E.S. DONALDSON, _Lieutenant Colonel, Acting Assistant Commissioner_. Major W.A. GORDON, _Assistant Adjutant General_. No. 44. Savannah, Ga., _August_ 1, 1865. General: In answer to your question with regard to free labor at the South, and particularly the way in which the contract system is viewed by persons who were formerly slaveholders, I would state that these persons accept the present condition of affairs as an alternative forced upon them, believing still that the emancipation of their slaves was a great blunder, and that slavery is the only system by which the colored laborer can be made profitable to his employer. Within this district the plantation contracts now in force were entered into just subsequent to the arrival of the army, and when it was impossible for planters to undertake the care of their plantations. The negroes, therefore, planted for themselves, promising the owner a fair proportion of the crop as rent for the use of the land. Now, however, the matter comes up in a different shape. Owners have returned, and it is necessary to make arrangements for the next season. Most of them complain and find fault with the government, and remain inactive. So long as the military form prevails they seem to submit and to conform to present requirements, but at heart they are unfriendly. Some few, however, ask of us what we are going to do with the negro, and what provision will be made with regard to labor. There is nothing in their conduct that betokens sympathy with our movements, or a desire to co-operate with us earnestly in our work. The rebel spirit is as bitter as ever in the minds of the southern people. To return to the old customs is now their effort, and step by step they would take us back to where we were when the war broke out. They will contract with the freedmen, not because they prefer to, but because they are obliged to, and so long as the authority of the United States is present for the protection of all parties, and to compel a faithful performance, the agreement will be carried out; but should the army be withdrawn, the freedmen would virtually be reduced to slavery, and freedom-loving men would find a southern residence unsafe. I think the negro is disposed to fulfil his contract, and in cases where it has seemed otherwise, the other party has often been at fault. While I have met a few planters who seem to realize that emancipation is a fixed fact, and that they must make the most of present circumstances, by resorting to the only means by which labor can now be obtained, (the contract system,) I have found scarcely one who will enter into the matter with any kind of sympathy, or with either the belief or the hope that our plans will eventually succeed, for they feel keenly that the success of those plans will prove the foolishness of slavery. The coming year will produce a change of opinion at the South, I think, if by thorough supervision we secure protection to free labor.