Your letter of the 29th. of August is just come to hand. My circular of the first of November which you had received required that you should not admit on loan the Certificates of the State of North Carolina upon its own account. The reason of this would operate in regard to the Comptroller2 or any other Officer of the State, or any individual who might be the acknowledged or secret Agent of the State, or to whom the State might have disposed of such Certificates. For if they are not receivable from the State itself on loan, it is on the principle that a Bond once surrendered to the Debtor, as satisfied or discharged extinguishes the Debt; and consequently there is in such case, no debt in existence, to be assumed. A transfer of the Certificates therefore to any other person even if real can make no alteration in the thing. You were of course right in refusing to receive them, in the name of the Comptroller and you were not less right in your objection to the Gentleman whom you did not name who effected the first and offered the second subscription you speak of, if by his conduct or other circumstances there was good ground to believe that the certificates he tendered were of the kind above mentioned. Were it not for the suspicion you express it would never have entered into my imagination that the Government of your State could resolve by any secret or indirect method to effect the receipt by you of certificates which you were not at Liberty from your instructions to receive. And even after what you communicate, I am obliged to suppose, either that your suspicion is without foundation or that some subordinate officer, whose zeal for the interest of the State makes him forgetful of what is due to its dignity to propriety and to fair dealing, has without authority or instruction resorted to so improper an expedient. Confiding that the Governor3 will be anxious to arrest a proceeding so exceptionable in every view, I desire that you will immediately make known to him your suspicion and the grounds of it, in order that being appraised of the thing he may take measures to prevent a repetition of the attempt. In my letter of the 12th. of August a copy of which accompanies this, you are authorised to receive the certificates in question from the State in order to their being submitted to me. This I did from a disposition to give the matter every possible chance which could result from the fullest consideration and with a view to taking finally the opinion of the Attorney General after hearing whatever might be offered on the part of the State. This you are still at liberty to do. But as you appear to think secret means were taking to pass the certificates upon you—you will do well to continue upon your guard. You will however receive the Certificates offered; giving a descriptive receipt for them as in other cases—but inserting in that receipt expressly that they are to be specially submitted to the decision of the Secretary of the Treasury whether receivable or not upon the loan. You will understand also that none of the receipts you have given in any case for certificates deposited are to be considered by you as conclusive upon the public. The Certificates are all liable to revision and may be rejected if they appear forged, or in any other respect not proper to be admitted on the loan. The only reason for a distinction between the forms of the receipts to be given for suspected certificates, and those to be given for such as are not suspected is to put purchasers on their guard.

The attempts you have announced are of such a nature as to oblidge me to desire; that before you issue any certificates of Stock in lieu of the State debt deposited, you advise me of the total amount of the sums subscribed, noting all such cases in which you have reason to believe the Certificates are of the kind not properly admissible on the loan. In making this communication you will use all possible dispatch.

I am yours &c