164 Bulletin of tJie University of Texas 
 
 on the ground that the judicial department of the government 
 had no authority to interfere with the executive department in 
 the performance of duties not ministerial in character.^ Un- 
 blushing bribery was charged in connection with the passage of 
 this International subsidy, and though the jury of a district 
 court found the allegation of fraud to be untrue, the charges 
 were so rife and upon such high authority as to give them 
 credence.^ It was a cause of wonder at the time that members 
 of the Twelfth Legislature whose income was their per diem 
 should at the end of the session be able to buy fine horses and 
 furniture and to travel north.^ 
 
 Except for the increase in salaries under the Throckmorton 
 government and the wastefulness of the constitutional conven- 
 tion of 1868, the expenditures to 1870 were not excessive. This 
 is not true, however, for the period of the Reconstruction there- 
 after. Expenditures then were beyond the ability of the state, 
 and the best evidence thereof is that, despite heavy taxation, 
 bonds were sold to pay current expenses and a large floating- 
 debt was accumulated. The Twelfth Legislature exhibited such 
 a degree of profligacy and open disregard of the state's eco- 
 nomic condition that it is notorious. Matters might have been 
 worse, though, and that they were not so was due mainly to 
 the integrity of the governor in the administration of the public 
 finances.* 
 
 ^Bledsoe v. the International Railroad Company, 40 Tex., 537 (1874). 
 
 -Bledsoe v. the International Railroad Company, 40 Tex., 537. Mes- 
 sage of Governor Coke, January 12, 1875. The San Antonio Daily 
 Herald, October 4 and 20, and November 24, 1870. The Houston Daily 
 Telegraph, February 23 and October 19, 1871. 
 
 ^Clippings from the State Gazette and Flake's Bulletin in the San 
 Antonio Daily Herald, September 27 and October 20, 1870. 
 
 "Ramsdell, Reconstruction in Texas, p. 318. 
 
Chapter 3. 
 
 RECEIPTS. 
 
 A. Tlie Property Tax. 
 
 The chief source of receipts during this period was taxation, 
 and the main tax was, as in previous periods, the ad valorem 
 tax upon real and personal property. The work of assessment 
 and collection was performed until 1870 by an assessor and 
 collector, but thereafter assessment was by the justices of the 
 peace, and collection by the sheriff of each county. Under the 
 provisional governments assessment and collection were subject 
 to special difficulties. The war had disorganized the machinery 
 of administration, and in many of the counties it was impos- 
 sible, owing to the opposition of the people to military author- 
 ity, to secure an assessor and collector. In 1868, for example, 
 thirty-nine counties out of one hundred and twenty-five had 
 vacancies in the office. It was not infrequent, too, that those 
 who qualified were inexperienced, inefficient, or corrupt.^ De- 
 spite these difficulties, however, receipts from taxes before 1870 
 were, proportionately to the rate and the total assessments, 
 more satisfactory than after 1870. This better showing was 
 due, in the first place, to the more rigid collection under the 
 military authorities, and, in the second place, to less burden- 
 some rates.^ A number of circumstances contributed to the 
 disarrangement of the tax system during this period. With 
 the emancipation of the slaves, who were assessed for taxation 
 in 1865 at $137,191,886, taxable property to that amount was 
 wiped out. Slaves in 1865 constituted 38 per cent of the taxable 
 property. The escape and undervaluation of real estate was 
 favored by the provision of the laws which permitted its ren- 
 dition either in the county of its situs or in the county of resi- 
 dence of the owner or agent. Furthermore, because of the 
 
 ^Report of the Comptroller, 1868-9, p. 4. In 1870 defaulting and 
 delinquent officers were due the state $350,000; ibid., 1870, p. 20. 
 
 -The United States Census of 1870 gave as the assessed value of 
 property $149,732,929 and as the true value $159,052,542. The per cent 
 of assessed to the true value was 87, which is a high proportion. Vol. 
 Industry and Wealth, p. 10. 
 
EXCHANGE 
 
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Exchange 
 
 UM 19 1917 
 
 BULLETIN 
 
 OF THE 
 
 UNIVERSITY OF [TEXAS 
 
 1916: No. 37 
 
 \r, 
 
 JULY 1 
 
 1916 
 
 A FINANCIAL HISTORY OF TEXAS 
 
 BY 
 
 Edmund Thornton Miller 
 
 Adjunct Professor of Economics in the 
 
 University of Texas 
 
 I ' 
 
 Published bj the University six times a month and entered ag 
 
 secora-class matter at the postoflSce at 
 
 AUSTIN, TEXAS 
 
Publications of the University of Texas 
 
 Publications Committee : 
 
 A. C. JuDSON C. Hartman 
 
 E. C. Barker J. L. Henderson 
 
 J. M. Bryant W. S. Hunter 
 
 G. C. Butte J. A. Lomax 
 
 R. H. Griffith 
 
 The University publishes bulletins six times a month. These 
 comprise the official publications of the University, publica- 
 tions on humanistic and scientific subjects, bulletins prepared 
 by the Department of Extension and by the Bureau of Munic- 
 ipjil Research, and other bulletins of general educational in- 
 terest. With the exception of special numbers, any bulletin will 
 he sent to a citizen of Texas free on request. All commxinica- 
 tions about University publications should be addressed to the 
 Editor of University Publications, University of Texas, Austin. 
 
 A, C. BALDWIN & SONS: AUSTW 
 
B290-616-12lt 
 
 BULLETIN 
 
 OF THE 
 
 UNIVERSITY OF TEXAS 
 
 1916: No. 37 
 
 JULY 1 
 
 1916^ 
 
 A FINANCIAL HISTORY OF TEXAS 
 
 BY 
 
 Edmund Thornton Miller 
 
 Adjunct Professor of Economics in the 
 University of Texas 
 
 Published by the University six times a month and entered 
 second-class matter at the postofRce at 
 AUSTIN, TEXAS 
 

 The benefits of education and of 
 useful knowledge, generally diffused 
 through a community, are essential 
 to the preservation of a free govei*n- 
 ment. 
 
 Sam Houston. 
 
 Cultivated mind is the guardian 
 genius of democracy. . . . It is 
 the only dictator that fi-cemen ac- 
 knowledge and tJie only security that 
 freemen desire. 
 
 President Mirabeau B. X^amar. 
 
 
PREFACE. 
 
 The iijcreasing number of histories of Texas and of books 
 about Texas testify to thq appeal which the history of the state 
 has alike to its sons and daughters and to those who are foreign 
 to its soil. Texas has been under the flags of Franco, Spain, 
 Mexico, the Republic of Texas, the Confederate States of Amer- 
 ica and the United States, and the scroll which records these 
 changing fortunes has attracted the novelist, the political his- 
 torian, the student of imperialism and of colonizing movements, 
 and finally the economic and financial historian. Just as its 
 political history is the most fascinating of any of the American 
 states, so its financial history is varied, frequently spectacular, 
 usually interesting, and alw^ays illustrative of either the prin- 
 ciples or the fallacies of public finance. 
 
 William Gouge published in 1852 his Fiscal History of Texas, 
 but outside of his book the finances of the state have had no 
 historian until the present writer undertook the task. The sug- 
 gestion of the undertaking came from the Carnegie Institution, 
 and the author is under grateful obligations to it for material 
 assistance. 
 
 The chief difficulty met with in the work has been the com- 
 plete absence of financial reports for some years and the many 
 imperfections in the reports extant. Too often do the reports 
 of the state's financial officials seem to have been gotten out in 
 a perfunctory way and merely to meet the minimum require- 
 ments of the law, and the author is convinced that a decided 
 reform must occur if the reports' are to fulfill their purpose 
 of presenting to the average citizen an intelligible conception 
 of the financial operations of the state government. The tax 
 system of the state is and always has been defective and is 
 sorely in need of change if the most elementary justice is to be 
 done among men. If this financial history can arouse any in- 
 terest in the state's fiscal problems, or if it can be of any use to 
 those who are already interested in these problems, the writing 
 of the book will be justified. 
 
 The chapters dealing with the Civil War and the Recon- 
 struction were *■ st published in the Quarterly of the Texas 
 Ci 
 
iv Bulletin of the University of Texas 
 
 State Historical Association^ and are included here in a some- 
 what modified form. 
 
 The author wishes to express his deep appreciation to Pro- 
 fessor Charles J. Bullock, of Harvard University, and Pro- 
 fessor Henry B. Gardner, of Brown University, for many val- 
 uable suggestions. He also gratefully acknowledges the aid of 
 Emily Maverick ]\Iiller in reviewing and criticizing the manu- 
 script before publication. 
 
 Edmund Thornton Milder. 
 Austin, Texas, June, 1916. 
 
Chapter 1. 
 Chapter 2. 
 
 Chapter 1. 
 Chapter 2. 
 
 Chapter 3. 
 
 Chapter 1. 
 
 Chapter 2. 
 
 Chapter 3. 
 
 Chapter 4. 
 
 Chapter 5. 
 
 TABLE OF CONTENTS 
 
 PART I PAGE 
 
 The Spanish-Mexican Period 9 
 
 The Revolution 13 
 
 PART II 
 
 The Republic, 1836-1846 
 
 Expenditures . . . 18 
 
 Receipts 28 
 
 A. The tariff 28 
 
 B. Tonnage dues and port fees 35 
 
 C. The property tax 36 
 
 D. Business taxes 43 
 
 E. The poll tax 45 
 
 P. The characteristics and the operation of 
 
 the system of property and business 
 
 taxes 45 
 
 Ct. Land and land dues 51 
 
 11. Miscellaneous and unclassified receipts. . 56 
 
 I. Character of receipts 56 
 
 J. Local taxes 57 
 
 The Public Debt ' 59 
 
 A. Ten per cent bonds of the five million 
 
 dollar loan acts 59 
 
 B. Audited drafts and audited claims. ..... 64 
 
 C. Treasury notes 67 
 
 D. Eio'ht per cent treasury bonds 78 
 
 E. Ten per cent bonds of June 7, 1837 79 
 
 F. Eight and ten per cent, bonds of Feb- 
 
 ruary 5, 1840 80 
 
 G. Miscellaneous debts 81 
 
 H. Recapitulation and summary 81 
 
 PART HI 
 
 The State, 1846-1861 
 
 Introduction 83 
 
 Expenditures , Sd 
 
 The School Funds 94 
 
 Receipts 99 
 
 A. The property tax 99 
 
 B. Business taxes Ill 
 
 C. The poll tax 113 
 
 D. Receipts from other sources 114 
 
 The Public Debt 117 
 
viii Contents 
 
 PAGE 
 
 B. Lands of the public free school fund. . . . 329 
 
 a. Agricultural lands 329 
 
 b. Timber lands and timber 342 
 
 c. Mineral lands and minerals 345 
 
 d. Summarj^ 350 
 
 C. University lands 352 
 
 D. Asylum lands 353 
 
 E. Conclusion 354 
 
 Chapter 14. The Public Debt 355 
 
 Chapter 15. Public Education 361 
 
 A. The permanent school fund 3G1 
 
 B. The available school fund 367 
 
 C. The University of Texas 372 
 
 D. The Agricultural and ^Mechanical Collesre 376 
 
 E. Other higher educational institutions. . . . 377 
 
 F. A special tax 378 
 
 Chapter 16. Financial Administration 379 
 
 Chapter 17. Conclusion 385 
 
 PART VIII 
 Appendix 
 
 Table 1. Revenues of the Republic 391 
 
 Table 2. Expenditures of the Repul^lic 391 
 
 Table 3. Classified Appropriations of the Republic 391 
 
 Table 4. Public Debt of the Republic 391 
 
 Table 5. Treasury Note Circulation 391 
 
 Table 6. Retail Prices 394 
 
 Table 7. Classification of Warrants Drawn on the General 
 
 Revenue Fund, 1848-1915 395 
 
 Table 8. Expenditures for Higher Education 399 
 
 Table 9. Net Expenditures, 1847-1915 403 
 
 Table 10. Classified Net Receipts, 1847-1915 405 
 
 Table 11. Classified Taxes, 1846-1915 409 
 
 Table 12. Tax Rates, 1846-1915 412 
 
 Table 13. Assessed Values of Property, 1846-1915 413 
 
 Table 14. General Revenue Fund, 1847-1915 416 
 
 Table 15. Available School Fund, 1847-1915 420 
 
 Table 16. Cost and Loss in Assessment and Collection, 
 
 1886-1915 324 
 
 Table 17. Public Debt, 18.46-1915 426 
 
 Table 18. Ownership of the State's Bonded Debt, 1865- 
 
 1915 428 
 
 Table 19. For Table of Confederate Currency Values... 429 
 
 Bibliography 431 
 
 Index 435 
 
PART I.. 
 
 Chapter 1. 
 
 the spanish-mexican period. 
 
 On January l'^ 1821, when ]Moses Austin was given permis- 
 sion by the Spanish authorities to introduce three hundred fami- 
 lies into Texas, that Spanish colonial possession was a wilderness 
 except for roving ,Indian tribes, some monastic 'settlements, 
 Spanish soldiers, and a few American squatters.^ Austin died 
 soon after the favorable answer to his petition, and the work 
 of carrying out the enterprise fell to his son, Stephen F. Aus- 
 tin.- Shortly after the latter 's arrival in Texas in 1822, he 
 was told by the Spanish governor at Bexar of the Mexican revolu- 
 tion,- and was advised to go to Mexico and get the concession 
 confirmed. Austin had no sooner arrived in Mexico than an- 
 other change in government occurred, by which Don Augustin 
 Iturbide made himself emperor. A colonization law was en- 
 acted January 24, 1823, and on February 18, 1823, the em- 
 peror affirmed by decree Austin's grant. A revolution soon 
 overthrew Iturbide, however, and it devolved upon Austin to 
 secure from the newly established federal government a con- 
 firmation of his concession. This was obtained April 14, 1823, 
 and Austin then returned to Texas to organize his colony. Other 
 empresarios also obtained grants conformable^ to the coloniza- 
 tion laws, and the influx of Americans into Texas began.^ 
 
 Texas and Coahuila were one state in the Mexican federal 
 system, and a state constitution was adopted March 11, 1827. 
 This constitution remained in effect until March 2, 1836, when 
 the Texans declared their independence of Mexico. 
 
 ^In 1820 the estimated population, exclusive of Indians, was 4,000; 
 Garrison, Texas, p. 124. 
 
 -Stephen F. Austin's account of the beginnings of this colony is 
 reprinted in Gammel, Laws of Texas, Vol. I. See also Wpoten, A 
 Comprehensive History of Texas, vol. I, pp. 439-493. 
 
 ^An estimate of the population in 1827 is 10,000 exclusive of Indians; 
 Garrison, Texas, p. 156. 
 
10 Biilletm of .iJi:iB\Umv\i^^^/Qf: texas 
 
 The finances and fijianfei-ai V«^J[^itt^j^is qf this period of 
 Texas history are very obscure.^ 
 
 It appears from the laws and decrees that the revenue came 
 from tithes,- excise,^ stamp,* and customs duties;^ and from 
 taxes on income® and on the export of coin and silver bullion/ 
 Other sources were the sale of the right of cock pit locations,'' 
 the monopoly of the sale of tobacco," and taxes on billiard ta- 
 bles,^^ on the slaughtering of stock,^^ and the capturing of mus- 
 tangs and wild cattle.^- Forced loans also were employed on 
 occasions.^^ 
 
 From most of these taxes the new American settlements were 
 exempt for a period of from six to ten years.^* Exemption from 
 certain taxes was given subsequently to the Spanish settlements 
 
 ^The Mexican archives in the City of Mexico and the Bexar archives 
 at the University of Texas may when investigated throw light on the 
 period. In the meantime, as one writer has said, "one is puzzled to 
 know whence came the revenues of Texas while a part of the Mexican 
 confederacy"; E. C. Barker, "The Finances of the Texas Revolution,' 
 in the Political Science Quarterly, vol. 19, p. 612. 
 
 ^Decree No. 34; Gammel, op. cit., vol. 1, p. 200. Decree No. 238; 
 ibid., p. 332. 
 
 ^Decree No. 14; ibid., p. 124. Decree No. 85; ibid., p. 228. Decree 
 No. 107; ibid., p. 247. Decree No. 202; ibid,, p. 310. 
 
 ^Decree No. 11; ibid., p. 120. 
 
 ''Decree No. 94; ibid., p. 241. 
 
 •Decree No. 90; ibid., p. 233. 
 
 ^Decree No. 79; ibid., p. 224. Decree No. 209; ibid., p. 313. 
 
 "Decree No. 2; ibid., p. 173. 
 
 ^Decree No. 15; ibid., p. 124. 
 
 '"Decree No. 2; ibid., p. 173. Decree No. 169; ibid., p. 286. 
 
 "Decree No. 279; ibid., p. 381. 
 
 "Decree No. 8; ibid., p. 178. 
 
 '^Decree No. 105; ibid., p. 245. Decree No. 171; ibid., p. 288. Decree 
 No. 305; ibid., p. 404. 
 
 "Colonization law of 1823, articles 24 and 25; Gammel, op. cit., voL 
 1, p. 30. This law controlled Austin's colony, and provided for an 
 exemption for six years. The colonization law of March 24, 1825, and 
 the decree of February 9, 1828. governed the other colonies, and pro- 
 vided for an exemption for ten years; ibid., pp. 130, 207. 
 
A Fiimncml History of Texas 11 
 
 also, on the ground that the dutiable articles were necessities, 
 or that the taxes would burden agriculture.^ 
 
 No mention is made in the laws and decrees of a direct tax 
 on land. Land dues, however, were probably an important 
 source of revenue. The state colonization law provided that 
 new settlers should pay as dues to the state $30 for each sitio 
 of pasture land, $3.50 for each irrigable labor, and $2.50 for 
 each non-irrigable laborr 
 
 AU the colonists were required to pay land dues, and were 
 subject also to stamp taxes on legal documents giving title to 
 property.'' The tobacco monopoly was in force throughout all 
 the colonies. Six years after its beginning, customs duties be- 
 came applicable to Austin's colony and were immediately applied. 
 They irritated the colonists, as is shown by the friction in 
 1830 at Anahuac between the citizens and the customs' officials, 
 and by the petition to the General Congress from the convention 
 which met at San Felipe de Austin, October 1, 1830.* This 
 petition represented that the tariff then in effect was so high 
 as to be equivalent to a total prohibition, and it asked for the 
 privilege of introducing free of duty for three years indis- 
 pensable articles, such as provisions, farming implements, tools, 
 cotton bagging, household and kitchen furniture, clothing, shoes, 
 hats, powder and shot.^ 
 
 There is much obscurity also as to what were the fiscal ma- 
 chinery and methods employed during this period. The col- 
 lection of stamp taxes was in Austin's colony in the hands of 
 Austin himself, and returns were made by him to the commis- 
 sioner appointed by the governor of the state. ^ After the 
 
 ^Maize, beans, and pepper were exempt from excise duties. Decree 
 No. 14; Gammel, op. cit., vol. 1, p. 186. Raw cotton, horses, cattle, 
 and smaller stock, and sugar plantations, vineyards, and the products 
 thereof were exempt for twelve years. Decrees Nos. 176 and 298; 
 Gammel, op. cit., vol. 1, pp. 291, 396. 
 
 ^Article 22; Gammel, op. cit., vol. 1, p. 43. A lahor was about 200 
 acres, a sitio abouf 4,400 acres. 
 
 'Decree No. 43; Gammel, op. cit., vol. 1, p. 207. 
 
 "Edna Rowe, "The Disturbances at Anahuac in 1832," in The Quar- 
 terly of the Texas State Historical Association, vol. 6, pp. 265-299. Also 
 Garrison, Texas, p. 176. 
 
 ^Proceedings of the Convention; Gammel, op. cit., vol. 1, p. 485. 
 
 •Ibid., p. 18. 
 
12 Bulletin of the University of Texas 
 
 organizatiou of an ayuntamiento, or elective town coiuicil, in 
 this and the other colonies, this body performed in connection 
 with its other duties those of a fiscal character.^ 
 
 There were excise agencies in the departments, and receivers' 
 offices in the municipalities. The excise agent in some cases sold 
 the tobacco and stamped paper.^ These agents and the receivers 
 of the customs were appointed by the governor. Returns were 
 made by them to the state treasurer^ who, in turn, made his 
 report to the governor ; and the governor, in turn, communicated 
 it to congress. This body fixed the amount of taxes to be raised, 
 according to the estimate of the expenditures presented by the 
 governor.^ 
 
 The revenue during this period w^as inadequate to meet the 
 wants of the state government. Complaints are frequent in the 
 laws and decrees of the "reduced state of the treasury," and 
 offices were discontinued from time to time owing to the insuffi- 
 ciency of public means.* 
 
 The period is not important for any influence exerted upon 
 subsequent periods. The fiscal organization was of a character 
 foreign to the Americans, and was not continued by them when 
 control passed into their hands. It could not be employed dur- 
 ing the Revolution, and new expedients for raising revenue had 
 to be found. The revenue from taxes must have been inconsid- 
 erable during this period, in view of the exemptions granted. 
 Except for the years when the tariff was in effect taxation could 
 not have been very burdensome, and there is little evidence that 
 it was one of the causes of the Revolution.'^ 
 
 ^Article 23 of the colonization law of 1825; ibid., p. 102. 
 
 ^Decree No. 132; ibid., p. 259. 
 
 ^^Decree No. 11; ibid., p. 184. 
 
 ^Decree No. 50; ibid., p. 211. Decree No. 144; ibid., p. 266. 
 '""Burnet, who was president ad interim, said in a message of October 4, 
 1836, "the experience pf the nation from which we have descended 
 affords abundant testimony of the pernicious consequences of an over- 
 charged tariff"; House Journal, 1st Tex. Cong., First Session, p. 15. 
 This statement and the ])etition of the general convention which 
 met at San Felipe de Austin throw light on the character of the Mexican 
 tariff. Although the tariff was not singled out for indictment at the 
 time independence was declared, there is little doubt but that it was 
 obnoxious enough to have exerted some influence 
 
 See for a general account of this period Barker, Potts, and Ramsdell, 
 A School History of Texas, ch. 5. 
 
Chapter 2. 
 the revolution. 
 
 From October 11, 1835, the date of the formation of the 
 Permanent Council, to October 22, 1836, when the permanent 
 government of the Republic of Texas was inaugurated, govern- 
 mental functions were performed by five different bodies: (1) 
 The Permanent Council, October 11, 1835, to November 1, 1835 ; 
 (2) the Consultation, November 1 to November 14, 1835, which 
 body organized a provisional government whose organ was (3) 
 the General Council, Avhich acted from November 14, 1835, to 
 March 1, 1836 ; (4) the General Convention, March 1 to March 
 17, 1836, which put forth the declaration of Texas independence, 
 framed and adopted a constitution, and provided a government 
 ad interim; and (5) the government ad interim^ which was es- 
 tablished on March 16, 1836, and exercised authority until Oc- 
 tober 22, 1836. when General Sam Houston, the duly elected 
 president of the republic, wa^ installed. 
 
 The separation from Mexico was begun under the Permanent 
 Council. This body was without resources, and its financial opera- 
 tions were insignificant.^ Receipts under it amounted to $374.30, 
 of which $316 was from loans and $58.30 from land dues.^ The 
 entire amount was expended on the army. 
 
 The receipts under the Consultation were larger on account 
 of donations received. The agent at New Orleans reported sub- 
 scriptions amounting to $7,000 ; and other donations aggregating 
 $3,200 were made.^ A loan of $500 was also contracted with 
 Thomas F. McKinney, a member of the Consultation body.* 
 
 Upon the establishment of the provisional government, an 
 organization of the finances was attempted. A treasurer was 
 
 ^The Journal of the Permanent Council is printed in the Quarterly 
 of the Texas State Historical Association, vol. 17, pp. 252-78. 
 
 -Journal of the Consultation, in Gammel, op. cit., vol. 1, p. 513. Bark- 
 er, in Pol. Sci. Quart., vol. 19, p. 614. 
 
 'Journal of the Consultation in Gammel, op. cit., vol. 1, p. 524. Bark- 
 er, in Pol. Sci. Quart., vol. 19, p. 622. 
 
 ^Journal of the Consultation, in Gammel, op. cit., vol. 1, p. 521. 
 
14 Bulletin of the University of Texas 
 
 appointed and his duties defined.^ The offices of auditor and 
 comptroller were also created, and it was made the duty of Ihese 
 officers to audit all claims, and to draw^ drafts on the treasurer, 
 the auditor signing, the comptroller countersigning them.- 
 
 The main resource of Texas in her struggle for inde]iendence 
 was her public lands. These she offered to all who would engage 
 in her service, and upon them she based the use of her public 
 credit. The General Council in November and December, 1835, 
 granted a bounty of 640 acres, later increased to 800 acres, to 
 each private and non-commissioned officer in the regular army, 
 and volunteers were rewarded according to the length of their 
 service.^ But land was a drug on the market, and had to be 
 supplemented by other means of getting revenue. 
 
 The need of immediate funds made the resort to direct taxes 
 impracticable, so customs — or import — and tonnage duties were 
 used instead.* On December 12, 1835, a customs duty of 20 
 per cent was levied upon goods entitled to a drawback in the 
 port from which they were shipped, and 10 per cent upon goods 
 not so entitled. Goods brought by immigrants for their own 
 use were exempt.^ A supplementary ordinance of December 15, 
 1835, imposed a tonnage duty of $1.25, and a specific duty of 
 121/2 cents a gallon on whiskey, American gin, rum, and brandy.*' 
 On December 27, 1835, another law was passed which levied 
 25 per cent and 15 per cent duties respectively upon goods en- 
 titled and goods not entitled to drawbacks, left the specific and 
 tonnage duties unchanged, and put bacon, pork, breadstuffs 
 and lumber for building on the free list.'^ This early revision 
 of the customs law was done primarily to safeguard the col- 
 
 ^Ordinances and Decrees, in Gammel, op. cit., vol. 1, p. 928. 
 
 ==Ibid., p. 1003. 
 
 nbid., pp. 926, 952, 991. 
 
 *The committee on finance, reporting November 27, 1835, rejected 
 dependence on the sale of public land and the taxation of land because 
 they required too much time to get into operation. It recommended 
 customs and tonnage duties, an export duty on cotton, and a direct 
 tax on each slave; Proceedings of the General Council in Gammel, op. 
 cit., vol. 1, 594. 
 
 ''Gammel, op. cit., vol. 1, pp. 983-9. 
 
 «Ibid., p. 990. 
 
 'Ibid., pp. 1008-17. 
 
A Financial History of Texas 15 
 
 lection of duties by requiring larger bonds from collectors and 
 to prevent the delay in payment of duties permitted by the 
 first act.^ The amount derived from these duties is unknown. 
 It must have been small however, for the acts were anticipated by 
 the merchants.- An incomplete report of the collector for the 
 department of Brazos shows receipts up to July 31, 1836, of 
 only $797.62. Furthermore, the Convention decided March 12, 
 1836, that the provisional government had exceeded its authority 
 in levying customs duties, declared the acts null and void, and 
 resolved to refund the amounts paid.^ 
 
 Stamp duties, land dues, and the sale of public property 
 were also sources of a small revenue.* But these, as were the 
 taxes, were received to an undetermined amount in the form 
 of audited drafts. 
 
 A more important source of ready means was donations from 
 sympathetic friends in the United States and from Texans. 
 These amounted to about $25,000 in money and in goods, and 
 were usually used in the place where they were given in the 
 purchase of munitions of war and in the equipment of volunteers. 
 
 The most important source of available funds, however, was 
 loans.^ An ordinance and decree of December 5, 1835, author- 
 ized a loan of $1,000,000 and provided for three commissioners 
 who should seek to negotiate it in the United States. The com- 
 missioners appointed were Stephen F. Austin, Branch T. Archer, 
 and William H. Wharton. Either in a body or individually they 
 visited New Orleans, Nashville, Louisville, Washington, Phila- 
 
 'Proceedings of the General Council, December 19, 1835, in Gammel, 
 op. cit, vol. 1, p. 683. 
 
 ^Proceedings of the General Council, January 4, 1836; ibid., p. 734. 
 
 ^Proceedings of the Convention, in Gammel, op. cit., vol. 1, p. 886. 
 
 'The committee of the General Council reported in November 27, 
 1835, that $1,678.77 had been received from land dues, and $250 from 
 the sale of stamped paper. From the sale jOf supplies captured in 
 December, 1835, $1,271.99 was received in the form of promissory 
 notes; Barker, in Pol. Sci. Quart., vol. 19, pp. 625-6. 
 
 ^In their report on November 27, 1835, the committee on finance 
 said: "Your committee have not been able to fix upon a project possess- 
 ing in greater degree all the essential requisites of speedy operation, 
 and combining celerity and certainty in its accomplishment, than that 
 suggested by a loan"; Proceedings of the General Council, in Gam- 
 mel, op. cit., vol. 1, 596. 
 
16 Bulletin of the University of Texas 
 
 delphia, New York, and Richmond in their efforts to place thi; 
 loan.^ The bonds were to be of the denomination of $1000, to 
 bear interest not exceeding 10 per cent, and to be redeemable in 
 not less than five years nor more than ten years.- On the basis 
 of this law two loans aggregating $250,000 were made in Ne\^. 
 Orleans in January, 1836. They were both subscribed by syndi- 
 cates. The first, known as the Triplett Loan, was for $200,000, 
 ten per cent of which was paid down. The second, known as 
 the Erwin Loan, was for $50,000, and, according to Gouge, 
 $45,802 of it was received.^ Although nominally loans, these 
 w^ere really contracts for the purchase of land. According to the 
 terms granted by the commissioners, should the subscribers elect 
 to take land in payment, they were to have priority in its loca- 
 tion over all grants made after the date of the loan. Such oppo- 
 sition was manifested against this privilege of priority, on the 
 ground that it was unjust to the soldiers and others in the actual 
 service, that the government refused to ratify the terms, and pro- 
 posed to refund the money.* Compromise was attempted and 
 bickerings followed, but the matter was finally adjusted on the 
 basis of a land payment.^ These two loans, with several smaller 
 ones, yielded, it is estimated, about $100,000.^ 
 
 Finally, on January 20, 1836, the issue of $150,000 of treasury 
 notes was authorized. The notes w^ere to be in denominations of 
 from $1 to $1000, were receivable in payment of public lands 
 and dues, and were redeemable with any money in the treasury 
 not otherwise appropriated."^ One of the last acts also of the 
 
 'Texas Diplomatic Correspondence, vol. 1, p. 111. 
 
 ^Garamel, op. cit., vol. 1, p. 948. Texas Diplomatic Correspondence, 
 vol. 1, pp. 51-52. 
 
 ^Fiscal History of Texas, p. 53. Texas Diplomatic Correspondence, 
 vol. 1, pp. 55, 57. 
 
 ^President Burnet's message, October 4, 1836. 
 
 ^Acts of June 3, 1837, and May 24, 1838; Gammel, op. cit., vol. 1, pp. 
 1289, 1499. 
 
 ^Barker, in Pol. Sci. Quart., vol. 19, p. 634. 
 
 'Gammel, op. cit., vol. 1, p. 1033. This ordinance was entitled an 
 •^Ordinance and decree for the better accommodation of the claims 
 against the government of Texas." When it was under discussion in 
 the General Council an amendment was proposed by which "all per- 
 sons should be obliged or bound" to take the notes. On the vote the 
 Council was divided, but the president voted in the negative and there- 
 
A Financial History of Texas 17 
 
 Convention was to respond to President Burnet's suggestion to 
 authorize the executive to issue 8% treasury notes to "an amount 
 adequate to the exigencies of the country.^ There is no evidence^ 
 however, that there were any notes issued under either of these 
 acts. 
 
 The total public debt on August 26, 1836, was estimated to be 
 $1,250,000. This amount w^as made up as follows : loans, $100,- 
 000; army, $412,000; navy, $112,000; supplies, $450,000; civil 
 and contingent expenses, $118,000; not itemized, $60,000. It 
 represents the small cost of independence which was handed down 
 to the permanent government.^ 
 
 ^Proceedings of the Convention; Gammel, op. cit., vol. 1, p. 903. 
 
 ^Letter of Morfit, President Andrew Jackson's agent to Texas, to 
 Secretary Forsyth, September 4, 1836, in House Executive Document, 
 24th Cong. No. 35. U. S. Doc. 635. Barker, in Pol. Sci. Quart., vol. 
 19, p. 635. 
 
 by defeated the proposal that they should be a legal tender. Proceed- 
 ings of the General Council; ibid., p. 748. The loan commissioners, 
 Austin, Archer, and Wharton, writing from Nashville, Tenn., to Gov- 
 ernor Smith, on February 24, 1836, recommended the issue of treasury 
 notes; Texas Diplomatic Correspondence, vol 1, pp. 71, 72. 
 
 2— H 
 
PART II. 
 
 THE REPUBLIC, 1836-1846.1 
 
 Chapter 1. 
 
 expenditures. 
 
 The convention which at Washington, on the Brazos, declared 
 independence, also established a government ad interim, and, on 
 March 17, 1836, adopted a constitution. The battle of San Ja- 
 cinto was fought on April 21, and the hero of that decisive 
 victory — General Sam Houston, was elected by the people the 
 first constitutional president of the Republic of Texas. The 
 First Congress convened on October 3, and Houston was in- 
 augurated on the twenty-second. On February 16, 18-1:6, Anson 
 Jones, the last president, formally pronounced the Republic 
 of Texas to be no more, and committed the i^^overnment to the 
 hands of the state authorities. 
 
 During the brief ten years of its existence, the republic had 
 a place somewhere in the background of the family of nations. 
 Patterned after the United States Government, it had a president, 
 vice-president, a cabinet, a congress, and an army and navy. 
 It received foreign representatives, and had its own abroad; 
 levied and collected customs duties, direct and license taxes; 
 possessed and administered an extensive public domain; issued 
 without stint paper money, and incurred a public debt whose 
 principal and accumulated interest at the date of settlement 
 amounted to over $12,000,000. The white population of Texas 
 was probably not over thirty thousand in 1836 and about one 
 hundred thousand in 1846.- It was not a timid population in 
 any of its governmental undertakings. 
 
 ^This period has been most fully treated by W. M. Gouge in his 
 Fiscal History of Texas, published in 18.52. The statistics presented 
 by him are the most complete obtainable, since many official documents 
 and other original material to which he had access have been lost in 
 the fires which have twice destroyed the State Capitol. Gouge was 
 attracted too much by what would allow play to his satire, and the 
 result is that his book is not a judicious account of his subject. See 
 Yoakum, History of Texas, vol. 2, pp. 219, 249, 334. 
 
 -Barker, Potts and Ramsdell, A School History of Texas, p. 166. 
 
A Financial History of Texas 19 
 
 The history of the republic is a chapter of difficulties and dis- 
 appointments, and the ten years were rich in governmental ex- 
 perience. There were few financial expedients whir^h were nol 
 resorted to. The key to its character and difficulties is to 'ue 
 found in its expenditures. These illustrate the functions of a 
 frontier government, and explain the adoption of disastrous 
 expedients. 
 
 Bordering on Mexico, who was an unsatisfied foe, and having 
 within her confines Apaches, Cherokees, Comanches. and o^her 
 warring Indian tribes to a number equal almost to one -third of 
 the white settlers, Texas held defence to be of paramount im- 
 portance. When the permanent government entered upon its 
 duties, the army, which numbered about two thousand men, was 
 suffering privation, and the navy consisted of only one large 
 vessel.^ The first matter, therefore, considered by the First 
 Congress was the' condition of these agencies of the national 
 defence; and acts were immediately passed and appropriations 
 made for their increase and maintenance.- In the winter of 
 1836-7, the army dwindled to about seven hundred men, and 
 the president was compelled to bind himself personally in order 
 to provide them with provisions.^ Volunteers from the United 
 States soon restored the number to nearly two thousand, but in 
 May, 1837, three-fourths of the soldiers were given furloughs 
 because of lack of means to pay them, and because the president 
 believed that a Mexican invasion was not to be expected.* Mili- 
 
 ^Message of Burnet, October 4, 1836. See also Report of Committee 
 on Naval Affairs; House Journal, 1st Tex. Cong., p. 97. 
 
 -Act of November 18, 1836, for the increase of the navy; Gammel, op. 
 cit., vol. 1, p. 1090. Acts of December, 5, December 20, and December 
 22, relating to the military establishment; ibid., pp. 1113, 1223, 1285. 
 The general appropriation act carried $700,000 for the army and $150,- 
 000 for the navy; ibid., p. 1145. 
 
 •Yoakum, op. cit., vol. 2, p. 207. 
 
 ^President Houston in a message of June 6, 1837, said that since he 
 had come into office only $500 in cash had come into the treasury, all 
 of which he had disbursed for provisions for the troops. 
 
 The soldiers were a turbulent body, and in the summer of 1836 re- 
 fused to accept General Lamar who had been designated by the gov- 
 ernment as their commander. This act of insubordination was also 
 a consideration in the granting of the furloughs; Garrison, Texas, 
 p. 232. 
 
20 Bulletin of the University of Texas 
 
 tary expenditures were in this way kept down, but some had to 
 be incurred to keep companies of rangers in the field to repress 
 the frequent Indian depredations during 1836, 1837, and 1838. 
 
 As for the initial civil expenditures, the First Congress estab- 
 lished a civil list which for length and compensation was far too 
 imposing and expensive for a pioneer settlement of some thirty 
 thousand Americans. It was provided that the president should 
 receive an annual salary of $10,000 and be provided with a 
 furnished house ;^ the vice-president, attorney general, and the 
 commissioner of the general land office, each $3,000; the secre- 
 taries of state, treasury, war, and navy, each $3,500; the post- 
 master-general, $2,000; the treasurer and auditor, each $2,500; 
 the chief justice, $5,000, and associate and district judges, $3,000 ; 
 foreign ministers, $5,000, and secretaries of legations, $2,000. 
 Members of congress received $5 per diem, and consuls and clerks 
 were paid on the same generous scale.- 
 
 The first general appropriation bill carried $150,000 for civil 
 purposes, but owing to the failure of the government's foreign 
 agents to sell land scrip or to negotiate a loan, public officers went 
 without their salaries during the first year.^ 
 
 About November 1, 1837, the issue of treasury notes began, and 
 thereafter there was no lack of such means to meet appropriations. 
 The effect of the issues was to raise prices to such an extent 
 that the high nominal salaries became by 1839 insufficient for the 
 support of those who received them.* 
 
 President Houston's first administration extended from Octo- 
 ber, 1836. to December, 1838. The total expenditures from 
 January 1, 1837, to September* 30, 1838, the close of the fiscal 
 year, were $1,777,363. Civil expenditures for the nine months 
 ending September 30, 1838, were $380,921, and expenditures for 
 the army and navy were $430,570.^ 
 
 ^The president's house in Houston was a log cabin of two rooms, one 
 of which had a puncheon floor, the other had only Mother Earth. In 
 1839 the seat of government was removed to Austin, and the presi- 
 dent's house there was more in keeping with his rank and salary. 
 
 ^Act of December 29, 1836; Gammel, op. cit., vol. 1, p. 1129. 
 
 ^Message of the President, June 6, 1837. 
 
 "Message of the President, November 12, 1839. 
 
 ^This includes support of the war department, appropriations for In- 
 dians, and $64,014 expended by executive order. Report of the Secretary 
 of the Treasury, September 30, 1838. 
 
A Financial History of Texas 
 
 21 
 
 Until the issue of treasury notes in the fall of 1837, appro- 
 priations were met by audited drafts and orders upon agents 
 in the United States who had land scrip to sell. It was this 
 poverty of the treasury during the larger part of Houston's 
 administration that was mainly responsible for keeping down ex- 
 penditures, and especially those of a military and naval . char- 
 acter/ 
 
 The administration of Mirabeau Lamar, Houston's successor, 
 extended from December, 1838, to December, 1841. It was 
 marked by a great increase in expenditures and by the practical 
 bankruptcy of the republic. Appropriations for civil purposes 
 leaped from $192,000 under Houston's last congress to $550,000 
 under Lamar 's first. This was due to no increase in existing sala- 
 ries, but to additional departmental clerks, to increased con- 
 tingent expenses, to the requirements of the postal service and to 
 the removal of the seat of government from Houston to Austin. 
 
 Appropriations for the army and navy increased from $881,000 
 by the Second Congress, to $1,523,455 by the Third, and to 
 $1,620,169 by the Fourth. The withdrawal in March, 1839, of 
 the French blockade of ^lexico left Mexico free, it was thought, 
 to make an invasion ; and though the continuance of the factional 
 fighting in that country favored the security of Texas, the Lamar 
 administration believed in strengthenings the army.^ In 1839 
 additions were made to the navy also, and though these were 
 paid for in bonds, the manning and maintenance of the ships 
 called for large expenditures out of current funds.^ Lamar's 
 attitude toward the Indians was a hostile one: he favored their 
 expulsion or extermination, and the campaigns in pursuance of 
 this policy resulted in bloody retaliations by the Indians.* 
 
 ^The fact that civil expenditures were almost equal to the military 
 and naval is explained by the large demands of the civil list, and by 
 the weakness of the military and naval establishments. 
 
 -Message of November 12, 1839. 
 
 ^Expenditures for naval purposes during the first nine months of 
 1839 were nearly $60,000, and it was estimated that half a million 
 would be required for 1840. Report of the Secretary of the Treasury, 
 November 8, 1839. 
 
 , "Message of November 12, 1839. Yoakum, History of Texas, vol. 2, p. 
 271, may be interpreted as defending Lamar's Indian policy, Houston's 
 more pacific policy, however, appears to have been both more Success- 
 ful and less costly. 
 
22 Bulletin of the Vmversity of Texas 
 
 The highest point in the expenditures of the republic waa 
 reached in 1840, when the amount was nearly $2,175,000. The 
 means of payment had been provided by the act of December 29, 
 1838, which authorized the issue of treasury notes without limit. 
 It is to be expected, therefore, that the year of largest expendi- 
 tures should be also the year of the largest outstanding circulation 
 of treasury notes.^ 
 
 A reaction in favor of retrenchment set in immediately. Pub- 
 lic opinion, as voiced by the newspapers and the candidates for 
 congress, ascribed the derangement of the finances to extrava- 
 gance.^ The congress elect, the Fifth, began the work of retrench- 
 ment by lowering salaries and abolishing or consolidating offices. 
 The salary of the chief justice was decreased from $5,000 to 
 $3,000.^ The office of secretary of the navy was abolished, and 
 its duties were devolved upon the secretary of war; the office 
 of postmaster-general was abolished, and its duties fell to the 
 secretary of state. Various minor offices also in the treasury, 
 and in the military and naval departments were cut off.* The 
 decrease in the number of dignitaries thus effected caused the 
 civil list of the republic to suffer a reduced appearance, but it 
 resulted in a saving of about $100,000 per annum. ^ The appro- 
 priations of the Fifth Congress for civil purposes amounted to 
 about $450,000, as compared with $550,000 by the Third. 
 
 The chief reduction in expenditures, however, took place in 
 the army and navy. No appropriation was made for the reg- 
 ular army, and the president was required to put out of com- 
 mission the vessels of the navy. The appropriation for these 
 branches of public defense amounted to only $211,050, as com- 
 
 'The estimated outstanding circulation, including treasury bonds, on 
 September 30, 1840, was $3,287,962. 
 
 -Telegraph and Texas Register, December 16, 1840. As early as 
 January 19, 1839, this newspaper employs the fiction of a dialogue be- 
 tween a merchant and a farmer to advocate economy. The merchant 
 advocates a national bank as the means of restoring the solvency of 
 the republic, but the farmer contends that the legislators should awake 
 from their "golden dream of folly," and study retrenchment. 
 
 ^Act of December 5, 1840; Gammel, op. cit., vol. 2, p. 553. 
 
 ^Act of January 18, 1841; ibid., p. 569. 
 
 '^Farewell address of the Speaker of the House; House Journal, 5th 
 Tex. Cong., p. 723. 
 
A Financial History of 'Texas 
 
 23 
 
 pared with $1,581,369 appropriated by the Fourth Congress, 
 The will of congress in regard to a reduction in military and 
 naval expenditures was not carried out fully by President Lamar. 
 He did not deem it practicable to retire the navy, and his ar- 
 bitrary promotion of the visionary Sante Fe expedition increased 
 military expenditures. Lamar had as early as 1839 suggested 
 the expedition to congress, but that body refused its assent. 
 The president then had it undertaken without legislative ap- 
 proval. The expedition resulted disastrously, and while those 
 who engaged in it paid a considerable part of the cost, it was 
 a source of some expense to the treasury.^ 
 
 The three years of the Lamar administration saw an increase 
 in treasury notes and in expenditures that was unparalleled in 
 any former or succeeding administration. The debt was more 
 than tripled and the paper promises of the government became 
 worth only twelve cents on the dollar. The republic was a 
 virtual bankrupt. To lead them out of the financial morass, the 
 people turned again to General Sam Houston. Lamar's policies: 
 were reversed, and the retrenchment initiated by the Fifth Con- 
 gress w^as carried much farther. 
 
 The Sixth Congress, or the first under Hjouston's second ad- 
 ministration, has been called the ''Reform Congress." The act 
 of December 11, 1841, abolished officers, decreased the number 
 of clerks employed in the several departments, and reduced sal- 
 aries from that of the president down.^ 
 
 ^Yoakum, op. cit., vol. 2, pp. 321-331, gives an account of this expedi- 
 tion. See also Garrison, Texas, pp. 244-6. 
 '•^The salaries, as fixed by this act, were as follows: 
 President, $5,000. 
 Vice-president, $1,000. 
 Secretary of state, $1,500. 
 Secretary of treasury, $1,500. 
 Secretary of war and navy, $1,500. 
 Attorney general, $1,000. 
 
 Commissioner of the general land office, $1,200. 
 Treasurer, $1,000. 
 Comptroller, $1,000. 
 
 Chief justice and district judges, $1,750. 
 Chief clerks, $600. 
 Assistant clerks, $500. 
 Members of Congress, $3 per diem. Gammel, op. cit., vol. 2, p. 684, 
 
24 Bulletin of the University of Texas 
 
 The zeal of congress for retrenchment in the civil list ex- 
 ceeded, however, that of the president. In his message of De- 
 cember 20, 1841, Houston said that the time when retrenchment 
 was necessary and important had gone by.^ He meant by this, 
 doubtless, that the military and naval policy of the Lamar ad- 
 ministration should never have been entered upon. In his 
 message of June 27, 1842, also, he complained that his sugges- 
 tions as to the finances had not been enacted at the preceding 
 session, and, as if to express his opinion of the retrenchment bill 
 that had been passed, he added that salaries were insufficient and 
 that the most efficient officers of the government were resigning.^ 
 
 The reduction in salaries was, indeed, extraordinary, and, in 
 view of the high prices prevailing and the opportunities for 
 gain outside of government employment, Houston was justified 
 in deprecating the action of congress.^ No further reduction 
 was recommended either in or out of congress, but the discon- 
 tinuance of what were regarded as useless officers, such as, for 
 example, foreign ministers, charge d'affaires, and secretaries of 
 legation, was advocated.* 
 
 More important than the economies worked in the civil list were 
 those in the army and navy. The policy of Lamar toward the 
 Indians was, as has been stated, one of extermination; and in 
 
 ^Executive Record, No. 40. 
 -Executive Record, No. 40. 
 
 'The following is a statement of salaries paid at the seat of govern- 
 ment before and after the act of December 11, 1841: 
 
 1840 $174,200 
 
 1841 173,506 
 
 1842 32,800 
 
 Quoted by Yoakum, op. cit., vol. 2, p. 321, from a statement of the 
 comptroller, December 16, 1842. The reduction here shown looks al- 
 most incredible, but the figures tally closely with those of the appropria- 
 tion acts. 
 
 *Th6 senate committee on finance believed in abolishing the for- 
 eign missions and offices of secretary of the treasury and secretary of 
 war and navy. Senate Journal, 7th Tex. Cong., p. 30. The Telegraph 
 and Texas Register of January 3, 1844, thought the work of economy 
 was not completed and advocated dispensing with "useless foreign rep- 
 resentatives." These recommendations were not carried out, however, 
 and the act of December 11, 1841, remained the great measure of re- 
 trenchment of civil expenditures. 
 
A Fhiancial History of Texas 25 
 
 regard to Mexico, he was in constant expectation of the renewal 
 of the war. Houston's policy toward the Indians was markedly 
 different. He had lived among them and understood them, and 
 they had a very high regard for him. Treaties were made with 
 nearly all of the tribes, and a regime of amity was established 
 which told greatly in favor of decreased Indian expenditures/ 
 
 The failure of the Fifth Congress to make any appropriation 
 for the regular army showed how little the legislators feared a 
 renewal of hostilities with Mexico. But, as a matter of fact, in 
 March and September of 1842 there were two invasions, and San 
 Antonio, Refugio, and Goliad were occupied by the enemy. Fol- 
 lowing the invasion in March, congress, in June, declared for an 
 offensive war, and a large body of Texans rushed to arms. The 
 invading armies withdrew after a few days' occupation of the 
 captured towns, and the failure of the republic's agents to effect 
 a loan and the president's veto of a bill appropriating one million 
 acres of land upon which land scrip should be based and sold, 
 dispelled the war cloud. jMexico besides being weak on account 
 of internal dissensions was also, like Texas, too poor to engage 
 in a war. 
 
 The expenditures of a military character were, after 1841, 
 only such as were necessary to keep a few companies of rangers 
 in the field. Expenditures on account of the navy diminished to 
 a nominal sum. A secret act was passed in January, 1843, to 
 sell the vessels, and they were put out of commission at once." 
 
 The economy of Houston's second administration resulted in 
 total expenditures of only $511,083 for the three years, 1842-44, 
 as compared with $4,855,215 for the preceding three years. At 
 the beginning of his term President Houston found the financial 
 condition of the government to be deplorable; at its close, he 
 
 ^The following statement of expenditures on account of the Indians 
 was prepared by the comptroller in 1854: 
 
 1837-1838 (Houston) $ 190,000 
 
 1839-1841 (Lamar) 2,552,319 
 
 1842-1844 (Houston) 94,092 • 
 
 1845 (Jones) 45,000 
 
 Yoakum, op. cit., vol. 2, p. 341 n. 
 ^This secret act was repealed February 5, 1844, but expenditures were 
 
 unaffected. Gammel, op. cit., vol. 2, p. 1027. 
 
26 Bulletin of the University of Texas 
 
 noted that the finances were in a most "healthy and prosperous 
 condition."^ 
 
 Viewing the entire period of the republic, the history of ex- 
 penditures falls into two well defined divisions, one of which 
 extends from 1836 to 1841, the other from 1841 to 1846. Total 
 expenditures for the first period were $7,128,873, or an annual 
 average of $1,879,978 ; the total for the second period was $736,- 
 713, or an annual average of $184,178. 
 
 The functions performed by the government were confined to 
 the administrative and protective. Although in the beginning 
 the general governmental framework was of most pretentious 
 proportions, it was gradually modified by either abolition or con- 
 solidation of ofijces until it was so simple as to be almost incon- 
 sistent with the position of Texas as a national entity. Civil 
 expenditures were quite exclusively for the congress, the presi- 
 dent and his cabinet, and the judiciary. One will look in vain 
 for appropriations for education, the care of the defectives, or 
 internal improvements.- It was not because such objects of ex- 
 penditures were unappreciated, but because there were more 
 pressing needs. In the case of education, rich provision was 
 made by appropriations of public lands, but the fruits of this 
 endowment did not materialize during the life of the republic. 
 
 The greatest drain upon the treasury, and the chief cause of 
 its difficulties, was the military and naval expenditures. The 
 frontier position and condition of the state caused these ex- 
 penditures. Mexico refused to recognize the independence of 
 Texas, and an army and navy were deemed necessary to repel the 
 expected attempt at resubjugation. Rangers also were in con- 
 stant service on account of the attacks of marauding Mexicans 
 and of hostile Indians upon the western settlements. It is true 
 that conditions in Mexico were throughout the period such as to 
 render fanciful the fear of an invading army strong enough to 
 
 'See Anonymous (C. E. Lester), The Life of Sam Houston, p. 191, 
 for a panegyric account of Houston's accomplishments in conducting 
 the government. Also Crane's Life and Select Literary Remains of 
 Sam Houston, p. 157-165. 
 
 ^The erection of a penitentiary was provided for by the act of Jan- 
 uary 4, 1842; Gammel, op. cit., vol. 2, p. 695. On February 3, 1845, 
 an appropriation of $9,000 was made for the erection of lighthouses 
 on Galveston Island and at Port Caballo; ibid., p. 1135. 
 
A Financial History of Texas 27 
 
 accomplish reconquest, but in the early years of the republic 
 this was not understood by the Texans. A different and less 
 costly policy toward the Indians also might have been adopted; 
 but there was no change in either policy until 1841, and by that 
 time the greatest harm had been done. The mistake of the 
 republic in preparing for defense is not to be judged too harshly 
 because both the Indians and the Mexicans seemed a great men- 
 ace at that time. 
 
Chapter 2. 
 receipts. 
 
 Morfit, the agent sent by President Jackson to Texas to report 
 on its condition, wrote in September, 1836, that "the present re- 
 sources of Texas are principally derived from the sympathies of 
 their neighbors and friends in the United States, and by loans 
 upon the credit of the State. "^ With the establishment of the 
 permanent government in October, however, this partial depend- 
 ence upon philanthropy was outgrown, and a system of taxation 
 was adopted, which, with the sale of the public domain, was 
 expected to provide an ample revenue. 
 
 The system adopted was one of direct and indirect taxation. 
 Direct included the general property tax, the poll tax, and license 
 taxes. Indirect consisted of customs duties and an excise tax.- 
 Of these taxes, customs are first in importance. 
 
 A. The Tariff. 
 
 The first general tariff was that enacted December 20, 1836.^ 
 It levied only ad valorem duties, which varied from 1% on bread- 
 stuffs to 50% on silk goods. Sugar and coffee were charged 
 21/2% ; coarse clothing and shoes, such as were worn by slaves, 
 10% ; iron, 10% ; wines, and spirituous and malt liquors, 
 45% ; all unenumerated goods, which included articles of most 
 common use, 25%. The policy manifested in this act of light 
 duties upon necessaries and heavier ones upon luxuries was ad- 
 hered to in all subsequent tariff' measures. In June, 1837, there 
 was a more detailed act, in which specific duties were largely 
 substituted for ad valorem.'* Its general trend, however, was only 
 slightly in the direction of higher duties. Cotton goods were 
 charged 15% ; boots and shoes, 25%, as compared with 
 
 ^House Executive Document, 24th Cong., 2d. Sess., No. 35. U. S. Doc. 
 635. 
 
 -Art. II, sec. 1 of the constitution of the republic provides: Congress 
 shall have power to lay and collect taxes and imposts, excise and ton- 
 nage duties. 
 
 'Gammel, op. cit, vol. 1, pp. 1207-8, 
 
 *Act of June 12, 1837; ibid., pp. 1313-19. 
 
A Financial Histm^y of Texas 
 
 29 
 
 10% under the former act. Breadstuff s, provisions, groc(Ties, 
 meats, malt liquors, coal, seeds, wearing apparel in use, tools of 
 trade, firearms, and building materials were put on the free list. 
 There were further additions to the free list in December, 1837, 
 for the benefit of immigrants.^ The act of February 5, 1840, 
 returned to the original policy of ad valorem duties, and, except 
 for wines and liquors, which were charged the same specific duties 
 as formerly, a uniform ad valorem rate of 15% was levied.^ The 
 free list was narrowed to include only the household furniture, 
 wearing apparel, wagons, necessary farming implements, and tools 
 of trade, brought in by immigrants for their own use, and books. 
 Provision also was made by this act for drawbacks on goods ex- 
 ported to noncontiguous countries, and for carrying out the com- 
 mercial treaty with France. According to the terms of this 
 treaty, which went into effect February 15, 1840, reciprocal treat- 
 ment of the vessels and imports of each nation was accorded, and 
 Texas agreed to admit French silks, imported direct in French 
 or Texas ships, at one-half of the former tariff rates, and to 
 reduce the duties on French wines by two-fifths and on brandies 
 by one-fifth. President Lamar, seeking to influence the French 
 government to guarantee the proposed Texan loan, issued a 
 proclamation on February 11, 1840, abolishing the duties on 
 French wines.^ Treaties of amity, commerce, and navigation 
 were signed also with Great Britain and the Netherlands.* As 
 there were no Texas vessels engaged in the foreign trade, and as 
 the direct commerce with these nations was insignificant, the 
 treaties were largely so much paper, and customs receipts were 
 not affected.^ 
 
 ^Act of December 18, 1837; Gammel, op. cit., vol. 1, p. 1422. Sugar, 
 coffee, tea, salt, flour, all kinds of breadstuffs, iron, steel, household 
 furniture, cotton bagging, bale rope, books, machinery of all kinds, 
 wagons, and implements, brought in by immigrants for their own use, 
 w^ere free. 
 
 ^Ibid., vol. 2, pp. 209-225. 
 
 ^For treaty and proclamation, see Gammel, op. cit., vol. 2, p. 655. 
 
 *That with Great Britain was signed in September, 1842; that with 
 the Netherlands in January, 1843; Gammel, op. cit., vol. 2, pp. 880-5, 
 905-12. 
 
 •^The commerce of Texas was overwhelmingly with the United States. 
 The imports from August 1, 1844, to October 31, 1845, were $1,204,370, 
 and of this total $1,151,733 came from the United States, $9,466 from 
 Great Britain and Ireland, and $2,048 from France. 
 
30 Bulletin of the University of Texas 
 
 The act of 1840 represents the closest approach to free trade 
 that was made at any time in the history of the republic. Owing 
 to the depreciation of the currency in which duties were paid, the 
 actual rate was nearer 3% than 15%, and in 1841, in order to 
 adapt the government receipts to the depreciation, all specific 
 rates were doubled and the uniform ad valorem rate of 15% was 
 trebled, except for sugar, coffee, salt, iron, and steel, which re- 
 mained unchanged.^ In January, 1842, the number of articles 
 subject to specific duties was increased, and the average rate im- 
 posed by the act was about 25%. Besides the necessary equip- 
 ment brought in by immigrants, only Bibles, testaments, primary 
 school books, and livestock were admitted free. An additional 
 duty of 5% was imposed on all goods imported in foreign bot- 
 toms, except where otherwise provided by treaty or act of con- 
 gress.- The improvement in the condition of the currency under 
 Houston accompanied, and was in part responsible for, this 
 change from the high nominal rates of 1841. 
 
 There were no further changes in the tariff' during the re- 
 mainder of the period. The Eighth Congress passed a bill that 
 would have reduced duties to an average of about 17%, but it 
 was vetoed by President Houston on the ground that the republic 
 could not afford to reduce the revenue.^ Under the Ninth Con- 
 gress, suggestions for reduction, reciprocity, and incidental pro- 
 tection were made, but except for admitting ice free of duty, no 
 changes were made. 
 
 The average rate of the customs duties levied by the republic 
 
 ^Act of February 5, 1841; Gammel, op. cit., vol. 2, p. 576. Message 
 of President Lamar, November 1, 1840. Kennedy, Texas, vol. 2, p. 
 362. 
 
 ^Thls discriminating duty aimed at the United States, with whom 
 there was no commercial treaty. See Minority Report of the Senate 
 Finance Committee, January 6, 1845, in Senate Journal, 9th Tex. 
 Cong., p. 120. The receipts due to this 5 per cent augmentation were 
 for the period August 1, 1844, to October 31, 1845, $34,476 out of total 
 duties paid of $310,473. Report of the Secretary of the Treasury, Feb- 
 ruary 15, 1846; Senate Journal, 1st Leg., appendix. For act of January 
 27, 1842, see Gammel, op. cit., vol^ 2, pp. 734-7. 
 
 ^Veto message, February 5, 1844; Executive Record, No. 40. Ac- 
 cording to the Telegraph and Texas Register, February 14, 1844. little 
 public notice was taken ofl the veto in view of contemplated annexation. 
 
A Financial History of Texas > 31 
 
 was not far from 25 per cent.^ There was no great variation 
 from this except under Lamar in 1840 and 1841. Throughout 
 the period of the republic the object of the tariff was revenue; 
 the only important suggestion of a different policy was that 
 made by President Jones that the tariff should be primarily for 
 revenue and incidentally for protection to agriculture and in- 
 dustries.^ 
 
 The weight of the tariff lay upon the necessaries of life, such 
 as breadstuffs, meats, sugar, salt, assorted gTOceries, boots and 
 shoes, dry goods and wearing apparel, household furniture, tools, 
 and farming implements. Distilled spirits were the most im- 
 portant item outside of this list. They were taxed at high 
 specific rates, and from the value of their importations it is to 
 be inferred that they constituted one of the most productive 
 items of the schedule. 
 
 Though the average rate of duty was comparatively low, 
 opposition to the tariff was frequently expressed. It was not so 
 much the principle that was objected to, as it was the vmequal 
 operation upon the different sections. The western and middle 
 districts obtained their imported goods through Galveston and 
 the other gulf ports of entry, where evasion was difficult. The 
 eastern district, however, bordering as it did on the United States, 
 obtained its supplies overland, and the long stretch of land 
 boundary made smuggling easy. As the eastern was the most 
 populous and wealthy section, the evasion by it of its share of 
 the burden of the tariff was a subject of frequent and bitter 
 complaint.^ 
 
 ^For the three years ending September 30, 1838, the average rate 
 was 19.3 per cent; for the year ending September 30, 1840, 17 per cent; 
 for the year ending July 31, 1844, 26.6 per cent; for the period from 
 August 1, 1844, to October 31, 1845, 25.7 per cent. The statistics neces- 
 sary in order to obtain the average of other years are lacking. 
 
 ^Inaugural address, December 9, 1844; Executive Record, No. 40. 
 The Telegraph and Texas Register, December 18, 1844, expressed its 
 unqualified disapproval of the president's suggestion. 
 
 ^The Telegraph and Texas Register, November 14, 1838; June 9, 1841; 
 October 5, 1842; September 6, 1843; January 3, 1844. Report of the 
 Secretary of the Treasury, November 1, 1842. Report of the House 
 Finance Committee, December 17, 1842; House Journal, 7th Tex. Cong., 
 p. 74. Report of the special committee on a memorial presented by 
 the citizens of Galveston and Houston, January 22, 1845; House Jour- 
 nal, 9th Tex. Cong., p. 272. 
 
