DEPARTMENT OF STATE, Washington, September 27, 1861.

SETH C. HALWY, Esq., New York.

SIR: Herewith I transmit to you all the papers on file* in this Department relative to Robert R. Walker, a prisoner now confined at Fort Lafayette, and will thank you to take such additional testimony as may be offered and return them to me with your opinion as to the case.

I am, sir, your obedient servant,

WILLIAM H. SEWARD.

NEW YORK, September 28, 1861.

Hon. WILLIAM H. SEWARD, Secretary of State.

SIR: As requested by your letters of the 24th and 25th instant I have examined the cases of J. K. Millner and Bethel Burton and beg leave to submit the following report: On applying to John A. Kenndy, superintendent of police, as directed by you, I was referred to Robert Murray, marshal of the southern district, and John S. Young, sergeant of the New York detectives. I inclose herewith the affidavits of both.

The testimony shows that Millner and Bethel are particeps ciriminis, engged in the same transaction; the testimony relates to both. I therefore make one report for both cases. The testimony is not taken in a manner nor is it of such a character as to be adminissible in the case of Burton on a trial in a court of law. Nevertheless it is sufficient to establish to a moral certainty certain important leading facts and to satisfy any mind that testimony admissible by technical rules can be adduced sufficient to inculpate both the men.

I think it is sthown that Burton was the inventor of a new implement of war in the character of a rifle; that Millner was a speculator with means; that they put their heads together, went to Richmond and contracted with the military authorities in command of the armies now making war against the Government to supply them with 40,000 or 50,000 of the rifles; and that they were arrested here in New York while making preparations for performing their contract. They had not onlyintended and agreed to do this thing but had taken steps and done over acts, such as engaging machinery and hiring men to manufacture the guns. All this can be amply and clearot doubt. I therefore do not doubt that J. K. Milner and Bethel Burton have committed an offense against the United States for which they can be legally held and punished.

I will add that in this case as in many others the mercenary and not the political motive preponderated in inducing the acts of the parties, and also that the men are men of talents, enterprise and courage, well calculated and very likely to pursue money-making shcemes regardless of law and patriotism.

I do not notice the matter of the paper money because one good reason for holding the men prisoners is enough; and further because I think that the uttering of the money was probably to have occurred at the South as a private speculation, in no way calculated to injure the United States Government or to aid the States or people who are engaged in rebellion. Punishment for that crime ought probably to proceed from the States where the money should be put in circulation.

All of which is submitted.

Respectfully,

S. C. HAWLEY.

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*Statement of Walker's friends establishing his loyalty, which are omitted.

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