IiuNois ^ SENATfiy Aébem.
Lesis. ) ¿2cl Session.
DECEMBER 21, 1840.
Read, laid on the table, and ordered to ba printed. A
LETTER
FROM
THE GOVERNOK,
TRANSMITTING THE
CORRESPONDENCE AND ACCOMPANYING PAPERS
OF THE
PRESIDENT OF THE BOARD OF CANAL COMMISSIONERS,
on the subject of the
SALE OF BONDS FOR CANAL PURPOSES,
AGREEABLY TO
A RESOLUTION OF THE SENATE.
SPRINGFÎKLD:
WH. WALTERS, PUBLIC PRINTER.
HE V-9
» ^
Executive Department,
Springfield, Dec. 19, 1840,
To the Hon. the Speaker
of the Senate.
Sir; Pursuant to various resolutions of your honorable body, request¬
ing information relative to a sale of Bonds for Canal purposes, 1 have the
honor to communicate the accompanying Papers, which contain the de¬
sired information.
I have the honor to be.
Your obedient servant.
THO. CARLIN.
COMMUNICATION
CONCERNING THE
SALE OF BONDS FOR CANAL PURPOSES.
Springfield, Dec. 15, 1840.
To his Excellency, Thomas Carlin,
Governor of Illinois.
Sir: 1 have the honor to acknowledge the receipt of your note of the
7th instant, together with a resolution of the Senate, requesting from
your Excellency, information relative to my agency in the sale of State
Bonds, on account of the contractors on the Illinois and Michigan Canal;
and I have subsequently received, directly from the Secretary of that
body, the following resolution, having the same object, but making ad¬
ditional inquiries: > -
'^Resolved, That General Thornton, one of the Canal Commissioners,
be requested to inform the Senate whether or not, in the late sale of
bonds to him, as agent of the Canal contractors by the Governor, provi¬
sion was made to pay the State the difference of exchange between the
United States and the place said bonds are payable; and also, whether
any bonds have been hypothecated by him for the purpose of raising
money to pay the interest on bonds; and also, whether or not the instal¬
ment by Messrs. Wright & Co. under the contract made by them with
the Hon. R. M.. Young, for the Illinois and Michigan Canal Fund, has
been paid to the said Young; and if so, at what time and by whom; and
where said money has been deposited; if said money has been paid over
to the Canal commissioners, and if not, the reasons why said payment
has not been made; and if the agents of the State have ever refused to
pay the same to the Canal commissioners, the reason assigned for such
refusal, and all information in his possession relative thereto."
In order to give a clear and connected view of the subject, I beg leave
to submit a detailed history of the whole transaction, embracing the ap¬
plication of the contractors for the purchase of bonds—the appointment
[22] 6
of an agent for the sale of them—the necessary payment of interest in
New York and in London, preparatory to attempting sales—the negotia¬
tion in London of a thousand bonds of £225 sterling each—the disposi¬
tion of the exchange between l.ondon and the United States—and the
final disbursements in part, and condition of the remainder of the funds.
Soon after the adjournment of the last session of the Legislature, a
general meeting of the contractors was held in Lockport, to take into
consideration the critical condition in which the laws just enacted had
left them; and to devise some plan, if practicable, of averting the ruin¬
ous consequences that must result from a stoppage of the work. The on¬
ly provision made ,bj the Legislature, other than to leave, undisturbed,
the previously existing authority to sell State bonds at par, was to pay
the contractors whatever might be due them on the first day of March,
and not thereafter, in checks on the State Bank of Illinois, bearing an
interest of six per centum per annum, and payable whenever funds could
be derived from the legal sales of bonds. Checks or scrip, of the charac¬
ter just described, amounting to about four hundred thousand dollars,
were accordingly issued for work and other liabilities which had accrued
during the winter. But the great scarcity of money at the time, and the
uncertainty of the early redemption of the scrip, produced serious losses
to contractors, and all parts of the community necessarily connected with
them in business. Entertaining no reasonable hope of relief through
any regular channel, the convention of contractors, already mentioned,
appointed a committee to wait on your Excellency, with a proposition
for the purchase of a sufficient number of bonds to sustain the work un¬
til the meeting of the General Assembly; and the President of the Canal
Board was urged to accompany the committee, in order that no delay
might ensue from the want of such information as your Excellency might
require from the commissioners. The result of the negotiation has been
communicated to the Legislature in your late message.
On the return of the committee to Lockport, the contractors were
again convened, and the following resolutions, among others, were unani¬
mously adopted, to wit:
"Eeso/ced, That confidently relying on the ability of the Board of
Canal commissioners, and their friendly aid in our behalf, this meeting
accept, and will carry into effect, the proposition made by his Excellency,
Governor Carlin, to the committee appointed by a meeting held by the
contractors on the 24th day of February last, for the purposé of waiting
on him in their behalf, as follows: 'Governor Carlin proposes to place
in the hands of the Canal commissioners an amount of State bonds, equal
to the amount of work that will be done on the Illinpis and Michigan
Canal, between this time and the meeting of the next Legislature, in¬
cluding the amount of work now done, the estimates of which aré unpaid,
supposed to amount altogether to about twelve hundred tb.ousand dollars;
and the Governor instructs said commissioners to sell the same, in their
discretion, on such terms only as shall secure the legal par value of the
same to the State, and the proceeds of such sale or sales to apply in pay¬
ment of the current expenses of the Canal.'
"Resolved, That the commissioners are hereby instructed to dispose of
bonds furnished in accordance with the foregoing resolution, to the best
7
[23]
possible advantage, at any price they may think proper, not less than
seventy-five cents on the dollar in par funds in New York; and when
requested by any party interested, to hold his bonds, or any part thereof,
at a higher rate than seventy-five cents, then they will observe such
requests, and carry them into eifect for the benefit of the contractor so
directing.
'^Resolved, That in case the commissioners shall be unable to sell bonds
within the rates limited by the foregoing resolution, or may deem it
more to the interest of contractors to hypothecate, they are hereby re¬
quested to hypothecate a sum not exceeding half the bonds, as in their
discretion they maj? deem advisable.
^'■Resolved, That in selecting an agent to negotiate the bonds on the
part of the contractors, it becomes necessary to combine financial talent,
firmness, and integrity, in one who knows our wants, and at the same
time knows the deep distress that would be the consequence of a failure
to progress with our work; and from the ability and well known qualifica¬
tions of W. F. Thornton, Esq. President of the Board of Canal Commis¬
sioners, we most confidently place our bonds at his disposal, feeling well
assured of his success. , * ,
Resolved, That General Thornton's expenses in negotiating bonds, in¬
cluding any commissions that he may think proper to pay to a banking
house, or other assistance, be charged to contractors purchasing bonds of
the State, in proportion to the amount of their several subscriptions; and
the Secretary of the Board, Joel Manning, Esq. is hereby authorised to
retain such sum from the estimates of contractors in proportion to their
respective amounts."
Previous to either of their meetings, the principal part of the contrac¬
tors had solicited me, in the event oftheir obtaining bonds, to act as their
negotiator, which from many considerations, involving my own comfort
and safety, I repeatedly declined ; but when my services were unanimous¬
ly required, with a very general assurance, that if I continued to refuse,
I might be the cause of defeating their last prospect; and especially since
your Excellency had expressed a wish that 1 should undertake the nego¬
tiation, I could no longer hesitate, and in co-'operation with the Board of
Commissioners, proceeded to make the proper preparations for the secu¬
rity of the State, and the introduction of the bonds legally into market.
Paper No. 1, is the power of Attorney of your Excellency, authorising
the Board of Commissioners to sell bonds to the contractors.
Paper No. 2, is the form of an obligation taken from each contractor,
to make good to the State the difference between the par value of the
bonds and the price at which his agent was limited to sell them.
Paper No. 3, is the form of a power of attorney, duly executed by each
contractor to the agent.
Paper No. 4, is a letter of attorney from the Board of Commissioners of
the Illinois and Michigan Canal to the agent of the contractors, empow¬
ering said agent to sell bonds on account of said contractors, in confor¬
mity with the Governor's authority as exhibited in Paper No. 1.
Paper No. 5, is your Excellency's power of attorney to sell bonds cn
account of the Canal Fund; and Papers No. 6 and 7, are your letters of
instruction relative to the sale of these bonds, as Well as tho.«e of the con¬
tractors.
[24]
8
This series of papers, supported bj sufficient evidences of the progress^
condition, and national importance of the Canal, and the value of its re¬
sources, independent of the credit of the State, completed the prepara¬
tions deemed necessary for offering the bonds in market. It remained,
however, to make timely provision for the payment of the interest falling
due on the first Monday of July following, which, in this country, amount¬
ed to about ^45,000, and in Europe, including a payment previously
made by the Bank of the United States, and still due her, to about
$90,000.
Unless the interest could be punctually paid, it was manifest to every
one, that any further attempt at negotiations would be in vain; hence
my first efforts were directed to that object.
There was no money in the Treasury as had been shown in the last
Annual Report of the Board of Commissioners; and the oppressed state
of the country rendered it entirely certain that neither sales of lands,
nor collections on account of those already sold, could be relied on as
early as July. But up to May, it had been confidently believed that
ample resources would be derived from Messrs. John Wright & Co.
of London, who had contracted with Judge Young and Gov. Reynolds
to advance £10,000 in January last, and £20,000 six months thereafter,
both of wh ich sums had been relied upon for the payment of the July in¬
terest—the one in this country, and the other in Europe. And here it
may be proper to revert to the Senate resolution, quoted in the com¬
mencement of this communication. .
Enqiury is made whether the £10,000 due from Messrs. Wright &Co.
has been paid, and if paid, where deposited, &c. I can only say, that I
learned from your Excellency, during last winter, and while the Legisla¬
ture was in session, that Judge Young had sold a draft on Messrs.Wright
& Co. for the amount in question, to the Bank of the United States, and
had deposited the proceeds, amounting to about $56,000, to his own cre¬
dit, in that institution; and I soon afterwards learned, but from what
source I do not now recollect, that Judge Young had withdrawn the de¬
posite from the Bank, and was converting it into western funds, to remit
for the use of the Canal.
