HOUSE DOCUMENTS.

[No. 1.]

Report of the Committee of Ways and Means on the subject of the Governor's Message relative to the Morris Canal and Banking Company.

The committee on ways and means, to whom was referred the message of the governor to the house of representatives, dated the 8th instant, accompanied by a communication from the state treasurer, and several letters from New York, touching certain property "assigned to this state by the Morris canal and banking company," having had the same under consideration, beg leave respectfully to report:

That it appears from the "memorandum of an agreement" between the late treasurer of the state of Michigan and the Morris canal and banking company, bearing date the 9th day of December, 1840, that among the property assigned by that company, as colla-. teral security to the state for the payment of the instalments of the five million loan remaining unpaid by the company, is "a deed of conveyance from George Griswold, to the state of Michigan, of the banking house and lot of ground, No. 45, William street, in the city of New York," valued by the company, and received by Mr. Robert Stuart, for the state, at "one hundred thousand dollars."

The present state treasurer, in the letter referred to the committee with the message of the governor, informs us, that he has been "advised by letters received, that the property is very valuable, worth much more than the amounts claimed by the attaching creditors, and that the interests of this state might be very much subserved by the agency of some person fully authorized to compromise and settle with those creditors, and probably without the advance of any cash funds."

Without disregarding the admonition of the treasurer, that the letters, which he has transmitted to the governor on this subject, were not, with the exception of that of Mr. Foote, the employed counsel of the state, designed for public exhibition, the committee feel no delicacy in condensing and presenting to the house the substance of those letters, without a disclosure of the names of the authors. These communications relate to a public subject, and contain no injunction of secrecy. Nor are their contents such as to require it.

It seems then from them, that the William street property, taken by Mr. Stuart for the state at one hundred thousand dollars, was at the time subject to two attachments; one for about twenty thousand and the other about forty thousand dollars. It is estimated to be worth at present from eighty to one hundred thousand dollars; but, if sold under the hammer, in the existing state of the New York money market, it is said that it would not realize more than thirty thousand. It is further stated that the property is actually advertised for sale by the sheriff of New York, under the attachment in behalf of the American exchange bank, for over twenty thousand dollars; and the object of some of the letters addressed to the state treasurer, appears to be to induce the state to go forward, assume the payment of the claims of the attaching creditors, and thus secure the property, free from any further incumbrance, as collateral security, in part, for the payment of what is due to her from the Morris canal and banking company. In other words, it is proposed that she shall assume the payment of about sixty thousand dollars, in the uncertain hope that the property may be worth a little more than that sum at some future period, more or less distant. It is added that the state may effect this object without paying any cash at the present time.

The committee cannot perceive from these representations, that even in a pecuniary point of view, the state would ultimately derive, with any degree of certainty, any benefit whatever from the adoption of the course suggested in the letters referred to them. They are the more especially confirmed in this opinion by the letter of Mr. Foote, the counsel employed for the state by Mr. Stuart. That gentleman in his communication, dated at New York, on the 22d ultimo, says, that "there are strong reasons to fear, that the state will not derive any advantage from this security," that depending,

however, upon the final decisions of the New York courts upon the claims of the attaching creditors. What those decisions may be, Mr. Foote states that he would not at present attempt to anticipate. The supreme court had not finally come to a decision, having "only allowed the sheriff to amend his return on the several attachments, declaring at the same time that such amendment would not affect the rights of the parties." Mr. Foote supposes that something may be done by negotiation; and he recommends "the presence of an agent in New York, with full powers on the subject." The committee report, that as a matter of pecuniary interest, they do not feel the force of such recommendation.

