hope that you will be driven to an immediate sale under a proper
regard to the interests of the state you represent
I have the honor to be
Your obedient servant, *
S. T. MASON.
E. R. BiDDLB, Esq. Vice-Pruident^ 4^.
Mtrneys received on account of Interned L npro v e me nt fund.
Statement of moneys received on account of sale of Michigan
State Bonds to the Morris canal and banking company, as fol-
lows :
1888.
Jan. 7. Gov. Ikfosoo's two drafts od
John Delafield, Esq. $»0JM0 00
60,000 00
8. (^iver Newberry on his con-
tract, 80,000 00
FeU 6. do do 81,000 00
34. do do 50,000 00
•150,000 00
Carried forward,
Digitized by VjOOQ IC
VI8 HOt;^ DOCUMENTS.
Brought forward, • f
Sep* 19. da do 80,000 00
200,000 00
July 11. Pejposited in New York by
Gov. Mason to the cre-
dit of the Michigan state
bank, 80,000 00
Aug. 1. Gov. Mason's sundry drafts
on Morris canal bank, 00
days, 250.000 00
Sep. I. do do do 100,000 00
Oct. 1. do do do 100,000 00
Nov. 1. do do do 100,000 00
Dec 1. do do do 100,000 00
June 16. Gov. Mason paid in Morris
canal bills, 910,397 70
Gov. Mason , paid PrinDe,
Ward <& Kind's account, 8,963 30
Gov, Mason paid John De-
lafield's account, 639 00
20,000 00
Dec 12. Bills of the Morris canal and
banking company to ap-
ply on the January, 1839,
payment, 100;0(>0 M
Gov.*Mason*s draft on Mor«
ris canal and banking c6.
'90 days, $ifiaO 00
Grov. Mason's check on Mi-
chigan state bank, 50 00
Bills of Morris canal and
• banktQg eomptny^ ft5,870 0^
In full of Feb. 1839, payment, 9100,000 00
•l,3r}0,000 00
Credited to the internal improvement fund, 1,180,000 00
Ypsilanti and' Teoognseh rtilretd co. 60,000 00
AllegaaBnri MarsbaU 4^ 60,000 00
•1,300,000 00
State Treasurer's Offics, >
Detroit, Dee. It, 1998. ]
H« HOWARD, l^eamirtt.
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yGoogk
mUSa DOOUMfiNTSi 919
Atatb Trbasurbr^s QmcBy \
JktniU Dec 12, IBB8. \
Sm— Ann^ed I hand you a statement of moneys received on
account of Michigan state loan, whicd inoiudos the bills of tba
Morris canal and banking company* deposited with tne^ as per my
neceipts therefor;
I am very respectfully,
1 our orodient servant,
H. HOWARD, JVeasurer.
His BxceHency Grov. Masori
Detroit.
Prime, Ward 4r King^s rqnn-t, /. DelafkUts receipt, ^
New York, Nov. 10, IS98.
Sir — In reply to the communication which you addressed to
us, oQ the 12th instant, desiring information on the subject of the
Michigan loan, entrusted for negotiation to our Mr. King, under
directions from your agent Mr. Delafield, we beg to enclose a
copy of Mr. King's note of 28th April last, to Mr! Delafield, es-
plaining the failure to eflTect the desired loan in Europe, which
friyes the needful information on that point. In relation to our va«
uations on London and subsequent reimbursement of their amountf
we have to state, that we acted under the explicit instructions
of Mr. Delafield, as will be seen by reference to the enclosed
copy of his letter to us, of 11th April last, but at that time,
he and we, here, were ignorant of the fact, that the bonds to ex-
tent of 300,000 dollars were not in a form to be sold in Eu-
rope, Our reimbursements were made on the best terms in our
power, and free from risk to the state of Michigan, charging the
LfOndon commission, and one per cent, for drawmg and remitting,
but of course without guaranteeing the state from loss upon the
operation.
