Since my last there has been considerable excitement here in regard to the burning of the Harvey Birch by a Confederate steamer, and the matter afforded materials for a warm discussion. But the excitement consequent upon the insult to the British flag by the U. S. frigate San Jacinto has entirely monopolized the public mind. I have never seen so intense a feeling of indignation exhibited in mu life. It pervades all classes adn may make itself heard above the wiser theories of the cabinet officers. The press have generally discussed the matter with some show of calmness. The Morning Post of London (the organ of Palmerson) goes over the ground with dignified moderation and closes its article as follows:

The insult therefore in any case was most gratuitons, and if as we think unwarranted by the code of nations it will not only be deeply felt but deeply rescuted.

I inclose some extracts from the London journals and also a leader from The Morning Courant of Edinburgh. * I wish you to read these articles carefully or get Robert to read them to you, for I need not disguise the fact that I am seriously apprehensive of the result of the present complication. It is said that Great Britain will send out the Warrior and demand the return of Mason and Slidell to the British flag from under which they were taken, and if they are not restored war will be declared. Now I hope the American people will not allow theluded with the idea that Great Britain dares not go to war. I know that that feeling finds daily expression in New York but notice the leader of the Courant:

Formerly a war with America meant deprivation of cotton; now it means immediate access to a supply of cotton. Formerly Britain could hardly muster a squadron; she could now send one across the Atlantic which in a few weeks would sweep the sea-board of the States as clean as a model ousewife's floor.

All this is no doubt very true, and when we reflect that she could land forces in Canada and in the Southern States as well as she could clockade our ports, I think it is suitable that we should think twice before we throw down the gauntlet. I hope myself that the excitement which is now heard throughout the land will subside. I say heard-Doctor Simpson who was in this morning said. "Have you heard the British lion? He is roaring from the Highlands to the Land's End. " The doctor thinks we will have war; I think not, although I am satisfied that with a good excuse for it in the eyes of the world the British people are quite prepared to take up arms against us. * * *

JAMES LORIMER GRAHAM, JR.

DETROIT, December 19, 1861.

Honorable W. H. SEWARD, Secretary of State.

DEAR SIR: Our telegraphic information yesterday led to the conculusion that the British demands arising out of the Mason and Slidell affair would reach you last evening and I therefore took the liberty of communicating with you by telegraph+ some suggestions that had occurred to me, presuming they would reach youch this morning during the Cabinet deliberations. You must find in my anxiety to avoid a war with England my reason for the liberty I have taken upon this occasion and I trust also an excuse for it.

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*Newspaper extracts not found.

+See p. 1130 for Cass to Seward, December 18.

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