I think it was about the close of the session that I informed your Ex¬
cellency of what I had heard, and took the liberty to recommend that
the money remain in eastern funds, for the payment of the July in¬
terest, being the only sure dependence for that purpose.
While in Quincy, in company with the committee of contractors, your
Excellency informed us of your determination to annul Messrs. Wright
& Co.'s contract, and of your having instructed Messrs. Young and Rey¬
nolds to that effect; but at the earnest request of ¿he committee, in
which I joined, you consented to countermand, the instructions, and allow
the contract to be turned over to the contractors pn the Canal,who were
willing to make it a par negotiation to the State, if funds could be real¬
ized from it in time to meet their engagements. In the course of a few
weeks, however, Judge Young expressed his opinion in a letter to the
contractors, that the proposed change could not be effected. But in the
latter part of April, your Excellency, urged by the contractors and my¬
self, sanctioned the contract of Wright & Co. on condition, that it could
be made available for the existing year's operations upon the Canal,
9
[25]
which being doubtful, left it also in doubt whether the £20,000 would be
paid at maturity, and whether, unless the conditions were removed.
Judge Young would not be required by Wright & Co. to refund the
£10,000, and cancel the contract: In such an event, I was authorized
by your Excellency to borrow money for the payment of interest, and to
hypothecate bonds as security, until some other arrangement could be
made. •
On j^my arrival in New York, about the middle of May, I found the
stock market so much depressed, as to leave no hope of negotiation
on reasonable terms, especially as the payment of the July instalment of
interest on any portion of our bonds was not yet certain. Our Fund
Commissioner was there, and had fair prospects of meeting his share of
the payments, if that of the Canal could be promptly arranged; and
without it there would be very little use in his making an effort, since it
was generally acknowledged, that a failure in either case would be deem¬
ed a failure intoto. Thus critically circumstanced, I proceeded immedi¬
ately to Washington city, and made an application to Judge Young and
Gov. Reynolds, for the £10,000 in their hands, and also for bills on Mes¬
sieurs Wright & Co. for the £20,000 due in July. No definite answer
was given as to the £10,000, but Judge Young, after a consultation with
, Gov. Reynolds, accompanied me to Philadelphia, for the purpose of en¬
deavoring to induce the United States Bank, to forward, to their agent in
London, a conditional bill for £20,000 on Messrs. Wright & Co. and
guaranty, on the collateral security of State bonds, the payment of the
European interest in the event of the bill not being duly honored. On
my way to Washington I met In Philadelphia, with Col. Mather, Presi¬
dent of our State Bank, then on his return from New York to Illinois,
and prevailed on him to remain with and aid me until something decisive
could be done. He united with me in urging Judge Young to appro¬
priate the £10,000 in hand to the payment of the New York interest,
expressing his opinion, that means having been provided for the Ameri¬
can interest, the United States Bank, as holders of the London bonds,
would readily consent to protect them. But the approval of the contract
with Wright & Go. had been made conditional by your Excellency. It
was therefore contended by Judge Young, that he was bound to hold the
£10,000, subject to the order of Messrs. Wright «& Co. should they reject
the condition, and prefer, as they had a right to do, an abrogation of the
contract. To obviate this objection, I proposed to Col. Mather to secure
the State Bank of Illinois, and let her become responsible to Judge
Young for the payment of the £10,000, if Wright &; Co. should demand
it to be refunded, which being acceded to. Judge Young promised to
return immediately to Washington, to confer with Gov. Reynolds, and
forward the result of their conference as early as practicable to New
York, where Col. Mather consented to await their answer. The propo¬
sition in relation to the conditional bill was then made to the Bank of
the United States, and rejected; but it was agreed by the President, that
he would transmit the bill for collection, and furnish me with a letter to
Mr. Jaudon, the agent of the Bank in London, which would, in all pro¬
bability, insure the payment of the interest, even should the bill be dis¬
honored.
Paper No. 8, is a copy of the Bill on Messrs. Wright & Co., for
£26]
10
)
£20,000, with the letter of advice, and the agreement of Mr. Dunlap,
■ that no damages should result from non-payment.
On the 23d of May, Judge Yonnglreturned to Washington, to obtain
the signature of Governor Reynolds to the bills, and to consult him in re¬
lation to the payment of the £10,000; and on the same day, Col. Mather
and myself left Philadelphia for New-York. '
Believing that no further difficulty could arise, I detérmined tb embark
for London, on the first of June; but on the 27th of May, I received
letters from Judge Young and Governor Reynolds, positively declining
either to part with the money in their possession, or to draw on Messrs.
Wright & Co., in favor of Mr. Jaudon.
Papers No. 9 and 10, being copies of the letters referred to, will furnish
the reasons of those gentlemen for declining any participation in the
payment of interest.
This late and unexpected determination, rendered it highly important
to the character of the State, and to the contractors on the Canal, who
had appointed me their Agent, that some new negotiation should be at¬
tempted, without loss of time. The interest, payable in London, would
be due on the first of July, and ought to be in place, and announced se¬
veral days in anticipation. The steamer, British Queen, was to sail from
New York on the first day of June, and no other steam ship until the
first of the following month. It was evident, therefore, that remittances
must go out in the Queen, or the interest be unpaid; and it was equally
plain that a certainty of being dishonored in Europe, would at once so
severely affect our credit at home, as to render any further effort unavail-
' able. It was conceded, too, that unless the Canal interest could be paid
in proper time, our Fund Commissioner would be unable to meet his en¬
gagements on the remainder of the State debt, which, otherwise, he
would find no difficulty in doing.
Impressed with a conviction of the disastrous consequences that must
flow from a failure to maintain the integrity of the State, one of whiçh
must be the prostration, for years to come, of the noblest enterprise in
the Union; and believing it to be my imperious duty to avert so great a
calamity, if in my power to do it, I unhesitatingly concluded to borrow
money, at any reasonable rate of interest, until the Legislature could
have an opportunity of determining on the proper course to be pursued.
I still believed, that by going immediately to Washington, and placing
the subject in its true light before Messrs. Y'^oung and Reynolds, I might
succeed in prevailing on them, if not to part with the money in hand, at
least to draw, conditionally, on Messrs. Wright & Co., for the £20,000,
which I was confident could be made available in London. I proposed
this course to Messrs. Nevins, Townsend & Co., who were deeply inter¬
ested in our welfare, and, with the assistance of Col. Mather, obtained a
promise from them to advance me ^45,000, at six per centum per annum,
for the payment of the interest coming due in New York,ii I could succeed
in obtaining the draft on Messrs. Wright & Co., and would proceed in the
'first ship for London, so as to secure the payment of the interest in that
city. I accordingly left New York in the evening train of cars, and arrived
in Washington the next morning, at eleven o'clock. Judge Young and
Governor Reynolds still persisted in withholding the Bill on Messrs.
Wright & Co., urging the absence of instructions from your Excellency,
11 - .[27]
but when I assured them that their continued refusal must certainly hring
discredit upon the State, and that with the aid of their conditional draft
on Messrs. Wright & Co., 1 could do without the £ 10,000, by borrow¬
ing money in New York, they concluded to draw, provided I would de¬
posite in their hands two hundred thousand dollars, in State bonds, which
I thought it best to acquiesce in, and on my way back, 1 left the Bill and
letter of advice with the President of the United States Bank, who trans¬
mitted it to Mr. Jaudon, without delay. ■ '
' Paper No. II, is a copy of my letter to Meesrs. NeVins, Townsend &
Co., pledging a hundred State Bonds, as security for the payment of the
New York interest; and Paper No. 12, is a^copy of a letter I had the
honor to address to your Excellency, on the first of June, in explanation
of the transactions just described.
On the same day, I took passage in the steam ship, British Queen, and
arrived in London on the 16th of the same month.
My first attention thertí,as in New York, was directed to the payment of
the interest, which would fall due in fifteen days. Ten of the filteen were
spent m repeated interviews with Messrs. Wright & Co., in which 1 ap¬
prised them of your Excellency's conditional approval of their contract
with Messrs. Young and Reynolds, and my letter from New York, recom¬
mending a withdrawál of the objectionable conditions. Having received
no assurance from them that could be calculated on with certainty, Mr,
Jaudon addressed them a note on the 2jth of June, requesting a positive
decision, in relation to the draft for £20,000; and On the following morn¬
ing received an answer, which was communicated to me on the same day,
and replied to on the next. Paper No. 13, is thé letter to Mr. Jaudon,
and Paper No. 14, is my answer. They resulted in the acceptance of the
draft, which was paid at maturity, ard the interest, amounting to
£13,500, was of course promptly met. The remaining £6,500, with the
exchange between London and Philadelphia, was passed to the credit of
the Canal Fund, in the Bank of the United States, which institution was
in advance to the Canal about $ 25,000, on account of interest.
Messrs. Wright & Co., having paid the £20,000, and decided to ad¬
here to their contract, I wrote to Judge Young on the 30th of June, ac¬
quainting him of the fact, and requesting him to apply the £ 10,000, now
unquestionably set at liberty, to the payment of Messrs.Nevins,Townsend
& Co., as I was anxious to redeem the hypothecated bonds; and I also
wrote to Messrs. Nevins, Townsend & Co., by the same ship, that the
money borrowed of them would at once be paid by Judge Young. Why
it was not then, nor since, paid, 1 have no knowledge. ' The bonds are still
in pledge, and the debt has been renewed from October to the first of
January, as per agreement with the lenders.
The punctual payment of the interest, both in New York and London,
enabled me to go into market with the contractors' bonds. Messrs.
Wright & Co. would neither buy nor make further advances, yet th^y
rendered mè every assistance in their power, particularly by inspiring the
confidence of investors. After a careful examination of the value of pub¬
lic stocks in London, and having, through the friendly services of Mr.