32 Bulletin of the University of Texas 
 
 Another objection to the tariff Avas that it drove mercantile 
 capital out of the eastern part of ^he republic, because farmers 
 found it more profitable to take their products to Shreveport and 
 other Louisiana points and exchange them for supplies 'than 
 to trade with home merchants who charged prices which included 
 tariff duties.^ Other objections were that it deterred immigra- 
 tion,2 and militated against the recognition by England of Texas 
 independence.^ 
 
 On the other hand, it was urged in favor of 'the continuance 
 of the tariff that it was the most productive, certain, and least 
 objectionable way of raising revenue,* and that it was necessary 
 in order to sustain the treasury notes. ^ Repeal, it was also said, 
 would be in favor of the commercial interests and to the detri- 
 ment of the agricultural,^ and would lead to such an increase 
 in importations as to drain the country of the "means requisite 
 to its prosperity. ' '^ 
 
 The administration of the customs Avas under the direction 
 of the treasury department. There were collectors and deputy 
 collectors appointed by the president, and inspectors and clerks 
 
 ^Report of Finance Committee, December 17, 1842; House Journal, 
 7th Tex. Cong., p. 74. 
 
 ^'Ibid., p. 75. 
 
 ^Report of Special Senate Committee on the Tariff, 1839; in appendix 
 to Senate Journal, 9th Tex. Cong. 
 
 *Report of Finance Committee, December 22, 1838; House Journal, 
 3rd Tex. Cong., p. 206. Report of Finance Committee, January 21, 
 1841; House Journal, 5th Tex. Cong., p. 406. Report of the Secretary 
 of the Treasury, November 1, 1842. Veto message of President Hous- 
 ton, February 5, 1844. Message of President Jones, December 16, 1844. 
 
 ^Report of Finance Committee, December 22, 1838; House Journal, 
 3rd. Tex. Cong., p. 209. It did not occur to this committee that if the 
 amount raised by customs duties were raised by a direct tax, the 
 demand for the notes would at least be the same. 
 
 ^Report of the Finance Committee, December 22, 1838; House Jour- 
 nal, 3rd. Tex. Cong., p. 208. Houston, also, in his message of December 
 20, 1841, said that the principal reason he favored reliance upon im- 
 port duties was that they were more just and equitable. Direct taxa- 
 tion bore, he thought, directly upon the farmer. 
 
 'Report of Finance Committee, January 21, 1841; House Journal, 
 5th Tex. Cong., appendix, p. 406. This argument was not developed 
 by the committee, but as a suggestion it is fallacious. 
 
A Financial History of Texas . 33^ 
 
 appointed by the collector. Collectors were required to givo 
 bond, and their compensation varied in accordance with the im- 
 portance of the port of entry. The act of June 12, 1837, al- 
 lowed a commission of 21/2 per cent nntil the sum amounted to 
 $2,000, after which the commission was one-half of 1 per cent/ 
 The retrenchment policy under Houstx)n led to a reduction in 
 compensation, and a maximum salary, including fees, was fixed 
 at $1,200 for the port of Galveston, and at smaller sums for the 
 other points of entry.- In order that the eastern district might 
 be better administered the sheriffs of the counties that lay in that 
 district were, in 1841, made collectors, and were allowed a com- 
 mission of 10 per cent upon their collections.'' 
 
 The practical absence of any checks upon collectors made 
 abuses of trust possible. There are no complaints of connivance 
 of officials with smuggling, but smuggling was practiced on a 
 large scale.* 
 
 The cost of collection was greater under the commission than 
 under the salary method of payment. For the three years end- 
 ing September 30, 1838, the cost was 17.2%, and for the nine 
 months ending October 31, 1842, 14.8% ; Avhile for the year 
 ending July 31, 1844, it was 11.7%, and for the fifteen months 
 ending October 31, 1845, only 11%. 
 
 The tariff was truly the foundation of the finances of the 
 republic.^ Of the total receipts of the entire period, it con- 
 tributed a little over 58%. From the beginning down to 1842 
 
 'Section 7; Gammel, op. cit., vol. 1, p. 1313. 
 
 ^Section 4 of the act of January 27, 1842; ibid., vol. 2, p. 736. 
 
 'Joint Resolution, February 6, 1841; ibid., vol. 2, p. 623. The act of 
 February 3, 1845, in order to elicit more vigilance on the part of the 
 regular collectors in the eastern district, allowed half of the commis- 
 sion and fees arising, which was in addition to the maximum salary 
 prescribed in the act of January 27, 1842; ibid., vol. 2, p. 1134. 
 
 "Houston, in a message of June 27, 1842, said that the government 
 lost at least one-half of the revenue to which it was entitled because 
 of smuggling. In a message of December 4, 1844, he stated that there 
 had been defalcations of $60,000 by collectors. 
 
 ''President Houston, in his address to the First Congress, May 5, 1837, 
 said that the public domain was "the foundation of the finances." 
 But this source, from which he expected so much, contributed only 
 about 14 per cent of the total revenue. » 
 
 3— H 
 
"34 Bulletin of the University of Texas 
 
 it contributed 42.5%, while from 1842 to the close of the period 
 its share was 83%. During the first period it was stall a ques- 
 tion as to whether direct or indirect taxation should prevail, but 
 after 1841 there was a complete breakdown of direct taxation 
 which was due in part to a popular preference for paying taxes 
 indirectly.^ As compared with other sources, Customs receipts 
 were also much the most uniform from year to year, and such 
 fluctuations as occurred were due not so much to changes in rates 
 as to the condition of the currency. 
 
 Up to 1843 treasury notes and 8% bonds were receivable at 
 par in payment of duties. After 1843 only specie and exchequer 
 bills, as the treasury notes issued during Houston's second ad- 
 ministration were called, were receivable, and the latter were 
 accepted only at the current rate of discount* in the market. 
 As duties were paid upon invoice cost, and as this was based 
 on treasury notes, the depreciation of the notes was reflected in 
 the value of importations. Down to 1842 the years of largest 
 receipts were 1840 and 1841, and these were the years also of 
 largest circulation and greatest depreciation of the notes. The 
 annual average of receipts during 1842, 1843, and 1844 is less 
 than that of any preceding year. The increase in population 
 and the improvement in the general economic situation of the 
 republic would be expected naturally to result in increased im- 
 ports and duties paid, aiid the failure of the revenue statistics 
 to show this is due to the improvement in the currency. The 
 red-backs, or old issues of notes, were not receivable for duties 
 after February 1, 1843, and the exchequer bills which suc- 
 ceeded the red-backs, while depreciated considerably at first, 
 never fell as low as the old notes, and were, besides, received 
 only at their current market quotation. - 
 
 ^Henry Smith, secretary of the treasury, said in a communication 
 to the senate, November 29, 1838, that, as a general rule, direct taxa- 
 tion was odious, and that in the situation of Texas it could not be 
 relied upon with certainty. See also Houston's message of December 
 20, 1841, and the Telegraph and Texas Register, November 30, 1842. 
 
 'After 1843 the customs began to show receipts in par funds. The 
 report for the year ending July 31, 1844, showed $73,299 in specie, 
 and $109,157 in exchequer bills which were worth in specie $95,486. 
 The report for the fifteen months ending October 30, 1845, gave specie 
 receipts at $202,121, and exchequer bills at $140,997, which had a 
 JBpecie value of $135,680. 
 
A Fimancial History of Texas 35 
 
 B. Tonnage Dues and Port Fees. 
 
 The several acts to levy customs duties imposed also tonnage 
 duties, and entrance, clearance and other port fees. These were 
 reported by collectors along with customs receipts, and commis- 
 sions, when they were the method of compensation, were al- 
 low^ed upon their amount. The bases for port charges were 
 until 1840 such as were paid in the ports of the United States 
 for the same service,^ but the act of February 5, 1840, prescribed 
 a schedule of new charges.- 
 
 By the act of December 20, 1836, a tonnage duty of 25 cents 
 a ton was levied upon all vessels of the burden of 10 tons and 
 upward from a foreign port.^ This was raised to $1.00 by the 
 act of June 12, 1837.^ In order to encourage steam navigation, 
 steam packets w^ere exempted from tonnage dues in 1837, but 
 this was repealed in 1839.^ In 1841 it was provided that all 
 vessels built in Texas and sailing under its flag should be free 
 of tonnage duty,^ but the act of January 27, 1842, prescribed 
 dues of 60 cents a ton. for merchant vessels and 30 cents for 
 steamboats,' and in 1844 it was provided that vessels of those 
 powers with which Texas had no treaty, should pay $1.00.' 
 In 1845 Texas vessels and vessels of powers having a com- 
 mercial treaty with Texas paid 62i/^ cents a ton, and the vessels 
 of other countries $1.00.^ Reciprocal treatment in regard to 
 tonnage dues and port charges were provided for in the com- 
 mercial treaties with France, Great Britain, and the Netherlands, 
 but, as in the case of customs duties, the effect upon receipts 
 was neglisrible, because the direct trade was insignificant. 
 
 ^Act of June 12, 1837, section 5; Gammel, op, cit., vol. 1, p. 1317. 
 
 ^Entrance and clearance of ships of less than 100 tons, $1.50; of 
 more than 100 tons, $2.50; every port entry, $2.00; permits to land or 
 load goods, 20 cents: bills of health and other documents, 20 cents. 
 Ibid., vol 2, p. 209. 
 
 'Ibid., vol. 1, p. 1286. 
 
 *Ibid., p. 1317. 
 
 •Act of December 18, 1837; ibid., p. 1428. Act of January 10, 1839; 
 ibid., vol 2, p. 40. 
 
 •Act of January 4, 1841; ibid., p. 480. 
 
 »Ibid., p. 737. 
 
 "Act of February 5, 1844; ibid., p. 107. 
 
 ^Act of February 1, 1845; ibid., p. 1109. 
 
36 Bulletin of the University of Texas 
 
 There are no statistics shoAving- the receipts from these sources, 
 except for the year 1844, when tonnage dues amouated to 
 $15,446. and fees of office and blanks, $2.390 ; and for the fifteen 
 months ending January 1, 1846, when the amount derived from 
 all items of this character was $25^,433.^ 
 
 C. The Property Tax. 
 
 No direct taxes were levied by any of the revolutionary gov- 
 ernmental bodies, because of the delay involved in their estab- 
 lishment and operation, the state of confusion existing in the 
 country, and the inchoate condition of land titles.^ Upon the 
 establishment of the permanent government improved conditions 
 made the adoption of a system of direct taxation practicable, 
 and Kennedy, the Englishman, writing in 1841, felt justified in 
 saying that Texas had "set the example of resorting to direct in 
 preference to indirect taxation."^ 
 
 The act of June 12, 1837, which was the first direct tax meas- 
 ure, provided simply that an ad valorem tax of % of 1% should 
 be levied on all ''real, personal, or mixed" property.* It was es- 
 pecially provided, however, that cattle and horses belonging to 
 citizens of the United States should pay $1 per head.'' The act 
 of May 24, 1838, enumerated the property that should be sub- 
 ject to the direct tax, and the list included only land, slaves, 
 horses over two in number, cattle over twenty-five in number, 
 watches, clocks, and pleasure carriages.^ The rate remained at 
 % of 1%. In 1839 land certificates were singled out for specific 
 
 ^It is not possible to state separately how much was derived from 
 tonnage dues and how much from other charges for the period ending 
 January 1, 1846. The receipts from these sources for other years are 
 not separated from customs receipts, and the latter are vitiated, there- 
 fore, to the amount of the former. 
 
 ^Art. 20 of the "Plan and Powers of the Provisional Government" 
 provides that the governor and council shall have the power to adopt 
 a system to meet the exigencies of the country. Gammel, op. cit., vol. 1, 
 p. 909. 
 
 ^History of Texas, vol. 2, p. 363. 
 
 *Sec. 1; Gammel, op. cit., vol. 1, p. 1319. 
 
 ''Sec. 7. This was repealed by the act of January 16, 1840, but was 
 restored by the act of February 3, 1845. 
 
 *Sec. 8; Gammel, op. cit., vol. 1, p. 1514. 
 
A Fmancial History of Texas 37 
 
 taxes, the amount varying with the quantity of land.^ Up to 
 1840 the only specific taxes levied were those on live stock be- 
 longing to non-residents, and land certificates. In 1840, how- 
 ever, this method of taxation was very much extended. Only 
 land, buildings in towns, and money loaned, became subject 
 to ad valorem rates, while upon slaves, livestock, pleasure car- 
 riages, watches, and clocks there were levied specific taxes. 
 Merchandise was reached by a tax on sales, and merchants 
 were subject also to license taxes, as were hotel, restaurant, 
 and boarding-house keepers, liquor dealers, and owners of bil- 
 liard tables, nine-pin alleys, and games of such kind. The ad 
 valorem rate was I/2 of 1% on land whose owners were citizens 
 of the republic, and 1% on land whose owners were non- 
 residents and on land held by an agent or attorney for another.^ 
 For the remainder of the -period of the republic, the practice 
 of enumerating the property that was subject to taxation and 
 imposing ad valorem rates on real property and specific rates on 
 personal property was followed. The notable act of February 5, 
 1842, departed from the rule only in making pleasure carriages 
 subject to an ad valorem instead of a specific rate. Besides im- 
 posing a tax of $3 per year on each horse kept exclusively for 
 racing, and reducing considerably all rates, this act also adopted 
 
 I 
 
 ^These certificates represented the right to the location of land. The 
 specific taxes levied were: on a certificate for less than 640 acres, $1; 
 for 640 acres and less than 1280, $2; for 1280 acres and less than one- 
 third of a league, $3; for one-third of a league and less than one 
 league, $4; for one league and labor, $5. Act of January 26, 1839, sec. 
 8; ibid., vol. 2, p. 141. 
 
 -Act of January 16, 1840; ibid., pp. 183-202. The property subject 
 to specific taxes was as follows: Each horse kept exclusively for rid- 
 ing, $10; for riding or carriage, $1; every stud or jack, the price of a 
 stand; all other horses and mules, except four each for every farmer 
 or laboring man, 25 cents a head; cattle over twenty-five in number, 
 10 cents a head; pleasure carriages, $1 for each wheel; slaves under 
 fifteen years of age, $1 per head; slaves between fifteen and fifty 
 years of age, $3; slaves over fifty years, $2; gold watches, $3 each; sil- 
 ver watches, $1; clocks with metal works, $3; clocks with other than 
 metal works, $1; every pack of playing cards sold, given away, loaned 
 or otherwise disposed of, $3. The practice of discriminating against 
 land held by an agent was begun by the act of January 26, 1839, which 
 imposed a double tax on it; ibid., p. 140. 
 
38 Bulletin of the University of Texas 
 
 a curiously variable ad valorem rate. In the acts of 1837 and 
 1840 the ad valorem rate was the same on all kinds of property, 
 except where the land was held by non-residents or by agents or 
 attorneys. The act of 1842, however, levied a rate of 1/10 of 1% 
 on land owned by residents, 1/5 of 1% on that owned by non- 
 residents, 1/4 of 1% on town lots and improvements and money 
 loaned at interest, and % of 1% on pleasure carriages.^ 
 
 Ae is to be seen from the preceding account, considerable 
 property was exempt from taxation. The act of 1837 included 
 all property, but in that of 1838 only those things were subject 
 which were enumerated, and improvements upon land, house- 
 hold and kitchen furniture, wearing apparel, and all that is un- 
 derstood as intangibles, were omitted from the enumeration. In 
 the act of January 16, 1840, improvements upon land in towns 
 were made taxable, but those upon 'agricultural lands, and other 
 property not specifically set forth in the act, were expressly ex- 
 empted.- From 1838 to 1845 livestock below a certain number 
 were exempted, and in 1841 one saddle horse became tax free 
 to each member of a volunteer company organized in certain 
 frontier counties.^ It was the practice also from 1839 to exempt 
 the property of colleges and universities either for five years or 
 for an undefined period.* It was not until 1845, however, that 
 legal exemption of property held for religious purposes was 
 made.'* 
 
 Up to 1840 it was the rule to assess property, both real and 
 
 ^The specific rates levied by the act of February 5, 1842, were: 
 horses and mules, except four for each farmer or laborer, 10 cents a 
 head; cattle over twenty-five in number, 3 cents a head; slaves under 
 ten years of age, 25 cents each; slaves between ten and sixty years of 
 age, 75 cents; gold watches in use, $1; silver watches in use, 50 cents; 
 clocks with metal works, in use, 75 cents; clocks with wooden works, 
 in use, 25 cents. Gammel, op. cit., vol. 2, p. 778. The act of February 
 3, 1845, levied a tax of 1 cent a head on all cattle; but on cattle, horses, 
 and mules owned by non-residents of the republic, except such as were 
 owners through heirship, the tax was $1 a head; ibid., pp. 778-780. 
 
 =Sec. 38; ibid., p. 200. 
 
 •Ibid., p. 647. 
 
 *Each charter of incorporation provided for the exemption; ibid., 
 pp. 144, 427, 540, 612, 920, 950, 1133, 1149, 1177. 
 
 ''Act of January 30, 1845; ibid., p. 1100. The exemption extended to 
 lands not exceeding ten acres, buildings, and furniture. 
 
A Financial History of Texas 
 
 m 
 
 personal, at the place where the owner, agent, or administrator 
 resided. A change was made by the act of January 16, 1840, 
 which provided that a person holding taxable property in any 
 other county than that in which he resided might send to the- 
 assessor of the county where the property was located a sworn-- 
 list of such property.^ There was a return to the old rule, how- 
 ever, in 1841.2. 
 
 The mixed system of ad valorem and specific taxes obviated 
 many of the difficulties of valuation. The law of June 12, 1837,. 
 required the person rendering property to give a complete in- 
 ventory and "a fair valuation". If the assessor thought the 
 valuation too low, he had to call in two citizens to value the 
 property.^ In 1839 a decided change w^as made by devolving 
 upon the chief justice of each county, assisted by two citizens, the 
 valuation of the inventories of assessment.* But in 1840 this 
 innovation was given up and the plan of permitting both inventory 
 and valuation by the person assessed was restored.^ It was stip- 
 ulated in the act of 1840, however, that the minimum valuationi 
 of land should be $1 per acre, that of unimproved lots in an in- 
 corporated town, $50, in an unincorporated town, $25.® 
 
 The work of assessment was done by an assessor appomted',- 
 until 1840, by the county court and thereafter by the commissioner 
 of roads and revenue. In 1839 he was replaced by a ''returning 
 officer ' ' in each precinct, w^ho w^as appointed by the county court, 
 and w^hose duty was simply to record the renditions made.'^ This 
 plan was discontinued in 1840. Until 1842 the assessor was ap- 
 pointed for one year, but after that for three years f and up to 
 1840 candidates for the position made sealed proposals to the 
 chief justice of the county, and he was appointed who seemed 
 "best calculated to perform the duties required and protect the 
 
 ^Section 6; ibid., p. 185. 
 
 ^Act of February 4, 1841, section 2; ibid., p. 577. 
 ^Section 3; Gammel, op. cit., vol. 1, p. 1319. 
 'Act of January 26, 1839, section 3; ibid., vol. 2, p. 141. 
 ''Act of January 16, 1840; ibid., p. 184. 
 
 «=Ibid., pp. 186, 190. The act of February 5, 1842, reduced the mini- 
 mum valuation of land to 50 cents an acre; ibid., p. 778. 
 'Act of January 26, 1839, section 1; ibid., p. 140. 
 *Act of February 5, 1842, section 8; ibid., p. 778. 
 
40 Bulletin of the University of Texas 
 
 public interest. ' '^ The method of compensation in the form of a 
 graduated percentage of the assessment was adopted in 1840; 
 up to that time, the compensation was that proposed in the bid 
 for the position.^ The assessor was thus a county officer whose 
 assessment served as the basis for county and republic tax levies. 
 He was under oath and bond to perform his duties faithfully. 
 These duties were few, consisting, briefly, of giving notice in 
 several public places of the time when he would be present at 
 the mustering ground or captain's beat in each precinct to re- 
 ceive the inventories of property; of attending these places at 
 the advertised time and receiving such lists; of administering 
 oaths ; of arranging for disinterested valuation where he deemed 
 the value given by the owner to be too low ; and of giving notice 
 to delinquents and posting taxable lists. Until 1840 twenty 
 days' notice, and after 1840, ten was required to be given. On 
 the day specified in the notice persons were required to present 
 themselves with a list or inventory of their taxable property. In 
 1840 only sickness or absence from the county excused one from 
 not attending in person the place of assessment, and permitted 
 instead a sworn list to be sent. Those not attending were sub- 
 ject to a penalty of $10 as a compensation to the assessor for 
 having to go to their residence. If the assessor did not find the 
 individual at home, he left a written notice to the effect that if 
 the list were not in by the date set for completing the assessment, 
 he himself would make an assessment to the best of his informa- 
 tion. A person assessed under these circumstances was liable not 
 only to the penalt^^ of $10 but also to a double tax. 
 
 The time varied as to when assessments should be completed. 
 The act of June 12, 1837, required that returns should be made 
 by the assessors to the treasury department before the meeting 
 of the next congress which was early in November. The time 
 thus allowed for the appointment of assessors and the work of 
 assessment for this year was very short. The act of 1839 pro- 
 vided that the returning officers should complete the inventories 
 
 ^Act of June 12, 1837, section o; ibid., vol. 1, p. 1321. 
 
 -The act of January 16, 1840, section 27, provided for 5 per cent on 
 the first $2,000 of taxes assessed, 3^ per cent on the next $4,000, 2 per 
 cent or the next $6,000, and 1 per cent on the remainder; ibid., vol. 
 2, p. 198. 
 
A Financial History of Texas i\ 
 
 and turn them over to the chief justice of the county on or 
 before December 1. By the act of January 16, 1840, the roll 
 had to be returned to the treasury department by the fourth 
 Monday* in July, or the assessor incurred a penalty of $1,000. 
 The act of 1842 fixed the date of completion of assessment at 
 December 1, but after 1843, it was September 1. 
 
 The requirements as to the manner of compiling and recording 
 the inventories were few and simple. The provision in the act 
 of June 12, 1837, was that "the register shall show in proper 
 columns the person's name, quantity of land in acres, number of 
 negroes, horned cattle, horses and mules, and miscellaneous, in- 
 cluding all other unclassed articles. Under each specific head 
 shall appear the number and amount belonging to each individual, 
 and one column showing the aggregate or gross amount, and 
 another column showing the corresponding amount due from 
 each."i 
 
 The act of January 16, 1840, required of each person holding 
 property for others, three inventories: one for the property he 
 owned, a second for the property he held as guardian, executor, 
 or administrator, and a third for that which he held as agent or 
 attorney.^ The fact that no separation of such property was 
 required before 1840 shows the crudity of the early law. Through- 
 out the period 1836-1860 the assessment rolls were made out in 
 duplicate, one of which was sent to the treasury department, the 
 other turned over to the collector.^ 
 
 By the act of June 12, 1837, the oath taken by the taxpayer 
 was in regard to the completeness of the inventory and the fair- 
 ness of the valuation. In 1838 an oath had to be made by the 
 taxpayer that there had been no removal of property in order 
 to avoid taxation ;^ but after 1839 the oath was only to the effect 
 that the inventory was complete. False rendition was, by the 
 act of 1837, an indictable offense, and entailed also a double 
 tax,® but in 1842 a forfeit of 5% a month on the amount not 
 
 ^Section 2; ibid., vol. 1, p. 1320. 
 
 'Section 5; ibid., vol. 2, p. 1321. 
 
 ''Act of June 12, 1837, section 2. Act of January 16, 1840, section 8. 
 
 ^Section 3; Gammel, op. cit., vol. 1, p. 1319. 
 
 ^Act of May 24, 1838, section 2; ibid., p. 1513. 
 
 ''Act of June 12, 1837, section 3. 
 
 i 
 
42 Bulletin of the University of Texas 
 
 rendered or undervalued was substituted for the double tax 
 penalty.^ 
 
 The collection of the property tax was performed by the sheriff 
 of the county. He was an elective officer, holding office for two 
 years, and received in compensation for the work of collection a 
 commission of 5%.^ In the same manner as the assessor he gave 
 notice as to when and where the payment of taxes would be 
 received. Under the act of June 12, 1837, collection began 
 October 1, and returns had to be made to the treasury depart- 
 ment by January 1. The act of December 21, 1837, made Sep- 
 tember 1 the date of return to the treasury departinent, with the 
 result that collection was made during the summer, or months 
 when the farmer was least able to pay. It was not until 1842 
 that collection was provided for during the convenient months 
 of the quarter beginning with December.^ 
 
 The rule until 1840 was that taxes should be paid in the county 
 where the owner or agent or administrator resided. In 1840 
 it was provided that payment should be made in the county where 
 the property was located.* Failure to pay taxes by the date set 
 was followed by execution and sale by the sheriff of any property, 
 real or personal, and until 1843 delinquent property was also 
 subject to a double tax.^ According to the act of May 24, 1838, 
 real estate could be redeemed by the original owner within twelve 
 months from the date of sale by repaying the purchase price plus 
 50%. This was changed in 1839 so that redemption could be 
 made within two years by paying the purchaser double the 
 
 ^Act of February 5, 1842, section 6; ibid., vol. 2, p. 780. 
 
 ^Act of December 20, 1837; ibid., vol. 1, p. 1239. .January 16, 1840; 
 ibid., vol. 2, p. 199. 
 
 ^Act of February 5, 1842; ibid., p. 778. 
 
 ^Act of January 16, 1840; ibid., p. 187. 
 
 "By the act of December 21, 1837, failure of payment was to be fol- 
 lowed by execution against the property of the delinquent, issuable by 
 any justice of the peace of the county, and sale by the sheriff of as 
 much as was necessary to satisfy the taxes and costs; ibid., vol. 1, 
 p. 1455. By the act of January 26, 1839, thirty days notice of public 
 sale was added; by the act of January 16, 1840, forty days notice in 
 the case of lands and twenty days in the case of personal property. 
 The act of February 5, 1842, provided that the assessor's list should 
 have the force and effect of an execution, and sixty days notice of sale 
 was required; ibid., vol. 2, pp. 88, 781. 
 
A Financml History of Texas 43 
 
 amount of the purchase price. The act of January 16, 1840, 
 added 20% interest on double the purchase price and taxes. 
 Finally, the act of February 5, 1842, provided that redemption 
 might be made within one year by simply paying double the 
 purchase price. 
 
 D. Business Taxes. 
 
 The taxation of business took the form of license and excise 
 taxes, and taxes upon gross sales of merchandise. There were 
 no taxes of this character until June, 1837, and from then until 
 1840, merchants were subject to an annual license charge of $50 
 for each establishment; public inns and dealers in spirituous 
 liquors, $100; nine pin alleys and like places of amusement, 
 $150 ; owners of billiard tables for each table, $200 ; and peddlers, 
 $50 in each county.^ In 1840 there came an increase in rates, a 
 change in the form of taxes, and additions to the list of occupa- 
 tions taxed.^ Merchants became subject to an annual license 
 charge of $100, and wholesale merchants were further required 
 to pay 25 cents, and retail merchants, 50 cents, on every $100 
 worth of merchandise sold during the year. Where spirituous 
 liquors were sold by retailers of merchandise, an additional 
 license tax of $100 was charged. The tax on billiard tables was 
 raised to $250, that on nine-pin alleys to $200. The tax on public 
 inns remained at $100, while that on peddlers was reduced to 
 $25. The additions to the list were theaters which paid $200; 
 museums, wax works, and the like, $50 ; public race tracks, $100 ; 
 boarding houses having five or more persons for pay, $50 ; cook- 
 shops and restaurants, $50; real estate, ship and merchandise 
 brokers, $100, and money brokers $100 and 3% on each $100 
 loaned; auctioneers, who paid upon sales, an ad valorem rate 
 which varied from 1% to 2%, according to the commission re- 
 ceived and the kind of property sold.^ The act also imposed an 
 
 ^Act of June 12, 1837; ibid., vol. 1, 1311. 
 
 "Act of January 16, 1840, 
 
 ■'On goods, wares, and merchandise, except such as were sold under 
 decree of court, 2 per cent; on sales of real estate, 25 cents on each 
 $100 of sale, when rate of commission was 1% per cent; 50 cents, when 
 rate of commission was 2^ per cent; 75 cents, when rate was 3% 
 per cent; and $1.00 when rate was 5 per cent. All goods, wares, and 
 merchandise sold at private sale were charged at the same rates. 
 
44 Bulletin of the University of Texas 
 
 excise tax of 5 cents on every gallon of spirituous liquors dis- 
 tilled. The act of February 5, 1840, supplemented the pre- 
 ceding act by levying a license tax of $250 upon retail dealers of 
 spirituous liquors in quantities less than a quart, and a further 
 charge of $5 for clerk's fee.^ In 1842 all business taxes were 
 reduced, and reduction was carried farther in 1845, when the 
 license tax upon retail merchants was lowered to $25, and the 
 taxes on gross sales were repealed.^ 
 
 The license required of one who engaged in a taxed occupa- 
 tion was issued by the county clerk, who was authorized to charge 
 a fee of $1, or, in the case of a liquor license, $5. Until 1843 
 he received also a commission of 5% upon the amount of licenses 
 collected.^ In 1843, however, the system was changed so that 
 payment was made to the county treasurer who in turn issued 
 a receipt which entitled one to receive the license of the county 
 clerk.* 
 
 The estimate of gross sales required by the act of January 
 16, 1840, was made to the assessor, and collection of the tax was 
 by the sheriff. The penalty for failing to pay the tax or make 
 the estimates of sales was, by the act of 1840, $1,000, except in 
 the case of peddlers, when the penalty was $500, one-half of 
 which went to the informer. For failure ito pay the liquor 
 license tax the penalty was $1,000 and three months imprison- 
 ment.** In 1843 the imprisonment feature disappeared, and the 
 
 ^Gammel, op. cit., vol. 2, p. 272. 
 
 -The act of February 5, 1841, provided that no tax should be levied 
 on any peddler whose goods were grown or manufactured within the 
 republic; ibid., p. 577. The taxes imposed by the act of February 5, 
 1842, were: wholesale merchants, billiard tables, and theaters, $100 
 per annum; retail merchants, nine-pin alleys, public race tracks, auc- 
 tioneers and money brokers, $50; public inns, museums, and real 
 estate, ship, and merchandise brokers, $25; cook shops, and restaurants, 
 $15; public boarding houses, $10. Retail merchants handling liquor 
 were subject to an extra license tax of $25 when sale was of a quart 
 or over in quantity, and of $100 when less than a quart. Auctioneers 
 also were subject to a further tax of 5 per cent upon commissions; 
 ibid., pp. 778-782. The act of February 3, 1845, is found in Gammel, 
 op. cit, vol. 2, p. 1141. 
 
 ^Act of December 21, 1837; Gammel, op. cit., vol. 1, p. 1455. 
 
 *Act of January 16. 1843; ibid., vol. 2, pp. 868-9. 
 
 'Act of February 5, 1840; ibid., p. 272. There were no penalties pre- 
 scribed for evasion of the tax levied on distilled liquors by the act of 
 January 16, 1840. 
 
A Financial History of Texas 45 
 
 money penalty prescribed was one-fourth of the annual license 
 tax for each day that business was done without a license.^ In 
 1845 the penalty for evasion of payment became simply doubl<^ 
 the amount of the tax.^ 
 
 E. The Poll Tax. 
 
 A poll tax of $1 was levied from 1837 to 1845, when it became 
 50 cents. By the act of June 12, 1837, it was levied on all 
 males, not slaves, between the ages of twenty-one and fifty-five. 
 The act of January 16, 1840, removed the upper age limit, but 
 the act of February 4, 1841, made it forty-five years, that of 
 February 3, 1845, fifty years. In 1841 in order to encourage 
 the formation of a volunteer company in each of the frontier 
 counties, exemption from the tax was extended to the members.^ 
 Payment of the poll tax was not a prerequisite to the exercise 
 of the suffrage, nor were there prescribed any penalties for 
 failure to paj^ 
 
 F. The Characteristics and the Operation of the System of 
 Property and Bu&iness Taxes. 
 
 The distinctive features in the taxation of property by the 
 republic were the employment of specific duties, the fixing of a 
 minimum valuation of land, and the discrimination against the 
 property of non-residents and that held by agents or attorneys 
 for others. Specific duties and minimum valuations were de- 
 signed to do away with undervaluation, which is a characteristic 
 weakness of the general property tax. Provided the objects 
 subject to specific rates are of fairly uniform value and are- 
 found by the assessor, the method is perhaps the simplest way of 
 taxing property. The property so taxed by the republic, — 
 slaves, livestock, pleasure carriages, watches, clocks, and land 
 certificates might be expected to have among a frontier popula- 
 tion no very great inequalities of value within each class. Eva- 
 sion of assessment was the common practice, however, and the 
 method of applying inelastic specific rates made the inequalities 
 
 ^Ibid., p. 868. 
 
 ^Act of February 3, 1845; ibid., p. 1141. 
 
 ■'Act of February 4, 1841; ibid., p. 647. 
 
46 Bulletin of the University of Texas 
 
 between individuals assessed and those not assessed more bur- 
 densome than would have been the case with an ad valorem system 
 alone.^ 
 
 Personal property constituted the most valuable part of the 
 property of the republic and contributed the largest share of 
 direct taxation. After 1842 such personalty as was taxable was 
 subject to specific rates, with the exception of pleasure carriages, 
 money loaned, and merchandise. In 1844 the specific taxes as- 
 sessed amounted to $19,756, the ad valorem to $22,736; in 1845 
 they were respectively $21,525 and $20,872.- When it is re- 
 membered that the ad valorem receipts included those from pleas- 
 ure carriages, money loaned, and sales of merchandise, the larger 
 contribution of personal property is evident. 
 
 The discrimination against the property of non-residents and 
 that held by agents or attorneys finds its explanation in the 
 hostility of a frontier people to absentee capitalists, and to the 
 desire that land should be put to use and not held as a specula- 
 tion. Suggestions were frequent that the tax rate should pro- 
 gress as the amount of land owned increased, the purpose being 
 to make large landholders, both resident and non-resident, sell 
 their holdings; but nothing like this was enacted.^ 
 
 The features of the taxes on business are their undoubted 
 heaviness upon all occupations and the selection of certain 
 amusements for particularly burdensome charges. The act of 
 
 ^The system of specific rates existed in both Louisiana and Alabama, 
 from which many of the early Texans came. The similarity between 
 the Texas statutes of January 16, 1840, and the Alabama acts of Jan- 
 uary 10, 1835, and January 13, 1837, is very close in respect to the 
 enumeration of property, occupations subject to license taxes, penalties, 
 and details as to assessment and collection. 
 
 -There are no statistics for earlier years and none for receipts. 
 Those quoted for 1844 are to be found in the Telegraph and Texas 
 Register, January 8, 1844; those for 1845, in the Report of the Secre- 
 tary of the Treasury, February 15, 1846. The polls assessed for 1844 
 were 8,247; those for 1845, 10,730. 
 
 ^The Report of the Special Committee of the Senate on the Tariff, 
 1838, and the Report of the Secretary of the Treasury, September 30, 
 1841, favored a progressive rate. The house committee on finance, 
 to whom had been referred a bill proposing this scheme, reported ad- 
 versely on January 5, 1844, on the ground that it lacked "fairness and 
 equity"; House Journal, 8th Tex. Cong., p. 156. 
 
A Financi-al History of Texas 47 
 
 January 16, 1840, especially illustrates these charact<iris1;ies. 
 Billiards, nine-pins, horse-racing, card playing, the theater and 
 wax works were to the early Texans undesirable amusements, 
 and the taxes imposed expressed the disapprobation entertained.^ 
 The commercial or monied interests were also regarded as 
 unproductive, and were the objects of some antipathy. The 
 high license taxes imposed regardless of the size of the establish- 
 ment, the taxes on sales, and the special burdens laid upon 
 brokers and auctioneers give evidence of this feeling.- The 
 system of business taxes, however, like the property tax, broke 
 down, especially after 1841. 
 
 Presidential messages and treasury and finance Committee 
 reports throughout the period are full of complaints of the ill- 
 working of the whole system of direct taxation. This was evi- 
 denced also by the wholesale fashion in which the laws were 
 changed annually down to 1842. The difficulties experienced 
 were due in part to the inadequacy of the laws and in part to 
 the unwillingness, and often to the inability, of the people to 
 bear the taxes levied. In the beginning much land to which 
 there were claimants escaped because the government deemed 
 it inadvisable to open the land offices.^ Land certificates were 
 valuable as representative of land, but they were not taxed 
 until 1839. They were, however, one of the most intangible 
 forms of property the assessors had to deal with, and evasion 
 
 ^The Alabama Act of January 5, 1837, has the same features. It im- 
 poses, for example, a tax of $2,000 on every billiard table, and the pen- 
 alty for keeping a table without a license was $4,000. Race horses, 
 public race tracks, cards, and museums, were also singled out for taxes 
 that were so high as to appear to have had a sumptuary purpose. 
 
 -The house committee on finance said in its report, December 22, 
 1838: "Repeal or remove the tariff, and you will place the great and 
 sterling interests of the country in the hands and at the mercy of the 
 commercial community." Houston, also, in his message of December 
 20, 1841, favored a diminution of direct taxation, because it bore im- 
 mediately upon "the actual laborer and productive classes." House 
 Journal, 3rd. Tex, Cong., p. 206. 
 
 The Alabama act of Jan. 5, 1837, suggests the Texas provisions in 
 this respect. It levied a tax on sales of merchandise, and though land 
 was taxed ten cents on the $100, money loaned was taxed twenty-five 
 cents. 
 
 ^President Lamar's message, December 2, 1838. 
 
48 Bulletin of the University of Texas 
 
 was comparatively easy. The non-resident holding of land was 
 on an enormous scale, and as the lands so held were required 
 to be rendered where the owner or agent resided, non-rendition 
 and undervaluation were comparatively easy/ The laws also re- 
 quired the rendition of lands by the owners, and a remedy for 
 the evasion which this opened up was sought in the provision 
 of the act of January 16, 1840, which required that the county 
 surveyor should provide the assessor with a list of the recorded 
 surveys in the county. This provision was repealed, however, 
 in 1841 and the old method of self-assessment with the absence 
 of system in reaching owners was restored. The fact that the 
 population was widely scattered made the visits of the assessor 
 and the collector difficult, and these officers usually waited in 
 vain for the taxpayer to present himself for submission to a 
 tax w^hich no less a person than Henry Smith, secretary of the 
 treasury under Houston, characterized as ''odious."^ 
 
 There were defects in the system of collection. The sheriff 
 performed this task of collection of. taxes in addition to his 
 other duties. He was frequently derelict not only in making 
 collections but also in making returns to the treasury of what 
 he had collected.^ It was suggested that collectors should be 
 appointed by the central government and subject to its rules, 
 and therefore not amenable to local considerations, but though 
 urged by both presidents Houston and Jones, the plan was not 
 adopted.* 
 
 The frontier counties were in a state of almost continuous 
 
 'The statistics for resident and non-resident holdings are not avail- 
 able for any year of the republic, but those for 1848 are near enough 
 to the period to be representative. The distinction between resident 
 and non-resident refers to ownership outside of the county, and not 
 necessarily to ownership by one who is not a resident of the state. 
 In 1848 the acres owned by residents were 17,807,643, valued at $13,- 
 798,320; those owned by non-residents, 20,980,796, valued at $10,813,835; 
 Comptroller's Report, 1848-1849. 
 
 'Telegraph and Texas Register, January 2, 1839. 
 • ^President Houston's message, December 12, 1843. 
 
 ^Report of the Secretary of the Treasury, November 1, 1842. Mes- 
 sage of President Houston, December 12, 1843. Message of President 
 Jones, December 16, 1844. Telegraph and Texas Register, December 6, 
 1843. 
 
 A 
 
A Financmi History of Texas 49 
 
 eonfusion OMnng to Indian and Mexican depredations, with 
 resulting loss and insecurity of property, and it was often ina- 
 bility to pay due to these conditions that accounted for the 
 failure to pay taxes. ^ 
 
 The use of the principle of a minimum valuation of land was 
 an incentive to evasion, for the minimum was undoubtedly too 
 high. From 1840 to 1842 it was $1.00 per acre, after 1842 it 
 was fifty cents an acre. These taxes were more than the value 
 of land taken on the average, considering the fact that land 
 could be freely had by all immigrants.- There was also a great 
 amount of land scrip on the market, which fact served further to 
 depress the value of land. Much of the deeded land also was 
 unoccupied and Avas producing nothing, and the taxes upon it 
 were a decided burden. The consequence was that where such 
 land was assessed, the taxes were not paid, and arrears to an 
 enormous amount accumulated. The total direct taxes assessed 
 for the four years 1837-1840 were $639,219, and of this amount 
 there remained unpaid in 1841 the sum of $337,592.^ During 
 the three years 1842-1844 there was a total direct tax assessed 
 of $168,257, of which amount there remained unpaid in 1846 
 the sum of $78,614. Thus of the total taxes assessed, most of 
 which was on land, over fifty per cent remained unpaid. 
 
 Of the total revenue of the republic, direct taxes contributed 
 20.1%, license taxes, 4.1%. Down to 1842 the proportion was 
 somewhat higher, that of direct taxes being 24.7%, that of li- 
 cense taxes, 4.4%. The receipts from property and business 
 
 'Finance Committee Report, January 21, 1841; House Journal 5tli 
 Tex. Cong., app., p. 405. Telegraph and Texas Register, November 30, 
 1842. The act of December 21, 1838, exempted the resident citizens 
 of some six frontier counties from land taxation, and the act of Jan- 
 uary 22, 1845, exempted the citizens of three counties from the pay- 
 ment of all direct taxes due up to the passage of the bill; Gammel, 
 op. cit., vol. 2, pp. 11, 1071. Gouge, Fiscal History of Texas, p. 142. 
 
 -Under the more secure and prosperous conditions of 1848 the as- 
 sessed value of land averaged 63 cents an acre. This was perhaps less 
 than its full value, by how much cannot be said, but it points to the 
 conclusion that the minimum valuations, if not greater than the real 
 value, were quite up to its limit. 
 
 'Statement in the Telegraph and Texas Register, August 18, 1841, 
 based on returns on file in the office of the commissioner of revenue. 
 
 4— H 
 
50 Bulletin of the University of Texas 
 
 taxes for 1841 were the largest of any year, and this increase 
 •can be accounted for by the marked increase in rates made by 
 the act of January 16, 1840. This increase in rates operated 
 over the years also of largest expeditures and greatest issue of 
 treasury notes, and was defended, as was the increase in cus- 
 toms duties at the same time, as necessary in order to adapt 
 the receipts of the government to the condition of inflated prices. 
 Under Houston's second administration there was a reaction 
 against the high direct and business taxation as there was 
 against the other policies of Lamar. Houston believed that di- 
 rect taxes bore especially hard upon the farming class, and he 
 recommended a repeal of the law authorizing the penalty of 
 double taxes, the reduction of the direct tax by one-half, and the 
 payment of all taxes in gold, silver or ''paper of unquestionable 
 character. "^ The reduction that was made by congress in the 
 act of February 5, 1842, exceeded his reconunendation, but 
 payment was required in the kinds of money recommended. 
 The years following these changes show a negligible revenue from 
 direct and license taxes. It is doubtful if the reduction in rates 
 made any change in the weight of the taxes, on account of the 
 ^changed requirement as to tender. The result was an increasing 
 amount of arrears, and the practical breaking down of the sys- 
 tem. ^ Of the receipts from 1841 to 1846, direct taxes contrib- 
 uted 12.8%, as compared with 24.7% for the period before 1842, 
 and license taxes, 3.7% as compared with 4.1%. Acts extending 
 the time for the collection of taxes were passed in 1840 and the 
 years following, but it is not apparent that they succeeded in 
 inducing payments, and they remain as legislative evidence of 
 the prostration of the system. 
 
 ^Message of December 20, 1841. The Telegraph and Texas Register 
 of January 12, 1842, said that the adoption of the president's sugges- 
 tion would increase the existing rates to nearly three times their "in- 
 trinsic value," and that "the people would be overwhelmed by the 
 burden." See also Yoakum, History of Texas, vol. 2, p. 348. 
 
 ^Messages of Houston, June 27, 1842, and December 12, 1843. Tele- 
 •graph and Texas Register, November 30, 1842, and February 22, 1843. 
 For the year 1843, of $49,000 assessed only $13,000 was collected: 
 Toakum, op. cit, vol. 2, p. 435. Of a total assessed in 1842 and 1843 
 of $111,771, only $58,196 was collected; Telegraph and Texas Register, 
 January 8, 1845. 
 
A Financial History of Texas 51 
 
 G. Land and Land Dues. 
 
 The estimated area of Texas at the beginning of the rep\iblic 
 was 242,594,560 acres, and the most of this vast area was not 
 only unoccupied but unclaimed. Land was the one thing in 
 which Texas was rich, and the policy which was followed in the 
 disposal of it is an interesting study, but only the outlines of the 
 policy can be given here.^ 
 
 The policy of rewarding service in the army and navy which 
 had been adopted by the provisional government was continued 
 under the republic- In order to put an end to the conflicts 
 in preceding laws in defining bounties for service, the acts of 
 December 4 and 14, 1837, provided that those who had served 
 for three months should receive 320 acres; for six months, 640 
 acres; for nine months, 960 acres; for twelve months or more, 
 1280 acres.^ Warrants issued for bounty lands were called 
 "bounty warrants." Additional grants were made to those 
 who had participated in the conflicts of the Texas Revolution 
 and to all who had become incapacitated for labor in the service 
 of the republic* The warrants issued for these grants were 
 called "donation warrants." 
 
 The policy begun during the Mexican period of granting land 
 free to immigrants was also continued under the republic. The 
 constitution of the republic contained the provision that every 
 head of a family residing in Texas on the day of the declaration 
 of Texas independence should be entitled to one league (4428 
 acres) and one lahor (177 acres) of land, and that every single 
 man of the age of seventeen and above should be entitled to 
 one-third as much. All who came to Texas between March 2 and 
 August 1. 1836, and volunteered for the army within that period 
 were treated in a like manner.^ Certificates issued in accord- 
 ance with these provisions were called "first class certificates." 
 It was enacted in 1836 that those who had immigrated after the 
 declaration of Texas independence and prior to October 1, 1837, 
 
 ^See Wooten, A Comprehensive History of Texas, vol. 1, pp. 748-848. 
 J. and H. Sayles, Laws of Texas relating to Real Estate, vol. 1, passim. 
 ='Gammel, op. cit., vol. 1, pp. 1094, 1323, 1412. 
 »Ibid., pp. 1368, 1404. 
 
 *Ibid., p. 1435. Ibid., p. 1450. Laws of 1860, p. 117. 
 "^Ibid., p. 1414. 
 
52 Bulletin of the University of Texas 
 
 should receive, if the head of the family, 1280 acres; if a single 
 man, 640 acres; but it was required that the grantee be a resi- 
 dent of the republic for three years and that he pay land-office 
 fees and expenses of survey/ Certificates issued in accordance 
 with the terms of this act were called "second class." Free 
 grants were discontinued by the act of June 12, 1837, to become 
 effective October 1, but this policy was short lived, and the act 
 of January 4, 1839, and January 4, 1841, provided that heads 
 of families should receive 640 acres and single men above seven- 
 teen years of age, 320 acres.^ Certificates issued to those im- 
 migrating between October 1. 1837, and January 1, 1840, were 
 called "third class," and those to persons coming in between 
 January 1, 1840, and January 1, 1842, were called "fourth 
 class." The same conditions of residence in the republic and 
 payment of fees attached to these certificates as attached to 
 second class certificates. The act of January 4, 1841, required 
 the immigrant to reside upon the land for three years, cultivating 
 not less than ten acres, but this condition was repealed by the 
 act of February 4, 1842.^ Though this method of giving away 
 land was discontinued in 1841, another method was introduced.* 
 The old policy of making contracts for the colonization of fami- 
 lies w^as reintroduced in 1841.^ Colonists received 640 or 320 
 acres, according as they were married or single; and the con- 
 tractor, or the one responsible for the introduction of the colo- 
 nists, received 6,400 acres for every one hundred families and 
 3,200 acres for every one hundred single men introduced. The 
 law was repealed in 1844, but under it contracts had been made 
 with several colonizers, and 4,494,806 acres were given to colo- 
 nists and contractors.^ 
 
 The homestead donation policy had its beginning in Texas with 
 the act of December 21, 1838, which granted 160 acres of land 
 to settlers along the military road from the Red River to the Rio 
 
 qbid., p. 1283. 
 
 =Ibid., p. 1323. Ibid., vol. 2, pp. 35, 554. 
 «Ibid., vol. 2, p. 777. 
 ^Ibid., vol. 1, p. 1324. 
 "Ibid., vol. 2, p. 555. 
 
 "Land Office Report, 1910-12, p. 24. Wooten, op. cit., vol. 1, p. 824. 
 Gammel, op. cit., vol 2, p. 958. Sayles, op. cit., vol. 1, pp. 182-206. 
 
A Financial History of Texas 
 
 53 
 
 Grande.^ The conditions were settlement and two years cul- 
 tivation. In 1841 grants were made for settlement along the 
 northern military road, but with the condition of five years 
 settlement.^ 
 
 In addition to the above ways of disposing* of the public do- 
 main, a liberal land endowment of public educatioji was pro- 
 vided. By the acts of January 26, 1839, and February 5, 1840, 
 four leagues (17,712 acres) were given to each county for the 
 establishment of a primary school; and fifty leagues (221,400 
 acres) were set apart for the establishment and endowment of 
 two universities.^ 
 
 It was liot a feature of the land policy of the republic, how- 
 ever, to make land grants in aid of internal improvements. The 
 only subsidy in land which was given appears to have been 
 to the surveyors and commissioners of the ''Central National 
 Koad of the Republic of Texas," which was a turnpike projected 
 to extend from the Trinity River near the mouth of Elm Fork 
 to the Red River opposite the junction with the Riamisha.* 
 The road was never built, but the state parted with 27,000 
 acres for the purpose.^ 
 
 Beneficiaries of the republic accepted land as headrights, 
 bounties, donations, subsidies, and so forth, but the creditors of 
 the republic were not so ready to accept land in discharge of 
 their claims. The act of 1841 which permitted the creditors 
 of the republic to exchange their claims for land scrip at the 
 rate of $2.00 an acre was repealed in 1845.** The Triplett and 
 Erwin loans were so discharged in 1837 and 1838, and in 1844 
 a debt of $54,408 to Thomas McKinney and S. L. Williams was 
 paid in land scrip. 
 
 The revenue derived from lands came from fees and from 
 the sale of land scrip and town lots. The grantees under the 
 laws of the Mexican period paid the fees prescribed by the laws 
 of Coahuila and Texas. These were for those who immigrated 
 
 'Gammel, op. cit., vol. 2, p. 17. 
 
 ^'Ibid., p. 536. 
 
 ^^Ibid., pp. 134, 320. 
 
 nbid., p. 1013. 
 
 ^Land Office Report, 1908-10, p. 25. 
 
 «Gammel, op. cit., vol. 2, pp. 624, 1210. 
 
54 Bulletin of the University of Texas 
 
 prior to May 2, 1835, $3.50 for each labor (177 acres) of irri- 
 gable land, $2.50 for each labor of arable, and $1.20 for each 
 labor of pasture land; for those who came in between May 2, 
 1835, and March 2, 1836, the amounts of the dues were double.^ 
 The republic did not continue this system of charges for the 
 grants made after March 2, 1836, but adopted a system of gov- 
 ernment and patent fees. As prescribed by the act of December 
 22, 1836, the government fees varied from $1.00 to $3.00, ac- 
 cording to the size of the survey plot, and the patent fees varied 
 from $5.00 for one league and tabor to $3.00 for one labor. The 
 price of surveying was fixed at $3.00 for every lineal mile.^ 
 In 1841 the patent fees were increased to $15.00 for each patent 
 for one league or more ; for more than one- third of a league and 
 less than one league, $10.00; and for one-third of a league and 
 less, $5.00.^ 
 
 In 1836 agencies were established in Mobile, Ala., and New 
 Orleans for the sale of land scrip in denominations of 320 and 
 640 acres. The conduct of the agents and their lack of success 
 excited the displeasure of President Houston and upon his rec- 
 ommendation the further sale of scrip was prohibited.* The 
 amount of scrip sold by the agents was estimated at 1,220,387 
 acres.'^ In the pre-emption act of 1845 the commissioner of the 
 general land office was authorized to sell land scrip to any actual 
 settler for $2.00 an acre payable in the evidences of debt of the 
 republic or for fifty cents an acre payable in par funds. The 
 east end of Galveston Island was sold for $50,000 ; and the rest 
 of the island, the east end of Matagorda Island, and the townsite 
 of Austin were sold in lots or small tracts. 
 
 The pre-emption policy was adopted in 1845, though before 
 this the actual settler had had preference right of location of his 
 
 ^Gammel, op. cit, vol 1, p. 1276; vol. 2, p. 1078. 
 
 =Ibid., vol. 1, 1276. 
 
 •Ibid., vol. 2, p. 467. 
 
 *Act of December 10, 1836; ibid., vol. 1, p. 1133. Joint Resolution, 
 December 10, 1836; ibid., p. 1136. Act of December 14, 1837; ibid., p. 
 1400. Message of President Houston, November 21, 1837. Texas Diplo- 
 matic Correspondence, vol. 1, p. 196. 
 
 'Gouge, Fiscal History of Texas, p. 280. The scrip issued amounted to 
 1,329,200 acres; Land Office Report, 1908-10, p. 23. 
 
A Financial History of Texas 55 
 
 certificate under certain conditions.^ Under the law of January 
 22, 1845, a person who had settled upon and improved, or whc 
 should thereafter settle upon and improve any unappropriated 
 part of the public land, had the right within three years from 
 the beginning of his settlement to locate, if head of a family, 
 any valid land certificate not to exceed 320 acres, if single, 160 
 acres, in preference to all other claimants. The pre-emptor was 
 required to make oath that he believed he had settld upon vacant 
 land. In lieu of any other valid land certificate, he could pur- 
 chase at the land office a certificate. 
 
 The '' boundless revenue" which President Houston thought 
 would arise from the opening of the land offices did not ma- 
 terialize.- Of the total receipts of the republic, those from land 
 and land dues, including town lots, constituted about 15%, 
 and town lots account for about one-half of this.^ The large 
 increase which took place in 1840 is due mainly to the sale of 
 town lots on Matagorda Island and in Austin.* During 1840 
 and 1841 also the depreciated treasury notes were receivable 
 at par for all payments on account of land, and this fact, ta- 
 gether with the increase in patent fees in 1841, helps to expiaim 
 the large receipts of these two years. There are no statistics for- 
 receipts after 1841, and their absence is perhaps explained by- 
 the act of December 27, 1842, which granted an extension ©£ 
 time for the payment of land dues to January 1, 1846.^ The 
 general land office was established by the act of December 22, 
 1836, but the opening of it was postponed from time to time, 
 and it was not opened until the spring or summer of 1844.^ 
 
 ^Gammel, op. cit., vol. 2, pp. 1073, 554. 
 
 'Message of November 21, 1837. The first general land office was at 
 Houston from June, 1837, to September of October, 1839; Land Office 
 Report, 1908-10, pp. 25-28. 
 
 ^The proportion of the total given in the table is 14 per cent, but as; 
 some land dues are included among the direct tax receipts of the three 
 years ending September 30, 1838, and among the miscellaneous receipts- 
 of 1839, the proportion is perhaps nearer 15 per cent than 14 per cent. 
 
 "According to Gouge, Fiscal History of Ttxas, p. 270, the amount de- 
 rived from town lots in 1840 was $168,797. He includes, however, some 
 receipts from direct and license taxes, and these have been excluded: 
 from the amount given in table I, Appendix. 
 
 ^'Gammel, op. cit., vol. 2, p. 996. 
 
 "Sayles, op. cit., p. 450. 
 
56 Bulletin of the University of Texas 
 
 H. Miscellaneous and Unclassified Receipts. 
 
 Except for the year 1839, the receipts of a miscellaneous char- 
 acter were negligible. The receipts for this year were large 
 because it was not found possible to classify the amount de- 
 rived from taxes and land, and could these be allowed for, the 
 really miscellaneous receipts would be small. Of the amount 
 given for the three years ending September 30, 1838, $3,195 is 
 from sale of prizes captured by the navy. The chief source of 
 miscellaneous receipts was probably fines and forfeitures. A 
 postal service was maintained by the republic, but no revenue 
 was reported from it. On the contrary, it was kept going with 
 difficulty even with appropriations of other revenues.^ 
 
 /. Character of Receipts. 
 
 The bulk of the receipts from taxes and other sources was 
 in the form of treasury notes and audited drafts. It was only 
 at the end of the period that specie to any important amount 
 was received.^ Audited drafts, or unpaid warrants drawn on 
 the treasury, were receivable for direct taxes down to 1842, and 
 for land fees throughout the entire period. Auditors' certifi- 
 cates, representing the government's indebtedness to those who 
 carried the mails, assessors' drafts, or warrants drawn in favor 
 of assessors in payment for the work of assessment, and drafts 
 
 'Houston in his message of December 4, 1844, said that the amount 
 appropriated for sustaining the post office during his second adminis 
 tration was only $29,000 while under Lamar it was $252,917. See also 
 Gammel, op. cit., vol. 1, p. 1256. 
 
 *In 1842 only $3 of specie was received, and a balance of $17.44 
 carried over from 1841 was jealously retained in the treasury through- 
 out 1842. Gouge (p. 274) says that previous to the adoption of the 
 exchequer note system (1842) the records do not disclose that the 
 government ever realized one dollar of its taxes in specie. Specie re- 
 ceipts from 1842 to February 19, 1846, were, according to Gouge, $10,- 
 440. This is by no means the true, or even approximately true, 
 amount, however, for the practice of the treasury after 1841 of designat- 
 ing as "par funds" paper received at par as well as specie makes it 
 impossible to tell how much of either was actually received. Such 
 par funds amounted, according to Gouge, to $275,420 from 1842 to 1846, 
 and some specie is included in another unclassified item of $70,005; 
 Gouge, op. cit., p. 273. 
 
A Financial History of Texas 57 
 
 issued by special acts of congress, were receivable for direct 
 taxes after 1842. 
 
 Treasury notes, including both the "red-backs" issued before 
 1842 and the exchequer bills issued in 1842 and thereafter, made 
 up the largest part of the receipts.^ After 1843 the old issues 
 of notes, or those before 1842, were not receivable for taxes, 
 except in payment of arrears, and the new issues were receivable 
 only at their current market rates.- 
 
 The other forms which receipts took were bonds and land scrip, 
 but they constituted only a small part of the receipts.-^ Bank 
 notes were for a short time receivable, but it does not appear that 
 any found their way into the treasury in payment of taxes or 
 fees.'' 
 
 /. Local Taxes. 
 
 Owing to the lack of statistics of any kind, nothing can be 
 given in regard to county and other local taxes except the pro- 
 visions in the laws. The act of December 20, 1836, provided 
 that the county board of commissioners should levy a tax suffi- 
 cient to meet the requirements of their respective counties, the 
 tax to be levied upon the same persons and property, and assessed 
 and collected by the same officers and in the same manner, as the 
 state tax.^ By the act of January 16, 1840, the county tax could 
 not exceed one-half of the state tax, and by the act of February 4, 
 1841, it could not exceed one-fourth.^ There were no limitations 
 on other local taxes until 1841, when it was provided that they 
 
 ^Of the $2,182,657 given by Gouge as the total receipts from 1835 to 
 1851, $919,425 was definitely in treasury notes, and of the $388,047 
 unclassified, there were certainly enough notes to make the total re- 
 ceipts in this form over $1,000,000. 
 
 ^'Gammel, op. cit., vol. 2, pp. 727, 744. 
 
 ^According to Gouge, $50,100 of the funded debt and $7,336 of land 
 scrip were received; op. cit., p. 273. 
 
 *Gouge, op. cit., p. 274. The act of October 4, 1836, made the notes 
 of any bank making loans to the republic receivable for all public dues; 
 but the act of December 14, 1837, prohibited their receipt for customs 
 duties, and this prohibition was renewed by the act of May 9, 1838. 
 After 1841 they were not receivable in any payments to the govern- 
 ment. 
 
 •Gammel, op. cit., vol. 1, p. 1206. 
 
 •Ibid., vol. 2, pp. 200, 577. 
 
58 Bulletin of the University of Texas 
 
 should not exceed the county tax.^ From this restriction to one- 
 fourth of the state taxes, the towns of Matagorda, Houston, Gal- 
 veston, and San Antonio wer6 excepted in 1844.^ 
 
 ^Ibid., p. 578. 
 ^Ibid., p. 942. 
 
Chapter 3. 
 
 the public debt.* 
 
 Upon the establishment of the permanent government in 
 October, 1836, the public debt wa^ estimated at $1,250,000; in 
 1846, the estimated amount was nearly $10,000,000; and the 
 amount for which provision was made in 1852 and thereafter 
 was nearly twelve million dollars. The explanation of this in- 
 crease is to be found in the preceding accounts of expenditure 
 and revenue. The fact that the largest part of the principal of 
 the debt was in the form of audited drafts, treasury notes, and 
 bonds representing the funding of floating liabilities, is evidence 
 of the excess of expenditures over receipts. The funded debt 
 would have been larger if the efforts of the republic to negotiate 
 a foreign loan had been successful. The early Texans over- 
 estimated the credit of their government, and their disillusion- 
 ment soon followed. The following is a descriptive account of 
 the debt : 
 
 A. Ten Per Cent Bonds of fhe Five Million Dollar Loan Acts. 
 
 One of the first measures of the First Texas Congress was 
 to authorize the president to negotiate a loan not to exceed five 
 million dollars. The terms offered to lenders were 10% interest, 
 and payment in not more than thirty nor less than five years. 
 If any bank should become an original purchaser of the bonds, 
 its notes would be receivable in payment of all public dues to the 
 amount of the purchase. A purchaser had the privilege also of 
 taking at any time the amount of his loan in land at the minimum 
 government price. For the punctual payment of the interest 
 and the final redemption of the loan, the public faith, the pro- 
 ceeds of the sales of public domain, and all taxes on land after 
 1838, were pledged.- Two commissioners were sent to the United 
 
 ^The public debt is the real theme of Gouge's Fiscal History of 
 Texas, but his work is incomplete in that it does not extend beyond 
 1851. 
 
 ^Act of November 18, 1836; Gammel, op. cit., vol. 1, pp. 1092-3. 
 
