whenever the same shall be required for expenditures on the canal."

The letter of authority, May 13, 1841, executed by the Governor, authorized Byron Kilbourn "upon receiving from any person or persons a certificate of the cashier of any of the safety fund banks of State of New York, or any specie paying bank which the said agent may select, that he or they have deposited with the said cashier any specified amount of money, subject to the order of the Receiver of the canal fund, as mentioned in last aforesaid act (act of Feb. 12,1841,) to deliver over to such person or persons so many of the certificates aforesaid (certificates of stock) as shall not exceed in amount the sum deposited.

In the certificates or bonds delivered to the agent, the time and place, when and where, the principal of the loan should be reimbursable, and also the names of the persons to whom the same should be due and payable were left in blank, which the said agent was (by said letter of authority) authorized to fill in such manner as should correspond with the loan which should be made.

The canal commissioners by letter under their hands and seals in May or June, 1841, selected and designated any of the specie paying safety fund banks of New York, the Ohio Life Insurance and Trust Company of Cincinnati, and two specie paying institutions of Columbus, as proper banks for the deposite of any moneys borrowed by the loan officer.

These are the powers and the only powers given to the Loan Agent. Under this law and these powers, the steps to be taken and the conditions to be observed in the sale of the bonds cannot be mistaken. 1st. The money in equal amount to the bonds to be sold must be deposited.

2nd. It must be deposited in a sound specie paying bank.

That bank must be one selected or designated by the Governor and commissioners.

Certificates of the deposite of such money, in such bank signed by the cashier thereof, must be delivered by the agent.

The certificates must be payable to the order of the Receiver of the canal fund.

Then and not till then, the agent is authorized to fill the blanks

with the times, places, and names corresponding with the loan, and to deliver the certficates to the person entitled thereto.

Here, then, was a special agent or attorney entrusted with a few simple and limited powers, so plainly prescribed that they could not be misunderstood.

There was no diseretion to exercise, no responsibility to assume. He was authorized to do a particular act in a particular manner. He could not lawfully transfer, sell or contract for the sale of any of the bonds in his hands unless in the manner pointed out by the law and his instructions.

He could not alter or dispense with any of the conditions or terms prescribed, in any emergency, or under any apparent necessity however urgent.

It may be a question unsettled in the minds of some, and a question which the committee may be called upon to decide-whether if such agent, has in any case transcended his powers, and has bargained or transferred any of said bonds in any manner not warranted by law, such bargain or transfer, is not a nullity; whether every bond so transferred, would be any thing better than worthless parchment, or the bond of any individual, association, or corporation, passed in a similar manner-whether such bonds on being executed by the Governor and Secretary became negotiable and transferred like bank bills or bills of exchange not due-or like all other bonds, are received by the holder, whether the first or any subsequent purchaser, at his own peril—whether the Loan Agent in this case, was not powerless to do harm to the Territory by the limitation of his authority -whether he could abuse his trust if disposed, and whether in this view due security for the faithful performance of his duties (and was not properly) dispensed with.

It might be yet another question whether, if such bonds have been bona fide negotiated to innocent purchasers for valuable consideration, although not in pursuance of the law, the Territory should not in honor and justice, feel bound to recognize their validity.

I wish the attention of the committee to be here directed to two requisitions of the law, made part of the instructions of the Loan Agent, to which reference will be made hereafter.

1st. That the funds deposited on certificates, should be subject or payable to the order of the Receiver of the canal fund.

By the first provision, not a dollar of the loan to be negotiated, could be touched, controlled, or come into the hands of the agent, who was not required to give any bonds, to faithfully account for money received.

That officer had no more authority by the law and instructions under which he acted, to take, keep and expend any of the funds for which the bonds might be negotiated, than he had to take, keep and expend, any other funds of the Territory without law or license. 2d. To the kind of funds to be received on the loan.

The law declares that the deposite should be made in money. The term money, unless qualified, can mean nothing but specie, or legal currency or its equivalent.

The bills of specie paying banks, redeemable in specie on demand and always convertible into specie, are generally received and for all practical purposes considered at or near the place of issue of said bills as money-being equivalent to money. It is not adopting a technical or rigid construction, to affirm that such was the character of the funds required by the law.