Jaudon and others, convinced myself that nothing would be gained by
going to France or Holland, 1 entered into contract, on the 20th of July,
with the distinguished house of Messrs. Magniac, Smiths & Co,, of Lom-
[28]
12 '
bard street, for the sale of one thousand bonds of two hundred and twenty
five pounds Sterling, each, at the rate of eighty-three pounds perhundred,
payable, principal and interest, at the banking house of Messrs. John
Wright & Co.^ in consideration of which, and having become interested
in our welfare, Messrs. Wright & Co. agreed to pay the January inter¬
est, or dividends, on all Sterling Canal bonds, without regard to further
sales under their contract with Messrs. Young and Reynolds. Paper
No. 15, is a copy of a letter from Messrs. Wright & Co., and Paper No. 16,
is a copy of one from Mr. Samuel Ailinson, an American broker, of high
standing in London, who had aided Judge Young,and whose services were
very useful to me. These letters will show the state of the market, and the
elevated character of the house,to whomi sold. Paper No. 17, is a copy of,
the contract with Messrs. Magniac, Smiths & Co.; and Paper No. 18, is
the copy of an agreement between the same parties, rendered necessary,
in the opinion of purchasers, by the proceedings of our Legislature, at
its last session.
Qy reference to the contract, it will be observed that the purchase mo¬
ney was to be paid in three instalments, to wit: £86,750, on the 15th day
of November, £50,000 on the 15th day of January, and £50,000 on the
15th day of March; but as bills on London are almost uniformly drawn
in this country at sixty days sight, the payments were so regulated that
the first would be cash, on my arrival in New York; the second on the
15th day of November, and the last on the 15th day of January. Of the
first payment, I received £ 1,000 in money, and ^ letter of credit to
Messrs. Rowland & Aspenwall, of New York, for £ 3,000, leaving a ba¬
lance of £82,750, for which 1 took the obligation of Messrs. Magniac,
Smiths & Co., payable, on the 15th of November, to Mr. Jaudon, agent
of the Ban'l? of the United States, who purchased it of me at the rate of
four dollars and eighty-four cents per pound Sterling, and gave me a cer¬
tificate of deposite for $400,510, payable to my order, in the city of New
York. Bills were then, and after my return, plentiful in all the Ameri¬
can cities, at six and a half per cent, premium, in specie funds, while the
sale to the Bank of the United States will nett a fraction under nine, be¬
sides saving one per cent, commission, making, altogether, a saving to the
State of about $ 14,000. Paper No. 19, is a copy of my letter to Mr.
Jaudon, which will more fully explain the terms of the sale. The certifi¬
cate of deposite was paid on presentation, but left in the same Bank, in
New York, till drawn for, in the course of disbursements. For the other
two payments of £50,000 each, I received a letter of credit, addressed
to the Bank of the United States, and to Messrs. Nevins, Townsend &
Co., authorizing either of them, or myself, to draw for those sums; and on
my arrival in New York, I entered into an agreement with Messrs. Nev¬
ins, 'fownsend & Co., to transact the business. Paper No. 20, is a copy
of the letter of credit, and also of the agreement. (See, also, Paper
No. 21.)
Of the proceeds of the thousand bonds sold to Messrs. Magniac, Smiths
& Co., the whole of the first and second instalments, and a part of the
last, have been paid to the contractors. The remainder will be disbursed
on the first of February next, when the transaction will be finally clo¬
sed.
In answer to the inquiry from the Senate, " Whether, in the sale of
bonds to the agent of the contractors, by the Governor, provision was
13
[29j
made to pay the State the difference of exchange bet?reen the United
States and the plaee where said bonds are payable," I have the honor to
state, that the whole of the exchange, already and yet to he realised, has
been secured to the Canal Fund^ I was not at liberty to do otherwise,
unless in violation of a conviction that the true par value of a State bond
is the precise amount that the State must pay to redeem it; and that the
rate of interest on the money received must be no greater than that pro¬
mised in the bond. As the agent of the contractors, I was authorised to' ■
sell bonds of a thousand dollars each, payable in New York; or of, two
hundred and twenty-five pounds Sterling each, payable in London, as, in
my opinion, might best subserve their interests ; and, with that view, I
decided, after I arrived in London, on selling Sterling bonds, payable there,
which brought eighty-three per centum; while dollar bonds, payable in
the United States, would not have commanded more than seventy-three, if,
indeed, they could have been sold at alL
The British coins, called Sovereigns, are real Pounds Sterling, and
were formerly worth, in this country, by comparison with our coins, four
dollars forty four cents and four mills, rating the dollar at four and six¬
pence Sterling; hence a thousand dollars would then have been exactly
equivalent to two hundred and twenty-five pounds Sterling. But by an
act of Congress, passed during the first Presidency of General Jackson,
the standard of our coinage was so changed that a Sovereign, compared
with our Eagles and Half Eagles, became intrinsically and legally worth
about an average of four dollars and eighty-four cents, or nine per cent,
more than before the change, and must continue to be so, as long as our
present standard is adhered to. Bills on England, therefore, at the nomi¬
nal rate of nine per cent, premium, is, in truth, at par; and, consequent¬
ly, when over or under nine per cent, are above or below true par. It ■
will be seen, from this fact, that a bond for £225, Sterling, payable in
England, is a bond for the same number of Sovereigns, which evidently
exceed a thousand dollars of our money, in the same proportion that four
dollars and eighty-four cents, the present legal worth of a Sovereign,
exceed four dollars and forty-four cents, the former worth; or; as a thou¬
sand and ninety dollars exceed a thousand. If, therefore^ I had sold
for the contractors, a thousand bonds of a thousand dollars each, payable
in New York, with interest at the rate of six per centum per annum, a
million of dollars in work on the Canal would have been par to the State;
because a million of dollars would retire the bonds at maturity, and sixty
thousand dollars pay the annual interest of six per cent. But I sold a
thousand bonds of two hundred and twenty-five pounds Sterling each,
payable in London, amounting to two hundred and twenty-five thousand
Sovereigns, to repay which will require, not only a million of dollars, law¬
ful money of the, United States, but somewhere about ninety thousand
dollars, in addition, by way of exchange, and the same rate of increase
will attend every annual or semi-annual dividend of interest. Admitting
the position to be true, as previously assumed, that the par value of a bond
is what it will take to redeem it, dollar for dollar and pound for pound,
the contractors must pay the State £225,000, in London, for the thou¬
sand bonds sold on their account, or a million of dollars, lawful money of
the United States, with the actual exchange between London and New
York; and : this they have been required to do, as the annual report of
m .
the Board of Canal Commissioners, about to be made, will show. The'
amount of exchange accruing to the State cannot be accurately ascer¬
tained until the sales of the bills be closed, and Messrs. Nevins, Towns-
end & Co. render their account; but it will not vary far from an average
of seven and a half per cent, nett, or seventy-five thousand dollars on the
thousand bonds sold, being one and a half per cent, less than regular par,
which, as before stated, is nine per cent, nominal premium. In the
spring, bills were worth ten and a half per cent., but becoming more and '
more plentiful, as our new crops of cotton and tobacco arrived in mark-'
et, they of course fell. Had the spring price been maintained, the State,
and not the contractors, would have gained the excess; as it is, she must
bear the depreciation. All that can be done by a negotiator is to re¬
ceive par at the point of negotiation, for bills may be heavily above the
regular or true par, when he leaves New York, and as much below when
he returns and has a right to draw ; or, the case may be reversed. '
The advantage gained for the contractors by selling Sterling instead of
dollar bonds may be clearly seen, by the following comparative calcula¬
tion: .
A thousand bonds of two hundred and twenty-five pounds Sterling
each, estimating the exchange at seven and a half per cent., cost the
contractors a million and seventy-five thousand dollars; and they receive
for them £ 186,750 Sterling, in London, which, with seven and a half
per cent, exchange, yeilcied them in New York f892,250, or eighty-three
dollars, in specie funds, for every hundred dollars paid to the State. "
On the other hand, a thousand bonds ofa thousand dollars each, paya¬
ble in New York, would have cost them a million of dollars, and brought
in London, seventy-three per cent., or, |^730,000, which, with seven and a'
half exchange, would have been ^ 784,750, or, ^ 78 47i, for every hun¬
dred paid; making a gain of $ 32,500, by purchasing, of the State, Ster¬
ling bonds of twq hundred and twenty-five pounds each, in preference to
thousand dollar bonds, payable in the United States.
I have been thus particular in defining the character of the two classes
of our bonds, knowing that many of the contractors honestly believe that
they should not have been charged more than a thousand dollars; each,
for two hundred, and twenty-five pound Sterling bonds; alleging, as a
reason, the known fact, that the thousand bonds sold by General Raw-''
lings and Governor Reynolds, to the Bank of the United States, in
April, 1839, were precisely similar, in ¡amount and quality, to those sold
by me. Their sale produced to the State, exclusive of expenses, about '
$ 988,000; that to the contractors, $ 1,075,000, a difference of $89,000.
The contracts made by other agents of the State, with Messrs. Wright &
Co., were also for Sterling bonds, payable in London, and will nett no
more to the hundred than the sale to the Bank of the United States. ' ;
Taking into consideration the great sacrifices made by contractors, both '
in scrip and in bonds, without which the Canal must have been Suspend- '
ed, with enormous loss to the State, the Legislature may possibly abate
the amount of exchange between Great Britain and the United States,,
and place them on a footing with all other purchasers of Sterling bonds.
But however equitable such a relief might be (and I confess that I think
it would be just,) I. am well satisfied that I have properly construed the
power of attorney and letter of instructions from your ExceBeney. ^
15
[31]
The cost of the negotiation, made for the contractors, is another inqui¬
ry by the Senate.
The expenses chargeable to the State, will be less than two hundred
dollars, for transportation, numbering and filling of bonds and coupons,
and the attestation of the requisite books and papers. The entire cost
to contractors is one and three-quarters per cent, on the amount of bond&
sold for them—half per cent, of which was paid for brokerage, and one
and a quarter for my commission and expenses. The two per cent, com¬
mission, named in the contract, as an allowance to Messrs. Magniac,.
Smiths & Co., is merely nominal; the sale being an actual one,, at th&
rate of eighty-three pounds per hundred, and one which has not been« ^
equalled since. Nor could it have been effected then, but for the satis¬
factory proofs which were exhibited, that the real estate, irrevocably
pledged for debt and interest, was amply sufficient to prevent the Canal
from ever becoming a burden to the State. The contract has received
the formal approbation of your Excellency, of the Board of Commis¬
sioners, and of the contractors unanimously.