60 Bulletin of the University of Texas 
 
 States to place the loan,, but they met with no success.^ In 
 May, 1838, another act was passed modifying slightly the pro- 
 visions of the first measure. It provided that the bonds should 
 be written in such foreign languages as might be required and 
 that the interest should be payable in such currency as might 
 be stipulated. The public faith was the only security extended, 
 but a supplementary act of January 22, 1839, pledged in addi- 
 tion as much of the revenues as might be necessary to meet the 
 semi-annual interest. A sinking fund also was to be established, 
 but in other respects the acts were alike. ^ In January, 1840, 
 provision was made for a sinking fund which was to be con- 
 stituted of the proceeds from the sale of the public lands, or, 
 should the public lands not be brought on the market, from other 
 revenue. The fund was to amount to $300,000, although "noth- 
 ing was to prevent the government from applying a larger sum." 
 It was to be used in purchases of the bonds at their market price, 
 and, in order that the remotest contingency might be guarded 
 against, it was provided that "should the premium reach fifty 
 per cent beyond par, the holders shall be required on application 
 of said agents to surrender and cancel the same on the payment 
 of par value and said premium."^ 
 
 In the fall of 1839 the commissioners succeeded in placino- a 
 part of the bonds with the Pennsylvania Bank of the United 
 States. The amount obtained, for which 10% sterling bonds 
 were given, was $457,380.* With this advance as a testimonial 
 that the republic enjoyed credit in the United States, one of 
 the commissioners, General James Hamilton, went to Europe and 
 visited the Hague, London, Paris, and Brussels. President 
 Tvamar reported in November 12, 1839, that the prospects of 
 obtaining the full loan were "cheering and satisfactory," and 
 
 ^Messrs. Gilmer and Burnley were the first commissioners. In 1839 
 James Hamilton was appointed commissioner to succeed Gilmer. Presi- 
 dent Houston in his message of Nov. 21, 1837, ascribes the failure of 
 the commissioners up to that time to the unfavorable condition of the 
 money market in the United States. See also Texas Diplomatic Cor- 
 respondence, vol. 1, pp. Ill, 171, 196, 224, 225, 267. 
 
 =Gammel, op. cit., vol. 1, pp. 1484-7; vol. 2, pp. 62-3. Texas Diplo- 
 matic Correspondence, vol. 1, p. 267. 
 
 ^Gammel, op. cit, vol. 2, pp. 230-233. 
 
 ^Report of the Auditor and Comptroller, December 27, 1849, 
 
A Financial History of Texas 61 
 
 the expectation of success undoubtedly led to its anticipation in 
 an enlarged scale of expenditures. The loan was the one topic 
 of exciting interest in the republic during 1840 and 1841, and 
 what would be its disposition was a subject of much discussion. 
 The plan of using the proceeds to establish a great national bank 
 was perhaps the most popular.^ Success was indeed very near in 
 the summer of 1841, for the banking house of Lafitte and Com- 
 pany of Paris was on the point of opening its books to* the flota- 
 tion of the loan, when the French minister of finance came out in 
 a semi-official note hostile to the proposition.- Until 1843 hope 
 was entertained by the Texas loan conuuissioners that the French 
 government would aid in floating the loan. It was believed that 
 mere recognition by France and England of the independence 
 of Texas would enable Texas to get all the money she desired.' 
 The duties on French wines imported into Texas were abolished 
 by proclamation for three years to win the favor of France, and 
 France could have secured for her guarantee of a loan the com- 
 mercial privileges which Texas had granted to the United States."* 
 Hope of securing the guarantee of the French government to the 
 loan was given up in 1843. An opinion adverse to the guarantee 
 was declared to the French government by M. de Saligny, the 
 representative in Texas of that government.^ M. de Saligny 's 
 motives in rendering an adverse opinion have been questioned on 
 account of the difficulty over the assault of his servant by Mr. 
 Bullock, an Austin hotel keeper, and also on account of the 
 
 ^Telegraph and Texas Register, January 16, 1841; Gouge, op. cit., 
 pp. 96-8. Gouge (p. 140) explains the loan by the Pennsylvania Bank 
 of the United States as intended to aid General Hamilton's efforts in 
 Europe, the idea of the bank being that the proceeds would be used to 
 establish a national bank in Texas which would act in co-operation 
 with the Pennsylvania institution. Also Texas Diplomatic Corres- 
 pondence, vol. 3, p. 1287. 
 
 -The terms of Lafitte and Company, the note of the French minister, 
 and the communication of General Hamilton are published in the Tele- 
 graph and Texas Register, June 30, July 7, and July 28, 1841. See 
 also extracts from French newspapers in Maillard, The History of the 
 RepuUic, pp. 399-409. 
 
 ^Texas Diplomatic Correspondence, vol. 1, p. 413. 
 
 'Texas Diplomatic Correspondence, vol. 3, pp. 878, 1283, 1285, 1287, 
 1336, 1405, 1406, 1433, 1410, 1422. 
 
 'Ibid., pp. 1427, 1431. 
 
62 Bulletin of the Vniversity of Texas 
 
 failure of M. de Saliguy to secure extensive land grants for him- 
 self and associates.^ The failure of Texas to place the loan any- 
 where would lead one to believe in the sincerity of M. de Saligny 's 
 opinion to his government. 
 
 The loan agents turned from France again to London, and 
 Germany also was sounded, but all without avail.- The panic of 
 1837 was a most inopportune event for the Republic of Texas, 
 for it is probable that if there had been no panic the bonds of the 
 republic would have been taken up in Europe by the optimistic 
 buyers of American stocks. But the panic caused a tight money 
 market for a long period ; and the repudiation by some states of 
 the United States of their obligations and the failure of the 
 states to meet on time the interest payments on their bonds 
 brought American securities into great disrepute among European 
 investors. 
 
 The inability of the commissioners to sell any bonds abroad, 
 the little success which attended similar efforts in the United 
 States, and the failure of the government to meet its existing 
 obligations led to the repeal in January, 1842, of the laws au- 
 thorizing the five million loan,"^ and in January, 1844, to a repeal 
 of all laws authorizing the president to negotiate a loan either 
 upon the public faith or upon the basis of the public lands.* 
 
 The principal and interest of the loan from the Pennsylvania 
 Bank of the United States were $960,498 on July 1, 1850, at 
 which date, according to the act of February 11, 1850, interest 
 liability ceased.'' As this debt was secured by a pledge of import 
 
 ^The correspondence between Saligny and the Texas government is 
 given in Texas Diplomatic Correspondence, vol. 3, p. 1289 et seq. 
 Gouge, op. cit., p. 111. 
 
 'Texas Diplomatic Correspondence, vol. 3, pp. 1449, 1467, 1481. 
 
 •Gammel, op. cit., vol. 2, p. 703. In his message of December 20, 1841, 
 President Houston said: "We are not only without money, but without 
 credit, and for want of punctuality, without character." 
 
 *Gammel, op. cit., vol. 2, p. 954. In addition to the two five million 
 loan acts, there were the act of December 10, 1836, authorizing the 
 president to borrow $20,000; the act of January 22, 1839, authorizing a 
 loan of $1,000,000, and the sinking fund act of January 14, 1840, which 
 empowered the commissioners to issue bonds to the amount of seven 
 million dollars, if necessary. See also Texas Diplomatic Correspond- 
 ence, vol. 3, p. 1482. 
 
 "Report of the Comptroller, 1855. 
 
A Financial History of Texas . 63 
 
 duties, it fell within the provisions of the acts of Congress of 
 September 9, 1850, and February 28, 1855. In its act of Jan- 
 uary 31, 1852, Texas provided that this debt should be settled 
 out of the $5,000,000 of United States bonds reserved in the 
 United States Treasury on the basis of 87 45/100 cents on the 
 dollar, this being the rating given it in the auditorial report of 
 1851. However, under the pro-rata arrangement proposed in 
 the act of Congress of February 28, 1855, and accepted by Texas 
 February 1, 1856, it was adjusted on the basis of 76 9/10 cents 
 on the dollar.^ 
 
 Another debt of the republic which was represented by bonds 
 issued under the five million loan acts w^as the so-called naval 
 debt. In accordance with the act of November 4, 1837, a con- 
 tract was made in November, 1838, with Frederick Dawson, of 
 Baltimore, for vessels which were received in 1839. The original 
 contract price w^as $280,000, payable in one year, but double that 
 amount if payment should not be made at maturity. Payment 
 was not made at maturity, and the two 10% bonds of $280,000 
 each put up as a forfeit with the Girard Bank of Philadelphia 
 were turned over to Mr. Dawson.^ In 1839. also, the Steamer 
 ''Zavalla" was purchased of James Holford and associates for 
 $97,953.50, on terms similar to the Dawson purchase ; and failure 
 to pay at maturity resulted in the forfeiture of 10% bonds to 
 the amount of $195,907. The principal of the naval debt with 
 interest to July 1, 1850, amounted to $1,622,404.70.^ Texas 
 
 ^Act of January 31, 1852; Gammel, op. cit., vol. 3, p. 916. Act of 
 February 1, 1856; ibid., vol. 4, p. 227. Act of Congress of September 
 9, 1850; U. S. Statutes at Large, IX, ch. 49, p. 446. Act of Congress 
 of February 28, 1855; ibid., X, ch. 129, p. 617. See also House Misc. 
 Doc. No. 17, 33d U. S. Cong., 2nd Sess. Serial No. 807. A bill to make 
 up the difference between what Texas acknowledged to be due and 
 what was received was passed by the senate a^id house of the Sixth 
 Legislature, but owing to a decision of the house that it required a 
 two-thirds majority, the bill was lost. Governor Pease recommended 
 in his message of November 2, 1857, the settlement of the difference 
 ($101,383.14), and a bill was introduced, but the senate committee on 
 the public debt recommended its indefinite postponement; Senate 
 Journal, 7th Leg., p. 139. 
 
 ^Report of the Auditor and Comptroller, December 27, 1849, and No- 
 vember 12, 1851. 
 
 'Report of the Comptroller, 1855. 
 
64 Bitlletin of the University of Texas 
 
 rated this debt at fifty cents on the dollar, but as the bonds were 
 secured by a pledge of import duties they were paid out of the 
 $7,750,000 reserved in the United States Treasury on the basis 
 of 76 9/10 cents on the dollar.^ 
 
 The above bank and naval debts were what may be designated 
 the "foreign debt" of the republic. There was, besides, a large 
 domestic debt, which was also largely held by non-residents at 
 the time of settlement. 
 
 B. Audited Drafts and Audited Claims. 
 
 The domestic debt was incurred in meeting the ordinary ex- 
 penditures of the government, although there may be some ques- 
 tion about calling ordinary the expenditures on account of Indian 
 and Mexican depredations. This debt was originally in the form 
 of audited drafts and treasury notes, but afterwards bonds were 
 issued to fund the floating liabilities and to meet appropriations. 
 
 All except $100,000 of the $1,250,000 debt handed down by the 
 government ad interim was in the form of treasury orders or 
 audited drafts, representing treasury obligations for supplies 
 for the army and navy, for pay of officers and men, and for civil 
 purposes.^ Such of these as had been issued for cash advanced 
 or for supplies furnished prior to March 1, 1836, bore interest at 
 8%. The amount of this description, however, was only $59,- 
 468.43.^ This continued to be the main form which domestic 
 indebtedness took until the issue of treasury notes began in 
 November, 1837. 
 
 Including $6,980.06 issued by the General Council in 1835 and 
 1836, the total issue of drafts up to December 31, 1837, was 
 $1,220,438.21. The amount redeemed during the period, either 
 by receipt in payments of public dues or by drafts on agents in 
 the United States, appears to have been only $24,822. Their 
 specie value in May, 1837, was about fifteen cents on the dollar.* 
 To meet this situation the act of June 7, 1837, was passed, au- 
 
 'Report of the Auditor and Comptroller, December 27, 1849, and No- 
 vember 12, 1851. Acts of January 31, 1852, and February 1, 1856. See 
 also House Misc. Document, No, 17; loc. cit. 
 
 -Morfit to Forsyth, September 4, 1836; loc. cit. 
 
 ^Report of the Auditor and Comptroller, September 30, 1836; House 
 Journal, 1st Tex. Cong., First Sess., p. 23. 
 
 *Gouge, op. cit., p. 267. 
 
A Financial History of Texas 65 
 
 thorizing the consolidation and funding of the public liabilities. 
 Claims against the government, after having been properly 
 audited, were received at par in exchange for 10% bonds, and 
 no interest was to be allowed on claims other than those funded.^ 
 The amount of audited drafts funded under the provision of this 
 act was $755,151.68.- The amount of drafts issued to the be- 
 ginning of Lamar's administration was $2,105,896.82; during his 
 presidency of three years the amount issued was $4,881,093.47, 
 while during Houston's second term and Jones' administration 
 the amount was only $694,791.81.^ These figures best illustrate 
 the policy of expenditures followed by the several administra- 
 tions. The total amount issued from the beginning of the gov- 
 ernment to February 19, 1846, when the period of the republic 
 ends, was $7,681,782.10. In addition to the $755,151.68 funded 
 in the 10% bonds of the act of June 7, 1837, $45,600 was funded 
 in the 10% bonds authorized by the act of February 5, 1840. Of 
 the balance, $5,985,131.21 was paid at the treasury, almost wholly 
 in promissory notes or treasury bonds ; $'639,061.15 was received 
 in the collection of revenue and destroyed, $74,441.26 was filed 
 with the auditor and comptroller, and $182,396.80 was outstand- 
 ing on September 1, 1851.^ 
 
 Until June 12, 1837, audited drafts were received by the gov- 
 ernment in payment of all dues and taxes, but by the act of that 
 date they were declared to be not a tender for taxes on retailers 
 of liquor, billiard tables, nine-pin alleys, and like games; and by 
 the act of December 14, 1837, they became no longer receivable 
 for customs duties.'^' By the act of January 16, 1840, they again 
 became receivable for all direct and license taxes, but after Feb- 
 ruary 1, 1843, they were not a tender for taxes, except in the 
 case of arrears incurred before that date.*^ There were in 1844, 
 however, special acts of congress which provided for the issue 
 
 'Gammel, op. cit., vol. 1, pp. 1301-3. 
 
 -Reports of auditor and comptroller, December 27, 1849, and No- 
 vember 12, 1851. The amount given in the reports, and repeated by 
 Gouge, is $835,500, but it includes $80,348.32 which does not represent 
 properly audited drafts funded. 
 
 'Gouge, op. cit., p. 267. 
 
 ^Report of the Auditor and Comptroller, November 12, 1851. 
 
 "Gammel, op. cit., vol. 1, pp. 1322, 1309. 
 
 «Ibid., vol. 2, p. 727. 
 
 5— H 
 
€6 Bulletin of the University of Texas 
 
 of a small amount of drafts that were receivable for direct taxes, 
 and in some cases, for customs. Throughout the period of the 
 republic audited drafts were receivable in payment of land dues, 
 and the act of February 11, 1850, provided that audited paper 
 could be exchanged for land certificates at the rate of fifty cents 
 an acre.^ If originally acceptable for that purpose, they were 
 received by the state in payment of arrears of taxes due the 
 republic, and small amounts continued to be received for land 
 dues and taxes at the treasury as late as 1859.^ 
 
 Audited drafts were warrants drawn by the auditor and comp- 
 troller of the republic upon its treasury, pursuant to the appro- 
 priation acts. There was, however, a large amount of claims 
 which never reached during the period of the republic the stage 
 of being audited, and the auditor and comptroller of the state 
 were authorized to pass upon them by the act of March 20, 
 1848, which provided for the ascertainment of the debt of the 
 republic. The legislature itself passed special acts from time to 
 time acknowledging the legitimacy of certain claims. In passing 
 upon these claims for services or supplies furnished, the practice 
 was followed of assigning to each claim, as far as was possible, its 
 par value at the time the service was rendered or the supplies 
 were furnished.^ From 1852, when payment first began, to 1902, 
 the date of the last payment, there was paid on account of this 
 character of debt, $1,576,214.29. Of this amount, however, $288,- 
 263.16 was discharged by being received by the treasury in the 
 collection of revenue.* 
 
 ^Ibid., vol. 3, p. 636. This act was intended to absorb the audited 
 paper of the republic. 
 
 -Act of January 23, 1850; ibid., p. 504. The comptrollers' reports 
 -do not separate in the receipts audited paper and treasury notes, so 
 it is not possible to classify the respective amounts of each received. 
 The total liabilities of the republic received from February 19, 1846, 
 to 1860, after which time they cease to appear, amounted to $289,110.86. 
 
 ^Act of March 20, 1848, sec. 2; Gammel, op. cit., vol. 3, p. 208. Re- 
 port of the Auditor and Comptroller, December 27, 1849. 
 
 *The appropriation acts, except the act of January 31, 1852, do not 
 separate principal and interest. The statement of the amount paid 
 does not distinguish, therefore, the principal from the interest pay- 
 ments. 
 
A Financial History of Texas 67 
 
 C. Treasury Notes. 
 
 The history of paper money has been enriched by the experi- 
 ence of the Eepublic of Texas Excessive issue, depreciation to 
 the point of worthlessness, old and new tenors, varying tender 
 qualities, and, in fact, every phase, except that of a legal tender 
 between individuals, was illustrated. The notes were of three 
 different kinds: ten per cent interest notes, called "star 
 money"; those not bearing interest, called "red-backs"; and 
 exchequer bills/ 
 
 The act of June 9, 1837, started Texas upon her tempestuous 
 experience with pa^er money. It authorized and required thie 
 president to issue the promissory notes of the government to 
 the amount of $500,000, in denominations of not less than $1 
 nor more than $1,000, payable twelve months after date, and 
 drawing interest at 10%. There w^ere pledged for their re- 
 demption one-fourth of the proceeds of the sales of Galveston 
 and Matagorda islands, 500,000 acres of land, all improved 
 forfeited lands, and the faith and credit of the government. 
 The notes w-ere to be paid out only for the expenses of the 
 civil departments of the government, except $100,000 for the 
 purchase of horses and munitions of war, and they were re- 
 ceivable in all payments to the government.^ President Hous- 
 ton's explanation of this issue was that Texas had just come 
 out of a war of independence and, to quote his own words, 
 "the struggle had left us destitute and naked. There were no 
 banks, there was no money; our lands could not be sold, and 
 the public credit was of doubtful character. To avoid the 
 absolute dissolution of the government, it became necessary 
 to resort to some expedient that might furnish temporary relief. 
 This could be only effected by creating a currency that should 
 command some degree of credit abroad, . . . such articles 
 in the market of the United States as were indispensable to 
 the country."^ 
 
 ^The interest notes were so called because of a five pointed star in 
 tjie center of the face of the notes. The non-interest notes were called 
 "red-backs" because of their red ground; Crane, Life and Select Lit- 
 erary Remains of Sam Houston, pp. 158, 162. 
 
 -Gammel, op. cit., vol. 1, p. 1309. 
 
 'Message of May 12, 1838; House Journal, 2nd Tex. Cong., p. 119. 
 
6S Bulletin of the University of Texas 
 
 9 ^ 
 
 The notes were not immediately issued, because the secretary 
 of the treasury, Henry Smith, thouj^ht the law authorizing 
 them conflicted, first, with a previous law of June 7, 1837, which 
 in providing for the funding of the public debt pledged the 
 revenues from customs and direct taxation to meet the interest 
 on the same, and, second, with the later tariff act of June 12, 
 1837, which provided that duties should be paid in specie or 
 such current bank paper as the authorities might direct. As 
 the success of the funding scheme would depend on payment 
 of interest in specie, and as the customs were looked to for 
 this specie, the secretary thought the provision making the 
 notes receivable for all government dues would result simply 
 in the substitution of one form of debt for another. He bowed, 
 however, to the "dictation of the chief executive," and the 
 notes appeared about November 1.^ 
 
 On December 14, 1837, there were authorized "change notes," 
 or treasury notes of small denominations, to an amount not 
 exceeding $10,000, and an additional issue of $150,000 of other 
 treasury notes, if required,- Also the issue by individuals of 
 printed or lithographed notes was prohibited, and customs 
 duties were made payable only in specie or treasury notes.^ 
 
 The amount of printed interest notes issued down to January 
 15, 1838, was $514,510.-' They were not reissued, and they 
 experienced little or no depreciation.^ They were succeeded 
 by the "engraved interest notes," whose issues from January 
 15 to November 3, 1838, amounted to $436,289, and from No- 
 vember 3, 1838, to January 1, 1839, to $214,340." The amount 
 
 'Statement of the secretary, November 16, 1837, in compliance with 
 a resolution of the house; House Journal, 2nd Tex. Cong., p. 139. After 
 the notes were issued, the secretary instructed the collectors of the 
 ports not to receive them, but he was compelled by the president a 
 week later to make the order. The exact date of the appearance of the 
 notes has not been ascertained, but the Telegraph and Texas Reg- 
 ister, March 17, 1838, in its chronology of the events of the second 
 year of independence, puts the issue under the date of November 1, 
 1837. 
 
 *Gammel, op. cit, vol. 1, pp. 1387, 1393. 
 
 •Ibid., pp. 1389, 1309. 
 
 *Gouge, op. cit., p. 268. 
 
 •Report of the Auditor and Comptroller, December 27, 1849. 
 
 •Gouge, op. cit., p. 268. 
 
A Financial History of Texas 69 
 
 in circulation on September 30, 1838, was $684,069.59, or 
 $34,069.59 above the amount which had been contemplated by 
 the government;^ and on November 3, 1838, the estimated 
 amount in circulation was $812,454.- A bill to increase the 
 issue to $1,000,000 was vetoed by President Houston on May 
 12, 1838, on the ground that such an amount would destroy 
 the value of the notes and defeat their original purpose; but 
 he signed on May 18, 1838, a bill that called for the "reissue 
 and continued reissue" of the notes until an appropriation of 
 $450,000 should be met.^ ^ 
 
 Depreciation set in soon after the appearance of the engraved 
 notes and by April, 1838, amounted to fifty per cent in New 
 Orleans, while in Texas they were circulating at from 65 c«nts 
 to 85 cents on the dollar."^ The current prices of commodities 
 at this time were high, but they were scarcity prices rather 
 than inflated ones.^ 
 
 With the advent of the Lamar administration in December, 
 1838, a new chapter in the history of the notes began. The 
 interest notes were succeeded by the "red-backs," or non- 
 interest notes, authorized by the act of January 19, 1839.^ 
 Further additions were authorized by the act of February 5, 
 
 ^Report of the Secretary of the Treasury, September 30, 1838. Tele- 
 graph and Texas Register, November 17, 1838. The secretary stated 
 "that exigencies of the time demanded their deviation" from the 
 amount the government regarded as expedient, to be kept in cir- 
 culation. 
 
 ^Gouge, op. cit., p. 269. 
 
 "■Veto message; House Journal, 2nd Tex. Cong., p. 119; Gouge, op. 
 cit., pp. 79, 80. The president stated in the veto message that the out- 
 standing amount up to that time had not exceeded $500,000. Crane 
 (op. cit., p. 162) erroneously says that the act authorizing the increase 
 was passed over the veto. For act of May 18, 1838, see Gammel, 
 op. cit., vol. 1, p. 1492. An act of November 16, 1838, required the 
 issue of $100,000 of notes already authorized to be expended for 
 military purposes exclusively. Ibid., vol. 2, p. 4. 
 
 *Compare (Lester), The Life of Sam Houston, p. 191. Gouge, op. 
 cit., p. 79. 
 
 'See list of prices. Appendix, table 6. 
 
 •Gammel, op. cit., vol. 2, p. 51. The notes first issued under this act 
 bore interest. The non-interest notes did not appear, it seems, until 
 about February 27. See act of February 28, 1840; ibid., p. 310. 
 
70 Bulletin of the University of Texas 
 
 1840, increasing the amount of "change notes" to $150,000, 
 and by the act of February 5, 1841, which placed no other limit 
 on issues of red-backs than the amount of appropriations to 
 be met.^ 
 
 . Although the outstanding circulation at the close of Houston's 
 administration was over $800,000, he had stood for restriction 
 of issue. Under Lamar, however, there was no restriction of 
 amount. From January 1, 1839, there were $1,569,010 of notes 
 issued, and from September, 1839, to September, 1840, $1,983,- 
 790, or a total, not including reissues, of $3,552,800.^ The 
 estimated outstanding circulation was on September 30, 1839, 
 $2,013,762, and on September 30, 1841, $2,920,860.75.^ The 
 occasion of this enormous increase was the reckless policy of 
 expenditures followed by the Third and Fourth congresses.* 
 
 The revenues of the government came to be paid entirely 
 in the form of its paper liabilities, and the system of direct 
 taxation broke down when the people had before them the 
 example of the easy way in which the government provided 
 itself with funds. The five million dollar loan was a delusion 
 entertained throughout the years 1839, 1840, and 1841, and 
 the feeling was that its negotiation would be the panacea for 
 all the ills the republic suffered. Lamar, who was familiar 
 with the general history of paper money, said in his message 
 of December 21, 1838, that the first issues of Texas had an- 
 swered a valuable purpose as a temporary expedient, ''but 
 experience admonishes us that to iirge it further, or continue . 
 it longer, would be. equally injudicious and prejudicial." He 
 favored, therefore, as' a permanent expedient, a national bank, 
 because it would confer ''many eminent and continued bless- 
 
 ^Ibid., pp. 364, 574. 
 
 =Gouge, op. cit., p. 268. 
 
 ^Reports of the secretary of the treasury, 1839 and 1841. Accord- 
 ing to Gouge the outstanding circulation on September 30, 1840, was 
 $3,287,962.42, but he includes in this amount treasury bonds. The 
 note circulation proper is not ascertainable, unless one deducts the 
 total of treasury bonds issued during 1840 and 1841 from the figure 
 given by Gouge. The amount thus obtained is $2,438,062. Making al- 
 lowance for bond issues made in 1841, it is safe to infer that the treas- 
 ury notes outstanding amounted to over $2,500,000. 
 
 *Anson Jones, Republic of Texas, p. 32. 
 
A Financial Histm-y of Texas ' 71 
 
 ings," among which was ''entire freedom from the odious and 
 too often impertinent surveillance of the tax gatherers/' The 
 specie required for the establishment of this bank was to be 
 derived from the expected loan. But the bank scheme was 
 succeeded in Lamar's mind by the expedition to Santa Fe, and 
 it was undertaken, he said, *' because if the commerce and 
 natural wealth of that section could be directed to the republic 
 ... it would do more to revive the drooping finances than 
 any financial theory that might be devised for a quarter of a 
 century to come."^ With such visionary ideas as these en- 
 gaging the mind of the executive, and with an extravagant 
 congress, there is little wonder that the ship of the Republic 
 of Texas went on the rocks. 
 
 The first issues of the red-backs were valued only at about 
 37.5 cents on the dollar; in November. 1840, they had fallen- 
 to 16.66 cents; and at the close of Lamar's administration in- 
 November, 1841, they varied from 12 to 15 cents.^ The New- 
 Orleans quotations w^ere for July 7, 1841, 11 to 13 cents; for 
 September 22, 13 to 15 cents ; for November 24, 12 to 13 cents ; 
 for December 15, 10 to 12 cents ; and for January 5, 1842, 8 to 
 11 cents.^ After 1839 the notes ceased to circulate as a medium 
 of exchange and became merely objects of speculation. The 
 government did not recognize the depreciation until the fall 
 
 'Message of November 3, 1841; Executive Record, No. 39. 
 
 -Report of the Auditor and Comptroller, December 27, 184ff, giVes 
 the depreciation at the date of issue and for November, 1841. The de- 
 preciation in 1840 is given in House Journal, 5th Tex. Cong. First Sess., 
 pp. 43, 127, and in the Telegraph and Texas Register, December 3, 1840. 
 The Register of this issue stated that the continued contradictory 
 statements about the French loan were believed to keep the notes 
 fluctuating. 
 
 ^ Reported in Telegraph and Texas Register. The depreciation can 
 not be followed in the prices of commodities in the Houston market,, 
 for after 1839 the quotations are specie prices. The market prices in 
 18S9 were paper prices, and if we construct a simple arithmetical index 
 number based on the prices of ten commodities quoted on September 
 1, 1838, the number for December 25, 1839, is 221, or an increase in 
 prices of nearly two and one-fourth fold. See schedule of prices in 
 Appendix. See also Texas Diplomatic Correspondence, vol. 1, p. 537; 
 / vol. 3, p. 1368. 
 
72 Bulletin of the University of Texas 
 
 of 1840, when it paid them out at the prevailing: rates of dis- 
 count.^ 
 
 An act of February 5, 1840, provided for the funding- of the 
 notes in bonds which bore 10% and 8% interest and which were 
 redeemable after June 30, 1845. Notes presented before July 
 1, 1840, were fundable in 10%. bonds; after July 1 in 8%.- 
 This was a short lived measure, however, for it was repealed in 
 1841.^ It was next provided that the holders of notes or any 
 other liquidated claim against the government might exchange 
 the same for land scrip at the price of $2.00 per acre.* More 
 stringent measures for sustaining the value of the currency were 
 suggested, but it is to the credit of the Texans that they were 
 not adopted.^ The notes could not be made a legal tender be- 
 tween individuals because of the provision in the constitution 
 which provided that ''nothing but gold and silver shall be made 
 a lawful tender."^ 
 
 The end of the interest notes and red-backs came in January, 
 1842, when they lost their legal tender powder in payments of 
 customs, direct and license taxes. They remained, however, a 
 tender for land dues and for arrears of taxes previously as- 
 sessed.' They immediately sank in value, being current at from 
 
 ^House Journal, 5th Tex. Cong., p. 41. Report of Auditor and Comp- 
 troller, December 27, 1849. Congressional Globe, 33d U. S. Congress, 
 2nd Session, appendix, p. 159. 
 
 ^Gammel, op. cit., vol. 2, pp. 453-4. 
 
 •Ibid., p. 639. 
 
 *Act of February 5, 1841; ibid., p. 624. 
 
 "^In the Third Congress a bill was introduced in the house providing 
 for a stay of execution for twelve months unless treasury notes should 
 be taken in payment. The committee to whom this bill was referred, 
 reported on January 5. 1839, that it deemed the bill "not only uncon- 
 stitutional, but highly impolitic and inexpedient." At this same ses- 
 sion a bill also was reported adversely which sought to compel the 
 officers of the government to receive the notes for all amounts due 
 them, but an act was passed January 19, 1839, compelling them, the 
 chief justice and district judges excepted, to receive the notes in pay- 
 ment of "all dues and appurtenances of their offices." Gammel, op. 
 <;it., vol. 2, p. 81. 
 
 *Art. II, sec. 2. See also Rice v. Powell, reported in Dallam, 413 
 (1841). 
 
 ^Gammel, op. cit., vol. 2, p. 727. 
 
A Financial History of Texas 73 
 
 ten cents to two cents on the dollar, and having no value at all 
 in many parts of the state.^ 
 
 $3,945,500 was the total amount of notes issued, not including 
 reissues and exchanges of new notes for old, from November 1, 
 1837, to September, 1840, after which no new issues of the above 
 kinds were made.- Of this amount $770,080 was funded in the 
 10% bonds and $22,800 in the 8% bonds authorized by the act 
 of February 5, 1840.^ Up to September 1, 1851, $518,324 had 
 been received in the collection of revenue and destroyed. There 
 was due by collectors and "likely to be paid over," $129,750; 
 filed with the auditor and comptroller $2,201,193, leaving out- 
 standing, $296,353.* As a result of the paper being filed with 
 the auditor and comptroller and of its payment to the state for 
 arrears of taxes and land dues owing the republic the amount 
 outstanding was reduced to $90,023 on October 31, 1853.^ Pay- 
 ments in them continued to be made to the state treasury as late 
 as 1859, and those that were not so paid in were probably lost 
 or destro3^ed. 
 
 In the adjustment of this portion of the public debt, the 
 rating given to the first issue, or the 10% printed notes, was 
 par. This was done because their issue ceased before any de- 
 preciation had taken place, and it was considered that the gov- 
 ernment had received full value for them.^ To the second 
 issue, or the 10% engraved notes, a rating of fifty cents on the 
 dollar was given, which was the average value estimated to have 
 been received by the government, owing to their speedy deprecia- 
 tion after issue.' The non-interest notes or red-backs were given 
 a rating of twenty-five cents on the dollar. The principle fol- 
 
 'Gouge, op. cit., p 117. Crane, op. cit., p. 163. New Orleans quota- 
 tions, as reported in the Telegraph and Texas IJ^eglster, were on Feb- 
 ruary 2, 1842, 5 to 8 cents, on May 9, 4 to 6 cents. 
 
 -The total given in the Auditor and Comptroller's report of December 
 27, 1849, is $4,717,939, but this includes $772,439 stated to have been 
 redeemed at the treasury. As this reduction was effected by giving 
 new notes for old, the net issue is as above given. 
 
 'Report of the Auditor and Comptroller, December 27, 1849. 
 
 ♦Report of the Auditor and Comptroller, November 12, 1851. 
 
 •Report of the Comptroller, 1852-3. 
 
 •Report of the Auditor and Comptroller, December 27, 1849. 
 
 Ubid. 
 
74 Bulletin of the University of Texas 
 
 lowed in this rating was to ascertain what the notes were valu(id 
 at when last paid out, but as this was impossible in the case 
 of the engraved interest notes and the red-backs, what was done 
 was to strike an average of the depreciation. For example, in 
 the case of the red-backs, the value was 37^2 cents when issued 
 and 12% cents at the end of 1841, the average being 25 cents.^ 
 These notes were a part of the revenue debt, however, and, 
 therefore, came within the provisions of the acts of Congress 
 of September 9, 1850, and February 28, 1855. Adjustment 
 finally took place on the basis of 76 9-10 cents on the dollar 
 under the provisions of the above act of February 28, 1855, 
 and, the assenting act of Texas of February 1, 1856. The par 
 amount of each kind with interest to January 1, 1841, for which 
 payment was made in 1856 was: 
 
 10% printed notes $ 65,208.33 
 
 10% engraved notes 451,708.32 
 
 Red-backs 2,199,728.64 
 
 Total $2,716,645.29^ 
 
 Scaled to 76 9-10 cents on the dollar this amount was $2,089,- 
 100.22. 
 
 The currency that succeeded the red-backs was a treasury 
 note that went by the name of "exchequer bill." The act which 
 repealed all the laws authorizing the issue and reissue of the 
 old notes and their reception for taxas authorized the president 
 to issue exchequer bills to an amount not exceeding $200,000. 
 They were in denominations of from $5 to $100, and were payable 
 on demand.^ No pledge was given for their redemption, but 
 it was made the duty of the collectors of the revenue to redeem 
 them with any sptcie on hand. They were simply demand 
 notes, and it was expected that their value would be sustained 
 by the provision making them the only paper receivable for taxes, 
 and by limiting the amount issued."* The expected demand for 
 
 ^Ibid. 
 
 ^'Report of the Comptroller, 1855. 
 
 ^Act of January 19, 1842; Gammel, op. cit, vol. 2, p. 727. 
 ^Message of President Houston, December 20, 1841; Executive Record, 
 No. 40. 
 
A Financial History of Texas Id 
 
 the notes, however, did not materialize. Large importations of 
 goods anticipated the requirement that duties should be paid 
 in the notes or in specie, and the demands for the notes wer© 
 further reduced by the reduction of the direct tax to a degree 
 that hardly made it worth collecting, and the failure of mer- 
 chants to pay their license taxes.^ Other circumstances un- 
 favorable to the demand for the notes ^^ere the unsettled con- 
 dition of the country caused by the Mexican invasion; the 
 general commercial depression; the competition of notes issued 
 by banks in the United States, by individuals and by local gov- 
 ernmental bodies in the state ; and the payment of nearly $50,000 
 of the notes for appropriations made before the notes were 
 issued when it had been planned to use notes only for the 
 future maintenance of the government.- Perhaps the most im- 
 portant factor influencing the value of the notes, however, Avas 
 lack of faith in the government's ability to fulfill its promises. 
 Confidence was entertained that Houston would rectify financial 
 matters, but the experiences under the preceding administration 
 were too fresh in mind to allay doubt entirely.^ Notwithstand- 
 ing the fact that the amount issued had not exceeded $150,000, 
 the bills fell by July to as low as 30 cents on the dollar.* 
 The result was the act of July 23, 1842, which made the bills 
 receivable in payment of taxes and postage at their current 
 market value only.^ It was the tendency for the bills to seek 
 the vicinity of the customs' houses, and their value varied at 
 
 ^Ibid., June 27, 1840; Executive Record, No. 40. Report of the Secre- 
 tary of the Treasury, November 1, 1842; House Journal, 7th Tex. 
 Cong., app., p. 53. 
 
 -Report of the Secretary of the Treasury, November 1, 1842. Senate 
 Finance Committee Minority Report, January 6, 1845; Senate Journal, 
 9th Tex. Cong., p. 116. Texas Diplomatic Correspondence, vol. 3, 
 p. 1407. 
 
 ^Gouge, op. cit., p. 118. Crane, op. cit., p. 168. 
 
 ^Telegraph and Texas Register of June 8, 1842, says they were pass- 
 ing in Houston and Galveston at from 40 to 50 cents on the dollar. See 
 also message of Houston, June 27, 1842. Crane (p. 164) gays, -specu- 
 lators, like buzzards watching a sick animal, attacked the exchequers 
 and entered into combination to destroy their value." 
 
 ^Gammel, op. cit., vol. 2, p. 812. The Telegraph and Texas Register 
 of July 27, 1842, says in regard to this act: "the public faith is becom- 
 ing a mock word and public credit an empty bubble." 
 
76 Bulletin of the University of Texas 
 
 the different locations. This variation in Value at the different 
 points of entry was due in large part to the different amounts 
 in circulation at each point/ But the president and the secre- 
 tary of the treasury recommended that the revenue be collected 
 only in specie, and the president suggested the prohibition of the 
 circulation of all foreign bank notes, and the suppression of 
 individual and local governmental issues.^ The measures adopted 
 were to make the bills receivable at par for direct and license 
 taxes and postage,^ and to limit the amount in circulation at 
 any one time to $50,000,* The limitation of issue which was 
 made possible by the policy of rigid economy, the diffused de- 
 mand for the bills for taxes and postage, and growing confidence 
 in the government led to a rise in the value of the bills in 
 1843.^ The president renewed his recommendation to exclude 
 
 'The Telegraph and Texas Register of July 13, 1842, reports that 
 the bills were at par in the eastern district, and again reports them 
 so on August 10, although they were valued at 30 cents in Houston 
 and 50 cents in Galveston. Merchants took advantage of the variation 
 by shipping to the port where the bills were received at par, and after 
 paying duties there, reshipped to the point of destination. Ibid., De- 
 cember 21, 1842. 
 
 -Message of December 1, 1842; Executive Record, No. 40. Report of the 
 Secretary of the Treasury, November 1, 1842. The suggestion as to the 
 payment of the taxes in specie was characterized by the Telegraph 
 and Texas Register of November 23, 1842, as absurd. This newspaper 
 went on to say that there was not enough specie in the republic to 
 meet the ordinary wants of the citizens as a circulating medium, that 
 all the necessaries of life were purchased of merchants with cotton, 
 hides and other products, and that even remittances made by mer- 
 chants to their creditors abroad were made in these articles. 
 
 ='Act of January 6, 1843; Gammel, op. cit., vol. 2, p. 866. Act regulat- 
 ing the postoffice department; ibid., p. 864. 
 
 *Act of January 6, 1843; sec. 5; ibid., p. 830. 
 
 ''The Telegraph and Texas Register, February 8, 1843, reports that 
 the collector at Galveston had rated the bills at 80 cents; that they 
 were current in Houston at from 50 to 60 cents. On May 31, they were 
 reported current in Houston at 45 cents, but were appreciating. On 
 December 6, 1843, they were taken by the collector at Galveston at par 
 and were current at from 90 to 95 cents, but later in December they 
 had declined to 80 and 85 cents. The amount outstanding at the date 
 of the message of December 12, 1843, was estimated by the president 
 at $13,000. 
 
A Financial History of Texas 77 
 
 foreign bank notes and individual and other issues, and congress 
 responded to the extent of repealing all laws granting to any 
 individual or corporation the authority to issue notes. It was 
 also provided that after March 1, 1844, the amount of ex- 
 chequers outstanding should not exceed $20,000/ But deprecia- 
 tion and fluctuation still continued, being influenced now by the 
 prospects for the annexation of Texas to the United States.^ 
 Houston was succeeded as president in December, 1844, by 
 Aijson Jones. The condition of the finances had so improved 
 by this time that the attempt was made to put the republic on 
 a specie basis.^ The act of February 3, 1845, repealed the law 
 authorizing the issue of exchequer bills, and provided that as 
 soon as the liabilities of the government were received in pay- 
 ment of taxes and other public dues, specie should be the only 
 public tender, except in the case of land dues and patents.* 
 The action of repeal was a little premature, however, for in 
 June, authority was given to issue exchequers to an amount 
 not exceeding $10,000 in order to defray the appropriations then 
 made.^ From July, 1844, to August, 1845, the bills were re- 
 ceived at Galveston at from 80 to 95 cents, but at par in the 
 eastern districts; those received subsequently were. at par. The 
 average discount on the bills received from July 31, 1844, to 
 September 1, 1845, was 3%.« Less than $10,000 of the exchequers 
 were outstanding at the close of the republic, and they were all 
 eventually received by the state in the collection of revenue du« 
 the republic. 
 
 ^Acts of February 5, 1844; Gammel, op. cit., vol. 2, pp. 1021, 1031. 
 
 -Telegraph and Texas Register, February 28, 1844. On February 12, 
 1844, following an issue of about $25,000, the rate at Galveston was 70 
 cents; on March 6, 1844, 50 cents, although the bills were current in 
 Houston at 60-75 cents, and at par in the eastern'district; Report of 
 the Secretary of the Treasury, 1844. The average discount on the 
 bills received from customs during the year ending July 31, 1844, was 
 121/^ per cent. 
 
 Message of Jones, December 16, 1844. (Lester) : Life of Sam 
 Houston, p. 258, says in error that Houston left the presidency with 
 the exchequer bills at par. 
 
 ^Gammel, op. cit., vol. 2, p. 1140. 
 
 '^Ibid., p. 1216. 
 
 "Report of the Secretary of the Treasury, February 15, 1846. 
 
78 Bulletin of the University of Texas 
 
 D. Eight Per Cent Treasury Bonds,. 
 
 The act of February 5, 1840, authorized the secretary of the 
 treasury to issue in denominations of $100, $500, and $1,000, 
 8% coupon bonds, to an amount not exceeding $1,500,000. In- 
 terest was to be payable semi-annually in gold or silver, and 
 the revenue from the license tax and the tax on personal prop- 
 erty was set apart for this purpose. The bonds Avere to be used 
 in the payment of the appropriations for 1840, and were re- 
 ceivable for any debt to the government/ 
 
 The appropriations of the Fourth Congress w^ere the largest 
 of any during the history of the republic, and this issue of bonds 
 was a measure adopted by the Lamar administration to meet 
 the appropriations. Treasury notes had depreciated to 16% 
 cents on the dollar, and it was thought the interest provision 
 would result in a higher rating for the bonds, and in their 
 supplanting the notes.- The provision that the interest should 
 be paid in specie was nothing short of a farce, in view of what 
 had been the specie receipts of the government, and it is in- 
 credible that either legislators or receivers of the bonds could have 
 had any faith in it. No change, moreover, was made in the laws 
 defining the tender for the taxes pledged. By the appropriation 
 act of February 5, 1841, it was provided that no further issues 
 of these bonds should be made after March 1, 1841, and the act 
 of January 19, 1842, deprived them of their tender power in 
 payment of debts to the government, except for land dues and 
 patent fees.^ 
 
 The amount issued was $849,900.* They were depreciated from 
 the beginning, the discount being from 85% to 75%.^ There 
 were received in the collection of revenue . and destroyed, 
 $41,200, leaving $808,700, with accumulated interest, to be paid.^ 
 
 ^Gammel, op. cit., vol. 2, p. 241. 
 
 ^'Report of the Auditor and Comptroller, December 27, 1849. 
 
 ^Gammel, op. cit., vol. 2, pp. 574, 727. An act of December 10, 1840, 
 stopped the further issue of the bonds, but that of December 24, 1840, 
 again authorized them for meeting the appropriations. Ibid., pp. 584, 
 473. 
 
 *Report of the Auditor and Comptroller, December 27, 1849. 
 
 ''Ibid. 
 
 ^Report of the Auditor and Comptroller, November 12, 1851. 
 
A Financial History of Texas 19 
 
 The average par value which the government received from them 
 was estimated by the auditor and comptroller in the report of 
 December 27, 1849, at 20 cents on the dollar, and this was the 
 rating adopted by the state legislature/ They came within the 
 provisions of the acts of Congress of September 9, 1850, and 
 February 28, 1855, however, and were therefore subject to pro- 
 rata payment out of the- $7,750,000 reserved in the United States 
 Treasury. Interest was allowed to July 1, 1850, and the original 
 principal and interest to this date, $1,417,680, was adjusted in 
 1856 at the rate of 76 9/10 cents on the dollar.^ The scaled 
 amount was $1,090,195.92. 
 
 E. Ten Per Cent Bonds of June 7, 1837. 
 
 The rapidly increasing amount of government indebtedness 
 in the form of audited drafts and the existence of many un- 
 audited claims led to the passage of the act of June 7, 1837. 
 It provided for the appointment of a stock commissioner who, 
 with the comptroller, should investigate all claims against the 
 treasury. Properly audited claims were exchangeable for the 
 bonds authorized by this act. An issue of $3,000,000 was pro- 
 vided for, of a denomination of $100, bearing 10% interest, and 
 redeemable at the pleasure of the government after September 
 1, 1842.^ Funding under this act continued until January 1, 
 1840.* The amount issued in the funding of audited drafts 
 and claims was $771,000, and in the taking up of land scrip, 
 $66,400, making a total of $837,500. During the period of the 
 republic there was redeemed in land sorip $1,500, and $10,000 
 was received in the collection of revenue.^ The value that the 
 government derived on the average from the liabilities funded 
 was estimated by the auditor and comptroller at 70 cents on the 
 dollar, and this was the rating adopted by the state.^ There 
 were some cases in which this scaling was recognized as doing 
 an injustice and these were recommended by the auditorial board 
 to the legislature for relief. These bonds as a part of the 
 revenue debt were finally adjusted on the basis of 76 9-10 cents 
 
 ^Act of January 31, 1852; Laws of 1852, p. 38. 
 
 ^Report of the Comptroller, 1855. 
 
 'Gammel, op. cit., vol. 1, p. 1301. 
 
 *Act of January 19, 1839; ibid., vol. 2, p. 51. 
 
 ''Report of the Auditor and Comptroller, December 27, 1849. 
 
 *Ibid. Act of January 31, 1862; Laws of 1852, p. 38. 
 
80 Bullet hi of the University of Texas 
 
 on the dollar, and at the date of settlement in 1856, the original 
 principal and interest to July 1, 1850, amounted to $1,687,594.80.^ 
 Scaled to 76 9-10 cents on the dollar this sum was $1,297,375.89. 
 As this settlement did not do justice to those cases recommended 
 in the auditorial report of 1849, an appropriation of $60,000 
 was made by the state legislature to make up the difference be- 
 tween the scaled rate and par.- 
 
 F, Eight and Ten Per Cent Bonds of February 5, 1840. 
 
 To succeed the funding act of June 9, 1837, which expired 
 January 1, 1840, and in order to relieve the currency of the 
 plethora of treasury notes, the funding act of February 5, 1840, 
 was passed. It provided for an issue of bonds in denominations 
 of $100, $500, and $1,000, to an amount necessary to fund the 
 notes and audited liabilities of the government. The bonds bore 
 10% interest payable in specie, and w^ere redeemable at the 
 pleasure of the government after June 30, 1845. Treasury 
 notes presented after July 1, 1840, however, were fundable only 
 in bonds bearing 8% interest.^ The differences between these 
 and the bonds authorized by the act of June 7, 1837, were that 
 the latter had a special pledge of revenue for the payment of 
 the interest but no stipulation in regard to the medium in which 
 it should be paid, were receivable for dues owing to the gov- 
 ernment, were transferable only on the books of the stock com- 
 missioners, and were not emplo^^ed in funding treasury notes; 
 while the former had no special provision for the payment of 
 interest, except that it ^hould be paid in specie, were not re- 
 ceivable in the revenue, were transferable by simple endorsement, 
 and were mainly employed in funding treasury notes. 
 
 The act of February 5, 1840, was repealed in 1841, owing no 
 doubt to its failure to raise the value of the treasury notes."' 
 Its operation was resulting in the substitution of an interest 
 for a non-interest liability, and with no apparent benefit to the 
 credit of the government. Of the bonds bearing 10 7^ interest 
 there were issued $813,800, $1,400 of which were redeemed in 
 land scrip during the period of the republic; of the 8% bonds 
 
 'Report of the Comptroller, 1855. 
 
 ''Act of February 2, 1856; Laws of 1856, Reg. Sess., p. 64. 
 
 ^Gammel, op. cit., vol. 2, p. 453. 
 
 *Act of February 4, 1841; ibid., p. 639. 
 
A Financial History of Texas 81 
 
 there were issued only $27,080.^ The auditorial board confesseiJ 
 to the impossibility of ascertaining with anything approaching 
 exactness the value received by the government from the lia- 
 bilities funded, and arbitrarily rated the bonds at 30 cents on 
 the dollar.^ The original principal and interest to July 1, 1850, 
 amounted to $1,674,380.42.^ In accordance with the acts of Con- 
 gress of September 9, 1850, and Febnlary 28, 1855, and the 
 assenting act of Texas of February 1, 1856, payment was made 
 on the basis of 76 9-10 cents on the dollar. Scaled at this rate 
 the amount became $1,287,788.54. 
 
 G. Miscellaneous Debts. 
 
 Under the ordinance and decree of December 5, 1835, au- 
 thorizing a loan of $1,000,000, there were two loans made of 
 investors in New Orleans. The history of these loans has al- 
 ready been given,* and it is sufficient only to note here that the 
 Triplett loan of January 20, 1836, from which $20,070 was de- 
 rived was settled with 8% interest in land scrip at fifty cents 
 an acre, according to the act of June 3. 1837, and that the 
 Erwin loan of January 11, 1836, was settled on the same basis 
 by the act of May 24, 1838.^ Advances by McKinney and 
 Williams, of Texas, during the struggle for independence, to the 
 amount of $54,408.11 were also settled in land scrip at the rate 
 of 50 cents an acre.^ These and such portions of its floating 
 debt as were settled by the republic itself were thus paid in 
 land scrip or in other evidences of debt, such as treasury notes 
 or bonds. 
 
 H. Recapitidation. 
 
 The total amount of specie or specie equivalent received by 
 the Eepublic of Texas from loans was $457,380, and if to this 
 
 ^Report of the Auditor and Comptroller, November 12, 1851. 
 
 ^Report of the Auditor and Comptroller, December 27, 1849. In 1841 
 the public talk of repudiating the debt, the president's recommendation 
 in his message of December 20, 1841, that redemption be postponed, 
 and the general critical financial condition of the government, caused 
 the greatest depreciation of the notes and bonds. On January 26, 1842, 
 the Telegraph and Texas Register quoted the 8 per cent bonds at from 
 6 to 7 cents, and on February 2 and May 9 at from 6 to 8 cents.' 
 
 •Report of the Comptroller, 1855. 
 
 Mnie, p. 16. 
 
 'Gammel, op. cit., vol. 1, pp. 1289, 1498. 
 
 "Act of February 5, 1844; ibid., vol. 2, p. 1007. 
 
 6— H 
 
82 Bulletin of the University of Texas 
 
 are added the proceeds of loans made by the revolutionary gov- 
 ernmental bodies the total receipts amount to $524,370.^ 
 
 The revenue debt, or that which came under the provisions 
 of the acts of the United States Congress of September 9, 1850, 
 and February 28, 1855; amounted, original principal and in- 
 terest to July 1, 1850, to $10,078,703.21. The holders of this 
 debt received the $7,750,000 appropriated by the United States 
 in 1855", which was payment on the basis of about seventy-six 
 and nine-tenths cents on the dollar. The state, however, ap- 
 propriated $60,000 to compensate certain creditors for the dif- 
 ference between the scaled and the par ratings, w^hich brought 
 the basis of settlement of this revenue debt to something more 
 than the 76 9-10 cents.- Of the $7,750,000 appropriated by the 
 United States for the payment of this debt, there remained an 
 unexpended balance on January 1, 1861, of $101,113.27. In 
 1881 a payment of $45,000 out of this balance was made. The 
 total payment made by the United States on account of the debt 
 of the Republic of Texas amounted to $7,693,886.73. 
 
 The face value of the audited claims and miscellaneous liabili- 
 ties cannot be stated. The amount of such, excluding interest 
 was, according to the report of the auditor and comptroller, 
 November 12, 1851, $1,008,267.37, but this was an underestimate. 
 Payment of this class of debt devolved upon the state, and the 
 total paid by the state down through 1902, the date of the last 
 payment, amounted to $1,287,951.13. To this amount of $1,287.- 
 951.13 should be added $288,263.16 which was the net amount 
 of the liabilities of the republic received by the state in the 
 collection of revenue due the republic. 
 
 SUMMARY : 
 
 Amount paid by the United States $7,693,886.73 
 
 Amount paid by the state 1,287,951.13 
 
 Amount received by the state in the collection of 
 
 revenue 288,263.16 
 
 Total paid on debt of republic $9,270,101.02 
 
 ^Gouge, op. cit., p. 273. 
 ^Laws of 1856, p. 64. 
 
PART III. 
 
 THE STATE, 1846-1861. 
 
 Chapter 1. 
 
 introduction. 
 
 In the general election held in September, 1836, to ratify the 
 constitution of the republic and to elect the national officers, 
 the voters of Texas declared themselves almost unanimously 
 in favor of annexation to the United States. Owing mainly 
 to the slavery question, however, the desire of Texas was not 
 at this time reciprocated.^ In 1843 overtures were again made 
 and a treaty of annexation was signed, but was rejected by the 
 United States Senate in April, 1844.^ The expedient of a joint 
 resolution was then adopted by the friends of Texas in Con- 
 gress, and on March 1, 1845, the United States proposed annex- 
 ation. President Jones of the republic called a convention, 
 which on July 4, 1845, passed an ordinance accepting the 
 proposal of the United States, and this ordinance and the 
 constitution for the new state which had been framed by the 
 convention were ratified by a popular vote on October 13, 1845.^ 
 Annexation was consummated by the joint resolution of the 
 United States, December 29, 1845; and on February 19, 1846, 
 President Jones turned over the government of the republic 
 to the officers of the new state. The first chapter of the state's 
 financial history ended in 1861, when secession took place and 
 a war was entered upon which prostrated the finances of the 
 state and the general economic life of the state for many years 
 to follow. 
 
 Texas shared with the rest of the United States the great 
 prosperity and material development w^hich characterized the 
 years 1846 to 1857. About the time of annexation, population 
 numbered roughly 135,000; in 1850 it had increased to 212,592, 
 and in 1860 it was 604,215. In 1850 the per cent of the total 
 population that was negro was 27.54; in 1860 it was 30.1. The 
 white population of the state increased 173.24 per cent in the 
 decade 1850-1860 ; the rate of increase of the slave population 
 was 213.89 per cent ; while the total population increased 184.2 
 per cent.* Thus, while the population of the state grew pro- 
 
 ^Garrison, Texas, p. 255. 
 
 ^Ibid., p. 257. 
 
 »Ibid., p. 260. 
 
 ♦Eighth Census of the United States. 1860. Vol. Population, p. 598. 
 
84 Bulletin of the University of Texas 
 
 digiously between 1850 and 1860, the large negro element 
 minimized the value of the growth. 
 
 The population of the state was almost wholly rural. Gal- 
 veston was the leading town in 1850 with a population of 4,177 ; 
 San Antonio was next with 3,488; Houston was third with 
 2,396 ; New Braunfels w^as fourth with 1,298, and Marshall was 
 fifth with 1,189. The total number of people in the twenty- 
 three Texas towns listed in the United States Census of 1850 
 was only 20,209, Only five of the twenty-three towms had over 
 one thousand inhabitants. Counting as urban the population 
 of all the towns, the per cent of the population of the state 
 that was urban was 9.5, The population was spread very thinly 
 over the state, there being on the average in 1850 only eight- 
 tenths of a person to the square mile. By 1860 the average 
 density of population was 2.3 persons to the square mile. There 
 was practically no increase in the urban proportion of the 
 population between 1850 and 1860. In 1860 San Antonio was 
 the leading city with 8.235 inhabitants; Galveston was next 
 with 7,307; Houston was third with 4,845; and Austin was 
 fourth with 3.494. The United States Census of 1860 lists 
 forty-two cities and towns with a total population of 59,651. 
 Their population was 9.8 per cent of the total population. 
 
 Population continued to follow rather closely the navigable 
 waterways, but transportation was nevertheless largely by 
 means of the ox wagon. Railroad building began before the 
 middle of the fifties, but the towns affected by it were com- 
 paratively few and were on or near the coast. The number of 
 miles of railroad in operation was 32 in 1854, 40 in 1855, 71 
 in 1856, 157 in 1857, 205.5 in 1858, 284.5 in 1859, and 306 in 
 1860.^ The estimated cost of construction of the 306 miles was 
 $11,232,345.- 
 
 'Eighth Census of the United States. 1860. Vol. Mortality and Mis- 
 cellaneous Statistics, p. 333. See also, Potts, Railroad Transportation 
 in Texas^ p. 42. Compare Ringwalt, Development of Transportation 
 Systems in the United States, p. 166, who gives the following mileage 
 statistics for Texas: 
 
 Turnpike 
 and other 
 Railroad mileage Steamboat mileage road mileage 
 
 1850 . . — 80 7,618 
 
 1860 . . 78 2,185 16,193 
 
 ^Eighth Census of the United States. 1860. Vol. Mortality and 
 Miscellaneous' Statistics, p. 328. 
 
A Financial History of Texas 85 
 
 Agriculture was practically the sole occupation of the people, 
 as was shown by the large per cent of the population that was 
 rural. In 1850 the number of acres of improved land in farms 
 w^as 643,976, and the number of acres of unimproved land in 
 farms was 10,852,363. In 1860 the respective amounts were 
 2,650,781 and 22,693,247. Though agriculture was almost the 
 sole occupation of the people of the state, the farm area was 
 only 6.8 per cent of the total land area in 1850 and 15.1 per 
 cent in 1860. The balance of the land area was unoccupied and 
 uncultivated, but it was owned either by the state or by land 
 speculators. The cash value of the farms in 1850 was $16,550,- 
 008, and in 1860, $88,101,320. The value of farming implements 
 was $2,151,704 in 1850, and $6,259,452 in 1860. The value of 
 livestock was $10,412,927 in 1850, and $42,825,447 in 1860. 
 Cotton w^as the principal crop, and corn was the second crop 
 in importance. There were 58,072 bales of cotton of 400 pounds 
 each produced in 1849, and 431,463 bales in 1859.^ The average 
 price per pound for upland cotton was 12.3 cents in 1849, and 
 11 cents in 1859.- 
 
 Manufactures were either brought in from outside of the 
 state or were made in the home, though there were some local 
 manufacturing establishments. In 1850 there were 309 manu- 
 facturing establishments, including shops doing custom's work 
 and repairing, with a total annual product valued at only 
 $1,168,538. In 1860 there were 983 establishments, whose 
 annual product was valued at only $6,577,202.^ The value of 
 home manufactured products was $266,984 in 1850, and $584,- 
 217 in I860.* 
 
 Though diversification of industry was yet to come and 
 though most people depended on the ox wagon, population was 
 increasing rapidly, agriculture was flourishing, and the state 
 as a whole was prospering. 
 
 The finances of this period will be treated under the topics, 
 Expenditures, School Funds, Receipts, and Public Debt. 
 
 ^Seventh Census of the United States. 1850. Pp. 515 and 1020. 
 Eighth Census of the United States. 1860. Vol. Agriculture, p. 148. 
 
 -Bulletin of the United States Department of Commerce, Bureau of 
 the Census, No. 131, p. 82. The average price for the period 1846-1860 
 was 11 cents per pound. 
 
 ^'Twelfth Census of the United States. 1900. Vol. 8, p. 862. 
 
 ^Seventh Census of the United States. 1850. Pp. 515 and 1020. 
 Eighth Census of the United States. 1860. Vol. Agriculture, p. 151. 
 
Chapter 2. 
 expenditures. 
 
 The history of expenditures to 1861 may be divided into the 
 two periods, 1846-1851 and 1852-1860. DoAvn to 1852 the policy 
 of economy followed during the last years of the republic was 
 continued. Annexation relieved the state of the duties having 
 to do with foreign intercourse, an army, a navy, and a post 
 service, and until 1852 no new duties were undertaken, nor was 
 the scale of performance of the old ones enlarged. The largest 
 items of expense down to 1852 were the judiciary, the legis- 
 lature, and the administration of the general land office. To- 
 gether they made up about 60 per cent of the total expenditures. 
 The judiciary had been scantily paid during the republic, but 
 after 1845 salaries were increased. Frequent sessions of the 
 legislature were called for in order to enact the statute laws 
 for the newly organized state, but until 1850 there were only 
 three sessions of about three months each. In 1850 the question 
 arose as to the settlement of the northwest boundary dispute 
 with the United States, and thereafter special sessions multi- 
 plied. Though they were of brief duration, the mileage expense 
 was a large item. Legislative expenditures constituted about 
 12 per cent of the total expenditures of the period. The gen- 
 eral land office was the most costly of the departments of 
 general administration, and receipts from lands did not counter- 
 balance the expenditures. 
 
 Until 1852 the state was dependent on taxation for revenue, 
 but in 1851 there came a windfall in the form of the five million 
 dollars of United States bonds which were a part of the pay- 
 ment by the United States for the cession of the northwest 
 territory and for the relinquishment by Texas of certain claims 
 against the United States. The first claim upon these bonds 
 was regarded to be that part of the debt of the Republic of 
 Texas which was not subject to payment out of the United 
 States Treasury.^ Payment of this debt was begun in 1852 and 
 continued throughout the period. It constituted by far the 
 largest item of expenditure, being about 23 per cent of the 
 total. 
 
 'Message of Governor Bell, January 13, 1853. 
 
