I beg to take this opportunity of making your Grace acquainted with what has occurred here in connection with the visit of the Confederate States steamer Alabama.

On Tuesday, the 4th instant, I received a letter from the Commander of that vessel, dated the 1st August at Saldanha Bay, announcing his having entered that bay with a view to effecting certain repairs, and stating that he would put to sea as soon as they were completed, and would strictly respect our neutrality.

When this intelligence was received, the United States Consul called on me to seize her, or at any rate to send her away instantly; but as the vessel which brought the news reported that the Alabama was coming immediately to Table Bay, I replied that I could not seize her, but would take care to enforce the observance of the neutral regulations.

On the next day, about noon, it was reported from the signal station that the Alabama was steering for Table Bay from the north, and that a Federal barque was coming in from the westward; and soon after, that the latter had been captured and put about. A little after 2 P.M. the United States Consul called to state that he had seen the capture effected within British waters; when I told him he must make his statement in writing, and an investigation should be made. I also, by telegram, immediately requested the Naval Commander-in-Chief to send a ship of war from Simon's Bay. The Alabama, leaving her prize outside, anchored in the bay 3.30 P.M., when Captain Semmes wrote to me that he wanted supplies and repairs, as well as permission to land thirty-three prisoners. After communicating with the United States Consul, I authorized the latter, and called upon him to state the nature and extent of his wants, that I might be enabled to judge of the time he ought to remain in the port. The same afternoon he promised to send the next morning a list of the stores needed, and announced his intention of proceeding with all despatch to Simon's Bay to effect his repairs there. The next morning (August 6th) the Paymaster called on me with the merchant who was to furnish the supplies, and I granted him leave to stay till noon of the 7th.

On the night of the 5th, Her Majesty's ship Valorous had come round from Simon's Bay. During the night of the 6th the weather became unfavourable; a vessel was wrecked in the bay, and a heavy sea prevented the Alabama from receiving her supplies by the time arranged. On the morning of the 8th, Captain Forsyth, of the Valorous, and the Port Captain, by my desire, pressed on Captain Semmes the necessity for his leaving the port without any unnecessary delay; when he pleaded the continued heavy sea and the absence of his cooking apparatus, which had been sent on shore for repairs, and had not been returned by the tradesman at the time appointed, and intimated his own anxiety to get away. Between 6 and 7 A.M., on Sunday, the 9th, he sailed, and on his way round to Simon's Bay captured another vessel; but on finding that she was in neutral waters he immediately released her.

In the meantime, the United States Consul had, on the 5th August, addressed to me a written statement that the Federal barque Sea Bride had been taken "about four miles from the nearest land," and "already in British waters;" on which I promised immediate inquiry. The next day the Consul repeated his protest, supporting it by an affidavit of the master of the prize, which he held to show that she had been taken about two miles and a half from the land; and the agent for the United States underwriters, on the same day, made a similar protest. On the 7th, the Consul represented that the prize had, on the previous day, been brought within one mile and a half of the lighthouse, which he considered as much a violation of the neutrality as if she had been there captured, and asked me to have the prize crew taken out and replaced by one from the Valorous, which I declined.

I had, during this period, been seeking for authentic information as to the real circumstances of the capture, more particularly with reference to the actual distance from the shore, and obtained through the Acting Attorney-General statements from the keeper of the Green Point Lighthouse (this was supported by the Collector of Customs), from the signal-man at the station at the Lion's Rump, and from an experienced boatman who was passing between the shore and the vessels at the time. Captain Forsyth, of the Valorous, also made inquiries of the captain of the Alabama and of the Port Captain, and made known the result to me. And upon all these statements I came to the conclusion that the vessels were not less than four miles distant from land; and on the 8th I communicated to the United States Consul that the capture could not, in my opinion, be held to be illegal by reason of the place at which it was effected.

In his reply of the 10th, the Consul endeavoured to show how indefensible my decision must be, if, in these days of improved artillery, I rested it on the fact of the vessels having been only three miles from land. This passage is, I think, of considerable importance, as involving an indirect admission that they were not within three miles at the time of capture. And I hope your Grace will concur in my view that it was not my duty to go beyond what I found to be the distance clearly established by past decisions under international law.

An important question has arisen in connection with the Alabama, on which it is very desirable that I should, as soon as practicable, be made acquainted with the views of Her Majesty's Government. Captain Semmes had mentioned after his arrival in port, that he had left outside one of his prizes previously taken, the Tuscaloosa, which he had equipped and fitted as a tender, and had ordered to meet him in Simon's Bay, as she also stood in need of supplies. When this became known to the naval commander-in-chief, he requested me to furnish him with a legal opinion; and whether this vessel could he held to be a ship of war before she had been formally condemned in a prize court; or whether she must not be held to be still a prize, and, as such, prohibited from entering our ports. The Acting Attorney-General, founding his opinion on Earl Russell's despatch to your Grace, of the 31st January, 1862, and on "Wheaton's International Law," states in substance that it was open to Captain Semmes to convert this vessel into a ship of war, and that she ought to be admitted into our ports on that footing.

On the 8th August the vessel entered Simon's Bay, and the Admiral wrote that she had two small rifled guns, with a crew of ten men, and that her cargo of wool was still on board. He was still doubtful of the propriety of admitting her.