Not only is the information contained in the papers communicated by the governor on the subject, too indefinite and uncertain to justify specific action upon it at present, by the legislature, but it would not, in the opinion of the committee, comport with the dignity or the more important interests of the state, to enter into complicated arrangements with individuals, or to entangle herself in lawsuits, for small sums which may never be realized, dependent upon contingencies which may never happen. She has too long been the victim of speculators, corporate and individual, in the money market; her interests and character have too seriously suffered by their operations, not to bring her to a pause in regard to matters of this kind. And the committee entirely concur with the governor, in the suggestion that the question involved in the papers referred to them, " is important beyond the particular claim mentioned," and that "appropriate action, in that regard, cannot with safety be determined, except in view of all relations of a financial character now existing between the state" and the Morris canal and banking company. These relalations involve points of considerable magnitude, both in principle and in reference to the interests of the state. It would, therefore, be indiscreet on her part, with the information now in her possession, to take any partial step which might commit her as to the ulterior measures which she may be called upon to adopt. This remark is made with a full sense, on the part of the committee, of the importance of the strict observance by the state of all her legal and equitable obligations, so far and whenever her means and ability may enable her to discharge them.

Among the securities taken by the late state treasurer from the Morris canal and banking company, was an obligation of the Morris and Sussex manufacturing company of Stanhope, New Jersey, to deliver forty-five thousand dollars worth of iron in New York, on the first of this month. In the letter of Mr. Foote to the state treasurer, dated the 22d ultimo, he says that he has no reason to suppose that this iron would not be delivered. Hicks & Company hold that bond, and have a small lien upon it. Mr. Foote adds, that they had a right, and he had also requested them, to receive the iron, and he advises the state treasurer to authorize them to take charge of it, and sell it.

This subject does not appear to have come within the scope of the matters specially referred to the committee on Saturday; but although they are not aware that it requires their particular attention, they have felt it to be their duty to bring it to the notice of the house. They do not know that any legislation is necessary in regard to it. They do not, without the further direction of the house, intend to propose any; because the same considerations of expediency, in reference to the future action of the state, in her relations with the Morris canal and banking company, which restrain the committee at present from suggesting any action with respect to the William street property, induce them likewise to abstain from proposing any measure with respect to the bond of the Morris and Sussex manufacturing company, to deliver iron in New York, on the first of this month, to the value of forty-five thousand dollars. The state has not, so far as our information goes, yet been advised of its delivery; and, if she had been, it might not be prudent on her part to adopt any legislative measure which might further embarrass her on the general subject of the five million loan.

The apprehension, originally entertained by many, that the collateral securities obtained from the Morris canal and banking company, for the ultimate payment of their portion of the five million loan, would prove of little value, is beginning, unhappily, to be too soon realized. The committee fear that the William street property, taken for one hundred thousand dollars, will yield no benefit to the state. They presume that the whole of it will be insufficient to satisfy the claims of the attaching creditors, if the final decisions of

the New York courts should be in their favor. Nor is the prospect much more flattering in relation to the value of most of the other collateral securities obtained by the late state treasurer from the Morris canal and banking company. If the provisions of the act of 1840, authorizing the taking of such securities, and the execution of that law, have failed as yet to accomplish any valuable purpose for the state, the committee would be happy to communicate to the house their opinion, that both the law and its execution had not faltered and produced delay in the measures necessary to bring to an early issue a final settlement with that company. They cannot, with their present impressions and information, express any such opinion. The agreement of the late treasurer with the company, stipulates and requires, that “the state of Michigan shall forbear any demand, suit or process whatever, against the Morris canal and banking company, on account of their debt and the interest thereon, until the first day of January, 1844." Consequently, if the state regards this stipulation as valid and binding, her hands are tied up for two years longer.

The same law, just referred to, also authorized and required the state treasurer to take measures to realize further securities for the payment, by the United States bank of Pennsylvania, of its portion of the five million loan. No such securities seem to have been sought or obtained under that loan, from that institution, the late treasurer deeming that portion of the loan safe, and not then doubting that it would be punctually paid. The committee need not add, that this has turned out to be a delusive anticipation, and that the consequences have been seriously injurious to the public improve ments commenced in Michigan.

But, as they hope to be able, before the close of the session, to submit to the house a general report on the financial measures and condition of the state, comprehending the topics glanced at in this report, as well as many others; and as they cannot perceive that any interference on the part of the legislature, for the present, in relation to the agreement of the late treasurer with the Morris canal and banking company, would be productive of any public advantage, the committee have concluded to present to the house no specific pro

position, at this time, in relation to the subject specially referred to them on Saturday.

JOHN NORVELL, Chairman.