A Financial History of Texas 87 
 
 The use to which the remainder of the bonds should he put 
 vexed the public mind and was a good test of the sanity of the 
 early Texans. There was more than four million dollars avail- 
 able. Some advocated its use for internal improvements, others 
 for education, while others believed it should be kept as a fund, 
 the interest from which would be sufficient to meet the ordinary 
 expenses of the state and thus relieve the people from taxation.* 
 $2,000,000 of the bonds was given to the general school fund, 
 $100,000 to the university fund, and the remainder was used 
 to meet the current expenditures of the state. The taxes that 
 would have been collected for the state purposes were relin- 
 quished from 1852 to 1858 to the counties and used by them 
 to pay their debts, to build courthouses and jails, and to meet 
 county expenses for other objects. This relinquishment did not 
 benefit equally all the counties, but, in general, the end sought 
 was attained, and as late as 1879 the bonded debt of Texas 
 counties was only $2,030,907.^ But the use of the bonds in 
 paying the ordinary expenses of the state government — which 
 was necessitated by this relinquishment policy — ^was very poor 
 financiering, and there is little doubt but that the benefit ta 
 the state would have been greater if the bonds had been used 
 to endow further the school and university funds. On August 
 31, 1860, there was to the credit of the general revenue account 
 only $50,000 of the bonds, and these were a part of the $100,000 
 borrowed from the university fund. Thus by 1861 not only 
 had all the bonds not reserved for the two trust funds been 
 expended, but those even in one of the trust funds had been 
 borrowed. This occurred during a period when the population 
 and wealth of the state were growing rapidly. Expenditures, 
 while liberal, were not extravagant, and the explanation of the 
 flight of the bonds lies rather in the revenue policy followed.* 
 After 1853 the salaries of those in the service of the state were 
 
 ^Message of Governor Bell, November 10, 1851. 
 
 -Tenth Census of the United States, vol. 7, p. 756. 
 
 "The Galveston News, January 24, 1854, comments on a tendency ta 
 extravagance in expenditures. Sam Houston in a letter of May 1, 
 1860, published in the State Gazette of July 21, 1860, criticizes the ad- 
 ministration of 1858 and 1859 as not having managed the government 
 economically. 
 
SS Bulletm of the University of Texas 
 
 increased, but $3,000 for the governor and the supreme court 
 judges, $2,250 for district judges, $1,800 to $2,000 for heads of 
 departments, and $900 to $1,200 for clerks were not unreason- 
 able compensations.^ 
 
 An item of extraordinary expense which became important 
 in 1852 and remained so thereafter was frontier defense. The 
 Indians had been comparatively quiet up to that time, but as 
 they were then being pushed farther and farther west, the 
 outposts of the white settlements experienced their resentment. 
 The state maintained mounted troops on the frontier at a heavy 
 expense in order to protect the settlements. The expenditures 
 for this purpose during the four years 1852-1855 amounted to 
 about $95,000, and the claim against the United States for this 
 amount was relinquished in accordance with the act of Con- 
 gress of February 28, 1855. From 1856 to 1861 over $375,000 
 was expended for this purpose, and it was on this account that 
 the $100,000 of United States bonds belonging to the univer- 
 sity fund was borrowed in 1860. The seriousness of this ex- 
 pense as a drain upon the treasury may be best understood 
 by the fact that it constituted in 1860 more than 24 per cent 
 of the expenditures. The Indians were the charges of the 
 United States and that government was financially responsible 
 for them, but Texas was not reimbursed for her expenditures 
 for frontier defense until 1906. 
 
 The state penitentiary was the object of increased appro- 
 priations from 1852 to 1858. It was enlarged, and as an adjunct 
 to it a factory for the manufacture of cotton and woolen goods 
 was built and equipped in 1854. The policy of leasing the 
 convicts in order to reduce their expense to the state was also 
 -considered, but was not adopted.- The net expense of the 
 
 ^The governor's salary had been fixed by the constitution at $2,000 for 
 ten years. The increase to $3,000 was made by the act of December 
 20, 1855; Laws of 1855, p. 13. Act of February 11, 1854, raised salaries 
 of the attorney general, comptroller, treasurer, and other heads; Laws 
 of 1854, p. 77. The salaries of the judges of the supreme and district 
 courts were increased in 1856; Laws of 1856, p. 69. The salaries of 
 chief clerks of the departments were increased in 1858; Laws of 
 1858, p. 247. 
 
 ^Message of Governor Pease, December 23, 1853. Report of the 
 Committee on the Penitentiary; House Journal, 7th Leg., p. 345. 
 
A Financial History of Texas ^ 89 
 
 institution decreased after the factory got into operation, and 
 during the Civil AVar the factory was a most important aux- 
 iliary of the government.^ 
 
 Until 1856 the state made no provision for the insane, the 
 blind, or the deaf and dumb, but in that year buildings and 
 maintenance were authorized for each of these, and each of 
 the institutions was endowed with 100,000 acres of land,- 
 
 Expenditures for public buildings increased after 1852. A new. 
 capitol, governor's mansion, land office building and treasury 
 building were erected. They were modest buildings, for the cost 
 of constructing and furnishing all of them did not exceed 
 $270,000. 
 
 Expenditures of minor importance were for pensions and for 
 what may be called industrial purposes. No general pension 
 law was enacted, but cases of soldiers and seamen disabled in 
 the Texas Revolution or in the service of the Republic of Texas 
 were dealt with individually. Industrial expenditures were fojr 
 the taking of the state census, and in 1858 for a geological and 
 agricultural survey of the state. Public printing increased in 
 cost after 1851, mainly because of the increased volume of 
 printing. 
 
 Expenditures so far considered related to state duties of un- 
 questioned legitimacy. The policy that should be followed in 
 regard to internal improvements, however, was the subject of a 
 vigorous controversy. During the republic four railroads were 
 chartered, but the aid granted to them was only their right of 
 way over the public domain, and not one was built.^ It was not 
 unusual to find in state constitutions which were drawn up at 
 about the time Texas adopted hers a provision that enjoined 
 encouragement to internal improvements. A similar injunction 
 was lacking in the Texas Constitution of 1845, and the only pro- 
 visions relating to the subject were that no appropriation should 
 
 ^The expenditures for the penitentiary from 1848 to 1861 amounted 
 to $318,958. Report of the Comptroller, 1868-9, pp. 44-49. See also 
 House Journal, 5th Leg., appendix. 
 
 ^Laws of 1856, Adjourned Session, pp. 39, 58 and 61, and Laws of 
 1858, p. 251. 
 
 ^Alexander Deussen, "The Beginnings of the Texas Railroad System," 
 in Transactions of the Texas Academy of Science, vol. 9, p. 43. 
 
90 Bulletin of the University of Texas 
 
 be made for internal improvements without the concurrence 0!*^ 
 Iwo-thirds of both houses of the legislature, and that the state 
 should not be part owner of the stock or property belonging to 
 any corporation.^ During the first years of statehood railroad 
 c-ompanies were chartered, but no construction took place, and 
 the charters were forfeited. No subsidies were given, foreign 
 capital was timid, domestic capital was both scarce and other- 
 wise more profitably employed, population was sparse, the 
 traffic in sight small, and distances to be covered were great. 
 The failure of unaided private enterprise down to 1852 to pro- 
 vide means of transportation forced the question of state assist- 
 ance to the forefront of public questions. 
 
 The method of state assistance first adopted was the donation 
 in several special chartering acts of eight sections of land for 
 each completed mile of road.^ Previously, in 1850, statutory 
 permission was given the cities and counties along the route 
 of the proposed San Antonio Railroad to subscribe to its capital 
 stock.^ The city of San Antonio and Bexar County each sub- 
 scribed $100,000, and these were the only municipal subsidies 
 given in Texas before the Civil War.* 
 
 The imagination of the public was kindled by the receipt by 
 the state of the $5,000,000 of United States bonds ; and in 1852 
 public meetings and conventions began to be held to discuss the 
 subject of internal improvement.^ During the years from 1852 
 to 1856, which was a period of discussion, three plans for secur- 
 ing a system of improvements were presented. One was called 
 the ''State Plan", and was championed by Governor Pease. It 
 comprehended a system of railroads, canals and river improve- 
 ments. The railroads were to be built and owned by the state. 
 
 ^Art. 7, sees. 8 and 31. 
 
 -Special Laws of 1852, p. 97. 
 
 ^Laws of 1850, p. 35. 
 
 ^Texas Almanac, 1859. The special tax levied by Bexar County was 
 reluctantly paid, particularly by non-residents of the county, and the 
 state comptroller in 1856 or 1857. following an opinion of the attorney 
 general, instructed the assessors and collectors no longer to insist on 
 the payment of the tax. Report of Comptroller, 1856-7, p. 20. 
 
 ^Message of Governor Bell, January 13, 1853; House Journal, 4th 
 Leg., Second Sess.. p. 20. The Texas State Gazette, July 12, 1856. The 
 Galveston News, January 17, 1854, and May 29, 1855. 
 
A Financial History of Texas 91 
 
 but leased for private operation. The funds for construction 
 were to be raised through the sale of state bonds, and the interest 
 on the bonds was to be met by a direct tax, until an amount 
 sufficient to meet the interest should be realized from the sale of 
 the public lands or from the profits on the constructed works. ^ 
 The advocates of this plan thought that by it the state would 
 secure during the next fifteen yesirs internal improvements valued 
 at from twenty-five to thirty million dollars. "No argument 
 against the practicability of the plan here presented," said the 
 governor, "can be drawn from the experience of other states, 
 which have attempted a system of improvements, because none 
 of them have attempted a system like this. ' ' 
 
 Another plan was called the ' ' Iron Policy. ' ' It was so called 
 because it proposed the investment of the school fund in railroad 
 iron which was to be loaned to the roads.- Governor Pease re- 
 garded this plan as the alternative to the "State Plan. "^ The 
 third plan was called the "Loaning System," and was the plan 
 to invest the school fund in the bonds of railroad companies.* 
 The "Loaning System" was approved by the convention called 
 to consider internal improvements which met in Austin July 4, 
 1856, and in which twenty-six counties were represented.^ 
 
 It was pointed out that the experience of other states with 
 internal improvements had been "enormous expenditures on 
 unprofitable works. State debts, repudiation, and finally ruinous 
 taxation."^ This experience was heeded, and the "State Plan" 
 
 ^Message of Governor Pease, November 5, 1855; Senate Journal, 6th 
 Leg., p. 8. House Journal, 6th Leg., pp. 401-412. The Texas State 
 Gazette, February 24, 1855, and April 5, 1856. The Galveston News 
 and the Galveston Journal supported the State Plan. The Marshall 
 Republican and the Houston Telegraph prominently opposed. See Gal- 
 veston News, January 1, 1856. 
 
 -House Journal, 6th Leg., pp. 412-19. The Texas State Gazette, April 
 5, 1856. The Galveston Weekly News, December 25, 1855, and January 
 1, 1856. 
 
 ^Senate Journal, 6th Leg., p. 29. 
 
 ^Majority Report of the Committee on Internal Improvements; House 
 Journal, 6th Leg., pp. 401-12. Message of Governor Bell, November 12, 
 1851. Message of Governor Pease, December 23, 1853. 
 
 ^The Texas State Gazette, July 12, 1856. 
 
 "House Journal, 6th Leg., pp. 401-12. The Galveston News, June 5, 
 1855. 
 
92 Bulletin of the University of Texas 
 
 and the ''Iron Policy" were rejected. The policy adopted was, 
 first, to donate to each railroad sixteen alternate sections of land 
 for every mile of completed road, the land to be surveyed in 
 sections of 640 acres at the expense of the road -^ second, to loan 
 for ten years at six per cent interest the United States bonds 
 belonging to the school fund to railroad companies chartered 
 by the state, at the rate of $6,000 for each mile constructed, the 
 loan to be secured by a first lien upon the property of a road ;- 
 third, to appropriate $300,000 out of the state treasury for the 
 improvement of the navigable rivers, bayous, lakes, and bays of 
 the state, and for the construction of canals.^ The act carrying 
 this appropriation imposed the important conditions that the 
 maximum amount to be given to any one river project should be 
 $50,000, and that no aid should be given unless there was raised 
 by private subscriptions a sum equal to one-fifth of the amount 
 asked of the state. Some eighteen contracts were entered into, 
 and by the end of the fiscal year 1863 the appropriation of $300,- 
 000 was exhausted.* It is difficult to believe that the amounts 
 expended accomplished anything. Texas rivers apparently were 
 no more permanently navigable before the Civil War than they 
 are today, for it was proposed in 1856 that $100,000 should be 
 expended on digging a number of artesian wells at the heads of 
 all Texas rivers in order that they might be supplied with water.^ 
 Any improvement in the rivers which mav have been effected 
 
 ^Laws of 1854, p. 11. 
 
 =Laws of 1856, Adj. Sess., p. 31. 
 
 ^Laws of 1856, Adj. Sess., p. 9. For railroad mileage see ante^ p. 84. 
 
 *At the end of the fiscal year 1859 there had been drawn $217,227. In 
 1860 and 1861 $90,449 was drawn, but this amount less refunds and 
 the sum derived from sale of property left net amount drawn of $87,- 
 555. In 1862 and 1863, $2,529 was drawn. The total drawn was $307,- 
 311. See comptroller's reports, 1856-7 and 1858-9; and the original 
 Warrant Register, 1861-1871, in the vault of the comptroller's depart- 
 ment. Texas Almanac, 1858, p. 191. 
 
 ''House Journal, 6th Leg., p. 517. The Galveston News, June 5, 1855, 
 thought the amount appropriated insufficient to secure permanent navi- 
 gation. In the issue of December 4, 1855, the appropriation is defended 
 as sufficient for securing permanent navigation for several hundred 
 miles into the interior. 
 
A Financml History of Texas 93 
 
 as a result of this state assistance was suffered to be lost during 
 the years of the war and the Reconstruction. 
 
 Expenditures of a character different from the above were 
 those for education and the public debt, and these will be treated 
 in connection with the school funds and the public debt. 
 
Chapter 3. 
 the school funds.^ 
 
 Xo system of public schools arose during the period of the 
 republic, but the liberal land grants to education made in 1839 
 were recognized and continued by the state. The Constitution o f 
 1845 contained the following provisions in regard to education : 
 ''The legislature shall, as early as practicable, establish free 
 schools throughout the state, and shall furnish means for their 
 support by taxation on property ; and it shall be the duty of the 
 legislature to set apart not less than one-tenth of the annual 
 revenue of the state derivable from taxation as a perpetual 
 fund, which fund shall be appropriated to the support of free 
 public schools; and no law shall ever be made diverting said 
 fund to any other use; and until such time as the legislature 
 shall provide for the establishment of such schools in the several 
 districts of the state, the fund thus created shall remain as a 
 charge against the state passed to the credit of the free common- 
 school fund. "2 
 
 "All public lands which have been heretofore granted or may 
 hereafter be granted for public schools to the various counties, 
 or other political divisions in this state, shall not be alienated in 
 fee, nor disposed of otherwise than by lease for a term not 
 exceeding twenty years in such manner as the legislature may 
 direct."^ 
 
 ' ' No appropriation of money shall be made for a longer term 
 than two years," except for purposes of education.* 
 
 The successive acts 'levying taxes carried out the constitutional 
 injunction to set aside to the school fund one-tenth of the annual 
 revenue of the state derived from taxation. Also the act of 
 
 ^For an eicellent summary of school legislation see Lane's, "The 
 Educational System of Texas," in Wooten, A Comprehensive History of 
 Texas, vol. 2, pp. 424-431, 439-444. 
 
 ^Art. 10, sec. 2. 
 
 'Art. 10, sec. 3. Sec. 4 provides that the counties which have not 
 received their lands shall be entitled to receive the same quantity as 
 other counties. 
 
 *Art. 7, sec. 8. 
 
A Financial History of Texas 95 
 
 January 16, 1850, provided that counties organized since Feb- 
 ruary 16, 1846, or which might thereafter be organized, should 
 each receive four leagues of land/ The counties were slow in 
 selecting their lands, and owing to the abundance of land little 
 was derived from the system of lease to which they were re- 
 stricted. ^ A better system of administration of these lands 
 would have been to have made them a part of the school fund 
 and so subject to administration by the state.^ In subsequent 
 legislation relating to the disposition of the public lands the 
 school fund was made the beneficiary. During the three years, 
 1858-60, $100,960 was received by the fund from the sale of the 
 public lands as authorized in 1858.* 
 
 The receipts from one-tenth of the taxes were small, and it 
 would have taken an indefinite length of time for an amount to 
 have accumulated, the income from w^hich would have been worth 
 while to apportion. Few counties had established schools up 
 to 1855, and it was realized that with the existing provisions the 
 establishment of a general system of education would long be* 
 delayed. The indemnity bonds received from the United States 
 provided very opportunely the means for giving some needed 
 assistance. By the act of January 31, 1854, $2,000,000 of the 
 bonds were set aside as a fund to be called a Special School 
 Fund, the interest of which should be distributed for the sup- 
 port of the schools. In 1855 the first distribution was made. 
 
 The school fund was made to serve the double purpdse of fos- 
 tering education and promoting internal improvements. The 
 original proposal for giving the $2,000,000 of bonds to the fund 
 was in a bill introduced at the called session of the Fourth Legis- 
 lature to set aside that amount for investment in railroad bonds 
 for the benefit of the school fund. This bill was defeated, but a 
 similar bill was introduced in the Fifth Legislature which met 
 in November, 1853.^ A majority of the committee on education 
 
 ^Laws of 1850, p. 37. 
 
 *As late as 1855 only 954,181 of the 1,753,488 acres to which the 99 
 counties were entitled had been selected; 38 counties had made no 
 selection. See message of Governor Pease, November 5, 1855; Senate 
 Journal, 6th Leg., p. 15; also message of December 23, 1853. 
 
 'Message of Governor Pease, November 5, 1855; Senate Journal, 6th 
 Leg., p. 15. 
 
 *Laws of 1858, p. 193. 
 
 ^House Journal, 5th Leg., p. 195. 
 
96 Bulletin of the University of Texas 
 
 to which it was referred recommended its indefinite postpone- 
 ment, with the result that the donation to the fund was made 
 without any condition as to its investment/ The sentiment for 
 internal improvement was too strong to be resisted, however, and 
 in 1856 the "Loaning Act" was passed.^ The governor, the 
 comptroller and the attorney general were constituted an ex- 
 officio board of school commissioners whose duty it was to loan, 
 under the guise of investment, the 5% United States bonds in 
 the fund to railroad companies incorporated by the state. Every 
 loan was secured by six per cent first mortgage bonds of the 
 road, and each company was required to pay two per cent each 
 year into a sinking fund held in the state treasury. Loans were 
 made to six companies, and the amount of their bonds purchased 
 by the end of 1860 was $1,476,000. Up to the outbreak of the 
 war the conditions of the loans were fully met in regard to 
 interest and sinking fund payments. 
 
 From 1855, when the first payment out of the school fund 
 was made, until 1861, a total of $560,015 was apportioned among 
 the counties. This amount is the total of the money expenditures 
 of Texas in behalf of education during the Irwenty-five years 
 preceding the Civil War. The per capita apportionment was 
 very small, being in 1857 only $1.21 for each child of school age.^ 
 After '1857 the amount for apportionment remained fairly uni- 
 form, but as the number of those within the school ages increased, 
 the per capita apportionment decreased. Receipts to the fund 
 were largely from the interest on the United States bonds held 
 by the fund. Little was derived from taxation, as the state rate 
 was low; and much less was received from land sales. The 
 United States Census of 1850 reported 347 public schools with 
 358 teachers, 7,869 pupils, and an annual income of $43,878. All 
 of the income was reported as derived from sources other than 
 taxes or public funds.* By 1860 there were 1,218 public schools, 
 M'ith 1,274 teachers and 34,611 pupils. The annual income was 
 
 'House Journal, 5th Leg., p. 205. Act of January 31, 1854; Laws of 
 1854, p. 17. 
 
 =Laws of 1856, Adj. Sess., pp. 31, 57. Laws of 1858, p. 57. 
 
 •^Message of Governor Pease, November 2, 1857; House Journal, 7th 
 Leg,, p. 29. 
 
 ^Seventh Census of the United States. 1850. Pp. 508 and 1020. 
 
A Financial History of Texas 97 
 
 $414,168, of which $15,847 was reported as derived from taxes, 
 $58,394 from public funds, and $339,927 from other sources.^ 
 There was practically no special taxation for school purposes 
 before the Civil War, the United States Census of 1860 reporting 
 only $1,379 of school taxes. - 
 
 Private schools and private support of the public schools were 
 much more important relatively in ante-bellum days in Texas 
 than at present. Thus in 1850 there were 97 academies, with 137 
 teachers, 3,389 pupils, and an annual income of $39,384. In 
 1860 the number of academies remained unchangfed, but there 
 were 236 teachers, 5,916 pupils, and an annual income of $142,- 
 134. The need of public common school education was very 
 great as was shown by the number of illiterates. In 1850 18.1 
 per cent of the white population twenty years of age and over 
 was illiterate ; in 1860 the per cent illiterate of those over twenty 
 years .of age was lO.l."^ All of the slaves w^ere illiterate, but 
 their illiteracy was not a problem until after the Civil War. 
 
 No public expenditures for higher education were made during 
 this period, though endowments were made, and steps were taken 
 toward the establishment of the University of Texas. In 1850 
 there was authorized a survey of three leagues granted under the 
 act of 1839, because the field notes of former surveys had been 
 lost.* In 1856 the legislature provided for the survey of the 
 fifty leagues granted to the University by the act of 1839. Alter- 
 nate sections were sold in lots of 160 acres at public auction ta 
 the highest bidder at not less than $3.00 per acre. The sale 
 took place at the county seat of the county in which the land was 
 situated. Purchasers were allowed twenty years in which to" 
 complete payment, and unpaid installments bore 8% interest.^ 
 
 ^Eighth Census of the United States. 1860. Vol. Mortality and 
 Miscellaneous Statistics, p. 505. This classification of receipts by the 
 Census is incorrect, as the report of the state school fund for 1859 
 shows $31,197.34 received from state taxes and $117,480.90 distributed 
 among the counties. 
 
 =Ibid., p. 511. 
 
 ^Seventh Census of the United States. 1850. P. 513. Eighth Census 
 of the United States. 1860. Vol. Mortality and Miscellaneous Sta- 
 tistics, p. 508. 
 
 'Laws of 1850, p. 96. 
 
 ••Laws of 1856, Adj. Sess., pp. 71, 87. 
 
 7— H 
 
98 Bulletin of the University of Texas 
 
 The University Act of 1858 provided for the establishment of 
 the University of Texas; appropriated to the fund $100,000 of 
 the indemnity bonds ; confirmed the grant of fifty leagues made 
 in 1839; and in addition gave to the University one section in 
 every ten sections reserved for the use of the state under the 
 act of 1854 which provided land grants in aid of railroad con- 
 struction.^ The bonds remained intact in the fund for two 
 years, when they were diverted to the state revenue account. 
 From interest and from sale of lands $31,087 was derived by 
 this fund down to 1861, and $1,641.45 was expended. The Uni- 
 versity of Texas, however, was not founded until twenty-five 
 years later. Such higher education as was provided in Texas 
 was supplied by private institutions. There were two so-called 
 colleges in 1850, with seven teachers, 165 students and an annual 
 income of $1,000.- In 1860 there were 25 institutions which 
 bore the name of college with 107 teachers, 2,416 students, and 
 an annual income of $95,072.^ 
 
 ^Laws of 1858, p. 148. 
 
 ^Seventh Census of the United States. 1850. P. 508. 
 ^Eighth Census. 1860. Vol. Mortality and Miscellaneous Statistics, 
 p. 505. 
 
Chapter 4. 
 
 RECEIPTS. 
 
 The provisions in the Constitution of 1845 relating to taxa- 
 tion were : (1) " Taxation shall be equal and uniform through- 
 out the state. All property in this state shall be taxed in pro- 
 portion to its value, to be ascertained as directed by law, except 
 such property as two-thirds of both houses of the legislature 
 may think proper to exempt from taxation. The legislature 
 shall have the power to lay an income tax, and to tax all per- 
 sons pursuing any occupation, trade, or profession: Provided 
 that the term "occupation" shall not be construed to apply 
 to pursuits either agricultural or mechanical."^ 
 
 (2) "The legislature shall have power to provide by law for 
 exempting from taxation two hundred and fifty dollars' worth 
 of household furniture or other property belonging to each 
 family in this state. ' '^ 
 
 There was no provision in the constitution of the Republic 
 of Texas enjoining equality and uniformity of taxation, and 
 the result was a mixed system of discriminating ad valorem and 
 specific rates. The state constitution on this point, however, 
 was patterned afer the Louisiana constitution which was adopted 
 early in 1845.^ The exemption proposed by section twenty-eight 
 is not found in any other state constitution at the time, and 
 appears, therefore, to be a contribution to constitutional provi- 
 sions relating to taxation. 
 
 The taxes levied during this first period of statehood were 
 property, license, and poll taxes, and they will be considered in 
 the order named. 
 
 A. The Property Tax. 
 
 A direct ad valorem tax was levied on all real and personal 
 property except that exempted. The laws were content with the 
 
 ^Art. 7, sec. 27. 
 *Art. 7, sec. 28. 
 
 'Louisiana Constitution, title VI, art. 127. Journal of the Conven- 
 tion (Texas), p. 435. 
 
100 Bulletin of the University of Texas 
 
 general statement that all property should be taxed, and entered 
 en no definitions or enumerations of real or personal property. 
 
 Certain property was exempt by law, and the first piece of tax 
 legislation was to exempt two hundred and fifty dollars worth of 
 the household furniture and other personal property belonging 
 to each family in the state.^ Later, property, including as much 
 as sixty acres of land, devoted to educational or religious pur- 
 poses, was exempted, as was also property, including as much 
 as ten acres of land, owned and occupied by charitable or lit- 
 erary associations.- Products of the soil while in the hands 
 of the producer were exempt from 'taxation after 1850.^ 
 
 Until 1848 assessment took place between March 1 and July 
 1, and the property assessable was such as was owned or held 
 on March I.'* In 1848 the period between January 1 and 
 June l*Avas chosen, and assessment was of property owned or 
 held on January l."^ In 1850, however, a change was made 
 from June 1 to May 1, and this arrangement lasted until 1861.*^ 
 
 In regard to the place of assessment, a singular amount of 
 latitude was allowed and no distinction was made between real 
 and personal property.' Throughout the period the taxpayer 
 was permitted to render for assessment in the county of resi- 
 dence, property lying in another county, although this was not 
 expressly incorporated in the laws until 1850.' In 1860 the 
 broad permission was given to persons outside the state who 
 owned land in the state, to render their land for assessment 
 to the assessor of any county.^ While this w^as the rule of as- 
 sessment, the taxes accrued to the benefit of the place of location 
 of the property. 
 
 Taxable property was rendered for taxation by its owner or 
 by those who held it in a representative capacity. Unrendered 
 
 ^Laws of 1846, p. 76. 
 
 ^Laws of 1849, p. 9. Laws of 1850, p. 80. 
 
 ^'Laws of 1850, p. 211. Laws of 1860, p. 88. See Report of the 
 Finance Committee; House Journal, 3rd Leg., Reg. Sess., p. 562. 
 
 'Laws of 1846, p. 349. 
 
 "Laws of 1848, p. 197. 
 
 "Laws of 1850, p. 210. 
 
 ^Laws of 1846, p. 349. Laws of 1848, p. 198. Laws of 1850, p. 211. 
 
 ■Laws of 1860, p. 88. Railroad, canal and colonization companies were 
 included in this permission. 
 
A Financial History of Texas 101 
 
 property was assessed to the owner, if he were known ; other- 
 wise it was assessed by description.^ 
 
 The laws were not explicit as to the measure of valuation of 
 property, but used such indefinite expressions as "valuation," 
 "cash valuation," "true value," and "average value." The 
 act of May 13, 1846, simply said that each pei^on should give 
 a list of his property and "its valuation," verified by oath, and 
 that the unrendered property of non-residents should be assessed 
 by the assessor at "its cash valuation and no more."- In 1860 
 "true value" was made the measure, but the lands of non-resi- 
 dents were made subject to rendition at the "average value" 
 of the lands in the county where situated for the year next pre- 
 ceding-, this average value beingf ascertained from the assessment 
 rolls by the comptroller and furnished to the assessors." 
 
 The work of assessment and collection was done in each county 
 by one officer who was called the assessor and collector. He 
 was an elective officer and held office for two years. The official 
 oath he took was laid down in the constitution and was that 
 he should execute his duties faithfully. He also gave bond. 
 Failure to return the assessment roll and malfeasance were the 
 only violations of his duty for which there were penalites pre- 
 scribed.^ 
 
 Compensation of the assessor and collector for the work of 
 assessment was on the basis of the assessed taxes. The schedule 
 was as follows: 8% upon all sums of $1,000 and less; 5% on 
 sums between $1,000 and $2,000 ; 4%, between $2,000 and $5,000 ; 
 3%, between $5,000 and $10,000; and 1% on all sums over 
 $10,000. The same percentag'es were received upon the taxes 
 assessed for county purposes until 1848, when one-half of the 
 rates were allowed. 
 
 In making assessments the assessor was required to call at 
 least once upon the owners and representatives of property in 
 his county and receive a list of their taxable property. If the 
 person sought to be assessed should not be at his usual place 
 of abode, a written notice was left directing him to make his 
 
 ^Laws of 1846, p. 350. 
 
 ^Laws of 1846, p. 349. 
 
 ^Laws of 1860, p. 88. 
 
 ^Laws of 1846, p. 347. Laws of 1848, p. 199. Laws of 1850, p. 212. 
 
102 Bulletin of the University of Texas 
 
 return to the assessor within the prescribed period of assess- 
 ment. In 1860 the personal call required of the assessor was 
 done away with, and the requirement which succeeded it was that 
 the assessor should make known by public advertisement in 
 each precinct, and at least ten days in advance, of the time and 
 place he would attend to receive the lists of taxable property.* 
 It was required of him to call upon those who did not attend, 
 and for this trouble he was entitled to collect of all, except wid- 
 ows, a fee of $1.00. 
 
 The taxable list furnished by the taxpayer contained under 
 the act of 1846 not only an inventory of the taxable propertj^ 
 but also its valuation, and all was verified by oath.- The in- 
 ventory and valuation were conclusive as to the taxpayer's lia- 
 bility. In 1848 the law was changred so that only a sworn in- 
 ventory was required of the taxpayers, the valuation being left 
 to be determined between the taxpayer and the assessor. In 
 the event of a disagreement between these parties over the value 
 to be fixed, each party selected a ''respectable freeholder," and 
 should these disagree the arbitrators themselves called in a third 
 party, and the decision of the majority was final. ^ This remained 
 the rule until 1860, when it was made the duty of the county 
 court to inspect the rolls and correct to their true value the 
 assessments of property in the county.* This was the beginning 
 in Texas of the method of equalization by a county board. Prop- 
 erty situated outside the county was rendered at the average 
 value of the lands in the county in which they were situated, 
 such average to be ascertained by the comptroller. Up to this 
 time the assessor had had no standard for the valuation of 
 outside property. 
 
 In the act of 1846 provision was made for the assessment of 
 the unrendered property of non-residents only. It was assessed 
 to the owner, if known, otherwise by description, and it was 
 assessed for its ''cash valuation." In 1848 all property in the 
 county which had not been rendered became subject to assess- 
 ment and valuation bv the assessor. The county clerk and the 
 
 ^Laws of 1860, p. 87. 
 =Laws of 1846. -p. 349. 
 ^Laws of 1848, p. 198. 
 'Laws of 1860, p. 87. 
 
A Financial History of Texas 103 
 
 county and district surveyors were expected to exhibit their 
 records and maps to the assessor for his assistance. Further 
 changes were made in 1850 whereby the assessor had to assess 
 only the unrendered personal property in his county. Unren- 
 dered land became subject to assessment by the comptroller's 
 department, and in order that this might be done, the general 
 land office was required to furnish the department with art 
 abstract of all surveyed lands in the state, while the assessors 
 were required to furnish maps of the towns in their counties. 
 The department compared the assessment rolls with the ab- 
 stracts and maps, the unrendered land was assessed at the 
 average value of the surrounding land, and the assessments 
 were then forwarded to the assessors and collectors.^ The pen- 
 alty for refusal or failure to render property was a fine of not 
 more than $50 nor less than $10.- Property not rendered was 
 subject to back taxation at the rates in effect during the years 
 it escaped. 
 
 The roll which was prepared by each assessor set down in. 
 separate columns the names alphabetically arranged of the tax- 
 able persons ; the amount and description of their property ,1 
 the value of the property ; and the amount of taxes. On or be- 
 fore July 1 three copies of the rolls were prepared, one of 
 which was kept by the assessor, one was deposited with the county 
 clerk, and one was forwarded to the comptroller. The assessor 
 simply certified to the rolls ; he was not required to swear that 
 he had done his duty. It was doubtless thought that the oath 
 which he took when he assumed office was sufficient. Willful 
 failure or refusal to make and return the rolls, or making out 
 and returning an unfair roll constituted malfeasance in office, 
 and the penalty was a forfeit of double the damage sustained 
 by the state, and this penalty was recoverable of the assessor 
 or his bondsmen. 
 
 The work of assessment and collection was done by the same 
 official, and the same graduated compensation was allowed him 
 for collection as for assessment. After 1850, five cents a mile 
 
 ^Laws of 1850, pp. 213, 215. 
 
 =Laws of 1846, p. 350. Laws of 1848, p, 197. Laws of 1850, p. 211. 
 
104 Bulletin of tJie University of Texas 
 
 each way was allowed for traveling to the seat of government 
 for the purpose of settling accounts. 
 
 Under the law of 1846 payment of taxes was required to be 
 made by January 1, and returns by the collector to the state and 
 county treasuries were required to be made by the same date.^ 
 In 1848 the law was changed so that payment of taxes should be 
 made by November 1 and returns to the treasury by December 1.- 
 The inconvenience to farmers of the date November 1 led in 
 1850 to a change to March 1, and to the December 1 following 
 for non-residents.^ The provisions in regard to payments into 
 the state treasury were also changed. Reports were required 
 to be made to the comptroller every three months as to the col- 
 lections of state taxes, and the assessor and collector was sub- 
 ject to draft for the amounts reported. Payment of county tax 
 collections had to be made to the county treasurer every three 
 months. Returns to the treasury of both state and county col- 
 lections were required to be in by July 1 until 1854, when June 
 1 became the date.* Until 1860 no notice of the collector's visit 
 had to be given, but in that year it was prescribed that he 
 should give ten days notice of the time and place he would 
 attend in each precinct for the collection of taxes. 
 
 Until 1850 the exchequer bills issued by the Republic of 
 Texas w^ere legal tender in payment of taxes, but after 1850 
 only specie was receivable.^ The law as to the place of payment 
 of taxes underwent frequent changes. Under the law of 1846 
 taxes on outside property could be paid in the county of the 
 residence of the owner, or in the county of the situs of the 
 property, or to the comptroller. In 1848 the law was changed 
 so that payment could be made only in the county of the situs 
 of the property or to the comptroller. The comptroller trans- 
 mitted to the counties the amounts due them. The difficulties 
 experienced by non-residents in finding trustworthy persons or 
 agencies to carry the money for taxes led in 1850 to a return to 
 the methods provided for in 1846. 
 
 ^Laws of 1846, pp. 352, 355. 
 
 '^Laws of 1848, pp. 200, 201. 
 
 ^Report of the Comptroller, 1848-1849. Laws of 1850, pp. 214, 215. 
 
 "Laws of 1854, p. 73. 
 
 "^Laws of 1846, p. 355. Laws of 1848, p. 201. Laws of 1850, p. 216. 
 
A Financial History of Texas 105 
 
 Neglect or refusal to pay taxes by the date set was followed 
 by a levy upon and sale of as much property of the delinquent 
 as was to be found in the county and to an amount sufficient to 
 pay the taxes and costs.^ Execution was made by the assessor 
 and collector, and his tax list was credited to be sufficient au- 
 thority for the act. Thirty days notice of the time and place 
 of sale had to be given in several public places. The sale took 
 place at public auction, and a deed given by the assessor and 
 collector was, when recorded, prima facie evidence that all the 
 requirements of the law for making the sale had been complied 
 with. Until 1850, redemption of property sold for taxes could 
 be made by the owner within one year of sale by payment of 
 double the amount of taxes and the casts of sale; but in 1850 
 the period within which redemption could be made was extended 
 to two years. 
 
 To cover the case of removal from the county without having 
 paid the taxes assessed and without leaving sufficient taxable 
 property to satisfy the taxes due, the act of 1846 provided that 
 the assessor and collector should certify such delinquency to the 
 assessor and collector of the county to which the delinquent had 
 removed and that collection or levy and sale should take place 
 in the latter county. This provision is not to be found in the 
 law of 1848 or in subsequent laws, and the reason for its absence 
 was no doubt that such delinquents were generally persons with- 
 out property, except for a little personalty, so that not only would 
 collection work a hardship but also the amount which might 
 be collected would not repay the trouble. 
 
 The legislation of 1846 and the years closely following has 
 been given in considerable detail in order that there might be a 
 full understanding of the system of property taxation established 
 at the beginning of statehood. It is surprising how few changes 
 have been made in the system even after more than fifty years 
 of its unsuccessful operation. In describing the legislation the 
 writer is under no delusion that the tax system on the statute 
 books was to the letter the one in operation. The description 
 
 'Laws of 1846, p. 352. Costs were not provided for in the act of 1846. 
 but they were in the act of 1848. 
 
106 Bulletin of tJie University of Texas 
 
 of the legislation is therefore followed by an account of the 
 property tax in operation.^ 
 
 The rate of taxation for state purposes was low and the per- 
 centage of assessed value to true value was high during the 
 period 1846-1860. From 1846 to 1850 the rate was twenty cents 
 on the one hundred dollars' valuation; from 1850 to 1858, fifteen 
 cents; and from 1858 to 1861, twelve and one-half cents. The 
 United States Census of 1850 reported that assessed values were 
 96% of true values, and the census of 1860 gave assessed values 
 as 73% of true values.^ 
 
 Contemporaneous Avith the rate of 20 cents, assessed values 
 increased 41% ; but between 1849 and 1858, or the period of the 
 rate of 15 cents, the increase in the value of assessed property 
 was 308%, and between 1858 and 1861, the period of the 121/2 
 cents rate, the increase was 60%. A number of circumstances 
 
 ^In a study of the operation of this tax little assistance can be got 
 from the reports of receipts as given by the comptroller or the treas- 
 urer. The receipts from all taxes are lumped together in the reports 
 of these officials. 
 
 =^The assessed value of property on June 1, 1850, was, according to the 
 United States Census, $51,027,456; the real or true value was $52,740,473; 
 Abstract of Seventh Census. 1850. P. 46. The Compendium of the 
 Seventh Census (p. 190), however, gives the value of the real property 
 in 1850 as $28,149,671, the value of the personal property as $25,414,000, 
 or a total value of $53,563,671, and a true value of $55,362,340. The 
 values given in the Compendium probably are those returned by indi- 
 viduals, while the values given in the Abstract are based on official 
 state records. The assessed value of property in 1850 as given by the 
 state comptroller was $51,814,615, but his figures probably include 
 assessed values of counties which had not been returned at th^ time 
 the census was taken. 
 
 The assessed value of real estate as ascertained by the census of 
 1860 was $112,476,013, the assessed value of personal property was 
 $155,316,322. The true value, according to the census officials, was 
 $365,200,614. Eighth Census of the United States. 1860. Vol. Mor- 
 tality and Miscellar.eous Statistics, p. 294. The value of real estate 
 on June 1, 1860. as returned by individuals to the census officials was 
 $191,166,301; the value of personal property was $261,984,452, or a 
 to^al of $453,150,753. Ibid., p. 319. The assessed value of property in 
 1860 as reported by the state comptroller was $294,315,639. The dif- 
 ference between the census figure of assessed values and the comp- 
 troller's figure was due probably to the difference in time of taking 
 the two official records. 
 
A Financial History of Texas 107 
 
 contributed to explain the increase in assessed values. The 
 change in the law in 1850 whereby unrendered lands were 
 assessed through the comptroller's department led to a better 
 assessment of the property of non-residents. The relinquish- 
 nlent to the counties of nine-tenths of the state taxes between 
 1852 and 1858 reduced the general weight of taxation. The in- 
 crease was due largely, however, to the growth of population 
 and wealth. Between 1850 and 1860, the white population in- 
 creased from 154,034 to 421,294, and the number of slaves from 
 58,161 to 182,566. The cash value of farm lands and buildings 
 increased from $16,550,008 in 1850 to $88,101,320 in 1860, and 
 the value of real and personal property increased from $55,362,- 
 340 to $453,150,753. 
 
 The wealth of the state consisted of those visible, tangible 
 objects which might be expected to be found in a community 
 wholly agricultural. Land, slaves, and livestock made up 95.2 
 per cent of the total assessments in 1846, and 90.2 per cent in 
 1860. Loaned money was the chief intangible item and con- 
 stituted only nine-tenths of one per cent of the total assessment 
 in 1849, and 1.4 per cent in 1859. Money loaned was subject 
 throughout the period to a special tax of 20 cents on the $100, 
 but this was levied not as a property tax, but as a license tax. 
 This was not a hard tax to bear since the interest rate varied 
 from 10% to 20%.^ The number of money lenders assessed 
 rose from 255 in 1849 to 3,053 in 1859, and the amount assessed 
 increased from $120,315 to $3,330,038.^ The amount of credits 
 which were assessed is not reported for this period. The absence 
 in official reports and messages and in newspapers of complaint 
 of evasion of taxation by money and credits indicates that their 
 assessment, if a problem, was not acute. Nor was corporation 
 taxation a problem. The general property tax was the only 
 business tax, except the ordinary license taxes upon those en- 
 gaged in merchandise, liquor, and other occupations. There 
 were no railroads before 1854; there were only stage coaches 
 and steamboats. There was not only no special taxation pre- 
 scribed for these, but their assessments under the general prop- 
 erty tax were not particularized, and so details as to their taxa- 
 
 'Texas Almanac, 1858, pp. 61, 65; ibid., 1859, p. 182. 
 ''Reports of the comptroller, 1849, 1859. 
 
108 Bulletin of the University of Texas 
 
 tion are not ascertainable. The incorporation of state banlcs 
 was prohibited by the constitution, and the only banks in the 
 state were private banks and one or two banks which had been 
 chartered by the republic. Accordinsr to the United States Cen- 
 sus of 1860, there was only one bank in Texas, and that was a 
 small one in Galveston/ Evidently the general property tax and 
 the license tax upon money loaned were thought sufficient for 
 the taxation of banks. 
 
 The weakness of the tax system was not the failure to tax 
 corporations or to reach personalty, but it was the escape of 
 land both from assessment and from proper valuation. The 
 difficulty that existed as to the taxation of land was due to the 
 enormous extent of non-resident holdings. In 1852, for example,^ 
 in twenty-four out of eighty-three counties reporting, the land 
 outside the county rendered for assessment was greater than 
 that within ; and in only six of the twenty-four were the assessed 
 values of the outside holdings larger than those for the lands 
 within.- It was permitted to render outside holdings in the 
 county of residence, and this opened the way for non-rendition 
 and undervaluation. Under the law of 1846 assessors were re- 
 quired to make a separate return to the comptroller of the rendi- 
 tions of outside holdings, accompanying the returns with a de- 
 scription' of each piece of land rendered.-^ Each assessor wa^s 
 also required to make a return of all property in his county 
 not rendered for assessment, accompanied by a description and 
 valuation of each piece. The comptroller compared the returns 
 to ascertain what lands were uncovered by other returns, and 
 advised each assessor of the lands in his county which had not 
 been rendered elsewhere. Because of labor and trouble involved 
 in getting from the surveyors' files a description of the un- 
 rendered lands, many assessors made no effort to assess them ; 
 and often when assessments were made they could not be used by 
 the comptroller because the records or descriptions were imper- 
 fect.* The chaotic situation was taken advantage of bv land- 
 
 'Vol. Mortality and Miscellaneous Statistics, p. 29. 
 
 ^Compiled from the Report of the Comptroller, 1852-3. Galveston 
 County in 1852 reported 89,896 acres assessed within the county and 
 2,236.950 acres out of the county; Nacogdoches County reported 440,660 
 acres assessed within and 1,919,686 acres without the county. 
 
 •Laws of 1846, p. 350. 
 
 *Report of the Comptroller, 1847; House Journal, 2nd Leg., p. 44. 
 
A Financial History of Texas 109 
 
 owners and evasion was rife. In 184^ the number of acres 
 assessed was 32,890,887, while the amount of patented and deeded 
 land in the state was 45,234,987 acres/ In 1850 the law was 
 changed so that the comptroller became possessed of both county 
 and town maps and so became enabled to compare the returns 
 with the maps of each county and as a result determine what 
 lands had not been rendered. The amount of land assessed in- 
 creased by more than five million acres in the year following 
 this change in the law, while for the five preceding years it had 
 remained practically stationary. The change in the law may 
 have accounted for some of this increase, but the law imposed too 
 huge a task upon the comptroller's department. Maps and 
 other data were not kept up, and the most important evidence 
 of the breakdown of the system is that there was little change 
 in the number of acres assessed after 1855, though this was a 
 period when land was being constantly patented.- 
 
 The conditions with respect to valuation was no better than 
 those of rendition. Valuation was made where the property 
 was rendered, but the machinery for revision of values existed 
 in the county where the property was located. It was impossible 
 for an assessor to know the relative value of land in the various 
 and distant parts of the state and the inevitable result was 
 undervaluation.'' . The plan of a minimum value, per acre, such 
 as existed under the republic, was suggested, but was not adopted.'* 
 
 The situation as to evasion of taxation was aggravated by a 
 loss of confidence in tax titles. The law\s relating to the sale of 
 property for taxes were minutely drawn and unless every detail 
 were carried out by the officials in charge of the assessment and 
 collection of the taxes and of the levy upon the property the 
 
 ^Report of the Comptroller, 1848-9, p. 7. 
 
 -Report of the Comptroller, 1856-7, p. 22; 1858-9, p. 16. Message 
 of Governor Runnels, November 10, 1859; House Journal, 8th Leg., 
 p. 42. Message of Governor Houston, January 13, 1860; House Journal, 
 8th Leg., p. 397. In 1856 out of over 68,000,000 acres of patented land, 
 only 44,110,437 were assessed; House Journal, 7th Leg., p. 483. 
 
 ■'■Report of Joint Select Committee on Taxation; House Journal, 7th 
 Leg., p. 483. See also references in preceding note. 
 
 ^Report of the Comptroller, 1856-7, p. 19. 
 
110 Bulletin of tlie University of Texas 
 
 courts would not sustain the title. ^ The frequency with which 
 they were not sustained contributed to neglect of rendition and 
 of payment.- The failure of land which was assessed outside 
 the county of situs to pay its share of the taxes became a sub- 
 ject of increasing complaints and led a joint select committee 
 of the house and senate which was appointed to examine the tax 
 laws to pronounce the system of taxation a "farce" in its 
 operation.^ 
 
 An estimate of arrearages and of costs of assessment and col- 
 lection of ad valorem taxes can be made by comparing assess- 
 ments and receipts of several years. The taxes assessed one year 
 were not as a rule paid into the treasury until the following fiscal 
 year. The assessments of 1846 and 1847 amounting to $214,103 
 should have been paid by the end of the fiscal year 1848, but 
 only $150,616 was received. Arrears and costs amounted to 
 about 30%. The assessments of 1858 were $294,758 but the 
 receipts of 1859, including back taxes, were $221,231, showing 
 arrears and costs of over 25 per cent. In 1848-9 the estimated 
 cost of assessment and collection was 13i/^ per cent ; delinquency 
 amounted to from 121/2 per cent to 16% per cent. 
 
 Taxation as a source of revenue was not important during the 
 greater part of this period. The state was sustained in the first 
 year of its history by the revenue which had accrued under the 
 laws of the republic, and after 1850 the indemnity bonds were 
 used. From 1852 to 1858 nine-tenths of the state taxes were 
 relinquished to the counties, and as the rate was only 12% 
 cents in 1858, the bonds continued to be the chief dependence of 
 the state government. 
 
 By the act of February 13, 1852, it was provided that inas- 
 much as many of the counties w^ere in debt and were in need 
 of courthouses, jails, jury funds and the like, nine-tenths of the 
 state tax on the assessments of 1852 and 1853 should be re- 
 linquished to the counties where the tax was assessed, the re- 
 
 ^Yenda v. Wheeler, 9 Tex., 408 (1853). Pitts v. Booth, 15 Tex., 
 453 (1855). 
 
 ^Report of the Comptroller, 1858-9, p. 17. In the report for 1848-9 
 the comptroller stated that probably one-third of non-resident assess- 
 ments would not be paid and would have to be secured by a sale of 
 property. 
 
 ^House Journal, 7th Leg., p. 483. 
 
A Finmicial History of Texas 111 
 
 maining one-tenth to be paid into the state treasury for the 
 benefit of the school f und.^ Again in 1854 and 1855 relinquish- 
 ment was made to the counties where the taxes were assessed, 
 but in 1856 and 1857 relinquishment was made for the benefit of 
 the counties where the property was situated.- The act of 1854 
 was vetoed because the governor thought that the counties in 
 which the property was located should get the benefit, but the 
 veto was nullified by a two-thirds vote of the legislature. The 
 act of 1856 also was vetoed for the same reason, but was passed 
 over the veto. This policy of relinquishment was unequal in its 
 operation and was carried too far. The counties in which there 
 were large assessments of property situated outside their bound- 
 aries profited unjustly at the expense of the counties in which 
 the property was located.^ The counties which were favored 
 were the richer counties, and those most discriminated against 
 were the frontier counties."* The policy was followed longer than 
 was necessary to secure in the majority of the counties the pur- 
 poses for which relinquishment was made. After 1855 a better 
 policy would have been to have relinquished the taxes only to the 
 frontier and the new counties. 
 
 B . Business . Taxes. 
 
 The property tax was a business tax inasmuch as it applied 
 to the real and personal property which was employed in any 
 business. In fact, the property tax was the only business tax, 
 except license or occupation taxes upon certain occupations. 
 
 Payment of the occupation tax levied by the state was made 
 to the assessor and collector of taxes, and the license was issued 
 by the county clerk upon presentation of the tax receipt.'^ Until 
 1848 the shortest time for which a license could be issued was 
 one year, but in 1848 four months were made the minimum 
 period. Under the act of 1846 failure or refusal to pay the tax 
 subjected the person to a forfeiture of double the amount of the 
 
 ^Laws of 1852, p. 93. 
 
 ^Laws of 1854, p. 30. Laws of 1856, Adj. Sess., p. 43. 
 
 •Veto message of Governor Pease, January 21, 1854. 
 
 ^Brazoria, Fort Bend, Galveston, Matagorda and Nacogdoches were 
 counties which had in 1852 the largest excess of outside holdings, .and 
 they were also the richest counties. 
 
 ''Laws of 1846, p. 357. Laws ot 1848, p. 203. Laws of 1850, p. 218. 
 
112 Bulletin of tJie University of Texas 
 
 tax for each month in which the business was engaged in \v\-th- 
 out a license, and recovery of this penalty was by suit brought 
 in a court of proper jurisdiction/ From 1848 to 1858, only the 
 amount of the tax was recoverable, and the delinquent 's property 
 could be levied upon and sold for that purpose. In 1858 the 
 penalty of double the amount of the tax was restored. 
 
 Practically all occupations, except agricultural and mechanical, 
 were taxed. Lawyers and doctors were taxed $5 annually until 
 1848, when the tax was repealed. • The taxes on the merchandise 
 and liquor occupations were the most important. Under the 
 act of April 28, 1846, wholesale merchants were taxed $100 on 
 each establishment; retail merchants, $25; dealers in spirituous 
 liquors in quantities of a quart or over, $25 ; dealers in quantities 
 of less than a quart, $50.- This method of a uniform charge 
 irrespective of the amount of capital employed in the business 
 was thought to operate unequally upon the small dealer and to 
 lead to the concentration of business in the towns and in the 
 hands of a few persons.-' In 1848 the law was changed in order 
 to meet these objections, and there was levied a tax of one-fifth of 
 one per cent on the purchases of wholesale and retail merchants 
 and of dealers in spirituous liquors in quantities of a quart or 
 more.'* The assessor was required to call upon dealers at least 
 every three months to get the returns of purchases. Failure to 
 make true returns made the offender liable to a fine of $50. This 
 special tax was in addition to the ad valorem tax on the prop- 
 erty, including the stock in trade, of the taxpayers.'^ The imme- 
 diate residt of the law of 1848 was a decrease in receipts from 
 the occupation tax which amounted to 32 per cent in 1848 as 
 compared with the receipts of 1847, and to 23 per cent in 1849 
 as compared with receipts- of 1848. The receipts from liquor 
 dealers and merchants were nearly equal until 1855, but in that 
 
 ^Aulanier v. the Governor, 1 Tex., 653 (1846); State v. Bock, 9 Tex., 
 369 (1853). 
 
 -Laws of 1846, p. 146. 
 
 ^Report of the Committee on Finance; House Journal, 2nd Leg., pp. 
 318-320. 
 
 ^Laws of 1848, p. 151. Laws of 1858, p. 258. State v. Stephen, 4 
 Tex., 140 (1849). 
 
 ''Laws of 1848, p. 152. 
 
A Financial History of Texas 113 
 
 year an anti-liquor movement over the state cut down retail 
 establishments and lessened the receipts from the liquor taxes.* 
 The receipts from occupation taxes fluctuated from year to 
 year and they constituted only 11.5 per cent of the assessed taxes 
 to 1860. The system of taxing' according to purchases provided 
 an opportunity for evasion, and the conclusion was in 1861 that 
 the law utterly failed of its purpose.^ 
 
 C. rJie Poll Tax. 
 
 Prom 1846 to 18-18 a poll tax of $1.00 was levied up)on every 
 free male person between the ages of 21 and 60, Indians and 
 persons non compos mentis excepted.^ In 1848 the age limits 
 were made 21 and dd^ In 1858 the tax was reduced to fifty 
 cents, and the maximum age limit was changed to 50.^ There 
 were 15,310 persons assessed for the tax in 1846, and 53,376 in 
 1859. The United States Census of 1850 reported for Texas a 
 white male population between the ages of 20 and 60 of 38,692, 
 and the census of 1860 reported one of 91,197 between the ages 
 of 20 and 50. Those assessed for the tax in 1859 were approxi- 
 mately 58 per cent of those who were liable. The poll taxes 
 assessed from 1846 to 1860 constituted 9.8 per cent of the total 
 assessed taxes. 
 
 The receipts from all the different taxes levied by the state, 
 the counties, the towns, and other taxing districts, amounted in 
 1852 to $131,313, divided as follows : state, $74,936 ; county, $35,- 
 055; all others, $21,332.« The census does not tell from what 
 taxes these receipts were derived. In 1860 the total tax receipts 
 of the different taxing jurisdictions were $533,265, divided as 
 follows: state, $298,859; counties, $208,053; towns and cities, 
 $24,409; school and miscellaneous, $1,944." Not much reliance 
 
 'Report of the Comptroller, 1854-5, p. 13; 1858-9, p. 14. Also message 
 of Governor Pease, November 5, 1855; Senate Journal, 6th Leg.. Reg. 
 Sess., p. 12. 
 
 -Report of the Comptroller, 1860-1, p. 105. 
 
 ^Laws of 1846, p. 146. 
 
 ^Laws of 1848, p. 151. 
 
 'Laws of 1858, p. 258. 
 
 ''Compendium of the Seventh Census of the United States, p. 190. 
 
 'Eighth Census of the United States. 1860. Vol. Mortality and Mis- 
 cellaneous Statistics, p. 511. 
 
 8— H 
 
114 Bulletin of tlie University of Texas 
 
 can be put in the amount reported for towns and cities, foi* it is 
 obviously too small. There were forty-two towns and cities in 
 Texas in 1860 with populations ranging from about 100 to over 
 8,000, and it is absurd to believe that their total tax bill was 
 only $24,409. The explanation for the small amount reported 
 may be that the census has included under county tax receipts 
 some receipts which belong to towns and cities. 
 
 D. Receipts froyn Other Sources. 
 
 Of great importance to the state in the first year of its history 
 were the receipts on account of the revenue due the Republic 
 of Texas. The}^ amounted to $125,993, and are to be compared 
 with about $58,000 of receipts on account of state revenue 
 laws.^ The state received from 1846 to 1856 on account of the 
 revenue laws of the republic, $161,722 in specie.- As the first 
 years of statehood were very lean years, these specie receipts 
 came in most opportunely.^ 
 
 The public lands were a source of but small cash receipts 
 during this first period of statehood, unless the cession of the 
 northwestern territory to the United States be considered a 
 sale of land and the $12,750,000 in United States bonds and 
 cash be regarded as the purchase price. The cash receipts from 
 individuals were small because the first general provision for 
 the sale of the lands was not made until February 11, 1858, and, 
 furthermore, the paper liabilities of the republic were made 
 receivable in payment of the fees and dues charged by the 
 general land office.'* The act of 1858 fixed the price of land 
 at $1 per acre, except in the islands and in the alternate sections 
 in the railroad surveys and in the surveys of the Galveston and 
 Brazos Navigation Company the price was $1.25 per acre, and 
 in the Memphis, El Paso and Pacific grant, where the price was 
 
 ^In Cocke v. Calkin, 1 Tex., 542 (1846), it was decided that the 
 laws of the republic regulating imposts existed in force until February 
 16, 1846; but this was overruled by the United States Supreme Court in 
 Calkin v. Cocke, 14 Howard, 227. The sum involved in this case 
 was about $7,000. 
 
 -Classification of receipts of this character ceases in 1856. 
 
 •Report of the Comptroller, 1847; House Journal, 2nd Leg., p. 42. 
 
 *Laws of 1849, p. 23. 
 
A Financial History of Texas 115 
 
 $2 per acre.^ The receipts went to the school fund, but they 
 were small because the prices fixed were too high. Land was 
 superabundant and the market price was probably nearer 50 
 cents than $1 per acre.^ Pre-emption privileges were accorded 
 by the laws during this period, except between August 15, 1856, 
 and February 10, 1858. 
 
 The act of February 11, 1850, authorized the payment of the 
 public debt in land scrip at the rate of 50 cents per acre, but 
 the creditors refused to take advantage of the act. The most 
 important legislation affecting the public lands during this 
 period was the adoption of the policy of land grants to rail- 
 roads. The act of January 30, 1854, granted to any company 
 constructing twenty-five miles or more of railroad sixteen 
 sections of land for every mile of completed road.^ The expense 
 of surveying the lands fell upon the railroads, and in this way 
 the state secured without expense the survey of the alternate 
 sections which it retained. The act of February 3, 1854, 
 granted land for the construction of sea vessels in the state.^ 
 There were also grants for the boring of artesian wells between 
 the Nueces and Rio Grande rivers, and it has been said of them 
 that they were ''one of the numerous schemes for wasting the 
 public domain afterwards so prolific. "° 
 
 In 1856 the approval of the commissioner of claims was 
 required for all bounty and donation certificates which had not 
 been patented, and in 1858 it was provided that all claims for 
 land for military services should be presented to the commis- 
 sioner of claims on or before September 1, 1858, or be forever 
 barred. In 1860 the date beyond which claims could be barred 
 was made June 1, 1861.^ 
 
 The policy of homestead grants, which had been applied in 
 1838 to a military road reservation, was expanded during this 
 period. In 1853 an amendment to the pre-emption law of 
 
 ^Laws of 1858, p. 193. 
 ^Report of the Comptroller, 1860-1, p. 101. 
 ^Laws of 1854, p. 11. 
 *Laws of 1854, p. 34. 
 
 ^Wooten, A Comprehensive History of Texas, vol. 1, p. 833. Laws of 
 1858, pp. 84, 130. 
 
 "Laws of 1856, p. 14. Laws of 1858, p. 40. Laws of 1860, p. 48. 
 
 ■ 
 
116 Bulletin of tlie University of Texas 
 
 January 22, 1845, accorded to settlers under that act the 
 privilege of claiming a homestead, but both the acts of 1845 
 and 1853 were repealed by the act of February 13, 1854.^ By 
 the act of 1854 a homestead of not exceeding 160 acres was 
 granted to persons who had settled upon and cultivated for 
 three years a portion of the vacant public domain. This act 
 was repealed by the act of August 26, 1856, and this repeal 
 ended the homestead policy until 1866.^ 
 
 By the act of August 30, 1856, one hundred thousand acres 
 of land were granted to each of the asylums for the insane, the 
 deaf and dumb, the blind and the orphaned, and an additional 
 grant of land was made to the school and university funds, but 
 only the university land was authorized to be sold.^ 
 
 The fees chargeable by the secretary of state, the commis- 
 sioner of the general land office, the comptroller, treasurer, and 
 attorney general were prescribed in 1848.* Apparently the 
 receipts from fees were insignificant. Their amounts cannot 
 be ascertained from the reports after 1853, but are included 
 under miscellaneous revenue. 
 
 ^Laws of 1853. p. 33. Laws of 1854, p. 106. 
 ^Laws of 1856, Adj. Sess., p. 56. 
 •Laws of 1856, Adj. Sess., pp. 76, 71. 
 *Law of 1848, p. 184. 
 
 I 
 
Chapter 5. 
 the public debt. 
 
 The controversy over the settlement of the debt of the 
 Republic of Texas which was inherited by the State of Texas 
 is one of the most spectacular features in the whole financial 
 history of Texas. The attempt was made to have the United 
 States assume this debt as one of the conditions of the annex- 
 ation of Texas/ But the joint resolution of the United States 
 Congress under which annexation took place provided that 
 Texas should retain her public domain to be applied to the 
 payment of the debt of the republic. In this resolution the 
 United States specifically disclaimed any responsibility for the 
 debt.2 
 
 An estimate of the debt of the Republic of Texas at the 
 beginning of statehood was $9,949,007.^ Until 1852 the settle- 
 ment of the debt was the paramount legislative question, but 
 thereafter it shared with internal improvements the public and 
 legislative interest. 
 
 As contemplated in the annexation resolution the public 
 domain was looked to as the source of payment; but how it 
 could be made available was the pressing problem. The plan 
 presented by the first two gavernors, Henderson and Wood, 
 and lengthily considered by the legislature, was to sell the 
 unappropriated lands to the United States.^ What the advan- 
 tages of this arrangement would be to Texas were obvious. 
 
 ^Texas Diplomatic Correspondence, vol. 2, pp. 278, 328. 
 
 *House Misc. Doc. No. 17, 33rd Cong., 2nd Sess., p. 28. 
 
 'Statement of the comptroller, March 20, 1846; House Journal, 1st 
 Leg., p. 317. A statement by the comptroller on December 3, 1847, 
 estimated the amount at $10,050,201; House Journal, 2nd Leg., p. 55. 
 
 ^Message of Governor Henderson, February 24, 1846; Senate Journal, 
 1st Leg., appendix, p. 8. Report of Senate Committee on the Sale of 
 the Public Domain; Senate Journal, 1st Leg., p. 114. Report of the 
 House Committee on the Sale of the Public Domain; House Journal, 
 1st Leg., p. 302. Message of Governor Wood, December 29, 1847; House 
 Journal, 2nd Leg., p. 167. Also message of November 6, 1849; House 
 Journal, 3rd Leg., p. 17. 
 