1 have stated, in another part of this communication, that the money
borrowed from Messrs. Nevins, Townsend & Co., on the first of June, for
the payment of the July interest, in New York, will be due on the first of
January. There will likewise be due, on the same day, 39,000, for the
payment of the'semi-annual interest on Canal bonds, payable in this coun¬
try. The last named sum will be paid by Judge Young, out of the funds-
in his hands, agreeably to your Excellency's directions; but no other pro-
vision having been made for discharging the debt to Messrs. Nevins,
Townsend & Co., I wrote to them, by Doctor Barrett, to retain the
amount out of the last payment due from Messrs. Magniac, Smith & Co.
By this means the Legislature will have full time to deliberate on the sub¬
ject, and may either authorise the borrowing of money upon a new hypo¬
thecation of bonds, or take a sufficient portion of the contractors' loan on
the same terms that they do.
I venture to suggest this alternative, under á knowledge of the condi¬
tion of the " Canal Fund," which, with the exception of bills receivable
and money held in trust for the contractors, consists of scrip issued by the
Board on the first of March, and received by the Treasurer during the
year, in payment of lands and interest.
The amount required to pay Messrs. Nevins, Townsend «fe Co. will be
about $47,000, of which there is about $7,000 in the United States Bank,
and about $ 17,000, in the hands of Judge Young, after paying the
$39,000, due for interest on the first of the next month. If these sums
be at once applied (and I see no reason why they may not.) the deficien¬
cy will be about $ 23,000.
Trusting that this report may afford all the information sought by the
Senate, and prove satisfactory to your Excellency.
I remain, sir,
• Very respectfully.
Your obedient servant,
■ I '
W. F. THORNTON.
DOCUMENTS
ACCOMPANYING
THE FOREGOING REPORT.
Paper No. 1.
COMMISSION.
Execütive Department, March 9, 1840.
To all to whom these Presents shall come, greeting:—Know ye, that
I, Thomas Carlin, Governor of the State of Illinois, reposing special trust
and confidence iu the capacity and integrity of William F. Thornton,
Jacob Fry, and David Prickett, commissioners of the Illinois and Mi¬
chigan Canal, have appointed, and by these presents do, by virtue of the
power and authority vested in me as chief magistrate of said State, by
an act of the General Assembly thereof, entitled "An Act to provide for
a loan for Canal purposes," approved February 23d, 1839, appoint said
William F. Thornton, Jacob Fry, and David Prickett, or any two of
thern, special agents in behalf of the said State of Illinois, to negotiate
a loan of one million of dollars, being a part of the loan of four millions of
dollars, authorised by the provisions of the said act, for the construction
of the Illinois and Michigan Canal, provided the same can be effected at
par, agreeably to the limitations and restrictions of the above recited act,
and such other acts as may have been enacted on that subject.
And the said commissioners of the Illinois and Michigan Canal, or any
two of them, are hereby fully authorized to sell at par value to anj con¬
tractor on the said Canal, such portion of the aforesaid loan of a million
of dollars in bonds of one thousand dollars, or two hundred and twenty-
five pounds sterling each, as said contractors may require for the prose¬
cution of his contract during the present year: Provided, that in all cases
of sales to contractors, they shall, jointly or severally, appoint an agent or
attorney, to be approved of by the Canal commissioners, or any two of
them, to re-sell said bonds, either in the U. States, or in Europe, at par,
above par, or below par, at the pleasure of each contractor. But in all
cases where a contractor shall authorize his agent or attorney to sell said
bonds for less than par value, said contractor shall be required by said
Canal commissioners, to give ample security to the State for the difife-
c
[34]
rence betïveen the par value of said bonds and the price at which sai-i
contractor shall authorize them to he sold by his agent or attorney. And
said agent or attorney shall pay over the proceeds of all sales on ac-^
count of contractors, to the Board of Commissioners of the Illinois and
Michigan Canal, to be paid by them to each contractor, respectively, in
proportion to the progress of his work.
Given under my hand, this ninth day of March, Anno Domini, one
thousand eight hundred and forty.
(Signed) THOMAS CARLIN,
Governor of Illinois,
Paper No. 2.
Form of a Bond taken from Contractors to secure the State against toss on
State Bonds.
Whereas the Governor of the State of Illinois has placed in the hands
of the Board of Commissioners of the lllinpis and Michigan Canal, a large
amount of Bonds of the State of Illinois, issued for and in aid of the con¬
struction of the said Canal, authorized so to be issued by the provisions
of'^An act to provide for a loan for Canal purposes," approved February
23, 1839, to be disposed of by said commissioners, at not less than par
value to the State; ,
And whereas the undersigned contractor on the said Canal desires to
obtain funds to carry on his work on said Canal, and has with that view
this day agreed, and hereby doth agree with said Board of Commission¬
ers of the Illinois and Michigan Canal, for the purchase of fifty of said
State Bonds, each being for the sum of one thousand dollars, or two hun¬
dred and twenty-five pounds sterling money, at the election of William
F. Thornton, at par, and has this day given to the said William F. Thorn¬
ton, Esq. President of said Board, a full power of attorney to dispose of,
sell, or hypothecate said bonds, at par, or above or below par, in his dis¬
cretion, for the benefit and on account of the undersigned;
And whereas the existing laws of the State of Illinois do not authorize
or permit a sale of said bonds on account of the State, at a less rate than
at par value, which the undersigned supposes to be a higher rato than
can now be obtained for them, the undersigned, therefore, hereby agree
to pay, account for, or allow to the Board of Canal commissioners, the
difference between the par value of said bonds, and the price at which
said Thornton, as attorney aforesaid, may sell, hypothecate, or otherwise
dispose of thé same, or any part thereof.
Now for the purpose of securing to the State of Illinois any différence
between the par value and the price at which said Thornton may sell,
dispose of, or hypothecate said bonds, the undersigned agrees and autho¬
rises said Board of Commissioners of the Illinois and Michigan Canal, to
retain in their hands, and to deduct from the account of the undersigned,
80 much of the back money or per-centage of the undersigned, as may
be now due, or so much of any other moneys or indebtedness due, or that
shall hereafter become due the undersigned from the Board of Canal
Commissioners as shall be sufficient to pay the difference between the par
19
[35]
value and the amount îbr which said bonds may be sold, disposed of, or
hypothecated as aforesaid. And the undersigned further agrees that the
said Thornton may pay over to, and the said Board of Commissioners
shall receive and retain in their hands, as security for the purchase mo¬
ney of said bonds, the amount received by said Thornton for said bonds,
on sale, or hypothecation, or other disprosition of the same, which amount
so received shall be paid to the undersigned for work done or to be done
on said. Canal, in pursuance of Canal contracts, the Canal Board reserv¬
ing, however, a sufficient amount to make said bonds of par value to the
State, and in case of failure on the part of the undersigned to pay the
State, or the Board of Commissioners, the par value of said bonds as
aforesaid, and in case the securities above pledged to the State should
not be found sufficient fully to the payment of such difference between
the price obtained for the bonds and their value, the undersigned further
agrees, that in case of any suit ot suits being brought by the undersigned
against the said Board of Commissioners of the Illinois and Michigan
Canal for damages for breach of contract, or for other cause or failure
■on the part of said Board to comply with their contract made with the
undersigned, that then and in that case the said Board of Commissioners
shall be permitted and allowed in defence as a set-off (to be deducted from
such claim for remuneration for any such breach of contract or other
action at law or in equity against them) the amount of any such deficit
that may yet remain due the State from the undersigned for bonds pur¬
chased at par value in manner aforesaid.
In witness whereof the undersigned hereunto sets his hand and seal,
this day of . A. D. 1840. >
In presence of
<L. S.)
<L. S.)
(L. S.)
Paper No. 3.
Power of Attorney from Contractors to W. F. Thornton, for sale of State
Bonds.
Whereas the Governor of the State of Illinois has placed at the dispo^
sal of the Board of Commissioners of the Illinois and Michigan Canal a
large amount of State bonds, authorized by the provision of "An Act to
provide for a loan for Canal purposes," approved February 23d, 1839, to
be disposed of by them in aid of the construction of the said Canal; And
whereas the undersigned did on the day of the date hereof agree with
the said Board of Canal Commissioners for the purchase of fifty of the said
State bonds, of the denomination of one thousand dollars each, or of two
hundred and twenty-five pounds sterling each, (at the election of William
F. Thornton,) at their par value:
Now, therefore, know all men by these presents, that I, Isaac Hardy,
of the county of La Salle, in the Stale of Illinois, have made, constituted.
[36J
20
and appointed, and by these presents do make, constitute, and appoint,-
William F. Thornton, Esq. President of the Board of the Illinois and Mi¬
chigan Canal, my true and lawful attorney for me, and in my name, or
otherwise, to sell, dispose of, hypothecate or pledge, the said bonds so
purchased by me as aforesaid, or any of them, to such person or persons,
company or companies, within the United States, or .Europe, as he may
deem proper, or to dispose of and transfer the same in such way and
manner as he may deem proper, for such price or sum as he can obtain
at par, or above or below par: hereby giving and granting unto my said
attorney, full power and authority to do and perform all and every
act and thing whatsoever requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as I might or could
do if personally present, with full power of substitution and revocation,
hereby ratitying and confirming all that my said attorney or his substitute
shall lawfully do or cause to be done by virtue hereof.
In witness whereof I have hereunto set my hand and seal, the
day of in the year of our Lord one thousand eight hundred and
forty. ' ,
Sealed and delivered in the presence of
(L. S.)
(L. S.)
(L. S.)
State ov Ielinois,/
County. 3
This day personally appeared before the undersigned, a Notary Public
in and for said county and State, the above named
whose name appears as a subscribing witness to the foregoing Power of
Attorney, and who is personally known to me to be a credible witness,
who being duly sworn deposeth and saith that he was present and saw
I the signers of the foregoing Power of Attorney
execute the same; that they are_personally known to him to be the real
persons for whom and in whose name said Power of Attorney is execut¬
ed, and that acknowledged that freely signed, sealed, and
delivered the same for the uses and purposes therein expressed. In tes¬
timony whereof 1 have hereunto set my hand and affixed the Notarial
seal at this _ day of A. D. 1840.
i
Paper No. 4.
