insurgents, and of hostility to the United States, and letters addressed by disloyal citizens of Baltimore to pretended officers in the insurgent forces, bearing the pretended postage stamps of the insurgents.

Under these circumstances, James McHugh was arrested, and is detained in military custody, as an active enemy of the United States, who has no claim to be treated as a neutral subject of her Majesty the Queen of Great Britain.

I am further to inform your lordship that since it is now confessed and fully known that the pretended insurgent authorities at Richmond are engaged in loading vessels and cargoes from British ports to the American ports on so-called government account, and since the Bermuda was despatched with her unlawful cargo by Fraser, Trenholm & Company, this government presumes in her case, until those who shall be found in her service shall prove to the contrary, that she is not a neutral merchantman, but a war transport, and that James McHugh, a resident owing temporary general allegiance to the United States, having been found on board of her, with arms and munitions of war for the enemy, is, on that ground, detained as an insurgent; amenable to the laws of the United States.

I append a copy of an intercepted letter written by the prisoner, McHugh.

I have the honor to be, with high consideration, my lord, your obedient servant,

WILLIAM H. SEWARD.

Right Hon. Lord Lyons, &c., &c., &c.

mr. mchugh has steamers for sale.

Mr. McHugh to Mr. Lamar.

Dear Sir: Your favor of the 22d is come to hand, I was pleased to see your name in the paper as having arrived by the Canada, as I feared you were on board the steamer Victory, captured by the United States steamer Florida, off Frying Pan shoals, last month. Should you not succeed in procuring steamers, we have still a few left here that may be had at a price. A very nice little river steamer, called the Heroine, leaves here at the latter end of next month, virtually for the Australian trade. Although the parties have paid ,£500 of a deposit, yet they may back down, as they bought her thinking that Vicks-burg would still be able to hold out.

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I shall be glad to hear from you, as to what day I may expect you over here. If not convenient, I shall go over and meet you in Liverpool.

Waiting your reply, I remain, very respectfully, your obedient servant,

JAMES McHUGH.

C. A. L. Lamar, Esq.