MEMPHIS, January 21, 1863.

Mr. STANTON:

DEAR SIR: You will remember our conversations on the subject of excluding cotton speculators from the regions occupied by our armies in the South. I now write to urge the matter upon your attention as a measure of military necessity. The mania for sudden fortunes made in cotton, raging in a vast population of Jews and Yankees scattered throughout this whole country, and in this town almost exceeding the numbers of the regular residents, has to an alarming extent corrupted and demoralized the army. Every colonel, captain, or quartermaster is in secret partnership with some operator in cotton; every soldier dreams of adding a bale of cotton to his monthly pay. I had no conception of the extent of this evil until I came and saw for myself. Besides, the resources of the rebels are inordinately increawed from this source. Plenty of cotton is brought in from beyond our lines, especially by the agency of Jewish traders, who pay for it ostensibly in Treasury notes, but treally in gold. What I propose is that no private purchaser of cotton shall be allowed in any part of the occupied region. Let quartermasters buy the article at a fixed price, say 20 or 25 cents per pound, and forward it by army transportation to proper centers, say to Helena, Memphis, or Cincinnati, to be sold at public auction on Government account. Let the sales take place on regular, fixed days, so that all parties desirous of buying can be sure when to be present. But little capital will be required for such an operation. The sales being frequent and for cash, will constantly replace the amount employed for the purpose. I should say that $200,000 would be sufficient to conduct the movement. I have no doubt that this $200,000 so employed would be more than equal to 30,000 men added to the national armies. My pecuniary interest is in the continuance of the present state of things, for while it lasts there are occasional opportunities of profit to be made by a daring operator; but I so my duty did I, on that account, fail to implore you to put an end to an evil so enormous, so insidious, and so full of peril to the country. My first impulse was to hurry to Washington to represent these things to you in person; return East so speedily. I beg you, however, to act without delay if possible. An excellent man to put at the head of the business would be General Strong. I make this suggestion without any idea whether the employment would be aggreable to him.

Yours, faithfully,

CHARLES A. DANA.

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 500 [sic.] 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 $1,500,000 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-holders would no longer find that the rebellion had quadrupled the price of their great staple, but only doubled it.

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