118 Bulletin of tlie University of Texas 
 
 It would avoid the cost in time and money of the survey of 
 the lands and would provide immediately proceeds which other- 
 wise would be slowly forthcoming from the sale of the lands. 
 The reasons presented for the United States acquiring them 
 were that they could be profitably sold, that they would enable 
 the United States to acquire control over the Indian tribes, 
 and that acquisition was necessary in order for the United 
 States to fulfill ''its high mission to the human race, by pre- 
 venting savage war and bloodshed, by subduing and fertilizing 
 the wilderness, by anticipating ages, and extending the empire 
 of American civilization and laws."^ The alternative to this 
 plan of sale was that payment of the debt should be made in 
 land.^ A third plan was that of refunding the debt in state 
 bonds.^ 
 
 The First Legislature came to no conclusion as to which plan 
 should be adopted, and the net result of its deliberations was 
 that the debt should first be ascertained and classified/ Ac- 
 cordingly the Second Legislature passed the act of March 20, 
 1848, which provided that the auditor and comptroller of the 
 state should ascertain the debt, reducing it to the "actual par 
 value which may have been realized by the Republic."'^ The 
 report of these officials was submitted on January 1, 1850.^ 
 It gave as the amount of debt filed for auditing, $7,213,477.43 ; 
 as the estimated amount not filed, $3,842,217.28. The total of 
 these was $11,055,694.70. This total scaled according to the 
 principle of value received at the time of issue amounted to 
 $5,600,696."^ 
 
 That the debt should be scaled was an accepted idea from 
 the beginning of the discussion over payment. Sam Houston 
 
 ^Report of House Committee; House Journal, 1st Leg., p. 302. 
 
 -Report of House Committee; House Journal, 1st Leg., p. 304. Mes- 
 sage of Governor Wood, November 6, 1849; House Journal, 3rd Leg., 
 p. 18. 
 
 ^Report of the Comptroller, December 3, 1847; House Journal, 2nd 
 Leg., p. 53. 
 
 ^Report of Senate Committee, April 19, 1846; Senate Journal, 1st 
 Leg., p. 219. 
 
 "Laws of 1848, p. 208. 
 
 "House Journal, 3rd Leg., pp. 210-223. 
 
 "For statement of items and ratings see supra, p. 126. 
 
A Financial History of Texas 119 
 
 Avrote in 1844: ''The assumption of our debts by the "United 
 States is a very trifling item, and as the liabilities were mostly 
 incurred on the principle, of equivalents, the whole debt will 
 not amount to five millions. All our 10% bonds, as well as I 
 am advised, were issued 6 for 1. I think the principle of 
 equivalents was established in the early part of 1839, and the 
 depreciation was pretty rapid until the close of Lamar 's adminis- 
 tration, when Red Backs were issued at 8 for 1. Thus you will 
 perceive that the United States will not in equity be bound ta 
 redeem the liabilities of Texas at a higher rate than what they 
 were issued. ' '^ Governor Wood declared in 1849 that ' neither 
 good faith nor the most fastidious conception of morality*' 
 required the state to pay more than the equivalent value that 
 the republic received.- To the advocates of scaling, the all- 
 sufficient reasons for it were that the liabilities had been issued 
 at varying rates of discount and were largely held outside the 
 state and by others than the original owners.^ 
 
 The advocates of paying the debt at its face value were few ;-. 
 they had no place on the legislative committee considering the 
 debt, — at least they left no evidence of their membership by 
 minority reports or protests ; and their motives were impugned 
 as having origin "if not in individual gain, at least in a desire- 
 for moral fame which leaps over the boundaries prescribed by 
 the ethics of this utilitarian age. ' '* 
 
 AVith the ascertainment and scaling of the debt accomplished, 
 
 'Houston to Van Zandt and Henderson, May 10, 1848; Texas Diplomatic 
 Correspondence, vol. 2, p. 278. See also ibid., p. 328. 
 
 -House Journal, 3rd Leg., p. 343. 
 
 ^Report of Committee on Sale of Public Domain; Senate Journal, 
 1st Leg., p. 114. Report of Committee on Public Lands; ibid., p. 219. 
 Report of Committee on Sale of Public Domain; House Journal, 1st 
 Leg., p. 307. Report of Special Committee on the Debt; House Journal^ 
 2nd Leg., p. 408. Message of Governor Wood, 1847; House Journal, 
 2nd Leg., p. 147. Message of Governor Bell, 1849; House Journal, 3rd 
 Leg., p. 343. Report of the Auditor and Comptroller, December 27, 
 1849. See also Gouge, op. cit., pp. 146, 153, and the Texas State Ga- 
 zette, May 31, June 28, August 2, September 20, October 4, and No- 
 vember 15, 1851. 
 
 ^Message of Governor Bell, December 26, 1849; House Journal, 3rd 
 Leg., p. 343. The Galveston Weekly News favored payment at full, 
 value. See issues of May 6 and July 15, 1851. 
 
120 Bulletin of tlie University of Texas 
 
 provision was made by the act of February 11, 1850, for pay- 
 ment in land at the rate of fifty cents an acre.^ It was prodded 
 also that interest should cease on all liabilities after July 1, 
 1850, the purpose of this provision being to force creditors to 
 accept payment in land immediately. 
 
 The scheme of scaling, or, as it was more euphemistically 
 called, classification of the debt, which was adopted by Texas, 
 and the plan for payment in land were not acceptable to the 
 creditors. They could not be blamed for refusing to accept 
 land, because the land was in a wilderness, was too abundant 
 to have any value until after a long lapse of time, and until 
 disposed of it would be subject to taxation and to all the risks 
 of loss which non-residents ran.- 
 
 The inability of the state to make payment except with land 
 and the unwillingness of the creditors to accept this medium 
 resulted in a deadlock. The way out was fortunately provided 
 as the result of a dispute between, Texas and the United States 
 over the state 's northwestern boundary. The military occupancy 
 of the territory now comprehended in New Mexico was resented 
 by Texas, and a special session of the legislature was called in 
 August, 1850, to protect the claims of the state against the 
 United States.^ The use of armed force against the ITnited 
 States was urged, if it should be necessary to enforce the claims 
 of Texas. 
 
 Three measures were introduced in the Senate of the United 
 States looking to the settlement of this dispute. The first was 
 called the ''Texas Reduction Limits Bill", and was introduced 
 by Senator Benton, of Missouri, January 16, 1850. It provided 
 that in consideration for the cession by Texas of the northwest 
 territory in dispute, and the relinquishment by Texas of all 
 claims against the United States for the debts of the Republic 
 
 ^Laws of 1850, p. 198. Message of Governor Wood, November 6, 
 1849; House Journal, 3rd Leg., p. 18. Message of Governor Bell, 
 December 26, 1849; ibid.; p. 343. See also Gouge, op. cit., p. 161. 
 
 -Gouge, op. cit., p. 169. 
 
 •^Message of .Governor Bell, August 13, 1850; House Journal, 3rd 
 Leg., Second Sess., p. 11. See also message of Governor Wood, March 
 2, 1848; House Journal, 2nd Leg., p. 901. Messages of Governor Bell, 
 1849; House Journal, 3rd Leg., pp. 343, 365. Congressional Globe, vol. 
 21, pt. 2, pp. 1526-7. 
 
Jl Financial History of Texas 121 
 
 of Texas and in consideration for the customs houses and other 
 public property surrendered by the state at annexation, the 
 United States would pay $15,000,000 in five per cent bonds. ^ 
 This contemplated cession of new territory involved the bill in 
 the slavery controversy, and on January 29, 1850, Henry Clay 
 submitted to the Senate eight resolutions of a compromise na- 
 ture, one of which provided that for the relinquishment by Texas 
 of all claims to any part of New^ IMexico the United States would 
 pay that part of the debt of the Republic of Texas which was 
 secured by import duties,- The resolutions were referred to the 
 Committee of Thirteen, the report of which was made by Mr. 
 Clay on May 8, 1850.^ The committee reported in favor of a 
 bond payment to Texas, the bonds to be applied first to the 
 extinction of any debts for which the duties on imports were 
 pledged.^ The "Omnibus Bill,'' of which the bill containing- 
 these provisions was a part, broke dow^n. As an independent 
 solution of the Texas question, Senator Pearce, of Maryland, 
 introduced the "Texas Boundary Bill". It contained the usual 
 provisions as to cession of territory and relinquishment of claims 
 against the United States, but proposed as the amount of in- 
 demnity to Texas $10,000,000 in five per cent bonds, and in- 
 corporated the important proviso that $5,000,000 should not be 
 issued "until the creditors of the state holding bonds of Texas 
 for which duties on imports were specially pledged shall first file 
 at the treasury of the United States releases of all claims against 
 the United States for or on account of said bonds. "^ This bill 
 was passed by the Senate on August 9, 1850, and by the House 
 on September 6, and was approved on September 9.*^ 
 
 Texas accepted this act on November 25, 1850.' As an imme- 
 diate result of it, she ceded 67,000,000 acres of public land, and 
 came into possession of $5,000,000 in United States bonds. Pro- 
 vision for payment of the debt was deferred, however, because 
 of the large amount of unascertained claims and of the need of 
 
 'Cong. Globe, vol. 21, pt. 1, p. 166. 
 
 =Ibid., p. 245. 
 
 ^Ibid., p. 945. 
 
 *Ibid., p. 947. 
 
 ^Ibid.,vol. 21, pt. 2, p. 1520. 
 
 ^bid., pp. 1555, 1764. 
 
 ^Laws of 1850. Second Session, p. 4. 
 
 i 
 
122 Bulletin of tJie University of Texas 
 
 construction of the proviso relating to the five millions reserved 
 in the United States Treasury. The contentions of Texas were 
 that she alone was qualified to define what constituted the revenue 
 debt, that paj^ment should be made on the basis of her rating 
 of the debt, and that as soon as an appropriation was made by 
 her for any part of this debt and releases for it were filed with 
 the United States Treasury, an equal amount of the reserved 
 five millions should be turned over to her as a refund.^ As to 
 the first and third contentions, Texas was at a disadvantage 
 because the Boundary Act left their settlement to the officials 
 of the United States. The Texas officials wanted to restrict the 
 revenue debt to those securities only upon whose face redemption 
 was stated to be secured by duties on imports.^ The Secretary 
 of the Treasury, Mr. Corwin, ruled, however, that the section 
 in the act of the Kepublic of Texas of January 14, 1840, which 
 pledged the revenues for the redemption of all loans negotiated 
 by the authority of the republic comprehended all loans negoti- 
 ated prior to that act, and that all public loans and all the liabili- 
 ties receivable for public dues were therefore debts for which 
 duties on imports were specifically pledged. The ruling was 
 approved by President Fillmore, September 13, 1851.^ The 
 effect of this rule was to include all bonds, except the 8% and 
 10% funding bonds of the act of February 5, 1840. But this 
 interpretation of the revenue debt was modified in 1853 by Mr. 
 Gushing, the Attorney General of the United States. He con- 
 strued the act of the Republic of Texas of January 14, 1840, to 
 apply not only to past debts but also to future loans, and he held 
 further that the phrase "bonds or certificates of stocks" in the 
 proviso of the Boundary Act should be construed in their ac- 
 cepted financial sense.* The effect of Mr. Gushing 's construction 
 was to include under the revenue debt the 8% and 10% bonds 
 of the act of February 5, 1840, and to exclude the treasury 
 
 ^Message of Governor Bell, November 10, 1851. Speech of Mr. Bell; 
 Cong. Globe, vol. 28. pt. 3, p. 595. 
 
 'Report of the Joint Select Committee of the Senate and House; 
 Senate Journal, 3rd Leg., Third Sess., p. 39. 
 
 -House Misc. Doc. No. 17, 33d Cong., 2nd Sess., pp. 4-9. The Texas 
 State Gazette, October 4, 1851. 
 
 *House Misc. Doc. No. 17, 33d Cong., 2nd Sess., pp. 12-23. 
 
A Financial History of Texas 123 
 
 notes.^ The interpretation by the United States authorities of 
 what should be included under the revenue debt was thus con- 
 trary to the wishes of Texas. The ruling of Secretary Corwin 
 that none of the reserved bonds w^ould be turned over to Texas 
 until releases for all the revenue debt were filed was also adverse 
 to the contention of Texas. 
 
 The interpretation by the officials of the United States of the 
 proviso in the Boundary Act and the report of the auditor and 
 the comptroller of the debts as ascertained to November 12, 1851, 
 were followed by the long delayed act for the payment of the 
 debt of the republic. This was the act of January 31, 1852.- 
 It accepted the rating of the debt as given in the auditorial 
 report of 1851 and appropriated $2,000,000 of the United States 
 bonds as a means of payment. It provided that the non-revenue 
 debt should be paid unconditionally, but that no payment should 
 be made on the revenue debt until the governor was notified by 
 the President that there would be issued an amount of the re- 
 served five million of bonds equal to the amount of releases filed 
 by the creditors with the United States Treasury. The debt for 
 which unconditional payment was provided consisted of audited 
 paper, audited claims, miscellaneous liabilities, and the 8% and 
 10% bonds issued under the act of February 5, 1840. The par 
 value of these debts, not including interest, was $1,678,242, but 
 scaled, the amount was $1,058,779. 
 
 Another deadlock between the state and the creditors took 
 place. The condition attached by Texas to the payment of the 
 revenue debt flew in the face of the ruling of Secretary Corwin. 
 This ruling would in its operation work a hardship upon the 
 state, for it would prevent reimbursement for payments on the 
 revenue debt until all this class of creditors filed their releases 
 with the United States. Unless a reasonable length of time were 
 prescribed within which filing should take place, the state could 
 be held up by tardy creditors and the state treasury would be 
 deprived of the funds expended for an unnecessarily long time.^ 
 At the same time this ruling protected the United States, and it 
 
 'Report of the Comptroller, 1852-3, p. 7. 
 =Laws of 1852, p. 38. 
 
 'Speech of Mr. Bell, Cong. Globe, vol. 28, pt. 3, p. 595. Message of 
 Gorernor Pease, December 23, 1853. 
 
124 BuUetin of the liniversity of Texas 
 
 was very much to the interest of the creditors. The other cause 
 of the deadlock was the refusal of the creditors to accept the 
 scaled rates adopted by Texas. 
 
 Memorials of creditors, some praying for a modification of the 
 secretary's ruling in order that payment might be begun by 
 Texas at the scaled rates; others proposing the responsibility of 
 ,the United States for the full payment of the revenue debt, 
 brought the matter into Congress.^ In the Senate on x\ugust 
 26, 1852, there failed a proposed amendment to a foreign rela- 
 tions bill which would have permitted the issue of bonds to Texas 
 as fast as releases were filed.- It was developed in the debate 
 upon this amendment that creditors whose claims had been scaled 
 but little would accept payment and that those whose claims 
 were heavily scaled would not; be satisfied and would continue 
 to demand relief from Congress."' The creditors contended that 
 the responsibility of the United States arose when Texas lost 
 through annexation the right to impose the customs duties which 
 were pledged for the payment of the public loans, arid they 
 contended further that this responsibility was virtually admitted 
 by the ''Boundary Act" in the proviso reserving the $5,000,000 
 of bonds.* The contention of the creditors was accepted in the 
 two reports of the Senate Finance Committee to which the mem- 
 orials were referred, and was the basis of the later action of 
 Congress.^ With its report on August 17, 1852, the Senate 
 Finance Committee submitted a bill to appropriate in lieu of 
 the $5,000,000 of reserved bonds, $8,555,000 in 5% bonds, to l)e 
 divided equally among the holders of the revenue debt." The 
 Thirty-Second Congress expired without any action being taken. 
 
 The question was reopened in the first session of the Thirty- 
 Third Congress by the introduction on December 12, 1853, of a 
 
 ^Cong. Globe, vol. 24 pt. 3, pp. 2231, 2380; vol. 28, passim. 
 
 ''Ibid., vol. 24, pt. 3, p. 2380. 
 
 ^Ibid.,p. 2381. 
 
 *Gouge, op. cit., pp. 312-316. 
 
 'Report of August 17, 1852, in Gouge, op. cit., pp. 312-316. Report of 
 July 1, 1854; House Misc. Doc. No. 17, 33d Cong., 2nd Sess., pp. 23-2S. 
 
 "Mr. Pearce, of Maryland, chairman of the committee, stated in his 
 speech of August 26, 1852, that the committee proposed to appropriate 
 $8,333,000 in 3 per cent bonds. See also message of Governor Bell, 
 January 13, 1853; Senate Journal, 4th Leg., Second Sess., p. 20, 
 
A Finaticial History of Texas 125 
 
 bill by Senator Thompson, of Kentucky, which proposed the dis- 
 tribution of $8,333,000 in 37r bonds among the revenue debt 
 creditors.^ The Senate Finance Committee, to which it was re- 
 ferred, reported it on June 15, 1854, with a substitute which pro- 
 posed a pro rata distribution of $6,500,000 in cash.^ This sub- 
 stitute did not meet the approval of the chairman and of other 
 members of the committee and it was recommitted to the com- 
 mittee on June 21. The committee again reported on July 1, 
 1854, but this time in favor of a distribution of $8,500,000 in 
 cash.^ This amount was equal to the face value of $5,000,000 of 
 reserved bonds with interest to maturity.^ An amendment by 
 ]\Ir. Bright, of Indiana, that the interest on the debt should be 
 regulated by the existing laws of Texas was agreed to, but an 
 amendment by Mr. Chase, of Ohio, to reduce the amount to $6,- 
 500,000 was defeated.^ The amount proposed by Mr. Chase and 
 later by the House was the reserved $5,000,000 with premium 
 and with interest to date.^ The bill with the Bright Amendment 
 passed the Senate July 21, 1854, by a vote of 27 to 19.^ The 
 first session ended, however, without any action being taken by 
 the House. At the second session the House made seven amend- 
 ments. They were, principally, that the sum to be appropriated 
 should be reduced to $6,550,000, and that the act should not 
 become effective until assented to by the legislature of Texas nor 
 until the legislature should withdraw and abandon all claims 
 and demands against the United States on account of Indian 
 depredations, prior to the admission of the state into the Union.* 
 The bill as amended passed the House February 7, 1855, by a 
 vote of 153 to 43.^ The Senate disagreed to the amendments and 
 the bill went to conference. ^^ In the conference the Senate with- 
 drew from its disagreements to the House amendments, and the 
 
 ^Cong. Globe, vol. 28, pt. 1, p. 28, and pt. 3, p. 1806. 
 'Cong. Globe, vol. 28, pt. 3, p. 1806. 
 'Ibid., p. 1806. 
 
 *Cong. Globe, vol. 28, pt. 3, p. 1845. 
 "Cong. Globe, vol. 28, pt. 3, p. 1845. 
 'Ibid., p. 1844. 
 ^Ibid., p. 1845. 
 
 *Cong. Globe, vol. 30, pt. 1, pp. 618, 619. 
 "Ibid., p. 619. 
 ^"Ibid., pp. 719, 743. 
 
126 Bulletin of tlie University of Texas 
 
 amount to be appropriated was agreed upon at $7,750,000.^ The 
 conference bill was accepted by the House by a vote of 123 to 77 
 and by the Senate by a vote of 30 to 14. The bill was approved 
 February 28, 1855.- 
 
 The $7,750,000 was to be pro-rated among the holders of the 
 debt reported to be within the provisions of the act of September 
 9, 1850, by Secretary Corwin and Attorney General Gushing. 
 Thus the difference of opinion between these officials was done 
 away with. The items and the par and scaled amounts of the 
 revenue debt with interest to July 1, 1850, were as follows:^ 
 
 Texas rating 
 
 on the Scaled 
 
 Description of debt. Par amount. dollar. amount. 
 
 Ten per cent funding bonds, 
 
 act of June 7, 1837 $1,657,803.33 .70 $1,160,462.33 
 
 Ditto, issued to Swartwout 29,291.47 1.00 29,291.47 
 
 Ten per cent bonds author- 
 ized by the five million 
 
 Dawson debt 1,211,000.00 .50 605,500.00 
 
 Holford debt 411,404.70 .50 205,702.35 
 
 Pennsylvania Bank of 
 
 the United States 960,498.00 .8745 839,955.50 
 
 Ten per cent funding bonds, 
 
 act of February 5, 1840 1,627,784.16 .30 488,335.24 
 
 Eight per cent funding 
 
 bonds, act of February 5, 
 
 1840 46,596.26 .30 13,978.87 
 
 Eight per cent treasury 
 
 bonds, act of February 5, 
 
 1840 1,417,680.00 .20 283,536.00 
 
 Ten per cent treasury notes, 
 
 first issue 65,208.33 1.00 65,208.33 
 
 Ditto, second issue 451,708.32 .50 225,854.16 
 
 Non-interest treasury notes 2,199,728.64 .25 549,932.16 
 
 Total $ 10,078,703.21 $ 4,467,756.41 
 
 The question of acceptance or rejection of the proposal of 
 debt payment contained in this act was submitted to the voters 
 of Texas in the general election of 1854. There were 11,609 
 votes in favor of acceptance and 13,818 against. Though the 
 question was one of great importance to the state, only 25.427 
 
 ^Ibid., pp. 853, 863. 
 
 ^Ibid., p. 990. For act see U. S. Statutes at Large, X, ch. 129. 
 
 ^Report of the Comptroller, 1854-5. 
 
A Financial History of Texas 127 
 
 out of over 45,000 who voted in the election expressed themselves 
 as to the proposition submitted.^ 
 
 According to the provisions of the act acceptance or rejection 
 was lodged with the, legislature, and though the vote of the 
 people was adverse to acceptance, the legislature gave the ques- 
 tion independent consideration. Within the legislature the con- 
 test was stubborn as to the decision which should be made. 
 The arguments advanced in favor of acceptance were chiefly^ 
 first, that no reasonable hope could be entertained that the debt 
 would ever be settled under the terms of the Boundary Act or 
 of the act of Texas of January 31, 1852, because Texas would not 
 accept the national government's construction of the Boundary 
 Act and the creditors would not accept the scaled rates adopted 
 in the Texas act; second, that Texas alone could not prescribe 
 the terms on which the debt should be settled, because in con- 
 senting to the Boundary Act she thereby admitted the participa- 
 tion of the United States; and, third, that it was important 
 that the "troublesome business should be settled upon terms 
 satisfactory to the creditors. "- 
 
 The arguments against acceptance were, first, that Texas 
 had the right to transact her financial affairs in her own way; 
 second, that acceptance would be in the interest of the "greedy 
 foreign speculator"; and, third, that there would be a financial 
 loss to the state to accept this act in lieu of the Boundary Act.* 
 The minority report of the house committee on public debt fig- 
 ured a total loss to the state by acceptance of $6,082,244. This 
 sum was arrived at by adding to the $5,000,000 in bonds re- 
 served in the United States Treasury the accumulated interest 
 to January 1, 1855, of $1,250,000; premiums of $500,000 on the 
 bonds; and Indian claims of $3,800,000; and subtracting from 
 
 ^Message of Governor Pease, November 5, 1855. 
 
 ^Message of Governor Pease, November 5, 1855. Majority Report of 
 House Committee on Public Debt, December 1, 1855; House Journal, 
 6th Leg., p. 141. Galveston Weekly News, May 12, 1855, and January 
 15, 1856. 
 
 ^Minority Report of the House Committee on Public Debt, December 
 1, 1855; House Journal, 6th Leg., p. 151. The Texas State Gazette, 
 May 19, June 30, and November 10, 1855. See also the Galveston 
 Weekly News, December 18, 1855, and June 8, 1856. 
 
128 Bulletin of tlie University of Texas 
 
 the total of $11,550,000 the amount of the revenue debt s*3aled 
 which according: to their statement was $4,467,756. This finan- 
 cial loss to the state was the principal basis of the opposition. 
 The bill passed and became the act of February 1, 1856. ^ The 
 bill passed the house by the very close vote of 42 to 38. 
 
 It was charged both in Congress and in the legislature of Texas 
 that some members of each body had a financial interest in 
 the passage of the bill. When the vote on the House bill was 
 about to be taken in Congress, the rule of the House in regard 
 to members voting upon a question in which they had a direct 
 interest was ordered read.^ In the legislature a committee was 
 appointed to investigate the charges of improper conduct on 
 the part of members of the legislature, but the report was that 
 no facts brought before it justified the charge that bribery was 
 employed. An attempt was thereupon made to have the com- 
 mittee itself investigated, but it failed.^ 
 
 The $7,750,000 prorated among the holders of the $10,078,703 
 revenue debt gave each creditor about seventy-six and nine-tenths 
 cents on the dollar. This settlement was very acceptable to the 
 majoritj' of the creditors. Settlement on the basis of the Texas 
 ratings, which varied from twenty cents on the dollar to par, 
 would have been a severe blow to those who had purchased the 
 securities as a speculation. The securities were held mainly out- 
 side the state — in Delaware. Kentucky, Pennsylvania, and South 
 Carolina.* In 1850 in Philadelphia ten per cent interest notes 
 were quoted at forty cents on the dollar and non-interest notes 
 at from twenty-four and one-quarter cents to twenty-four and 
 three-quarter cents. Eight per cent treasury bonds were quoted 
 at thirty-five cents on the dollar, and a block of 45,000 of the 
 bonds changed hands at that price.'' 
 
 In the adjustment proposed by Texas in the act of 1852 there 
 were three items of debt which were rated higher by $123,217.56 
 
 ^Laws of 1856, p. 47. 
 
 'Congressional Globe, vol. 30, pt. 1, p. 618. See also the speech of 
 Mr. Giddings, of Ohio; ibid., p. 598. 
 
 ^House Journal, 6th Leg., Adj. Sess., pp. 314, 506-522, 554. Galveston 
 Weekly News, August 12, 1856. 
 
 'House Misc. Doc. No. 17, 33d Cong., 2nd Sess. 
 
 ■'The Texas State Gazette, April 13, 1850. 
 
A Firm^icial History of Texas 129 
 
 than they were settled for by the United States under the act 
 of 1855. When the question of settlement was under considera- 
 tion in Congress this difference was noted as an objection to the 
 passage of the act of 1855, and to obviate it a provision was 
 incorporated in the bill which authorized the Secretary of the 
 Treasury to repay to Texas on the pro-rata basis out of the fund 
 of $7,750,000, the amount of the revenue debt which had been 
 paid by the state. It was thought that the repayment would 
 enable the state to pay to the creditors the $123,217.56 which 
 they would lose by acceptance of the act of 1855.^ The state 
 received in 1856-7 from the United States $300,450.01 which was 
 the amount that creditors had received from the state in pay- 
 ment of $997,042.90 of revenue debt, that amount being at the 
 rate of thirty cents on the dollar.- These creditors received 
 from the United States out of the fund of $7,750,000 the amount 
 necessary to bring the settlement to the basis of seventy-six and 
 nine-tenths cents on the dollar. But those creditors who had 
 lost $124,217.56 by the acceptance of the act of 1855 were never 
 reimbursed by Texas. Certain holders of the non-revenue debt, 
 however, were compensated by the state for the difference be- 
 tween the scaled and par amounts of their debts.^ The amount 
 paid to them w^as $57,768.82.* 
 
 The refusal of Texas to fulfill to the creditors who lost the 
 $123,217 which she had previously acknowledged was due them 
 is an illustration of the hostile attitude of the state towards the 
 holders of the revenue debt. The reasons for scaling were that 
 the, bonds and notes of the republic were issued at "an ex- 
 ceedingly dark and gloomy period," and so suffered a heavy 
 discount, and that they had passed out of the hands of the 
 original holders and had been purchased by outsiders as a 
 speculation. These are the usual arguments for repudiation, 
 and their adoption means the destruction of public credit. It 
 was fortunate for Texas that after her struggle to effect repudia- 
 tion she had no occasion soon to go into the general loan market. 
 
 'Message of Governor Pease, November 2, 1857. 
 ^Report of the Comptroller, 1856-7, p. 78. 
 ^Laws of 1856, p. 64. 
 ''Report of the Comptroller, 1856-7, p. 26. 
 
 )— H 
 
130 Bulletin of flie Umversity of Texas 
 
 The failure of Congress to appropriate an amount sufficient to 
 pay in full the principal and interest of the revenue debt was 
 an act of repudiation as discreditable as that which Texas w^ould 
 have committed, because the passage of the act of 1855 w^as a 
 de facto acknowdedgment of the responsibility felt for this debt. 
 The amount appropriated to be pro-rated was unconnected with 
 the $5,000,000 of United States bonds reserved in the United 
 States Treasury under the act of 1850 or with any other logical 
 basis, and was merel}^ the result of politics. The $5,000,000 in 
 bonds reserved in 1850 was thought at the time to be sufficient 
 to pay all of the revenue debt, and the foundation of this belief 
 was a document of the auditorial board w^hich stated that the 
 revenue debt amounted to $4,500^000.^ But this w^as only the 
 amount of the bonds upon wiiose face the customs duties w^ere 
 pledged in name. Since the original a<it contemplated an amount 
 w^hich would discharge the revenue debt at par, the insufficient 
 amount of the act of 1855 is without extenuation. 
 
 The stoppage of interest after July 1, 1850, was an act which 
 had the marks of a breach of faith. It was an attempt to compel 
 the creditors to take in payment land or something for which 
 they had not contracted. As the greater part of the debt was 
 not paid until 1856, about six years' interest was lost. Besides 
 the scaling and the stoppage of the interest, a third characteristic 
 of the debt treatment was the barring of claims. By the act of 
 March 20, 1848, it was provided that all claims not presented 
 before the second Monday in November, 1849, should be post- 
 poned.2 The act of February 8, 1850, extended the time to the 
 first Monday in September, 1851, and barred all claims not pre- 
 «ented by that time. Later acts, however, extended the time to 
 June 1, 1861.^ There are acceptable administrative reasons for 
 a state ascertaining its debt, but when the object is rather to 
 force unwilling creditors to submit to a scaling system the 
 threat to bar claims is a dishonorable piece of legislation.* 
 
 Congress extended the time for presenting the revenue debt 
 
 .^Cong. Globe, vol. 28, pt. 3, p. 1846. 
 ^'Laws of 1848, p. 208. 
 
 ^Laws of 1853, Called Sess., p. 54. Laws of 1854, p. 79. Laws of 
 1856, p. 23. Laws of 1858, p. 47. Laws of 1860, p. 60. 
 *Goiige, op. cit., p. 225. 
 
A Financial History of Texas 131 
 
 to January 1, 1861, and at this date there remained a balance 
 of $101,113.27. In 1881, $45,000 was paid out of this balance 
 and the remainder was turned over to Texas. 
 
 By 1861 Texas had paid out of the proceeds of the $5,000,000 
 of five per cent bonds received in 1850, $1,558,055.31 for the 
 debt of the republic. But as $300,450.01 was revenue debt, the 
 United States refunded that amount in 1856 and 1857. leaving 
 $1,257,605.30 as the net amount paid by Texas. The state 
 furthermore received between 1846 and 1860 on account of debts 
 due the republic $289,110.86 in the audited paper and other 
 liabilities of the republic, but $847.70 of this was refunded by 
 the United States in 1857, leaving the net amount of the debt 
 discharged in this way at $288,263.16. The amounts of pay- 
 ments on debt and of liabilities received were as follows : 
 
 Payments. Liabilities. 
 
 1847 $101,045.60 
 
 1848 46,-548.15 
 
 1849 34,961.24 
 
 1850 32,220.15 
 
 1851 7,750.74 
 
 1852 $997,684.12 34,771.90 
 
 1853 116,460.52 9,042.16' 
 
 1854 179,015.81 1,122.49 
 
 1855 44,412.36 1,047.47 
 
 1856 113,865.60 89.01 
 
 1857 8,946.44 324.90 
 
 1858 72,879.73 
 
 1859 12,852.53 20,187.05 
 
 1860. . 11,938.20 
 
 Total $1,558,055.31 $289,110.86 
 
 After 1860 the amount paid was $29,498.13, distributed as 
 follows : 
 
 1861 $8,520.00 
 
 1862 1,783.80 
 
 1863 20.83 
 
 1873 503.00 
 
 1881 3,000.00 
 
 1883 610.50 
 
 1885 60.00 
 
 1902 15,000.00 
 
 Total 29,498.13 
 
132 Bulletin of tlie Umversity of Texas 
 
 The state itself incurred no bonded debt during the period 
 1846-1860, except in 1850. By the act of December 2, 1850, 
 $36,000 of five per cent state bonds were authorized to be issued 
 and exchanged for an equal amount of specie in the school fund. 
 The money obtained in this manner was used to defray current 
 expenses, and the transaction was merely in anticipation of the 
 receipt of the United States bonds under the Boundary Act. 
 In 1851 United States bonds were exchanged for these bonds, 
 and the latter were canceled. 
 
 The experience of the republic with debt appears to have 
 impressed itself upon the framers of the first constitution of 
 the state. It was proposed in the constitutional convention of 
 1845 that, no loan should ever be made on the faith of the 
 state, and though this radical proposition was rejected, the 
 provision adopted was so restrictive as to indicate a strong anti- 
 debt sentiment.^ The provision was that ''the aggregate amount 
 of debt hereafter contracted by the legislature shall never ex- 
 ceed the sum of $100,000 except in case of war, to repel in- 
 vasion, or suppress insurrection. And in no case shall any 
 amount be borrowed, except by a vote of two-thirds of both 
 houses of the legislature."- 
 
 Owing first to the revenue accruing under the laws of the 
 republic and later to the receipt of the $5,000,000 of United 
 States bonds, Texas during this first period of statehood was 
 virtually free of any bonded debt, and, except in 1860, of any 
 floating debt. This gave her a unique place among the states. 
 By 1860 the United States bonds had been expended, and be- 
 cause of increased expenditures and insufficient taxation the 
 general revenue account had warrants outstanding against it 
 which it could not pay, and the state was indebted to the 
 university fund for the $100,000 of United States bonds bor- 
 rowed from that fund in order to pay the increasingly heavy 
 expenses of protecting the frontier. 
 
 ^Journal of the Convention, 1845, p. 185. 
 
 'Art. 7, sec. 33. This was also the limit imposed by the Louisiana 
 Constitution of 1845. 
 
A Financial History of Texas 133 
 
 SUMMARY. 
 
 The first period of statehood began and ended with thi) gen- 
 eral treasury in financial difficulties, and but for the opportune 
 receipt of the $5,000,000 of United States bonds and the as- 
 sumption of the payment of the revenue debt of the republic by 
 the United States the treasury would probably have been in dire 
 straits throughout the entire period. As it was, however, the re- 
 ceipt of the bonds enabled the state during eight years out of the 
 fourteen of the period to pay a large and harassing debt, to en- 
 dow the school fund generously, to construct public buildings, to 
 meet the ordinary expenses of the government, to aid in the con- 
 struction of railroads, and to administer the vast public domain 
 not with a view to revenue but so as to encourage the growth of 
 population and the material development of the state. The 
 indemnity bonds were the key to the expenditure and revenue 
 policies of the period, and their influence was felt in later periods. 
 Inasmuch as the general treasury was greatly assisted prior to 
 the receipt of the bonds by the revenue accruing under the laws 
 of the Republic of Texas, the state government was supported 
 throughout the first period of statehood not from taxation but 
 from extraneous sources, — from windfalls. The result was that 
 the people of the state did not become accustomed to taxation 
 as a method of supporting the government, and a habit of de- 
 pending upon other sources was thereby fostered. The begin- 
 nings of this habit had really been made during the period 
 of the republic, because the republic lived on credit. 
 
 The purely agricultural character of the population and the 
 frontier condition existing throughout the state were reflected 
 not only in the general attitude towards education but also in 
 the expenditure, revenue and debt policies. There was a tend- 
 ency to confine expenditures to the support of the narrow pro- 
 tective functions of government ; poll and occupation taxes which 
 would fall on those engaged in business were popular, and the 
 scaling of the debt was a widely approved policy. 
 
PART IV. 
 
 THE CIVIL WAR, 1861-1865.1 
 
 Chapter 1. 
 
 expenditures. 
 
 Texas was perhaps the most fortunate of the Confederate 
 States during the war. Her territory was not a battleground 
 and was free from devastating invasion. That part of her 
 population which was not in the armies was free therefore to 
 follow agriculture and other pursuits unmolested. Proximity 
 to Mexico provided a comparatively safe outlet to a market 
 for cotton and inlet for needed supplies of various kinds. The 
 possession, too, of a large amount of disposable assets in the 
 form of United States bonds obviated the need of an early 
 resort to high taxation or an extensive use of the state's credit. 
 Pull advantage of these favoring circumstances of geography 
 and assets could not, however, be taken. Transportation of 
 products to the Mexican frontier proved to be slow, expensive 
 and dangerous, while the United States bonds were only par- 
 tially productive and served but to stay temporarily the evil 
 day of financial disorder. In the end the financial story of 
 Texas was the same for this period as that of the other southern 
 states, though the details are less direful. It was one of trust 
 funds violated, of debt accumulated, and of receipts and ex- 
 penditures, swollen fictitiously by the depreciation of the paper 
 money in which they were payable, monnting large to meet a 
 growing desperate situation. 
 
 The only expenditures of 1861 to reveal a state of war were 
 those for the regiment ordered' raised by the Constitutional 
 Convention. Total warrants drawn for these purposes amounted 
 to $79,870.33, of which only $2,139.35 was for the regiment. 
 The total net expenditures for the year were $577,593.51. The 
 total net expenditures for the war period proper, or from 
 
 ^The period of which this is a study extends from August 31, 1860, to 
 June 8, 1865. The fiscal j^ear ending August 31, 1861, has been in- 
 cluded not because the finances reflect the war but on account of the 
 legislation which made the initial financial provision for the struggle. 
 
A Financial History of Texas 135 
 
 August 31, 1861, to June 8, 1865, were $4,863,790.55. The 
 portion of this that was of a military character is $3,180,275.97. 
 This amount does not represent fully, however, the expenditure 
 attributable to the war. To obtain this amount there should 
 be added to military expenditures those for hospital facilities 
 and for the support of the needy families of Texas soldiers. 
 In 1862 and 1863 warrants drawn on account of the hospital 
 fund were $104,493.58; for the soldiers' families, $306,305.74; 
 in 1864 and 1865 the amounts were $107,446.02 and $1,127,- 
 814.73 for the respective services, — or a total for the four years 
 of $1,646,060.07. There were refunds of $41,950.77, leaving a 
 net amount of $1,604,109.30. The amount of these warrants 
 that was paid cannot be stated. Since after May 28, 1864, civil 
 appropriations and those for the support of soldiers' families 
 were payable in treasury warrants, it may be assumed safely 
 that the warrants drawn in 1862 and 1863 were paid and were 
 therefore included in the comptroller's items of expenditures. 
 Because of this element of conjecture, however, no attempt is 
 made to state the absolute amount of expenditures incident to 
 the war, but to rest content with the statement that more than, 
 three-fourths of the expenditures were attributable to it. 
 
 A part of the military expenditures was chargeable to the 
 Confederate States government, and for such the state had a 
 claim for refund. The reports do not indicate that there were 
 any such refunds, but at the close of the war the Confederate 
 government was indebted to the state in the sum of $399,751.90 
 for ordnance, quartermaster, medical, and such stores.^ 
 
 At the beginning of the war all expenditures were made 
 through the state comptroller and the state treasurer and were 
 pursuant to specific legislative appropriations. In December, 
 1861, Judah P. Benjamin, Secretary of the Confederate Treas- 
 ury, proposed to Governor Lubbock the exchange of the United 
 States bonds then in the state treasury to the credit of the 
 school fund for Confederate bonds.^ The need of secrecy about 
 such a transaction and the necessity also of some organization 
 to superintend the defence of the state of a more continuous 
 and adaptable character than the legislature led to the creation 
 
 ^Report of the Comptroller, 1863-1865, p. 14. 
 =MSS. Record of Military Board No. 101, p. 5. 
 
136 Bulletin of tlie University of Texas 
 
 on January 11, 1862, o'f the Military Board. ^ This board was 
 known as the Old Board and was composed of the governor, 
 the comptroller, and the treasurer. It was reorganized on 
 April 12, 1864, in accordance with the act of December 16, 1863, 
 to be composed of the governor and two appointees, and was 
 known as the New Board.- The duty in general of the boards 
 was to provide for the military defence of the state by securing 
 supplies of arms, ordnance, ammunition and other stores. 
 
 The two boards drew from the treasury a total of $1,651,- 
 621.85, divided as follows:^ 
 
 In Confederate treasury notes $257,191.90 
 
 In specie .7,729.95 
 
 In state treasury warrants . 25,000.00 
 
 In 8 per cent state bonds 595,000.00 
 
 In United States 5 per cent bonds 634,000.00 
 
 In coupons of United States bonds 132,700.00 
 
 "With these receipts as a basis, the boards carried on the 
 varied and complex operations of purchasing, exporting, and 
 selling cotton, of purchasing and importing supplies, of manu- 
 facturing arms and munitions, and of working the salt deposits 
 in Van Zandt County. 
 
 The Old Board purchased, as far as can be ascertained, 5,736 
 bales of cotton, for which $544,438.23 was paid, mostly in Con- 
 federate notes and 8 per cent state bonds. One hundred and 
 twelve bales were burned or otherwise lost, and 5,551 sold for 
 $434,454.38. The New Board purchased 266 bales, 211 of which 
 are accounted for by sale. The disposition of 128 bales of the 
 total purchased by both boards is unaccounted for. Besides 
 these direct operations in cotton, contracts were made with 
 individuals to export their own cotton, but in the name of the 
 I)oard. These contracts promised some benefit to the state, as 
 for example, the return of supplies which would be subject to 
 purchase by the board. There is little to show, however, that 
 
 ^MSS. Record of Military Board No, 101, p. 14, Laws of 1862, pp, 
 .40, 45, 
 
 -Laws of 1863, p. 26. 
 
 ^'Report of Pease and Palm, 1865, p. 1. This published account is 
 condensed. For the full report see Executive Record No. 281, 
 
A Financial History of Texas VM 
 
 any important amount of supplies was introduced as a result 
 of these private contracts. The direct operations in cotton, 
 though, resulted in the securing of such needed supplies as 
 arms, cartridge boxes, powder flasks, powder, shoes, cotton 
 cards, quinine, etc. 
 
 Mpst important of the funds turned over to the board were 
 the United States 5 per cent bonds belonging to the school fund. 
 On January 13, 1862, an agent of the Confederate States gov- 
 ernment received from the Military Board 100 of the bonds of 
 the denomination of $1,000 each. In accordance with the plan 
 proposed in Secretary Benjamin's letter, a like amount of 8 
 per cent Confederate bonds were to be given in exchange. 
 Secretary Benjamin shortly decided, however, that he had no 
 authority to make this exchange, but that he would purchase 
 of the state any arms or munitions of war which might be 
 procured for the bonds. The failure at this time to negotiate 
 the bonds for supplies terminated the whole matter between 
 the state and the Confederate governments, and the bonds were 
 returned to the Military Board.^ 
 
 Of the 634 bonds ^he Old Board received 364 with 3,311 
 interest coupons of $25 each, — a total par value of $546,775.00. 
 These bonds and coupons were sent to Mexico and Europe for 
 disposition, but fear of their repudiation resulted in but few 
 of them being sold. Only 44 bonds and 310 coupons were sold 
 by the Old Board. Their par value was $49,750.00, and they 
 were sold for $38,022.50. 
 
 The New Board was responsible for 139 bonds and 633 cou- 
 pons. Four of the bonds and 22 of the coupons were sold for 
 $4,550, and 135 bonds and 611 coupons were turned over to 
 White and Chiles for cotton cards and medicines. The state 
 did not receive the supplies contracted for, as, according to 
 White and Chiles, they were destroyed in transit by disbanded 
 troops.^ Nineteen bonds and 80 coupons were turned over by 
 Governor Murrah to an a^ent to be disposed of for medicine 
 and cotton cards. There is no evidence of any such purchase, 
 however, and the person to whom they were alleged to have 
 
 ^MSS. Report of Military Board, 1865; File Case No. 55. 
 ^Texas v. White, 7 Wallace, 706 (1868). See also report of Pease and 
 Palm, p. 4. 
 
138 Bulletin of tlie University of Texas 
 
 been given denied that he received them of the agent.^ The 
 remainder of the bonds to the number of 109 and 959 coupons 
 were returned to the treasury upon the institution of the Pro- 
 visional Government. 
 
 The Old Board erected a state foundry in Austin for the 
 manufacture of cannon, also a factory for the making of per- 
 cussion caps. The foundry cost, including expenses of oper- 
 ation, $172,725,12 ; the cap factory, $100,292.29. The cessation 
 of the military demand for the kind of cannon made at the 
 foundry, and the greater cost of public over private operation 
 of the cap factory, resulted in the abandonment by the New 
 Board of the operation by the state of these enterprises and 
 in their lease to private individuals.- 
 
 The boards and their successors returned to the treasury a 
 total of $1,006,279.30. Most of the sum, $543,958.28, was 
 returned in 1864, and in Confederate notes. In 1865 unused 
 United States bonds and coupons to the amount of $129,975.00 
 were turned over to the Provisional Government, and during 
 the period from October 13, 1865, to August 13, 1866, $33,205.25 
 was returned in specie. United States currency, 8 per cent state 
 bonds, and state treasury warrants. In 1876 a net amount of 
 $298,825.22 was recovered by the state on account of United 
 States bonds and coupons of the par value of $357,175.00 en- 
 trusted by the board in April, 1862, to Mr. J. M. Swisher for 
 disposition and which were committed by him to English and 
 German bankers for sale.^ 
 
 The penitentiary was not a source of expense to the general 
 treasury during this period, but was self-sustaining. The ex- 
 penditures of the school fund were small, amounting to only 
 $114,544.26 in the four years 1862-1865 as against $119,351.60 
 in 1861. The heaviest item of civil expenditures was the sup- 
 port of the indigent families of Texas soldiers.* The county 
 courts w^ere the agencies of distribution, and beginning in May 
 
 ^Report of Pease and Palm, p. 4. 
 
 ''MSS. Report of Military Board, March, 1865; File Case No. 55. 
 
 ^The total of the returned amount has been deducted from military 
 expenditures. 
 
 "Act of March 5, 1863; Laws of 1863, Called Sess., p. 12. Act of De- 
 cember 15, 1863; Laws of 1863, p. 21. 
 
A Finmwial History of Texas 139 
 
 of 1863 and extending to the close of the war the assistance 
 extended was nominally large but really small on account of 
 the depreciated value of the notes and treasury warrants. 
 After May, 1864, the medium of payment was treasury warrants, 
 but these soon became practically worthless. The ordinary civil 
 expenditures — or those for salaries, support of departments and 
 state institutions, were on a moderate scale. Salaries remained 
 unchanged throughout the war period, and their recipients were 
 subject to the hardship of having to meet with the same nominal 
 receipts prices that were steadily increasing by reason of 
 scarcity of products and inflation of the currency. 
 
Chapter 2. 
 receipts. 
 
 Texas entered upon the war period in an unsatisfactory 
 financial condition. In 1860 the means for defending the 
 frontier against Indian uprisings were largely provided by the 
 use of the United States bonds belonging to the university fund. 
 Despite the recommendations of the governor, no increased 
 taxation was voted at this time. By January 19, 1861, the 
 treasury deficit was $817,827.00, and the revenue which w^as to 
 come in before the end of the fiscal year was estimated to fall 
 far short of the deficiency.^ Each subsequent year saw de- 
 ficiencies, and at the close of the war the amount of treasury 
 warrants outstanding was $2,068,997.90. 
 
 Net receipts in 1861 were $509,788.64, and the total net 
 receipts during the war period, 1862-1865, were $8,161,928.58. 
 About 40 per cent was from taxes, 8 per cent from sale of bonds, 
 38 per cent from the penitentiary, and the remainder, 14 per 
 cent, from interest on the bonds in the school fund, the sale of 
 land, land dues, the sale of public property, and fees. The 
 proportion of receipts derived from the sale of bonds does not 
 indicate, however, the extent to which the state used its credit, 
 for it does not show the extent of indebtedness to special funds 
 for assets transferred, or the floating debt. 
 
 By the close of the war a complex tax system had been de- 
 veloped consisting of property and poll taxes, salary and occupa- 
 tion taxes. 
 
 A. The Property Tax. 
 
 The ad valorem rate of the general property tax remained, 
 against the counsel of the governor, at 121/2 cents in 1861, with 
 an additional 4 cents, collectible in specie, to meet the interest 
 and provide a sinking fund for the $1,000,000.00 loan authorized 
 by the act of April 8, 1861.- In 1862 the rate for all purposes 
 
 ^Message of Governor Houston, February 5, 1861; House Journal, 
 8th Leg., Extra Sess., p. 17. 
 ^Laws of 1861, p. 39. 
 
A Financial History of Texas lil 
 
 was raised to 25 cents, and in 1863 to 50 cents, which 'w^as the 
 rate also in 1864. At the above rates the taxes assessed were 
 $465,494.00 in 1861, $700,609.00 in 1862, $1,675,954.00 in 1863, 
 $1,790,959.00 in 1864,— a total of $4,633,016.24. Assessed values 
 showed a decrease in 1861 and 1862, but in 1863 they were 
 $335,190,700.00, and in 1864, $358,191,886.00 as compared with 
 $294,315,659.00 in 1860. The number of acres of land, of 
 negroes and other objects of assessment changed but little 
 durino- these years, so that the increase in assessed values was 
 due to higher valuations which were the result mainly of the 
 inflated state of the currency. 
 
 The act of April 3, 1861, permitted non-residents of the 
 counties to return land for taxation either in the county of 
 their residence or in the county of its location, and the result 
 was, as formerly, that a large amount escaped.^ Unrendered 
 land amounted to 34,659,321 acres in 1861, 29,320,425 in 1862, 
 47,854,029 in 1863, 34,970,258 in 1864, and 56,821,220 in 1865.^ 
 The lands sold to the state for taxes for the years 1861-1864 
 were 7,100,000 acres. Since from the beginning of statehood 
 to 1861 the total sold was 17,594,229 acres, the forfeitures 
 during the war were Extraordinarily large. The total number 
 of acres redeemed during the period 1846-1863 was only 
 1,065,600.^ 
 
 B. The Poll Tax. 
 
 By the act of January 13, 1862, the poll tax was raised from 
 
 50 cents to $1.00, and was assessed throughout the war on all 
 
 male persons over 21 years of age.* The assessments were as 
 
 follows : 
 
 1861 $28,521.00 
 
 1862 66,776.00 
 
 1863 . 53,798.00 
 
 1864 75,204.00 
 
 1865. 5.6,529.00 
 
 ^Ibid., p. 33. 
 
 ^Report of the Acting-Provisional Comptroller, 1866. 
 'Report of the Comptroller, 1868-9, pp. 110-111. 
 *Laws of 1862, p. 50. 
 
142 Bulletin of the University of Texas 
 
 C. Business Taxes. 
 
 An extensive system of occupation taxation was begun by the 
 act of January 13 1862.^ Some features of this act were the 
 reimposition of a license charge upon doctors, lawyers, and 
 dentists, — a practice which had been in abeyance since 1848; a 
 tax of $50 upon insurance companies, — which marks the beginning 
 in this state of special taxes upon corporations ; and the absence 
 of any occupation taxes upon mercantile establishments other 
 than the regular ad valorem rate upon goods purchased or re- 
 ceived for sale. By the act of March 6, 1863,- lawyers and 
 doctors were exempted from payment of a license charge, and in 
 order to discourage the conversion of corn into liquor, a tax of 
 $1,000 was laid on each still. The still tax was repealed in De- 
 cember, 1863, but was reimposed in November, 1864, as were 
 also the license taxes upon doctors and lawyers.^ 
 
 A system of taxes on the sales of distilled spirits, fermented 
 liquors and wines was adopted December 15, 1863.* The taxes 
 were payable monthly, and the rates were proportioned to the 
 value per gallon. These taxes were described in the statutes and 
 were popularly know^n as ''income" taxes. By the act of De- 
 cember 16, 1863, those engaged in, the sale of merchandise were 
 subject to a tax of 50 cents on each $100 proceeds of sales, and 
 1 merchandise was subject to no other state taxation. This was 
 Mmown as the "merchandise tax." Assessors and collectors were 
 required to call once in every three months and get returns of 
 sales under oath. The act of November 15, 1864, replaced the 
 graded liquor income tax by by one that levied simply 5 per cent 
 on gross sales, and modified and extended the taxation of gross 
 receipts. The several occupations and professions taxed were 
 classified and different fixed charges and percentage rates ap- 
 plied. Wholesale merchants were subject to a tax of $300 and 1 
 per cent on gross receipts ; retail merchants, druggists, and auc- 
 tioneers, $100 and 1 per cent. Those keeping a billiard hall or 
 nine or ten pin alley, doing a storage business, and cotton com- 
 
 4bid. 
 
 =Laws of 1863, Called Sess., p. 25. 
 
 'Act of December 16, 1863; Laws of 1863, p. 48. Act of November 15, 
 :1864; Laws of 1864, Second Called Sess., p. 7. 
 *Laws of 1863, p. 16. 
 
A Financial History of Texas J 41} 
 
 pressing and insurance companies, were subject to a tax of $100 
 and 2 per cent on gross receipts. Kailroad companies were sub- 
 ject to a tax of one-fourth of 1 per cent on their gross receipts ; 
 but no special provision was made for the determination of the 
 amount of gross receipts or for the collection of the tax. 
 
 £>. Income Taxation. 
 
 Under the amended Constitution of 1861, as under the original 
 of 1845, the legislature had the power to. lay an income tax. A 
 beginning of income taxation was made in the act of January 13, 
 1862, which imposed on each person having a fixed annual salary, 
 w^hether a^ a public officer or by private contract, 25 cents on each 
 $100 of such, salary over $500.^ The tax was self assessed and 
 no penalties were prescribed for failure of returns. This salary 
 tax was not re-enacted in the act of December 16, 1863, which ap- 
 plied the principle of income or receipts taxation to the merchan- 
 dise business, as it had been applied to the liquor business in the 
 act of December 15, 1863. It was not until November 15, 1864, 
 that the principle was extended, though it was yet so restricted as 
 to make the tax an occupation tax rather than an income tax in 
 the accepted sense of the term. Dentists and lawyers became sub- 
 ject to a tax of 2 per cent on the gross receipts from their profes- 
 sions, and presidents, directors, conductors, engineers, secretaries 
 and clerks of railroad companies, and doctors to a tax of 1 per 
 cent. Those engaged in agriculture and mechanical pursuits and 
 those in general who enjoyed fixed incomes were not taxed on 
 their income as such. The income tax as thus levied was there- 
 fore a partial one. 
 
 E. Receipts from Taxes. 
 
 The financial reports of this period do not classify the receipts 
 from the several taxes, and for the general property tax and the 
 poll tax one must rest content with the assessments to get an idea 
 of their importance in the tax system. The amount received 
 from license taxes in 1861 was $43,097. No similar statistics are 
 available for 1862. In 1863 the tax on sale of merchandise pro- 
 duced $21,892.53; the tax on distilleries, $34,383.30; and the 
 taxes on other occupations, $13,932.38. - In 1864 the tax on sales 
 
 'lAws of 1862. D. 50. 
 
144 Bulletin of tJie University of Texas 
 
 of merchandise brought in $54,315.76; the liquor receipts tax, 
 $67,423.35 ; while the license tax on distillers produced $43,883.28, 
 and the taxes on other callings only $13,392.62. More than 62 
 per cent of the taxes, other than ad valorem, in 1864 were thus 
 obtained from the liquor business. The act of November, 1864, 
 was very productive, the revenue in 1865 on account of it being 
 $308,582.39. The license tax on distillers and other callings con- 
 tributed $172,279, the merchandise and income tax, $136,303. 
 
 The laws imposing the gross receipts taxes especially were not 
 strictly drawn, and this fault and the disorganization of conditions 
 generally resulted in evasion and in the imperfect assessment and 
 collection of all taxes.^ As to the tax on professions, which is tho 
 tax nearest to income taxation in the financial history of Texas, 
 Governor Throckmorton later said that its yield was small and 
 that it operated oppressively and unequally. He recommended a 
 minimum exemption with a graduated but moderate rate on 'the 
 remainder. - 
 
 In estimating the burden of taxation account must be taken of 
 the taxes levied and collected by the Confederate States' govern-* 
 ment. In the administration of the Confederate taxes there was 
 a chief collector for the state and assessors and collectors for the 
 districts into which the state was divided for purposes of tax- 
 ation. Texas was one of the two states, Florida being the other, 
 which did not permit their tax officers to serve in the same 
 capacity for the Confederate government. It was also one of 
 the two states, Mississippi being the other, which did not assume 
 their quota of the Confederate direct taxes.^ Confederate tax- 
 ation w^as much heavier and more rigorously collected than was 
 state taxation, and it amounted for the four years 1861-1864 to 
 the huge sum of $37,486,854.43. Only $26,904.64 of this amount 
 was collected in specie.* 
 
 ^Message of Governor Murrah, October 20, 1864; Executive Record 
 No. 280. 
 
 'Message, August 18, 1866. 
 
 ^Smith, The History of the Confederate Treasury, p. 25. 
 
 ^Condensed account of G. J. Durham, collector of Confederate tax for 
 Texas, in the Weekly Southern Intelligencer, August 11, 1865. 
 
A Financial History of Texas 145 
 
 F. Public Lands. 
 
 There was little demand for the public lands during the 
 period of the war, and the receipts from sales were almost en- 
 tirely in the form of treasury warrants. The act of January 1, 
 1862, made two important amendments to the law of February 
 11, 1858. One of these lowered the price of the $1.00 lands to 
 fifty-five cents, and the other directed that the proceeds should 
 accrue to the general revenue fund instead of to the common 
 school fund.^ No changes were made in the prices of the lands 
 r'.n the islands and in the railroad and other surveys. With the 
 hope of getting more revenue and in order to offset the deprecia- 
 tion of the Confederate notes and state warrants the prices of 
 all lands were changed in 1863. The fifty-five cent land was 
 raised to $2.00 and the price of other lands was advanced to 
 $5.00.2 The acts of December 15, 1863, aiid November 7, 1864, 
 authorized grants of land to any one erecting and putting into 
 successful operation by March 1, 1865, machinery for the manu- 
 facture of iron, cotton, wool, firearms, nitre, sulphur, powder, 
 salt, cotton or woolen cards, spinning jennies, paper, and oil. 
 Grants were made on the basis of 320 acres for each $1,000 
 worth of machinery.^ 
 
 G. Character of Receipts. 
 
 The act of February 9, 1861, authorized the receipt of 10 per 
 cent interest warrants in payment of land and the 2 per cent 
 sinking fund of railroad bonds held by the school fund, and 
 the act of January 11, 1862, made all treasury warrants receiv- 
 able in payment of land.* After January 11, 1862, treasury 
 warrants and Confederate notes were receivable for taxes and 
 all other public dues, except for the specie loan tax and for 
 interest and principal of the railroad loans by the school fund.^ 
 
 ^Laws of 1861-1862, p. 22. 
 
 =Laws of 1863, Extra Sess., 9th Leg., p. 11. 
 
 ^Laws of 1863, 10th Leg., p. 22. Laws of 1864, 10th Leg., Second Called 
 Sess., p. 3. 
 
 *Laws of 1861, p. 19. Laws of 1862, p. 22. 
 
 ^Laws of 1862, p. 37. The Tri-Weekly Telegraph, December 2, 1861, 
 noted that state treasury warrants passed at a discount of from 50 to 
 60 per cent, and it dissented from Governor Lubbock's recommenda- 
 
 10— H 
 
146 Bulletin of the University of Texas 
 
 The act of December 16, 1863, however, made treasury warrants, 
 bonds and interest coupons of the state receivable in payment of 
 railroad indebtedness to the school fund.^ 
 
 The great depreciation of Confederate notes led in the spring 
 of 1864 to the law w^hich provided that after the last day of 
 June and until October 31, Confederate notes of the old issue 
 of the denomination of $100 should not be receivable for public 
 dues except at a discount of one-third and that no Confederate 
 notes bearing interest should be received after the last day of 
 June.^ The purpose of this legislation was to compel the fund- 
 ing of the old issue into Confederate bonds and to sustain the 
 value of the new issue. 
 
 The specie needed to meet the interest and sinking fund re- 
 quirements of the $1,000,000 loan issue of 1861 w-as provided for 
 by a special specie tax.^ This special tax began to fail in the 
 early part of 1863, and for the year ending August 31, 1864, 
 produced only $1,352.77 in specie. By the act of March 3, 1863, 
 it was provided that the tax might be paid in other funds, and 
 the Military Board was authorized to obtain the specie required 
 for interest.* The history of this special tax well illustrates the 
 disappearance of specie from general circulation. Receipts in 
 1862 on account of it were $36,900.06, all of which was in specie ; 
 in 1863, $123,608.09, of which $57,549.18 was in specie; in 1864 
 $152,369.94, of which $1,352.77 was in specie. In 1865 the specie 
 receipts were not derived from taxation, but were provided by 
 the Military Board. 
 
 By the act of January 14, 1862, the disbursement of Confeder- 
 ate notes was restricted, except for about $30,000., to the payment 
 
 ^Laws of 1863, p. 37. Act of May 28, 1864; Laws of 1864, Called 
 Sess., p. 9. Act of November 15, 1864; Laws of 1864, Second Called Sess., 
 p. 14. 
 
 =^Act of May 27, 1864; Laws of 1864, Called Sess., p. 6. 
 
 ^Laws of 1861, p. 39. 
 
 *Laws of 1863, Called Sess., p. 8. . 
 
 tion that Confederate notes should be made receivable for public dues. 
 This paper opposed also the funding of state warrants and urged that 
 the best way of making them approximate par was to make them re- 
 ceivable for taxes and other public dues, and advised that to this end 
 taxation should be increased and expenditures decreased. See issues 
 .of December 16, 1861, and October 26, 1864. 
 
