The previous post was accurate in its findings. I would like to suggest one other implication behind Jefferson's image. At the time of his assertion, America as a nation was expanding both geographically, through Westward Expansion, and economically, as both the industrial North and the slave based agrarian South were becoming economic boons of America. Jefferson understood that the issue of slavery was challenging, indeed, as it is to hold a wolf by the ears. The wolf is the presence and challenges of slavery in America. Yet, in holding the wolf by the ears, one realizes it is necessary and must be done in order to maintain survival and viability. Some have suggested that Jefferson was suggesting that "holding the wolf" was a way of saying that slavery had become a part of American society, especially in the South, that to let it go would lead to absolute disaster. It is a powerful quote because Jefferson is not endorsing slavery within it, but noting that the challenge of slavery was that one could not simply call an end to it for it had become so embedded in American society. In the statement, there is a definite sense that Jefferson was foretelling the start of the Civil War in American History.
jefferson means that you can't stop slavery just like you can't let go of the wolf's ears because if you do then the wolf would eat you, or if you stop slavery the south or any one who depends on it would be furious and probably start a rebellion.
Simile of holding wolf by the ears to describe Americas position in relation to slavery was used by Jefferson several times. For example, the website referred below gives the following two quotations.
But as it is we have the wolf by the ears, we can neither hold him, nor let him safely go. Justice is in one scale, and self preservation in the other. - Thomas Jefferson to John Holmes, 1820.
We have the wolf by the ear and feel the danger of either holding or letting him loose. - Thomas Jefferson to Lydia Huntley Sigourney, 1824.
Clearly Jefferson was pointing to the fact that it is undesirable and very difficult for America to hold on to slavery because of the consideration of justice and equality, which were central to the concept of America as a nation. Jefferson also felt that pressure of growing opposition to slavery within America. At the same time he felt that abolition of slavery will create other problems, which he likened to the problems of letting the wolf go. The wolf will not just go away. Once released it will harm the person holding him by ears. By this Jefferson was pointing out to the economic problems that will be faced by doing away with the cheap labour available through the institution of slavery.