Mr. Seward to Lord Lyons.

My Lord: With reference to your communication of the 2d instant, relative to the capture of the British steamship Sir William Peel, near Matamoras, by the United States gunboat Seminole, in the month of September last, and to my reply, I now have the honor to enclose to you the copy of a letter, of the 10th instant, addressed to this department by the Secretary of the Navy.

The protest and the chart which accompanied your note are herewith returned to you.

I have the honor to be your lordship’s obedient servant,

WILLIAM H. SEWARD.

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

Mr. Welles to Mr. Seward.

Sir: I have the honor to acknowledge the receipt of your letter of the 5th instant, transmitting a note of the 2d instant and its accompaniments from Lord Lyons, relative to the case of the steamer Sir William Peel, which vessel was captured on the 11th of September last by the United States steamer Seminole, and requesting any information possessed by this department on the subject.

Commander H. Rolando, who seized the Sir William Peel, gives the following reasons for his action: She had cotton on board which he believed to be the property of the Confederate States, and was being shipped by confederate agents to England or other points. He felt assurd the vessel herself is the property of the confederates. At the time of her seizure she laid in American waters, and from thence had discharged a cargo of contraband articles, of which fact there were sufficient witnesses. He also believed she had on board guns and munitions of war intended to be used to convert her into a privateer. He found on board about one hundred and fifty axles for field artillery, several casks of iron rings for artillery harness, and on deck were two guns below and under her cotton.

The vessel is now in the hands of the prize court at New Orleans.

The papers enclosed with your letter are herewith returned as requested.

Very respectfully, &c.

GIDEON WELLES, Secretary of the Navy.

Hon. William H. Seward, Secretary of State.

P. S.—I have extracted from the protest of the master and other officers of the Sir William Peel that part containing serious charges against the conduct of Commander Rolando and others, of the Seminole, to forward to them for explanation; also the copy of a paper which professes to give the substance of a conversation between Commander Woolsey, of the navy, and the master of the Sir William Peel, relative to the capture of that vessel, which will be transmitted to Commander Woolsey to confirm or refute.