It is right to add explicitly, that it was for no convenience or
profit to us, that these valuations were made, ^nd that we were
ready at ai^ moment, to advance our half of the amount agreed
upon with your special agent when here, and it was^ undoubtedly
believed* that a fall in the rate of exchange would enable us to
make reimbursement upon terms that would snve any expense or
loss to the state, which, unfortunately, proved otherwise.
We remain, sir, with respect,
Your obedient servants,
PRIME, WARD & KING.
S. T. Mason, Esq.
Governor of the State of Michigan.
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990 HOUSE DOCUMENTS.
I9ew York, lia April, ISdS.
Messrs. 'Pbime, Ward & Ktiici,
Gbntlbmbn — I have ycMH* letter of yesterday, statin;;^ that at
my request as agent, and under our joint respoosibiiity to reim-
burse the advancer if required, you bud drawn upon Messrs. Ba-
ring, Bro's & Co. of London, against the •300,000 Micbigao
bonds consigned to them for saie.
Say on 31 March, £20,000 60 days at 5l 993,333 38
7 insUnt, 12,iJ00 19 2 4| 56,666 67
£324209 19 2 * 9150,000 00
At your request, I do hereby acknowledge the receipt of one
hundred and fifty thousand dolfairs, advanced to the state of Afi-
chigan ; and I enga£[e individually, to refund to Messrs. Baring,
Bro's &, Co. one half of the amount drawn as above stated, oo
deooand, with interest and commisitions, in case of n^d, confirm-
ing the engagements set forth in your letter of the 10th insL
1 am respectfully yours,
(Signed) J. DELAFIELD,
Agent for the Slate of Michigan.
Three parcels of Michigan bonds, amounting together to •300,-
000, accompanied by Mr. Delafield's letter of 29ih November,
transferring his agency, with an exeaiplified copy of the acts of
Michigan, authorizing a loan of $5,000,000, and an act ameadiog
the same, authorizing a rate of interest nut exceeding six per cent,
was received in London, in December, 1837. Preparatory negoti-
ations had been entered into there with a prospect of success, in
the anticipation that the amendatory act of Michigan would have
been clear and explicit as to making principal and interest, both
in sterling money, payable in London.
Said amendatory act, as also the original act, relating to these
bonds, no where expressly and directly, nor in any way but by
inference, auth<»rized or permitted the payment of the principal
abroad, although it was explicit as to such payment of interest,
but it directly limited the rate at which payment of either or both
should be made in London, at par, or four dollars foriy-four one
hundredths, per pound sterling, alihoii^h it required that any pre-
mium or gain of exchange upon negotiation should be accounted
for to the slate of Michigan.
That although the state might receive proceeds of the negotia-
tion of bonds in sterling abroad, at a premium of ten per cent,
^'et9 it should only refund the money and pay the interest at par«
in other words, to receive four dollars eighty-eight one huodretbf»
Digitized by VjOOQ IC
HQUSB DOCUMENTS. 731
pM pomut itttrK^gi but to pty back four poundi forty-four cm
.buodratbs, per pouod stcrlittgw
It wa« th^ thought pracCicableu to negotiftte for bonds in dol-
jarsi principal and iolareat payable in New York, but the unoer-
taioty as to the rates of exdiange, reodered any probable price in
LiondoB jusufficient to cover limits } an e^rt was made to obtain
jkuthority to draw for a given amount, upon leaviQg tbe bonds in
I^QOdofit if that would suit the state of Michigan, iHit as such au-
.thority, except aflar sales made, could not be obtainedi no author-
ized course was left but to bring back tbe 9300,000 bonds, wfaidi
Jias been done. The rate in Loncton for a Michiaan loan six per
cent, mterest and principal payable in New York, would proba-
bly be ninety percent, equal at six per cent premium, to ninety-
five forty one hundredths, without allowance for conuoission or
charges, for 9100 of stock.
Coipy of note, dated 29th April 1838, from J. 6. King to Joha
Belafieldy agent.
(B,)
Amtoer 0f StevemT. MasM to IntBrrogat^^ CommiUm.
