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Fears were entertained, however, that by the fraud or connivance of the State Agent, false certificates might be issued and frauds perpetrated. Accordingly, the State Legislature, by an act which took effect on the 11th day of March, 1859, changed the mode and place of issue of certificates of stock.

By this act it was provided, that thereafter no certificates of stock should be issued by the Agent of State, but that on the presentation to him of certificates for transfer, he should receipt for them, and immediately transmit them to the Auditor of State, at Indianapolis; that the Auditor should cancel them and file them in his office, for preservation and reference, and issue, in the name of the person to whom the transfer was to be made, new certificates of stock, to be signed by him and the Treasurer of State, and after registering them in a book to be provided by the Auditor for that purpose, send them to the Agent of State, to be by him registered and delivered to the proper person, upon presentation of the receipt. The fourth section of this act declares that any certificate of stock issued or transferred in violation of the provisions of the act shall be deemed fraudulent and void as against the State of Indiana. It will be perceived that this act throws additional and, in my opinion, abundant safeguards around the issue of the stock. To avoid the dangers and temptations which this change in the law was designed to guard against, as soon as the new law went into operation, the blank certificates, signed by the officers of State, in the hands of the State Agent, should have been promptly withdrawn by the officers of State and destroyed. This was not done.

When Col. Hudson, the present State Agent, came into office, early in February, 1861, he found in the office in New York three bound volumes of the forms, which he immediately cancelled, by punching a hole through the signature of each form.

STOVER FRAUD.

In this connection I invite your attention to the gigantic forgeries of Indiana five per cent. stocks which have been committed in New York.

The Hon. James A. Cravens was elected State Agent in February, 1859. He held the office about nine months, during which time Ď. C. Stover acted as his clerk. He then resigned, and Mr. Stover was appointed by Gov. Willard, to fill the vacancy. He continued in office under this appointment until February, 1861, when he was succeeded by Col. Hudson, the present incumbent, who had been duly elected by the Legislature. The forged certificates of stock were executed upon the blank forms left in the office of the Agent of State, which had been signed by W. R. Norsinger as State Treasurer and H. E. Talbott as State Auditor. These gentlemen came into office early in 1855, and went out early in 1857, having served two years. The forgery consisted in falsely filling up the blanks as to dates,

names of payees and amounts, and signing the name of James A. Cravens as Agent of State. The forged certificates, so far as I am advised, bear date in March, April and June, 1859, thus purporting to be executed during the period in which Mr. Cravens was State Agent, though I believe they were executed and issued at a later date. I am informed by Col. Hudson, that the forged certificates were all made payable to Samuel Hallett except about $100,000 payable to a person by the name of Deschaux. He further informs me that the whole amount issued, so far as he has been able to discover, is $2,538,000, of which amount $1,295,000 has been retired and destroyed. Col. Hudson states, that he discovered the existence of this spurious stock in a few weeks after he came into office, and immediately charged the matter upon Mr. Stover, who confessed it all, but said there was only about $200,000 out, and that if the matter were kept secret, he, and those operating with him, would take up and destroy them, so that nobody should lose anything by them. Col. Hudson further says, not knowing what might be the liability of the State upon these certificates, he deemed it highly important for her interest that they should be gotten off the market and destroyed, and, for that purpose, agreed with them, for the time, to communicate the matter to nobody, without however, giving them any assurance that they should not be ultimately exposed and prosecuted.

The knowledge of this forgery was first communicated to me about the latter part of January last, by Messrs. James M. Ray and Jesse J. Brown, two of the Loan Commissioners, appointed by the State to negotiate her War Loan.

They had learned it from Mr. Lanier, of the firm of Winslow, Lanier & Co., who had discovered it in some way about the first of December previous. I immediately repaired to New York, and in company with the Hon. John P. Usher, then the Attorney General of Indiana, and Jesse J. Brown, Esq. endeavored to investigate the affair. In the opinion and confidence entertained by Col. Hudson, and some other gentlemen who had been consulted, that Mr. Stover and those acting with him, would retire the fraudulent stocks I did not share, and was not for that or any other reason in favor of delaying their exposure and prosecution a single hour.

Accordingly, I proceeded at once to place all the facts of which I had any knowledge, in the possession of Mr. Hall, the District Attorney prosecuting the pleas of the State, for the city of New York. The crime had been committed in New York, and to the laws and authorities of that State its punishment belonged.

Mr. Hall, after deliberation, and such investigation as he could make, determined that an exposure and prosecution of the parties at that time would be highly inexpedient, and informed me that he took the responsibility of deferring any public disclosure and prosecution until such time as in his judgment it was proper to make them. Matters thus stood from February until about the 27th day of May, when learning that the affair had become public in New York, and believing that no reason could exist for further delay in the prose

cution, I caused the arrest of Mr. Stover, who was then in this State, and sent him to New York. On his arrest he freely consented to go, and waived all process or formal authority. The Hon. John F. Kibbey, then acting Attorney General, by my direction proceeded to New York, and under the instructions of Mr. Hall, filed a complaint before the grand jury, in the name of the State of Indiana, and demanded an investigation.

The grand jury returned bills of indictment against Stover and Hallett. At the September Term of the Court in which the bills were pending, the Court quashed the indictments against Hallett, on the ground that it was no crime against the laws of New York to forge certificates or obligations purporting on their face to be executed by the State of Indiana. From this decision Mr. Hall has prosecuted a writ of error to the Court of Appeals, but no decision thereon has been had.

The indictments against Stover are still pending. When this forgery was first made public, Indiana securities were suddenly depressed in the market from ten to twenty per cent., but soon after rallied to nearly or quite their former rates.

