"Nevertheless it is true. I arrested him at the Lynch House this morning," affirmed the detective.

"Do you believe him guilty?" asked Mr. Lawrence, noting with perplexity Fred's open countenance and tranquil manner.

"No. Still, circumstances are against him."

"Please explain."

"I found your uncle's gold watch and chain in his bundle?"

"Is it possible?"

"It is quite true, Mr. Lawrence," said Fred calmly. "Mr. Ferguson will allow me to say that I was as much surprised as he to find them. The bundle was a small one and only contained a shirt and collar which I bought at Jersey City yesterday morning. I can only say that the watch was not in the bundle then."

"Perhaps," said Lawrence, who was favorably impressed by Fred's openness, "you have some theory as to the manner in which the watch got into your bag."

"Yes, sir, I have. I had for a room-mate a stranger—a man whom I only met last evening after the train arrived. We fell in with each other the way to the hotel. We were obliged to room together on account of there being but one room vacant at the hotel."

"What was the man's appearance?"

"He was rather tall, thin, and dark complexioned. Though it was late he did not go to bed at once, but sat up for a while finishing a book in which he was interested. When I awoke in the morning he was gone."

"You think he was the real burglar?"

"Yes, sir."

"What is your reason?"

"Because it must have been he that put the watch and chain in my bundle."

"With a view of diverting suspicion from himself?"

"Yes, sir."

"One question more. When were you in Elmira, last?"

"I was never in Elmira at all," said Fred promptly. "I have never been so far West before."

"What was your object in making your present journey?"

"I came to make money," answered Fred, smiling.

"That answer may go against you," said the detective.

"Not when I explain that I am the train boy. I have usually made short runs, but yesterday morning the superintendent told me I was to go to Niagara, and gave me permission to stay over Sunday to have a chance to see the Falls. I began to think I would not see them, after all, but Mr. Ferguson was kind enough to walk out with me, and let me have a view of them."

"Is this boy also a train boy?" asked Lawrence, indicating Frank Hamblin.

"No; he is related to the clerk of the Lynch House, and was kind enough to come up to my room and keep me company."

"Who has the watch?" asked Lawrence, after a pause. "I have," answered the detective, producing it. Lawrence took it from his hand.

"It is my uncle's watch, sure enough," he said. "I remember it a dozen years since. He sent to Europe for it."

"His name is in it," said Ferguson. "But for that I might not have recognized it as one of the articles lost."

"Do you know what was taken besides?"

"Money and securities, I am informed, but to what value I have not learned."

"You think the boy's room-mate has them in his possession?"

"There seems to be little doubt of it."

"Where do you think he is?"

"On the Canada side, no doubt."

"He went there this morning?"

"Yes."

"I was myself at the Clifton House this morning, and I now remember the arrival of a man presenting the appearance of this young fellow's room-mate. He is probably still at the Clifton House."

"Then he is beyond my jurisdiction," said Ferguson.

"Do you remember what luggage he had?" asked Lawrence, turning to Fred.

"He had a small valise, about the size of this," said Fred, his eyes resting on the satchel which Lawrence had brought from the Clifton, and thrown down carelessly. "Why," continued Fred, in excitement, "this is his valise. I recognize it by a dark spot on the side."

"What do you mean?" said Lawrence sharply. "This is my valise."

He took it in his hand, and uttered an ejaculation.

"The boy is right! This is not my valise."

"Do you mean to say this valise belongs to the man who roomed with you last night?" demanded die detective.

"Yes, I feel sure of it."

"Then—good Heavens!—it no doubt contains the property stolen from my uncle. Mr. Ferguson, shall we be justified in opening it?"

"I will take the responsibility," said the detective.

He took from his pocket a bent wire, and dexterously inserting it in the lock opened the valise.

All gathered eagerly about it, anxious to ascertain whether their suspicions were correct.

There were a few articles of underwear, which the detective took out hastily and laid upon the bed.

"Ha, here we have it!" he exclaimed triumphantly as he drew out two long envelopes, such as are employed for bonds and securities. "I will take the liberty to open them."

One envelope proved to contain two one thousand dollar railroad bonds. The other contained two U. S. Government bonds of five hundred dollars each, and miscellaneous securities all together amounting to three thousand dollars more.

"A very clever capture on my word!" said Ferguson. "Really, Mr. Lawrence, you have beaten me in my own line."

"I am entitled to no credit. It belongs to the boy who identified the valise. I assure you the wrong bag was given me at the Clifton most fortunately. I am content to lose the few articles which my own contained for the sake of recovering my uncle's property. It really seems like an interposition of Providence."

"I suspect the thief will feel very ill-satisfied with the exchange. I wonder what he will do about it."

There was little chance for speculation on this point. There was a knock at the door, and a hall boy put in his head.

"There is a gentleman below who wishes to see you, Mr. Lawrence," he said. "Here is his card."

Mr. Lawrence took from his hand a card on which had been written the name

F. GRANT PALMER.

"That is the man, Mr. Lawrence," exclaimed Fred in excitement. "He has come for his valise."

"Bring Mr. Palmer up in about five minutes," said Lawrence; "not sooner."

"All right, sir!"

"Now let us repack the valise," said the detective. "I always carry a large bunch of keys with me, and shall probably find one that will relock it."

The shirts, socks, and other articles which had been taken from the bag were carefully replaced, and Ferguson, as he had thought probable, found a key which fitted the lock. Then the valise was laid carefully on the sofa.

"Mr. Palmer must not see us, and particularly the train-boy," said the detective, "or he will think something is up. Where can you conceal us?"

"There is a bedroom attached to the apartment," said Lawrence. "Go in there, all of you, and remain till I call you. You can leave the door ajar, as you will probably be curious to hear what goes on between us."

"Capital! Couldn't be better!"

Ferguson, followed by the two boys, entered the smaller room, and waited impatiently for the entrance of Palmer.

A knock was heard.

"Come in!" Lawrence called out lazily.

The door opened, and F. Grant Palmer entered, carrying in his hand a valise which seemed to be a fac-simile of the one lying on the sofa. Palmer's quick eye caught sight of it as he entered the room.

"Pardon me for my intrusion!" he said suavely, "but I believe we exchanged valises—at the Clifton—this morning."