DEPARTMENT OF STATE, August 2. 1816.

The Right Honorable CHARLES BAGOT

SIR I have had the honor to receive your letter of the 26th of July, by which you inform me, that Mr Adams had intimated to your government, the desire of The President to arrange by compact, the naval force which should be retained on the Lakes by both Nations, with a view to lessen equally the expence of each, and likewise to guard against collision, but that he had not explained in sufficient detail, the proposal, which he had been authorized to make, to lead, at that time, to any practical result. You assure me that H. R. H. the Prince Regent is well disposed, to the object, and that, in concert with this government, he is wining to adopt, such measures, as may be deemed expedient, to give it effect.

The President, being satisfied, that if each nation should maintain on the Lakes, a large naval force, it would expose both, to considerable and useless expense, while it would multiply the risks of collision, between them, instructed Mr Adams, shortly after the peace, to make the proposal which you mention, in the hope, from the amicable spirit in which it was conceived, and the advantage, which it was believed, both parties would derive from it, that it might be carried into immediate effect. It is very satisfactory, to The President, to find that your government, approves the principle, on which the proposal is founder, and that H. R. H. the Prince Regent is willing to act on it.

I infer from your letter that you are desirous of obtaining a precise project, either for the purpose of acting on it here, immediately, in conformity with the powers already given you, or of transmitting it to your government for its consideration. Whether it be for the one or the other purpose, I am instructed to afford all the facility that I may be able; though it would undoubtedly be more agreeable to The President, that the arrangement should be made, and executed, with the least delay possible.

I have the honor now to State that The President is willing, in the spirit of the peace which so happily exists between the two nations, and until the proposed arrangement shall be cancelled, in the manner herein after suggested, to confine the naval force to be maintained on the Lakes on each side, to the following vessels, that is, on Lake Ontario, to One Vessel not exceeding One Hundred Tons burthen and One Eighteen Pound Cannon, and on the Upper takes to Two Vessels of like burthen and force, and on the Waters of Lake Champlain to One Vessel not exceeding the like burthen and force; and that all other armed vessels on those Lakes, shall be forthwith dismantled, and likewise that neither party shall build or arm any other vessel on the Shores of those Lakes.

That the Naval Force thus retained by each party on the Lakes, shall be restricted in its duty, to the protection of its Revenue Laws, the transportation of troops, and goods, and to such other Services, as will in no respect interfere with the armed vessels of the other party.

That should either of the parties be of opinion hereafter that this arrangement did not accomplish the object intended by it, and be desirous of annulling it, and give notice thereof, it shall be void and of no effect, after the expiration of months from the date of such notice.

If this project corresponds with the views of your government, and you are authorized to accede to it, under any modifications which you may propose, and in which we can agree, I am instructed to give it immediate effect, either by Convention, the interchange of Notes, or in any form, which may be thought, best adapted, to the ends proposed. If, on the other hand, you consider it your duty, to submit this project to your government, for consideration, and to wait its sanction, before you can adopt it, and have power to make, ad interim, any provisional reciprocal arrangement, having the same objects in view, I shall be happy to digest with you such provisional arrangement, and to carry it, reciprocally, into effect, for such time, and in such manner, as may be agreed on: or, should your powers be adequate, I am ready to concur in an immediate Suspension of any further construction or equipments of armed vessels for any of the waters above named.

I have the honor to be &c.

JAMES MONROE.