1. To first interrogatory of the commilee — I answer, that it will
1)6 recollected a loan of one hundred thousand dollars was nego-
tiated at an early day in the history of our state, for the current
expenses of the government, t call the attention of the committee
to this loan from the fact that as ii was nei^otiatcd through the
agency of Mr. John I)eln field of the city of New York, I was in-
duced, on the passage of a law authoriziilga loan of five millions
of dollars for purposes of internal improvement, to apply to Mr.
Delafield for his assistance, the former loan haVir^ been made
payable at his bank, and he then acting as agent of^the state in
the payment of interest, &c
Accordingly, on the passage of the law authorizing the five
million loan, I visited New York in the spring of 183T, and held
personal interviews With Mr. Delafield and other capitalists of
that city. The embarrassments then existing in the money mar-
ket, soon convinced me that no negotiation or sale of state stocks
could be made at that period. I returned home, leaving a copy of
the Ujtin law with Mr. l)elafield, and authorizing him to correspond
with capitalists, at home and abroad, on the subject of the loan.
In the autumn of that year, Mr. Delafield advised me, that al\er
diligent and earnest inquiry, he was satisfied no portion of the loan
could be negotiated linless the interest on the stock was increased
to six per cent, and both interest and principal made payable in
Europe ; that in the event of such an amendment of the law,
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:732 HOUSE DOCUMENTS.
Mr. Jamps Kiog» of the hooM 4)r Primfe, WtH mid King, trtib
was about visiting Europe, would Cake charge of the ioen, mmI
give his personal attefnfion to it. The ametSed law, ami three
h!indred thousand dollars of' bonds, were transnHtted to Mr. King,
in London. Mr. King's efl^s to eifecf a sale in Europe were
'Uosucceasful, for reasons stated by him in a donimunicatioo before
«the conmoittee. Mr. Deiafield in the mean time, having agreed
to advance to the state one hundred and fifty thousand doUarS^
Under the expectation thai Mr. King would succeed in his nego-
tiation, drafts were dfawn on him for the amount : ninety thou-
aand dollars in favor of the Michigan state tmnk, and sixty thou-
saiMl dollars in favor of the Bank of Michigan. The premium
'Was paid to the credit of the linking fund* Mh Delafield, how-
'^ver, contrary to my expectations, iriet my drafts by bills drawn
on the Barings of London. The amount of these bills I had to
ifi^mit to Condon, and the rate of exchange having gone ap^
contrary to all expectation, the premiums paid for the foreigD bilb
about cancelled the advantages in the original drafts drawo oo
Mr. Delufield. The purchase of these bills explains the item of
ten thousand three hundred and ninety .seven dollars and seventy
cents paid Prime, Ward and King, as slated by the Treasurer,
fit of six hundred and tbirty-nihe dollars paid J. lM$r
or postage paid in transmitting bonds to London* prinl-
&c as will appear by the vouchers filed with the Trea-
} commissions for services were either paid to Mr. Ue*
) Mr. King. This statement closes the transactions
)elafield.
Previous to June 1st, 1838, I sold to Oliver New-
., five hundred thousand dollars of bonds on a written
nd security. Mr. Newberry paid two hundred thou-
s on this contract, together with the premium of six
A portion of his stock was sent to Euro|)e, but return-
having been made. The two hundred thousand dol-
lars sold, was purchased at an average rate of about ninety-five
cents on the dollar. I think Mr. Ward informed mc that part was
sold as low as ninety-three cents oti the dollar. The remaining
three hundred thousand dollars was returned by Mr. Newberry,
'and is included in the contract with the Morris canal and banking
company,
. I also, on or about the 8th of May, 1838, entered into a con-
tract with E. R. Biddle, Esq., in behalf of himself and friends in
Philadelphia, as alleged by him, for the entire loan at par. Eighty
thousand dolhirs were paid down at the time of closing tlie con-
!tract, but alter waiting until the last of the month, I was com-
pelled to surrender the contract in consequence of the inabilihr
of Mr. Biddle to consummate his arrangements so as to meet his
' payments.
