On the 29th of July, 1861, as will appear by the copy of a contract with the Confederate Government, herewith inclosed and marked X, the original of which is in my possession, Gautherin & Co. agreed to furnish the Confederates with a large amount of cloths for uniforms, which are the cloths spoken of in the communication of Mr. Sanford.

About the 1st of April of this year a cargo of the goods was shipped to Havana and from thence to Matamoras under charge of the senior partner of the house, Edw. Gautherin now in Europe. That cloth was smuggled across to Brownsville and delivered to Captain Sharkey, quartermaster, and the agent of the Confederate Government. The original in voice and his receipt are hereto annexed, marked E and F.

Between the 14th of April and the 24th of April, the day the fleet passed the forts, Mr. J. B. D. De Bow, produce loan agent of the Confederate States, made application to the Bank of New Orleans for a loan of $405,000 in coin, without interest, as will appear by the communication hereto annexed, marked C. This proposition was acceded to by the bank upon a pledge made by Payne, Huntington & Co., the junior partner of which firm was the president of the bank, of cotton to be delivered on the plantations in Louisiana and Mississippi. The contract is hereto annexed, marked D.

This transaction was not entered into in good faith, as is confessed by the testimony of the acting president, Mr. Davis, taken from his own lips in short-hand, a copy of which is hereto annexed, marked O. But the transaction was a contrivance by which the specie might be got out of the bank. Specie to this amount was placed in the hands of the French consul, with his full knowledge of the intent of the transaction and a receipt was given by him to hold it in trust for the Bank of New Orleans. At the same time a pretended sale of the remainder of the specie in bank, amounting to $400,000 for sterling, was made by the bank, and that sum was also placed in the hands of the French consul. These two sums, amounting the $800,000, made substantially the whole specie capital of the bank. This is shown by the confession of the only director of the bank who has not run away into the Confederacy, Mr. Harrell. A copy of his statement is hereto annexed, marked R.

Matters stood in this condition at the time the city of New Orleans was taken possession of by us. Upon my assurance to the banks that if they would return their specie they should be protected, the pretended sale for sterling exchange was rescinded and the French consul sent back the money, and the bank received into its vaults $400,000.

In regard to the $405,000, the French consul, Count Mejan, became uneasy and move upon the bank to take up his receipt given to the Bank of New Orleans, and gave a new receipt running directly to Gautherin & Co.

At this point of time I ordered all the specie in the hands of the French consul to be sequestered and held until affairs could be investigated. Reverdy Johnson, commissioner of the State Department, came down here, and without investigation, and without knowing anything of the transactions, and without even inquiring of men about them, made such representations to the Department of State that I was ordered to release the French consul from his promise not to deliver up any specie held in his hands without informing me, which order I obeyed. In the meantime Gautherin & Co. had succeeded in delivering their goods to the Confederatled upon the bank to get their money, which had been deposited, in the hands of the French consul. This delivery had not been completed at Brownsville until the 22nd of June, and some time in the last of July the bank, through