A Financial History of Texas 147 
 
 of military appropriations/ Other appropriations were payable 
 in specie or in treasury warrants. Inasmuch, however, as the 
 revenue was collected principally in notes and to a much larger 
 amount than military expenditures could absorb, the act of 
 March 6, 1863, provided that all appropriations should be pay- 
 able in notes.- 
 
 In the spring of 1864 the Confederate currency was rated in 
 specie at from 20 to 30 cents on the dollar.^ The state recognized 
 by the act of May 27, 1864, a depreciation of SSy^ per cent, and by 
 the act of May 28, 1864, made appropriations for the support of 
 ^the civil departments of the government and for the indigent 
 families of Texas soldiers payable in treasury warrants. These 
 warrants, however, enjoyed no better credit than the notes had 
 had, and were quoted in the fall of 1864 at 8 and 10 cents on the 
 dollar.* The constitutionality of the issue of treasury warrants 
 which would perform some of the functions of money was ques- 
 tioned, but a majority of the senate judiciary committee held 
 that they were not money and were not intended to circulate as 
 money.'^ This was also' the opinion of the Supreme Court of the 
 United States in 1899 in the case involving the validity of the 
 payments of warrants to the school fund by the railroad com- 
 panies.^ 
 
 The bulk of receipts during the war period was in Confederate 
 notes and treasury warrants. During the five years 1861-1865, 
 $948,711.34 of treasury warrants was received, distributed as 
 follows: 
 
 1861 $ 12,278.21 
 
 1862 27,654.15 
 
 1863 333,946.77 
 
 1864 393,544.57 
 
 1865 181,287.64 
 
 ^Laws of 1862, p. 52. 
 
 ^Laws of 1863, Called Sess., p. 23. Message of Governor Lubbock, 
 February 5, 1863. 
 
 "Message of Governor Murrah, May 11, 1864; Executive Record 
 No: 280. 
 
 ^Proclamation of Governor Murrah, September 13, 1864; Executive 
 Record No. 280. 
 
 '^The Tri-Weekly Telegraph, December 9, 1864. 
 
 «H. & T. C. R. R. Co. v. Texas, 177 U. S., 83 (1899). 
 
148 Bulletin of tlie University of Texas 
 
 No distinction was made in the financial reports betwiien Con- 
 federate notes and specie until the year beginning September 1, 
 1862, which would indicate that by that date the disproportion 
 in the amounts of notes had, begun to complicate the operations 
 of the treasury. During the three years 1863-1865, specie re- 
 ceipts amounted to only $163,647.37, the most of which was 
 credited to the special loan account and was secured for this 
 account by the Military Board. The specie receipts were dis- 
 tributed as follows: 
 
 1863 $72,149.97 
 
 1864 2,323.42 
 
 1865 89,173.98 
 
 Receipts of Confederate notes were $957,137.96 in 1863 ; $3,- 
 652,813.91 in 1864, and $1,559,757.88 in 1865— a total of $6,- 
 169,709.75. In the Fox Table^ of currency values, the average 
 value of $1 in gold was $5.88 in Confederate notes in 1863; 
 $19.89 in 1864. On the basis of this scale of depreciation the 
 receipts in Confederate notes in 1863 were equivalent to $162,- 
 778 in specie ; the receipts in 1864 to $183,650 in specie. 
 
 Besides the excessive amount of Confederate notes in circula- 
 tion which receipts of the state and the Confederate government 
 would indicate, there were state treasury warrants, city and 
 county warrants, and the notes of individuals and corporations. 
 The effect of this inflation of the circulating media, together 
 with the scarcity of commodities, Avas an enormous rise in prices. 
 As early as January, 1862, the currency became redundant, and 
 before the end of the year public meetings were called in various 
 parts of the state to consider the rise in prices. The depreciation 
 of the currency was popularly ascribed to the perversity of ' ' mer- 
 chants ' ' and ' ' capitalists, ' ' and tariffs of prices and other coercive 
 measures were suggested as remedies, but none was enacted.^ 
 
 ^For Fox Table, see Appendix, table 18. 
 
 ^The Tri-Weekly Telegraph, August 4, December 10, 1862; January 
 9, January 23, May 25, 1863. 
 
Chapter 3. 
 public debt. 
 
 From the beginning of statehood to 1860 Texas had no public 
 debt other than that inherited from the Republic of Texas. The 
 inadequacy of the revenue system and the increase in expenditures 
 due to frontier defence led to a deficit in 1860, one consequence 
 of which was a practical suspension of payment of what remained 
 of the debt of the republic. There was paid on this debt, how- 
 ever, $8,520 in 1861, $1,783.80 in 1862, and $20 in 1863. Another 
 result of the deficit was the appearance of a floating debt. The 
 act of February 14, 1860, authorized the issue of 10 per cent 
 interest warrants, when there was not money in the treasury; 
 and the act of March 20, 1861, authorized the issue of $300,000, 
 10 year, 8 per cent bonds for the purpose of funding the war- 
 rants issued for the protection of the frontier from Indian and 
 Mexican depredations.^ This funding act was repealed January 
 11, 1862, after $16,000 of warrants had been funded. 
 
 The important loan act during the Avar period was that of April 
 8, 1861, which authorized a loan of $1,000,000, to bear 8 per cent 
 interest and to run 16 years.- A specific tax of 4 cents on the 
 $100 to pay the interest and maintain a sinking fund was also 
 authorized by the act, but it was not until January 11, 1862, that 
 it was provided that this tax should be a specie tax.^ Under the 
 provisions of this act $917,000 of bonds were issued, $294,000 of 
 which were used in funding state warrants, $28,000 in paying 
 debts contracted under the authority of the Constitutional Con- 
 vention of 1861, and $595,000 were turned over to the Military 
 Board. Seventeen thousand dollars of the bonds given to the 
 Military Board were returned and $1,000 mutilated, leaving a net 
 
 ^Laws of 1860, p. 115. Laws of 1861, p. 24. Act of January 11, 1862; 
 Laws of 1862, p. 44. 
 ^Laws of 1861, p. 39. 
 =^Laws of 1862, p. 37. 
 
150 Bulletin of tlie University of Texas 
 
 amount outstanding of $899,000. The net amount for which the 
 Military Board was responsible was $578,000.^ 
 
 The act of December 16, 1863, authorized the issue of $2,000,- 
 000, 7 per cent bonds, payable 6 to 12 years after the close of the 
 war, for the purchase of cotton.^ Certificates for these bonds to 
 the amount of $195,190.29 were issued, but only 45 bonds were 
 issued and delivered in redeeming certificates. This debt with in- 
 terest amounted at the close of the war to $211,130.83.^ 
 
 The only other bonds authorized and issued were 6 per cent 
 bonds to fund the treasury warrants received by the school fund 
 for interest and principal payments by the railroads.* OP these 
 there was issued a total of $320,367.13, all of which was held by 
 the school fund.^ 
 
 The 8 and 7 per cent bonds were disposed of to citizens of the 
 state for cotton, currency, and military equipment and supplies. 
 The cotton purchased was transported to Mexico and either ex- 
 changed for military supplies or sold and the proceeds used to 
 purchase the supplies. After the organization of the Military 
 Board it issued a stirring circular address to the people of the 
 state calling upon them to take the bonds at par for their cotton. 
 
 ^The following is a statement of the disposition of the bonds held by 
 the Military Board up to January 1, 1863, the only period for which an 
 itemized statement is obtainable: 
 
 299 were sold for Confederate money. 
 
 3 were sold for Nichols' guns. 
 
 3 were sold for sulphur and saltpeter. 
 
 20 were paid for the steamer Bayou City. 
 
 21 were paid for alterations and repairs on the steamer and for re- 
 moving obstructions from Buffalo Bayou and Galveston Bay. 
 
 114 were used in the redemption of cotton certificates. 
 
 Total, 460. 
 
 Par value $460,000.00 
 
 Premiums 16,422.60 
 
 Total value $476,422.60 
 
 MSS; File Case No. 54, State Department. 
 
 -Laws of 1863, pp. 9, 29. 
 
 ^Report of Pease and Palm, p. 8. 
 
 *Act of December 16, 1863; Laws of 1863, p. 37. Act of November 
 15, 1864; Laws of 1864, Second Called Sess., p. 14. 
 
 ''Report of the Comptroller, 1863-1865, p. 7. 
 
A Financial History of Texas 151 
 
 The cotton growing part of the state was divided into di«tricts 
 and agents were appointed in each to take subscription to the 
 loan in either cotton or money. Upon the purchase of any cotton^ 
 or the sale of bonds for money, the agent took a bill of sale and 
 delivery and executed a receipt or certificate to the seller,- which 
 certificate entitled the seller to bonds of even date/ 
 
 The interest on the 7 and 8 per cent bonds was payable in 
 specie. Specie interest payments were $6,009.61 in 1862. $46,- 
 586.11 in 1863, $40,502.90 in 1864, $72,696.61 in 1865. These 
 amounts were paid, though apparently somewhat irregularly, 
 but despite them the value of the bonds fell in 1864 to less than 
 25 cents on the dollar.- The provision in the 8 per cent loan act 
 for a sinking fund w^as not observed in respect to a specie fnnd. 
 
 Treasury warrants outstanding at the close of the war amounted 
 to $2,068,997.90, about $180,000 of which were 10 per cent inter- 
 est warrants. In 1863 and 1864 these had a value in specie of 8 
 and 10 cents on the dollar.^ There were at all times in 1863, 1864, 
 and 1865 enough Confederate notes in the treasury to redeem all 
 the outstanding warrants, but the holders held them back with the- 
 expectation of ultimately getting something better in pajonent.* 
 
 The state was indebted to special trust funds to the amoumit of 
 $1,455,913.86 on account of United States bonds and specie usedl 
 and for evidences of state indebtedness received in the collection 
 of revenue. The school fund was due $1,137,406.05, the univer- 
 sity fund, $283,514.22, and other special funds, $34,892.49/' 
 
 The amount due soldiers and for supplies was estimated at 
 $3,150,000 ; the unpaid debt of the republic at $110,613.23 ; mift- 
 
 'MSS. Record of Military Board, No. 101. On November 26, 1862, the 
 board opened bids for $100,000 of the 8 per cent bonds. There were bids 
 for $136,000 or 136 bonds. For 23 bonds a premium of 12 per cent was. 
 offered; for 25, 10 per cent; and for 6, 12^/4 per cent. The bids for 
 these 54 bonds were in Confederate money and amounted to $59,995> 
 On the basis of the Fox Table of $1 in gold for $3,75 Confederate notes,, 
 the specie value of the bids was equivalent to $15,998.66. 
 
 -Message of Governor Murrah, October 20, 1864; Executive Record,, 
 No. 280. 
 
 ^Message of Governor Murrah, October 20, 1864. 
 
 "MSS. Report of Pease and Palm; Executive Record No. 281, p. 118. 
 
 ^MSS. Report of Pease and Palm; Executive Record No. 281, p. 116. 
 
152 Bulletin of the University of Texas 
 
 cellaneous debt at $199,176.^ The total debt was $8,110,832.58. 
 Deducting the debt of the republic, there remains $8,000,219.35 
 which represents the debt incurred from 1860 to the close of the 
 war. 
 
 ^Ibid., pp. 118-119. 
 
Chapter 4. 
 
 SCHOOL AND UNIVERSITY FUNDS. 
 
 The amount due the school fund at the close of the, war was 
 $1,137,406.65. $766,700 of this was for United States bonds and 
 interest coupons transferred to the Military Board in Au^st 
 and November of 1862 ; $331,604.84 for state treasury warrants 
 received ; $26,927 for specie used, and $12,173.93 for interest on 
 state bonds. 
 
 Receipts of the school fund from taxes, land sales, and interest 
 on securities amounted during the four years 1862-1865 to $643,- 
 525.81, while expenditures, exclusive of investments, amounted 
 to only $114,544.26. In 1861 loans were made to railroad com- 
 panies under the act of 1856 to the amount of $190,500, and in 
 1862 to the amount of $150,000. These loans brought the total 
 loaned to $1,816,500. 
 
 The railroad companies made no interest payments in specie 
 during this period, but in accordance with the acts of December 
 16, 1863, and November 15, 1864, they paid in state treasury 
 warrants a total of $320,367.13 for interest and principal of 
 bonds. The state funded the warrants in 6 per cent bonds, and 
 the latter remained of doubtful validity until 1883 when they 
 were paid. The legality of the payments of the companies in 
 warrants was subsequently contested on the ground (1) that the 
 warrants were issued for the purpose of being circulated as 
 money and so were in violation of the state constitution; (2) 
 that they were bills of credit emitted by the state and were there- 
 fore in violation of the Constitution of the United States; and 
 (3) that the acts under which they were issued and paid were in 
 aid of the Rebellion and were therefore void. The decision of 
 the Supreme Court of the United States was against the state 
 on all three points.^ 
 
 In 1876 $297,758.22, out of a total of $357,175 in United 
 States bonds and coupons originally transferred, was recovered 
 by the state and returned to the school fund. 
 
 'H. & T. C. R. R. Co. V. Texas, 177 U. S., 66-103 (1899). 
 
154 Bulletin of tlie University of Texas 
 
 The indebtedness to the university fund at the close of the war 
 was $283,514.22. This was for United States bonds to the amount 
 of $100,000 and specie from interest and land sales transferred 
 to state revenue account in 1860-1862, and for treasury warrants 
 and Confederate notes received in payment of land sales. Re- 
 ceipts of this fund from land sales during the four years 1862- 
 1865 amounted to $134,183.39. There were no disbursements 
 other than transfers. In 1866 5 per cent state bonds to the 
 amount of $134,472.26 were placed to the credit of the fund 
 to replace the United States bonds and interest used, the balance 
 of the debt not beino^ recognized. The bonds thus credited re- 
 mained of doubtful validity until 1883, when they were paid 
 with accumulated interest; $10,300.41 of this old debt of war 
 times was also validated and paid in 1883, but without interest. 
 
 The effect of the war upon the school and university funds 
 was to strip them of their sources of revenue, and as a result of 
 conditions brought about by the war, education in Texas was set 
 back bv more than two decades. 
 
Chapter 5. 
 condition of the treasury at the close of the war. 
 
 On June 8, 1865, the total cash balances on hand amounted to 
 $3,368,510.07. This was made up of $2,908,038.34 in Confederate 
 notes, $445,074.37 in state paper, and $15,397.36 in specie. Only 
 $362,548.11 of the Confederate notes were actually in the treas- 
 ury, the remainder, $2,535,490.23, Avere old issues, and had been 
 -turned over to the Confederate States ' depository to be exchanged 
 for new issues. In addition to the above balance there was in 
 the hands of the Military Board $129,975 in United States bonds 
 and interest coupons. This latter and the specie were the only 
 part of the balance that was of value. 
 
 The finances of the war period which secession inaugurated 
 ends June 8, 1865. At this date the pen which traced the ledgers 
 of the fiscal department of the state government stops off short, 
 and until October 13, 1865, when the work of accounting is again 
 resumed in a new handwriting, a gap of blank pages follows — 
 mute witnesses of the end of a disastrous struggle and of the 
 temporary dissolution of state government. Social disorder at- 
 tended the break-up of the Confederacy and on the night of 
 June 11, 1865, the state treasury was broken into and looted. 
 There was little of value in it that was negotiable, so that the 
 loss, except for something less than $5,000 in specie, was not 
 serious. 
 
PART V. 
 
 THE RECONSTRUCTION, 1865-1874. 
 
 Chapter 1. 
 
 introduction. 
 
 Although General Lee surrendered early in April, 1865, the 
 break-up of the Confederacy did not occur in Texas until the 
 end of May. Disorganization of all authority followed, and in 
 the general confusion Confederate and state property was ap- 
 propriated by disbanded soldiers and even the state treasury at 
 Austin was looted. The loss of property, however, was small 
 and the disorder little when viewed against the background of 
 bitter disappointment and uncertainty of the future which the 
 people of the state felt on account of the downfall of the 
 Confederacy. 
 
 The arrival at Galveston on June 19, 1865, of General Gordon 
 Granger initiated the first provisional government — a mongrel 
 of civil and militarj^ rule, but predominantly military. A. J. 
 Hamilton, who had been appointed on June 17 provisional gov- 
 ernor of Texas by President Johnson arrived at Galveston on 
 July 21, and proceeded soon to Austin to take office. After 
 some delay a registration of those citizens of the state who would 
 take the oath of amnesty was made and an election of delegates 
 to a constitutional convention was ordered. The convention met 
 in Austin on February 7, 1866, and was in session eight weeks. 
 In the election that followed the conservative ticket, or that en- 
 dorsing President Johnson's policy for the restoration of the 
 state governments, headed by J. W. Throckmorton, was success- 
 ful, and the amendments to the constitution were adopted. The 
 newly elected government took possession on August 13, 1866, 
 and on August 20 President Johnson declared by proclamation 
 that the insurrection in Texas was at an end. The restoration 
 of civil government to a normal state and the amelioration of 
 general conditions were terminated, however, by the reversal by 
 Congress of President Johnson's pplicy. Under the provisions 
 of the so-called Reconstruction Acts, passed in March and July 
 of 1867, Texas became a part of the Fifth Military District, and 
 
A Financial History of Texas 157 
 
 went again under a provisional form of government wliieh 
 lasted from August 8, 1867, to January, 1870. Again, also, 
 the process of emergence from the provisional form of govern- 
 ment was gone through with, and another constitution was adopt- 
 ed and another election of state officials was held. E. J. Davis 
 was the new governor elected, and his administration, which is 
 popularly known as the period of radical rule, lasted three full 
 years. It was undermined by the election of a democratic 
 legislature — the famous Thirteenth — in November, 1872, and fell 
 and was swept away by the election in December, 1873, and the 
 inauguration on January 15, 1874, of Richard Coke as governor, 
 r During the years of the Civil War and the Reconstruction, 
 and especially during the decade 1860-1870, the absolute growth 
 in population and material wealth was the smallest of any 
 decade in the history of the state. Population increased from 
 604,215 in 1860 to 818,579 in 1870. This was a percentage in- 
 crease of 35.5 as compared with 184.2 during the decade 1850- 
 1860. The United States Census of 1860 placed the number of 
 slaves at 182,566 or 30.2 per cent of the total population. This 
 vast mass of propertyless, ignorant blacks was added to the cit- 
 izenship of the state as a result of the war, and by 1870 the negro 
 element of the population numbered 253,475, or 30.9 per cent of 
 the total population. Nothing w^as done up to 1870 to improve the 
 economic or intellectual status of this class, and nothing could 
 be done for either whites or negroes because of the misgovem- 
 ment at Washington and the prostrate financial condition of the 
 state. 
 
 The amount of illiteracy and the conditions as to education 
 pointed to the greatest task of the state, — namely, the education 
 of its citizens. Thirty-three per cent of the population ten years 
 of age and over could not read, and there were only 548 schools 
 in 1870, with 23,076 pupils, 706 teachers, and a total income of 
 H14,800.i 
 
 The population of the state was almost wholly employed in 
 agriculture, and this added to the difficulties of the problem of 
 education. Out of the total of the population ten years and over 
 engaged in all occupations 166,753, or 70 per cent, were engaged 
 
 ^Ninth Census of the United States. 1870. Vol. Population, p. 450. 
 
158 Bulletin of the University of Texas 
 
 in agriculture.^ The population of the state was thinly spread 
 . out, the average density being 3.1 persons to the square mile. 
 
 Agriculture showed a marked decline during the decade 1860- 
 1870. Evidences of this decline were the decrease in the value 
 of the farms from $88,101,320 to $60,149,950, or 45.4 per cent, 
 the decrease in the value of farming implements from $6,259,452 
 to $3,396,793, or 56.6 per cent, and a change in the acreage of 
 land in farms from 25,343,028 in 1860 to 18,396,523 in 1870, 
 or 27.4 per cent. The per cent which farm acreage was of the 
 total area of the state declined from 15.1 in 1860 to 11.0 in 1870. 
 The per cent of land in farms which was improved increased, 
 however, from 10.4 to 16.1. The production of cotton was 
 431,463 bales in 1859 and 350,628 in 1869. The price of cotton 
 fluctuated violently during the period. In 1865 the price was 
 43.2 cents per pound and in 1870 it was 17 cents. - 
 
 Manufacturing, railroad construction, and banking increased 
 during the period. The railroad mileage grew from 307 in 
 1860 to 711 in 1870, or 131 per cent. Manufacturing establi.sh- 
 ments numbered 983 in 1860 with a value of products of $6,577,- 
 202, and in 1870 they numbered 2,399 with products valued at 
 $11,517,302.^ As to banking, there was only one chartered bank 
 in Texas in 1860. It was located in Galveston and had a capital 
 of about $100,000.* Four national banks were established 
 in 1866, and this number remained unchanged until 1870. Two 
 of the national banks were located in Galveston, one was in 
 Houston and one was in San Antonio. Their capital and sur- 
 plus amounted to $575,000 ; their deposits to $617,000, and their 
 loans to $532,000.^ The Constitution of 1869 abandoned the 
 policy of prohibiting state banks which had been followed 
 
 ^Ninth Census of the United States. 1870. Vol. Industry and Wealth, 
 p. 450. 
 
 =The average prices in cents per pound of upland cotton were in other 
 years as follows: 31.6 in 1866, 24.9 in 1867, 29 in 1868, and 24 in 1869. 
 
 'The census included under the term manufacturing establishment 
 purely local or neighborhood shops. 
 
 ^Eighth Census of the United States. 1860. Vol. Mortality and 
 Miscellaneous Statistics, p. 29. 
 
 ''Report of the Comptroller of the Currency, 1888, pt. 1, p. 318. 
 
A Fhmncial History of Texas ]59 
 
 since 1846, and a number of such banks were organized.^ For 
 the state as a whole the supply of credit facilities during this 
 period was in the hands of merchants and private lenders, and 
 this condition of affairs continued until the middle of the eighties 
 or until national banks came to be more widely established. 
 Although the Reconstruction as a political condition ended at 
 the close of 1873, and though the financial policy came under the 
 control of new hands at the beginning of that year, the finances, 
 industry and commerce of the state were slow in recovering from 
 the effects of the war and radical rule, and it was 1880 before 
 a normal condition was again reached. The period treated in 
 this study, however, extends from the close of the war through 
 August 31, 1874. 
 
 ^The state banks were required by law to report annually to the 
 secretary of state, but the law was not obeyed. The taxation of the 
 capital and deposits of such banks under the internal revenue laws of 
 the United States made it necessary for the banks to report to the 
 commissioner of internal revenue, but the number of reporting institu- 
 tions was not given by the commissioner until 1876. The number of 
 state banks and savings banks reported in 1876 was 101, with a com- 
 bined capital of $3,302,388, and deposits of $4,713,759; Report of the 
 Secretary of the Treasury (IT. S.), 1876, p. 186. 
 
Chapter 2. 
 expenditures. 
 
 The character and amount of expenditures are exhibited in the 
 appendix. The table there presented shows only the amount 
 of warrants drawn during each fiscal year; and, owing to a 
 continued treasury deficit, in only one year, 1868, is the amount 
 of cash paid out of the treasury the same as the amount of^ 
 warrants drawn. However, as the w^arrants drawn were de- 
 mands upon the treasury which were eventually met, the table 
 represents the policy pursued with respect to expenditures. 
 
 The cost of administering the state government was fluctuat- 
 ing, but on the whole showed an upward tendency until 1870, 
 and after that year took a violent rise. The multiplication of 
 state employees and especially the increase in salaries and con- 
 tingent expenses worked to swell the cost of running the several 
 departments. The Constitution of 1866 extended the term of 
 office of the governor to four years and provided for a salary 
 of $4,000, which was an increase of $1,000 over the former figure. 
 This was further increased in 1870 to $5,000. The- secretary of 
 state, the treasurer, and the comptroller each received annual 
 salaries of $1,800, and the commissioner of the general land 
 office $2,000, until 1866, when all were increased to $2,500, and 
 in 1870 they were further increased to $3,000. Chief clerks after 
 1870 received $1,400 to $1,600. By the Constitution of 1866 the 
 number of judges of the supreme court was enlarged from three 
 to five, and the minimum salary raised from $3,000 to $4,500. 
 The minimum salary of district judges also was raised from 
 $2,250 to $3,500. These substantial increases in salaries were ill- 
 timed and were beyond the ability of the taxpaying public. 
 The claim for an increase on account of high prices was stronger 
 during the war, but neither the general price level nor the op- 
 portunities in private life at this time warranted the increases 
 provided. 
 
 Occasions of large annual expenditures were the sessions of 
 the legislature, and to this cost of law-making may be added that 
 on account of the constitutional conventions. Legislative ses- 
 
A Financial History of Texas 161 
 
 sions were frequent and long and were taken up largely with 
 private legislation which could have been avoided to a great 
 extent by a general corporation law\^ The legislature, however, 
 was not extravagant in the matter of outlays on itself either 
 to the same degree or in the same fashion that characterized other 
 southern legislatures of this period. Expensive chamber furniture 
 and other furnishings, and champagne and cigars to enable com- 
 mittees to endure better their arduous labor do not shame Texas 
 legislative annals as they do those of states which, like South 
 Carolina, were ridden by carpet-baggers. There were, though, 
 improper expenditures which were cloaked under the blanket 
 fippropriation for contingent expenses; pet partisan newspapers 
 were generously subscribed for; and the mileage and per diem, 
 provided were unprecedentedly liberal.^ 
 
 While the state departments and the legislature explain a part 
 of the growth of expenditures after 1870, the bulk of the growth 
 is ascribable to other objects. The cost of the judiciary more 
 than doubled, but the organization of new courts and the activity 
 of the state's prosecuting agents account largely for this. The 
 increase in fee payments to sheriffs and prosecuting attorneys 
 w^as marked, but the fee system was no more abused at this time 
 than under later administrations. After 1871 disbursements 
 from the available school fund took a leading place among the 
 state's expenditures. The use of the assets of the school fund 
 during the war and the failure, due chiefly to inability, to make 
 restoration or reparation to that fund resulted in a suspension 
 of its functions until their revival by the act of 1871. There 
 was expended out of this fund during 1872, 1873, and 1874, 
 $1,489,675, as against $37,885 from 1865 through 1871. Begin- 
 ning in 1871 the protection of the frontier settlements against 
 marauding Indians and jMexicans called for large annual outlays. 
 The need of protection became manifest immediately after the 
 war, and failure of the Federal government to extend it forced 
 
 'Message of Governor Davis, January 10, 1871. The San Antonio 
 Daily Herald, April 20, May 8, and June 11, 1873. Proceedings of 
 Taxpayers' Convention, Austin, 1871, p. 21. 
 
 'Reconstruction Journal, 1868, p. 47. The San Antonio Daily Herald,. 
 June 11, December 22 and 29, 1868. Flake's Daily Bulletin, August 27^ 
 1868. Message of Governor Davis, January 14, 1873. 
 
 11— H 
 
162 Bulletin of tlie University of Texas 
 
 the state to perform the duty. Despite expenditures during the 
 four years, 1871-1874, of $524,963, the protection extended was 
 held to be inadequate.^ The expenditures of this account were 
 subsequently refunded to the state by the national government, 
 but not during the period of the Reconstruction. In 1888, 
 $922,541.52 was refunded; in 1891, $148,615.97. These amounts 
 were refunded under the act of Congress of June 27, 1882, and 
 reimbursed the state for all expenditures of this character be- 
 tween 1866 and 1882. Expenditures for the asylums, especially 
 for the insane, increased during this period, but no exception 
 can be taken to the better provision for the unfortunate wards 
 of the state. There appears to have been some jobbery, how- 
 ever, in connection with the purchase of supplies for the asylums 
 and the repairs of public buildings.- Except in 1869, when a 
 large amount was expended for support, the penitentiary was 
 not an expensive institution. The expediency of leasing it 
 and the labor of the convicts was suggested in 1868 and was 
 carried out in 1871. Thereafter the only expense of the state 
 in connection with it was for the transportation of prisoners. 
 
 Perhaps the most obnoxious of the measures of the E. J. 
 Davis administration was that providing for a system of state 
 police. Warrants drawn on account of the state police and the 
 state militia, — almost wholly, however, for the police, — amounted 
 during the period 1871-1874 to $688,091, or 15 per cent of the 
 total of warrants drawn on the general revenue fund. The per- 
 sonnel of the police body, their abuse of authority, and the fact 
 that they performed functions which belonged to the local gov- 
 ernments, led to the abolition of the system by the Democratic 
 legislature in 1873.^ 
 
 Texas narrowly escaped during this period the subsidizing of 
 railroads with bonds, — a policy that characterized a number of 
 southern Reconstruction governments and which resulted in 
 grievous financial burdens to the states. The constitution of 1866 
 empowered the legislature to guarantee the bonds of railroad 
 
 ^The San Antonio Daily Herald, September 6, 1871. Senate Journal, 
 12th Leg., Adj. Sess., p. 206. 
 
 -Report of Committee on Asylums; House Journal, 14th Leg., p. 14. 
 Report of Committee on Public Buildings; ibid., p. 161. 
 
 'Ramsdell, Reconstruction in Texas, pp. 302, 312. 
 
• A Fhmncial History of Texas 163 
 
 companies to any amount not exceeding the sum of $15,000 per 
 mile. No resort was made to this provision because the Constitu- 
 tion of 1866 was short lived, and the provision was believed to be 
 in conflict with section 33 of the constitution, which prohibited 
 the legislature from contracting a debt to exceed $100,000, ex- 
 cept in case of war, to repel invasion, or suppress insurrection.^ 
 The Constitution of 1869 shut out land grants to any but actual 
 settlers, but permitted bond subsidies to internal improvements. 
 By the act of August 5, 1870, incorporating the International 
 Railroad Company, a subsidy in 8 per cent, thirty-year bonds 
 of $10,000 a mile, was granted, and an ad valorem tax upon all 
 taxable property sufficient to pay the interest and contribute to 
 a 2 per cent sinking fund was authorized. The state pledged 
 itself in this act that its bond subsidies to works of internal 
 improvement should not exceed $12,000,000.- An act carrying 
 a subsidy of $6,000,000 in 8 per cent, thirty-year bonds to a 
 road that should cross the state from east to west and reach the 
 Pacific Ocean was opposed by the governor, and it was only 
 when the bill had passed the legislature after two vetoes that he 
 withdrew his opposition.^ A bill that proposed to subsidize the 
 East Line and Red River Railroad Company with 7 per cent 
 bonds to the amount of $30,000 a mile was effectively vetoed.* 
 It was provided in the act chartering and subsidizing the Pacific 
 road that when the state should have power under the consti- 
 tution to grant lands in aid of internal improvements, a land 
 grant should be substituted for the bond subsidy, and this sub- 
 stitution was made in 1873, following the adoption of an amend- 
 ment to the constitution authorizing land donations. Bonds of 
 the subsidy to the International road were signed by the gov- 
 ernor, but when presented to the comptroller to be countersigned 
 and registered,, that officer refused. The company thereupon 
 brought suit to compel the signature of the comptroller, but the 
 supreme court of the state reversed the judgment of the district 
 court awarding a peremptory mandamus and dismissed the ease 
 
 'Report of Committee on Judiciary; House Journal, 11th Leg., p. 733. 
 -Act of August 5, 1870, section 10; Special Laws of 1870, Called 
 Sess., p. 109. 
 
 ==House Journal, 12th Leg., p. 1688. 
 *House Journal, 12th Leg., p. 881. 
 
164 Bulletin of tJie TJniversity of Texas 
 
 on the ground that the judicial department of the government 
 had no authority to interfere with the executive department in 
 the performance of duties not ministerial in character.^ Un- 
 blushing bribery Avas charged in connection with the passage of 
 this International subsidy, and though the jury of a district 
 court found the allegation of fraud to be untrue, the charges 
 were so rife and upon such high authority as to give them 
 credence.^ It was a cause of wonder at the time that members 
 of the Twelfth Legislature whose income was their per diem 
 should at the end of the session be able to buy fine horses and 
 furniture and to travel north.^ 
 
 Except for the increase in salaries under the Throckmorton 
 government and the wastefulness of the constitutional conven- 
 tion of 1868, the expenditures to 1870 were not excessive. This 
 is not true, however, for the period of the Reconstruction there- 
 after. Expenditures then were beyond the ability of the state, 
 and the best evidence thereof is that, despite heavy taxation, 
 bonds were sold to pay current expenses and a large floating 
 debt was accumulated. The Twelfth Legislature exhibited such 
 a degree of profligacy and open disregard of the state's eco- 
 nomic condition that it is notorious. Matters might have been 
 worse, though, and that they were not so was due mainly to 
 the integrity of the governor in the administration of the public 
 finances.* 
 
 'Bledsoe v. the International Railroad Company, 40 Tex., 537 (1874). 
 
 -Bledsoe v. the International Railroad Company, 40 Tex., 537. Mes- 
 sage of Governor Coke, January 12, 1875. The San Antonio Daily 
 Herald, October 4 and 20, and November 24, 1870. The Houston Daily 
 Telegraph, February 23 and October 19, 1871. 
 
 ^Clippings from the State Gazette and Flake's Bulletin in the San 
 Antonio Daily Herald, September 27 and October 20, 1870. 
 
 *Ramsdell, Reconstruction in Texas, p. 318. 
 
Chapter 3. 
 
 RECEIPTS. 
 
 A. Tlie Property Tax. 
 
 The chief source of receipts during this period was taxation, 
 and the main tax was, as in previous periods, the ad valorem 
 tax upon real and personal property. The work of assessment 
 and collection was performed until 1870 by an assessor and 
 collector, but thereafter assessment was by the justices of the 
 peace, and collection by the sheriff of each county. Under the 
 provisional governments assessment and collection were subject 
 to special difficulties. The war had disorganized the machinery 
 of administration, and in many of the counties it was impos- 
 sible, owing to the opposition of the people to military author- 
 ity, to secure an assessor and collector. In 1868, for example, 
 thirty-nine counties out of one hundred and twenty-five had 
 vacancies in the office. It was not infrequent, too, that those 
 who qualified were inexperienced, inefficient, or corrupt.^ De- 
 spite these difficulties, however, receipts from taxes before 1870 
 were, proportionately to the rate and the total assessments, 
 more satisfactory than after 1870. This better showing was 
 due, in the first place, to the more rigid collection under the 
 military authorities, and, in the second place, to less burden- 
 some rates.^ A number of circumstances contributed to the 
 disarrangement of the tax system during this period. With 
 the emancipation of the slaves, who were assessed for taxation 
 in 1865 at $137,191,886, taxable property to that amount was 
 wiped out. Slaves in 1865 constituted 38 per cent of the taxable 
 property. The escape and undervaluation of real estate was 
 favored by the provision of the laws which permitted its ren- 
 dition either in the county of its situs or in the county of resi- 
 dence of the owner or agent. Furthermore, because of the 
 
 ^Report of the Comptroller, 1868-9, p. 4. In 1870 defaulting and 
 delinquent officers were due the state $350,000; ibid., 1870, p. 20. 
 
 =^The United States Census of 1870 gave as the assessed value of 
 property $149,732,929 and as the true value $159,052,542. The per cent 
 of assessed to the true value was 87, which is a high proportion. Vol. 
 Industry and Wealth, p. 10. 
 
166 Bulletin of tlie University of Texas 
 
 seeming impossibility for assessors and collectors to comply 
 strictly with all the details of the laws regarding sale for taxes, 
 the courts would not sustain titles to property purchased at 
 tax sales. For this reason taxpayers no longer feared forced 
 sales.^ Further, the tax year ended December 1, which re- 
 sulted in the collection of taxes during the summer or fall, or 
 the seasons of greatest scarcity of money for the farmers.^ 
 Back taxes piled up as a consequence of these circumstances, 
 and strenuous efforts were made to collect them. The act of 
 November 12, 1866, required the compilation of a list of all 
 lands on which taxes were due from 1849 to 1866, and provided 
 for their sale. In 1865 and 1866 791,000 acres, and in 1867 and 
 
 1868 the unprecedented number of 7,800,000 acres, were sold 
 to the state for unpaid taxes.^ This act was later nullified, and 
 the attempt was again made in 1870 to collect back taxes, but 
 failed because of the governor's veto of the appropriation to 
 carry it out.* Subsequent attempts were of the nature of com- 
 mutation for all unpaid amounts by payment of three or five 
 times the amount of the current taxes. The Constitution of 
 
 1869 was the first Texas constitution to provide that the home- 
 stead should not be sold for taxes except for taxes due thereon. ** 
 
 The feature of taxation under radical rule which more than 
 any other explains the ill-working of the tax system is that 
 state and local taxes together constituted too great a burden. 
 In 1865 the state ad valorem rate was 12^2 cents on the $100 
 valuation ; in 1866 and 1867, 20 cents ; in 1868, 1869, and 1870, 
 15 cents; in 1871, 1872, 1873, and 1874, 50 cents. In 1868 there 
 was, in addition to the regular tax of 15 cents, a special tax 
 of 20 cents to pay the expenses of the constitutional convention. 
 In 1868 the state and county ad valorem taxes amounted in 
 Bexar County, for example, to $1.10 on the $100 valuation, and 
 in 1870, to $1,121/^. Besides these there were state and county 
 
 ^Report of the Acting-Provisional Comptroller, 1866. Report of the 
 Comptroller, 1868-9, p. 7. Message of Governor Coke, April 19, 1876. 
 -Report of the Comptroller, 1874, p. 3. 
 •■'Report of the Comptroller, 1868-9, p. 110. 
 ^Message of Governor Davis, January 10, 1871. 
 »Art. 12, sec. 15. 
 
A Financial History of Texas 167 
 
 income, salary, poll, and occupation taxes, and city taxes.^ In 
 1871 combined state and county ad valorem rates amounted 
 at a conservative estimate to $2,175, and there were besides the 
 state and county poll and occupation taxes, and city taxes.^ 
 In 1869 collected state and local taxes of all kinds aggregated 
 $1,129,577 ; in 1872 assessed state and county ad valorem and 
 occupation taxes and local taxes for public schools amounted 
 to $4,584,275.^ All of our statistics indicate an increase in 
 taxation that was enormous. Assuming 10 per cent as a low 
 average rate of interest on loanable capital, state and county 
 taxes of $2.17 would be equivalent to an income tax of 21 per 
 .cent. No government would dare to levy an income tax at 
 such a figure, and it should be no surprise that the imposition 
 of this rate indirectly through the property tax occasioned 
 bitter complaint and led to the undervaluation and escape of 
 property. Conventions of taxpayers were held in a number of 
 counties, and as a culminating protest a convention of the tax- 
 payers of the state was held in Austin on September 22, 23 and 
 25, 1871, with two hundred and seventeen delegates present 
 representing ninety-four counties.* This convention was called, 
 by the radicals, /*a body of sulks and soreheads," but these 
 epithets ill app/ly to ex-governors Throckmorton, Pease and 
 Hamilton and to the other leading men who were delegates." 
 
 In estimating the weight of taxation upon the people of the 
 state during this period certain Federal taxes need to be con- 
 sidered. The sum of the direct tax of 1861 apportioned to 
 Texas was $355,106.66. By an ordinance of the convention of 
 1866, the state assumed the payment of this tax, and the comp- 
 
 ^The San Antonio Daily Herald, April 9, 1868, November 18, 22, 26^ 
 and December 22, 1870. 
 
 'Proceedings of the Taxpayers' Convention, Austin, 1871, p. 22. . See 
 also Clegg V. the State, 42 Tex., 605 (1875). 
 
 ^In 1869 state taxes were $589,363, county taxes, $312,335, and town^ 
 city and other taxes, $227,879; Census of 1870. Vol. Industry and 
 Wealth, p. 58. Message of Governor Davis, January 14, 1873. 
 
 ^Proceedings of the Taxpayers' Convention, Austin, 1871, pp. 5-8. The 
 Houston Daily Telegraph, August 13, 25, September 5, 8, 19, 20, 1871. 
 The San Antonio Daily Herald, September 26 and 27, 1871. The Austin 
 Democratic Statesman, September 23 and 26, 1871. 
 
 *The Austin Daily Journal, September 21, 1871, et passim. 
 
168 Bulletin of tlie University of Texas 
 
 troller was authorized to effect settlement if possible by setting 
 off against the amount due the amount owed Texas by the 
 national government on account of advances by the state for 
 frontier defence, unpaid bonds of the United States held by the 
 state, etc.^ Nothing came of this, and by an act of November 
 13, 1866, the governor was authorized to have assessed and 
 collected upon all real property a tax of 28 cents on each $100 
 of value of such property rendered for the year 1861, and any 
 deficiency was to be made up from the state revenue account.^ 
 Nothing came of this measure either, however, and all that was 
 collected of the tax was that effected by the United States 
 internal revenue agents in 1865 and 1866. Up to the time of 
 the suspension of collection by the act of Congress of July 28, 
 1866, there was credited to Texas $180,841.51, leaving the 
 amount uncollected $174,265.16." 
 
 More burdensome than the direct tax was the Federal tax 
 upon cotton which was levied from 1864 to 1867. It Avas 2 and 
 3 cents a pound and its collection was rigidly enforced. The 
 total paid by Texas was $5,502,401.* 
 
 B. Income and Salary Taxes. 
 
 The income tax levied during the war was not an income tax 
 in the strict sense of the term, but was really an occupation 
 tax. Governor Throckmorton recommended certain changes in 
 it, the chief ones being that the rates should be graduated and 
 that there should be an exemption.^ His suggestions were 
 carried out in the act of November 6, 1866.^ This act provided 
 
 ^Laws of 1866, }3. 37. 
 
 ^Laws of 1866, p. 257. 
 
 ^House Executive Document, No. 159, Forty-ninth Congress, Second 
 :Session. Dunbar, "The Direct Tax of 1861," in Quarterly Journal of 
 Economics, vol. 3, pp. 450, 453. The Southern Intelligencer, May 10 
 and June 7, 1866. By the act of Congress of March 2, 1891, refunding 
 the direct tax, Texas received $180,886.72. This amount was held in 
 trust for, and distributed to, those who paid or their heirs, until March 
 2, 1897, when the balance of $66,197.89 reverted to the general treasury 
 tof the state. 
 
 ^51st Cong. First Sess., House Report, No. 683. 
 
 ^House Journal, 11th Leg., Reg. Sess., p. 79. 
 
 ■•Laws of 1866, p. 91. 
 
A Financial History of Texas 1 69 
 
 that there should "be levied on and collected from every person, 
 firm, corporation, or association, doing business within this 
 state, at any time during the year 1866, and in every year there- 
 after, an annual income tax, as follows: on the first $1000 of 
 net taxable income, a tax of 1 per cent; on the second, a tax 
 of 1^/^ per cent ; on the third, fourth, and fifth, a tax of 2 per 
 cent; and on all taxable income above $5000, a tax of 3 per 
 cent." 
 
 This tax was known as the "incojne tax." It was provided 
 also "that upon the salaries of all salaried persons, serving in 
 any capacity whatever, except upon persons in the army or 
 ^navy of the United States, or those whose salaries are $600 or 
 less per annum, an annual tax of one-half of 1 per cent on all 
 sums over $600 so received" should be levied. This tax was 
 known as the "salary tax." 
 
 In the assessment of the income tax the sworn schedule pro- 
 vided for a statement of the gross income and the deductions 
 therefrom. The following deductions were allowed: from all 
 incomes, when returned by heads of families, $600; losses on 
 real estate, if purchased within the year; interest, taxes; 
 amount actually paid for rent of homestead; and salaries. In 
 addition to these, rent, insurance, and other expenses were 
 allowed to be deducted from the profits of trade ; from the rent 
 of land, the average annual outlay for the repair of fences was 
 deductible ; and from the rent of buildings, actual repairs, not 
 to exceed 10 per cent of the rent and insurance paid by the 
 owner; from farming operations, the amounts paid for labor, 
 repairs, live stock bought and sold during the year, insurance, 
 and interest on any incumbrance upon the farm.^ 
 
 It is to be noted in regard to the assessment of the income 
 tax that no use whatever was made of the principle of stoppage 
 at the source. The salary tax also was self-assessed. 
 
 The income and salary taxes were in operation four years, 
 or from 1867 to 1870. The returns, and especially those of the 
 salary tax, were small. The law was poorly drawn and laxly 
 administered, and evasion was wholesale. In 1867 no incomes 
 were assessed in forty-two and no salaries in one hundred and 
 
 ^Act of November 10, 1866; Laws of 1866, p. 140. See Millar v. 
 Douglas, 42 Tex.. 288 (1875). 
 
170 Bulletin of tlie University of Texas 
 
 one out of one hundred and thirty-three counties; in 1868 no 
 incomes were assessed in sixty-one out of one hundred and 
 thirty-six counties, and no salaries in one hundred and fifteen 
 counties.^ 
 
 C. Business Taxes. 
 
 The business taxes levied during this period were the cus- 
 tomary specific occupation taxes, the income tax as described 
 above, and the special tax upon the receipts of railroad, tele- 
 graph and insurance companies. The occupation tax embraced 
 a widening range of vocations as time went on, and especially 
 after the discontinuance of the income tax in 1870. It is 
 interesting to note that in 1866 an ad valorem tax on money 
 loaned and on merchandise higher than the general ad valorem 
 tax was levied under the guise of an occupation tax. This 
 feature, which was observable in ante-bellum taxation and rep- 
 resented a spirit of hostility to money lenders and merchants, 
 does not reappear in subsequent acts. The occupation taxes 
 were frequently changed, and those upon the retail liquor busi- 
 ness particularly showed violent fluctuations. There were de- 
 fects in the laws levying them and laxity of administration, 
 especially in the matter of light penalties for non-payment and 
 of the absence of checks upon collections. - 
 
 This period is important in the history of corporation taxation 
 by the state for the attempt to make use of special corporation 
 taxes. Until 1870 the method of taxing corporations was by the 
 property tax and the income tax. In 1870 there was levied, in 
 addition to the general property tax, an annual tax of tv\"0 per 
 cent upon the gross receipts of railroad, insurance, and telegraph 
 companies.'^ In 1871 this was changed, and railroad and tele- 
 graph companies became subject to a tax of one per cent upon net 
 receipts, life insurance companies to an annual occupation tax of 
 
 ^Report of the Comptroller, 1868-9. Income tax assessed in 1867, 
 $38,892; salary tax assessed in 1867, $1,186; ad valorem and poll taxes 
 assessed in 1867, $354,418; income tax assessed in 1868, $14,600; salary 
 tax assessed in 1868, $1,086; ad valorem and poll taxes assessed in 1868, 
 $310,626; per cent of income and salary taxes to total assessed taxes in 
 1867, 10; in 1868, 4.8. 
 
 ^Report of the Comptroller, 1874, p. 56. 
 
 ^Laws of 1870, Called Sess., pp. 199, 216. 
 
I 
 
 A Financial History of Texas 171 
 
 $500, fire and marine insurance companies to one of $250.^ A 
 few days later a tax of one per cent upon gross receipts was sub- 
 stituted for the one per cent tax upon net receipts. This com- 
 bined use of the property and the receipts tax was thought to 
 operate unfairly upon railroads as compared with telegraph com- 
 panies because of the greater amount of tangible property owned 
 by the railroads, and an increase in the tax upon telegraph com- 
 panies to five per cent of their gross receipts was suggested.^ 
 The legislature, however, passed a bill which relieved railroads 
 of taxation by the property tax, but it was vetoed by the governor 
 on the ground that since the counties were not allowed to tax the 
 receipts of railroads, fairness required that the ad valorem tax 
 should not be remitted.'^ The result of this difference of opinion 
 between the governor and legislature was the repeal of the re- 
 ceipts tax, leaving only the ad valorem property tax applicable.* 
 Corporations got off with comparatively light taxation, and for 
 the first time in the state 's tax history there appeared complaints 
 of the working of the property tax as applied to corporations.^ 
 
 D. The Poll Tax. 
 
 A poll tax of $1 was levied throughout the Reconstruction 
 period. Until 1871 it applied to all males over twenty-one years 
 of age, thereafter to those between twenty-one and sixty years, 
 with the usual exceptions of Indians and persons 7ion compos 
 mentis. The tax of 1871 and thereafter was for the benefit of 
 the public schools. The penalty for failure to pay this tax was 
 that the person failing should not receive any money due him 
 from the state or the county until the tax with interest had been 
 paid. That there was considerable evasion of the tax may be 
 inferred from the fact that whereas the census of 1870 reported 
 the number of males twenty-one years of age and upward at 
 169,258, the number assessed for the poll tax in 1869 was only 
 95,895.« 
 
 ^Laws of 1871, First Sess., pp. 47, 60. 
 
 -Message of Governor Davis, April 24, 1871. 
 
 'Message of Governor Davis, November 28, 1871. 
 
 *Act of December 1, 1871; Laws of 1871, Adj. Sess., p. 55. 
 
 •'Message of Governor Davis, .January 14, 1873. 
 
 ^Census of 1870, vol. 1, p. 619. Report of the Comptroller, 1870, p. 85. 
 
172 Bulletin of tlie University of Texas 
 
 E. Other Receipts. 
 
 Next to taxation the chief source of receipts was the sale and 
 hypothecation of bonds. The attempt was made during the 
 Throckmorton administration to issue frontier defence bonds, but 
 it was unsuccessful. Upon the establishment of the Davis ad- 
 ministration, however, the issue and sale of bonds began. Ke- 
 ceipts from sale and hypothecation during the four years 1871-4 
 amounted to $1,406,650.60 as compared with $3,900,766 derived 
 from taxation. 
 
 Receipts from the sale of land were neglibly small on account 
 of the policy of giving away the public domain to actual settlers. 
 Heads of families without a homestead were entitled to one hun- 
 dred and sixty, single men to eighty, acres.^ The conditions 
 attached to the gift were three years' residence upon the land 
 and payment of the land office fees. The old policy of pre-emp- 
 tion was continued by the act of August 12, 1870, which provided 
 that any actual settler in good faith upon the vacant public do- 
 main could purchase not exceeding one hundred and sixty acres 
 at $1 per acre. Previous to the Constitution of 1869 and after 
 the adoption of the constitutional amendment of 1873 grants also 
 were made to railroads, and nine of the roads chartered during 
 1873 and 1874 received grants. School lands and certain other 
 lands were reserved from location by settlers or railroads, but 
 only a small amount of them was sold, and that during the 
 early part of the period. One of the merits of the Reconstruc- 
 tion governments is that the school, university, and asylum lands 
 were not suffered to be spoliated. No provision for their sale 
 was really made until 1874. , The Constitution of 1869 prohibited 
 the sale of certificates at the land office, except to actual settlers, 
 in excess of one hundred and sixty acres. ^ 
 
 ^Laws of 1866, p. 203. Constitution of 1869, art. 10, sec. 8. Laws of 
 
 1870, Called Sess., p. 69. Laws of 1871, First Sess., p. 16. Laws of 
 
 1871, First Sess., p. 93. Laws of 1873, p. 101. 
 ''Art. 5, sec. 6. 
 
Chapter 4. 
 
 educational funds. 
 
 A. The School Fund, 
 
 At the beginning of this period the assets to the credit of the 
 school fund were $1,753,317 of 6 per cent railroad bonds, $320,- 
 367.13 of 6 per cent state bonds, and $19,474 in state warrants. 
 
 TJie amended Constitution of 1866 reserved to the school fund 
 its former endowments of securities and lands, but it did not pro- 
 vide, as had the old constitution, that a part of the annual revenue 
 of the state derived from taxation should belong to the fund. As 
 a result, the receipts during the five years 1866-1870 were from 
 lands and railroad bonds only and were insignificant in amount. 
 The Constitution of 1869 made some important changes. Endow- 
 ments theretofore made were confirmed, and all of the proceeds 
 of the public domain, one-fourth of the annual revenue from tax- 
 ation, and a poll tax of $1 were granted. By the act of August 13, 
 1870, the present division of the school funds into a permanent 
 fund and an available fund was made. Under the new tax pro- 
 visions a total of $1,053,625 was received by the available fund 
 during the four years 1871-1874. Apportionment, which had been 
 suspended since the war, was begun in 1872, the per capita vary- 
 ing between $1.81 and $1.95. As there was little local taxation to 
 supplement the state apportioned funds, the school facilities af- 
 forded were meager, but any facilities at all represented a step, 
 forward. Such opposition as was expressed to taxation for schools 
 was not against the state taxes but against the taxes which the 
 county or school districts were empowered to levy. Most strongly 
 protested was the 1 per cent ad valorem tax which the directors of 
 each school district could, by the act of April 17, 1871, levy for 
 the purpose of building schoolhouses and maintaining schools.^ 
 
 A question which came up for consideration during this period, 
 and which was of great importance to the school fund, was the 
 adjustment of the indebtedness of the railroad companies to the 
 
 ^Proceedings of the Taxpayers' Convention, Austin, 1871, pp. 22 and 
 27. Kinney v. Zimpleman, 36 Tex., 554 (1872). See also Clegg v. 
 the State, 42 Tex., 605 (1875). 
 
174 Bulletin of tJie University of Texas 
 
 fund. The act of November 10, 1866, gave the companies the 
 privilege of paying the interest due in installments, the last pay- 
 ment to be made June 1, 1870. During 1867 and 1868, $60,871.73 
 was paid. On March 1, 1868, the companies owed $450,140.08 
 on account of accrued interest, and $1,753,317 as principal, or a 
 total of $2,203,457.08.1 The Reconstruction Convention of 1868-9 
 was disposed not to be lenient with the companies. It granted 
 relief to the Houston and Texas Central, to which was joined 
 the Washington County Railroad, and to the Southern Pacific, 
 but the Houston Tap and Brazoria, and the Texas and New 
 Orleans were ordered sold.^ Relief was extended to all the roads 
 by the act of August 13, 1870, permitting payment of interest 
 and in addition 1 per cent toward a sinking fund every six 
 months. Past interest due to May 1, 1870, was charged as prin- 
 cipal, and the total amount in state warrants in 1864 and 1865 
 was $979,069.86. The only road sold for failure to accept these 
 provisions was the Houston Tap and Brazoria. The amount ob- 
 tained from this sale was $130,000.'' As a result of this default 
 and forced sale the school fund lost the sum of $165,800 principal 
 and $178,970 interest.* The Houston and Texas Central and the 
 Southern Pacific were authorized to exchange for their indebted- 
 ness new 7 per cent bonds, and the Central was further favored 
 by having credit allowed it for the sums paid for interest in 
 treasury warrants during the fiscal years 1864 and 1865.^ The 
 comptroller, however, upon the advice of the attorney general, 
 refused to allow credit to the Houston and Texas Central for the 
 payments made in warrants in 1864 and 1865, and the exchange 
 of bonds was never made.^ The validity of the payments in 
 state warrants during the war was subsequently legally contested, 
 however, and was settled in favor of the railroads."^ Interest 
 payments were resumed by the companies in 1870, but the ex- 
 perience was responsible for the constitutional provision that 
 
 ^Report of the Comptroller, 1868-9. 
 
 ^Ordinances of the Constitutional Convention, 1868, pp. 46, 77, 35, 36. 
 ^'Report of the Comptroller, 1871. 
 ^Report of the Comptroller, 1891, p. XIX. 
 
 ^Ordinances of the Constitutional Convention, 1868, pp. 46, 47. Laws 
 of 1870, Called Sess., p. 325. 
 
 ^Message of Governor Roberts, January 11, 1881. 
 
 ^H. & T. C. R. R. Co. V. Texas, 177 U. S., 66-103 (1899). 
 
A Financial History of Texas . 175 
 
 future investments of the school fund should be in United States 
 bonds. 
 
 In 1868 $82,168.82 in 5 per cent state bonds appeared among 
 the assets of the permanent school fund. These bonds replaced 
 that amount of cash which was derived from the payment of 
 United States bonds belonging to the fund and which had been 
 used by the state government. They were regarded as a valid 
 debt of the state, but no interest was paid on them. The 6 per 
 cent bonds amounting to $320,367.13, which were executed to the 
 scbpol fund during the war in exchange for state treasury war- 
 rants received from railroads in payment of the interest and 
 principal of their indebtedness, were not recognized as a valid 
 debt during this period.^ 
 
 B. University Fund. 
 
 The university fund had been depleted of its assets by the 
 legislation of 1860 and was possessed of nothing at the beginning 
 of this period except some state warrants and a comptroller's 
 certificate of indebtedness, both of which were of doubtful val- 
 idity. 
 
 The Constitution of 1866 reserved to university purposes the 
 previous grant, but the Constitution of 1869 made no reference 
 whatever to the subject. The act of November 12, 1866, provided 
 for the issue to the fund of $134,472.26 of 5 per cent state bonds 
 to replace the United States bonds and interest on same w^hich 
 were appropriated in 1860. No interest was paid on this debt, 
 however, during this period. Measures were passed in 1870 and 
 1871 authorizing the sale of the university lands, but they were 
 vetoed by Covernor Davis on the ground that there existed no 
 necessity for sacrificing these lands.- The act of April 8, 1874, 
 provided for the sale of the lands, however, and the receipts 
 under this act are the only ones accruing to the fund from any 
 source during the Reconstruction period. 
 
 C. Agricultural and Mechanical College. 
 
 By the act of Congress of 1862 and the supplementary act of 
 1866, Texas received from the United States land scrip for 180,000 
 
 ^Message of Governor Davis, August 6, 1870. 
 =Veto message of May 29, 1871. 
 
176 . Bulletin of tlie University of Texas 
 
 acres for the purpose of establishing an agricultural and mechan- 
 ical college. This scrip was sold in 1871 at 87 cents an acre, the 
 amount realized being $156,600. This was quite as well as other 
 states did in the sale of their scrip, but representing as it did 
 some of the best land of the national domain, it was unfortunate 
 that it could not have been held for sale until a later date.^ The 
 proceeds were invested in $174,000 7 per cent frontier defence 
 bonds of the state and in $12,000 10 per cent bonds of Brazos 
 County ; $12,000 of the proceeds was drawn under the pretence 
 that it was necessary to purchase the lands required for the loca- 
 tion of the college, but the money was loaned and the comptroller 
 held unpaid notes for it ; $21,096 also was expended for a worth- 
 less foundation for the main buildino:." 
 
 ^The San Antonio Daily Herald, April 14, 1871. 
 ^House Journal, 14th Leg., p. 119. 
 
Chapter 5. 
 
 PUBLIC DEBT. 
 
 The first official statement of the debt incurred during the war 
 was made in October, 1865. A. J. Hamilton was appointed pro- 
 visional governor of Texas by President Johnson on Januarj'- 17,. 
 1865, and ex-Governor Pease and Swante Palm were appointed by 
 the provisional governor to report on the finances of the state 
 since secession. Their report was made under date of October 
 30, 1865.^ The following analysis of the debt is based on their 
 report and on the state statutes: 
 
 Item I. 8 per cent state bonds. Authorized by the 
 act of March 20, 1861, entitled ''An Act to pro- 
 vide for the funding of the debt contracted for the 
 protection of the frontier- $ 16,000.00 
 
 Item II. 8 per cent state bonds. Authorized by 
 the act of April 8, 1861, entitled ''An Act au- 
 thorizing a loan and imposing a specific tax to 
 meet the principal and interest thereof"^ $ 899,000.00^ 
 
 Item III. 7 per cent state bonds. Authorized by 
 the act of December 10, 1863, entitled "An Act 
 to raise two millions of dollars, or so much 
 thereof as may be necessary, by the sale of cotton 
 bonds, to provide for the defence of the State and 
 to repel invasion, and for the purchase of ma- 
 chinery for manufacturing purposes"^ 211,130.8? 
 
 'Executive Record No. 281. The report is abridged and printed as 
 an appendix to the House Journal, 1866. 
 
 =Laws of 1861, Called Sess., p. 24. Repealing act of January 11, 1862; 
 Laws of 1862, p. 44. 
 
 'Laws of 1861, p. 30. Amendatory act of January 11, 1862; Laws of 
 1862, p. 40. Act of January 13, 1862; Laws of 1862, p. 40. Act of 
 March 3, 1863; Laws of 1863, Called Sess., p. 10. 
 
 ■'There were $917,000 of these bonds issued, but $17,000 were unused 
 and $1,000 mutilated, leaving net amount $899,000. 
 
 ''Laws of 1863, p. 9. Supplementary act of December 16, 1863; ibid.,, 
 p. 29. 
 
 12— H 
 
178 Bulletin of tlie University of Texas 
 
 Item IV. Treasury warrants. These were of two 
 classes, 10 per cent interest warrants and non- 
 interest warrants. The interest-bearing warrants 
 were authorized by the act of February 14, 1860.^ 
 The amount of 10 per cent interest warrants out- 
 standing, including interest, was given to be 
 about 180,000.00 
 
 Non-interest bearing warrants were authorized by 
 the act of January 10, 1862,^ The amount of 
 non-interest warrants outstanding was given 
 to be 1,888,997.90 
 
 Item V. Due soldiers and for supplies. Amount 
 
 estimated at 3,150,000.00 
 
 Item VI. Due on account of the Republic of Texas. 
 
 Amount estimated at 110,613.23 
 
 Item VII. Due school fund, university fund, and 
 other special funds of the treasury on account of 
 securities and specie borrowed by the general fund 
 and on account of treasury warrants and Confed- 
 erate notes received by such funds $1,455,913.86 
 
 Item VIII. Unclassified debt 199,176.76 
 
 Total $8,110,832.58 
 
 An account of the objects for which the above debt was in- 
 curred is essential to an understanding of later legislative action 
 on it. The 8 per cent bonds of item I were issued to fund treas- 
 ury warrants on account of liabilities antedating March 2, 1861. 
 The 8 per cent bonds of item II were issued on account of $92,- 
 601.67 of liabilities incurred before March 2, 1861, and of $105,- 
 600.38 of civil and $700,797.95 of military liabilities incurred 
 after March 2, 1861. The 7 per cent bonds of item III were 
 issued on account of military expenditures after March 2, 1861. 
 The outstanding treasury warrants of item IV are not classified as 
 
 'Laws of 1860, p. 115. Repealed by act of January 10, 1862; Laws 
 of 1862, p. 34. See also the funding act of March 20, 1861; Laws of 
 1861, p. 24. And the act of January 11, 1862; Laws of 1862, p. 44. 
 
 =Laws of 1862, p. 34. The act of January 13, 1862 (Laws of 1862, p. 
 40) authorized funding in 8 per cent loan bonds. See also act of May 
 28, 1864; Laws of 1864, First Called Sess., p. 10. 
 
i 
 
 A Fhmncial History of Texas ' 179 
 
 to use or date of issue, but it is stated that about $1,150,000.00 
 was drawn after March 2, 1861, for the support of soldiers' fam- 
 ilies. The claims estimated under item V were obviously of a 
 war character and dated after March 2, 1861. The amount of 
 item VI represented an estimate of the unfunded, non-interest- 
 bearing debt of the Republic of Texas. There existed an appro- 
 priation for the payment of such of this debt as had been audited.^ 
 Of item VII, the amount due the school fund was $1,137,406.65 
 and was on account of United States bonds, interest coupons and 
 specie transferred from that fund, and state bonds and treasury 
 warrc"nts held by that fund. All of the transactions occurred 
 after January 28, 1861. The amount due the university fund 
 was $283,514.22, and was on account of United States bonds, 
 interest coupons and specie transferred from that fund, and 
 treasury warrants and Confederate notes received by that fund. 
 Some of the debt to this fund was incurred prior to January 28, 
 1861. The balance of item VII was due special treasury accounts, 
 such as escheated estates, county tax funds, etc., and was incurred 
 after January 28, 1861. Item VIII, or the debt of miscellaneous 
 character, was not described by the investigators. 
 