Digitized by VjOOQ IC
HOUS& DOCUMENTa, 789
llie above stadeooeot concludes all cootraots niia<fe previooa to
June 1,1838.
2* A^iswer to the second ijiterrogoUny'-^l answer^ that I did
coocitfde a contract with tl^ Morris canal and banking oompany»
with a view of obtaining a loan for five millions of dollars, for tbs
<tate of Michigan ; that said negotiation was coosomroated io the
city of New York on the 4lh day of June, 1888^ apd that such
negotiation did terminate in a positive i^reement, as will appear
by the documents transmitted to the legislature. In further aih
swer to the iotCTrogatary, I would state, that by the terms of the
contract the Morris canal and banking company were to nego*
tiate for the state of Michigan the entire five millions of stoek>
and to guarantee to the state the different instalmeots, whether
they were put in funds from a sale of the stock or not. For this
fuarantee a commission of two and a hall percent was allowed i
ut in the event of a sale above par, the premiums w^re to be
divided until the par value of the stock was realised to the state {
— the reason for making the agreement as an agency, was from
the fact, that the company were satisfied the first saJe, if not the
entire amount of stock, must be for less than par, and that tfafej
could not encounter the risk of so large a contract for less tb^a
the commission stipulated* This belief was induced by the <ate
of the stock n^arket abroad, and from the knowledge ttmt all \}m
atock issued by the mate to private companies hi^ sold at leas
than iu par value. The company were to pay for the stock at
the tate of one million per year, in quarterly instalments, for
the first year their own notes were to have been received and dhr
burscd by the state ; for the subsequent years, drafts wens to be
drawn for the dificrent instalments at sight It will be seen, hovtf
ever, by the documents before the legislature, that an. agreemeiit
was entered into between the Morris canal add banking company
and Mr. Norton, as my agent, for drafts at ninety days for t^
first year's instalment, instead of disbursing the notes of the io^
tution ; this modification was made in consequence of 4he risk ie
traosDorung the bills of ih^ company, and from a sinceiw desire
to relieve our commercial interest at home by throwing exchange
into th0 hamfs of our banks. These drafts were ofkr^ to ihe
Ifanks of the city of Detroit, on the conditions that tbey wodM
pay out their own paper, or such other paper as tbev womU
make equal to cash at their own counters, and the proposition wa|
rejected by all but the Michi|pn state bank* For a n»ore mi*
jMite detau of the contract with the Morris canal aed babkk||
company, 1 refer the committee to the docun^ents aocoenpaoyii^
my annual message, and printed by order of the legislature. The
Morris canal and banking company was the only party ijeocg^
fiiasd in the oootract, althoii^h I wm informed that the Fonriam^
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W4 HOtJSE DOCUMENTS.
loan and trust company of New YorIc» and the Ro&schQds of Pa-
ris, by their ag6nt, Mr. Belmont, were parties.
3; Atwjoer to the third interrogatory — I answer, that on or
about the eighth day of June, 1839, 1 received frtim the Morris
canai and banking company their notes to the amount of one bun-
dred' and ten thousand three hundred and ninety^seven dollars and
seventy cents — the sum of ten thoustind dollars and seventy cents
was the balance of the first cash payment of two hundred and
fifty thousand dollars ; the sum of one hundred thousand ddlan
was part of the subsequent August instalment. This sum of mo-
ney was received at their banking hous6, placed in a trunk, and
the trunk delivered into my possession.
4. Answer to the fourth interrogatory-^I answer, that I re-
ceived the sum of one hundred and ten thousand three hundred
"and ninety-seven dollars and seventy cents, as above stated.
5. Answer to the fifth interrogatory — 1 answer, that on my
arrival at home a deficiency of four thousand six hundred and
thirty dollars in the sum of money delivered to me by the Morris
canal and banking company was discovered, and will here state
firfly all the circumstances attending the loss, as seems to be de-
rired by the committee.
