The Nashville Daily Union

Information of a peculiar and grave character, intimately involving the welfare of the country, comes to us from a highly responsible source, and is of such a nature that we should not be justified in withholding it from the public. Personally knowing nothing of the facts alleged, we give the statement in the language in which it is made to us as follows:

"A contract for the surrender of the trans-Mississippi country to the United States was made between the Government of the United States and Kirby Smith, commanding the rebel forces West of the Mississippi river. Casey and Butler being the agents of both parties in making the terms of agreement. Casey is from Chicago, and Butler was formerly State Treasurer of Illinois; both are in the confidence of the Administration.

The information is derived direct from Casey himself.

The terms of the contract were as follows:

Kirby Smith agreed to retire from the country with his army and then disband it; he would destroy no property, but on the contrary, surrender all Confederate cotton to the United States Government.

In order to increase the amount of cotton to be thus given up, he was largely engaged in its purchase from private parties, paying double the amount offered by the agents of the rebel government, and then branding it "C. S. A.," that there might be no difficulty in the way of confiscation and seizure by the United States.

In return, the United States government agreed to guarantee a safe exit from the country to Kirby Smith and his officers, and pay for all cotton surrendered twenty cents per pound in foreign exchange; with which money Smith & Co. were to retire to Europe. The government also agreed to respect private property, and to prevent devastation and plunder by the troops in their march into the interior.

Casey was asked whether private parties might not engage in the business of buying Smith's cotton, and replied that the matter had gone too far with the Government.

Brigadier General Ellet, commanding Marine Brigade, knew the fact of this arrangement, but it is not certain whether Maj. General Banks was aware of it or not.

When General Banks started on his expedition up Red River, Casey expressed a fear that Banks would do something that would interfere with the fulfillment of the contract.

It appears that General Banks and Admiral Porter had colluded in a gigantic cotton speculation all swindle. They have been seizing all the cotton they could lay their hands upon, and if it belonged to private parties they would brand it 'C. S. A.,' and then confiscate it, they were also plundering the country—in both acts grossly violating the terms of the agreement between the United States Government and Kirby Smith.

Kirby Smith seeing his hopes of a retirement in ease and wealth thus dashed, and the cotton he had bought with his private means, together with his prospective riches thus snatched from his grasp, was driven to madness and desperation; instead, therefore, of retiring from the country, he was making as much resistance as lay in his power, and was burning the cotton he would otherwise have gladly delivered to the United States Government.

Major General Banks may have been ignorant of the contract aforesaid; but it appears that he had abandoned his duties as commander of an army and neglected the real points of his campaign for the purpose of lining his pockets with cotton—thus sacrificing the efficiency and safety of his army and the success of the cause to his own personal profit. Had he been successful, he could have defied the anger of the Administration which his interference with their plans will excite, and have thrown himself upon the populace, who ever judge of a man's actions by the degree of success which attends them, and not by the intentions which they were entered upon; whereas his failure will cause, if no more disastrous result, his immediate removal from command, and blast his hopes for the Presidency."