erals, except Matamora. In fact, Maximilian holds but little in Mexico, except the towns occupied by Franco-Mexican troops, and in some of these towns only the ground their troops are encamped upon. The necessity of troops along the Rio Grande has been very demoralizing to the Imperial cause, and has withdrawn all Mexican support from it. All the troops France could send to Mexico will not restore the ground lost. I am also happy to state that rebels who went into Mexico have been defeated in their calculations, and have been forced to join the losing side. I my previous visit, and by the assistance of trusty scouts, I posted the Liberals in what I believed to be their intention, which was to joint them against Maximilian, and when successful they would be able to control the new Government, in fact, take possession of it, and that the disaffected rebels from the South would flock to their standard in sufficient numbers to hold the Government, which would be one deadly hostile to the United States. There is no use disguising the fact that while the people of the South will obey the laws here there is bitterness in their hearts. The result of this influence brought to bear on the Liberals turned them against the rebels, and the Governor of Nuevo Leon arrested Smith, Shelby, and company, disarmed them, rejected their overtures, but permitted them to go to Molino del Rey. I saw Cortina accidentally at Brownsville and found him in good spirits. He holds up to Matamoras, and before I left stopped marketing from going into the city. Not a message is allowed to go into the interior, and state of great alarm exist at Matamoras. In fact, if I was to say that the Government would give security and protection to this city, I believe it would declare for the Liberals without hesitation.

Shelby, finding his overtures to the Liberals rejected, has taken service with the Imperialists in command of his battalion of 400 Missourians, with the rank of lieutenant-colonel, and is to operate against Cortina along the Rio Grande. It is reported that there are two more rebel regiments being organized at Monterey. What progress has been made in organizing them I do not yet know, but will soon. There is no doubt but that the Emperor has made and agreement with the rebel for the colonization of Tehuantepec and Chiwapa. The Government should look out for this. It may be what is called the Brazilian scheme. The rebels in Matamoras are preparing to go to Tehuantepec and Chiwapa under grants made by Maximilian, and General Slaughter has authority to colonize from the United States. Tehuantepec and Chiwapa are held by the Liberals and are the richest provinces in Mexico, besides embracing the railroad route. The Liberals are looking to the United States for support, and not only that, but to give them a government. I think we ought to go after Shelby and his command. I feel certain that with 6,000 or 8,000 cavalry I can stir up the whole of Northern Mexico. The Liberals are suffering for want of ammunition, and Matamoras is vital to them on that account. Cortina could take it with 400 men if he only had the requisite grit. If I am not allowed to go after Shelby, I believe that by going up to Eagle Pass and moving Merritt's column to that point I could infuse much enthusiasm into the Liberals. Negrete and Juarez have 12,000 men. There are about Piedras Negras and San Fernando about 1,000 men. Cortina has 1,000 men. I fear Juarez, if successful, would require the support of our army for some time.

I am, general, very respectfully, Your obedient servant,

P. H. SHERIDAN,

Major-General.