The plan was set out in a letter from Grant to Henry W. Halleck, general-in-chief of U.S. forces, and is quoted in Adam Badeau’s 1881 Military history of Ulysses S. Grant: from April 1861 to April 1865, Vol 2. Badeau had served on Grant’s staff.

Here’s Grant’s letter to Halleck, quoted by Badeau:

Nashville, Tennessee, January 19, 1864.
Major-General H. W. Halleck,
Washington, D. C.:

Confidential.

I would respectfully suggest whether an abandonment of all previously-attempted lines to Richmond is not advisable, and in lieu of these, one to be taken farther south. I would suggest Raleigh, N. C, as the objective point, and Suffolk as the starting point. Raleigh once secured, I would make Newbern the base of supplies until Wilmington is secured. A moving force of sixty thousand men would probably be required to start on such an expedition. This force would not have to be increased unless Lee should withdraw from his present position. In that case, the necessity for so large a force on the Potomac would not exist. A force moving from Suffolk would destroy, first, all the roads about Weldon, or even as far north as Hicksford. From Weldon to Raleigh they would scarcely meet with serious opposition. Once there, the most interior line of railway still left to the enemy—in fact, the only one they would then have—would be so threatened as to force him to use a large portion of his army in guarding it. This would virtually force an evacuation of Virginia, and indirectly of East Tennessee. It would throw our armies into new fields, where they could partially live upon the country, and would reduce the stores of the enemy. It would cause thousands of North Carolina troops to desert and return to their homes. It would give us possession of many negroes who are now indirectly aiding the rebellion. It would draw the enemy from campaigns of their own choosing, and for which they are prepared, to new lines of operations never expected to become necessary. It would effectually blockade Wilmington, the post now of more value to the enemy than all the balance of their sea-coast. It would enable operations to commence at once, by removing the war to a more southern climate, instead of months of inactivity in winter quarters. Other advantages might be cited which would be likely to grow out of this plan, but these are enough. From your better opportunities of studying the country and the armies that would be involved in this plan, you will be better able to judge of the practicability of it than I possibly can.

I have written this in accordance with what I understood to be an invitation from you to express my views about military operations, and not to insist that any plan of mine should be carried out. Whatever course is agreed upon, I shall always believe is at least intended for the best, and until fully tested, will hope to have it prove so.

U. S. GRANT, Major-General

In explaining the context, Badeau says that this plan actually came from Grant’s chief engineer, Brig Gen W. F. Smith, who had served in the eastern theater:

Brigadier-General W. F. Smith was at this time chief engineer on Grant’s staff. He had served in the army of the Potomac, a division during McClellan’s Peninsula and Antietam campaigns, but his appointment as major-general not having been confirmed by the Senate, he was reduced to the rank of brigadier. Never having himself served at the East, and having no other officer near of Eastern experience, Grant consulted Smith…

Badeau explains why this New Bern plan never came about:

All these ideas were those of Smith, upon whose judgment in this matter, for the reasons mentioned, Grant, in his own unacquaintance with the country and campaigns on the Atlantic coast naturally relied. When, however, he visited the East in person, and studied for himself the situation there, he at once abandoned these plans and views. After his first visit to Washington, he never dreamed of undertaking or advising the operations sketched above.

To me, this emphasizes that, while an invasion of Raleigh was never formally planned, it could have been seen as a possibility — and thus a legitimate concern on the part of Gov Vance and a valid rationale for the construction of defenses.

ARB — 7 Feb 2020