The minority of the committee on Finance to whom was referred a communication from the Hon^l R M Young together with a copy of a contract for the disposal of canal bonds to Mess^rs Wright and C^o of London beg leave to report.

Your committee are instructed to enquire whether the sale or disposal of said bonds as per contract above referred to them, is at par value and according to the provisions of law. The minority in [...?] examining the subject are constrained to dissent from the views of the majority of the committee and they submit therefore this report together with the accompanying resolution for the consideration of the house. It appears from the terms of the contract that R. M. Young deposited canal bonds to the amount of one million of dollars with Wright and company of London and that said Wright & C^o stipulates to pay 91 pounds sterling in London for every 100 pounds bond thus deposited. This rate of 91 for every 100 is by the terms of the contract made the minimum, for whatever variations may take place in the exchanges between the two countries it is stipulated to secure 91 per cent If the exchange be above 9 per cent when drawn, the state is to have the benefit of the excess difference. In addition to this should they be able to dispose of the bonds for more than 95 percent the state is entitled to one half the excess Wright and C^o reserving one per cent in commission upon every payment of interest. Such are the terms of the contract as far as they are material to the present inquiry.

It is here worthy of remark that the whole contract is based upon the act of the 23^d of February 1839 authorizing a loan for canal purposes which act is embodied in the contract, and that

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said Wright & C^o stipulate that said loan shall “be made in all respects upon the terms and conditions and under the limitations and restrictions prescribed in the said act” and one of these limitations is that the bonds shall not be sold below their par value. It appears further that Wright & C^o are authorized by the contract, “to effect the sale of said bonds at any price that can be reasonably obtained for the same not being less than par, estimated either according to the then courses of exchange between London and the state of Illinois or between London and the city of New York” From these terms it is plain that the par value in the estimation of the contracting parties means no more than that we shall receive at in the city of New York a sum of money equal in amount to the bond delivered in London and this it is believed is the standard among financiers in every country. If this be correct one branch of the enquiry is answered, but in order more fully to elucidate the subject the following data taken from official sources are submitted

first, That the American Eagle of the new coinage contains 232 grains of pure gold

2^d that the British sovereign which is their standard contains 113 grains and 18.1214 parts of a grain of pure gold which is worth according to our recent valuation $4.07.7.120 but passes in every kind of business for $4.07£

3^d That in the prices current $4.44.4 is assessed as the par of exchange in England that is it is equivalent to the British Sovereign.

4^th Since the passage of the Act of 1834 for reforming the American gold coinage and fixing its real value the true par of exchange with England estimating gold against gold is above the nominal par by 9 ⁷/10 per cent

To apply these data to the contract the following calculations are submitted, premising that the true par is adopted as contradistinguished from the nominal or fluctuating par of exchange.

But add to the sum received in N. York the difference of exchange between that city and Illinois and we get the value of the bond here

One million of Bonds drawn for at the same rates will make $2[?].082 above par in Illinois & the whole sum received will be $1.02[?].0[?]2

at the present time exchange between N. York Illinois and New York is much above 3 per cent, even ^to^ 9 or 10 were a calculation made at this rate it would increase the above amount in the same proportion, but it would not be safe to calculate on a continuance of such a great inequality longer than the present derangements in the our monetary concerns shall exist. The resumption of specie payments by the banks establishing public confidence and financial tranquillity will restore the equilibrium of exchanges to their former standard and it is believed that 3 percent is a fair estimate of what may be expected to be an average rate considering the various revulsions to which we are exposed from the multiplicity of banks and their operations on the various business transactions of community. In estimating the policy of creating a debt of such amount due regard should be had to the probable condition of the state and the whole union at the time of reimbursement. Should our progress in wealth population and enterprize for the next 30 years be commensurate with the past it will present an aspect very different from that which now darkens our horizon. Imagination can hardly pourtray the vast changes which that period will effect in our condition. Our state is unsurpassed in fertility and the facilities for developing its yet dormant resources are unequalled. With a climate genial in the extreme and all the advantages to be derived from the vast

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chains of navigable waters which encircle our borders and intersect the interior, requiring but a moderate co-operation on our part to make it the greatest granary for bread stuffs and for manufactured productions of various kinds in the whole union When we consider then the vast amount of our mineral & agricultural resources and the population at that period the question of making a loan to prosecute works of acknowledged importance will be regarded in a different light from what it assumes at present. Hitherto the balance of trade with every part of the union has been against us. our lands have remained unimproved for want of markets and channils of communication and we supported our progressive growth & importance only by emigration. may we not reasonably anticipate that in 30 years our state as well as the whole union will be great exporters to the markets of the world, that instead of having the balance of trade against us as has been the case hitherto heavy balances of specie will be due to us in foreign countries which may be appropriated to pay interest and principle on our loans without the losses arising from exchanges. That such will be the case no man can doubt who duly estimates our resources and energies. A Judicious plan ^system^ of improvements ^therefore^ calculated to afford facilities to the agriculturalist to realize the value of his [...?] products will give an impetus to production, stimulate enterprise and extract latent wealth from our vast and uncultivated territory

But it is objected that the principal and interests on this loan being made payable in Europe great loss to this state will be incurred and the sale of the bonds is not at their par value

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In regard to the policy of the loan the foregoing observations are submitted although collateral to to the enquiry contained in the resolution. the following calculations will shew the amount of loss sustained, estimating exchanges at the true par

It follows therefore that notwithstanding the large loss to the state in the above aggregate yet it amounts to but a fraction above the legal rate of interest annually. To any person conversant with the state of the money markets of Europe and the vast amount of American stocks offered for sale it will appear plain that the negociation is as favourable as could reasonably be expected. The rate of interest in England for the past year has been as high as 7 per cent and sometimes 10 for short periods under such circumstances of depression and financial embarrassment it was hardly to be expected that our bonds could be sold unless at a ruinous sacrifice

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The sale of canal bonds on terms so favourable must be considered at the present time as an evidence of the high estimation in which our state credit and honour are regarded abroad but especially the security afforded by that stupendous work the Illinois & Michigan Canal. The prosecution of that great work to its completion without intermission is of vital importance to this state, and t its suspension or abandonment would involve us in damages and indemnities to contractors to the ^a vast^ amount of nearly two ^ one ^ millions ^&^ of dollars, It is evident that in order to procure funds for the prosecution of that and other public works we must conform to the state of the money [...?] markets of the world in the sale of our securities and it ^is^ equally evident that the suspension of a work of such magnitude and importance and in such a state of forwardness as the Canal would be productive of infinitely greater losses and evils than the trifling addition of a fraction to the legal rate of interest on loans for its prosecution, The minority of the committee therefore report that ^if^ the negociation for the sale of canal bonds made by the Hon^l R M Young they are of opinion that With Wright & C^o of London the par value of the bonds as received and that such negociation is in accordance with the provisions of law. therefore

Resolved by the house of Representatives the senate concurring therein that it is expedient and necessary for the best interests of this state to ratify the negociation for the sale of canal bonds made by the Hon^l R M. Young with Wright & C^o of London.