 The debt as above described was, both as to amount and char- 
 acter, that which confronted the delegates to the constitutional 
 convention which convened in Austin on February 7, 1866. This 
 convention was composed of delegates elected by such citizens only 
 as had taken the oath of amnesty or had received special pardon 
 from the President of the United States. 
 
 Ordinance No. 2, passed by this convention March 15, 1866, 
 declared all debts created by the State of Texas in the aid of the 
 late war, directly or indirectly, to be null and void, and forbade 
 the legislature to assume or make any provision for the payment 
 of any portion of the debts contracted or incurred, or warrants 
 issued by the state between January 28, 1861, and August 5, 
 1865, except warrants issued in payment of services rendered, or 
 liabilities incurred before January 28, 1861.- 
 
 Ordinance No. 15 of this convention validated all the warrants 
 issued for the payment of troops called into the service of the state 
 
 ^Report of the Comptroller, 1860-1. 
 
 -Ordinances of the Constitutional Convention, 1866, p. 33. 
 
180 Bulletin of tJie University of Texas 
 
 by Governor Houston for the protection of the frontier prioi to 
 March 2, 1861.^ 
 
 Ordinance No. 12 acknowledged the indebtedness of the state 
 to the school fund for only the United States bonds and interest 
 coupons transferred from that fund and which were then in pos- 
 session of the state or which mio'ht be recovered by the state. It 
 also acknowledged the indebtedness of the state to the university 
 fund for the United States bonds and interest coupons transferred 
 from that fund in February, 1860. It directed that the legisla- 
 ture should issue state bonds to these funds for this indebtedness, 
 and it ordained that the legislature should have no authority and 
 was forbidden to assume or provide by taxation or otherwise for 
 the payment of any other claim or pretended liability of the state 
 to the school and university funds.^ 
 
 The debt repudiated by ordinance No. 2 included all the war 
 debt incurred on account of civil as well as military expenditures. 
 Some ten members of the convention went on record in protest 
 against the repudiation of the debt for civil purposes, on the 
 ground that it was not required by the President's restoration 
 policy.^ The arguments advanced in support of repudiating the 
 civil debt were : first, that it consisted largely of treasury war- 
 rants issued to circulate as money and therefore in violation of 
 article VII, section 8, of the amended Constitution of 1861; 
 second, that the assumption of this debt would bankrupt the 
 state; third, that the warrants were in the hands of domestic 
 speculators who had evaded military service during the war; 
 and, fourth, that a large amount of the debt had been contracted 
 for the persecution of Union sympathizers.* Opposing argu- 
 ments were based on the injustice to those who had furnished 
 their services and goods to the state institutions and civil depart- 
 ments, and on the effect the repudiation would have on the credit 
 of the state.^ 
 
 The convention appears to have acted, however, in accordance 
 with what it conceived to be the President's restoration policy. 
 
 ^Ibid., p. 46. 
 
 ^Ibid., p. 45. 
 
 'Journal of the Convention of 1866, p. 356. 
 
 ^Ramsdell, Reconstruction in Texas, p. 102. 
 
 ''Convention Journal, 1866, p. 117. House Journal, 11th Leg., p. 193. 
 
A Financial History of Texas 181 
 
 ''We have by ordinance declared the entire debt growing out 
 of, and accruing during the war null and void, and forbidden 
 the legislature assuming or providing for the payment of any 
 portion of it. In so complete and full a manner as language can 
 express, we have declared ourselves on these important questions 
 which have been deemed so vital to sustaining your policy."^ 
 No record has been found of a suggestion by President Johnson 
 to the provisional governor or to the convention of this repudia- 
 tive action. He had, however, in the previous year made the 
 suggestion to Provisional Governor Holden of North Carolina 
 that ''Every dollar of the debt created to aid the rebellion 
 agaii?rt the United States should be repudiated finally and for- 
 ever. ' '2 
 
 The provisional government of Texas ceased and a restored 
 state government went into effect August 20, 1866. An act of 
 November 9, 1866, entitled " An Act to ascertain the amount of, 
 and adjusting and funding the State debt, and to state any and 
 all accounts between the State and individuals," created an audi- 
 torial board "for the purpose of auditing all claims for money 
 against the state and reauditing all the audited liabilities of the 
 state not inhibited by the Constitution."-^ The principal work of 
 the board consisted in separating from the debt incurred between 
 January 28, 1861, and August 5, 1865, that part incurred on 
 account of expenditures authorized before January 28, 1861. 
 The action of the board ceased December 1, 1867.* An analysis 
 of its report shows the following: 
 
 Item I. 8 per cent bonds of March 20, 1861. 
 Amount issued, $16,000.00. Amount rejected, 
 $86.04. Amount of principal recognized or esti- 
 mated valid, $15,913.96 ; interest, $1,319.60. Total 
 $17,233.56. Amount audited, $4,133.56. Balance 
 outstanding $ 13,100.00 
 
 'Report of select committee to prepare an address to President 
 Andrew Johnson; Journal of the Convention of 1866, p. 317. 
 
 -W. L. Fleming, Documentary History of Reconstruction, vol. 1, p. 180. 
 
 'Laws of 1866. p. 122. 
 
 "The report of the board is to be found in the Comptroller's Report, 
 1868-9, pp. 32-37; also in the Reconstruction Convention Journal, 1869, 
 vol. 1, pp. 364-8. 
 
182 Bulletin of tJie University of Texas 
 
 Item II. 8 per cent bonds of April 8, 1861. Amount 
 issued, $917,000.00.1 Amount rejected, $855,- 
 111.95 Amount of principal recognized or esti- 
 mated valid, $61,888.05; interest, $13,909.00. 
 Total, $75,797.05. Amount audited, $30,389.88. 
 Balance outstanding and unaudited $ 45,407.17 
 
 Item III. 10 per cent warrants. Amount issued 
 less amounts funded and received in the collec- 
 tion of revenue, $109,988.69. Interest to Decem- 
 ber 1, 1867, $69,292.44. Total principal and 
 interest, $179,281.12. Amount rejected and esti- 
 mated to be invalid, $30,591.29. Amount audited 
 as valid, $72,680.05. Amount outstanding and 
 unaudited and estimated valid, $76,009.79. Total 
 recognized and estimated valid 148,689.84 
 
 Item IV. Non-interest notes (warrants). Amount 
 issued less amounts funded and received in the 
 collection of revenue, $62,942.82. Interest al- 
 lowed to December 1, 1867, $27,065.41. Total 
 principal and interest, $90,008.23. Amount of 
 principal and interest audited, $35,047.61. 
 Amount outstanding, of which $11,541.72 was 
 estimated as valid, $54,960.62. Total audited 
 and estimated valid 78,466.51 
 
 Item V. Amount of 8 per cent certificates issued 
 in payment of minute companies under act of 
 November 12, 1866, and audited, $3,570.76. In- 
 terest and amount unaudited, $354.97. Total. . 3,925.73 
 
 Item VI. Unaudited claims. Amount audited, 
 $3,323.48. Estimated outstanding, $5,000.00. 
 Total 8,323.48 
 
 The debt described in items V and VI appears to have been 
 incurred after August 5, 1865. Omitting these, therefore, for the 
 time being, the total of the debt described in Items I-IV was, 
 with interest, $1,217,517.96 ; total rejected, $897,331 ; total valid, 
 $320,186.96. 
 
 ^This figure includes the $17,000 unused and the $1,000 mutilated. 
 
A Fiivancial History of Texas 183 
 
 Adding the total of Items V and VI to the valid, 
 
 the total valid debt was. $ 332,436.17 
 
 Audited 149,145.34 
 
 Outstanding and unaudited 183,290.83 
 
 The act creating the auditorial board authorized the issue of 
 6 per cent, ten-year bonds, interest payable semi-annually, for 
 which audited valid claims were exchangeable at the state 
 treasury. The board issued $149,145.34 certificates of valid 
 claims, and $125,100.00 were exchanged for bonds known as 
 the Throckmorton bonds. 
 
 The auditorial board confined its action to the debts due 
 individuals and did not audit those due the special funds, suck 
 as the school and university funds. The indebtedness of the^ 
 state to these funds was defined by ordinance No. 12 of the- 
 Convention of 1866. Pursuant to this ordinance, the legislature^ 
 by act of November 12, 1866, provided for the issue to the 
 school fund of 5 per cent, twelve-year bonds, interest payable- 
 semi-annually, in place of the United States bonds and interest 
 coupons transferred from that fund since January 28, 1861^ 
 and which were then in the possession of the state or which 
 might be recovered by the state.^ Bonds of the state to the 
 amount of $82,168.82, bearing date of January 1, 1867, were 
 accordingly debited to the school fund.^ This- same act of 
 November 12, 1866, in obedience to the requirements of ordi- 
 nance No. 12, provided for the issue of similar bonds to the 
 university fund on account of the United States bonds and 
 interest coupons transferred from that fund in February, 1860, 
 and February, 1861.^ This transfer of the United States bonds 
 w^as made under authority of the acts of January 31, 1860, and 
 February 8, 1861. Bonds of the state, bearing date of January 
 1, 1867, to the amount of $134,472.26, were debited to the uni- 
 versity fund in pursuance of the law of 1866. Ordinance No-. 
 12 specifically provided that these were the only liabilities of 
 the state to the school and university funds which the legis- 
 lature had any authority to assume or provide for by taxation 
 
 ^Laws of 1866, p. 208. 
 
 ^Report of the Comptroller, 1868-9. Laws of 1883, p. 15. 
 ^Hoiise Journal, 17th Leg., Called Sess., p. 27. 
 
184 Bulletin of tlie University of Texas 
 
 or otherwise. Despite this prohibition, however, every comp- 
 troller's report from 1866 to 1883 included in the school fund 
 statement 6 per cent state bonds for $320,367.13, dated May 
 13, 1865, and in the university fund statement, a comptroller's 
 certificate of indebtedness for $10,300.41, dated June 8, 1865. 
 The 6 per cent bonds were issued to the school fund for the 
 purpose of funding state treasury warrants received by the 
 school fund from railroad companies in payment of interest on 
 their bonds.^ The warrants funded were received during the 
 period from August 31, 1863, to June 8, 1865. The certificate 
 of indebtedness held by the university fund w^as on account of 
 treasury warrants received by that fund from land sales which 
 were fundable in the 8 per cent bonds of April 8, 1861.^ The 
 warrants were received between February, 1861, and June 8, 
 1865. 
 
 The action on the debt of the state taken by the constitutional 
 convention of 1866 and by the legislature of 1866 was not to 
 be the final one, however, for the civil government which had 
 been inaugurated on August 13, 1866, and under which an 
 orderly ascertainment of, and provisions for, the debt had been 
 made, was short-lived. Under the Reconstruction Acts of Con- 
 gress of March and July, 1867, Texas was held to be unrecon- 
 structed, her civil government was abolished, and a military 
 or provisional government again established." Another consti- 
 tutional convention was ordered and held in Austin from June 
 1 to August 31, 1868, and from December 7, 1868, to February 
 6, 1869. A constitution was framed which was accepted by the 
 people in an election held from November 30, 1869, to Decem- 
 ber 3, 1869, and this constitution was ratified by the Congress 
 of the United States on March 30, 1870. Between the date of 
 -the amending of the constitution by the convention of 1866 
 and that of the framing of the constitution adopted in 1869, 
 the Fourth Amendment to the Constitution of the United States 
 had been adopted. This amendment was proposed on June 16, 
 
 ^Laws of 1863, p. 37. Laws of 1864, Called Sess., p. 9, and Second 
 Called Sess., p. 14. 
 
 ^Laws of 1861, p. 19. Laws of 1862, p. 42. 
 
 •Gammel, Laws, vol. 6, pp. 3-12. For the history of this period, see 
 Texas v. White, 7 Wallace, pp. 700-743 (1868). 
 
A Financial History of Texas 185 
 
 1866, and was declared by Confess adopted on July 21, 1868. 
 Section 4 of this amendment provided that ''neither the United 
 States nor any State shall assume or pay any debt or obligation 
 incurred in aid of insurrection or rebellion against the United 
 States . . .; but all such debts, obligations and claims shall 
 be held illegal and void." Accordingly, the Texas Constitution 
 of 1869, article 12, section 34, provided: 
 
 (1) That ''All debts created by the so-called State of Texas, 
 from and after the 28th day of January, 1861, and prior to the 
 5th day of August, 1865, were and are null and void; and the 
 Legislature is prohibited from making any provision for the 
 acknowledgment or payment of such debts/' 
 
 (2) That "All unpaid balances, whether of salary, per diem, 
 or nionthly allowance, due to employees of the State, who were 
 in the service thereof on the said 28th day of January, 18j61, 
 civil or military, and who gave their aid, countenance, or sup- 
 port to the rebellion then inaugurated against the government 
 of the United States, or turned their arms against the said 
 government, thereby forfeited the sums annually due them." 
 
 (3) That "All the 10 per cent warrants issued for military 
 services and exchanged during the rebellion at the treasury 
 for non-interest warrants are hereby declared to have been 
 fully paid and discharged." 
 
 (4) "Provided, that any loyal person or his or her heirs or 
 legal representatives may, by proper legal proceedings, to be 
 commenced within two years after the acceptance of this Con- 
 stitution by the Congress of the United States, show proof in 
 avoidance of any contract made, or revise or annul any decree 
 or judgment rendered since the said 28th day of January, when, 
 through fraud practiced, or threats of violence used towards 
 such persons, no adequate consideration for the contract has 
 been received ; or when, through absence from the State of such 
 person, or through political prejudice against such person, the 
 decision complained of was not fair and impartial."^ 
 
 Nothing was done by the legislature about the debt until 1871, 
 when by the act of May 2, 1871, provision was made for its 
 
 ^The paragraphing is that of the present writer. 
 
186 Bulletin of tJie University of Texas 
 
 reauditiiig/ A bill was introduced in the called session oi' tlie 
 Twelfth Legislature in 1870 to audit and ascertain the public 
 debt, but it was not passed until the eve of adjournment and 
 did not receive the signature of the governor.- An auditorial 
 board was created by this act whose duty it was to examine 
 the work of the auditorial board of 1866 and to audit all other 
 claims against the state. The act provided that bonds issued 
 by the board of 1866 for claims void under the constitution should 
 be considered void and should be canceled. A comparison of 
 the provisions of 1866 and of 1869 shows that the only claims 
 interdicted by the Constitution of 1869 and not by that of 1866 
 were: (1) the unpaid balances due those employees of the state 
 on January 28, 1861, who did not remain loyal to the government 
 of the United States, and (2) the 10 per cent warrants issued for 
 military services and exchanged during the war for non-interest- 
 bearing warrants. 
 
 The auditorial board created by the act of May 2, 1871, made 
 its first report under date of September 1, 1871.^ The report 
 stated that, ''upon a careful examination of the transactions 
 of the board of 1866, we have been unable to discover any error 
 in the auditing with the exception of $10,283.12 allowed as in- 
 terest on non-interest warrants — , but this is a question about 
 which persons may honestly differ." In regard to the unpaid 
 balances due disloyal persons on January 28, 1861, and the 10 
 per cent interest warrants exchanged during the war for non- 
 interest warrants, each of which was interdicted by the Con- 
 stitution of 1869, the board stated that the former character of 
 claims would not exceed $10,000, the latter $78,466.51, and that 
 the board of 1866 had funded about $40,000 of these claims in 
 6 per cent bonds. On account of the higher interest (10 per 
 cent) which the valid portion of the claims would bear if re- 
 audited as compared with the 6 per cent interest which the 
 bonds bore, the board estimated that the state would save only 
 about $25,000 by repudiating the claims. Because of the com- 
 
 'Laws of 1871, p. 67. Supplementary act; ibid., p. 123. Supple- 
 mentary act; Laws of 1871, Adj. Sess., p. 25. 
 ^Report of the Comptroller, 1870, p. 10. 
 ^House Journal, 12th Leg., Adj. Sess., p. 66. 
 
A Financial History of Texas 187 
 
 paratively small amount involved and because the holders of 
 the bonds refused to submit them for cancelation, on the ground 
 that they were issued in accordance with the constitution and 
 laws of Texas and of the United States, the board, which was 
 composed of the attorney general, the comptroller, and the 
 treasurer of the state, recommended that the action of the board 
 of 1866 in regard to these claims be confirmed. The recom- 
 mendation of the board in regard to the bonds was adopted by 
 the legislature and appropriation for the payment of interest 
 on the claims was made in the act of November 13. 1871. ^ 
 
 This legislative validation of the action of the board of 1866 
 extended only to the bonds based upon the certificates of in- 
 debtedness issued by that board. But for this validating act 
 some ^40,000 of the 6 per cent bonds issued under date of Jan- 
 uary 1, 1867, would have been held null and void, because they 
 represented either debt to disloyal persons or were on account of 
 an exchange of interest warrants for non-interest warrants dur- 
 ing the war. It will be remembered that there were some $24,- 
 045.34 of unfunded certificates issued by the board of 1866. The 
 act of November 13, 1871, validated these also, subject to the 
 provisions of the Constitution of 1869. The board of 1866 had 
 reported that the estimated valid portion of the outstanding 
 and unaudited debt amounted to $183,290.83. These claims 
 were also subject, in auditing by the boards of .1871 and sub- 
 sequent years, to the provisions of the Constitution of 1869. It 
 will thus be noted that the act of November 13, 1861, observed 
 the distinction between bonds and unfunded claims. Although 
 some of the bonds issued during the war and based upon liabili- 
 ties incurred before the war would be included in these un- 
 funded claims, their amount was not known aiid they could not 
 be properly classed as a part of the bonded debt of the state 
 until they had been audited. The life of the auditorial board 
 was extended by the act of November 13, 1871, to January 1, 
 1873, and it was also provided that all interest-bearing claims 
 should be presented on or before March 1, 1872, on pain of not 
 bearing interest after that date. 
 
 The act of May 2, 1871, provided for the issue and sale of 6 
 
 'Laws of 1871, Adj. Sess., p. 25. 
 
188 Bulletin of tJie University of Texas 
 
 per cent, twenty-year bonds to secure the money needed to pay 
 the valid claims ascertained by the auditorial board; it was also 
 provided that holders of claims might exchange their claims 
 for these bonds. The claims subject to payment from the pro- 
 ceeds of the sale of these bonds, or to funding in them, were the 
 valid certificates of .indebtedness issued by the board of 1866 
 and the other valid claims of the same period. The act of 
 November 13, 1871, not only validated the bonds of 1866, amount- 
 ing to $125,000.00, but also appropriated $40,269.15 to pay 
 the interest upon them from date of issue. It also appropriated 
 $15,000 to pay the principal and interest of the bonds issued 
 under the act of March 20, 1861. These amounts were drawn 
 during the fiscal year ending August 31, 1872.^ 
 
 All of this legislation of the state and all the acts of the 
 auditorial boards related to the debt of the state to individuals. 
 The 5 per cent bonds, amounting to $82,168.82, issued under the 
 act of November 12, 1866, to the school fund, and the 5 per cent 
 bonds, amounting to $134,472.26, issued under the same act to 
 the university fund, were issued to those funds because of trans- 
 fers made from them to the state revenue account. Those held 
 by the school fund were on account of the United States bonds 
 and interest coupons transferred under authority of the act of 
 January 11, 1862, and which in 1866 were in the possession of the 
 state, or which might be recovered by the state. ^ The comp- 
 troller's reports for 1874 and subsequent years err in describing 
 the state bonds issued to the school fund at this time. as indem- 
 nity for United States bonds used during the war. They were 
 only transferred from the school fund during the war, but as 
 the ordinance of 1866 and the comptrollers' reports of 1866 and 
 1867 make clear, they were used for general revenue purposes 
 between August, 1865. and January, 1867. The 5 per cent bonds 
 issued to the university fund were on account of the United 
 States bonds and interest coupons transferred from that fund 
 to state revenue account in February, 1860, and February, 1861. 
 It is highly questionable whether one should regard the bonds 
 
 ^Report of the Comptroller, 1872, pp. 29-30. 
 
 ^For act of January 11, 1862, see Laws of 1862, p. 55. For act of 
 November 12, 1866, see Laws of 1866, p. 208. 
 
A Financial History of Texas 189 
 
 of the' state held by its special funds as binding state obliga- 
 tions, subject, like the state debt to individuals, to all debt con- 
 ditions against non-payment of interest and failure to pay prin- 
 cipal at the contracted date. It is certainly questionable in the 
 case of the state obligations held at this time by the school and 
 university funds. Neither the Constitution of 1846 nor the 
 amended Constitution of 1861 protected the educational funds 
 against the transfer of the funds authorized by the acts of 
 January 31, 1860, and January 11, 1862.^ Legislative action 
 alone was responsible for the possession of the 5 per cent United 
 States bonds by these funds and legislative action was unre- 
 strained by any constitutional provision against recalling them 
 at any time. But even if they should be regarded at the time 
 of issue as a binding, bonded obligation, the failure of the state 
 to acknowledge their validity, as it did the other debt authorized 
 in lJ?o6. throws doubt on their validity after the overthrow of 
 civil government in 1867. Neither the legislature nor the au- 
 ditorial board of 1871 took any cognizance of these 5 per cent 
 state bonds, and this appears to have been fatal to their po- 
 sition, for they were classed as doubtful or worthless in every 
 comptroller's report after 1870, except that of 1881-2. The 
 passage of the Reconstruction Acts of Congress in 1867 and the 
 consequent overthrow of civil government and the establishment 
 of military government in Texas, threw the state back exactly 
 to where it had been at the close of the war in 1865. As the 
 bonded debt due individuals and authorized by the act of 1866 
 had to be reviewed to be valid, so it would seem any other 
 bonded debt authorized in 1866 should have been reviewed and 
 validated to be a binding obligation. This was not done for 
 the 5 per cent bonds held by the school and university funds, 
 and they remained of doubtful validity, no interest being paid 
 on them and their date of maturity passing without payment, 
 until 1883. By this act of February 23, 1883, they were vali- 
 dated and were ordered paid with accrued interests 
 
 The reports of the comptroller after 1865 carried also among 
 
 ^See art. 10 of the Constitution of 1846 and the amended Constitu- 
 tion of 1861. 
 
 =^Laws of 1883, p. 15. 
 
190 Bulletin of tJie University of Texas 
 
 the debt of doubtful validity the 6 per cent state bon.js date^l 
 May 13, 1865, and the comptroller's certificate of in lebte.dness 
 dated June 8, 1865, the bonds being held by the school fund, and 
 the certificate by the university fund. As has b^cn explained 
 these were specifically declared void as war debts in 1866, and 
 they were not validated until 1883. Their validation and pay- 
 ment under the act of February 23, 1883, was, as far as legal 
 obligation was concerned, a pure gift under the ^^uise of payment 
 of a debt. The failure of the state up to 1883 to pay the inter- 
 est or the principal of the above obligations held by the school 
 and university funds was therefore legally justifiable in the 
 light of the history of the obligations. 
 
 If the action taken by the constitutional conventions and the 
 legislature relative to the principal of the war dobi, can be justi- 
 fied, was the interest on the bonded indebtedness found to be 
 valid by the auditorial boards of 1866 and 1871 paid after the 
 war? It appears from the report of the auditorial board of 
 1866 that interest on the bonds of March 20, 1861, was paid 
 to January 1, 1867, and that no interest was paid on the bonds 
 of April 8, 1861, from January 1, 1865, to January 1, 1867.^ 
 Such of this debt as was found to be valid by the board o^ 1866 
 and was funded in the bonds authorized by the act of November 
 9, 1866, had no interest paid on it until the passage of the act 
 of November ] ?, 1871. The failure to pay interest as it fell due 
 is not chargeable to the dereliction of the State of Texas but 
 to the Congress of the United States. If there had been any 
 bonded debt which antedated the war, there would have been no 
 question as to the obligation of the state to pay interest on it 
 at the time stipulated; but all of the bonded debt of the state 
 was authorized during the war or after January 28, 1861. 
 Therefore, the question as to payment of interest on the valid 
 debt subsequent to the war depends on the date of the establish- 
 ment of the validity of the debt. Because of the abolition of the 
 civil government and the re-establishment of the military govern- 
 ment by the Reconstruction Acts of Congress in March and 
 July of 1867 the action of Texas in 1866 providing for its ascer- 
 tainment was nullified, and Texas may be said not to have had 
 
 'See Comptroller's ledger, 1861-5, pp. 437-441. 
 
A Financial History of Texas 191 
 
 any known valid debt until 1871. As soon as the valid debt was 
 determined, payment of accrued interest was promptly made, 
 and interest thereafter on it and on all other debt was always 
 promptly paid. 
 
 It may be asked further. Was the principal of the valid debt 
 promptly paid at maturity ? The bonds issued under the act of 
 March 20, 1861, were payable July 1, 1871. Because these bonds 
 were issued during the war period, though to fund floating lia- 
 bilities incurred before the war, they were subject to auditing 
 before their validity could be established. In view of the Re- 
 construction Acts of Congress, there was no legally constituted 
 body that could finally determine their validity until 1871. By 
 the act of November 13, 1871, appropriation was made for the 
 audited and valid portion of this debt. The bonds issued under 
 the act of April 8, 1861, were due sixteen years from their date. 
 Such of these as were valid and were exchanged for the bonds 
 issuf d in 1866 were paid at maturity ; those valid and which were 
 not exchanged for the bonds of 1866 were either exchanged for 
 bonds authorized by the act of May 2, 1871, or were paid be- 
 fore their maturity. 
 
 The beginning of the Reconstruction debt proper was in 1870. 
 By the act of August 5, 1870, the issue of $750,000 of 7 per 
 cent gold bonds, redeemable after twenty years and payable 
 after forty years, was authorized to meet the appropriations 
 made for maintaining ranging companies on the frontier.^ Au- 
 thority was given also to levy a tax sufficient to pay the interest 
 and provide a sinking fund for the bonds, and the governor 
 was empowered to sell or hypothecate the issues at the best 
 price obtainable, the commission on sale, however, being restrict- 
 ed to not more than 1 per cent. The governor, the comptroller 
 and the treasurer were at loggerheads for a time, the latter 
 officers declining to give their signatures to the engraver on the 
 ground that it would place the credit of the state in the en- 
 graver's hands.- Only three hundred and fifty of the boiids 
 were sold during this period and these in the year 1871 and at 
 
 ^Laws of 1870, Called Sess., p. 45. These are known as the frontier 
 defence bonds. 
 The San Antonio Daily Herald, September 7, 1870. 
 
192 Bulletin of tlie University of Texas 
 
 an average price of 89.4. The gross amount received \\'as 
 $313,200, which, after deducting commissions, left a net amount 
 of $312,200.^ Of the three hundred and fifty sold, one hundred 
 and seventy-four were exchanged for cash held in the Agricul- 
 tural and Mechanical College fund, leaving only one hundred 
 and seventy-six disposed of to outsiders. These circumstances 
 attest a difficulty of sale due to lack of faith in the state's credit. 
 The interest on these bonds was met and a sinking fund was 
 established. The sinking fund, however, was not invested in 
 United States bonds, but was used to retire the frontier defence 
 bonds, and up to August 31, 1874, $53,000 of these bonds had 
 been redeemed. 
 
 Beginning with the fiscal yeav 1870 there were annual de- 
 ficiencies in the current revenue, and bond sales w^ere resorted 
 to for the purpose of making ends meet. In May, 1871, $400,000 
 10 per cent bonds, redeemable in lawful currency of the United 
 States after two years and payable after five years, were au- 
 thorized to cover, the deficiencies of 1871 and 1872, and in 
 December, 1871, an issue of $2,000,000 7 per cent, twenty year 
 bonds, were authorized for deficiency purposes. There Avere no 
 restrictions as to the price at which these bonds should be sold, 
 and in the case of the December issue no limit as to the com- 
 mission that might be paid for sale.- In May, 1873, $500,000 
 10 per cent bonds, redeemable after three years and payable 
 after ten years, were authorized for the purpose of funding state 
 warrants.^ There were sold in 1871 and 1872 two hundred and 
 fifty-two of the deficiency bonds authorized by the act of May 
 2, 1871. At an average price of 93.5 they yielded gross $235,- 
 870.74, but with commissions deducted the net amount received 
 was $229,375.94, and $156,433.47 of this amount was received 
 in state warrants.* None of the deficiency bonds authorized by 
 the act of December 2, 1871, was sold, and only $89,800 of the 
 10 per cent funding bonds Avere issued up to August 31, 1874. 
 In addition to bonds sold, three hundred and fifty of the frontier 
 
 'Statement of the Comptroller; House Journal, 16th Leg., First Sess., 
 p. 79. 
 
 -Laws of 1871, p. 106. Laws of 1871, Adj. Sess., p. 63. 
 
 ^Laws of 1873, p. 119. 
 
 *House Journal, 16th Leg., First Sess., p. 79. 
 
A Financial History of Texas 19^ 
 
 defence and one hundred of the deficiency bonds were hypothe- 
 cated with Williams and Guion, of New York, for. $327,074.70. 
 
 Excluding $650,000 of debt authorized by the act of March 4, 
 1874, because it represents a measure of the administration which 
 succeeded the Reconstruction, there was added to the funded 
 debt of the state up to August 31, 1874, a gross amount of 
 $900,900. There was redeemed during the period $57,100 of 
 debt, so that the net addition was $843,800. There was besides 
 a floating debt of $1,574,826.31, making a total debt contracted 
 before January 14, 1874, or the date when the Democratic ad- 
 ministration succeeded the radical, of $2,418,626.31^ There was 
 also the debt due the school and university funds which was 
 classed as of doubtful validity and which amounted to $809,- 
 311.67.^ The sum of the recognized and the doubtful debt is 
 $3,227,937.98. Deducting $956,321.88,— which is the sum of the 
 debt ascertained by the auditorial boards of 1866 and 1871 
 ($251,047.84), the debt of doubtful validity with accrued in- 
 teres?" due the university fund, and the indebtedness to the school 
 fund under the act of November 15, 1864, — as the amount of 
 pre-reconstruction debt, there remains $2,271,616.10. This latter 
 amount is the debt imputable to Reconstruction. The portion of 
 this Avhich was incurred during the Davis administration is 
 approximately $2,172,262.21. 
 
 The debt policy of the reconstructionists is open to sharp criti- 
 cism. The issue of bonds to meet deficiencies in the revenue when 
 caused by extravagance in expenditures is illegitimate financier- 
 ing and is to be wholly condemned. The funded debt also existed 
 in five different shapes and was issued under as many different 
 statutes. A debt issued under more uniform provisions would 
 probably have been more inviting to capitalists. Considering, 
 however, the character of the state government at this time and 
 the doubtfulness of state credit generally, the prices at which 
 the bonds were sold were fair. 
 
 The result of the large floating debt was injustice to creditors, 
 an added cost to the state for supplies purchased, and collusion 
 
 ^The Report of the Comptroller, 1874, gives as the amount of certifi- 
 cates of public debt fundable in 6 per cent bonds $40,974.84. The amount 
 given should be $46,947.84. 
 
 -This amount includes $262,003.05 accrued interest. 
 
 13— H 
 
194 Bulletin of the University of Texas 
 
 between officials and creditors in the payment of warrants.^ The 
 discount on warrants was as much as 50 per cent, and the spectacle 
 was presented of men and boys employed by merchants to stand 
 in the treasurer's office from mornino- until night to watch for 
 deposits.^^ Suggestions were made for paying warrants accord- 
 ing to their date or number, and for making them receivable at 
 the treasury in discharge of debts due the state, but neither of 
 these was adopted, though the former would seem to have been 
 desirable. As soon as the new administration came into power 
 the payment of warrants dated before January 15, 1874, was 
 temporarily arrested, but they were allowed 8 per cent interest 
 from date of registration with the comptroller.^ 
 
 But for the chance obstinacy of the comptroller and the opposi- 
 tion of the governor, Texas would have issued from the Recon- 
 struction period saddled with a heavy debt representing subsidies 
 to railroads. The state was under moral obligation to the Inter- 
 national Railroad Company to adjust its claim to a subsidy, be- 
 cause construction of the road had begun and the company had 
 otherwise met the conditions of the chartering act. The blocking 
 of the will of the legislature and of the governor in this matter by 
 the comptroller, while his action redounded to the welfare of the 
 state, was, to put it mildly, extraordinarily presumptions. In the 
 adjustment of the matter a very respectable element favored a 
 subsidy and thought that this kind of aid generally would be the 
 most effective in securing railroads. Tlie cost, however, which 
 this policy would have involved would have been beyond the 
 ability of the state, and the grant of land and exemption from 
 taxation for twenty-five years to the International Company and 
 land grants to other companies is to be regarded as a wise solution 
 of the vexed question. 
 
 ^Message of Governor Coke, February 10, 1874. Warrants outstand- 
 ing on the general revenue fund amounted on August 31, 1872, to 
 $544,745.24; on August 31, 1873, to $679,404.83; on August 31, 1874. to 
 $628,370.23, and warrants outstanding on the school fund at the latter 
 date amounted to $104,577.74. 
 
 -House Journal, 12th Leg., Second Sess., p. 435. Message of Governor 
 Davis, January 14, 1873. Message of Governor Coke, February 10, 1874. 
 
 'Act of March 7, 1874; Laws of 1874, p. 239. 
 
A Financial History of Texas 195 
 
 CONCLUSION. 
 
 The salient features of the Reconstruction financial period of 
 Texas history are the large growth of expenditures, the great in- 
 crease in taxation, and the rapid accumulation of a comparatively 
 heavy debt. The finances do not indicate the rule, however, of 
 such venal and pillaging adventurers as infested other southern 
 state with carpet-bag governments. At the same time there was 
 more open abuse of public trust than at any other period of the 
 state's history. An adjutant-general was guilty of defalcation of 
 about $30,000 -^ the funds of the treasury department were used 
 for a time to abet private ends and its books fell into ''reckless 
 disorder ;2 petty jobbery existed in supplying state institutions, 
 and bribery was charged on high authority to have been instru- 
 mental in securing the subsidy to the International Railroad. 
 
 'House Journal, 13th Leg., p. 34. 
 -House Journal, 13th Leg., p. 27. 
 
PART VI. 
 
 THE PERIOD OF RECOVERY, 1874-1880. 
 
 Chapter I. 
 
 INTRODUCTION. 
 
 Richard Coke was inaugurated governor on January 15, 1874, 
 which event marked the political end of the Republican regime 
 and of the Reconstruction in Texas. 
 
 Although a tax rate of fifty cents had been imposed since 1871 
 and bonds had been issued to meet the expense of frontier de- 
 fence and to cover deficiencies in the ordinary revenues, an empty 
 treasury and a rapidly increasing floating debt confronted the 
 new Democratic administration. There was only $37,137.00 in 
 the treasury available for general purposes, and the net receipts 
 to accrue from taxes by September 1, 1874, were estimated at 
 $481,714.00, while the expenditures were estimated at $1,236,- 
 116.00.^ There were, in addition, claims of school teachers for 
 services rendered prior to July 1, 1873, amounting to over 
 $400,000.00, an unexecuted cash pension law, and a harassing 
 controversy with the International Railroad over a bond subsidy. 
 
 The state's financial problem was difficult, and its solution 
 called for intelligence, courage, and patience. Immediate clari- 
 fication and settlement were not possible, for though legislation 
 could accomplish something, it was indispensable that there 
 should be time for the recuperation of the industrial and com- 
 mercial forces which had been depressed by the war, the Recon- 
 struction, and the prostrating panic of 1873. Additional taxa- 
 tion as a way out was inexpedient in view of the already un- 
 popular height of the tax rate, and bonds could not be immediate- 
 ly sold except at an almost prohibitive discount. The means of 
 relief to the treasury which were adopted were the stoppage of 
 payment of warrants dated before January 15, 1874, the use of 
 special trust funds, and the issue of bonds. The treasury did 
 not get on an actual cash basis, however, until the spring of 1879. 
 Each year between 1874 and 1879 saw treasury deficits, the 
 
 ^Message of Governor Coke, February 10, 1874. 
 
A Financial History of Texas 197 
 
 state 's warrants at a discount, the maintenance of the same high, 
 tax rate, an increase in the bonded debt to meet the ordinary ex- 
 penses of government, and parsimony in expenditures for char- 
 itable, educational and other developmental purposes. 
 
 Industrially a new era began in 1879, as that was the year 
 when there was generally throughout the country a marked up- 
 ward movement indicating the completion of industrial recovery 
 from the panic of 1873.^ The population of the state grew from 
 818,579 in 1870 to 1,591,749 in 1880. This was a percentage of 
 increase during the decade of 94.5 as compared with 35.5 during 
 the preceding decade. Negroes numbered 393,384 in 1880 and 
 constituted 24.7 per cent of the total population as compared 
 with 30.9 per cent in 1870. The population was preponderantly 
 rural, only 8.5 per cent living in towns of 2,500 population and 
 over. The density of population remained small, though there 
 was an increase from 3.1 in 1870 to 6.1 in 1880. 
 
 Agriculture engaged 68.8 per cent of the population ten years 
 of age and over employed in all occupations. Agriculture 
 showed a marked improvement in condition in 1880 over 1870. 
 Though the number of farms increased 185 per cent and the 
 acreage in farms increased 97.3 per cent, the percentage increase 
 in the improved acreage was 326.6. A large part of the land area 
 of the state was unoccupied and uncultivated, however, as shown 
 by the fact that the farm area was only 21.6 per cent of the total 
 land area of the state. The vast area of land not in farms was 
 either owned by the state or was privately owned and held as a 
 speculation. The value of farm land and buildings amounted to 
 $170,468,886 in 1880, which was an increase of 254.2 per cent 
 over 1870. Farm implements and machinery showed an increase 
 of 233.1 per cent, and domestic animals, poultry and bees an in- 
 crease of 155.7 per cent. The value of livestock was $60,307,987 
 in 1880 as compared with $37,425,794 in 1870. 
 
 Agriculture and stockraising were the chief sources of wealth 
 to the state. Mining was negligible, and manufacturing was 
 not advancing in a remarkable way. The number of manufactur- 
 ing establishments increased only 25 per cent, and the value of 
 the products increased from $11,517,302 to $20,719,928 between 
 
 ^Noyes, Forty Years of American Finance, p. 66. 
 
198 Bulletin of the University of Texas 
 
 1870 and 1880. The percentage of growth in the value of the 
 products was 79.9, or less than that in population. 
 
 Under the liberal land grant policy which was in ett'ect from 
 1873 to 1882 railroad mileage grew rapidly. The increase be- 
 tween 1870 and 1880 was from 711 miles to 3,244, and that be- 
 tween 1873 and 1882 was from 1,578 to 6,009. 
 
 Statistics for the growth of state banking are not available, 
 but those for the national banking system do not show a rapid 
 growth of that system.^ The number of national banks increased 
 from 4 in 1870 to 13 in 1880, and their deposits from $575,000 
 to $1,579,000. 
 
 A new era also in the state's finances began in 1879, due in 
 no small part to the country's prosperity, but also to a vigorous 
 financial policy. The important features of this policy were the 
 refunding and payment of the public debt, the sale of the public 
 lands, changes in the administration of taxes, the adoption of 
 new business taxes, and reduction in expenditures. The policy 
 adopted in 1879 was known as the "pay-as-you-go" policy, and 
 the most striking, and at the same time the most effective, of the 
 measures relating to expenditures which were adopted to insti- 
 tute this policy was the reduction of the school fund's share of 
 the general revenues from the customary one-fourth to one-sixth. 
 The fiscal operations of the state government during the year 
 1880 evidence the advent of a new era and the final issuance from 
 the financial slough into which the state entered in 1861. 
 
 ^The state banks chartered during the Reconstruction period were 
 supposed to report to the office of the secretary of state, but apparently 
 the law was not obeyed, for the reports of the secretary of state contain 
 statements of only a few banks. 
 
Chapter 2. 
 expenditures. 
 
 The period from 1874 to 1880 was one unusually full of influ- 
 ences conducive to economy in public expenditures. The panic 
 of 1873 cast its shadow of depression over the country until 1879^ 
 and this alone warranted the most economical administration of 
 the state's affairs. Other potent reasons for the practice of pub- 
 lic economy were the high rate of taxation, the large floating 
 debt and the weakness of the state's credit, the imperative need 
 of putting down internal lawlessness, of protecting the border, 
 and of satisfying the minimum demands of the charitable, cor- 
 rectional, and educational functions of the state. 
 
 The Constitution of 1876 reduced the salaries of state officials 
 and judges, and there was also a decrease during this period 
 in the support of the several state departments, the judiciary, 
 and the charitable institutions.^ The reduction in salaries and. 
 
 ^The following is a comparison between the salaries stipulated in 
 the constitutions of 1869 and 1876: 
 
 1869 1876 
 
 Govei nor $5,000 $4,000 
 
 Supreme court judges, each 4,500 3,500 
 
 District judges, each 3,500 2,500 
 
 Comptroller, treasurer, commissioner of the 
 
 general land office, each 3,000 . 2,500 
 
 Secretary of state, attorney general, each 3,000 2,000 
 
 Superintendent of the lunatic asylum 2,500 2,000 
 
 Superintendents of the blind and the deaf and 
 
 dumb institutes, each 2,000 2,000 
 
 Per diem of the members of the legislature 8 $5 for the first 
 
 sixty days and 
 $2 thereafter. 
 The appropriation bill for 1880 and 1881 in response to the "pay-as- 
 you-go" slogan made sweeping reductions in the salaries of the em- 
 ployees of the state. The salaries of the chief clerks in the state 
 and treasury departments were cut $300 each; the salary of the chief 
 clerk in the comptroller's department was pared $500, that of the gov- 
 ernor's private secretary, $300, and corresponding reductions were 
 made in the salaries of the other employees. See Report of the 
 Special Committee on Retrenchment, February 18, 1879; House Journal. 
 16th Leg., First Sess., p. 421. 
 
200 Bulletin of the University of Texas 
 
 the severe limitations on the debt-creating and taxing powers 
 of the state and local governments reflect the commercial, 
 financial and agricultural depression which follow^ed the panic 
 of 1873. Expenditures on account of sessions of the legislature 
 declined, those for direct promotion of immigration and for 
 the geological survey disappeared, and the share of the general 
 revenues appropriated to the school fund was reduced to one- 
 sixth for the year 1880. The creation in 1876 of the depart- 
 ment of insurance, statistics and history, buildings- for the 
 Agricultural and Mechanical College, and quarantine against 
 yellow fever were responsible for minor additions to expendi- 
 tures. The expenditures of this period showed no decrease 
 over those of the preceding period, however, and this was due 
 chiefly to the pensioning of the veterans of the Texas Revo- 
 lution, to the protection of the frontier, and, above all, to the 
 heavy interest charge of the funded debt and to the payment 
 of debts incurred before January 15, 1874. The pension policy 
 underwent frequent changes. The act of August 13, 1870, had 
 granted $250 annually to each surviving veteran of the Texas 
 Revolution and an additional $250 to such as had been wounded, 
 but the appropriation of $224,817 for their payment in 1871 
 and 1872 was vetoed by Governor Davis.^ In 1874 this act 
 was repealed, but the arrearages under it were made payable 
 in 10% bonds, and a new pension act was passed granting an 
 annual pension of $150 to indigent veterans and an additional 
 "$150 to those who were disabled by reason of wounds received 
 in the service.^ This act was in turn repealed in 1875 on the 
 ground that all who were eligible to its benefits had received 
 10% pension bonds and that the law afforded an opportunity 
 lor the perpetration of frau(J on the state.^ The Constitution 
 of 1876 authorized pensions not to exceed $150 per annum to 
 indigent survivors of the Texas Revolution and their unmarried 
 widows.* In 1876 an annual pension of $150 was granted, but 
 
 *Laws of 1870, Called Sess., p. 119. Laws of 1871, p. 106. 
 
 *Laws of 1874, p. 114. 
 
 'Act of March 13, 1875; Laws of 1875, p. 112. The comptroller de- 
 clined in 1874 to issue certificates for pensions because of the indefi- 
 niteness of the law in defining indigency. 
 
 *Art. 16, sec. 15. 
 
A Financial History of Texas 201 
 
 it was repealed in 1879 because of the unexpected number of 
 applicants. There was substituted for the cash pension a land 
 grant of 640 acres to each indigent veteran.^ The land grant 
 measure relieved the treasury of pension expenditures and so 
 assisted in establishing the "pay-as-you-go" policy. Pension 
 bonds authorized in 1874 were issued to the amount of $1,115,- 
 009, and up to March, 1879, $501,750 interest was paid on them.- 
 "Warrants drawn on the treasury on account of casli pensions 
 aggregated $283,662 for the period, and as $213,542 of this 
 amount was drawn in 1879, the hasty repeal of the act of 1876 
 may be understood. 
 
 The penitentiary had been leased in 1871 for fifteen years, 
 and as there was no resumption of control during the period 
 the only expense to the state, was the conveyance of prisoners 
 and the beginning of the construction of the eastern branch 
 of the penitentiary at Rusk. The conditions existing at Hunts- 
 ville were described as discreditable to the state, but the in- 
 crease in taxation which resumption of control would entail 
 was a bogey against which the cry for reform was unavailing.* 
 
 The increase of expenditures on account of the protection 
 of the frontier against marauding Mexicans and desperadoes 
 and the interest on the public debt offset any economies effected 
 in other lines. The protection of the frontier was a duty which 
 the United States Government should have performed, and it 
 afterwards reimbursed the state for the expenditures made, but 
 at the time the disbursements were made they constituted an 
 onerous burden. The funding of the floating debt incurred 
 during the Davis and succeeding administrations and the issue 
 of bonds to meet the current needs of the government account 
 for the appearance in 1875 of a heavy annual interest charge. 
 The total of the warrants drawn on the general revenue on 
 account of these two items of expense and its percentage of 
 total warrants drawn were as follows: 
 
 »Act of July 28, 1876; Laws of 1876, p. 61. Repealing act, March 13, 
 1879; Laws of 1879, p. 34. Act of April 26, 1879; ibid., p. 175. 
 
 ''House Journal, 16tli Leg., Reg. Sess., p. 807. 
 
 'Message of Governor Coke, April 18, 1876. Galveston News, April 
 30, June 3, 8, 9, and 20, 1876. Laws of 1876, p. 193. 
 
202 Bulletin of the University of Texas 
 
 1874 $222,944 15.1% 
 
 1875 461,608 35.9^0 
 
 1876 502,408 37.9% 
 
 1877 581,190 45.2% 
 
 1878 522,020 45.2% 
 
 1879 567,312 34.4% 
 
 1880 432,595 31.7% 
 
Chapter 3. 
 
 RECEIPTS. 
 
 The revenues accruing during this period were of two classes, 
 ordinary and extraordinary: the latter came from the sale of 
 bonds, the former from taxes, fees, interest on investments, 
 and the Jike. The following table shows the per cent of total 
 net receipts derived from taxes, sale of bonds, and miscel- 
 laneous sources ■} 
 
 Taxes. Bonds. Miscellaneous. 
 
 1874 64.1 29.1 6.8 
 
 1875 56.8 32.5 10.7 
 
 1876 60.8 26.7 12.5 
 
 1877-8- 79.5 5.6 14.9 
 
 1879 82.6 8.3 9.1 
 
 1880 66.7 22.6 0.7 
 
 The taxes, in their order of importance, were the general 
 property tax, the occupation taxes, and the poll tax.^ 
 
 'It should be. remembered that this table does not represent the 
 contributions to the general revenue account only. There were no 
 receipts from bond sales accruing to this account in 1874, 1878, and 
 1880. The large per cent shown from bond sales in 1880 is due to 
 the refunding operations. 
 
 'The receipts for 1877-8 are net receipts, except for the interest re- 
 ceived on state bonds held by the special funds, the amount of which 
 was not separately stated in the comptroller's report. 
 
 ^The reports of the state's financial officers are not so compiled 
 and published as to make it possible to state what proportion of the 
 tax receipts each of the taxes contributed. A rough idea of the 
 proportion may be gained from the statistics of assessed taxes, but the 
 statistics for occupation taxes are especially defective: they are in 
 every instance reported as partial, and those for 1876 are not pub- 
 lished. In the case of the general property tax also the assessments 
 are not complete. The following are the amounts and percentages 
 of the several taxes assessed or reported: 
 
 Date Property Per cent Occupation Per cent Poll Per cent 
 
 1875 $1,254,354 71.7 $295,012 16.8 $198,322 11.5 
 
 1876 1,288.246 211,134 
 
 1877 1,594,828 385,943 .... 464,808 
 
 1878 1,516,122 377,935 .... 500,211 
 
 1879 1,519,516 61.3 425,429 17.1 531,778 21.6 
 
 1880 1,594,853 57.4 636,580 22.9 542,603 19.5 
 
204 Bidletin of the University of Texas 
 
 A. The Property Tax. 
 
 The scope of this tax remained what it had always been, and it 
 is described in article 8, section 1, of the Constitution of 1876 
 to be as follows: ''All property in this state owned by natural 
 persons or corporations, other than municipal, shall be taxed in 
 proportion to its value, which shall be ascertained as may be 
 provided by law." The constitution exempted from taxation 
 household and kitchen furniture to the value of $250 to each 
 family,^ and empowered the leorislature to exempt property used 
 for burial, religious, charitable, educational, and public purposes, 
 and to release from the payment of state and county taxes the 
 inhabitants of counties, cities and towns which suffer a public 
 calamity.^ 
 
 The act of August 21, 1876, carried out these constitutional 
 permissions.^ It also exempted state pensions, growing crops, 
 notes taken for land, the shares of stock of domestic corpora- 
 tions whose property was taxed by the state, and it provided 
 that only the excess of credits over debits was taxable. The 
 exemption extended to land notes, or mortgages, was repealed in 
 1879.* In 1873 there were exempted from taxes the residents 
 of the frontier counties of Montague, Wise, Parker, Hood, Erath, 
 Hamilton, Lampasas, Burnet, Blanco, Kendall, Bandera, Medina, 
 Frio, McMullen, Duval, Starr, and all other counties lying west 
 and southwest of these. This exemption was repealed in 1875.'^ 
 The act adjudicating the controversy between the state and the 
 International Railroad exempted the property of this company 
 from state and other taxes for twenty-five years.^ 
 
 Until 1870 the work of the assessment and collection of the 
 general property tax was confided to one officer — known as the 
 assessor and coUecteor — in each county. The Constitution of 
 1869 changed this system and provided that the justice of the 
 peace, of whom there were five in each county, should be the 
 assessor of the taxes in his precinct and that the sheriff should 
 
 ^The amount exempted under the act of May 2, 1874, was $50. 
 
 'Article 8, sees. 2 and 10; article 9, sec. 9. 
 
 ^Laws of 1876, p. 275. 
 
 *Laws of 1879, p. 39. 
 
 •Laws of 1875, p. 10. 
 
 'Act of March 10, 1875; Special Laws of 1875, p. 69. 
 
A Financial History of Texas 205 
 
 be the collector. This system worked badly : it was iinceiitrali:».ed, 
 expensive, and inefficient. Each justice was paid 5 per cent of 
 the assessed taxes until his commission reached $1,000, the result 
 of which was that after each one had assessed $20,000 of taxes, 
 he stopped assessing through lack of inducement to additional 
 work.^ An amendment to the constitution was proposed and 
 adopted in 1873 which called for a return to the old system of 
 one assessing and collecting officer, and in 1875 this was enacted 
 into law.- This officer was to assess and collect both state and 
 county taxes, was to be elected for four years and was to be 
 paid by fees graduated to the assessed values but with no maxi- 
 mum prescribed. This system was short lived, however, since 
 the Constitution of 1876 ordered a different one. The one laid 
 down in 1876 is the one now in use. It was then provided that 
 for each organized county there should be an assessor of taxes, 
 and in counties having 10,000 or more inhabitants a collector of 
 taxes, each elected to hold office for two years; that in counties 
 having less than 10,000 population the sheriff should be the ex- 
 officio collector.^ The Constitution of 1876 also provided that 
 the taxes on the property of residents of an unorganized county 
 should be assessed and collected by the assessor and collector of 
 the county to which it was attached for judicial purposes, though 
 the taxes on lands in such counties owned by non-residents and 
 lands' lying in the territory not laid off into counties should be 
 assessed and collected at the office of the comptroller.* 
 
 The policy adopted in 1875 of fixing no limit to the com- 
 pensation which the assessor and the collector might receive was 
 followed throughout this period. The assessor received 5 per 
 cent on the amount of the state taxes assessed and 3 per cent on 
 the amount of county taxes assessed, and the collector received 
 
 ^Message of Governor Coke, January 12, 1875. The comptroller's 
 report for 1874 states that the city assessments for Galveston exceeded 
 the state and county assessment for the whole county by $8,528,424. 
 
 ^Laws of 1874, p. 234. Laws of 1875, p. 92. 
 
 'Art. 8, sees. 14 and 16. Acts of August 21, 1876; Laws of 1876, pp. 
 255, 259. 
 
 *Art. 8, sec. 12. Such provision bears witness to the frontier char- 
 acter of a large part of western Texas. In 1876 there were 152 organ- 
 ized counties and 21 unorganized. Comptroller's Report, 1876, p. 67. 
 
206 Bulletin of the University of Texas 
 
 liked percentages on the amounts collected. In view of these 
 wide-open limits there was no criticism, such as was urged in 
 the preceding period, that the policy as to compensation failed to 
 make the interests of the officers identical with those of the state. 
 There was also no criticism that this policy resulted in excessive 
 compensation to some officers. 
 
 The laws in regard to the place of assessment and collection of 
 taxes are important in their bearing upon the operation of the 
 general property tax. Under the Constitution of 1869 and the 
 legislation thereunder real property could be rendered and the 
 taxes thereon paid either in the county where the property was lo- 
 cated or in the county where the owner or agent resided ; personal 
 property was assessable where the owner or agent resided.^ The 
 alternatives here offered opened the way for property to escape 
 assessment, but the poor facilities which existed in the state at 
 this time for making remittances and for transmitting intelli- 
 gence made rather liberal provisions necessary. The Constitution 
 of 1876 laid down the rule that : ' ' All property, whether owned 
 by persons or corporations, shall be assessed for taxation and 
 the taxes paid in the county where situated, but the legislature 
 may, by a two-thirds vote, authorize the payment of taxes of 
 non-residents of counties to be made at the office of the comp- 
 troller of public accounts."- The laws carrying out these provi- 
 sions, with the exception of unorganized counties, were clear as to 
 the place of taxation of real property, but not as to the place 
 of taxation of personal property, and it remained for the 
 courts to decide that tangible personalty was, like real prop- 
 erty, taxable where located; intangible personalty, w^here the 
 owner resided.^ At first only the lands in unorganized counties 
 and territory and the property of railroad, telegraph, plank road 
 and turnpike companies in unorganized counties were assessed 
 
 ^Laws of 1873, p. 124. Laws of 1874, p. 176. 
 
 -Art. 8, sec. 11. The provision relating to unorganized counties has 
 been stated. 
 
 ^Ferris v. Kimble, 75 Tex., 476 (1889). Intangible personalty — for ex- 
 ample, purchase money notes, which has acquired a situs in the state 
 is taxable though owned by a non-resident; Hall v. Miller, 102 Tex., 
 289 (1909). See also Jesse French Piano and Organ Co. v. City of 
 Dallas, 61 S. W. Rep., 942 (1901). 
 
A Financial History of Texas 207 
 
 and the taxes collected by the comptroller; but on account of 
 complaints of the hardship of the requirement that non-residents 
 of organized counties should pay only to the collectors of such 
 counties, the law was changed so as to permit payment to the 
 comptroller/ 
 
 Paschal said of taxation in this state during the Civil War and 
 the Reconstruction that it was "another of those subjects upon 
 which legislation has been feverish, restless, changeable, and 
 almost irreconcilable." This description is particularly appli- 
 cable to the legislation relating to the delinquent taxes and un- 
 rendered property. Such matters have been the occasion for 
 more kaleidoscopic, voluminous, intricate, and unavailing legis- 
 lation than any other subject of taxation ; and this was especially 
 true of the period 1874-1880. During the periods of the Civil 
 War and the Reconstruction there was a vast amount of prop- 
 erty which escaped taxation through non-rendition and there was 
 very much delinquency in the payment of taxes assessed.^ 
 
 Direct taxation was comparatively unimportant during the 
 periods of the republic and of statehood down to the Civil War, 
 and there was a virtual breakdown of it during the war. It was 
 stringently administered under the military governments, but 
 from 1869 to 1874 the disfavor in which the state government was 
 held strongly disinclined taxpayers to the payment of taxes. 
 There was a tendency after 1875 to overestimate the revenue 
 that f ould accrue from the collection of the delinquent and un- 
 rendered property taxes which had accumulated.^ But the un- 
 certainty of the records, the doubtful legality of the taxes levied 
 during the Civil War, and the disfavor in which the military 
 government was held, influenced the legislature to take a very 
 liberal, if not coaxing, course with respect to these arrears. Both 
 
 ^Laws of 1879, p. 41. In 1876 about 39,000,000 acres were rendered 
 in the counties where situated and about 23,000,000 in counties other 
 than where situated. 
 
 -The comptroller in 1874 estimated that more than 35,000,000 acres 
 of land escaped assessment in 1873, and the official estimate of the 
 average annual loss of taxes assessed was 25 per cent. Messages of 
 Governor Coke, February 10, 1874, and January 12, 1875. 
 
 'On the basis of 25,000,000 acres of land escaping taxation annually 
 between 1870 and 1876, and valued at $1 per acre, the back taxes were 
 estimated at $750,000. It was estimated also that about one-tenth of 
 the taxes assessed were delinquent; Comptroller's Report, 1876. 
 
208 Bulletin of the University of Tex<is 
 
 delinquent taxes and taxes on unrendered property prior to the 
 year 1870 were relinquished, and those before January 1, 1873, 
 were waived if those accruing since the date were paid before 
 proceedings for forced payment were begun.^ The huge task of 
 compiling the lists of property, delinquent and unrendered, de- 
 volved upon the comptroller's office. The work was so slow and 
 the difficulties so many that new legislation was called for in 
 1879.2 
 
 Strangely there was no legislation until 1879 carrying into 
 effect the provisions of the new constitution in regard to the taxa- 
 tion of property in the unorganized counties and territory not 
 laid off into counties, and this was a serious omission. Until 1879 
 the provisions of pre-existing laws were applied, but as payment 
 by non-residents of such counties and territory could not be en- 
 forced, a vast amount of land escaped taxation.^ 
 
 The provisions adopted in 1876 in regard to enforcement of 
 payment of current taxes were an improvement over those 
 enacted under the Constitution of 1869, but they were not a solu- 
 tion of the vexing problem. The new legislation differed from 
 the old especially in that it did not postpone for so long a period 
 the sale of land for delinquent taxes. Under the old laws the 
 comptroller every five years returned to the counties the listf; 
 of delinquents, after which suit in the nature of an action for 
 debt had to be brought in the district court, and if the judgment 
 was in favor of the state, the sheriff proceeded to sell the land 
 or offered it for sale once in each six months.* The new legisla- 
 tion provided for the annual seizure and sale by the collector 
 of property sufficient to pay th^ taxes, and if there was no indi- 
 vidual purchaser, it was bid off to the state.'^ By article 16, sec- 
 tion 50 of the constitution the homestead was protected from 
 
 ^Acts of August 19, 1876; Laws of 1876, pp. 214, 255. 
 
 ^Laws of 1879, p. 161. Ibid., Special Sess., p. 12. By 1882 only about 
 forty counties had been furnished delinquent lists, and even this small 
 result of six years' labor was defective, owing to the inaccuracy of 
 the records from which the lists were compiled. See Act of May 16, 
 1882; Laws of 1882, p. 39. 
 
 'Comptrollers' reports, 1876, 1877-8. It was estimated that not one- 
 fourteenth of the taxes due by non-residents were paid. 
 
 *Laws of 1871, First Sess., p. 51. Laws of 1873, p. 187. 
 
 ''Laws of 1876, p. 259. Laws of 1879, p. 46. Ibid., pp. 46, 132, and 141. 
 Ibid., Spec, Sess., p. 36. 
 
A Financial History of Texas 209 
 
 seizure and forced sale for any taxes except those due on it./^ 
 In order to ascertain better the unrendered land it was provided 
 in 1879 that the general land office should furnish each assessor 
 with a correct abstract of all the existing surveys of lands in his 
 county and with all new surveys each j^ear.- 
 
 The policy of bidding off lands to the state when there were 
 no individual purchasers which had been followed since 1846, 
 except during the period of the Reconstruction, came in for criti- 
 cism, and the policy of offering continuously such lands for sale 
 until they were sold was advocated.^ 
 
 There was a change made during this period in the dates for 
 the assessment and collection of taxes for the greater convenience 
 of taxpayers and officers. In 1874 the final date for the rendition 
 of property was changed from April 1 to May 1, but December 
 1 remained the date of final settlement between the comptroller 
 and the tax collectors.* In 1876 it was enacted that assessment 
 should take place between January 1 and June 1, that collec- 
 tions should begin on October 1 and that taxes should be paid 
 by October 1 or be delinquent.^ 
 
 A frequent complaint met with in this period of the state's 
 financial history, and especially before 1876, is the non-rendi- 
 tion of land. This resulted in inequality of taxation, but the 
 explanation for this escape lay largely in the failure of the law 
 until 1879 to provide for the enforcement of payment of taxes on 
 lands in the unorganized counties. Undervaluation of property 
 and vne escape of personalty characterized the period, though it 
 had been hoped that the legislation of 1876 would establish a just 
 system.*^ The United States Census of 1880 gave the estimated 
 
 ^This provision first appeared in the Constitution of 1869. Wright v. 
 Straub, 64 Tex., 64 (1885). 
 
 ^Laws of 1879, p. 24. 
 
 ^It was estimated that at least four-fifths of the lands offered for 
 sale were bid off to the state; Comptroller's Report, 1876. An act of 
 April 19, 1879, provided for the monthly offering for sale of delinquent 
 lands, but this was repealed in July of the same year, and the old 
 policy returned to; Laws of 1879, p. 118; ibid.. Spec. Sess., p. 36. 
 
 *Laws of 1874, p. 173. 
 
 "Laws of 1876, pp. 259, 265. 
 
 "Messages of Governor Coke, January 12, 1875, and April 19, 1876. 
 Message of Governor R. B. Hubbard, January 14, 1879. Comptroller's 
 Report, 1875. 
 
 14— H 
 
210 Bulletin of the University of Texas 
 
 true value of the property in the state to be $725,000,000. The 
 assessed valuation for 1880, however, was only $311,470,000, 
 or 41.5 per cent of the true value/ In comparing the estimated 
 true and assessed values, allowance must be made for legal 
 exemptions ; but these would account for only a small part of the 
 difference. 
 
