the proposals therein made, a careful perusal, and examined it in connexion with the statement furnished by you on the 8th instant, to which I was referred in our interview as a plain exhibit (with a slight and immaterial modification,) of the mode in which the state was to be restored to her original position. You state that "we have concluded to meet the views of the executive, as expressed" in my letter of the 10th inst. This you propose to do by liquidating the five first instalments becoming due by an agreement, to return in 18 months, a certain amount of state stock, to pay a further sum on said instalments in the stocks of other states at 9 months, or in a certain bond and mortgage in Pennsylvania. After a due reflection upon this proposition and the statement showing your method of adjusting the interest account, I am satisfied that your proposition will, in no essential particular, place the parties to the loan in their original position. It seems unnecessary to point out more particularly the objections which are so manifest upon the face of the proposi tion. I had certainly hoped that, of so large a portion of stock confided to the contractors, some portion at least would have remained under their immediate control. In this I have been disappointed. I have, therefore, after an effort protracted for nearly two months, during which no approximation has been made, in my opinion, to a conclusion on your part, to meet the views of the executive, as expressed through me, respectfully to decline any further negotiation on behalf of the state of Michigan. With great respect, Your obedient servant, K. PRITCHETTE. To George Griswold, Esq., Bank of United States, in New York, informing him that the attempt to negotiate with the Morris Canal and Banking Company, had failed and was closed. (Copy.) To GEORGE GRISWOLD, Esq., New York, January 13, 1840. Bank of United States, in New York: SIR-I had the honor to make a communication to you on the 6th instant, stating that I had received on that day, a proposition from the Morris canal and banking company, for a surrender of a portion of the Michigan state bonds, and advi sing you that if the proposition should prove acceptable, it woud place my negotiation on such basis as would enable me to entertain that made by the bank of the United States. That proposition having proved entirely unsatisfactory, it appears to me due to you to make the fact known to you, as a result which puts an end to all further negotiation through me with the state of Michigan. With great respect, Your obedient servant, K. PRITCHETTE. Letter from E. R. Biddle, President of the Morris Canal and Banking Company, covering a proposition to the State of Michigan, to secure and pay their indebtedness on the Michigan State loan. (Copy.) OFFICE OF MORRIS CANAL AND BANKING COM., KINTZING PRITCHETTE, Esq.: SIR-We beg leave to submit for the consideration of the state of Michigan, a renewed proposal to secure and pay the state, in consideration of a prolonged credit being given on some of the instalments, or delivery of the bonds, as the case may be, and to the full extent of our indebtedness. It is probable that a very considerable extension in time, will be required on some of the future instalments, should our proposal to secure the state be again declined. I am, very respectfully, Your most obedient servant, E. R. BIDDLE, President. The Morris canal and banking company propose to the state of Michigan 1st. To surrender, within the term of eighteen months, the bonds of the state, at the $150,000 00 Also, within the term of twenty-four months, as above, to the amount of 150,000 00 Also, within the term of thirty months, as above, to the amount of 150,000 00 And also, within the term of thirty-six Carried forward, Brought forward," months, as above, to the amount of the Also, a bond and mortgage of Sidney 174,500 00 150,000 00 225,000 00 $999,500 00 These bonds and mortgages to be taken without recourse to the Morris canal and banking company. In consideration of the above payments, &c., the said company will retain as follows: 1st. Of the instalments that will be due to the state, one-half in April and one-half in Also, of the instalments which will be due in January, 1841, guaranteed by the said bank, 2d. The instalments due to the state from the said company, and not guaranteed by the said bank, and falling due the 1st of April next, and subsequently each consecutive quarter shall be liquidated for $200,000 00 50,000 00 749,500 00 $999,500 00 The said company will agree, in this settlement, to relinquish their claim of thirty days' interest on the instalments settled by this agreement. They will agree to pay the interest on the stock to be delivered to the state from 1st January, 1840, and will so arrange interest, as to place the state in the same position, (as regards interest,) as though thecontract had never been made for the above sum of $999,500 00. The said company will also place security