the Army, Navy, and Treasury Department, in relation to this trade, are fully defined by existing laws, by regulations which have the force and authority of law, and by the orders of the President all trade with points under the control of insurgents in Texas is absolutely prohibited, and the fact that Matamoras is a neutral port is not material. Under a rule of international law, confirmed by the uniform decisions of the courts, the character of the trade is determined by the ultimate destination of the goods, no matter how circuitous the route may be. This rule is applied to the existing rebellion by the act of May 20, 1862, and the only practical difficulty that has existed in enforcing it has been that of determining how much of the ostensible trade of Matamoras is intended to benefit the rebels in Texas. Fortunately, we have now very full and definite information in regard to the character and extent of the unlawful trade carried on with Texas through Matamoras, and with the persons engaged in it, and are able to determine with very little difficulty the ultimate destination of any supplies that are to be sent to that port. The provisions of the laws and regulations are mandatory, and leave no discretion to the officers who are charged under the President's order with their execution, and whenever, from evidence in our possession, or from the character of the supplies, or the known character of the persons engaged in the trade, there is satisfactory reason to believe that the ultimate destination is some point within the insurgent territory beyond the lines of national occupation, the military permit will be refused, and the facts reported to the collector of the port, in order that, under first section of act of May 20, 1862, the clearance may be refused. It is scarcely material to entertain the question of what articles may be permitted or refused, as all trade within the insurrectionary districts is unlawful, and no military permits orr custom-house clearances will relieve the parties engaged in the trade from the penalties of the law. The only effect will be to make the officers giving the permits or granting the clearance an accomplice in the grave crime which it involves and against which the heaviest penalties to the law are denounced.

The trade with Matamoras must be exclusively limited to that which can lawfully be carried on with a neutral territory, and whatever privileges are granted or limitations applied to you, will be equally granted or applied to all other persons engaged in that trade. No military permit will be given to any steam vessel under American colors that can enter the port of Texas or be useful to the rebels in navigating the Rio Grande. This restriction is imposed because I have been for some time in possession of information of a plot, originated in Mobile, to seize and carry into Texan ports any steamers that might be used on the Rio Grande, or in running the blockade, and this restriction is as much to the interests of the owners as to the interests of the Government. The complaint that an unjust discrimination has been made against the port of New Orleans is not well founded; the fact that licenses unwarranted by law have been given to shippers from Northern ports, is no reason why the evil should be enlarged by permitting violations of law at this port, and the same argument might be used with equal propriety for the commission of any other crime. The restrictions under my instructions are not limited to the port of Matamoras, but are applied to any other foreign port, when there is reason to believe that the goods presented for shipment are intended for the use and benefit of the rebels. I have no authority to license an unlawful trade and no disposition to countenance or encourage, in any way, an intercourse that