I am well aware that your Government has conceded to the so-called Confederate States the rights of belligerents, and is thereby bound to respect Captain Semmes' commission; but having refused to recognize the "Confederacy" as a nation, and having excluded his captures from all the ports of the British Empire, the captures necessarily revert to their real owners, and are forfeited by Captain Semmes as soon as they enter a British port.

Hoping to receive an answer to this and the preceding letter as early as possible, and that you will not construe my persistent course throughout this correspondence on neutral rights as importunate, or my remarks as inopportune, I have, &c.

Mr. Rawson to Mr. Graham. August 12, 1863.

I am directed by the Governor to acknowledge the receipt of your letter of this date, and to acquaint you that it was not until late last evening that his Excellency received from the naval Commander-in-chief information that the condition of the Tuscaloosa was such as, as his Excellency is advised, to entitle her to be regarded as a vessel of war.

The Governor is not aware, nor do you refer him to the provisions of international law by which captured vessels, as soon as they enter our neutral ports, revert to their real owners, and are forfeited by their captors. But his Excellency believes that the claims of contending parties to vessels captured can only be determined in the first instance by the Courts of the captor's country.

The Governor desires me to add that he cannot offer any objection to the tenor of the correspondence which you have addressed to him on this subject, and that he is very sensible of the courtesy you have exhibited under such very peculiar circumstances!!! He gives you credit for acting on a strict sense of duty to your country.

Mr. Graham to Sir P. Wodehouse. August 17, 1863.

I have delayed acknowledging the receipt of your last letter, dated the 12th August, on account of events transpiring, but which have not yet culminated so as to form the subject of correspondence.

Your decision that the Tuscaloosa is a vessel of war, and by inference a prize, astonishes me, because I do not see the necessary incompatibility. Four guns were taken from on board the Talisman (also a prize), and put on board the Conrad (Tuscaloosa), but that transfer did not change the character of either vessel as a prize, for neither of them could cease to be a prize till it had been condemned in an Admiralty Court of the captor's country, which it is not pretended has been done. The Tuscaloosa, therefore, being a prize, was forbidden to enter Simon's Bay by the Queen's Proclamation, and should have been ordered off at once; but she was not so ordered. Granting that Her Majesty's Proclamation affirmed the right of Captain Semmes as a belligerent to take and to hold prizes on the high seas, it just as emphatically denied his right to hold them in British ports. Now, if he could not hold them in Simon's Bay, who else could hold them except those whose right to hold them was antecedent to his—that is, the, owners?

The Tuscaloosa remained in Simon's Bay seven days with her original cargo of skins and wool on board. This cargo, I am informed by those who claim to know, has been purchased by merchants in Cape Town; and if it should be landed here directly from the prize, or be transferred to other vessels at some secluded harbour on the coast beyond this Colony, and brought from thence here, the infringement of neutrality will be so palpable and flagrant that Her Majesty's Government will probably satisfy the claims of the owners gracefully and at once, and thus remove all cause of complaint. In so doing it will have to disavow and repudiate the acts of its executive agents here—a result I have done all in my power to prevent.