On Tuesday, the 20th instant, the Philo Parsons arrived at Sandwich in the possession of some eighteen men who had taken passage on her the day before at Malden. It seems that after taking possession of her the piratical party seized and sunk a small steamer named the Island Queen, both occurrences taking place in the waters of the State of Ohio. They then proceeded to within four miles of Sandusky, and not, probably, seeing signals that had been agreed upon, or receiving any assistance that was probably expected from Sandusky, returned to Detroit River and proceeded to Sandwich, Canada West, where they plundered the steamer and cut her pipes to sink her, and abandoned her. The steamer was, however, recovered by her owners in a damaged condition, half full of water, and brought to this side of the river.

It seems that my telegram to Captain Carter led to the arrest of Cole, who made some disclosures which caused the arrest of other parties in Sandusky, the particulars of which will be doubtless communicated by the commanding officer there. It was unfortunate that Captain Crater did not proceed to meet the Philo Parsons, as the whole party could have been captured; but there have been so many rumors and reports here of rebel plots that it is hard to discriminate between those having some reality and those purely fabrications. In this case had I placed soldiers on board, whom I could not spare at this time, or deferred in any way the departure of the steamer, suspicions of the conspirators would have been aroused, and the matter deferred to a time when we would have had no intimation of it.

As the case now stands, the rebel agent in Canada, residing in Sandwich, Colonel Jacob Thompson, has organized and expedition in Canada to seize American steamers. The steamers Philo Parsons and Island Queen were seized, and the latter sunk, in American waters, the Philo Parsons plundered whole lying in British waters, off the town of Sandwich, an attempt made to sink her, and the persons employed in these acts now residing in Canada, under the protection of the British Government.

The U. S. attorney has addressed a communication to our consul in Windsor, to call upon the authorities to arrest the persons committing these outrages, in anticipation of demand being made for their delivery, and affidavits will be sent by him to the Secretary of State; and I had and interview this morning both with him and Senator Howard, and everything is being adopted to place the matter in proper legal shape before the Government and the British authorities.

Very respectfully, your obedient servant,

B. H. HILL,

Lieutenant-Colonel, U. S. Army, Commanding District of Michigan.

A 2 - 1.

DETROIT, September 17, 1864.

Captain J. C. CARTERS:

(Care U. S. Steamer Michigan, Sandusky.)

It is reported to me that some of the officers and men of your steamer have been tampered with, and that a party of rebel refugees leave Windsor to-morrow with the expectation of getting possession of your steamer.

B. H. HILL,

Lieutenant-Colonel, U. S. Army, Military Commander.