Mr. Seward to Mr. Stuart.

Sir: In the matter of the seizure in New Orleans of certain sugars made by the order of Major General Butler, and claimed by certain Greek, English, and other foreign merchants, I have the honor to state that the same, under the authority of the President, was investigated by the Hon. Reverdy Johnson during his recent mission to New Orleans, and that he has reported to this department that the sugars should be returned. This report having been approved by the President, directions will be given to the major general and to commanding officers of the United States at New Orleans to release the sugars to the claimants. A copy of so much of Mr. Johnson’s report as relates to the transaction is herewith enclosed for your information.

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

WILLIAM H. SEWARD.

Hon. William Stuart, &c., &c., &c.

[Extract.]

Mr. Reverdy Johnson to Mr. Seward.

The sugars seized by order of Major General Butler, and claimed by certain Greek, British, and other foreign merchants—

I. The largest quantity is claimed by Messrs. Covass & Negroponte, Greek merchants, residents of New Orleans.

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The fact of their purchase of the sugars is not only fully proved, but was not contested. Their right to them, therefore, in the absence of other evidence, cannot be questioned. The seizure was made on the ground that the purpose of the claimants was, in some way or other, to assist the rebel government. Of this, however, there was no proof. The purchase of each parcel was shown to have been made in the customary mode, and to have been paid for in the customary mode. The bills drawn on Europe by the claimants, as was their uniform practice, placed in the hands of their bill brokers for sale—the price only being fixed by the house—were by the brokers sold, proceeds at first deposited in bank to their own credit, and the net amount of sales, less commission, paid to the claimants by the broker’s check.

It does not appear that in this instance, or in any other, the claimants knew who were the purchasers of their bill, or with what purpose they were purchased. The suspicion that there existed, after the rebellion, as was suggested to me, “an association of Greek merchants residing in New Orleans, London, and Havana, or elsewhere, formed for the purpose of or actually carrying on the enterprise of selling foreign exchange for confederate money, with the view of transferring abroad the credit of the Confederate States to be converted into bullion for the purchase of arms and munitions of war,” is wholly without support. And as to these claimants there is proof as positive and demonstrative as there could be in such a case that the fact was otherwise. They sold their bills and invested proceeds, from time to time, in the produce of the country, for sale here or shipment abroad. There is not a scintilla of evidence that they ever belonged to such an association, if there was one, (of which, however, there is no proof,) but, on the contrary, their conduct in negotiating their bills, as exhibited in the many depositions annexed, is absolutely inconsistent with such a connexion. The seizure by the major general was evidently made under a misapprehension. His conduct in this particular, as in those of the $800,000 and $716,196, is to be referred to the patriotic zeal which governs him, to the circumstances encircling his command at the time so well calculated to awaken suspicion, and to an ardent desire to punish, to the extent of his supposed power, all who had contributed, or were contributing, to the aid of a rebellion the most unjustifiable and wicked that insane or bad men were ever engaged in.

I am, therefore, clearly in the opinion that the sugars should be released. They have already lost much in quantity by leakage, and the sooner the return is made, the better, I beg to suggest, will it be for the cause of individual justice and the honor of the government.

* * * * * *

I have the honor to be, with high regard, your obedient servant,

REVERDY JOHNSON.