The Loan agent says in his communication to the Executive, of Dec. 27, 1841, that 44 of these bonds, numbered from 57 to 100 inclusive, are in his hands, and subject to the order of the Governor and Legislative Assembly. And the situation of all these bonds, as far as appears to the public, may be more particularly learned from the report of the Loan agent to the Executive above mentioned.

5. What amount of money has been received from sale of Canal lands?

The report of the canal commissioners, made to the Assembly, Dec. 4, 1841, informs us that "the total amount received from lands, is $13,604 40."

6. What amount of said moneys has been paid out for the construction of said canal?

The same report answers this question also-that the above amount, together with $1000, received from loans, equal to $14,604 40 has been paid out on said work.

7. What amount has been expended on said canal by said company? The report of the canal company, signed by its President and Directors, and made to the Assembly, Dec. 13, 1842, informs us that "the amount which has been expended by the company, including all expenditures from the commencement of the first survey up to this time, is $25,063 51," as will be more fully shown by reference to the accounts in detail on the books of the company-why these accounts, so necessary to enable the Assembly to arrive at a full understanding of this important matter, are withheld, we are uninformed.

8. What part of said canal has been completed?

The letter of the Territorial Engineer, Thomas L. Ogden, Jr. herewith submitted, answers, that one mile of said canal is in progress, and nearly completed.

9. Whether the Territory will ever derive any profit from the proceeds of said canal?

The answer to this inquiry, being purely conjectural, the committee deem it unnecessary to consider it.

10. What right the canal company has sell the hydraulic power, created by said canal?

This question involving an inquiry of purely a legal character, was, by order of the committee, submitted to the Attorney General for an opinion; That opinion is contained in the letter of that officer to the chairman of the committee, and is herewith submitted.

Before the committee proceed to inquire into the right of the Canal Company to sell the water power, a previous question arises, to wit: have the company sold such power? On this point they have no information but the statement of Mr. Tweedy, in his letter to the committee, to which the House is referred for a discussion of this point at large, not only as to the fact of the sale, but also as to the right.

It will be perceived from that letter, that the condition of the sale made by the canal company, as it appears of record, was the sum of $27,000, secured by mortgage; here is evidence alluded to by Mr. Tweedy, on record, (in Milwaukee county?) of a sale. Mr. Tweedy discusses at length the power of the canal company to make such sale; and the committee concur fully in opinion with that gentleman, that "the exclusive control of the water power" notwithstanding the canal company has attempted to sell it to the Hydraulic company, will ever be and remain fully in the Territory or State, until legally parted with. This water power is unquestionably of immense value; and of itself, furnishes a sufficient reason for the zeal and activity of the canal company hitherto manifested in the work; and the completion and fancied secure acquisition of which, may furnish an equally satisfactory reason, for the temper now evincing itself, to abandon the further prosecution of the canal.

The committee deem it not out of place here, to allude to the act incorporating the Milwaukee Manufacturing Company, approved March 11, 1839, the affairs of which, and those of the canal company, it appears, have become "somewhat entangled." This act authorized the erection of a mill dam, on the Milwaukee river, on fractional section No. 21, T. 7, N. R. 22 E, the same on which the canal company have erected their dam. It is manifest that two powers cannot be erected on the same site; and one or the other of these acts, so far as relates to these water powers, must be a dead letter: it is further believed that the Hydraulic company has erected no

works whatever under their charter. The 16th section of that act requires the "expenditure of $2,000, in the construction of said dam, within two years, or forfeit their charter." This the committee think, has not been done; if not, ought not that charter to be declared forfeited and thereby an end to put to the juggling operations about the water power, hitherto had between the Hydraulic company and Canal company.

11. What interest the Territory will become liable to pay in two years, for and on account of the debt contracted for and on behalf of said canal?

The answer to this question will depend entirely upon the point at issue, whether the bonds have or have not been negotiated according to law, so as to bind the Territory.

