swindle upon the treasury of the State, amounting to $244,268, by the refunding of the Macalister and Stebbins bonds, so-called, which struck consternation into the ranks of the leaders. The democratic press, which had stood almost dumb under the revelation of the canal check fraud and meekly received the vehement blows of its adversary, was not slow to avail itself of the oppor tunity thus afforded to off-set the former, and it rallied to the onset with a will. While the two wrongs did not make one right, it was nevertheless a great relief (such is human nature) for the lat ter to find grounds to charge the former equally with culpability. In 1841, June 17th, John D. Whiteside, fund commissioner, received an advance of $261,460 from Macalister & Stebbins, bankers in New York, for a short period, and as security, hypothecated with them 804 State bonds of $1,000 each, bearing 6 per cent. interest from May 1, 1841. Eight days later he delivered to them 30 $1,000 6 per cent. internal improvement bonds; on the 1st of July following he gave them an order on Nevins, Townsend & Co., of New York, for a further batch of 41 bonds of $1,000 each, which they received; and on the 27th of October following, they received from Michael Kenedy $38,215 44 in canal scrip-the whole aggregating $912,215 44 of Illinois interest bearing indebtedness, which that firm received to secure their advance of $261,460 to the State. The receipt of these sums they acknowledged in their account current rendered in 1842, during the session of the general assembly, being 28 64-100 cents on the dollar of security in their hands. Upon the bonds and obligations received by them, after the first 804, they had agreed to make further advances to pay the State's July interest for 1841, if it was found necessary, but the State stopping her interest payments, the advance was never made; and under her then financial embarrassments, the $261,460 advanced was not repaid; the hypothecated bonds, according to the contract with the fund commissioner, became forfeit, and Macalister & Stebbins claimed their full redemption in money. But it was answered that this contract was made in violation of law; that it was the duty of the lender to have inquired into the fund commissioner's legal authority to hypothecate these obligations, and as he had manifestly been overreached by the arts and cunning of money-jobbers, the State, at the bar of conscience, would only repay the amount actually received with the interest agreed to be paid. But these just terms of settlement were refused, after which the pledged securities were known as the "Macalister & Stebbins' bonds."

In 1847 (Feb. 28th,) the legislature passed "an act to authorize the funding of the State debt." By its provisions the Macalister & Stebbins bonds were specially excluded from its operation. The new "certificates of indebtedness" authorized by it were desig nated "New Internal Improvement Stock of the State of Illinois," of $1,000 each. "Certificates" for matured interest of over 6 years were to be issued, not to draw interest till after 1857, being with out coupons, as the interest was stipulated in the body of the cer tificates. A "transfer agent" was to be appointed in New York to attend to the funding of the complicated Illinois indebtedness.

Three days after a supplemental act was passed to authorize a settlement with Macalister & Stebbins, by the provisions of which

36 cents on the dollar were offered, in new bonds on the amount hypothecated; the bonds to bear upon their face the words, "liquidation bonds," which, it will be observed, would have made two classes of Illinois funded bonds. By its terms the law expired on the 4th of July, 1847, and as the holders of the bonds refused to surrender them, or settle according to its provisions, nothing more was done.

Subsequently better counsel prevailed, and at the session of the legislature in the winter of 1849, Wm. H. Bissell, then a member of congress from Illinois, was sent by Macallister & Stebbins to Springfield to make as good a bargain with the State as he could for the redemption and settlement of these securities. "An act" was passed "to prevent loss to the State on the Macalister & Stebbins bonds." It was enacted that upon surrender of the bonds and scrip hypothecated with Macalister & Stebbins, amounting in the aggregate to $913,215.44, together with the interest coupons, the governor was to settle and pay the amount of money originally advanced with 7 per cent. interest thereon from the date of deposit to the time of settlement, in $1,000 bonds due after 1865, bearing 6 per cent. interest, payable semi-annually in New York, pro rata out of the interest fund. The old bonds to be surrendered in such amounts at a time as $20,000 of the new bonds would settle; and all heretofore surrendered to be credited in full at 26 cents on the dollar of the 804 bonds first hypothecated. The new bonds, like those provided for in the act of 1847, were to bear upon their face the words "liquidation bonds." Hence no "new internal improvement stock" could legally be issued for these bonds; these liquidation bonds were a distinct class. The greater portion of the Macalister & Stebbins bonds were funded under this act at the rate offered, but not all-114 having passed out of their hands.

