Your letter of April 25th. inclosing the British project of a Convention of limits, and your proposed amendments, has been duly received. The following observations explain the terms on which the President authorizes you to close and sign the instrument.

lst. The modification of the 5th. Art. (noted as one which the British Commissioners would have agreed to) may be admitted, in case that proposed by you to them, be not attainable. But it is much to be wished and pressed, tho’ not made an ultimatum, that the proviso to both should be omitted. This is in no view whatever necessary; and can have little other effect, than as an offensive intimation to Spain, that our claims extend to the pacific ocean. However reasonable such claims may be compared with those of others, it is impolitic, especially at the present moment, to strengthen Spanish jealousies of the United States, which it is probably an object with Great Britain to excite by the clause in question.

2d. The privileges of British trade and intercourse with the Indians, allowed by existing stipulations, are not to be extended to Indians dwelling within the limits of the United States--as determined by the Treaty of peace.

The motives for excluding foreign traders from the territories of the United States westward of the Mississippi have been heretofore stated to you. These motives gain strength daily. It is manifest also that the proposition on the part of Great Britain, fails essentially in the point of real and fair reciprocity; first as it excepts the possessions of the Hudson’s Bay Company, without any equivalent exception on our side of the boundary: secondly, as the use of the privilege by our traders on the British side of the boundary is known to be attended with danger and secret obstructions, to which British traders on our Side of the Boundary are in no degree exposed: thirdly, as all chance of competition with British traders on the British side would be completely frustrated by the disparity of duties and of prices, under which the american and British traders would respectively carry their merchandize to the Indian market on that Side. The British Government now complains of the disadvantage resulting to their Indian traders on the Eastern side of the Mississippi from an excess of duty amounting to about 6 p Cent. In the Indian trade within the British territory, the difference against our traders is equal to the difference between the duties imposed in the United States, and those imposed in Canada, or rather, as no duties are probably imposed in Canada; equal to the full amount imposed in the United States that is to 15 or 20 p Ct. It is enough to be under this inequality, as it relates to the existing stipulation. To extend it as proposed is more than can be fairly expected. The bargain would be Still far worse on our side, if the British proposals contemplate a free access to the waters westward of the Mississippi, with goods free of duty for the Indians of Louisiana.

Having already transmitted to Mr. Monroe sundry documents throwing light on our relations with the Indians in the Northwest quarter, I add a few others not a little curious, as well as not uninteresting.

3d. Access by land or inland navigation from the British territories, thro’ the territory of the United States to the river Mississippi, is not to be allowed to British subjects with their goods or effects, unless such articles shall have paid all the duties, and be within all the custom House regulations, applicable to goods and effects of Citizens of the United States. An access thro’ the territory of the United States to the Waters running into the Western side of the Mississippi, is under no modification whatever to be stipulated to British subjects.

There can be no good reason with Great Britain for wishing an access to the Mississippi for goods free of duty; because the river can never be a high way to any other market than the consumption of our Citizens and as this cannot be attained without a previous payment of the usual duties, it must be the same thing whether the duties be paid on or after entering the limits of the United States: or rather the only difference would be in the greater facility of evading the duties in the latter than in the former case; a facility which cannot be supposed to be approved by Great Britain, or admissible by the United States.

4 It may be agreed, that the ad valorum duties now payable on goods imported into the United States from the neighbouring territories of Great Britain shall be regulated according to the value thereof, estimated in the same manner as if directly imported from beyond sea, and that licences to Indian Traders, and passes for their canoes and carriages, shall be freely granted, but that the British traders shall in all respects be subject to the restrictions and precautions with respect to the articles to be supplied to the Indians, as are imposed on Citizens of the United States engaged in the same trade.

I have only to express the Presidents approbation of the idea of keeping open, for future decision our right to the Island of Grand Menan, and to suggest as a desirable addition to the 8th. art. a clause providing "that in the mean time British vessels shall not be restrained from carrying plaister &c to any ports of the United States". It appears that a disposition exists to compel the British vessels to trade to the more distant ports of the United States, instead of resorting to the nearer ones, whence the plaister &c is now conveyed by vessels of the United States. For the spirit and outrages which prevail in that quarter, I refer to the communications from the Collector of Passamaquoddy, herewith inclosed. Affidavits of the facts stated by the Collector, have also been transmitted by him. I have the honor to be &c