condition upon which the faith of the state should be pledged, and
it fixed a' value below which its stock should not be sold. Your
comhnittee refer to the memorandum and quotations of stocks ap-
pended to the testimony of Gov. Mason, as well as the testimony
Itself, which is, with the interrogatories propounded by the com-
mittee, herewith submitted as a part of this report, marked (B.)
Your committee does not inquire if the compensation stipulated
to be paid to the Morris canal and banking company was exorbi-
tant/nor whether a sale of the bonds could have been made on
more advantageous terms ; they refer to the act of the legislature'
as their only rule of action.
The committee do not discover the necessity or the authority^
by which drafts were subsiitoted for the notes of the Morris ca-
nal and banking company, reference being had to the supplenfien-'
tal contract herewith appended, and the payment rn lieu tnereof in
funds of the various banks of Michigan.
In the transmission of a portion of the funds received from the
Morris canal and banking company, a circumstance occurred
which, if consistent with thchr duty, your committee would veil
in oblivion, not that they would countenance crime or shelter in-
famy. In June last. Gov. Mason received from the office of the
Morris canal and bankmg company, their notes, to the amount ot
9110,397 as due and to fall due from that company under the con-
tract he had just madow
This sum was placed in a trunk procured for the purpose, and
under the superintendence of Gov. Mason, was brought tp De-
troit. Upon his arrival the State Treasurer executed to Gover-
nor Mason a receipt f >r the entire amount, counting only a pack*
age of $10,397 70. The irunk with the entire sum was then,
deposited by the Treasurer in the vaults of the Michigan state
bank.
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708 HOUSE DOCUMENTS.
Subsequently tl^e mooey was couoted, and a deficiency was
discovered of <N^,630. (tov. Mason immediately advised the
Morris canal and banking company of the deficit, and on the same
day that his letter reached the bank» the amount of the deficiency
(excepting the sum of $50) was received by the bank throura
the post office in the city of IS' ew York, xour committee, for
the purpose of arriving at all the facts connected with the negoti-
ation and transmission of the funds to the state, called before thens
again Gov. Mason, and propounded to him the accompanying in-
terrogatories, and received the annexed answers herewith ap-*
pended, marked jJC.) Theodore Romeyn, who accompanied
Gov. Mason, from New York, was also called before your com-
mittee, and the interrogatories and answers marked (U.) are like-
wise appended.
The committee beg leave res[)ectfully to state, that a(\er a full
examination of the laws, documents and correspondence connec-
ted with the negotiation, their attention was directed to the ab-
straction of the funds, and for this purpose called many witnesses
before them, and have accumulated a large mass o^ testimonyt
much of which is irrelevant, and nothing ^hich would tend to
identify the person guilty of the foul transaction before a judicial
tribunal. It sleeps in the bosom of him who perpetrated the
crime. It is due to Gov. Mason and to the public to say, that no
imputation whatever rests upon \]m.
The journal of the proceedings of the committee, together with
the testimony taken before them is herewith submitted, (except
such as is appended to this report) and from its voluininousoess
and irrelevancy, your committee recommend dispensing with its
publication, but that it be placed with the papers of this legisla-
ture.
All which IS respectfully submitted.
DOCUMENTS.
(A.)
Correspondence^ ^. rekoing to tlie negotiaiion of the 95,00(^000
loan.
Contract with the Morris Canal and Banking Company.
Articles of agreement entered into this first day of June, in the
year of our Lord eighteen hundred and thirty eight, between the
Ejople of the state of Michigan, by Stevens Thompson Mason,
overnor of the said stale of Michigan, acting in behalf of the
people and under the authority of the stale aforesaid, of the first
part, and the Morris canal and banking company, a t>ody politic
Digitized by VjOOQ IC
HOUSE DOCUMENTS. TO©
and corporat6i for tbemsdves and their sacdessors, of the second
part.
