" It is covered, perforated 4" drain pipe. It is in a bed of crushed rock. The water should drain through the wall, but maybe I am wrong. I guess if the wall collapses then that will give my another project to do. "
Some of the water will invariably drain through the wall, as it is not a solid (i.e. poured concrete) wall. However, you want to allieviate water behind the wall, as that is what will eventually cause the wall to fail.
I hope the crushed rock is washed, or the water will have a harder time getting to the pipe.
"It souds like you are suggesting I would have been better off just letting the downspout dump into the bed? "
Nope, not at all. The downspout should be tiled out on a separate tile, a 4" solid wall (non-perforated) corrugated pipe. That should be run under the wall and into the yard or to a ditch, somewhere away from the wall.
Short and sweet wall building:
Excavate for base, figuring at least 4" of compacted limestone and one course of block/timber below grade. Try to get excavated trench as level as possible. Do final leveling with compacted gravel in base. With the type of block you are using, I believe manufacturer states not to go over 2-2.5 feet. Other types can go much taller. Once compacted base is set, start building, but after the first course is set, lay in a perforated pipe behind the wall (as long as the base is level, the water will find it's way out, but if the pipe has some flow, even better), giving an outlet on the *outside* of the wall. Once wall is built to finished hieght (if relatively short), backfill over the pipe with pea gravel to bottom of top course of block. It never hurts to put some sort of fabric between the existing soil and the pea gravel too.
Dan