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66 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 prea scribed 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:

Ist. 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. JOIIN H. 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, Ilon. 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 Secrctary, 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

munication addressed by me to a select committee of the Council.

The authority of the agent and the legality of his acts, are therein fully discussed.

By these papers, it appears that 11 bonds have been ostensibly sold by the agent. That these bonds were, at the time of the latest information, held by Mr. Kilbourn, in his own name, (as he declared) as trustee for the equitable owners in New York and Albany.

That $1000 in certificates of deposite of the Ohio Life and Trust Company of Cincinnati, payable in current bank notes, were received in payment of one of these bonds, and paid out by the Receiver on the canal.

That $10,000 were deposited in banks in New York and Albany, in the name of Byron Kilbourn, in payment of 10 of these bonds, and have been expended by him as he affirms.

That 30 bonds now remain in the custody of the Ohio Life and Trust Company, not sold or transferred. That 15 bonds are in the custody of the Bank of Vernon, N. Y., not sold or transferred. These bonds, together with the remaining 44 in the hands of the Loan agent, are the property of the Territory, (if they are property at all,) and the surrender of them can be required and enforced by the Governor, or any authorized agent of the Territory.

Whether any or all of the 11 bonds claimed to be sold, are the rightful property of the holders, is a question upon which the Legislature will be able to form an opinion, upon the facts before them.

The 4th and 5th inquiries are fully answered by the last annual report of the canal commissioner, by which it appears that the total amount of money received from the sale of canal lands, is $13,004 40.

That all of this money has been expended in payment of work on the canal, for salaries of officers, and for incidental expenses.

The details of the expenditures will be found in the annual reports of the Canal Commissioners to the Legislature, and in the qnarterly reports of the Register and Receiver to the Governor.

The balance of funds in the hands of the Receiver, December 4th, 1841, was 39 cents.

The amount expended by the Canal Company on the canal, is stated in the last report of the Company to be about $25,000. Of this amount, $10,000 is a debt becoming due on a contract about three years hence, to a contractor for the costruction of a dam across the Milwaukee river. The balance of $15,000, has been expended in making the survey and location of the canal—for obtaining the grant of land from Congress—for salaries and compensation of officers, and agents—for printing, and other incidental expenses. I do not know that any sum has been expended by the Company, (excepting the proceeds of the 10 bonds claimed to be sold at New-York and Albany,) for work done on contracts, to construct any portion of the canal. The details of these expenditures I am not able to furnish.

The report of the Canal Company, of the Canal Commissioners, and of the Loan Agent, show the situation and progress of the work on the canal. Work of the value of $25,000, or thereabout, has been done on the dam, guard-lock, and the line of excavation and embankment, about one mile in length. I believe that neither the dam, the lock, or the work on the line is yet completed.

Any opinion expressed in answer to the 8th inquiry, “ whether the Territory will ever derive any profit from the proceeds of the canal,” would be a mere conjecture.

The investment made by the Territory of the procaeds of the canal lands, may become the property of the future state of Wisconsin, and may be of insignificant or of considerable value.

If the loan of $10,000, is recognized by the Territory, the investment of that sum may also become the property of the future state.

Whether that property will or will not hereafter become valuable and productive, will depend upon the adjustments of the relative interests of the Territory, of the Canal Company, and of the Hydralic and Manufacturing Company, now somewhat entangled—or in other words, upon the control and disposition of the water power.

The presentment of these rights and interests will constitute an · answer to another inquiry of the resolutions, relative to the right of

the Canal Company to sell Hydraulic power, created by the canal. This inquiry points, without doubt, to a sale or supposed sale of some interest in the water power at Milwaukee, by the canal company.

The Canal Company has not, it is believed, by its charter alone, any tangible property in the water power at Milwaukee.

By the 25th section of the act incorporating the Company, it is provided, “ That nothing herein contained, shall authorize said Company to take or use more water from any stream or fountain, that shall be actually necessary for the economical navigation of said canal, unless they shall have obtained the right to use an excess of water, over and above the quantity required for navigation, from every person or persons, corporation, or corporations, lawfully claiming the same.”

The act incorporating the Hydraulic and Manufacturing Company, approved February–,1839, gives to said Company the privilege of erecting a dam, five feet above high water, across the Milwaukee river, on section 12, (upon which the canal dam and lock are now situated,) and to use the water of the river for Hydraulic purposes, subject to the right of the canal company.

All the law upon the subject is here presented. The rights of the canal company, to which the Hydraulic charter is subject, are the rights to erect dams, construct locks, tow path, and canal and use so much of the water of the river as may be needed for the economical navigation of the canal.

The use of the surplus water of the river for Hydraulic purposes, is given to the Hydraulic Company on certain conditions. Whether those conditions have or can be performed, may be a question.

The canal company does not possess, and cannot therefore sell the use of the surplus water, of the Milwaukee river, for hydraulic purposes, unless it has acquired that use by purchase or grant from the rightful owners.

But, I understand, the company has nominally sold to the Hydraulic company, all of its interest in the water power created by the canal, and has thereby undertaken to sell the perpetual use of the dam and works of the canal, for the purpose of using thereby the surplus water for Hydraulic purposes.

The canal company then undertakes to sell the use of the works, but not the right to the use of the water.

The exclusive use of the works is valuable property, which the future State can acquire and absolutely control. The exclusive use of the surplus water, is granted upon condition; and one of those con

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