But by referring to another requirement of the law, it will be perceived, that no room is left for construction on this point.

The law requires the money to be deposited in some sound specie paying bank to be selected by the Governor and commissioners.

The object of this provision was two-fold, first, to secure a safe place of deposite of the loan, but secondly, and chiefly, to designate the character of the funds which should be received.

The law in designating the character of the bank, intended to designate the character of the funds and not only intended to secure the receipt of the loan in funds of the same character with the bank, to wit: the bills of sound specie paying banks, but also in the bills of such specie paying banks as the Governor and commissioners should select, as furnishing the best circulating medium.

It was never supposed that if the Bank of America of New York, or any other institution of like character, were selected as the depository of the loan-that by the law the deposites could be received

or paid out in bills of insolvent or suspended banks of the same State, however current, much less in the depreciated paper of Michigan, Indiana or Illinois, which might be at a discount varying from 8 to 20 per cent.

The law and the law-makers contemplated, that the deposites would be in money, not in bills which might serve some of the purposes of money-but were worth, as compared with money, but 90 or 95 cents on a dollar-that the certificates of deposite would be payable in money-and that whenever such certificates should be presented for redemption, the same would be redeemed in specie, in bills of the specie paying bank issuing the certificates or in bills equivalent in value, at the option of the holder.

But the intention of the law-makers cannot be doubted. I aided in the draft of this very proviso of the law-was present in the House of Representatives when the bill was under consideration. No part of the bill was the subject of so much discussion or so jealously guarded as that relating to the character of the funds to be received on the loan. Great jealousy was felt that the loan would be negotiated in western depreciated paper, which would be diffused throughout the country and become our circulating medium.

To guard against this, several propositions were submitted, all having the same object in view-at last, after a long conversation, the present proviso was adopted, as avoiding every objection. The first object of the provision, openly urged, was to insure the introduction of the bills of the best eastern specie paying banks. And so strenųous were many on this point, that it was insisted that the lcan should be negotiated in the bills of the New York Safety Fund Banks.

But at last, the power of designating the bank, and thereby the kind of funds, (whether in bills of specie paying banks of New York, Ohio or St. Louis,) was given to the Governor and commissioners, upon the assurances being given by them and their friends, that the discretion would not be abused. Of all these facts, and of the views of the commissioners, the Loan Agent was fully informed by Mr. Hustis and myself, in May last. powered the Loan Agent to act for him in the selection of the bank of deposite, and though the agent urgently solicited the commission

And though the Governor had em

ers in letters and in conversations to confer upon him similar authority to act in their behalf, they steadfastly refused, declaring the power to be a personal trust reposed in them which they pledged themselves to execute with fidelity and which they could not delegate.

Knowing these facts, I cannot believe the Loan Agent to be sincere in the declaration of his conviction made in his report, that his arrangements for the negotiation of the loan of $30,000 at Cincinnati were justified by the spirit and object of the law.

But the sincerity of the Loan Agent in this instance will be made to appear by an extract from his letter to me of March 8, 1841, urging the commissioners to entrust to him the power of selecting the banks of deposite. The extract is as follows:

"If entrusted with the power to receive deposites at any point (under the law) where I might deem it expedient, I should of course, observe the strict injunctions of the law as regards their character for specie payments. I should receive no deposites except specie deposites, and should not under any circumstances receive funds in any shape except in such certificates-no other funds, either in the shape of specie or paper, would be received by me or pass through my hands."

Having presented these my views of the construction of the law, and of the powers and duties of the Loan Agent, I come now to consider the facts in their order.

Mr. Kilbourn left Milwaukee on his way east somewhere about the last of May.

The first notice received by the commissioners of any loan being made, was by his letter to me of June 23d, a part of which is quoted in his report.

He there states "that he has been obliged to make the loan in funds bankable at the Ohio Life Insurance and Trust Company, that he considers even that very favorable under the circumstances, and that he conceives that the discretion rested solely on himself—that he hopes it would be satisfactory."

All this appears to be an admission that he had negotiated a loan in funds not legitimately receivable-that he had assumed the responsibility to exercise a discretion, beyond the law, and that he concei