It is agreed between the parties as above mentioned, as foir
lows :
First The parties of the first part have contracted with and
employed and do hereby contract with and employ, the parties of
the second part as agents to sell the bonds issued and to be Itoued
by the state of Michigan, by virtue of the act of the legislature
of said state, entitled ** An act authorizing a loan of a sum of mo*
ney not exceeding five millions of dollars," approved the twenty-
first day of March, eighteen hundred and thirty-seven, and aaact
suppfementarv thereto, approved the fifteenth day of November,
eigljteen honclred and thirty-seven, also an act entitled **An ad
authorizing a loan of one hundred thousand ilollars for the relief
of the Allegan aqd Marshall railroad company," and an act eoti*
tied ''An act authorizing a loan of a sum not exceedir^ one hyt>*
dred thousand dollars for the benefit of the Ypsilanti and Tecum*
seh railroad company," the two latter approved on the sixth day
of April, eighteen hundred and thirty-eight, bearing interest at
the rate of six per cent per annum, payable semi-annually, the
principal and interest to be made payable in the city of New York,
and in the lawful money of the United States, and redeemed at
^any time after the years eighteen hundred and fifty-nine and eigh«
teen hundred and sixty three, as provided for by the aforesaid
acts of the legislature of the said state, to be sold by the said
agents, the parties of the second part, at such times and in such
parcels, and either in this C( untry or in Europe, as they may
deem advisable and for the best interest of those concerned there-
in^ And the parties of the first part shall allow to the parties of
the second part, for their agency and services in the premises, and
in consideration thereof, a commission of two and a half per cent
on the proceeds of sales, which is also to be in lieu of all other
expenses that may be incurred in the negotiation and sale of said
bonds, and to be by said agents deducted from the proceeds of
said sales.
SecoQd. The parties of the second part shall have and deporito
the proceeds of said sales, and of any benefit to be derived from
the difference of exchange, in case the principal or any part there-
of shall be contracted for and received in Europe, in the city of
New York, ready to be there delivered lo the parties of the first
part, or to such person or persons as may be duly authorized to
receive the same, and they the parties of the second part* hereby
ffoaranty the safe transmission thereof to the city of New Yors,
m case the sales be made and payable elsewhere, and they the
parties of the second part further guaranty and agree, that in case
the sales of the said bonds shall be so negotiated as that the whole
proceeds of such sales, and of |he benefit of the exchai^ as abore
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710 HOUSE DOCUMENTS.
meiitiiMied, if any* shall not equal the par vdoe of the aggremte
amount of the bonds sold, they the parties of the second part shall
makeup the deficiency, viz : they shall and will allow and pay
to the parties of the first part, t such person or persons aa may
be duly authorized to receive the same, in addition to such pro-
ceeds, the diflference between the said proceeds and the par value
of said bonds, after deducting their commissions as aforesaid oq
the par value, which is to be allowed them ; and in case the sums
realized on the sale of the said bonds shall amount to par, the
parties of the second part shall allow and pay such proceeds in
the city of New York as aforesaid, after deducting their commis-
sions as aforesaid, and the parties of the second part shall and wBI
advance and pay siwh proceeds In the city of New York as afore-
said, after deducting their commissions as aforesaid* at the times
hereinaiter mentioned* viz : two hundred and fifty thousand dol-
lars to be paid and advanced in cash on the execution of this con-
tract ; one million and fifty thousand dollars as may be reqaired
by the parties of the first part or on their behalf, the same being'
subject to their order ; and the residue of such of the proceeds as
are to be paid over under this contract, shall be paid quarterly, in
sums of two hundred and fifty thousand dollars each, the first
payment thereof to be made on the first day of July, in the year
of our Lord eighteen hundred and thirty-nine, until the whole of
such proceeds shall have been paid, whether the said parties of
the second part shall be in funds from the pn>ceeds of such sales
to meet the instalments or otherwise. And in consideration of the
above guaranty and stipulations in this clause mentioned, it is
further agreed that whatever sum may be realized on the sale of
the aforesaid bonds over and above the par value* such excess, to
the amount of five per cent and undefr* shall be equally divided
between the parties hereto. The parties of the second part to re-
tain their hall thereof, and all beyond the said five per cent shall
be retained by the parties of the second part. The (x)rtions of
such excess so to be retained by them to be in addition to their
commission of two and a half per cent on the par value of the
whole five millions as aforesaid.
Third. The said bonds shall be drawn in such sums, in such
forms* and be delivered to the parties of the second part at such
times as may be desired by them prior to the instalments becom-
ing due ; the same to be prepared* nevertheless, conformably with
the laws authoriz'ng the issuing thereof.
Fourth. One million three hundred thousand dollars of said
bonds are to be delivered to the said parties of the second part on
the execution of this contract, and such further delivery of the
bonds is from time to time to be made to the said parties of the
second part, as always to put them in possession of one million of
doliars m bonds in advance of the payment by them ttctuaily made
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HOUSE DOCUMENTS. 711
to the said parties of tho first part* or the person or persons ati-
ihorized to receive the same.
