4th. The Bank of the United States was not authorised to

make the purchase.

5th. The bonds were sold at less than their par value, in violation of the charter of the bank.

The money paid for those bonds did not come into the State Treasury. The officers of this government had no control over its disbursement. The bonds were disposed of in August 1838 by collusion and fraud, in violation of the constitution and laws of this State. The Mississippi Union Bank and the Bank of the United States were parties to this unlawful transaction. You have the endorsement of both of these institutions, and to them you must look for payment. This State never will pay the five millions of dollars of State bonds issued in June 1838, or any portion of the interest due, or to become due, thereon.

When I ascertained, in January 1839, the terms on which the bonds had been sold, I communicated the same by message to the Legislature, and denounced the sale as illegal. At that time only two millions of dollars had been paid on the bonds by the Bank of the United States. By a proclamation I subsequently issued the sale of the second five millions of dollars of State bonds delivered to the Mississippi Union Bank was prevented; I absolutely refused to execute the last five and a half millions of dollars of State bonds demanded by that institution. These decisive measures prevented the illegal disposal of ten and a half millions of dollars of State bonds, and will convince you that the government of this State never has countenanced and cannot be made responsible for the fraudulent acts of the Mississippi Union Bank.

I have forwarded to your address the journals of the legislature of this State for the years 1840 and 1841. It will afford me much pleasure to forward you such other documents as you may desire. I am anxious that the bondholders should be possessed of all the facts in relation to the issuance and disposal of the bonds held by them. Your great experience in commercial affairs no doubt has made you familiar with the principle that parties contract with reference to the law, and that, in a constitutional and free government, every act of a public functionary is merely an exercise of delegated power entrusted to him by

the people for a specific purpose, and that his acts are the acts of the people only while within the powers conferred upon him.

I am, gentlemen, very respectfully,
Your obedient servant,

Messrs. Hope & Co., Amsterdam, Holland.

A. G. McNUTT.

Governor McNutt, in replying to Messrs. Hope & Co., seems to have overlooked the fact that the Mississippi Union Bank was established under a supplement' to the original Act, which nullified the terms of the charter, and therefore violated the provisions of the constitution of the State of Mississippi.

Some eight or nine years after this correspondence took place the following statement was furnished :

The law which established the Mississippi Union Bank 'originated in the House of Representatives at the biennial 'session of the Legislature in 1836; at the adjourned session, in 1837, it was passed and approved by the Governor, "so far as "the action of this Legislature is concerned." At the next regular biennial session, in 1838, the bill again passed, received 'the sanction of the Governor, and became a law on the 5th of February, 1838. Ten days thereafter, a bill passed the Legislature, and was approved by the Governor, which was entitled "An Act supplementary to an Act to incorporate the sub"scribers to the Mississippi Union Bank." It was under this 'supplemental act, which had not been submitted to the people, and which had not been enacted by two successive legislatures, 'that the bonds were issued, and the Union Bank came into 'existence. So far from these bonds having been issued by the authority conferred in the original charter of the Union Bank, 'this supplemental act repealed the power of the Governor to ' issue the bonds, according to the provisions and for the pur'pose of the original law. If the people had agreed that the "Legislature might pledge the faith of the State, in the manner and for the object which its discretion might select, the con'ditions being changed would not affect the constitutional question; but if the conditions constituted an essential part ' of the grant, those conditions could not be repealed without carrying the grant with them. The grant, connected with.

6

other and incompatible conditions, would be a new and distinct 6 proposition. To show that such is the case in relation to the Union Bank bonds, I will compare the original law, which, after much deliberation and a reference to the people, passed 'two successive legislatures, with the supplemental act, the hasty creation of one.

'The original law authorised the establishment of the Mississippi Union Bank, with a capital of fifteen millions five hundred thousand dollars, "to be obtained by the directors of "the institution."

'It provided for books of subscription to be opened, divided the stock into small shares, and directed that none but owners ' of real estate and citizens of the State should be stockholders. Thus it was expected "to secure the loan of said fifteen ❝“millions five hundred thousand dollars," the capital stock of 'the bank.

