With the aid of a good glass a man could be seen in the foretop of the Federal flagship with a flag in his hand, which he waved to right or left as he saw the effect of the firing; this enabled the gunners to better their aim until the shells struck just astern of the _Kate_ or passed in a line ahead of the vessel. On a closer approach of the fleet they were driven off by Fort Caswell's heaviest guns. The _Kate_ and her crew were in great peril on this occasion, owing to the fact that there were a thousand barrels of gunpowder on board for the Confederacy, making the risk from the shells extremely dangerous. Mr. McDougal said to me on this occasion that when the Yankees began shelling them at Fort Caswell a detachment of soldiers was being embarked for Wilmington on the Confederate transport _James T. Petteway_, and that when the first shell struck the beach near the _Petteway_, the whole company broke ranks and ran like rabbits to the fort again. Some time ago the _Wilmington Daily Review_ published an account of the recovery of a large lot of wire from the bottom of the sea near Fort Caswell. This was doubtless part of the _Kate's_ cargo thrown overboard as described. The Second "Kate." The second _Kate_ was a new iron steamer, double-screw propeller, 344 tons, English built, commanded by Captain Stubbs. She had made a successful run into Charleston with a valuable cargo, and was also successful in running out again with 700 bales of cotton, which she landed in Nassau. She had loaded a second inward cargo at Nassau and sailed for Charleston, but, failing to elude the blockaders, she ran for Wilmington and on July 12, 1863, at 4.55 o'clock a.m., was making for New Inlet close ahead when she was intercepted by the Federal blockader _Penobscot_, which opened a heavy fire on her and drove her ashore on the south end of Smith's Island, where her wrecked hull still remains. The Federals attempted to haul the _Kate_ off into deep water, but were prevented by the Confederates on shore, who drove them away. With the exception of two of her crew who remained and were captured, the officers and men of the _Kate_ escaped to the shore. The "Night Hawk."