Fifth. The said parties of the second part are to have the option
of paying over in the city of New York, the balance of five mil-
lions ot dollars, deducting thereout their commission of two and a
half per cent., or any part of such balance^ and receiving the resi-
due of the bonds of five millions of dollars, on thirty days' notice,
to be given in writing to the Governor for the time being of the
state ; and whatever may remain to be paid, if any, shall be paid
over by the parties of the second part, in the city of New York,
as soon thereafter as the whole bonds can be disposed of and re*
alized and the account closed.
Sixth. It is further agreed that all and singular, the bonds of
five millions of dollars above mentioned, are to be delivered to the
parties of the second part at their banking house in Jersey pity, in
the state of New Jersey. And it is further agreed and under-
stood, in consideration of tlie premises and more particularly of
the above guarantees entered into by the parties of the second
part, that this agency shall be irrevocable, and shall continue ill
full force until all the services and stipulations herein mentioned
shall be fully performed and consummated.
In witness whereof. His Excellency the Governor of the said
state, in the name and in behalf of the people of the said state of
Michigan, has ht-reunto set his hand and afllxed his seal> and the
Carties oi the second part have caused their corporate seal to be
ereunto aflixed and attested by their vice-president and cashier,
the day and year first above written.
STEVENS T. MASON, [l. s.]
The Morris Canal and Banking Company,
By E R. BIDD1.E, VicePresidem, [l. s.]
In presence of
Ch. B. Buroh,
Waltss BnT8,jr.
Atlest : Isaac Gibson, Cashier.
Supplementary agreement relative to Internal Improvement Loaru
Memorandum of an agreement made and entered into this 4th
day of June« A. D. 1838, by Stevens T. Mason, Govemr r of
the state of Michigan, with the Morris canal and banking com-
panv.
Whereas, the said Morris canal and banking company have
passed to the credit of the said Stevens 1\ Mason, the sum of one
million three hundred thousand dollars, for an amount of Michi-
gan six per cent bonds equal at par to that sum :
Now, in consideration of such payment as aforesaid, the said
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712 HOUSE DOCUMENTS.
Stevens T. Mason does hereby agree to receiTO said sum of one
million three hundred thousand dollars, in the notes of the Morris
canal and banking company, and to disburse them so far as the
exigencies of the state of Michigan may allow, as follows, to wit :
two hundred and fifty thousand dollars on or about first day of
August next ; one hundred thousand dollars on or about the first
day of September next, and one hundred thousand dollars on the
first days of each of the ensuing months.
In witness whereof, the said Stevens T. Mason has hereunto
set his hand and seal, the day and vear first above written.
STEVENS T. MASON, [l. s.]
Morris Canal Compant/s agreement for ninety day drafts.
Whereas, the .Morris canal and banking company, have cofh
tracted with the honorable S. T. Mason, Governor of the state 6[
Michi^n, to sell the bonds of said state, and have a commissioa
for said agency, as stipulated in a contract bearing date the firat
day of June, 1838.
And where. \ it was agreed and understood between tl)e par-
ties that the Iviurris canal and banking company, should pay cer-
tain sums of money on account of sale of said bonds, on first day
of August next, also on first day of September, October, Novem-
ber, Etecember, January, February, March and April following.
And whereas, it is represented by John Norton, jr. Esq., cash-
ier of State Bank of Michigan, fiscal agent of said state, and act-
ing in behalf of Governor Mason, with his full power, that it will
better promote the interest of the state and internal improvement
fund, to transfer money to be received on account of above pay-
ments, to the treasurer of said state, by drawing bills from Detroit
to New York, to be accepted by Morris canal and banking com-
pany, than to transfer the amount from iXew York to Michigan,
as was intended to be done, (when contract was executed) in
bank bills.
It is hereby mutually agreed and understood, by and between
the Morris canal and banking company and said John Norton,
junion acting in behalf of said Governor Mason, that said John
Norton, shall draw bills from Detroit on the Morris canal and
banking company, payable at an average of not less than ninety
days, after aforesaid instalments severally become due and paya-
ble.
And it is further agreed by the parties to these presents, that
said bills, when drawn in conformity with foregoing stipulations,
and by authoritv of Governor Mason, shall be accepted and paid
by AvNrria canal and banking company.