Letter of Attorney from the Board of Commissioners of the Illinois and
Michigan Canal, to W. F. Thornton.
Whereas the Governor of the State of Illinois has placed at the dispo¬
sal of the Board of Commissioners of the Illinois and Michigan Canal, a
large amount of State bonds of the State of Illinois, issued in pursuance
of, and by authority- of the act of the General Assembly of the State of
21
Illinois, entitled "An Act to provide for a loan for Canal purposes," ap¬
proved February 23,1839, to be disposed of, for, and on account of, the
contractors on said Canal;
And whereas the Governor of said State has agreed that whenever the
said contractors shall appoint an agent or attorney to dispose of said
bonds, and said appointment shall be approved by the Board of Canal
commissioners, that the said agent or attorney might then proceed to
dispose of said bonds, either in the United States or Europe;
And whereas the contractors aforesaid have appointed William F.
Thornton, Esq. President of the Board of Commissioners of the Illinois
and Michigan Canal, said agent or attorney, and the Board of Commis¬
sioners have approved of the said appointment:
Now, know all men by these presents, that the undersigned Board of
Commissioners of the Illinois and Michigan Canal have, and by these
presents do nominate, constitute, and appoint the said William F. Thorn¬
ton our true and lawful attorney, to hypothecate, sell, or otherwise dis¬
pose of, at par, above or below par, in his discretion, according to the
directions of the several contractors, the amount of State bonds placed
opposite the names of the several contractors, a list of which is hereto
annexed, for and on account of the said several contractors named in said
annexed list, hereby ratifying and confirming whatever our said attor¬
ney or his substitute or substitutes may lawfully do in the premises.
And we do hereby authorize and empower our said attorney to substi¬
tute one or more attornev or attorneys, and the same to revoke at plea¬
sure.
And we do further authorize and empower our said attorney, or his
substitute or substitutes, to deposite all money or moneys obtained for
the sale of all or any of the State bonds aforesaid, in some safe bank or
banks in the cities of New York, Philadelphia, or Boston, to the credit
of the Board of Commissioners of the Illinois and Michigan Canal.
In testimony whereof, we have hèreunto set our hands and affixed the
seal of said Board, at f.ockport, in the State of Illinois, this fourteenth day
of April, one thousand eight hundred and forty.
JACOB FRY,
Acting Corner.
D. PRICKETT,
Treasurer.
(L. S.)
[38]
32
List of Powers of Attorney executed in favor of William F, Thornton, for
the sale of State Bonds, on account of the Contractors on the Illinois and
Michigan Canal.
Mames of Contractors.
ilo. Bonds.
Names of Contractors.
NÍO. Bonds.
E. B. Hulbert,
10
H. Norton,
35
Wm. Osborii, Jr.
20
George Barnet,
25
Wm. B. Ogden,
20
Charles Kerr,
20
Harmon, Loomis, & Raymond,
20
H. Blanchard & P. Thompson
20
John J. Temple,
20
P. Amer,
15
Jas. E. Bishop,
25
McGlaughlin & Darug
2
Isaac Strail,
25
J. Crotty,
15
Benj. Wilder,
10
Henrichs & Rush, by att'y.
15
Robert Boyd,
10
W. A. Chatfield,
1
Thomas Armstrong,
8
R. L. Wilson,
20
John Yarwood,
10
B. M. Webber,
2
John Beach,
25
G. Sherburn,
15
Irwin & Kettering,
15
P. Stewart,
18
J. S. &, D. L. Roberts,
28
James Kerr
60
Alton & Pestaña, by attorney.
20
Edward McSweeny,
10
Smith & Granger,
25
James Y. Sanger,
40
Wm. Avery,
60
Wra. E. Armstrong,
4
John Clifford,
25
E. Durgin, by att'y.
10
John Rodgers, by attorney.
30
Thomas Beale,
4
N. J. Brown,
40
S. C. Dickinson,
20
James Brooks,
10
Adam Lamb,
18
H. L. Stewart,
20
H. Twitchell,
10
J. Negus,
20
John Green,
6
Thos. Williams,
10
Isaac Hardy,
50
A. J. Douglass,
12
H. D. Risley, by att'y.
3
John Lonargan,
30
Wm. L. Pierce,
18
John V. Singer,
16
Benj. F. Lamb,
6
O. P. Root,
7
Wm Byrne,
20
W. B. & E. Newton,
1 20
[39]
Paper No. 5.
COMMISSION.
Governor Carlin to W. F. Thornton.
Executive Depatment, Äpril 30¿A, 1840.
Know all men by these presents, That I, Thomas Carlin, Governor of
the State of Illinois, reposing special confidence in the capacity and integ¬
rity of William F. Thornton, President of the Board of Commissioners of
the Illinois and Michigan Canal, do constitute and appoint him an Agent,
to sell, either in the United States of America or in Europe, bonds or
certificates of " Illinois and Michigan Canal Stock," to the amount of
five hundred thousand dollars, being part of the loan of four millions of
dollars, authorised by the provisions of an act of the General Assembly of
Illinois, approved February 23d, 1839, entitled, "An act to provide fora
Loan for Canal purposes," and by the seventh section of another act of
the same General Assembly, approved February 1st, 1840, entitled "An
act to amend the several laws in relation to the Illinois and Michigan
Canal."
And the said William F. Thornton, is hereby vested with full power to
take all proper means and measures for the sale and transfer of said
bonds or certificates of stock; and to do and perform all lawful things,
requisite in the premises, which the above recited acts of the General
Assembly allow to be done by an agent.
In witness whereof, I have hereunto set my hand, and c.'iused the
jr 1 seal of State to be affixed, this 30th day of April, Anno Domini,
one thousand eight hundred and forty.
THO'S. CARLIN,
Governor of Illinois.
Bt the Governor.
A. P. FIELD, Secretary of Stale.
Paper No. 6.
Governor Carlin to Gen. Wm. F. Thornton.
Quincy, April 30¿A, 1840.
Gen. Wm. F. Thornton:
Dear Sir: As you are about setting out for the purpose of negotiating
State bonds, on behalf of the contractors upon the Illinois and Michigan
canal, and feeling, as I do, a deep interest, both on account of the State
and the contractors themselves; and in view of the embarrassed condi¬
tion of our financial affairs, and the depressed state of the money market
[40]
24
in this country at the present time, which must continue as long as our
Banks generally withhold specie payments, a due regard for the interest
of the State, and justice to the contractors, has induced me to accept and
confirm the sale of ^ 1,001),000, of Canal bonds, made by the Hon.
Richard M. Young to Messrs. Wright & Co., of London, in the month
of last, provided the money can be realized at such times, and
in such sums, as will meet the wants and engagements of the Canal, for
the present year. This loan was considered by me of doubtful charac¬
ter, as to its conformity to the law under which it was made; and the
conditions of the contract was, therefore, referred to the Legislature, at
its last session, which, after being considered, was passed over, without
any definite action. By this sale, the State of Illinois will receive par for
her bonds, in New York funds, and will realize the difference of exchange
between New Y^ork and Chicago, which will perhaps indemnify her for
the necessary discount to be incurred on the payment of the accruing in¬
terest in London; and what may be the slate of exchange between the
two countries, at the time of the final redemption of the bonds, no one
can foresee. The confirmation of this sale, will enable the State to dis¬
pense with the payment of bonds to contractors, and thereby prevent
their depreciation, on forced sales by them, and will thus preserve the
credit and value of the bonds, in our future operations. I am, therefore,
fully satisfied that expediency requires me to accept of this loan, as it will
prevent the payment of bonds to contractors, or the abandonment of
the work on the Canal, either of which would infiict infinitely more loss
upon the State, than can possibly grow out of this transaction.
It is almost unnecessary for me to repeat again, that I would recom¬
mend the reduction of the work, as far as possible, upon the Canal, and
the sale of the smallest amount of bonds that will enable the State to meet
the liabilities for the present year. If the ^1,000,000 should be realized,
under the negotiation of Judge Young, and a deficit should exist to meet
the expenditures for the year, no sale of bonds under the authority of the
State to meet such deficit can be recognized, short of complete par; but
should the $ 1,000,000 not* be realized, then, and in that case, the only
alternative will be for you to proceed to sell bonds under the authority of
the contractors upon »he Canal.
Paper No. 7.
Governor Carlin to TV. F. Thornton-
(copy.)
Executive Department,
April 30th, 1840.
General W. F. Thornton;
Sir : Having authorised the Board of Commissioners of the Illinois
and Michigan Canal to sell bonds or certificates of "Illinois and Michi¬
gan Canal Stock," amounting to a million of dollars to the contractors on
said Canal, of whom you have been appointed the agent, with the appro-
35
[41]
bation of said Board and myself ; and having this day given you a Com¬
mission to sell additional bonds, to the amount of half a million of dollars,
on account of the Canal Fund, I hereby authorise you to make your
sales, in all cases, where the interest of the State, in your opinion, may
require it, with the condition that the present bonds may be hereafter sub¬
stituted by others, of any form or denomination, most desirable to the
purchaser, and with semi-annual instead of annual payments of interest.
1 have authorised Messrs. Young and Reynolds to carry into effect
their contract with Messrs. Wright & Co., of London, for the sale of
bonds, to the amount of a million of dollars, provided Messrs. Wright &
Co., will guaranty the proceeds to be available during the present year;
and in that event it is my wish that you diminish your sales, as well for
the contractors as for the Canal Fund, by the same amount that Messrs.
Young and Reynolds may be able to obtain, with certainty, from Messrs.
Wright & Co., after having paid the interest on all Canal loans, to the
first of January, 1841.
As it is highly desirable to redeem, as early as possible, all the checks or
scrip issued by the Canal Commissioners, under the authority of an act
of the General Assembly, approved on the 1st of February last, you
will, in all sales of bonds on account of the Canal Fund, receive said
checks or scrip as lawful money of the United States, taking care to se¬
cure to the State the par value of the bonds.
Respectfully,
Your obedient servant,
THO'S. CARLIN,
Governor of Illinois.
Paper No. 8.
Copy of a Bill for £, 20,000, Sterling, drawn on John Wright Co., of
London, by Messrs. Young and Reynolds, with their Letter, and that of
Thomas Dunlap, Esq., in relation to the condition on which said Bill is
drawn.
Philadelphia, May 23r<f, 1840.
£20,000 Sterling.
On the fifteenth day of July next, after the date of this our first of ex¬
change, (second and third of the same tenor and date unpaid) pay to the
order of A. Lardner, Esq., Acting Cashier, twenty thousand pounds Ster¬
ling. Value received. Which charge, as advised, by
Your obedient servants,
RICHARD M. YOUNG,
JOHN REYNOLDS,
Agents of the State of ¡¡liruns,
for making the Illinois and Michigan Canal Loan,
To Messrs. John Wrioht & Co. London.
m
26
S. Jaudon, Esq., London;
Sir: We send you, through the Bank of the United States, the annex¬
ed bill of Messrs. John Wright & Co., of London, for £ 2P,000 Sterling,
the proceeds of which, when paid, you will please apply to the payment
of interest due on the first Monday in July next, on £225,000 Sterling
Illinois and Michigan Canal Bonds; No. 1 to 1000—£225 each—interest
at six per cent, annually.
It is, however, distinctly understood between the Bank of the United
States and ourselves, that, should the bill not be accepted, or paid by
Messrs. Wright & Co., it is not to be protested; Messrs. Wright & Co.
having the option to annul and repudiate the contract at present existing
between them and us, in relation to the loan to the State of Illinois for
Canal purposes. We have written fully to those gentlemen to-day, on
the subject, and our bill, as above, will be paid, or not, as they may think
proper to decide.
We are, very respectfully.
Your obedient servants,
(Signed,) RICHARD M. YOUNG,
JOHN REYNOLDS,
Agents of the Stale of Illinois,
for making the Illinois and Michigan Canal State Loan.
Bank of the United States,
May 23rd, IS40.
S. J addon, Esq.
Agent of the Bank of the U. States, London :
Sir: The foregoing letter of Messrs. Young and Reynolds,is in confor¬
mity to an understanding we have with them, and we request you will
carry the same into effect.
Very respectfully, your's,
(Signed,) THOMAS DUNLAP.
Paper No. 9.
John Reynolds and Richard M, Young to W. F. Thornton.
Representatives' Hall,
Washington City, 25th May, 1840.
Dear Sir: We have béstowed much reflection on the subject of draw¬
ing on Mr. John Wright and Company, Bankers, of the city of London,
for a certain amount of money, which is subject to the order of Thomas
Carlin, Governor of the State of Illinois. The object of our draft would
be to appropriate said money to the payment of interest due in July next,
27
m
on State bonds heretofore sold. Under ail the facts and circumstances
of the case, we are constrained to decline acting in the premises.
The reason at once will appear evident to you, when we say, that we
have no authority or power from the Governor of the State of Illinois to
appropriate this money in any manner whatever. We are ministerial
agents, acting under the authority of the Governor, and cannot assume
the power to draw for this money for such a purpose; although the payment
of the interest on the bonds of the State, heretofore sold, may be very
desirable.
In the next place, we cannot reconcile it to our notion of propriety to
appropriate this same money, advanced by Mr. Wright and Company, on
a contract, when the Governor of the State has, in a material part, pro¬
posed to change the terms of the contract, and Mr. Wright and Company
have had no opportunity to accede to, or reject, the alteration; and in
case the alteration be not agreed to by Mr. Wright and Company, then
the Governor is positive in his authority and instructions to us, to annul
and rescind the contract entirely.
Having no authority to act, and also considering it improper to appro¬
priate the money, under the peculiar circumstances of the case, we are
constrained, although much against our desire, to decline acting in the
premises.
With much respect.
We are your ob't servants,
JOHN REYNOLDS,
RICHARD M. YOUNG.
General Thornton.
Paper No. 10.
Richard M. Young to Gen. Wm. F. Thornton.
Senate Chamber,
Washington City, May 1840.
Dear Sir: Since my return from Philadelphia, I have consulted with
Gov. Reynolds, on the subject of providing for the interest on our Canal
bonds, at New York and London. He is altogether unwilling to make
such an appropriation of the £ 30,000, or any portion of if, until it is
known that Messrs. Wright & Co. will accept the condition imposed by
Gov. Carlin, in his letter of approval, of the 1st of May, and especially,
as the Governor did not, in that letter, request us to assist you in the pay¬
ment of the interest. I also informed him of the guaranty offered by Col.
Mather, as President of the State Bank of Illinois, for the reimbursement
of the $45,000, proposed to be paid in New York. He says he cannot
consent to any such arrangement, as he is unwilling to assume responsi¬
bility, without express authority from the Governor. Without his con¬
sent I do not feel authorised to act, and must therefore decline, for the
present, doing any thing further in the matter. It appears to me, upon
[44]
28
much reflection, that it would be better, before we do any thing more, to
inform Messrs. Wright &. Co. of the approval of our contract by the Go¬
vernor, with the circumstances attending the approval, and at the seme
time to hold ourselves in a position to cancel the contract, by refunding
the £10,000 drawn, and asking for a return of the $ 1,000,000 of bonds,
provided they are unwilling to promise the money within the current
year. It would unquestionably be better to keep this contract for the
present, separate and distinct from all other transactions, until we can
close it up in some way, and surrender our agencies. I deplore exceed¬
ingly the present condition of things, affecting the character of our State,
and see nothing but mist and gloom in the prospective, and very much
regret, as every citizen of our State must feel, that the last Legislature
did not do something more effectual, to place the credit and integrity of
the State, on some substantial basis. The July interest, should, at all
events, have been provided for with certainty, and not left to depend on
remote probabilities. We will send our letter, with its enclosures, to
Messrs. Wright & Co., by the British Queen, which sails on Monday
next, and ask the favor of you to take out a duplicate; and will lose no
time in making our contract available to the State, as soon as Messrs.
Wright & Co.'s acceptance of the new condition, proposed in the Gover¬
nor's letter, shall have been communicated to us. We should have sent
the original lètter for Messrs. Wright & Co. directly to your care, if we
had any assurance that you would be ready to go out in the Queen, which
we suppose as yet is uncertain.
Before writing this morning, Gov. Reynolds and myself advised yvith
Gen. Robinson and Gov. Casey, as to the course We ought to pursue in
the present emergency, after stating the difficulties with which you were
surrounded, and the guaranty proposed by Col. Mather, as President of
the State Bank, for the reimbursement of the New York interest, and
they both advise us against all expedients, and say that it is our duty,
both as it regards the interest of the State, and as matter of good faith
towards Messrs. Wright & Go. to refrain from doing any thing whatever
under our contract, until we hear from them, and have their approval of
the change proposed by the Governor, and at the same time to hold our¬
selves in a position to cancel the contract, by refunding the £ 10,000,
and asking for a return of the bonds, if Messrs. Wright & Co., after a
consideration of all the circumstances, shall be unwilling to promise the
money within the current year.
Very respectfully,
Your obedient servant,
RICHARD M. YOUNG.
P. S. Gov. Reynolds has written a joint letter, expressive of his views,
which, at his request, I have signed with him. R. M. Y.
29
[45J
Paper No. 11.
Copy of a Letter to Messrs. Nevins, Townsend &, Co.
New York, June \st, 1840.
Messrs. Nevins, Townsend & Co.
Gentlemen: Having deposited in your hands twenty-two thousand
five hundred pounds Sterling, of Illinois and Michigan Canal Bonds, as
your security for accepting my draft, payable 1st of October next, with¬
out grace, for forty-six thousand eight hundred and ninety-nine dollars
and forty-three cents, which it is understood that you are to renew, should
I require it, for the term of ninety Jays; you are hereby authorised to sell
such portion of said bonds as shall be sufficient to reimburse you for any
advance which you may remain under at the expiration of said ninety
days.
And 1 agree to substitute one hundred thousand dollars, in dollar bonds,
of the Illinois and Michigan Canal, as your security, in lieu of said Ster¬
ling bonds, (with like authority to sell the same) should you desire it at
the expiration of six months from date.
Your's respectfully,
W. F. THORNTON.
Paper No. 12.
Wm. F. Thornton to His Excellency, TAos. Carlin, Governor of Illinois.
New York, June Isi, 1840.
Dear Sir: I have been twice to Washington, to Philadelphia three
times, and am now in New York for the third time, struggling to make
arrangements for the payment of the July interest on Canal bonds, as well
in London as in New York. I have spared neither labor nor responsi¬
bility, in the attainment of so important an object, convinced, as all oth¬
ers connected with our affairs are, that unless the interest be promptly
provided, and that provision be at once made known, no further negotia¬
tions need be attempted, either through Messrs. Wiigbti&Co., on ac¬
count of the State, or through any other channel, on account of contrac¬
tors. The immediate prostration of the State credit, already seriously
impaired, and the consequent ruin of thousands of our citizens could not
be averted a single day, if it were believed that any part of our interest
would remain unpaid. After your sanction, although conditional, of
Messrs. Young and Reynolds' contract with Messrs. Wright & Co., I cal¬
culated that the £l0,000, already drawn, and the jE20,000, authorised to
be drawn for in July, would certainly be applied to the payment of in¬
terest, since Messrs. Wright & Co, had ample security in their own hands
to reimburse themselves, even should they choose to relinquish the con¬
tract; and I was under the impression that you had written to Messrs.
Young and Reynolds to pay the interest, if in their power. But they say
30
they have received no order from you to pay the interest in any eVentj
and, that if they had, the conditions attached to your sanction of Wright
«fe Co.'s arrangement, render it improper for them to .part with the
£ 10,000, now in hand, until they can be assured that Messrs. Wright &
Co. will proceed to carry out their contract, notwithstanding the modifi¬
cation insisted on. For the same reason, they hesitated several days, in
drawing for the £20,000, due in July, to enable me to pay our interest
in London, but have since consented, on condition that 1 would deposite
with them two hundred Slate bonds, until you shall have ordered them
to apply any funds derived from Messrs. Wright <fe Co., to the payment
of interest. Hence you will see the necessity of immediate instruction
to that effect. j
Failing to obtain the £10,000, now in the hancjs of Judge Young, 1
was compelled to borrow $45,000, in this city, for the payment of that
part of our interest coming due in the United States, and to rely upon
arrangements in England to meet the London interest, if Messrs.Wright
«fe Co. refuse to honor Messrs. Young and Reynolds' bills for £ 20,000,
which they will have a right to do, and which, by agreement with the
Bank of the United States, is not to subject us to any damages whatever.
But I carry such letters to Mr. Jaudon, and others, at London, as will,
with very little doubt, secure the payment of the European interest at
the proper time.
It is the unqualified opinion of every intelligent financier 1 have con¬
versed with, that unless our engagements are kept with, Wright <fe Co.,
and they continue to repose confidence in our stocks, it will be needless
to offer the bonds in Europe, and if discredited in Europe, it would be
equally fruitless to try the American market. 1 therefore look upon the
good will of Wright & Co. as so essential to our preservation, and so
necessary to the re-establishment of our character, that I trust you will
not hesitate a moment in taking off all restrictions, and leaving them free
to act according to the original understanding with Judge Young. By
that agreement the bonds were to be sold or withdrawn within eighteen
months, from last October, which limitation, without further provision,
will bring the matter to a close in April next; and, even if they refuse to
warrant full sales during the present year, and I am obliged to sell a few
bonds, on account of the contractors, any money which Wright <fe Co.
can furnish, up to the middle of April, will be much needed betöre new
negotiations can possibly be effected. Judge Young and Gov. Reynolds
will write you on the same subject, and if our recommendation be atten¬
ded with succcess, they should be informed of it with the least possible
delay, in order that the information may reach London lime enough to
avail us, in the event of the rel'usal of Wright <fe Co. to proceed, as now
restricted.
I have had engraved, under the supervision of Judge Young, new
bonds, of £300 and £100, with serri-annual interest, to an amount suffi¬
cient to substitute those in the possession of Messrs. Wright <fe Co., say
£225,000 Sterling, which will be forwarded to you without delay, and I
beg you will be good enough to execute them as early as practicable, and
transmit them to Judge Young, who will take the proper steps to forward
them to me, in London; and, if used by Wright <fe Co., I will take up the
old bonds, and deliver them to you on my return, seeing that they are first
31
[47J
hammer cancelled, as soon as the others pass into the hands of Wrjght&
Co. I shall also have prepared five hundred bonds, of $ 1,000 each, to
be sold in this country, for scrip and money, which, when you have exe¬
cuted, you will hold until bonds of £225 each, be presented to you, in
exchange, by those to whom I may sell with that condition, agreeably to
your letter of instructions to me, of the first of last month.
Our delegation, generally, and Judge Young, particularly, have been
very useful to me, in procuring me proper letters, and otherwise aiding
me, in the objects of my mission.
I am using every effort to get off this morning, in the British Queen,
for London, consequently am much hurried, which will excuse me, I hope,
for the hasty manner I have made this communication. I shall write
again, from London, as soon as I can do any thing decisive, and would be
much pleased to hear from you.
Very respectfully.
Your obedient servant,
W. F. THORNTON.
To his Excellency, Thos. Carlin,
Governor of Illinois.
Paper No. 13.
John Wright ^ Co. to Samuel Jaudon.
6 Henriella Street, 26th June, 1840.
Samuel Jaudon, Esq.
Sir: In answer to your favor of yesterday, we beg leave to say, most
unequivocally, we shall have no hesitation in accepting the bill of £20,000
if the arrangements, under which We agreed to accept, remain in force.
Without such an understanding, it is clear, from the letters of the Com¬
missioners, handed to us by Gen. Thornton, that we are not called upon
either to accept or pay the bill.
If Gen, Thornton is disposed to abide by the existing agreement, not
the smallest difficulty or delay will occur. We need not add, that we are
as sensinle as yourself of the evil which would come from any stock to
the credit of the State of Illinois, or indeed any other State of the Union,
and would do all that could reasonably be required of us to avert it.
Perhaps you will be kind enough to communicate with General Thorn¬
ton, and inform us of the result as soon as possible.
We are. Sir,
Your obed't h'ble serv'ts.
WRIGHT & Co.
[48]
32
Paper No. 16.
JV. F. Thornton to Messrs. John Wright êç Co.
London Coffee Hofse, Lüdgate Hill,
June '¡¿1th, 1840.
Messrs. John Wright & Co.
Gentlemen: 1 have been furnished with a copy of your note of yester¬
day's date, to Mr. Jaudon, in which you say: "In answer to your favor
of yesterday we beg leave to say, most unequivocally, that we shall have
no hesitation in accepting the bill of £20,000, if the arrangements under
which we agreed to accept, remain in force. Without such an under¬
standing it is clear, from the letters of the Commissioners, handed to us
by Gen. Thornton, that we are not called upon either to accept or pay
the bill. If Gen. Thornton is disposed to abide the existing agreement,
not the smallest difficulty or delay will occur." I have already assured
you verbally, gentlemen, of my sincere wish that your'agreement with
Messrs. Young and Reynolds, for the sale of Illinois and Michigan Ca¬
nal stock, could be brought in aid of the operations of the Board of Com¬
missioners of the Illinois and Michigan Canal, during the present fiscal
year, ending on the first of March, I84I, and I now distinctly state, for
your government, that if you accept the bill of Messrs. Young and
Reynolds, in favor of Mr. Jaudon, for twenty thousand pounds Sterling,
payable on the I5th proximo, and thereby confirm the advance of
£10,000, already made to the same gentlemen, any sales which you may
be able to effect, at prices specified in your contract, can be made avail¬
able at any time prior to the first of March next.
But it is highly desirable that money should be realized as early as
possible; and in order to afford facility, and consequently inducement, to
the purchasers of Bonds, your authority for drawing bills on your house,
at four months sight, will be deemed equivalent to money, provided the
interest on the bonds shall not commence until the purchasers shall have
paid for them.
Trusting that this communication will be entirely satisfactory, and that
you will immediately apprise Mr. Jaudon of your determination to accept
the bill for £20,000.
1 am, gentlemen,
Your ob't serv't,
W. F. THORNTON,
Pres'i B'd Cotn'rs Illinois and Michigan Canal.
33
Papbr No. 15.
Copy of Letter from John Wright 6^ Co.
London, 18<A July, 1840.
General Tbobnton, London:
Sib: We beg leave to assure you that we feel highly honored at the
preference you have given us, in offering us the contract of the new mil¬
lion of Illinois Canal Bonds; but, though we entertain but little doubt of
placing the bonds, as soon as the money could be wanted, yet we have an
unwillingness to enter into a positive contract; and as Messrs. Magniac,
Smiths & Co. have left us the agency, of paying the dividends, so far from
feeling any jealousy, we feel much pleasure in the co-operation of so
powerful and respectable a firm, than which none ranks higher in our
metropolis.
Till Messrs. Magniac, Smiths &■ Co. have sold out the bonds, taken un¬
der rhe above contract, it will be naturally impossible for us to proceed
with our sales,as arranged with Judge Young; but we trust the time is not
far distant, when the market will revert to those prices. In the interim,
as your arrangements here involve the credit of the State and the pro¬
gress of the work, we are sure you have acted well and wisely in carry¬
ing them out, as you have done. We also beg to assure you, that if the
new bonds, with coupons, (payable semi-annually,) arrive here before the
January dividends fall due, the interest will be provided for by us, even
without additional sales of the bonds entrusted to us for circulation by
Judge Young.
We are. Sir,
Your ob't. h'ble. serv'ts,
WRIGHT & Co.
Paper No. 16.
Samuel Allinson to Wm. F. Thornton.
London, 23rd July, 1840.
Dear Sir: I cheerfully comply with your request, that I would give
you my candid opinion of the negotiation which you have just effected,
of $ 1,000,000 Illinois Canal six per cent, bonds, and can state, that it is
remarked upon in the city, as a matter of surprise, that you have succeed¬
ed in selling those bonds. No single negotiation of an American securi¬
ty, has been effected here, during the current year, for one-half the
amount of your's, and I doubt whether any important sale will be made
during the unexpired half of this year.
When I first had the pleasure of seeing 3 0U, I could not then think that
you would be compelled to accept so low a price; but your active and I
d
[50]
34
may say cool, dispassionate, yet decided exertions, have obtained, in the
opinion of every one with whom I have conversed, the highest price at
which such an amount was negotiable. I ventured to advise you, that
the acceptance of this price for a part, and the consignment of the residue
for future sale, would produce a better result; but that would have left
your constituents in uncertainty; and I am convinced that in the many
fluctuations of the money market, your present arrangement is the best
that could be made. One thing is certain, that you have the authority to
draw on a house as undoubted as any in Europe. Bills on Magniac,
Smiths & Co., the commercial house of the great bankers. Smith, Payne
& Smiths, will, in my own experience, sell as New York at the highest
exchange. The united capital of the Smiths is equal to that of any house
in Europe; but their high moral character is a still greater guarantee for
their engagements.
I cannot close without venturing one further remark. Your negotia¬
tion of these bonds with the Smiths, and your provision for the payment of
interest and dividends, with Messrs. Wright & Co., the bankers selected
by Judge Young and the other Commissioners, is of great importance to
the negotiation of the bonds now remaining in their hands. I do consider
this arrangement of very great interest to the State of Illinois, and one
which, with the management that I confidently anticipate, will greatly
enhance the value of the bonds of the State, now unsold, in this market.
Wishing you a safe passage and a happy meeting with your family,
I remain, dear Sir,
Your friend and serv't,
SAM. ALLINSON.
Paper No. 17.—Dated 20tA July, 1840.
ILLINOIS LOAN.
General Thornton and Messrs. Magniac, Smiths ^ Go.—Contract jar sale
of Bonds of the State of Illinois.
An Agreeuent, made and entered into the twentieth day of July one
thousand eight hundred and forty, between General William Fitzhugh
Thornton, of Springfield, Illinois, of the one part, and Messrs. JMag-
niac. Smiths & Co. of London, Merchants, of the other part.
The said General Thornton agrees to sell to the said Magniac, Smiths
& Co. who agree to buy one thousand bonds of the State of Illinois, in
North America, for two hundred and twenty-five pounds sterling each,
bearing interest from the first July instant, at the rate of six per cent
per annum, payable in London at or for tbe price of one hundred and
ninety-one thousand two hundred and fifty pounds sterling, being at the
rate of eighty-five per cent, to be paid in manner, and subject to tbe
deduction after-mentioned.
35
[51]
The said General Thornton agrees to allow to the said Magniac,
Smiths & Co. a commission, at the rate of two pounds per cent, on the
said sum of two hundred and twenty-five thousand pounds, to be deduct¬
ed from the purchase money.
The said bonds are to be delivered on the execution of this agreement,
and the said Magniac, Smiths & Co, are to pay for the same as follows:
The sum of eighty-six thousand seven hundred and fifty pounds, part
thereof on the fifteenth November next, and the sum of fifty thousand
pounds, being the balance of the purchase money, deducting the aforesaid
commission, on the fifteenth March next. These sums are to be drawn
for by the said General Thornton, in such manner that the bills shall fall
due on the days hereinbefore fixed, and no one bill to exceed twenty
thousand pounds.
The said General Thornton, in pursuance of especial authority in that
behalf, of the Governor of the State of Illinois, hereby engages that the
bonds so sold shall be exchanged for other bonds to the same amount, and
with semi-annual instead of annual payments of interest; and the said
Gen. Thornton engages to procure such bonds, to be prepared and exe¬
cuted for such sums as shall be required by the said Magniac, Smiths &
Co. and to deliver the same to them at their counting-house, in London,
within six months from the date hereof, in exchange for an equivalent
amount of the bonds now sold.
W. F. THORNTON,
MAGNIAC, SMITHS & Co.
Witness to the signature by the above named
General William Fitzhugh Thornton, and
Messrs. Magniac, Smiths & Co.
Wm. Frasbk, of No. 3 Lombard Street.
Paper No. 18.—Dated 20tA July, 1840.
ILLINOIS LOAN.
General Thornton, and Messrs. Magniac, Smiths ^ Co.—Agreement of
Guarantee, ^c.
An Agreement, made the twentieth day of July, one thousand eight
hundred and forty, between General William Fitzhugh Thornton, of
Springfield, in the State of Illinois, in America, of the one part, and
Messrs. Magniac, Smiths & Co. of London, merchants, of the other
part.
Whereas the Legislature of the State of Illinois, by an act to provide
for a loan for Canal purposes, approved twenty-third February, one
thousand eight hundred and thirty-nine, authorized the Governor of the
State to negotiate a loan to an amount of four millions of dollars, on be¬
half of the State, or to issue bonds of the State to that amount, in any
currency, and to sell the same at a orice not under par, and the Gover-
[52]
36
%
nor of the Stal e, in pursuance of such authority, by a commission dated
ninth March last, authorized the said General William, Fitzhugh Thorn¬
ton, Jacob Fry, and David Prickett, Commissioners of the Illinois and
Michigan Canal, to negotiate a loan for one million dollars, part of the
said sum of four millions, provided the same could be effected at par, and
the said commissioners were thereby authorized to sell at par value, to
any contractor on the said Canal, portions of the aforesaid loan of one
million dollars, in bonds of one thousand dollars, or two hundred and
twenty-five pounds sterling, as therein mentioned; Provided such con¬
tractors should appoint an agent to be approved by the Canal Commis¬
sioners, to resell said bonds at par, above par, or below par, at the plea¬
sure oí each contractor. And the said Commissioners, in pursuance of
such authority, sold one thousand bonds as aforesaid to contractors on the
said Canal, who have appointed the said Gen.Thornton their agent, to sell
the same at a price not below seventy-five per cent, and the appointment
of Gen.Thornton to be such agent has been approved by the Canal Com¬
missioners, and by the Governor of the State, and the price of said bonds
is to be paid to the said Canal Commissioners; And whereas the Governor
of the State of Illinois,by a commission dated thirtieth April last, has further
authorized the said Gen.Thornton to stipulate that the said bonds may, in
pursuance of the power given by an act to amend the several laws in rela¬
tion to the Illinois and Michigan Canal, approvedfirst February, one thou¬
sand eight hundred and forty, be exchanged for bonds of any form or
denomination most desirable to the purchaser, and with semi-annual in¬
stead of annual payments of interest; And whereas in pursuance of such
authorities the said General Thornton has contracted and agreed to sell
the aforesaid one thousand bonds to Messrs. Magniao, Smiths & Co. at
or for the price of one hundred and ninety-one thousand two hundred
and fifty pounds sterling, which sum, subject to a deduction at the rate of
two per cent, on the amount of the bonds for commission to Magniac,
Smiths & Co. is to be paid as follows, that is to say; the sum of eighty-six
thousand seven hundred and fifty pounds, part thereof on the fifteenth
November next, and the sum offifty thousand pounds, further part there¬
of, on the fifteenth January next, and the balance which, after deducting
the said commission, will amount to fifty thousand pounds on the fifteenth
March next. And for the satisfaction of the purchasers it has been agreed
that the arrangement so made with the contractors on the said Canal,.
and the proceedings of the Canal Commissioners and of the said General
Thornton shall be submitted to the Legislature of the said State, and
that the sale made by the said General Thornton shall be approved by
the Governor of the said State, and by the said Canal Commissioners—
Now it is hereby agreed, and the said General Thornton engages, that
for the satisfaction of the said Messrs. Magniac, Smiths & Co. and the
purchasers of the said bonds, he will procure the contract so made for
sale of the said one thousand bonds to be approved by the Governor of the
State of Illinois, and by the Commissioners of the said Illinois and Michi¬
gan Canal, and shall and will, within six months from the date hereof,
deliver, or cause to be delivered, to the said Magniac, Smiths & Co. a
copy of the said contract so ratified. And it is further agreed, that with¬
in six weeks after the meeting of the Legislature of the State of Illinois,
the said General Thornton shall lay a Report of the sale of the said bonds.
\
\
37 [53]
add of all tííé facts and cireumstances connected therewith, before the
Lezislafóre of the same State«
® W. F. THORNTON,
MAGNIAC, SMITHS & Co.
Witness to the signature by the above named
General William Fitzhugh Thornton and
Messrs. Magniac, Smiths & Co.—
Wm. Fraser, of J^o. 3 Lombard Street.
Paper No. 19.
Cqpy of a letter to the United States Bank Agent, Mr. Samuel Jaudon.
London, July 23,1840.
S. Jaudon, Esq. Agent Bank United States, London.
Sir: I have this day sold to you Messrs. Magniac, Smith & Co.'s obli¬
gation to pay you on the 15th November next £82,750; and 1 have re¬
ceived ia payment therefor your certificate of deposit, (in duplicate,)
payable by the Bank United States to my order, in New York, for
$400,510, with this understanding and agreement, viz: that the said sum
of $400,510 shall remain in deposit in the Bank U. S. to be drawn for
by the State Bank of Illinois, from time to time, in the ordinary course of
business, or by such other Bank or parties as I may authorize, and that
the average period of the said deposit with the Bank of the United
States, shall be at least sixty days from the 15th day of August next; or
in case of earlier payment, the Bank of the United States shall deduct
compensation for the unexpired time, at the rate of one per cent, for six¬
ty days.
Your obedient servant,
(Signed) W. F. THORNTON.
Paper No. 20.
Nevins, Toionsend ^ Co.''s Agreement for sale of Exchange.
We have this day received of William F. Thornton, Esq. President of
the Board of Commissioners of thé Illinois and Michigan Canal, a letter
of credit from Magniac, Smiths & Co. of London, a copy of which is here¬
unto annexed, ana we hereby agree to negotiate and sell on the best
terms in'our power, the ansount of bills authorized to be drawn by said
letter, and to account with said Wm. F. Thornton, President, for the pro¬
ceeds thereof, after deducting one per cent, for our commission on the
negotiation and sale of the same.
[54]
38
It is understood and agreed that the said Thornton, Président,is autho>
rized to draw on us as follows, viz: On or after tho tenth daj of Novem¬
ber next, for the proceeds of fifty thousand pounds, and on and after the
I5th January next, for the proceeds of the remaining fifty thousand
pounds. It is further understood that we have full and entire authority
to sell and dispose of said bills at any time We think proper, in conformity
with the letter of credit.
NEVINS, TOWNSEND & Co.
New York, August 14, 1840.
London, July 23, 1840.
Messrs. Nkvins, Townsend & Co. JVein York; or,
The Cashier of the Bank of the United States, Philadelphia.
Gentlemen: We hereby authorize General William Fitzhugh Thorn¬
ton, of Illinois, to pass drafts, or to permit you to daaw for his account,
upon us, for the respective sums of j05O,OOO, to fall due here on the 15th
January, 1841, and of jg50,000, to fall due here on 15th March, 1841,
amounting in all to £100,000—say one hundred thousand pounds sterling;
to which extent such valuation shall meet due honor.
We remain. Gentlemen,
Your most obedient servants,
(Signed) MAGNIAC, SMITHS & Co.
Paper No. 21.
Copy of a letter from W. F. Thornton to Messrs. Magniae, Smiths ^ Co.
London.
New York, August 13,1840.
Messrs. Magniac, Smiths & Co.
Gentlemen: 1 have just made an arrangement with Messrs. Nevins,
Townsend & Co. of this city, by which the authority contained in your
letter of the 22d ultimo, directed to them or to the Cashier of the Bank of
the United States, at Philadelphia, for me to draw, or to permit either of
the parties just named to draw on your house for one hundred thousand
pounds sterling, (of which fifty thousand pounds will fall due on the I5tb
of January next, and the remaining fifty thousand on the I5th March
next,) is now conferred on and rests solely with Messrs. Nevins, Town-
send & Co. whose bills you will please honor in conformity with your let¬
ter already recited.
Very respectfully, Gentlemen,
Your obedient servant,
(Signed) W. F. THORNTON.