During the session of the general assembly in 1857, Dr. W. W. Roman, member from St. Clair, introduced a bill which became a law, entitled "An act to fund the arrears of interest accrued and unpaid on the public debt of the State of Illinois." It authorized the governor to take up all arrears of interest due and unpaid, and to issue to the holders thereof bonds of $1,000 each, the same as those authorized by the funding act of 1847; for old bonds without coupons, interest certificates were to be issued to the holder, for which new bonds were to be issued upon presentation; and "any holder of canal or internal improvement scrip holding less than $1,000 may present the same with interest certificates enough to make $1,000 or more, and the governor shall issue a bond as before stated for such amount."

After its passage it was apprehended that the law was broad enough in its terms to include the outstanding Macalister & Stebbins bonds. To prevent such a construction, a joint resolution was promptly passed: "That no bonds or certificates for arrears of interest upon the Macalister & Stebbins bonds, held by lien, shall be issued by the governor to the holders of the aforementioned indebtedness, to their agents, or to any person or persons claiming under them."

The outstanding 114 Macalister & Stebbins bonds of $1,000 each had passed into the possession of other parties in New York, who alleged that they had purchased them some 16 years ago at public auction without the knowledge that the State refused to pay them

at par. They now, under the law of 1857, made application to the governor to have them funded at par, which was refused. They next applied to the supreme court for a mandamus to compel the governor to fund them, but the writ was also refused, the court holding that the executive is a co-ordinate and independent branch of the government, and that they had no power to command him to do an official act. No opinion was expressed relative to the power of the governor, under the law, to issue the bonds; but Judge Breese, in delivering the opinion of the court, added: "If the governor asks our opinion on the point of duty, we will cheerfully give it; but we refer him to the high tribunal of his own conscience and the public judgment."

But notwithstanding the refusal of Gov. Bissell at this time to fund them, and apparently in the face of the joint resolution above quoted, he subsequently changed his mind, signed the requisite number of new bonds in blank, as did also the treasurer, Miller, and sent them on to New York to be filled up, as was the reprehensible custon of the time. In 1859 he further ordered the State transfer agent, Edward Bement, resident in New York, to fund the old Macalister & Stebbins bonds at their full value, principal and interest, in the "New Internal Improvement stock" of 1847, authorized by the funding act of that period, which in express terms forbade the funding of these bonds. The principal, $114,000, was accordingly funded, February 5th, 1859, leaving $78,660, the arrears of interest, still unfunded. The bonds were held at the time by the New York Bowery Insurance Company, $85,000; the Mechanics' Banking Association, $26,000; and Morris Ketchum, $3,000. Under the existing laws of the State, the governor had no power to settle with these parties upon any other terms than those proposed by the law of 1849, at 28.64 cents on the dollar; and the just liability of the State on these outstanding Macalister & Stebbins bonds, including interest, was less than $45,000, whereas by this action it would have been directly $192,683, and ultimately $244,268-a loss of near $200,000.,

The transaction seems to have been kept a profound secret. But at this time the canal scrip fraud having transpired, a bill was introduced into the legislature abolishing the funding agency in New York, and ordering the books of the office, containing the evidences of this transaction, to be forwarded to Springfield-and now on "a more careful examination of the law [the governor] became doubtful of his authority in the matter, and immediately telegraphed Mr. Bement to stop funding, which was done at once."* Immediately after this the governor informed the auditor of the fact. "I was for blowing it at once," said that functionary, "but he [the governor] insisted that that would lessen his chances of having the bonds returned, and I reluctantly consented to keep still for a time." A correspondence was immediately opened by the governor with Mr. Bement and the holders, to negotiate with them for their surrender, which did not at once succeed. In May the books of the New York funding agency were brought to Springfield. The auditor, professing now to derive his information from them, broke the subject to the treasurer, who was already apprised of it. These gentlemen, before the

*See Dr. Mack's letter to the Chicago Journal, July 12, 1859. tSee Dubois' letter, Ill. State Jour., July 20, 1859.

treasurer started to New York to pay the July interest on the State bonds generally, agreed and determined positively between themselves "that nothing should ever be paid upon the bonds of either principal or interest, while [they] were in the offices." With this resolution on their part, the closure of the transfer office in New York, and the fact that the new bonds issued under the law of 1849 were inscribed bonds-not transferable except upon the books-they could not be used or placed upon the market at any price; nothing could be done with them, and as neither principal nor interest had been paid to any considerable extent, the State could not be, and was not, financially, harmed. The scheme was nipped in the bud; though before the transfer agency was closed in New York Mr. Ketchum succeeded in having his three new or funded certificates of $1,000 each transferred on the books to a Mr. Graham.

