The above statement shows that under the act providing for the completion of the Capitol, $3,500 were paid into the Treasury on the 26th of March last, by Daniel Baxter, on the sale of bonds; which bonds were issued in good faith, and strictly in compliance with the statue, the proclamation of the Executive to the contrary notwithstanding.

Shortly after the first of November, the contractor informed me that he could make no further use of the bonds whatever; and on the 18th I exchanged $200 with him for bonds. On the Commissioner's draft of December 4th, I paid him the balance of the money which had occurred in the sale of the bonds.

I was well aware that the statute contemplated one half the amount drawn for by the Commissioner to be paid in bonds; but considering the situation of Mr. Baxter, the holder of the bonds and the contractor, and having a number of laborers in his employ, and the bonds having become depreciated in his hands in consequence of the Governor's proclamation, I did not consider it a violation of the statute or a deviation from duty to make the payments in the manner above stated. All of which is respectfully submitted,

R. L. REAM,

Treasurer of the Territory of Wisconsin.

MADISON, December 13, 1841.

Document B.

REPORT OF THE MILWAUKEE AND ROCK RIVER CANAL COMPANY.

To the Ilonorable, the Legislative Assembly

of the Territory of Wisconsin:

The Milwaukee and Rock River Canal Company submit the following REPORT:

The work on the canal from various causes has not progressed du

ring the past season with so much energy and effect, as it was hoped it would from the favorable action of the Legislature during its last session; and it is to be sincerely regretted that the work should have been retarded, and the patriotic intentions of the Legislature defeated by obstacles unnecessarily interposed from a quarter the most unlooked for.

Owing to a want of funds, which it was hoped would be supplied through means of loans, which it was understood, had been negotiated, but which have only to a small extent, been made available, the company have not thought it expedient to let any contracts, during the present season, in addition to those formerly made, except in one case, where the security of the work in progress required it as a measure of safety and protection. This was the guard lock at the dam in the Milwaukee river, which is required to secure and perfect the dam itself, as well as that portion of the canal below the dam exten ding to the town.

This portion of the canal is in a state of forwardness, nearly approaching to completion, and a considerable part of it quite finished. The dam required but a small comparative expenditure to complete it, and the guard lock is so far advanced as to render it safe for the winter-both works will probably be completed by the first day of January next, as will also the greater part of the excavations and embankments throughout the entire section of the canal now under contract; and it is in contemplation to let the water into this part of the canal early in the ensuing spring.

It was the design of the Canal company to put under contract this fall, or early in the winter, the western section of the Canal, including about seven miles of the line at the western termination, had it not been for the difficulties before referred to, relative to the loan, which have been so interposed as to prevent them from carrying out that design. As now situated nothing can with propriety be done in that respect, without further action of the Legislature, but the Company nevetheless stand ready to place that work under contract, if desired so to do by the Legislature, and as soon as the Canal fund can be made available to co-operate in that measure.

The amount which has been paid by the Company, including all

expenditures from the commencement of the first survey up to this time, is twenty-five thousand and sixty three dollars and fifty one cents, as will be more fully shown by reference to the accounts in detail on books of the Company.

The number and grade of officers and their compensation in the. employ of the Company is the same as at the date of their last annual report to which reference is made, in case the Legislature should desire further information on that point.

It is a question involving much uncertainty, if not extreme difficulty, for the Company to determine what course to pursue during the ensuing year in their operations which would tend most effectually to carry forward the work and meet the just expectations of the country. Owing to the multifarious difficulties with which the company have had to contend, coming both from officers of the Territory and from individuals hostile to the Canal, the Company have come to the conlusion, that the present system offers but little beneficial results; and that some different arrangement in the control of the Canal or of the canal fund arising from the sale of Canal lands, had better be devised by the mutual assent of the parties interested. The control of both in the same hands can be much more efficiently brought to bear on the work than to have them divided as under the present system.

The Canal Company, therefore, in order that there may be something tangible for the consideration and action of the Legislature, will propose,

1st. That the Territory take the control of the work and let it be conducted entirely by Territorial officers, refunding to the canal company the amount by them expended agreeably to the terms of the charter, and pledge the faith of the Territory for the completion of the canal within the time limited by the charter of the company—or

2nd. That the Territory authorise the company to take charge and dispose of the lands granted to the canal, and apply the proceeds to the construction of the canal; the company giving suitable security for the faithful application of the funds derived from that source, and held accountable to the Legislature annually at every regular ses sion, and all their transactions to be subject at all times to investigation in detail, by any authorised committee of the Legislature, or by

any other officers duly authorised to make such investigation by the Legislature.

The company are willing to make such an arrangement on the basis of either of the foregoing propositions, as will secure the just rights of the Territory, the settlers on the canal grant and of the canal company; and they leave the option with the Legislature to determine which they will accept, if either. The company after mature deliberation and four years of experience, feel strongly the conviction that the present system cannot be made to act vigorously, and that under it the canal must languish. To obviate all difficulties therefore the company are willing to make any fair and equitable arrangement which the Legislature may think beneficial to the progress of the work and to the interest of our citizens.

Finally, we take leave of the subject by expressing the confident hope that the wisdom of the Legislature will be so directed as to preserve the faith and honor of the Territory-the welfare of the people, and the speedy completion of the Milwaukee and Rock river canal. Respectfully submitted.

BYRON KILBOURN, Pres't.
JOHN S. ROCKWELL,

W. R. LONGSTREET,

LORING DONEY,

SAMUEL BROWN.

Document C.

AUDITOR'S REPORT, FOR A. D. 1841.

To the Honorable the Legislative Assembly

of the Territory of Wisconsin:

In conformity with the law, I have prepared and submit to the Legislature, the following report:

As I do not find that a full and complete statement of the records in the Auditor's office has ever been made, I have thought it best to extend the report back to the time of the organization of the Territory, that at one view, giving the full receipts and expenditures to and from the Treasury since that time.

The amount of the 5 per cent. tax, which should have been received by the treasurers of the several counties, for the year A. D. 1838,-is as follows: