NEW ORLEANS, December 11, 1866-1 p. m.

GENERAL: I telegraphed you last evening of the good condition of affairs on the Rio Grande. The act of General Sedgwick gave rise to no complications; in fact, General Escobedo called on me to ask me not to hold him responsible for it. The Canales faction having been submerged I was enabled to release General Ortega, upon Escobedo promising that he would look out for him. There is not a city or state in Mexico which takes issue against Juarez's government. On my return I met General Sherman at Brazos Santiago. He had just come from Vera Cruz, and was en route with Mr. Campbell for Matamoras. P. H. SHERIDAN,

General U. S. GRANT.
Official:

Major General, &c.

GEO. K. LEET, Assistant Adjutant General.

HEADQUARTERS DEPARTMENT OF THE GULF,
New Orleans, La., December 11, 1866.

GENERAL: I have the honor to make the following report of my recent trip to the Rio Grande frontier: I arrived at Brownsville at 4 o'clock on the morning of the 6th instant, and found that, on the 24th of November, General Sedgwick, commanding the sub-district of the Rio Grande, had demanded and received the surrender of the city of Matamoras from Canales, who arbitrarily held possession of the city against the legitimate authority of his government. That, on the 30th ultimo, the few United States troops (about fifty) holding the city had been withdrawn, in obedience to instructions sent by me disapproving the act of occupation or any action arising from it.

The motives which influenced Brevet Brigadier General Sedgwick in this act are unknown to me, but the alleged one of protecting American citizens and their property was in violation of a decision made by the honorable Secretary of State on this subject, which decision is on file in his office.

The case presents itself to my mind in this way: After the surrender of Matamoras to General Caravajal, the merchants of Matamoras-most of them foreign-born, and some claiming American citizenship, but ultra Maximilian adherents and blockade runners during the rebellion-induced Canales (a noted character) to pronounce against the authority of the liberal government. They had two objects in this: first, to help the imperial cause by creating as much dissension as possible among the liberal leaders; second, that they might pass out goods from the city free of duty, or nearly so. This worked well for them, and goods said to amount to a large sum of money were so moved out.

This condition of affairs continued until General Escobedo, in command of the liberal forces, advanced troops against Matamoras for its recapture. Pending this event Ortega was sent for, and, as Canales was a usurper, it was necessary to support him by a more noted character like Ortega; but Ortega having been arrested at Brazos Santiago, and Escobedo having laid siege to the city, these merchants were obliged to change their plans. They then proposed that Canales should surrender the city to Escobedo, if Escobedo would agree to pay them the money given, or said to have been given, to Canales, the amount be:ng some ($600,000) six hundred thousand dollars. This Escobedo refused, and fearing that they would lose their claim, and perhaps their property, if the city was taken, they brought their influence to bear on Brevet Briga lier General Sedgwick, and made him their "cat's-paw" to protect their interests. This is the point of the whole affair.

The occupation of the city was a mere matter of form, and had the consent of General Escobedo, who made no objections, and since the city passed into his hands has called on General Sedgwick in the most friendly manner, and asked me to forgive his action.

There is little doubt but that this unauthorized and harmless intervention does much to reconcile and bring about the very good condition of affairs that existed in Matamoras when I left Brownsville, which condition of affairs enabled me to release General Ortega, as he had but few friends on the Mexican side after the suppression of the Canales usurpation.

I am, general, very respectfully, your obedient servant,

Brevet Major General J. A. RAWLINS,

Official:

P. H. SHERIDAN,
Major General U. S. A.

Chief of Staff, Washington, D. C.

GEO. K. LEET,

Assistant Adjutant General.

Copy of an article published in the Rio Grande Courier, of date Brownsville, December 7, 1866.

THE OCCUPANCY OF MATAMORAS.

From the despatches which appear in the northern papers, via Louisville, coupled with the arrival of General Sheridan at this point, it would seem well settled that Colonel Thomas D. Sedgwick either has been, or immediately will be, relieved from the command of the sub-district of the Rio Grande.

While the primary cause of this is, no doubt, the dissatisfaction felt by high authority on account of his course in the late occupancy of Matamoras, yet it is more than probable that some change would have occurred at an early date.

While we know of no earthly reason for reflecting upon the good intentions of Colonel Sedgwick, yet it has been well understood that the delicate position of affairs here requires a man of enlarged experience, both in military and civil matters. Colonel Sedgwick came to the command by virtue of seniority of rank solely, and without regard to fitness or qualification. He did not seek the place. Indeed, without claiming to speak by authority, we think we can safely say that he accepted it only because his official duty did not allow him to decline it. It has so happened that the difficulties over the river, and the machinations upon this side, have been far greater and more numerous than usual during his administration, making his duties the more intricate and arduous.

It is impossible for either the authorities at New Orleans or at Washington to lay down a course of conduct to be followed in every case which may arise. All they can do is to mark out a general line of policy, leaving to the good sense and judgment of the commander here to attend to the details. To do this is oftentimes the most difficult part of the task.

The interests upon the other side of the Rio Grande are so often complicated, the leaders so numerous, their professions so persistent, and their skill at diplomacy so great, backed up, as they are, by any number of shrewd, intelligent lawyers, that he is indeed a man of unusual intelligence who can cope with them. And for this reason we say, as we have before said, that there is no place upon the continent where a commanding officer of great sagacity and firmness is more required.

In the late fiasco, for such it was, Colonel Sedgwick has been simply outwitted by a combination of military and civil influences, the latter mostly of American nationality.

The foreign merchants and capitalists of Matamoras, who have been compelled to advance money to Canales, were naturally enough anxious for its return. Escobedo, in all attempts which were made at negotiations, persistently refused to recognize Canales's engagements. These merchants were consequently opposed to any surrender of the city which should involve the loss of the money advanced by them. Many of them were Americans, and, in these matters, had the ear of the commanding officer. In their advice and representations they were of course influenced by their interests. They were also in the confidence of Canales, for, in the matter pending, their interests lay with him. With these, and with Canales, who professedly recognized Juarez as President, Colonel Sedgwick had to deal; every question which might at the same time arise, the more complicated by the presence of an army, under the command of the recognized representative of Juarez, besieging the city, for whose success Gen. Sedgwick was at all times anxious. The result was a blunder which, in its practical results, was in this instance "worse than a crime." The object desired, viz., the advancement of Escobedo's interest, was not obtained, but rather the contrary, as the presence of the American force, in the attack which followed, contributed very greatly to the success of Canales. Nor, as it seems, were the wishes of the government carried out, as, in rendering assistance to Juarez, his instructions did not warrant the occupancy of American territory. The result has been Colonel Sedgwick's removal. Though not as generally well known as his predecessors, socially he has been popular with our citizens, and, aside from his official duties, his departure from among us (should this be involved) will be regretted. In commenting upon his course in the late affair, this journal has felt compelled to criticise it with some severity. The result has shown that we

were correct.

In doing so, we have been actuated by no unkind feelings to Colonel Sedgwick, but have acted solely for the honor and interest of the American name. Official:

HEADQUARTERS A. U. S., December 27, 1866.

GEO. K. LEET, A. A. G.