Albert B. Paine in _Mark Twain, a Biography_, Vol. II. gives the complete
story of this quote.  In 1897, Clemens and a distant cousin, James Ross
Clemens were both residing in London.  When James R. became ill, rumors in
the
states were that it was Sam who was taken ill.  A reporter ferreted out Sam
and showed him the instructions from his paper:

"If Mark Twain very ill, five hundred words.  If dead send one thousand."

Twain replied after seeing the reporter's instructions, "You don't need as
much
as that.  Just say the report of my death has been grossly exaggerated."

The cablegram sent back to the states read much the same.

Barb