for the surrender of the stock and payment of the interest thereupon as above, in the hands of some party, to be mutually agreed upon-such security to be returned as the payment of principal and interest are made, in amounts pro rata to the payments. The company will be bound to comply with these proposals, provided the same are accepted by the state within thirty days. To Edward R. Biddle, President of the Morris Canal and Banking Company, acknowledging the receipt of a proposition to the State of Michigan. (Copy.) To EDWARD R. BIDDLE, Esq., New York, February 1, 1840. President of the Morris Canal and Banking Company: SIR-I have the honor to acknowledge the receipt of your favor of the 31st ultimo, covering a proposition to the state of Michigan for the liquidation of certain instalments of the Michigan state loan becoming due from your institution. As I leave immediately for Michigan, it will give me great pleasure to give your proposition the direction indicated, without delay, and have no doubt a reply may be received within the time therein limited. With great respect, Your most obedient servant, K. PRITCHETTE. [No. 59.] Report of the Minority of the Committee on Finance, on the five million loan. The undersigned, a member of the committee on finance, to whom was referred a special message of the executive, upon a proposition made to the state by the Morris canal and banking company, regarding the state loan of five millions of dollars, having examined the report of the majority of that committee, takes occasion to express his entire dissent therefrom. He considers it a duty which truth and justice demand, that he should protest against the partial and unfair statements therein made, and exercise his privilege in presenting the following re.sults of his investigations, as the minority report: It appears, that sometime in the month of October, 1839, during the universal embarrassment which has arisen from the prostration of the credit system, displaying itself in the general inability to meet pecuniary engagements, particularly among the banking institutions of the United States, a suggestion was made to the executive of the state, by the president of the Morris canal and banking company, "that it might have become an object to the bank, as well as the state, to cancel the existing contract and obligations of the respective parties, to the Michigan state loan." The avowed motive of this suggestion was, that the bonds of the state were unavailable to the bank, in consequence of the depreciation of American securities in Europe. Soon after came the astounding intelligence, that the drafts of the bank of the United States on Europe, had been dishonored, her credit abroad destroyed, and her situation rendered exceedingly critical. A suggestion, therefore, of the character stated, made at such a time, from such a quarter, impressed the executive with strong apprehensions that both the bank of the United States, and the Morris canal • and banking company, from their well known extensive engagements doubted their own ability to comply with their contract with the state. The daily expectation of an universal bank suspension, in which the bank of the United States had taken the lead, and compelled a majority of the banking institutions of the several states to follow her example, rendered the payment of the future instalments of the loan exceedingly doubtful. With these facts in view, the undersigned is of the opinion, that the apprehensions of the executive were well founded, and that the apparent urgency of the case called for, and justified prompt and vigorous measures to preserve the state, if possible, from loss. Should the purchasers of the state bonds fail to meet their engagements with the state, it is difficult to imagine an occurrence fraught with consequences more fatal to the future prosperity of Michigan. Burdened with the interest on five millions of dollars for twenty years, and the principal at the expiration of that period, without having received but little more than two millions of the amount, is a picture calculated to startle the boldest. Had such a catastrophe occurred, as there was every prospect, without any effort to prevent it, when would the sound of the clamor have ceased against the executive for his culpable remissness in neglecting the most vigorous measures to save the state? That the course taken by governor Mason was proper in the opinion of the most prominent members of the present administration, and urged most strenuously upon him by their ablest financier, notwithstanding the singular duplicity now presented, will hereafter be made to appear. To avert the evil which appeared so imminent, to avoid the consequences of so disastrous a loss, to relieve the state at once of $3,000,000 of its onerous debt and the interest payable thereon, the executive, acting under the authority which gave him power to create the loan, instructed and empowered the late bank commissioner |