Mr. Stanton.
P.S.—Since writing the above I have seen General Grant, who fully agrees with all my statements and suggestions, except that imputing corruption to every officer, which of course I did not intend to be taken literally.
I have also just attended a public sale by the quartermaster here of five hundred bales of cotton confiscated by General Grant at Oxford and Holly Springs. It belonged to Jacob Thompson and other notorious rebels. This cotton brought to-day over a million and a half of dollars, cash. This sum alone would be five times enough to set on foot the system I recommend, without drawing upon the Treasury at all. In fact, there can be no question that by adopting this system the quartermaster's department in this valley would become self-supporting, while the army would become honest again, and the slaveholders would no longer find that the rebellion had quadrupled the price of their great staple, but only doubled it.
As soon as I could get away from Memphis I went to Washington, where I had many conversations with Mr. Lincoln and Mr. Stanton about restricting the trade in cotton. They were deeply interested in my observations, and questioned me closely about what I had seen. My opinion that the trade should be stopped had the more weight because I was able to say, "General Grant and every general officer whom I have seen hopes it will be done."
The result of these consultations was that on March 31, 1863, Mr. Lincoln issued a proclamation declaring unlawful all commercial intercourse with the States in insurrection, except when carried on according to the regulations prescribed by the Secretary of the Treasury. These regulations Mr. Chase prepared at once. At the same time that Mr. Lincoln issued his proclamation, Mr. Stanton issued an order forbidding officers and all members of the army to have anything to do with the trade. In spite of all these regulations, however, and the modifications of them which experience brought, there was throughout the war more or less difficulty over cotton trading.
From Washington I went back to New York. I had not been there long before Mr. Stanton sent for me to come to Washington. He wanted some one to go to Grant's army, he said, to report daily to him the military proceedings, and to give such information as would enable Mr. Lincoln and himself to settle their minds as to Grant, about whom at that time there were many doubts, and against whom there was some complaint.
"Will you go?" Mr. Stanton asked. "Yes," I said. "Very well," he replied. "The ostensible function I shall give you will be that of special commissioner of the War Department to investigate the pay service of the Western armies, but your real duty will be to report to me every day what you see."
On March 12th Mr. Stanton wrote me the following letter:
War Department,
Washington City, March 12, 1863.