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HOUSB tXDCtJBfENtS. 718
And h 18 further agreed bj said NortoDy that in conirideratioQ
of these f>reMift8, and especially in consideration of said Morris
canal and banking company accepting when presented, and pay^
ing said bills when due, for amount of each instalment, they shall
foe considered and received as payment in full for the several in-
itatments, in the same manner as though each payment was
made in cash, on the day they are understood to be doe, by the
original understanding and agreement*
JOHN NORTON, Janior.
E. R. BIDDLE, Vice-Pres^
of Morris canal and bankii^ company.
New York l^A July, 1888.
In presence of
M. Gbiswold.
S. T. Mason to E. JR. BiddJe, Novi 8, 1888.
New York, November 8» 1888.
Dbab Sim — ^Tbe approaching session of our state legislature
foquires that I should be prepared to present the state of the
ageney of the Morris canal and banking company for the negotia-
tion of 95,000,000 under my contract of May lait^ You wiH«
therefore, oblige me, by furnishing a full statement of the sale of
bonds up to this date by your company ; and at the same time I
should be pleased to receive such general suggestions on the sub-
ject, to be presented to the legislature, as would be calculated to
promote the measure entrusted to your care.
I am) respectfolly*
(Signed.) S. T. MASON.
E. R. BsDi^jM, Esq. Vice-Pres't, &a
E. R. Biddies Rupott, Nov. 10» 1888.
Office of the Morri$ Canal and Banking Co., )
Nov. 10, 1888, \
Sir — ^I have received yours of the 3d inst. requesting a stato-
ment and report of the conditi m of the bonds negotiated by this
oompany as agents of the state of Michigan, which will meet due
attention.
Pefore renderii^ it, however, I deem it proper to say, that the
recent advices from London place the condition and prospects o^
â–²meriean secorilies in such a light as to lender it very deshnable
88
Digitized by VjOOQ IC
TW HOUSB D0CIJM£NT$.
to close the sale of the balance of your bon4si if lo be aooooi-
plished within the iimita fixed by our cootraet under <late of first
of June last«
It is DQW in the power of this company to do so and to pass the
whole amount lo the credit of the state of Michigan at par* Jess
our commissbn of two and a half per cent, (which the contraot
atithorizes us to do,) provided yoq will consent to deliver the resfr-
due of the bonds immediately and take the obli^tion of the Bask
of the United States in Pennsylvania to pay three-fourths, and of
this Qocnptny to pay the remaining one-fourth of the aggr^te
an)MDt« at the 9i9veral periods when by the original contract tiiey
shall respectively become due.
An interest account will be kept and the state of Michigaa wil
be credited with interest by both institutions at .six per cent per
annum from the date of the earliest coupon, which it is proposed
shall be of the first of January next, up to the maturity of the in-
stalments which shall respectively become due, and which instal-
ments are to be drawn for on thiy institutioo Qoder their respec-
tive dates by the Treasurer of the State of Michigan, at thirty
days sight.
To enable us to carry oat this meaftare, I moat aak ytwr piodnpt
Tep\y to this prbposal, and, if it moots your fkpproral, that yoo will
tMrder the whole of the bonds to be sent from Detroit by a speekl
messenger without delay.
I remain, respectfblly,
Your ob't serv*t,
E. R; BIDDLE, V. R
Hh Exceliency,
Stevmb T. Mason,
Oew. State of Michigan.
E. R. Biddle to S. T. Mason, Nov. 15, 1836.
Office of the Mortis Oand and BaUdikg Company, \
Nov. 16, 1838. \
To His Exoelleney,
SrevBvs T. MASoiiy
Governor of the SU9$e of Midkigash
DftAB SiK — Wo received your fovor of the 1^ iost in roit«
tion to making the sales of, and the deliveries of the six per oenC
bond« of ycMv state, as proposed in our cornmonicailiQa to yml of
the 10th inlt.
After consulting wkh those co-iniereBted with os^ in the <
Digitized by VjOOQ IC
HO0S8 DOOtlMBNTO. f 15
iriKit afid agency imide with you on behalf of your statei We haW
come to the conclusion that as We see no pfoepdct of benefifingf
you by declining the t)flel- now made to us, We conform to your
views as now expressed to us, viz :
'^ Cart a better sale than the one proposed be effected, and
would it be advisable pr expedient to let the opportunity now
presented pass ?" ...
We have, therefore, closed with the party making the proffer
lo purchase the whole of the unsold balance of your stock lit par,
open the terms mentioned in our letter of the 10th instant.