12. On what terms the said company will settle with the Territory?

A full answer to this question is contained in the communication of the President of the canal company, made to the House on the 3rd inst., and herewith submitted. Two distinct propositions are therein contained:-the first of which is a reiteration of that proposed by the President of said company, to the Assembly, Dec. 28th, 1839; the terms of which are as follows, and are extracted from that document, [vide Appendix to House journal, 1840, p. 319:]

"1st. Satisfactory assurance to be given that the work will be commenced by the Territory, as soon as the money affairs of the country will enable a loan to be effected; or if such loan cannot be obtained before September next, that the funds then on hand, and thereafter accruing, will be correctly applied to the work from that time until a loan can be effected, said funds to be applied to the performance of the work, or the job now under contract, and for which the Company are held liable to the contractors."

"2nd. The Company will transfer to the Territory all lands, and contracts for lands held by the company, or by others on behalf of the company: subject to the conditions of the original contracts, between the grantors and the company; the Territory to exhonorate the company from all liabilities under or growing out of such contracts."

"3rd. That no material alteration be made in the line of canal, as now located, without the concurrence of the company."

“4th. That an amount of work be performed on the canal, from and after the first loan can be obtained, equal to $50,000 or upwards, each year; and the canal be completed in ten years from the pasage of the act of grant by Congress."

"5th. That the Territory pay the company, in the manner prescribed in the charter, the amount which they have expended prior to the time of transfer."

Such is the first proposition of the canal company. The second is set forth at large in the communication of Mr. Kilbourn to the House of the 3rd inst., and is contained in paragraphs marked, 1, 2, 3, 4, 5, 6, 7, 8, 9, and 10, inclusive.

In view of this whole matter, two prominent considerations arise: 1st. Are the acts of the Loan agent such as the law contemplated, and such as will bind the Territory?

This question is so fully discussed by the agent himself on the one hand, and by the Receiver of the canal fund on the other, that the committee do not feel called upon to enlarge, believing that sufficient is already laid before the House, to enable it to come to a full and just conclusion.

2nd. Are the terms proposed by the President of the canal company for a divorce of the company and the Territory, such as ought to be acceded to?

It is the opinion of the committee that they are not.

It is manifestly the duty of the Assembly not to omit any thing in its power, to secure the Territory against fraud or loss, by means of sales or transfers of the outstanding bonds.

The committee recommend the adoption of the accompanying resolutions, and ask to be discharged from the further consideration of the subject.

Respectfully submitted in behalf of the committee.

A. G. ELLIS, Chairman.

LETTER OF THE HON. JOIN II. TWEEDY, TO THE

COMMITTEE.

To the Committee on Territorial Affairs,

of the House of Representatives:

I have the honor to acknowledge the receipt of a communication of the 26th inst., addressed to me by your Chairman, Hon. A. G. Ellis, enclosing a copy of a resolution of inquiry of the House of Representatives, and requesting me to furnish the committee with any information in my power, called for, by said resolution.

Much of the information asked for by the several inquiries of the resolution, has been already submitted to the public and to the Legislative Assembly, by reports and communications from several quarters; though the material facts elicited, have not been presented in one orderly and connected statement.

I will notice the inquiries in their order, presenting briefly and plainly the results of the evidence as before me, referring you to the proper sources for more complete information in detail.

The resolution first inquires "what amount of bonds have been issued under the provisions of the several acts relating to the Milwaukee and Rock river Canal?"

Under the act of February 19th, 1839, two sets of bonds, 50 in number, for the sum of $1000 each, were at different times executed by the Governor and Secretary, and delivered to two different agents to negotiate. These bonds were returned, and probably now remain in the office of the Executive, cancelled.

Under the act of February 12th, 1841, 100 bonds of $1000 each, bearing an interest of seven per cent., were executed by the Governor and Secretary, delivered to Byron Kilbourn, Esq., to negotiate, as the agent of the Governor.

The 2nd, 3rd, and 4th inquiries, relate to the negotiation and disposition of the bonds.

All the material facts called for by these inquiries, which are known to me, will be found in the report of the Loan agent to the Legislative Assembly, dated December 12th, 1841, in his report dated December 27th, 1841, to the Governor, and in a com