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circulation without loss, risk or difficulty-would these funds readily be received by the contractors—could future contracts be let at rates equally favorable as in anticipation of specie funds—could that object of the law, the circulation of a better and wholesome currency, be overlooked-it might perhaps by some be deemed a rigid construction of the law, to reject such funds because they were not equivalent to legal currency—and the Receiver might have been justified by some in assuming the responsibility to take and disburse such funds, under some circumstances,

It appears that, at the time, these certificates could not be exchanged without loss and difficulty for Illinois bills.

The certificates could not be received by the contractors generally, as the sums must be paid out on estimates varying from 50 to 500 dollars. In anticipation of such funds, further jobs would not be taken at prices as low as before. There being no exchange between Milwaukee and Cincinnati, the Receivers or other holders obliged to cash the certificates, must have submitted to the terms dictated by the cupidity of the money broker.

Loss must have been sustained by the Territory or her officers, for which the law does not provide, and other embarrassing and discreditable consequences might have ensued, and a currency been put into circulation, continually depreciating in the hands of the people, worth 10 or 12 per cent. less than the money exacted from the purchasers of canal lands for interest to meet the interest on such loans.

If I had felt myself authorized to receive and expend current bank notes under the loan, I should have hesitated under the circumstançes to use these funds, until some arrangement had been made, or mode. pointed out by the loan agent by which these certificates could be converted and used without loss to the Territory.

These are some of the objections to the proposed loan, honestly entertained by myself and the commissioners, and which fixed me in the resolution not to use the funds receivable on such loan.

This resolution being formed, it became plainly my duty to give notice thereof to the parties whose arrangements might be affected thereby, that is to the loan agent, the depository of the bonds and te the contractors.

* Tbat duty was performed by my letters to Mr. Williams and to Mr. Kilbourn.

The loan agent not being then in Cincinnati, I thought it prudent to desire Mr. Williams to cause the arrangements for the loan to be, for the time being, suspended, before the delivery of the bonds, until the objections to the loan could be avoided by converting the funds to be deposited into legal currency or its equivalent.

I feared that unless the transfer of the bonds was suspended, the bonds might pass beyond the control of the agent.

Had I used without objection, the certificates sent by Mr. Lapham; had I suffered the entire loan of $30,000 to be deposited and the bonds to pass without an intimation of the views of the commissioners and myself, and after silent sanction of the loan-had I rejected the balance of $30,000—my conduct would have misled the loan agent, and merited severe censure.

The letter did not assume to dictate or control the agent in the performance of his duties, as he affects to believe, though the commissioners by designating the bank of deposite, did prescribe and dictate the character of the funds; neither did I seek to arrest his doings in the exercise of a discretion devolving solely upon himself, for he had no discretion or responsibility to exercise or abuse:

But the letter did distinctly object” to the kind of funds proposed to be received—did“ pronounce " such loan to be illegal-did give notice of the determination of the Receiver hot to sanction such loan by acceptance of the funds—did propose by a timely intervention to prevent any mischief or embarrassment likely to result from the transfer of the bonds.

In pursuing this course, instead of being prompted, as charged, by a disposition to thwart or embarrass the operations of the agent-the commissioners and myself were so solicitous for his success in his efforts, that they would not have been deterred by any over-nice scruples or technical irregularities from the sanctioning of any loan, which any fair and liberal construction of the law would justify.

But all this ado about the interference of the Receiver is mere pretence, and made to mislead. However unjustifiable may have been the course of that officer, he did not and could not defeat the arrangements of the Loan Agent.

Kilbourn, Williams and Reed are well known to each other, were all interested in property at the termination of the canal, had been familiar with the policy of the canal and knew the power of the agent and commissioners, and any extra official act of the Receiver could have with them no other effect than a declaration of his opinion. How much Mr. Reed was deterred by the expression of that opinion, is shown by his subsequent tender of $3,000. And it appears by the prior and subsequent conduct of Mr. Kilbourn, that he had early discovered a simple mode of obviating any obstacle which the Receiver might interpose by declining to receive the fund, viz: by so providing as to receive and expend it himself.

· But if it had been in the power of the Receiver or commissioners to thwart or defeat the operations of the Loan Agent, the committee will learn by the sequel how disastrous have been the consequences of the interference of the Receiver in this case.

