I inclose herewith the papers transmitted in the case of Bethel Burton and J. K. Millner and also affidavits of Robert Murray and John S. Young; specimen of Mr. Millner's currency.

[Inclosure No. 1.]

METROPOLITAN POLICE DISTRICT, ss:

Robert Murray being duly sworn doth depose and say as follows: I am the marshal of the southern district of New York. I arrested J. K. Millner who is now in Fort Lafayette; he stated to me that he was a Virginia; that he came on here some three weeks previous; that he was introduced to Bethel Burton by a Mr. Walker (these men are now in Fort Lafayette). Walker stated to him (Millner) that Burton was the inventor of a patent rifle or gun which was a very effective weapon; that if they could introduce it into Virginia they would make a large sum of money. After negotiation Burton went down to Virginia with Millner to see what arrangements could be made with the leaders of the rebellion. They took one of the guns with them - taken apart and packed in their baggage. They saw at Richmond the Confederate Government with which they made a contract to make 40,000 of the rifles at a stated price.

Burton and Millner then returned to New York to get the machinery and workmen to manufacture the guns and ship them to Virginia by the way of Hatteras Inlet, the capture of which disconcerted their plans. So far this is the statement of Millner. When I arrested Millner he was in the act of paying $15,000 to Burton for an interest in the gun and contract. I arrested Millner on a warrant issued by a U. S. commissioner, a copy of which is appended. After the arrest of Millner on inquiry I found quite a number of men who had been hired by Millner and Burton to go on to Virginia. They were mechanics such as would be employed on such work.

With one of these men was found the paper money, a sample of which in annexed. Millner admitted that he had ordered this paper money made. Until this communication from Millner I had no knowledge of Bethel Burton. I placed two men to watch his house. He absented himself until the second night, when he was found at about 2 o'clock in the morning coming to his house and was arrested.

I caused Walker's place of business to be watched for some three weeks previous to the arrest, believing that he was shipping goods to the rebels. I am informed and believe that he shipped large quanities of goods ostensibly to Nassau, New Providence, Bermuda and Matamoras, Mexico, clearing the vessels for those ports, but really to North Carolina by way of Hatteras Inlet. I am informed and believe that a number of vessels were found inside of Hatteras Inlet when it was taken that he had cleared the above ports; that his place of business was a rendezvous for Virginia and North Carolina men who were here on business. The vessels he cleared as above were cleared under the British flag, but all of them were in fact American vessels.

To Mr. Walker's place of business I traced George Miles and J. G. Guthrey,* and theym there when they were arrested. We found here $30,000 of Mr. Millner's money which he offered to the officeres if they would let him go and take his paper money with him. He also offered it to me on same conditions.

ROBERT MURRAY.

Sworn before me this 28th day of September, 1861.

[S. C. HAWLEY,

Chief Clerk.]

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*See case of John Garnett Gutherey, p. 509, et esq., and case of George Miles, p. 531 et seq.

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