that I could put any confidence in, twenty-three years of age, and has resided nine years in this country, his father and mother now living in the neighborhood of Monterey.

Immediately on hearing of his arrest the commander of this city demanded him, and he was released, but the letters were retained. I had addressed a letter to the commander, urging him to demand the release of the prisoner and whatever documents he might have with him. Since this I have not pressed the matter further, as it would only bring a collision between the two cities.

The crowds of refugees from Texas do not diminish in the least, although it is very difficult, owing to the strict watch kept upon their movements, for them to get out. Many are arrested; some are hung; others are taken and pressed into service.

False dispatches of the most ridiculous kind are circulated throughout the country and through Mexico; but even his mode of encouraging the masses is failing,and throughout the counties bordering on the Rio Grande there exists a perfect reign of terror.

At Austin there is a strong Union party, headed by Ex-Senator Hamilton, who will probably resist all attempts that may be made by the rebels, to subdue them. At San Antonio nearly all the stores are closed, and many of the merchants are now residing here, waiting patiently for their time to come when they can return.

I am, sir, very respectfully, your most obedient servant,

L. PIERCE, JR.,

United States Consul.

[Inclosure No. 2.]

MATAMOROS, MEXICO, May 23, 1862.

Hon. W. H. SEWARD, Secretary of State, Washington, D. C.:

SIR: I arrived in the country the 26th instant. Of course I have not business and nothing really worthy an official letter, yet, sir I hope to make it worth reading. I have seen much that my Government at Washington should know, then correct as far as their many duties shall afford.

Captain Hunter, of the United States steamer Montgomery, is all that the Government can ask or expect; yes, more; his position is difficult; he lays in a fleet of all nations. To take a prize is out of the question. Smuggling is apparent, bu the neutral river affords excuses, &c.

There is no harbor; exposed to gales, in many of which he has at great risk saved vessels and lives. The Mexicans have been laid under obligations by his saving 9 of them from drowning in the surf. They appreciate it, and are on the shore furnishing beef, &c., also giving shelter and feeding the destitute Union men that make their escape from Texas. They do it, sir,to the risk of their lives against the threats of the Texas army, to which the little Mexican villages will be exposed, especially if our ship is removed.

Captain Hunter had brought off through the surf 70 of these refugees. There does not appear to be provision for the protection of this class of our citizens.

I hope it may be consistent for your to give me some special instructions or advice. I have been for the past two days with Mr. Pierce (consul here),and from what I see it is evident that he should expend treble his salary upon the worthy Union citizens. It is really painful for a consul to see men driven from home and the comforts of life, not even allowed to bring an article of clothing; the only cause of complaint