In tne first place, I must state that I am unwilting to express my
opinions or suspicions, where no positive testimony exists. I nei-
ther accuse or acquit any one Interested. Each individual con-
oerned must take care of his own reputation.
The bin* were counted in part at the banking-house in Jersey
dty, and the remainder at the agency in New York ; they passed
through the hands of several different clerks. I did not count
them myself, from a belief, that clerks accustomed to count money
^rould be more correct in counting so large an amount of bills.
After being eounted and placed in packages, the amount of each
package was marked on the band of paper around it, and for fear
of robbery on the journey to Detroit, each bill whs stamped in
ftdon the back \ the ends of eaeh package were left open. A
trunk pruouied for me by Theodore Ronr>eyn, Esq.^was sent to
the trank, and the packages were placed in the trunk. The peck*
age of ten thousand three hundred and ninety-seven dollars and
•evemy cents being for immediate disbursement* was placed on
the top t the trunk was locked and delivered tome, the Key never
leaving my potsessfon until I reached Detroit
I raeeived the trunk abdut 8 6^clock in the evenipg and imme^
liiately conveved it in a carriage to the Astor house. It was left
in the public bar under the charge of the book keeper, and near
Ms desk, whilst I was at tea. On my return from tea, I found
Mr. Romeyn standing in the bar, and enquired if he would re*
â– itiD at home that evening, as Lwas going out He replied ia
the affirmative, and I requested him to take the trunk to h» room
Digitized by VjOOQ IC
HOUSE DOCUMENTS. HW
for safe keeping until my tetum. I returned hdme 'li^WteD
eleven and twelve o'chxsk, supped, and then went to Mr Ro^-
meyrfs room for the trunk ; found it there and Mr.Romeyn at
his'table, writing. I unlocked the trunk, placed in it difierent ar-
ticles belonging to Mr. R., and then had it conveyed to my own
room. I there placed in it some additional articles of my own,
locked it and strapped on the top of it an overcoat. I did not
leave the room again that evening. It U perhaps due to Mr. Ro^
meyn, that 1 should say, that he, on several occasions, spoke of
leaving the city for home without me, and that I requested him to
remain, that I might have his company on my return ; and fur-
ther, that when I requested him to take the trunk to his own room
he expressed an unwiPingness to db so, ms he did not desfre any
of the responsibility of the charge of the money.
On the next morning, after receiving the triknk, I left New
York in the six o^clock boat ; the trunk was not out of my sight
more than ten minutes, and then under the lock of my room until
it was placed on board the Albany boat. When on thfe boat, I
requested Mr. Romeyn to have it pfaced m the Captain^s office,
having attached his name to the trunk. My reasons for identify-
ing the trunk with Mr. R., as well as the reason for requesting him
to purchase it, was, that as it was generally known I was nego*
tiating a loan in New York, I might be followed for the purpose
of stealing the trunk on the road home. At Albany the trunk Ivas
kept in my room, and when I was out I had the key of the room
in my possession. I was in Albany one evening. Between that
place and Utica, it was under the fock of the baggage car. Prom
Utica to Syracuse it was in front of the stace under the driver^
seat. We left Utica about 4 o'clock in the afternoon and reaehecl
Syracuse at about one or two o'clock in the morning. At S3rrst-
cuse it was not out of my keeping. Prom Syracuse to Oswego
It was on the deck of the canal boat for about half A day. M
Oswego for one afternoon, it was under lock in my room. ' From
Oswego to Niagara it was in the office of the Captain of the boait
for one night. From Niagara to Buffalo it was on the* top ofthe
railroad car, and I rode on the outside in the night with it. Aft
Bufialo it remained in my room under k)ck. On Lake Eric it
was placed in the Captain's office and delivered to me at Detroit.