"The plan embraced the funding of the 114 bonds under the general law of 1847, which expressly prohibited its being done; to issue for them 'New Internal Improvement Stock,' to the credit of which new stock was to be placed, the aggregate of pro rata interest which the State had paid in cash on its bonds since 1847, amounting on these $114,000 of 'stock' to $37,298, which sum would be payable on the 1st of July, 1859, the first interest pay day after the funding of the bonds, (the bonds being funded on the 5th of February, 1859); in addition to which two sums there was issued certificates for interest due from date of the original bonds surrendered, up to the passage of the law of 1847 under which they were funded, amounting to $41,388 83; and the holders were entitled to the further sum of $41,382, being the balance of the 12 year's interest remaining uncredited to the 'new stock,' for which, under Dr. Roman's law of 1857, they would be entitled to certificates"-making a total of $244,268 83, or just about $200,000 more than the State justly owed.

During the summer of 1859, Dr. Mack was sent to New York to negotiate for the surrender of the refunded bonds. As the holders found they could not make them available-being inscribed bonds they could not be sold without transfer on the booksthe State department unwilling to recognize them or pay interest on them either accruing or in arrear, they were finally, in October, 1859, surrendered. The holders were unwilling, however, to settle by the law of 1849. Six years later, at the session of 1865, the legislature passed a law compelling the surrender of the Macalister and Stebbins bonds, under penalty of a forfeiture of interest after July, and principal after January following, 1866. The amount allowed to be paid by this law on each $1000 was $248 13. The action of Gov. Bissell in ordering the funding of the Macalister and Stebbins bonds is difficult to explain. He apparently disregarded the Dr. Roman resolution, misremembered the mandamus proceedings in 1857 to compel him to do what he now did, and violated the law of 1847, under which the funding was done, which expressly forbade it; while even if he had been legally authorized to pay their full value of principal and interest, as only about 28 cents on the dollar had ever been reeeived for them by

Letter of "Investigator" to Chicago Times, Aug. 1839.

the State, it was plainly contrary to the justice and equity of the case, and popular opinion would have sustained him in a refusal, for the protection of the treasury of the State."

NOTE "When the transaction gained the light, during the height of the canal scrip fraud investigation, Bissell's enemies, stimulated doubtless to additional partisan feeling, or influenced by personal animosity, put the very worst construction possible upon it, and the most corrupt motives of combining with New York sharpers to rob the treasury were attributed to his excellency. A long letter from New York to the Chicago Times, dated August 20, 1859, signed "Investigator," evinces a "working up of the case" with apparently damaging effect to his excellency. From it, it seems, that an old Belleville acqaintance of Bissell's, through letters of introduction from him, is 1858, gained credit enough in New York to buy 111 of the bonds, with their accrued interest of $120,000 besides, for $85,000. He brought an installment to Illinois to get funded, but owing to a quarrel as to how the profits were to be divided between him and his confederates, the sale was rescinded, and after some threats with the law, the bonds were given back. Next, the New York owners, one of whom was Morris Ketchum, a close friend of the governor's and one of the original Illinois Central Railroad incorporators, having also resigned the State transfer agency, his partner, Bement, being appointed in the place, all with a view to the consummation of this fraud, it is hinted, tried their skill and ultimately succeed, as we have seen, in having the bonds partially funded; and with all these efforts. Bissell, who had the power to fund the bonds, is sought by letters, conjectures and deductions, to be connected as a corrupt sharer in the profits of the transaction. The letter is the careful, elaborate and able argument of a legal prosecutor, who manifestly has much personal feeling in the matter. It contains a complete history of the Macalister and Stebbins bonds, and many of the points against the governor appear to be well sustained by his own correspondence. At the meeting of the democratic State convention at Springfield, in January, 1860, Hon. J. L. Doň Morrison avowed himself its author, and in a speech supplemented his charges against his excellency by the production of a number of letters from him to the New York parties and his Belleville acquaintance +

Prior to Morrison's convention speech, Bissell had been under many inflictions; but this was too much and in the Illinois State Journal of January 11, 1860, he published a stinging reply, evincing the rekindling of his old flame of scathing invective. He attributes the causeless attack upon him to the envy and jealousy of his assailant, as the key to all his malice; they were neighbors, both living in Bellevilleone, obscure, had been honored with office repeatedly; the other, wealthy and conspicuous, had met with constant disappointment in this respect. He denied receiving one cent during his long official career that did not properly and legally belong to him; pronounced the Investigator" letter "a tissue of vile assumptions, inferences, deductions and downright lies;" accused Morrison of dishonorably suppressing a letter of his to Penseneau [the Belleville friend) rejecting a dishonorable proposition in reference to the funding of the Macalister and Stebbins bonds, which would have "blown his pitiful cobwebs sky-high," and by way of counter charges, proceeds negatively to intimate his assailant's connection with many dishonorable acts, overreaching widows and orphans, &c., to obtain titles to lands, prompting the Old Ranger to exclaim: “If that man keeps out of the penitentiafy 20 years he will be the richest man in Illinois.

+See 111. State Register, Jan. 10, 1860.