This quote is found in Act I, in my edition, page 20. Here, Thoreau is speaking to Bailey, and thoughtfully commenting on Bailey's position that he is an honorable man who acts with conviction. When Bailey says he would never burn down a barn, for such a thing was against...
his principles, Thoureau cynically replies that he might as well be guilty of doing something if everyone is convinced beforehand of his guilt.
Henry: I'll put it in plain Anglo-Saxon, Mr. Bailey. You're an uncommon man. You were protesting against the barn-builder who shut you down with clapboard and daily work hours.
Bailey: Don't say that to no judge! If I burned down a barn, they'd throw me in jail.
Henry (thoughfully): Good for you. Fire inside burns hotter than fire outside. A man's conviction is stronger than a flame or a bullet or a rock."
Bailey is certainly less educated and thoughtful than Thoreau, and completely misses Henry's analysis: that is, that he is reacting primarily against the strictures of a set location and the hours prescribed for his working life. However, while the subtleties may go over Bailey's head, Thoreau is convinced that the man's innate integrity will eventually cause him to rise up against this type of oppression, and in the end will be a tougher opponent than bullets or rocks, or barn burnings, ever could hope to be.