HEADQUARTERS MIDDLE DEPARTMENT,
January 14, 1865.

Lieutenant General U. S. GRANT,

City Point, Va.:

DEAR GENERAL: I had a visit yesterday from a Mr. S. S. Brown, formerly a schoolmate of mine in Indiana, now a Texas refugee residing near Monterey, Mexico. Feeling assured of his reliability, but without giving him any idea of what was in contemplation, I drew from him a great deal of information about transactions in Matamoras, which at my suggestion he summed up in the inclosed note. You will not fail, I know, to appreciate his first sentence, wherein he describes the use the rebels are making of that city. There was one point in his conversation to which he reverted several times, and which was suggestive of a new idea. It was that if overtures were now made to them he believed the rebel soldiery in Western Texas, particularly those at Brownsville, would gladly united with us and cross the River under the Juarez flag. This belief he based upon the great disheartenment that prevailed all through the regions west of the Mississippi. Altogether, his remarks upon this point made a strong impression upon me. Recurring to my past letters, the greater convenience of the route by the way of Brazos is self-apparent. Before deciding anything I submit to you, therefore, if it is not best to let me go and take a look at it and see exactly what obstacles are in the way and how they may be removed, if at all. The adoption of the Juarez flag on the bank of the Rio Grande as the basis of a compromise would stagger the rebellion next to the giving in of the State of Georgia. It is worth a trial, anyhow. While Blair and Singleton are in Richmond, let me, from Brazos, upon my own authority, invite the commandant of Brownsville to an interview on the old battle-field of Palo Alto. If the man's soldier I'll wager you a month's pay that I win and that Blair and company lose. You know how to get me there - an order to make an inspection of affairs on the Rio Grande will do so. Such information as Brown's will, I think, fully justify examination. If it be found true, you may be in position, on report of the facts, to send me troops to smother the Brownsville-Matamoras trade. Then it will be my own fault if I don't get the arms through. Such as inspection ought not to consume more than a month. If you say so, McCook, who is now here, can take care of my department until results are had. If you send me I will at least put you in possession of the situation in that region and test fully the virtue of the rebel commandant at Brownsville. If I win him to my views all the bad luck will be to Maximilian. The handwriting of my friend Brown is so execrable that to save you trouble I have illustrated it with pencil interlineations. Finally, general, if you think me persistent in the Mexican idea, please ascribe it to yourself. "Hold on" is the lesson you are constantly teaching us. Had Butler served under you as some of the rest of us have he wouldn't have left Fort Fisher.

Very truly, your friend,

FEW. WALLACE,

Major-General.

[Inclosure.]

COLEMAN'S EUTAW HOUSE,

Baltimore, January 13, 1865.

Major-General WALLACE:

DEAR SIR: In reply to your favor of this date I would say that Matamoras is to the rebellion west of the Mississippi what New York