The Secy of the Treasy respectfully submits to the Prest. of the US. the following Report.

On the 19th of August 1796 information was recd. by the Secretary, by a Letter dated July 26th 1796, from James Read Collector for the District of Wilmington in North Carolina that a French Privateer had arrived at Wilmington on the 14th. of July with two British Prizes with valuable Cargoes, consisting principally of sugar Rum & Coffee.—Permission to land & enter the Cargoes was requested;—the permission was however refused, on the ground, that the sale of Prize Goods was forbidden by the Treaty with Great Britain—A representation was then made, that the Vessells were leaky, and that repairs were necessary, which could not be made, without unloading the Vessells;—this representation was refered to the Treasy for instructions.

On the 20th of August, the day after Mr. Reads Letter of July 26th was recd. an answer was transmitted, authorizing the Collector, to permit the Vessells to be unladen in case that measure was necessary in order to their reparation, but on condition that the Cargoes should be stored, under the care & inspection of the Officers of the Revenue.

On the 26th of Novr. ’96 a Circular Letter was written by direction of the President establishing rules to be observed in respect to Prize Vessells—a Copy of which is enclosed—By the third of these Rules, sales were authorized of such portions of the Cargoes of Prize Vessells, as should be necessary to defray the expences incident to the reparation of damaged Vessells—And where Prizes were incapable of reparation, the Cargoes were, by the second rule, authorized to be exported as foreign property subject to the risque of reception.

From the time that Sales for the purpose of defraying the expences of repairs were authorized, constant efforts have been made by the Agents of the Prizes, which have been seconded by the Consul General of France, to extend this liberty, beyond the limits authorized by the President—With the view of introducing the Cargoes of the Prizes for consumption in the United States.—Construction given to the rule, has been liberal, to avoid colourable complaints on the part of the Government of France.—The correspondence of the Collector is herwith submitted to the President.

In the summer of the year 1797, it was discovered, that sugar had been introduced into Massachusetts, as Rice in Rice Casks, from Wilmington, and one of the Prize Vessells was seized at Portsmouth;—after having illicitly disposed of the whole of her Cargo.

By confidential Letters which are herewith submitted, it appears, that suspicions were entertained in Boston derogatory from the character of the Collector of Wilmington;—which suspicions recd. additional force when communicated to the Treasury, from a discovery of the extent of the frauds which had been committed;—the adequate means of prevention known to have been in the Collectors power, & also from the participation of William Campbell a man of property in Wilmington & the friend and acquaintance of the Collector.

To investigate the conduct of the Collector General Jedediah Huntington of Connecticut was deputed with the approbation of the President in pursuance of a power vested by the Collection Law, whose Report dated Jany. 22d. 1798 is herewith submitted.

To this report the Secy. takes the liberty to add two Letters from James Read Collector dated Jany 10 and another dated Jany 17th—Also a Letter from John Walker the Naval Officer dated January 15th 1798.

The Report of General Huntington and the documents accompanying the same, with the Letters above refered to, establish in the mind of the Secy, the following facts & conclusions

1st. That a valuable Cargo of Sugar & Rum has been illicitly introduced into the United States from the Prize Vessell Aarun.

2d. That the unlading was effected in the District of Wilmington;—that suspicions were entertained at the time which were communicated to the Collector, and disregarded by him on the pretence that it was improper to notice the information of a Negro.

3d. That Wm. Campbell of Wilmington was in fact the purchaser of the Prize Cargo, that this fact was generally known, and must in all probability have been known to the Collector;—that the long delay of the Vessell in Cape Fear River could not fail to excite suspicions of improper designs which were neither communicated by the Collector, nor counteracted.

4th. That the Inspector was a man of bad character, and notoriously negligent in performing his duty. Notwithstanding which the Collector has proffessed to entertain doubts, of his power to discharge him.

5th. Before the siezure at Boston, it was publickly mentioned at Wilmington, that Mr. Campbell was preparing One hundred & fifty Rice Casks for the purpose of shifting the sugar at one of the Prize Ships—

6th. That the Conduct of the Collectors Deputy and of the Inspectors, as stated in the Naval officers Letter of January 15th is mysterious, & calculated to excite the suspicions suggested by the Naval Officer.

To the foregoing facts, it is proper to add, information the source of which will be verbally communicated that there has been a general suspicion in the neighbourhood of Wilmington—that frauds upon the Revenue have been committed.

Considering the embarrassments which must attend the public business when conducted under circumstances which forbid confidence & believing that the conduct of the Collector has been grossly negligent, if not corrupt, the secy is reduced to the necessity of reporting it as his opinion that James Read, Collector for Wilmington ought to be removed from Office.

All which &c.