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several acts of the Legislative Assembly to aid in the construction of the Milwaukee and Rock River Canal Company.

To the several Reports of the Engineers, Canal Commissioners and President of said Company, submitted at various times to the Assembly; and particularly to two documents submitted to the Assembly, and one to the Est cutive, by Byron Kilbourn, President of the said Company, at the present session.

To a document herewith submitted, laid before a committee of the other branch of the Assembly, having a similar inquiry in charge, by the Hon. J. II. Tweedy, Receiver of the Canal Fund.

To a document (herewith submitted) in reply to a letter of the Chairman of this Committee, by the same gentleman.

To a letter of M. M. Jackson, Esq. Attorney General of the Territory, in reply to one of said Chairmen.

To a letter (herewith submitted) of the Territorial Engineer, Thomas L. Ogden, Jr., in reply to one of said Chairmen, and to the several communications of his Excellency the Governor, made to the two Houses this session, on this subject.

To all which documents, your committee respectfully refer.

The committee now proceed as briefly as possible to consider and dispose of the questions in their order.

1. What amount of bonds have been issued under the provisions of the several acts, authorizing the Governor to issue bonds for the completion of the Milwaukee and Rock river canal?

Fifty bonds of $1000 each, were issued by the then Governor, on the 11th day of March, 1840, under the act of the Assembly, for that purpose, approved Feb. 26, 1839. Those bonds have been returned to the office of the Governor, and are cancelled.[vide Executive message to the House of Representatives, Jan. 28, 1842.]

One hundred bonds for one thousand dollars each, bearing interest at seven per centum, were issued on the 13th day of March last, by Gov. Dodge, under provisions of the act of Assembly, approved Feb. 12, 1841. None of the last bonds have been returned or cancelled, but all are outstanding against the Territory.

2. What amount of said bonds have been negotiated, and by whom?

Byron Kilbourn, President of the Milwaukee and Rock river Canal Company, was appointed by Gov. Dodge, Loan Agent of the Territory, to negotiate these bonds which were placed in his hands for that purpose, on the 15th of March, 1841.

From the report of that officer, made to the Executive on the 27th day of December last, it is said that 56 of these bonds, numbered from 1 to 56 inclusive, have been negotiated. For a detailed statement of this negotiation, the committee refer to the Executive message to the Assembly of 28th ult., to the Report of the Agent above cited, to the communication of the Hon. John H. Tweedy, submitted to a committee of the other branch inquiring into this subject, and a letter of that gentleman to this committee herewith submitted.

From a consideration of these several documents, the committee derive serious doubts, whether any of these bonds have been disposed of by the Agent, in conformity to law—and if not according to law, it is submitted whether they are in fact negotiated or sold at all, in such manner as to bind the Territory:

3. What amount of money and what kind, has been received therefor?

From the letter of Mr. Tweedy, Receiver of the Canal Fund, it appears that the sum of one thousand dollars, in current Bank notes, was received and paid out on the canal; it does not appear, nor is it even claimed, that any part of this loan has been received, or is expected to be received in money, or in notes of any “sound specie paying Banks, selected by the Canal Commissioners, and the Governor of the Territory;" or placed on deposite, “ SUBJECT TO THE DRAFT OF THE RECEIVER OF THE Canal Fund,” according to the requisitions of the act of Assembly, approved Feb. 12, 1841. But it does appear that it was expected that the loan should be paid, and that what has been received, was in the ordinary currency of the West. It also further appears that the supposed loans, have in some instances, been deposited, not only in Banks not selected by the Canal Commissioners and the Governor according to law, but that all of them have been deposited, not to the credit of the Receiver of the Canal Fund, but to that of the President of the Canal Company.

4. What amount of said bonds are un-negotiated, and where they are? 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 uninform

ed.

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 $27,060, 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 susficient 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 aets, 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.”

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