When we firit assumed this agency, Considering the larg^
amount of the undertakii^ and the importance of dividing the
riak and combining larger influence in bringing it favorably inta
the European market, we invited several respectable individuate
and institutions to unite with us. These parties have now con-
sented to become purchasers of the portion held by them at par,
and thereby enables us to report to you the entire close of ypur
stock at that rate, teds our coimnrrissron.
We are free to confess that tbe recenttadvices from Europe of
the greaf and qnexpectad {accumulation of Americ^iem securities
offered at low rates, and the fact that some of the most undoubted
state stock have been urged u|
whose coonexion with this coi
ent course, have inspired no li
aalts. Qfid. have caused us fursi
mission stipulated for, forms b\
contJfU^iDg the risk of the foreign market.
In corroboration of these views, it is in our power to state that
Charles Butler, Esq. of this city, whose reputation is known to
you, and who is now in London, having in bra charge the kbler^
etfs c}f cMfe of the institutions concerned in tbe oontmct^'WriteSf
uader date of the 26th October, moat discouragmgly as to the
GDspeeta of a favorable result to the Michigan bonds held by
esars, Rdthschilds, and of tba apparent want of confidence in
Aese^aeoorities. Other bankinff^hootes of the highest respecta-
bilHy tn-bendon, give a very gloomy aspect to the feeling in re-
^d 10 American securities, and the Great Western has actually
brooi^ bttttk. a'larg^ qfUaality of Arkansas bonds, payable m Zon-
don^ from utter inability to realize except al MYfrnaosor ncriftoBb ^^
In addition to all this, steriing six per cent AiabmM boodilAive
recently been sold in this city nt 103, and more are ofiered at the
same rate, which would reduce the value of your bonds, (being
payable in this country,) to about 92.
Added to this, it is no small inducement for closing tiiis sale,
that by so doing we bring to the aid of your state all the influ*
ence which can be deriv^ from the capital of the Bank of the
Digitized by VjOOQ IC
T19 HOUSE DOCVMBNT&
Uniled SiMi/^ and the benefit of which may be ezperienoad in Ike
ftiturp fioancial transactions of Michigan*
I remain, with great respect.
Your ob't serv*tt
E. R. BIDDLE, V^ P.
Extract of a letter of CharUs Butter, Esq^ dated London, 2Gt&
October^ 1838, above referred to*
<* 1 have seen the Messrs. Rothschilds several times within a
few days on the subject of the Michigan bonds, and find they haie
done nothing, nor do I find them any more iiivorably inclined to-
wards them. I have said what I could to inspire them with con*
fidence, and have urged them to hold on to the bonds until the
period of disposition was more favorable.''
Treaturei^s Account, ending December, 1838.
St&ie of Michigan.
In the following accounts with H. Howard, Treasurer.
Dr.
To the following :
For cash on hand, 9735,072 60
I'or balance due the Treasurer on general account,
by own drafts on Michigan state bank, 7,960 74
•74%979 84
Cb.
Bf the follomng balanoes. m :
To eradit of ooatingent fund.
•1.0SS IS
Uitivvnity fund.
861 71
Siakiiig do
65381 Oft
Imeroal knproToment do
00537141
Allagw and M«nl»U milmd fond.
ftOyOOOOO^
SvArt TBaAflVBSE't Omoi^
XMrait; Jk«. 88, 1M6.
t74«370 84
H. HOWARD,
Digitized by VjOOQ IC
HOUSB DOOUUENm 717
& T. Mamm to E. R. Biddk, JVbMnkr 11, 1988.
New Tork^ November 11, 1838.
Sir — Your favor of the 10th inst communicating to me a pror
position for the sale of the Michigan state bonds under the agency
of the Morris canal and banking company, has been duly re-
ceived.
It is with regret I perceive that the state of the European mar-
ket is such as to render the sale of ;he Michigan bonds a matter
of hazard and doubt My expectation under the contract with
your institution was, to realize at least par on the stock, and it is
with extreme disappointment th^t I have presented to me the pro^
babifuy of losing the two and a half per cent, commission which
covers your charges. I still ding to the hope that an immediate
sale may not be imperatively necessary. But as the negotiation
of this loan has been a most thankless and perplexing undertaking
on my part, 1 feel unwilling to advise you in the premises.-
The contract ffives you a free agency to act as the interests of
the state of Mioiigan may require. The questions to determine
are, can a better sale than the one proposed be effected, and would
it be advisable or expedient to let the opportunity now present^
pass? All this you must take the responsibilitv of determining.
To the details of the proposition I have no obiection, and only