He mentioned that, in 1777, while the army was yet encamped at Valley Forge, Mrs. ----, a lady from Philadelphia, with whom Reed was long known to have had a criminal intercourse, was arrested within the lines, and that her suspicious conduct induced a search, which led to the discovery of a letter upon her person, from Governor Johnstone to General Reed, and enclosing a note from Lord Carlisle, which was in _cypher_. This letter related to overtures upon which Donop, the Hessian officer, and General Reed, had already exchanged their views; pronounced them to be somewhat extravagant; and suggested that Reed had better close the arrangement which had been proposed to Count Donop, and he would have no reason to complain. The ten thousand pounds of which Donop spoke, Johnstone said would be immediately paid, and he did not think there would be any difficulty about the land or its equivalent; but of the _office_ that Donop mentioned, he (Governor Johnstone,) could not speak with confidence; upon that subject, the enclosed note from Lord Carlisle, Governor Johnstone said, would inform General Reed more definitely. This note being in cypher, General Washington informed me he never succeeded in having unravelled. Immediately upon receiving these papers, General Washington informed me he called a council, and sent for Reed. He placed the two letters in General Reed's hands, and demanded an explanation. Unfortunately, the officer whom he had sent for Reed had informed him what had happened and he had thus some time and opportunity for preparation. Reed professed himself unable to read the note in cypher, and said he did not know what it meant.