When I arrived at home I look ft^m the trunk the hrticles be-
longing' to Mr. Romeyn and myself, and delivered It to the Trea-
surer. At no time on tho journey was the trunk opened by me,
nor could I at any time observe thjat the overcoat on tte top had
been moved. On opening the trunk at home, every thing seemed
to me as I had placed them. The package often thousand three
hundred and ninety-seven dollars was on the top, as I had placed
hy and was immediately delivered to the Treasurer as part of tho
cmA paymeot» ooontedby hfan, and found to be correct.
Digitized by VjOOQ IC
, & Jjuwrnrio tlmMboihinUnvgtaofy^'I iiDiwer» that thd Trea^
Buner gave me a reoeipt tar the entire amouot cootaioed in the
trunk on my arrival at borne, he counting at the time only the
package o^ (en thousand three hundred and ninety^aeven dollarB
aod seventy cents, an<j[ at the time depositing the whole in the
Michigan state bank. Some days subsequent, I think at my siig-
gestion, he concluded to count the one hundred thousand dollars
of the August instalment, and found in the different packages of
fives, tens and twenty dollars, the amount of four thousand six
hundred and thirty dollars abstracted. I would also state that
the trunk was delivered to the Treasurer on the moming of my re^
turn home*
7. Answer to tM seventh interrogaJtory — I answer, that the state-
ment marked A. i^ a true copy of my letter to Edward Biddle^
S^f, Dotifjing ^m of the abstraction* This letter was written
iaunediately after the entire amount of the loss was ascertained,
and a statement of that Un% preoared by the Treasurer. On en-
quiry at the post office, J found the noail of that day had closed ;
and anxious to lose no time in notifying the Morris canal and
banking conipany of the abstractiop, so that the first note present*
ed at their counter m^ht be traced, I first determined to place my
letter on board the boat to be mailed at Buffalo, but subsequently
ipeeting Mr. Lee of Troy, New York, whom I had known (cnt
some years, I handed the letter to hio^ with a request that he
would mail il at Albany,, he having informed n)e he would go
through as fast as the mail. I have not seen Mr. Lee since, and
jlmow not by what agpncy it was mailed to New York, but pre-
sume, as I informed him of the impoitancc of its reaching Kew
York without .delay, he sent it by the first North river boat after
hi^ arrival at Albany.
8. Answer to the eighth interrogatory — I answer, the remain-
ing notes were sealed up and placed in the vaults of the Michigan
atate bank, to be returned to New York, but as the Morris canal
smd banking cpmpany insisted that they should be transported at
the risk oAlie state, they were never returned, and have been
paid to the Treasurer of the state in December last
8« Ansv^er to 'the ninth interrogatory — I answer, that th^
W^i« receipted for by the Treasurer as the January and Fehru-
mry instisimejiits on the loan, and were delivered to him about ibe
last of December. 1888.
IQ. Answer to the tenth interrogatory^ answer, that the not^
•wore paid into the state deposite bank, as I believe, bv the Trea-
aurer, as a part of the internal improvement fund. The notes ab-
atracted were, with the exception of fifty dollars of the c eoomi-
nation of t )0, returned to the Blorrn canal office through the posi
office in the city of New York, but no information has ever been
received as to wl^o placed them there, although every effort by
Digitized by VjOOQ IC
Hooiffi Doouksirm. m
4ieM made to MoeHain th^ ftot The aiiNMiat loomed wti
drawn for by drafts and axpMne my drttft for fnor thbutaiK) flrt
4iQildred and eighty dollars in the Treasurer's statemenL Tba
fifty dollars not returned^ was paid by me to tha Treaturary and
«splaios my check as stated by him for that amount
I bc^ leaVe to state, akhou^ not internigiited to that efleoti that
1 have not received one farthing's beneBt by or on acoiHiiit of the
loan, either directly or indirectly, in any shape whatsoever ; that
I expect to receive none, aiid that in no transaction grtrn'mf^ out
of the loan or any other act as governor of Michigan, liipre I been
or am I to be benefited beyond the simple salary of my office.
11. Answer U> the ele^th inierrqgaforj^l answer, as Vtdl
as I now reeolleott Mr. Biddte, vice-president, Mr. Gibson, cash*