The minority of the committee on finance, to whom was referred a communication from the Hon. R. M. Young, together with a copy of a contract for the disposal of Canal Bonds, to Messrs. Wright & Co., of London, beg leave to report:

Your committee are instructed to inquire 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 the law. The minority in examining this 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 & Co., of London, and that said Wright & Co., stipulate to pay 91 pounds sterling, in London, for every 100 bonds thus deposited. This rate of 91 for every hundred 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 difference. In addition to this, should they be able to dispose of the bonds for more than 95 per cent. the State is entitled to one-half the excess—Wright & Co., reserving one per cent. as a 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 23rd of February, 1839, authorizing a loan for Canal purposes, which act is embodied in the contract, and that said Wright & Co. stipulated 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 & Co. are authorized by the contract “to effect the sale of said bonds at any price than can be reasonably obtained for the same, not being less than par, estimated either according to the then course of exchange between London and the State of Illinois, or between London and the city of New York.” From these terms it is plan that the par value in the estimation of the contracting parties means no more than that we shall receive 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 inquiry is answered; but in order more fully to elucidate the subject, the following data, taken from official sources, are submitted.

1st. That the American Eagle of the new coinage, contains 232 grains of pure gold.

2d. That the British sovereign, which is their standard, contains 113 grains, and 18.1214 parts of a grain of pure gold, which is worth accor-

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ding to our mint valuation, $4,87 7-120, but passes every kind of business for $4,87½.

3d. That the prices current $4,44 4 is assumed as the par of exchange on England—that is, it is equivalent to the British sovereign.

4th. 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 fluctuating rate of exchange:

One million of bonds drawn for at the same rates, will make $28,082 above par in Illinois, and the whole sum received will be $1,028,082.

At the present time, exchange between 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 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 per cent. 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 os such amount, due regard should be had to the probably condition of the State, and the whole Union, at the time re-imbursement. Should our progress in wealth, population and enterprize, for the next thirty 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 deriv-

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ed from the vast 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 and 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 channels of communication, and we supported our progressive growth and importance only by emigration. May we not reasonably anticipate that in thirty 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 appropriated to pay interest and principal 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 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 enterprize, and extract latent wealth from our vast and uncultivated territory.

But it is objected that the principal and interest on this loan being made payable in Europe, great loss to the State will be incurred; and that the sale of the bonds is not at their par value. In regard to the policy of the loan, the foregoing observations are submitted, although collateral to the inquiry contained in the resolution. The following calculations will show the amount of loss sustained, estimating exchanges at the true par:

This is the amount on $1,028,082. The rate per cent. for interest, exchanges and commission, is in the same proportion, about 6 7-10.

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 market of Europe, and the vast amount of American stocks offered for sale, it will appear plain that this negotiation is as favorable 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

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was hardly to be expected that our bonds could be sold unless at a ruinous sacrifice.

The sale of Canal bonds on terms so favorable must be considered at the present time as an evidence of the high estimation in which our State credit and honor are regarded abroad; but especially the security afforded by that stupendous work the Illinois, and Michigan Canal. The prosecution of that work, to its completion without intermission is of vital importance to this State, and its suspension or abandonment would involve us in damages and indemnities to contractors to a vast amount. 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.