To avoid all embarrassment in the future, which might arise from the existence of the forged certificates, I recommend that the Auditor of State be authorized to procure a new plate, differing in form and appearance from the old, upon which new certificates shall be printed, and that the holders of all genuine stocks be requested to surrender them and receive instead, certificates of the new impression.

JULY INTEREST ON STOCKS.

Many of the Western States, among them Ohio and Illinois, were making provision in New York, to pay the interest on their debt, in coin; in order to maintain the credit of their stocks.

As the credit of Indiana had received a shock by the development of forgeries of her stocks, and as the circulation of many of the Free Banks of Indiana was based upon Indiana stocks, it seemed to me especially important, that she should take the same course, in order to assure her creditors and the public, that her ability and disposition to pay her debts, were in no wise disturbed or impaired by this assault upon her credit. Accordingly, I instructed Mr. Harvey, Treasurer of State, to provide, if he could upon reasonable terms, the coin with which to pay the July interest upon our stocks. This he did, upon the terms, and in the manner stated in his report. The announcement of the purpose of the State to pay her interest in coin, had an immediate and salutary effect in restoring confidence and bringing back the value of our stocks to its former standard.

At the time, I directed the payment of the July interest in coin, the premium on coin was very small, but has since increased so greatly as to forbid the like arrangement for the January interest.

COMMON SCHOOLS.

The operations of the common school system for the past two years have been quite successful. The amendments made to the School Law at the last regular session, so far as I can learn, have worked well, and meet with general approval. The report of Prof. Miles J. Fletcher, Superintendent of Public Instruction, for the year 1861, is laid before you, but the report of the present Superintendent, Samuel L. Rugg, for the year 1862, has not been completed. The Rev. Sam'l K. Hoshour was appointed to fill the vacancy occasioned by the death of Mr. Fletcher, who held the office until his successor was duly elected and qualified.

DEATH OF MILES J. FLETCHER.

The death of Miles J. Fletcher was a misfortune to the State. Possessed of fine talents, highly educated, endowed with every accomplishment that can make a man attractive in society, with a heart full of the warmest affections and the most generous impulses, he united with all these an indomitable energy of character that gave no rest, and ever pressed him forward in the path of duty. His industry was a marvel, and the amount of labor he accomplished wonderful. The duties of his office he discharged, not scantily as a task, but with a devotion and pleasure that were satisfied only with a full performance. The cause of education he regarded of the first importance, and the vocation and calling of the educator the most honorable and dignified, next to that of the Christian Minister. The misfortunes of his country deeply afflicted him, and notwithstanding the delight he took in the performance of his official duties, and his untiring devotion to the education of youth, he would have resigned his office and gone to the field, had he not been dissuaded by his friends, who urged that he could serve his country better in the position he then held. He devoted much time, labor and money to the care of the sick and wounded soldiers. He visited the hospitals and the field of battle to hunt up and minister to the neglected and the dying, and in carrying a wounded man upon a steamboat at Pittsburg Landing, shortly after the battle of Shiloh, suffered a bodily injury, from which most likely he could never recover. When he was killed, he had started upon another mission of mercy to the army. I was standing by his side at the moment of his death, and never before did I have brought home to me in full force that passage of Scripture which declares, “That in the midst of life we are in death." Had I been asked a moment before who, among all the young men of Indiana, bade fairest for a life of great usefulness and fame, I would have answered, Miles J. Fletcher.

BENEVOLENT INSTITUTIONS.

The reports of the Boards of Trustees of the Asylum for the Blind, Institution for the Deaf and Dumb and Hospital for the Insane are herewith submitted. The management of these Institutions for the past two years has been eminently successful and satisfactory. The Superintendents have displayed ability and fidelity, as well as the subordinate officers and teachers, and I commend the reports to your especial consideration, and the Institutions to your fostering care and attention.

PRISONS NORTH AND SOUTH.

At the regular session of the Legislature in 1861, the sum of 10,000 dollars was appropriated for the purchase of materials and construction of the Northern Prison, located at Michigan City, for the year 1861, and a like sum for the year 1862. At the extra session in 1861, the sum of 30,000 dollars was appropriated for materials and construction of the Northern Prison, and for the support of convicts, and the payment of the expenses incurred for the month of January, 1861.

At the same session a law was passed for the transfer of 200 convicts from the Southern Prisons, at Jeffersonville, to the Northern Prison, but no provision was made for their return in case their labor should not be required. At the same session an act was passed providing that all persons sent to the penitentiary from counties north of the National Road should be confined in the Northern Prison. The work in the construction of the prison was vigorously pressed in the summer and fall of 1861, and it was found necessary, by the Board of Directors, in order to keep the convict labor employed, to anticipate, and draw upon the appropriation made for the construction of the prison in 1862; so that when the work for the year 1861 was closed up, there remained unexpended of the fund appropriated for the construction of the prison in 1862, but about 3,000 dollars. It was apparent, then, that the labor of the convicts could not be employed in the construction of the prison during the year 1862, for the want of means with which to purchase the necessary materials. The labor of the convicts could not be leased or hired out to contrators for the want of shops in the prison in which they could be employed. To work the convicts out of the prison and about the town, would be so expensive, in the employment of guards, as to make their labor unprofitable, beside there was no authority for doing so, except as connected with the construction of the prison.

As the matter stood, it was inevitable that the convict labor should be almost wholly unemployed throughout the year 1862, and must so continue until the prison shops were constructed, when the labor might be hired to contractors, as in other prisons. If the shops were constructed in 1862, this labor could be made remunerative through the year 1863, but if not constructed until 1863, this could not hap

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