About four weeks after the date of my letter to Mr. Williams, I received a letter from that gentleman in answer to my letter, in which he stated that he had no connection with or interest in the loan, excepting that the deposites were to be made in the bank of which he was President—that he would inform the Loan Agent of the objection raised by me to the loan—but regarded the difficulty, if any, of no consequence, as he was convinced that the contractor for the loan would not comply with his contract.

I then regarded the contract as a failure. About the same time I received a letter from Mr. Kilbourn in answer to mine, full of bitter denunciations of my conduct, but giving no new information. Some time in August, Mr. George Reed tendered to me at my office $3000 in bills of the Illinois State Bank, in payment of bonds bought, as he said, of the Loan Agent, Mr. Kilbourn. I declined receiving the money-objecting, that the law required the money to be deposited in a bank, subject to the Receiver's order, and objecting to the kind of funds.

This is the tender of the $3000 alluded to in the report of the Loan Agent–a tender which that officer, in my presence, afterwards noticed as absurd.

It is not true, as stated in the report, that the contractors urged

me to accept this sum, nor do I recollect that I ever had any communication with any of them upon that subject.

I heard nothing further in relation to the results of the Ohio loan until the return of Mr. Milbourn, about the 23d of September, when I had two interviews with Mr. Kilbourn relating to the loan. Much conversation was had; he desired to know whether I had changed my views about the Ohio loan, and whether I could accede to the arrangements which he might yet make. I inquired as to the nature of these arrangements. I then learned, that the Cincinnati loan for $30,000 was contracted for by George Reed—that no part of the money had been deposited—that the only assurance of the ability of Mr. Reed to furnish the sum of $30,000, was his contract--that this contract was a condition of another contract, as I understood, between the canal company and Mr. Reed, as President of the Hydraulic and Manufacturing Company. · I asked whether he believed that Reed could furnish the $30,000, or any considerable portion. Upon being pressed on that point, he admitted that he did not think that Reed could obtain the money, but said that he might possibly procure $10,000—might not more than $1,000—but gave me to understand that his chief solicitude to get my consent to any arrangement which he might enter into was, by fulfilling his part of the contract to hold Reed fast on his contract.

I inquired how Reed proposed to obtain the money. He replied by drafts on friends in New York. I wished to know if Reed proposed to obtain the money by New York drafts—which drafts were better than specie—why the deposites on the loan could not be made in good funds. He replied, that Reed might wish to make the ex. change for himself. He had in the same conversation acquainted me with the payment by him of a bonus of 20 per cent. for the loan of $5,000 at New York.

In view of these statements of Mr. Kilbourn, the letter of Mr. Williams, and my knowledge of the pecuniary circumstances of Mr. Reed, I was satisfied in my own mind that he could not comply with his contract taking the loan; and I was equally well satisfied from the same evidence, that if he was able to furnish the funds, there would be no serious difficulty on the part of the Loan Agent in having the deposit made in proper funds. These convictions I stated to Mr. Kilbourn, but at the same time expressed my readiness to go as far as the law would permit in aiding any arrangements that could be made between him and Mr. Reed; but declined entering into any engagement until a distinct proposition was submitted.

Such a proposition the agent was not able to present, until he had ascertained what could be done with Mr. Reed.

We then parted with a good understanding as far as I observed; he on his part engaged to see Mr. Reed in order to make a definite proposition. I, on my part, engaging to consult the other commissioners, and to be governed by their views and the views of our mutual friends in deciding upon his proposition. Since that time the agent has had no communication with me on the subject of the loan.

In the conversation referred to, the Loan Agent stated some of the particulars of the several loans in New York state, and among others, that two of the loans made at New York city and Albany of $10,000, were made to personal friends; that he gave his personal guarrantee for the payment of the Albany loan; that he took care to have the money received on said loans deposited to his own order, so as to retain the control; and that the bonds had been endorsed to him by the purchasers, and were now held by him as trustee for them.

It is not true, as stated in the report, that I admitted to him, that the funds received on the loan were but from 3 to 5 per cent. below par at Milwaukee. But I did state, giving faith to his representations, that I believed the funds proposed to be received, might by proper management be converted into funds not more than 3 or 5 per cent. below par in Ohio.

In no conversation with the Loan Agent, did I intimate an opinion as to the legality of the loan at New York or Albany, nor did I manifest any design to decline to expend the proceeds of the loan on the canal, in case the certificates of deposit were delivered to me.

I now proceed to examine another charge of the Loan Agent.

The charge is, that the commissioners have been guilty of a wilful violation of law and shameful disregard of duty, in failing to make

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