It further provided, "That, in order to facilitate the said "Union Bank for the said loan of fifteen millions five "hundred thousand dollars, the faith of this State be and is "hereby pledged, both for the security of the capital and ""interest; and that seven thousand five hundred bonds of ""two thousand dollars each," &c., "shall be signed by the "Governor of the State to the order of the Union Bank, ""countersigned," &c.

After guarding, with great care, against the allowance of 'more stock to any subscriber than was amply secured by 'mortgage, and requiring that each stockholder should "pay in ""cash," whenever required by the directors, ten per cent. upon

his stock, it further provided, "That after the closing of the ""books, and when it shall appear that at least five hundred ""thousand dollars shall have been subscribed and paid in on "the original stock of the capital of said bank, the said "institution shall go into immediate operation.”

'It further provided, that when a board of directors, with a 'president, should be organised, that the same should be notified to the Governor of the State, "who will thereupon execute to "the said bank, from time to time, bonds in amount propor"tioned to the sums subscribed, and secured to the satisfaction "of the directors, as required by the charter, until the whole

""amount of fifteen millions five hundred thousand dollars ❝“shall be furnished in bonds, as hereinbefore provided for.”

'The supplemental act provided, "That as soon as the books "of subscription for stock in the said Mississippi Union Bank ""are opened, the Governor of this State is hereby authorised ""and required to subscribe for, in behalf of this State, fifty "thousand shares of the stock of the original capital of the "said bank; the same to be paid for out of the proceeds of "the State bonds, to be executed to the said bank as already ""provided for in the said charter."

Under this supplemental act the bonds were issued. Will 'any candid intelligent mind fail to perceive that it was not by the authority of the original law, but in violation of its most 'important provisions, and in direct contravention to the pro'hibition of the constitution which I have quoted? By the law 'which received, in the constitutional mode, the assent of the 'people, the faith of the State was to be pledged to facilitate a 'loan to the Union Bank; by the supplemental act, bonds of 'the State were to be issued in payment for bank stock.

By

the original law, the State was to be secured by bonds and mortgages on real and personal estate before any liability 'should be incurred; by the supplement, the State was to

become liable for five millions of dollars, without any security 'whatever, unless the stock for which she became a subscriber 'be so considered.

'The Legislature was authorised to pledge the faith of the 'State for a specific purpose, and under certain enumerated 'conditions. Could the authority so given be used for a totally 'different purpose, and without the fulfillment of the con'ditions? If not, then the supplemental act, and the bonds 'issued under it, impose no legal obligation upon the State. 'As an independent act, by which the faith of the State was to 'be pledged, it was necessary that this supplement should be 'passed by the Legislature-the yeas and nays entered on the 'journal-then be referred to the people by publication in 'three newspapers of the State, and be again passed by the 'next succeeding Legislature, before it could become a law. These constitutional requirements were not complied with, and 'therefore we have held that the supplemental act, so far as

it assumed to pledge the faith of the State, was, from the beginning, constitutionally void.'

It was bad enough in the officers of the Bank of the United States to part with the bonds, even as collateral security, after the notification of Governor McNutt; but it is passing strange' that Messrs. Hope & Co., and their constituents, the Messrs. Rothschilds and others, should likewise transfer them to innocent (?) holders. But these innocent holders,' as the dates make manifest, were aware of their worthlessness at the time they received them. The real sufferers were the stockholders of the Bank of the United States at Philadelphia, whose own agents had committed the fraud.

The persons who received the Union Bank bonds made largely by the transaction; the other American State stocks held by them having risen rapidly in value, sold for more in the market than the amount of the original debt. The par figures of the State securities lodged in the hands of Hope & Co. against the loan of £800,000 amounted to $14,450,506,16

'The Times' of December 4, 1839, publishes a statement of the affairs of the Bank of the United States, furnished to the Legislature of Pennsylvania the preceding January. Among the list of assets is the item Mississippi bonds, $7,000,000.' As the Union Bank bonds amounted to but $5,000,000, it follows that the sum was made up by the $2,000,000 issued to the Planters' Bank, which institution was likewise intimately connected with Mr. Biddle's bank and the cotton transactions. Since the date mentioned there has not been a market for these bonds. It is quite clear, therefore, that the stockholders of the Bank of the United States-the widows and orphans' of Philadelphia-were also the actual losers by this transaction.