 There was no standard of valuation for taxation of the prop- 
 erty of individuals during the Reconstruction period. In 1873 
 it was enacted that rendition and valuation should be under 
 oath, but the formal oath covered only the completeness of the 
 inventory and the truth of answers touching it. In the event of 
 disagreement over valuation between the assessing officer and 
 the taxpayer each selected an arbitrator and they a third, and 
 the decision of the arbitrators was final. The standard adopted 
 in 1876 was *'true and full value," which was the fair cash 
 market value at voluntary sale.- The oath prescribed in 1876 
 for the taxpayer did not differ from the preceding one, but that 
 required of the assessor in submitting his assessment rolls cov- 
 ered the completeness of the list and the truth and correctness of 
 the valuation. The laws provided for uniformity of assessment, 
 but no adequate provisions were made for carrying them out. 
 
 The Constitution of 1876 failed to provide for the machinery 
 that might have prevented flagrant differences among the coun- 
 ties in the percentage of assessed to true values. A new provi- 
 sion in Texas constitutions was section 18 of article 8 of the 
 Constitution of 1876 which reads: "The legislature shall provide 
 for equalizing, as near as may be, the valuation of all property 
 subject to or rendered for taxation,- (the county commissioner's 
 court to constitute a board of equalization) ; and may also pro- 
 vide for the classification of lands with reference to their value 
 in the several counties." It is a matter of speculation whether 
 this ( verbiage prevents the creation of a state board of equaliza- 
 tion with broad powers of equalizing all county values, but the 
 fact is that no such board has been created. The duties of the 
 
 ^The census gives $320,364,515 as the assessed valuation, but this does 
 not agree with the amount reported by the comptroller, and the latter's 
 amount is taken. See Report of the Tenth Census on Valuation, Taxa- 
 tion, and Public Indebtedness. 
 
 "Act of August 21, 1S76; Laws of 1S76, p. 275. 
 
A Financial History of Texas 211 
 
 county boards were defined for the first time in 1879/ For un- 
 organized counties the board of equalization was composed of the 
 p:overnor, the attorney general, and the secretary of state.- 
 
 An explanation sometimes offered for the undervaluation ^or 
 escape of property — especially for the escape of intangible prop- 
 erty — is the high rate of taxation. The weight of'taxes on prop- 
 erty cannot be understood by looking at the state rate alone, but 
 the rates levied by ^ counties, cities, towns, and other taxing dis- 
 tricts must be included. The Constitution of 1876 limited the 
 state tax on property, exclusive of the tax to pay the -public debt, 
 to 50 cents on the $100 valuation.^ The county limit of taxation 
 was fixed in the constitution at 75 cents, except in the ca.se of 
 coast counties which had such additional taxing power as the 
 legislature might confer to construct sea walls, breakwaters, and 
 for sanitary purposes, and except for the purpose of paying 
 county debts incurred before 1876.* The county tax, as lim- 
 ited by statute, however, was fixed at 75 cents, outside of a tax 
 sufficient to pay the interest on the bonds subsidizing railroads 
 and contribute to a sinking fund for such bonds.®. 
 
 The taxing power of towns and cities was so defined in the 
 constitution as to resolve them into several classes. It was pro- 
 vided (1) that no city or town should levy more than one-half 
 of the state rate, except ' for the payment of debts already in- 
 curred and except for the erection of public buildings for which 
 latter purpose a tax not to exceed 50 cents might be levied.*^ 
 This limited the rate to 75 cents, except for the payment of debts 
 inciK-'red before 1876. It provided (2) that cities and towns 
 having a population of 10,000 or less could be incorporated only 
 by general law, with a tax limit for current expenses of 25 cents ; 
 and (3) that cities having a population of more than 10,000 
 could be incorporated by special act with a tax limit for any and 
 
 I 
 
 ^Laws of 1879, p. 44. I. & G. N. R. R. Co. v. Smith County, 54 
 Tex., 1 (1880). 
 
 -Laws of 1879, p. 141. 
 
 ''Art. 8, sec. 9. 
 
 ^Art. 8, sec. 9; art. 11, sec. 7. 
 
 ''Laws of 1876, p. 52; ibid., p. 174. Laws of 1879, pp. 33, 61, 109; Rev. 
 Stats., 1879, art. 1516. 
 
 'Art. 8, sec. 9. 
 
212 
 
 Bulletin of the University of Texas 
 
 all purposes of $2.50.^ These rates Avere laid down as maxima. 
 The actual rates which were levied were such as the legislature 
 authorized, and in the case of the specially chartered cities the 
 maximum authorized has not been uniformly $2.50. The con- 
 stitution provided (4) that coast cities could levy au"! .3ollect 
 such taxes as might be authorized by the legislature to construct 
 seawalls, breakwaters, and for sanitary purposes.- 
 
 It was also provided in the Constitution of 1S76 that the legis- 
 lature might constitute any city or town a separate and inde- 
 pendent school district, but the tax limit was not fixed.^ The 
 statute relating to the subject of independonr school districts 
 was ambiguous until 1881.* 
 
 Throughout the period of 1874-1880 the rate ' of the property 
 tax for the state purposes, including the common schools, was 
 50 cents, and one-fourth of the proceeds went to the available 
 school fund." County rates in 1876 varied from 25 cents in Starr 
 County to $1.20 in Anderson. 'The principal burden lay in the 
 city taxes, however, and the total of state, county and city taxes 
 amounted in s.ome instances in 1880 to $3.00 on the $100 valua- 
 tion. ** There were no taxes levied in 1880 for schools by the 
 
 ^Art. 11, sees. 4 and 5. 
 
 ^Art. 11, sec. 7. 
 
 ^Art. 11, sec. 10. 
 
 *Laws of 1876, p. 209. Laws of 1881, p. 64. 
 
 ''Laws of 1875, p. 243. Laws of 1879, p. 145. 
 
 1876. 
 County State Tax 
 
 Bexar $0.50 
 
 Dallas 0.50 
 
 Galveston 0.50 
 
 Harris 0.50 
 
 Travis 0.50 
 
 County Tax 
 $1.00 5/6 
 .65 
 
 .73 1/3 
 .40 
 .50 
 
 1880 
 
 State tax County tax Principal city Total 
 
 $0.50 $0.85 $1.00 San Antonio $2.35 
 
 0.50 0.75 1.75 Dallas 3.00 
 
 0.50 0.70 1.50 Galveston 2.70 
 
 0.50 .20 2.00 Houston 2.70 
 
 0.50 .50 .90 Austin 1.90 
 
 The county statistics for 1876 are taken from the comptroller's 
 report for 1876; those for 1880 are taken from the Tenth United States 
 Census. 
 
A Financial History of Texas 213 
 
 counties or by school districts. Other minor civil divisiouw re- 
 ported only $1,994 of school taxes. ^ Total state, county and local 
 taxation amounted to $4,568,716, distributed at follows: state, 
 $2,188,540 ; county, $1,685,907 ; local, $694,269.^ A rate of $3.00 
 on the $100 valuation is a high direct tax ; for, assuming 10 per 
 cent income from property, such a rate is equivalent to a tax on 
 income of thirty-three and one-third per cent. It is to be re- 
 membered, however, that evasion and undervaluation reduced 
 this by two-thirds or more, and any opinion of the heaviness of 
 taxation during this and the preceding period as well should be 
 formed in the light of facts known to exist regarding under- 
 valuation and evasion. For those, however, who could not or 
 who would not evade or undervalue the rates were burdensome. 
 Between 1874 and 1880 expenditures increased 47.6 per cent; 
 assessed values, 27.3 per cent. The high mark of assessed values 
 was reached in 1877 when they were $319,373,000 as compared 
 with $244,510,000 in 1874 and $311,470,000 in 1880 ; but partly 
 because of a relapse of financial depression and partly because 
 non-residents of organized counties secured lower assessments 
 through their appointed agents, assessed values fell off over 
 $16,000,000 in 1878.^ Taxation was not sufficient to prevent 
 annual deficits in the general revenue account, and there were 
 bond sales for the benefit of this account in 1875, 1876, 1877, 
 and 1879. More efficient methods of administration of the prop- 
 erty tax would have rendered unnecessary bond sales to meet 
 the current ordinary expenditures. A special interest tax of 15 
 ceiits was urged by the house finance committee in 1876, but 
 it was opposed by the governor.* A state tax rate of 65 cents is 
 high, but in view of undervaluation this would have been only 
 the nominal rate. It is probable that if the additional tax had 
 been levied, the credit of the state would have been better.^ 
 
 ^Tenth Census of the United States, 1880. Vol. Valuation, Taxation 
 and Public Indebtedness, p. 25. 
 ^Ibid. 
 
 ^Comptroller's Report, 1879-80. 
 
 ^Letter of Governor Coke to A. C. Gray, November 27, 1876. 
 ^Galveston News, July 12 and December 7, 1876. 
 
214 Bulletin of the University of Texas 
 
 B. Business Taxes. 
 
 Under business taxes are included the oeneral propery lax 
 modified in administrative details to suit the special conditions 
 of business, the ordmary occupation taxes, and the special occu- 
 pation taxes. 
 
 At the close of the Reconstruction period a somewhat central- 
 ized method existed of taxing by the general property tax the 
 property of railroad and telegraph companies. Their property 
 was required to be rendered to the justice of the peace of the 
 precinct where the principal office was located, and the lists 
 were then forwarded to the comptroller for his approval or dis- 
 approval. Incorporated cities and towns certified their tax rates 
 to the comptroller, and the taxes might be paid to him, though 
 payment to him was not mandatory.^ The Constitution of 1876 
 reversed this modified employment of the unit method of assess- 
 ment, and provided that such corporate property should be as- 
 sessed and the taxes collected in the several counties where it 
 was situated. 2 Exceptions to this rule were and are (1) that 
 the property of railroad, telegraph, plank road and turnpike 
 companies in unorganized counties shall be assessed and the 
 taxes thereon collected at the comptroller's office, and (2) that 
 the rolling stock of a railroad company shall be assessed in gross 
 in the county where the principal office is located and the value 
 so assessed shall be apportioned by the comptroller among the 
 counties on the basis of the proportion of the mileage of the 
 road in each county to the total mileage of the road in the state, 
 the taxes being collected by the county collectors. A wholly de- 
 centralized method of taxing these complicated properties was 
 thus fastened upon the state, and the results compare unfavor- 
 ably with those under the preceding method.^ 
 
 ^Act of April 30, 1874; Laws of 1874, p. 175. 
 ^Art. 8, sec. 8. 
 
 *Act of August 21, 1876; Laws of 1876, p. 275. 
 Year Miles 
 
 1874 1409 
 
 1875 1487 
 
 1876 1493 
 
 1877 1781 
 
 1878 1929 
 
 1879 1958 
 
 Total value 
 
 Assessed average 
 
 
 value per mile 
 
 $17,514,000 
 
 $12,430 
 
 16,605,000 
 
 11,167 
 
 16,577,000 
 
 11,103 
 
 15,040,000 
 
 8.445 
 
 15,229,000 
 
 7,894 
 
 14,817,000 
 
 7,562 
 
A Financial Histonj of Terns 21.5 
 
 Banking was the other business for which special rules of 
 assessment were laid down. Under the Constitution of 1869 
 state banks could be incorporated, but the Constitution of 1876 
 returned to the policy which prevailed from 1846 to 1870 of 
 prohibiting the establishment of state banks. National banks, 
 private banks, and state banks chartered between 1870 and 1876; 
 were the banking institutions in the state. They were taxed 
 on their real property, tangible personalty, money, credits and 
 securities, less deposits, accounts payable, and such bonds or 
 other securities as were exempt by national or state laws. The 
 shares of stock of national banks in the state were taxable ta 
 the holder. 
 
 Occupation taxes were of two kinds; namely, what may he 
 called ordinary, or general, and special. The Constitution of 
 1876 empowered the legislature to impose occupation taxes, 
 except upon persons engaged in mechanical and agricultural 
 pursuits, but all such taxes had to be equal and uniform upon 
 the same class of subjects within the limits of the authority^ 
 levying the tax.^ The occupations which were taxed were^ 
 numerous, but they were the same in general as those taxed!, 
 in 1873. Occupations called useful as w^ell as those which po/pu.- 
 larly are not so eonsidered were taxed. Those on merchants' 
 and on liquor dealers were the important taxes which were 
 heavily increased.^ In some instances the taxes were intended 
 to be prohibitive, as, for example, those of $1,000 on nine or 
 ten-pin alleys and of $200 on fortune tellers. The taxes on 
 merchants were roughly classified according to the amounts of 
 purchases, and in the case of a number of occupations, such as 
 photography, and dealing in stocks and bonds, classification 
 was based on population of the town or city. The rates which 
 counties, cities and towns could levy were limited by the con- 
 stitution and the statutes to not more than one-half of the state^ 
 rate, but in the case of some occupations, as for example^ 
 
 ^Art. 8, sees. 1 and 2. 
 
 ""The taxes imposed on retail liquor dealers by the acts of 1873 and' 
 1876 were upheld as constitutional in Harris v. State, 4 Tex. Crim.. 
 App., 131. The tax on lawyers, was upheld in Lanquille v. State, 4 Tex. 
 Crim. App., 312 (1878). See also ex-parte Williams, 18 'ex. Crim. App.,. 
 262 (1892). 
 
/ 
 
 216 Bulletin of the University of Texas 
 
 lightning rod dealers and sewing machine dealers, the rates 
 were specified. 
 
 The occupation tax measure wliich is the most celebrated of 
 any in the annals of the state was passed in this period. It has 
 gone down in history^ as the Bell Punch Law, and applied to 
 the sale of liquors. According to it, all dealers in spirituous, 
 vinous, and malt liquors in quantities less than a quart were 
 required to pay a specific occupation tax of $250 per annum, 
 when only malt liquors were sold a tax of $25, and a tax of 
 two cents on each drink except malt, for Avhich the tax was 
 one-half cent, sold or drunk on the licensor's premises. The 
 seller was required to have two registers, one marked "Alco- 
 holic," the other **Malt," and each register was provided with 
 a bell which was struck at each revolution of the crank, and 
 with a device which registered upon the face of the machine 
 the number of revolutions of the crank. The registers were 
 furnished by the state at $10 each. The sale of each drink 
 had to be registered in the presence of the purchaser, and it 
 was unlawful, and punishable by a fine, for anj^ person to pay 
 for a drink until it had been registered. Penalties were pre- 
 scribed also for failure to pay the tax, for failure to turn the 
 crank, for any willful injury to the register, for any counter- 
 feiting of the register, and so on. The tax collector visited 
 each licensor once a month and collected the tax. One-third 
 of the net collections in each county accrued to the county. 
 Incorporated cities and towns could levy a tax of one-fourth 
 of one cent on spirituous and vinous, and One-eighth of one 
 cent on malt, drinks sold.^ The law proved to be a failure and 
 was repealed in 1881. 
 
 Another celebrated occupation tax enacted in 1879 was the 
 -drummers' tax. It amounted to $200, but it Avas not imposed 
 on those soliciting for houses which had paid the merchants* 
 •occupation tax of $200, an exception which obviously worked 
 an injustice on the smaller houses. This tax, in so far as it 
 
 ^Act of April 3, 1879; Laws of 1879, p. 71. The idea of this tax 
 appears to have been borrowed from Virginia; message of Governor 
 Roberts, January 21, 1879. Constitutionality upheld in Albrecht v. 
 State, 8 Tex. Crim. App., 216 (1880). ' 
 
A Financial History of Texas 217 
 
 applied to citizens of other states, was declared an unconsti- 
 tutional interference with interstate commerce.^ 
 
 An important change in the administration of occupation 
 taxes was made in 1879. Until 1879 collectors were charged 
 on the books of the comptroller's office with only such taxes 
 as they reported collected, and there was considerable laxity 
 in reporting collections. By the system adopted in 1879 the 
 collector was charged on the comptroller's books with an allot- 
 ment of occupation tax receipts, on which the amounts of the 
 taxes were printed, and he was responsible for the value of 
 all not returned. Loopholes still existed, however, for de- 
 frauding the state." Certain of these taxes, namely, those on 
 sewing machine canvassers and clock peddlers, were, without 
 any apparent reason, made payable directly to the comptroller. 
 
 The description "special occupation taxes" is applied to 
 those paid chiefly by corporations. At the beginning of this 
 period, life, fire, and marine insurance companies were the only 
 ones of the great modern corporations subject in this state to 
 a special occupation tax. By the end of the period, however, 
 and as a result of the tax measures adopted in 1879, not only 
 were these companies, but gas, telegraph, express, sleeping and 
 dining car, and railroad companies were so taxable. Com- 
 plaints that the general property tax was not suited to reach 
 the tax-paying ability of insurance, transmission and trans- 
 portation companies were not heard to any extent during this 
 period, and between 1873 and 1879 corporations were singu- 
 larly free from the special taxation which had made its appear- 
 ance in the preceding period. 
 
 In 1873 the occupation tax payable to the state by a life 
 insurance company was $500, that payable to each county, $10; 
 fire and marine companies each paid $200 to the state and $5 
 to the county. In 1876 the tax on the life companies was 
 reduced to $200, but it was increased in 1879 to $300, and the 
 county tax of fire and marine companies was doubled. In 1879 
 a state occupation tax of $50 was imposed on gas companies 
 
 ^Ex-parte Stockton, 33 Federal Reporter, 95 (1887). 
 ''The practice was reported of collectors issuing memorandum re- 
 ceipts; Comptroller's Report, 1881-2. 
 
218 Bulletin of the University of Texas 
 
 and one of $750 on express companies, but $250 of the latter 
 amount was apportionable among the counties on the bnsis of 
 the business done in each. On telegraph companies there was 
 imposed in 1879 a tax of one cent for each full rate message 
 sent and one-half cent for every message sent at less than full 
 rate; and on the gross receipts derived within the state from 
 passenger travel of railroads, steamboats, and stage coaches, a 
 tax of one per cent was levied.^ Two different measures taxing 
 sleeping and dining car companies were passed in 1879 : the 
 first taxed them at tlie rate of $2 per mile of railroad in the 
 state over which their cars ran; the second imposed an ad 
 valorem tax of one-half of one per cent on the value of cars 
 owned or assigned for use in the state.- All of these taxes 
 were payable directly to the comptroller. The tax upon sleep- 
 ing and dining car companies exempted them from all other 
 taxes. No county or city could employ the occupation taxes 
 imposed on telegraph, railroad, steamboat and stage coach 
 companies. As compared with present day occupation taxes 
 on such corporations, these taxes, with the exception of the 
 tax on the gross receipts from passenger travel, were mere 
 bagatelles. 
 
 A very marked extension of occupation taxes took place, as 
 shown above, in 1879. Financial needs rendered some increase 
 in taxation desirable, and the argument for the extension of the 
 occupation taxes was chiefly that the ad valorem property tax 
 did not reach the ability of those engaged and that this failure 
 was to the prejudice of the interests of the agricultural class.^ 
 
 Occupation taxes constituted 22.9 per cent of the assessed taxes 
 in 1880, as compared with 16.8 per cent in 1875 and 17.1 per 
 cent in 1879. The taxes on liquor amounted to 50.1 per cent 
 of the total occupation taxes in 1880, and the special corporation 
 taxes constituted only 4.3 i:)er cent of the total. The receipts 
 
 ^This tax was urged by Governor Roberts in a special financial mes- 
 sage, January 29, 1879. 
 
 =*Laws of 1879, Spec. Sess., p. 39. Galveston News, June 15, 1879. 
 
 '^Inaugural address of Governor Roberts, January 21, 1879. The jus- 
 tification for the passenger tax urged by the governor was the theo- 
 retically unsound one that the state provided protection to travelers. 
 
A Financial Hist or ij of Texas 1J19 
 
 from corporation taxes would have been larger had not the 
 Western Union Telegraph Company contested the law apply- 
 ing to it on the ground that it taxed interstate messages, and this 
 contention was sustained by the Supreme Court of the United 
 States.^ 
 
 C. The Poll Tax. 
 
 Section 1 of article 8 of the Constitution of 1876 provides 
 that ''the legislature may impose a poll tax", and section 3 pro- 
 vides that "there shall be set apart annually a poll tax of $1 on 
 all male inhabitants in this state between the ages of 21 and 60 
 years, for the benefit of the public free schools." The age limits 
 were the same as had been adopted for the tax of the preceding 
 period. Until 1876 the tax was $1, one-fourth of the proceeds 
 of which went to the available school fund, but in 1876 the tax 
 was increased to $2, $1 of which was foi- the school fund and $1 
 for the general revenue fund. The only persons within the tax- 
 able age limits who were exempt were Indians and the insane. 
 In 1879 the blind and persons who had lost the use of one or 
 both of their hands or feet were added to the exempted class. 
 There was great laxity in the payment of the poll tax, real estate 
 owners being practically the only ones who paid it.^ The at- 
 tempt was made in 1879 to have an amendment to the constitu- 
 tion submitted which would make the payment of the tax pre- 
 requisite to voting. The joint resolution proposing this passed 
 only *he house of representatives, and it would have been lost 
 there if the negro member from Brazos County had not changed 
 from the opposition upon being assured that the people would 
 have to vote upon it before it could be adopted.^ It was pro- 
 vided in 1879 that real and personal property should be liable 
 for all state and county taxes, including the poll tax.* As show- 
 
 ^Western Union Telegraph Company v. State of Texas, 105 U. S., 
 560 (1881). See also 55 Tex., 314 (1881). 
 
 ^Houston Daily Telegraph, January 29, 1875. Inaugural address of 
 Governor Roberts, January 21, 1879. 
 
 ^Galveston News, March 14, 1879. 
 
 *Laws of 1879, p. 46. 
 
220 Bulletin of the University of Texas 
 
 ing the amount of evasion, the total polls assessed in 1881 were 
 287,723 as compared with a census male population within the tax- 
 able age limits of 356,627 in 1880. As the insane, blind, prisoners 
 and those in almshouses of both sexes and all ages numbered 
 only 4,788, exemption does not begin to explain the difference 
 between the number assessed and the number assessable. The 
 showing for the tax is worse when to evasion through escape of 
 assessment, there is added evasion through failure to pay the tax 
 assessed. In 1881 the percentage of non-payment of the tax 
 assessed was 32.1. 
 
 2). Miscellaneous Receipts. 
 
 Miscellaneous receipts were mainly from fees, interest on in- 
 vestments, and land sales.^ The bulk of the fee revenues came 
 to the general land office for work done by it in connection with 
 the administration of the public lands. The fees collected by 
 the other departments of the state government were insignificant. 
 There were no corporation charter fees imposed before 1879, but 
 in that year fees of $100 for railroad, telegraph, and street rail- 
 way charters, $25 for charters of other business corporations, 
 and $5 for charters for other than business corporations were 
 fixed and made payable to the secretary of state.^ 
 
 The amount derived from interest on investments was a growing 
 one. The interest from investments which constituted a net addi- 
 tion to the state 's revenue was derived from the railroad bonds held 
 by the school fund and the United States bonds and land notes 
 held by the school, university, and asylum funds. The Consti- 
 tution of 1876 limited the investment of the special funds to 
 United States and Texas bonds. The former were to be invested 
 
 ^The proceeds of land sales by permanent funds, such as the per- 
 manent school fund, are not included among receipts along with taxes, 
 fees, interest and the like, but are separately stated. Such permanent 
 funds are of the nature of capital accounts, their receipts from lands 
 being subject only to investment and reinvestment in bonds, the inter- 
 est alone on such investments being applicable to current expenditures. 
 There was no division of the university fund into an available and a 
 permanent fund which makes it necessary to include its receipts from 
 lands among other revenues of an active character. 
 
 =Laws of 1879, p. 12. 
 
A Financial History of Texas 221 
 
 in only when State of Texas bonds were not obtainable, whereas 
 under the Constitution of 1869 only United States bonds could 
 be invested in.^ The refunding operations of the national gov- 
 ernment during this period made state bonds more desirable than 
 Federal bonds, their interest being higher and their premium 
 beiuR: lower. 
 
 ^Art. 8, sees. 4, 9, and 11. 
 
Chapter 4. 
 
 PUBLIC LANDS. 
 
 The legislation of April, 1874, provided for the sale of the 
 school, university and asylum lands.^ Preference in purchase 
 was accorded actual settlers, they being given six months from 
 the date of the act within which to make application to purchase. 
 Settlement on the asylum and university lands was required with- 
 in six months, and on the school lands within twelve months. It 
 was provided that if the university lands were not purchased by 
 actual settlers they should be open to purchase by non-settlers. 
 The maximum amount of land purchasable was 160 acres, except 
 that there was no limit to university lands purchasable by persons 
 who were not actual settlers. The minimum purchasable was 80 
 acres, except that it was 160 acres for purchasers of university 
 lands who were not actual settlers. The minimum value placed 
 on all the lands was $1.50 an acre, and appraisal of their value 
 by local commissioners was prescribed. One-tenth of the pur- 
 chase price was payable down, the remainder in installments of 
 one-tenth, with interest at 10 per cent. The acts of 1874 pro- 
 viding for the sale of the school, university and asylum lands 
 were in effect until 1879. 
 
 While the laws contemplated sale to actual settlers, they were 
 not drawn so as to insure this. They were otherwise defective.^ 
 Purchasers were able to enter into possession of land by making 
 a first payment, and often valuable timber lands belonging to 
 the school fund were stripped and abandoned before purchase 
 was completed.^ 
 
 The public land not held by the special funds and which w^as 
 vacant and unappropriated was not on the market before 1879, 
 but was open to homestead, railroad, and other scrip claimants. 
 Throughout this period each head of a family without a home- 
 stead was entitled under the usual conditions of three years 
 
 ^Laws of 1874, pp. 72, 142, 146. Laws of 1876, p. 75. 
 
 =^Land Office Report, 1877, p. 3. Ibid., 1878, p. 3. Ibid., 1896-8, p. 15. 
 
 'Ibid., 1878. 
 
r 
 
 A Financial History of Texas 223 
 
 settlement and payment of fees to 160 acres, each single man to 
 80 acres of public land.^ New railroads received grants at the 
 rate of sixteen sections per mile.^ Grants were made somewhat 
 liberally, it not wastefully for the improvement of rivers and 
 bayons, and for the construction of canals and ditches.^ 
 
 The Constitution of 1876 (Art. 14, sec. 4) prohibited the sale 
 of certificates of land at the land office except to actual settlers, 
 and the amount purchasable was limited J:o 160 acres. The Re- 
 vised Statutes of 1879 (Art. 3924) granted to the actual settler 
 the right to purchase up to 160 acres, but the right of preemption 
 could not be acquired by one who has already the owner of land.* 
 
 1879 ended the purely developmental policy of administering 
 the unappropriated public lands. The unappropriated lands in 
 the Panhandle counties and scrap lands in organized counties 
 were appropriated, first, to the amount of 3,050,000 acres to the 
 erection of a state capitol ; second, to the payment of the public 
 debt ; and, third, to the increase of the endowment of the school 
 fund.^ The minimum price fixed on these lands was fifty cents 
 an acre. This price while not too little at the time for the land 
 on the frontier was below the value of the scrap land.^ The land 
 legislation of 1879 shows small results until after 1880. The 
 receipts under the fifty cents act were only $5,718.77 up to Sep- 
 tember 1, 1880. 
 
 The receipts from sales of land belonging to the school, uni- 
 versity and asylum funds were : 
 
 1874 .......$ 1,572.46- 
 
 1875 39,843.89 
 
 1876 125,546.78 
 
 1877-8 203,745.89 
 
 1879-80 254.241.89 
 
 Total u . . . . .$624,950.91 
 
 ^Constitution of 1876, art. 14, sec. 6. Laws of 1876, p. 197. 
 
 -Constitution of 1876, art. 14, sec. 3. Laws of 1876, p. 153. 
 
 ^Laws of 1874, p. 169. Ibid., p. 185. Laws of 1875, p. 22. Ibid., p. 77. 
 
 ^Sayles, op. cit., p. 2^7. Gambrell v. Steele, 55 Tex., 582 (1881). 
 '^Constitution of 1876, art. 16, sec. 57. Laws of 1879, pp. 9, 11. Laws 
 of 1879, Spec. Sess., p. 48. 
 
 «Land Office Report, 1879-1880. 
 
224 Bulletin of the University of Texas 
 
 Over one~half of the receipts, or $322,450, wa^ from sales of 
 university lands set apart in 1839 and lying in Callahan, Collin, 
 Cooke, Fannin, Grayson, Hunt, Lamar, McLennan, and Shackel- 
 ford counties. 
 
Chapter 5. 
 
 SCHOOL AND UNIVERSITY FUNDS. 
 
 Diirin": this period there existed the same division of the 
 school fund into a permanent and an available fund which had 
 been made in 1870. The principal of the bonds and other funds 
 and the principal of the proceeds from the sale of school lands 
 constituted the permanent fund; the interest on the investment 
 of the permanent fund and a share of the taxes made up the 
 available fund, and was the amount which was applicable an- 
 nually to the support of the public free schools.^ These funds 
 could not be appropriated to any other purpose. The Constitu- 
 tion of 1869 set apart to the school fund the lands and other 
 funds theretofore given to it, the proceeds of all public land 
 sales, one-fourth of the annual revenue from general taxation, 
 and the full revenue from an annual poll tax of $1.- The Con- 
 stitution of 1876 gave to it the ''funds, lands, and other prop- 
 erty heretofore set apart and appropriated for the support of 
 public schools ; all the alternate sections of land reserved by the 
 state out of grants heretofore made or that may hereafter be 
 made to railroads or other corporations of any nature w^hatsoever ; 
 one-half of the public domain of the state." This was consti- 
 tuted the permanent fund and the income from it and ''not 
 more than one-fourth of the general revenue of the state, and a 
 poll tax of $1" w^as defined to be the available fund.^ 
 
 The permanent fund had in bonds and cash on August 31, 
 1874, $2,563,313; on August 31, 1880, $3,542,126. Included in 
 these amounts were $402,535 of state bonds of doubtful validity 
 and the railroad bonds without any deduction of the sinking 
 fund. The increase between 1874 and 1880 was due principally 
 to the sales of school lands and to the recovery in 1876 of some 
 of the United States bonds which had been taken from the fund 
 during the w^ar and put at the disposal of the Military Board. 
 The bonds were sold for $339,240, which amount less commis- 
 
 'Constitution of 1876, art. 7, sec. 5. 
 
 *Art. 9, sec. 6. 
 
 •Art. 7, sees. 2 and 3. 
 
 15— H 
 
"226 Bulletin of the Vniversitij of Texas 
 
 ■sions of $39,216 on contracts for recovery, netted $300,023. 
 Neither the permanent fund nor the available fund benefited to 
 any large extent from the public lands. The total receipts to 
 the permanent fund from land sales were during the six years 
 ending August 31, 1880, only $251,089, while the available fund 
 received as interest on land notes only $61,695. Nothing was 
 derived from the lease' of school lands, but the millions of acres 
 belonging to the fund afforded free pasture to vast herds of 
 cattle. In 1879 a rental of $25 per section was fixed for any 
 one enclosing any of the public lands and using them to the ex- 
 elusion of the public; but this barely touched the policy of ''free 
 •grass. ' ' 
 
 Until 1880 the available fund received the maximum share 
 of one-fourth of the general revenue. The continuous deficits 
 in the general revenue fund resulted in 1879 in an agitation 
 which charged the school fund as the cause of the deficit, and a 
 decided effort was made in the regular session of the Sixteenth 
 Legislature to reduce the share during 1880 and 1881 to either 
 one-sixth or one-eighth of the revenues.^ Neither branch of the 
 legislature was willing to meet the public with such a reduction, 
 Tiowever, and it remained for the governor to veto the item ap- 
 propriating one-fourth. At the special session though, in 1879, 
 one-sixth of the ad valorem and occupation tax receipts was ap- 
 propriated.2 It was contemplated, of course, that this reduction 
 should be only temporary.^ 
 
 The per capita apportionments from the available fund were 
 as follows : 
 
 Total. 
 
 1874 $1.95— $499,800 
 
 1875 1.59 
 
 1876 1.47 
 
 1877 2.82 
 
 1878 4.50 
 
 1879 4.25 
 
 1880 3.00— $679,317 
 
 ^Message of Governor Roberts, January 29, 1878. 
 
 =^Laws of 1879, p. 44. 
 
 'The deficiency argument was joined with the appeal to popular 
 prejudice that the school system was a child of the Reconstruction era. 
 See Galveston News, March 18, 20, 21, and 30; April 11, 19, and 24; 
 and May 7, 8, and 15, 1879. 
 
A Financial History of Texas 227 
 
 There were warrants outstanding against the available fund 
 on August 31, 1874, of $104,577 ; on August 31, 1875, of $384,- 
 838, and there was also 'a large unascertained amount of un- 
 audited claims of school teachers for services rendered prior to 
 July 1, 1873. In 1874 $400,000 of the available fund not other- 
 wise appropriated was appropriated to the payment of the 
 teachers' claims, and it was provided that teachers' warrants 
 registered by the comptroller should draw 8 per cent interest 
 or should be fundable into school bonds.^ No school bonds were 
 authorized, and these claims dragged on. The Constitution of 
 1876 provided that the legislature should either pay or fund 
 them, and by the bond act of July 6, 1876, their payment out 
 of the proceeds of the bond sales was authorized.- The amount 
 paid on their account was through 1883, $404,536, and an addi- 
 tional appropriation of $15,000 was made in 1883. Claims con- 
 tinued to appear long after this date. 
 
 Little support from the general treasury was given to higher 
 education during this period. The Constitution of 1876 called 
 for the establishment as soon as practicable of a state university 
 and of a branch university for the instruction of negroes, but 
 provided that no tax should be levied and no money appropri- 
 ated out of the general revenue, either for the university for 
 negroes or for buildings for the University of Texas.^ It called 
 for an immediate appropriation of $40,000 for the completion 
 of the buildings and the furnishings of the Agricultural and Me- 
 chanical College.* Provision was made in 1876 for the establish- 
 ment of a negro agricultural and mechanical college, but in 1879 
 tiiis project was replaced by one for a negro normal school. The 
 Sam Houston Normal Institute for whites was provided for in 
 1879. The support of the negro normal, $6,000 a year, devolved 
 upon the university fund; the support of the white normal, 
 $14,000 a year, upon the available school fund. Nothing was 
 done towards the establishment of a state university. The Con- 
 stitution of 1876 repealed the valuable grant made to the Uni- 
 
 ^Laws of 1874, p. 149. 
 
 'Constitution of 1876, art. 16, sec. 36. Laws of 1876, p. 40. Comp- 
 troller's Report, 1875. Message of Governor Coke, April 19, 1876. 
 ^Art. 7, sees. 10 and 14. 
 *Art. 7, sec. 13. 
 
228 Bulletin of the University of Texas 
 
 versity of one-tenth of the alternate sections of lands donated 
 to railroads by the act of 1858, but gave one million of the un- 
 appropriated lands as a substitute land endowment. The new 
 lands given were located in the western part of the state and 
 were not as valuable as the lands taken away.^ Suit was also 
 brought during this period which resulted in the loss to the uni- 
 versity fund of valuable land in McLennan County. 
 
 Though the state itself was doing little for education, the 
 counties and minor civil divisions were doing nothing. There 
 was no taxation by school districts, and only $1,994 of local 
 school taxes were collected in 1879. At the same time 24.1 per 
 cent of the population ten years of age and over was unable to 
 read, and 29.7 per cent was unable to write. The negro element 
 was responsible for these large percentages, as 75.4 per cent of 
 the negroes ten years of age and over was unable to write, while 
 the percentage for the whites was 15.3.- 
 
 ^Message of Governor Roberts, April 6, 1882. 
 
 =Tenth Census of the United States. Vol. Population, p. 919. 
 
Chapter 6. 
 public debt. 
 
 The public debt constituted the liveliest of the period's 
 financial problems.. When the Coke administration succeeded 
 the Davis on January 14, 1874, the general revenue account 
 was confronted with estimated demands of $1,236,116 before 
 the end of the fiscal year and with estimated receipts from 
 taxes of only $481,714. The amount of cash in the treasury 
 was only $36,178, and there was owing to the available school 
 fund for its share of the general revenue about $60,000. The 
 available school fund was in an equally critical condition; its 
 balance on hand was $157,603, but this was below its require- 
 ments, and the fiscal year closed with warrants outstanding, 
 or a deficit, of $104,577, and with unaudited claims of school 
 teachers for more than $400,000. State warrants were hawked 
 about for sixty and seventy cents on the dollar, reflecting the 
 low ebb of the state's credit/ 
 
 There were three courses open for meeting the exigency; 
 namely, the levying of a sufficient tax .to pay the outstanding 
 floating debt, the sale of bonds, or the funding of the floating 
 debt. The course favored by the governor was to cut off the 
 warrants issued before January 14, 1874, from payment out of 
 the current revenues and to fund them. All three expedients 
 ''were resorted to. By the act of March 4, 1874, the issue of 
 bonds to the amount of $1,000,000, bearing 7% interest and 
 payable thirty years from January 1, 1874, was authorized, 
 and it was provided that their proceeds should be applied 
 exclusively to the payment of warrants drawn between Janu- 
 ary 1. 1866, and January 15, 1874, and of warrants since drawn 
 on account of indebtedness incurred between these dates.- Such 
 warrants could be registered and draw 8% interest, and w^re 
 receivable at par in payment for any bonds of the state. The 
 
 ^Message of Governor Coke, February 10, 1874. 
 
 =Laws of 1874, p. 14. The original act did not specify in what kind 
 of money the interest and principal should be payable, but two amend- 
 atory acts stipulated gold. 
 
230 Bulletin of the Universiti/ of Texas 
 
 bonds authorized were sold to private investors in 1874 and 
 1875 at 85 and 86 cents on the dollar. The gross amount 
 realized was $851,465, which, less selling commissions of 
 $17,029, netted $834,436/ 
 
 In addition to the above issue, there was authorized the sale 
 of $400,000 of the frontier defense bonds, as the 7% 20-40 year 
 bonds of the act of August 5, 1870, were called, and $500,000 
 of the 7% 20 year revenue deficiency bonds of the act of 
 December 2, 1871.'- The proceeds of the sale of these two bond 
 issues were applied to the payment of Williams and Guion, of 
 New York, with whom one hundred and fifty of the bonds had 
 been hypothecated by the Davis administration, and the balance 
 was turned over to the general revenue fund. These bonds 
 were sold to private investors, the frontier defense ones bring- 
 ing from 85 to 92.5 cents on the dollar, the revenue deficiency 
 ones from 85 to 95 cents. The gross amount realized from the 
 $900,000 sale was $799,671 ; commissions of $15,993 were paid, 
 leaving $783,678 net. By the three 7% bond sales authorized 
 by the two acts of March 4, 1874, a total of $1,900,000 was 
 added to the bonded debt; the gross amount received was 
 $1,651,137, or an average of 86.9 cents on the dollar ; commis- 
 sions paid at the rate of 2% amounted to $33,032 ; the net 
 amount received was $1,618,114, or 85.1 cents on the dollar.^ 
 The net proceeds of the sales were disposed of as follows: 
 $607,357 to the payment of warrants on account of indebted- 
 ness incurred prior to January 15, 1874, excluding the warrants 
 outstanding against the available school fund; $354,562 to 
 Williams and Guion; $653,752 to the general revenue fund to 
 meet current expenses; and $2,665 to legal expenses, express 
 charges and miscellaneous. 
 
 The addition to the public debt made by the above bond 
 issues is unquestionably chargeable in large measure to the 
 Reconstruction administration. There has been a disposition 
 to charge to it also the large bonded debt incurred on account 
 
 'House Journal, 15th Leg., p. 166, 
 
 ^Laws of 1874, p. 16. 
 
 •'House Journal, 16th Leg., Reg. Sess., p. 803. The proceeds were in 
 depreciated greenbacks. In gold the net proceeds were equivalent to 
 $1,451,842. Galveston News, April 20, 1876. 
 
A Financial History of Texas 231 
 
 of pensions. The legislatnre of 1870 granted very liberal pen- 
 sions to the veterans of the Texas Revolution, but Governor 
 Davis vetoed the items in the appropriation bill for 1871 and 
 1872. By an act of April 21, 1874, the pension act was repealed 
 and it was provided that all arrearages of pensions due under 
 the act up to July 1, 1874, should be paid in state bonds, bear- 
 ing 10% interest, payable 20 years after date, but redeemable 
 at the pleasure of the state within five years.^ By 1879, $1,115,,- 
 009 of the pension bonds and $18,610 of certificates convertible 
 into bonds were outstanding, making a total debt on this 
 account of $1,133,619. 
 
 The funding of the floating indebtedness was also resorted 
 to as a means of relieving the pressure upon the treasury. . The 
 act of May 30, 1873, which authorized the issue of one-half 
 million dollars of 10% funding bonds, was amended so as to 
 provide for bonds of denominations other than $100, for coupon 
 instead of registered bonds, and for funding the interest on. 
 warrants as well as the warrants themselves.- There were 
 $89,800 of the 1873 bonds outstanding on August 31, 1874, and: 
 their exchange for the new issue was authorized, and all but 
 $4,400 were exchanged. New bonds to the amount of $413,600 
 were issued, making a total outstanding on August 31, 1876, 
 of $503,400.'^ These bonds were payable ten years after Janu- 
 ary 1, 1874, but were redeemable at the pleasure of the state 
 at any time after three years from their date. 
 
 The important feature of debt legislation in 1875 was the 
 ^-settlement of the International Railroad bond subsidy contro- 
 versy. The question of the subsidy was reopened by the legis- 
 lature immediately upon convening in 1875 by the introduction 
 in the senate of a bill which would limit the subsidy to 
 $3,000,000. This bill passed the senate by the narrow vote of 
 14 to 12.* In the house of representatives there were amend- 
 
 ^Laws of 1874, p. 117. 
 
 ^Act of May 2, 1874; Laws of 1874, p. 207. 
 
 "Warrants received for funding aggregated for the years 1874. 1875, 
 and 1876, $505,985.45; cash received in order to make even amounts 
 of bonds, $1,190.98. There were also martial law certificates to the 
 amount of $2,813 received in the collection of taxes and canceled. 
 
 ■■Senate Journal, 14th Leg., Second Sess., pp. 104, 155, 204, 217, and 226. 
 
232 Bulletin of the University of Texas 
 
 ments made which would require the company to purchase 
 $320,000 of state bonds and to pay annually 2% of its gross 
 earnings until the payments with other taxes should equal the 
 principal and interest of the subsidy bonds.^ The senate con,- 
 curred in the amendments and the bill went to the governor. - 
 There was a feeling of uncertainty as to w^hat the governor 
 would do, but it was settled shortly by his veto. 
 
 Western Texas took a vital interest in the construction of the 
 road, which caused strong resentment to be expressed against the 
 legislature and the governor, and the old talk of dividing the 
 state to be revived.^ Consideration of the interests of the west- 
 ern section and of the railway company led finally to a settle- 
 ment; of the controversy whereby the company received twenty 
 sections of land per mile of road and exemption from all state, 
 county, city, and other taxes for a period of twenty-five years.* 
 
 The possession of a vast public domain thus enabled the state 
 to escape a public debt in aid of internal improvements which 
 would have proved very burdensome at this time in its financial 
 history. To guard against a debt of this character in the future 
 the Constitution of 1876 forbade the legislature "to give or to 
 lend, or to authorize the giving or lending, of the credit of the 
 state in aid of, or to, any person, association or corporation, 
 whether municipal or other ; or to pledge the credit of the state in 
 any measure whatsoever, for the payment of the liabilities, present 
 or prospective, of any individual, association of individuals, 
 municipal or other corporation whatsoever."^ The Constitution 
 
 ^House Journal, 14th Leg., Second Sess., pp. 380, 406, 407, 415, 422, 436. 
 
 -Ibid., p. 487. The reasons given for the veto were (1) that if 
 the intention of the bill was to use the proceeds of the state bond 
 purchases by the railroad company to pay the interest on the subsidy 
 bonds, the bill required a two-thirds majority; (2) that the payment 
 annually of 2 per cent of the gross earnings was a mere pittance as 
 compared with the interest on the bonds; (3) that the people were 
 over-taxed; and (4) that the original act was unconstitutional. 
 
 ^'San Antonio Daily Herald, March 3, 6, and 8, 1875. The governor 
 was bitterly assailed as a "time server" and as being entitled to the 
 •"ineffable scorn and loathing of the people of Western Texas." 
 
 'Senate Journal, 14th Leg., Second Sess., p. 503. Special Laws, 1875, 
 p. 69. The International Railroad became later the International and 
 Great Northern. 
 
 ''Art. 3, sec. 50. 
 
A Financial History of Texas 233 
 
 of 1869 did not contain such a prohibition, nor did it put any 
 limit on the debt creating power of the legislature, except that 
 it should provide adequate means for the payment of current 
 interest and a 2 per cent sinking fund.^ The Constitution of 
 1876, however, did not enjoin any sinking fund, but it limited 
 the debt which might be created at any time to supply casual 
 deficiencies in the revenue to $200,000, and confined the creation 
 of debt to this purpose and to repel invasion, suppress insurrec- 
 tion, defend the state in time of war, and pay pre-existing debt.- 
 
 The maturing of bonds in 1876 and 1877, the desirability of 
 replacing bonds bearing 10 per cent interest with bonds bearing 
 lower interest, the existence of floating claims of long standing, 
 and the persistent recurrence of deficiencies in the ordinary 
 revenues, made necessary some debt legislation in 1876. The act 
 of July 6, 1876, authorized the issue of $1,675,000, 6 per cent 
 gold bonds, payable thirty years from July 1, 1876. It was pro- 
 vided that $800,000 should be coupon bonds, $875,000 registered, 
 and that none should be sold below par.^ 
 
 The disposition of the proceeds of the issue was stipulated in 
 the act. The holder of any of the claims for the payment of 
 which the act provided was authorized to exchange them for 
 bonds at the current market value of the bonds, but at not less 
 than par. In order to aid the floating of this issue, the legis- 
 lature authorized first the sale of the United States bonds held 
 by the permanent school fund and the investment of the pro- 
 ceeds in state bonds, and, second, the investment of certain funds 
 of the Agricultural and Mechanical College in state bonds. The 
 ■'legislature required the investment of the proceeds of the sale 
 of university lands in the bonds."^ 
 
 ^Art. 12, sec. 23. 
 
 -Art. 3, sec. 49. 
 
 ^Laws of 1876, p. 40. This legislation was recommended by Gov- 
 ernor Coke in his message of April 19, 1876, and the bill was reported 
 by the house finance committee. May 30, 1876; Galveston News, May 
 31, and July 1, 1876. 
 
 *Laws of 1875, pp. 38, 44, 216, 283. A minority of the house finance 
 committee dissented against the bill to sell the United States bonds 
 on the ground that it consulted only the exigency of the state treasury; 
 Galveston News, July 4, 1876. The sale was a fortunate one,however, 
 for they were sold at a premium of $81,741, which premium would 
 have been lost because the bonds were called for payment by the 
 United States Treasury on December 1, 1876. 
 
234 Bulletin of the University of Texas 
 
 By August 31, 1880, $1,647,000 of the 6 per cent bonds had 
 been issued, and this remained the total amount except for $1,- 
 000 added in 1881-2/ The bonds were sold as follows: $500,000 
 to the American Exchange National Bank of New York at IO2V2 ; 
 the balance, or $1,147,000, to the special funds, the permanent 
 school fund taking $945,000, the university land sales fund, 
 $167,000, and the Agricultural and Mechanical College fund, 
 $35,000. The special funds paid par for all bonds purchased, 
 except that the university fund paid for 45 and the permanent 
 school fund for one at the rate of 1021/2. The total realized on 
 the $1,647,000 was $1,660,650, or a premium of $13,650.^ The 
 proceeds of sale were disposed of as follows: $100,000 in 1876 
 and $101,125 in 1877 to the general revenue fund to meet or- 
 dinary deficiencies; $19,999.92 in payment of 10 per cent war- 
 rants issued prior to January 28, 1861; $59,797.84 in payment 
 of certificates of debt issued by the auditorial boards of 1866 
 and 1871; $45,280 in payment of interest on state bonds held 
 by the Agricultural and Mechanical College; $42,721.29 in pay- 
 ment of warrants outstanding on the general revenue fund; 
 $376,2^3 in payment of warrants drawn in favor of school 
 teachers for services prior to July 1, 1873 ; $279,000 in payment 
 of 10 per cent revenue deficiency bonds due July 1, 1876 ; $125,- 
 000 in payment of the 6 per cent Throckmorton bonds due Jan- 
 uary 1, 1877; $503,400 in payment of the 10 per cent funding 
 bonds of 1873 and 1874, retirable at pleasure on and after Jan- 
 uary 1, 1877. The total of the proceeds thus disposed of was 
 $1,652,547.^ 
 
 This bond issue represented in the main onl.y a change in the 
 
 'As $1,000 were redeemed in 1881-2, the total outstanding until re- 
 tirement was $1,647,000. 
 
 'House Journal, 16th Leg., Reg. Sess., p. 806. 
 
 ^The balance, or $8,103, is not traceable in the reports. Some of 
 it went for commissions on sale, some for express charges. Included 
 in the amount to pay certificates of public debt is $3,000 of bonds trans- 
 ferred in 1882-3. Special accounts were set up on the books of the 
 treasury in the name of the several objects of payment, and later 
 when the claims appear to have all been out, the balances were trans- 
 ferred to the general revenue account. Balances transferred in 1879, 
 1885, and 1893 amounted to $18,743.70. 
 
A Financial History of Texas 235 
 
 form of the state debt. Only $200,000, or the par value of that 
 sold to meet current deficiencies in the ordinary revenue, was an 
 addition to the debt; the remainder, or $1,447,000, merely took 
 the place of maturing bonds and of unfunded debt whose origin 
 antedated January 15, 1874. The conversion of the 10 per cent 
 funding bonds saved the state $20,136 on its annual interest 
 charge. 
 
 In 1879 the opportunity to convert the 10 per cent pension 
 bonds was seized. These were redeemable at the pleasure of the 
 state after July 1, 1879, and provision was made for their re- 
 demption by the act of April 21, 1879.^ By this act $2,573,000, 
 5 per cent, 30 year bonds, and $1,000,000, 4 per cent, 20 year 
 bonds were authorized. It was provided that the proceeds of 
 $200,000 of the bonds should go to supply deficiencies in the 
 current revenues, and that the proceeds of the remainder of the 
 issues should be applied to the payment of the outstanding bonded 
 debt, being applied first to the payment of the pension bonds 
 and certificates for pension bonds. Holders of bonds to be re- 
 tired were extended the privilege of exchanging them for the 
 new bonds at the latter 's market value, but at not less than par; 
 and holders of warrants could fund them in the 4 per cent bonds 
 on the same terms. The 4 per cent bonds were of the denomina- 
 tions of $5 and $10, and the expectation was that the demand 
 for them would come from holders of warrants and small in- 
 vestors. A total $1,117,300 of the 5 per cent, and $4,620 of the 
 4 per cent bonds were sold or exchanged in 1879 and 1880, and 
 these remained as the amount outstanding.- $143,700 Avere ex- 
 changed at par for pension bonds held by the special funds, and 
 "the remainder of those issued were sold to private investors, re- 
 alizing a total premium of only $2,-545. The proceeds were used 
 
 'Comptroller's Report, 1877-8. Message of Governor Hubbard, Janu- 
 ary 14, 1879. Message of Governor Roberts, January 29, 1879. Laws 
 of 1879, p. 120. 
 
 -The 4's were only a novelty, and those sold were purchased to 
 gratify a fancy. As the 5's were on the market the 4's were not 
 attractive as an investment. It was expected that they would be used 
 to pay the current debts of the state, but the condition of the treasury 
 after May 1, 1879, made this use of them unnecessary. Message of 
 Governor Roberts, January 11, 1881. 
 
236 Bulletin of the University of Texas 
 
 to take up pension bonds and certificates to the amount of $!,■• 
 118,448 and to pay $202,545 of 4 per cent deficiency warrants 
 issued in 1879/ The addition to the debt by the bond issue was 
 $200,000, which was the amount used to meet deficiencies; the 
 remainder of the issue was for the conversion and the funding' of 
 existing debt. The saving in the annual interest effected by the 
 conversion of the 10 per cent pension bonds into 5 per cent bonds 
 was $55,721.70. 
 
 In May, 1879, the treasury went on a cash basis and there came 
 an end to the chronic annual deficiencies in the general revenue 
 account. Though special funds were drawn upon and bonds 
 were sold and the proceeds turned over to the general revenue 
 account, each year saw a deficit and the holders of warrants who 
 had not been able. to anticipate the situation by charging higher 
 prices to the state had to bear the loss of the discount.- Claims 
 accruing between September 1, 1876, and February 29, 1879, on 
 account of inadequate appropriations, which includes $30,000 
 for teachers' services prior to July 1, 1873, were appropriated 
 for in 1879 to the amount of $540,000, and it was provided that 
 until paid they should draw 4 per cent interest. These, except 
 for teachers' services, were paid in 1879 and 1880,'^ 
 
 Until the amendment to the penal code in 1875 making it a 
 misapplication of public money for any public officer having 
 public money in his keeping to purchase state warrants, public 
 money was used for private speculation by sheriffs and other 
 officers.* Until 1879 the practice also prevailed at the treasury 
 to pay warrants irrespective of their date and number, but 
 
 ^Message of Governor Roberts, January 11, 1881. For act authorizing 
 deficiency warrants to draw 4 per cent interest, see Laws of 1879, 
 p. 180. 
 
 -During 1874 warrants were quoted in the market at from 70 to 
 97 cents on the dollar; in 1875, from 88 to 98 cents; in 1876, from 
 82 to 97 cents. In February, 1879, they were selling at 92 cents. 
 Galveston News, December 7, 1876, and February 23, 1879. 
 
 ^Deficiency warrants were quoted at 85 and 86 in August, 1879; 
 and at 93 and 93 J in December, 1879. Galveston News, August 30, 
 and December 28, 1879. 
 
 *Message of Governor Coke, January 12, 1875, Laws of 1875, p. 11. 
 
A Financial History of Texas 237 
 
 Treasurer Lubbock adopted the rule of payment aeeoi'ding to 
 date and number.^ 
 
 The Constitution of 1869 enjoined the establishment of a sink- 
 ing fund of 2 per cent when any bonded debt was authorized. 
 The only sinking fund established in accordance with this pro- 
 vision was one for the frontier defence bonds of 1870. It was a 
 • combined interest and sinking fund, and an amount of taxes was 
 supposed to be turned over to it sufficient to pay annually the in- 
 terest on the bonds and 2 per cent of the principal. Its receipts 
 were not adequate to meet even all of the interest on the bonds, 
 for that on the bonds held by the Agricultural and Mechanical 
 College went overdue. In 1874 $20,000 of the bonds were re- 
 deemed and canceled, but after 1874 the fund was not main- 
 tained, and it was closed in 1878 and $5,000 of bonds redeemed 
 with the money then on hand. 
 
 The Constitution of 1876 does not require that the establish- 
 ment of a sinking fund shall accompany the creation of a debt. 
 It merely states that the legislature shall have the right to levy 
 taxes for ^'the benefit of the sinking fund, which shall not be 
 more than two per centum of the public debt."- 
 
 The bond act of July 6, 1876, provided for the establishment 
 of a sinking fund of 2 per cent. This provision, though man- 
 datory upon the treasurer, was not carried out. The item ap- 
 peared in the appropriation bills, but no funds were reserved in 
 1876, 1877, or 1878. In 1879 Governor Roberts vetoed the ap- 
 propriation items of $400,000 for interest and $100,000 for the 
 sinking fund in order to force the legislature to reduce the share 
 of the general revenue appropriated to the school fund, and after 
 rhis suggestions were adopted he approved the debt items.^ In 
 1879 and 1880 $200,000 was set aside for the fund, but it was 
 not applied tp bonds, but to the payment of deficiency warrants.* 
 
 ^Galveston News, March 12, 1879. This had the effect of lowering 
 the discount; message of Governor Roberts, January llj 1881. 
 • "Art. 3, sec. 48. 
 
 ^Galveston News, April 24, May 8, 31, 1879. The veto was not taken 
 in the financial world to signify a repudiation sentiment; the Commer- 
 cial and Financial Chronicle, vol. 28, p. 495. 
 
 ^Message of Governor Roberts, June 10, 1879, and January 11, 1881. 
 The report of the comptroller for 1879 and 1880 is confused on the 
 sinking fund statement in that the fund is not credited in 1880 with 
 the $100,000 which the general revenue fund states was transferred. 
 
238 Bulletin of the University of Texas 
 
 The bond acts of 1879 did not contain any provisions for a 
 sinking fund. This method of paying- the public debt was 
 changed to one which used the surplus in the treasury and the 
 proceeds of the sale of the public lands. In 1879 the vacant and 
 unappropriated lands in the fifty-five Panhandle counties, or the 
 territory north of the thirty-third degree of latitude and west of 
 the one hundredth degree of longitude, were set aside for sale at 
 fifty cents an acre, and one-half of the proceeds was appropri- 
 ated to the payment of the public debt.^ Only $5,718 was re- 
 ceived up to the end of the fiscal year 1880, and $2,308 was ap- 
 plied to the redemption of bonds. 
 
 The recognized funded debt on August 31, 1874, was $1,493,- 
 800; the ascertained floating debt, $1,136,527; and the debt of 
 doubtful validity, exclusive of accumulated interest, due the 
 school and university funds was $537,008 — or a total debt of $3,- 
 167,335. On August 31, 1880, there was no floating debt, and 
 the funded debt, including that of doubtful validity, was $5,- 
 566,928. The increase of $2,399,593 was due principally to the 
 pension bond act of 1874 and to the use of bond sales to meet 
 the annual deficiencies in the current revenues. The increase 
 due to pensions was $1,117,300, and that on account of defi- 
 ciencies was approximately $1,152,000. The receipts to the gen- 
 eral revenue fund from bond sales amounted to $1,058,228, dis- 
 tributed as follows :- 
 
 1875 $653,752 
 
 1876 100,000 
 
 1877 101,125 
 
 1879 203,351 
 
 Pensions and deficiencies combined were responsible for an ad- 
 dition of approximately $2,269,300, and the balance of the in- 
 crease was due to the funding of claims antedating January 16, 
 1874. 
 
 'Message of Governor Roberts, January 29, 1879. Laws of 1879, p. 48. 
 
 '^The proceeds in 1875 represented bonds sold at an average dis- 
 count of 15 per cent; all the other sales were at par or at a premium. 
 In order to get the face value of the debt which the proceeds of 1875 
 represent, 15 per cent is added. 
 
A Financial Histoid of Texas 239 
 
 The close of this period witnessed a gratifying advance in the 
 credit of the state, for whereas 10 per cent bonds sold in 1874 
 and 1875 at a discount, 5 per cent bonds brought par in 1880. 
 In 1874 14 per cent of the funded debt, including that of doubt- 
 ful validity, bore 6 per cent interest, and the remainder bore 10 
 per cent and 7 per cent. In 1880 56 per cent was on a 6 per cent 
 and 5 per cent basis. Five per cent was as low as the state 
 could get money in the open market, and had it not been for the 
 fact that the school and other special funds took so large a share 
 of the debt, it is doubtful if a 5 per cent rate could have been 
 secured. The wiping out of the harassing floating indebtedness, 
 the refunding operations, and the establishment of the treasury 
 on a cash basis after a long period of deficiencies are among the 
 most notable achievements during this period.^ 
 
 ^According to the report of the Tenth U. S. Census, the bonded debt 
 of the state in 1880 was $5,566,928; the debt of counties, $2,509,287; 
 the debt of cities and towns, $3,588,178. 
 
PART VII. 
 THE PERIOD 1881-1915. 
 Chapter 1. 
 introduction. 
 
 By 1880 Texas had emerged definitely from under the spell 
 of depression cast by the Civil War, the Reconstruction, and 
 the panic of 1873. Conditions which trace their origin to these 
 unhappy periods persist, however, and tend to complicate many 
 of the political and economic problems which engage the pres- 
 ent generation. 
 
 The growth of population during this period took Texas from 
 out of eleventh place and put her in 1910 into fifth place among 
 the states^ The decennial census figures were as follows: 
 
 1880..... 1,591,749 
 
 1890 •. 2,235,527 
 
 1900 3,048,710 
 
 1910 3,896,542 
 
 The negro element in the population declined relatively, its 
 percentage of the total being 24.7 in 1880, 21.8 in 1890, 20.4 
 in 1900, and 17.7 in 1910. Negroes numbered 393,384 in 1880, 
 488,171 in 1890, 620,722 in 1900, and 690.049 in 1910. In 165 
 counties out of a total of 245, the percentage of negroes of the 
 population was less than 12.5. These were mainly the Pan- 
 handle and the western and southwestern counties, or the 
 newer, more sparsely settled and non-cotton-growing counties. 
 In only eight counties, in 1910, was the percentage of negroes 
 over 50, whereas in 1900 this was true in the case of thirteen 
 counties. In those counties in which negroes are numerous 
 they are an asset as a labor force, but otherwise they are a 
 heavy social liability. They accumulate little property, they 
 are an unskilled and indifferent class of laborers, and the 
 expense of their policing and education falls almost wholly 
 upon the whites. 
 
A Financial History of Texas 241 
 
 The population of Texas is very largely rural, and though 
 the urban element is increasing, the change is not at a rapid 
 rate. In 1890 the rural percentage of the population was 84.4, 
 in 1900 it was 82.9, and in 1910 it was '75.9. The density of 
 population was 6.1 persons to the square mile in 1880 and 14.8 
 persons in 1910. 
 
 Agriculture in 1910 engaged 60 per cent of the population 
 ten years of age and over employed in all occupations, as 
 compared with 68.8 per cent in 1880, 64.3 per cent in 1890, 
 and 62.4 per cent in 1900. Since 1880 the expansion of agri- 
 culture resulted in a large part of the area of the state being 
 reclaimed from a state of uselessness to one of production. 
 In 1880 21.6 per cent of the land area w^as in farms; in 1890, 
 30.6 per cent ; in 1900, 74.9 per cent ; and in 1910, 67 per cent. 
 The decline between 1900 and 1910 was due to the fact that 
 land which was used for grazing in 1900 and which was classi- 
 fied under farm land had been cut into small tracts by 1910, 
 and at this latter date these tracts were owned by speculators 
 or others who withheld them from use, which prevented them 
 from being classified as farm land. During this period the 
 Panhandle, the western and the southwestern parts of Texas 
 were brought into the area of cultivation. While the per cent 
 of lands in farms greatly increased, the percentage of this area 
 which was improved declined. In 1880 34.9 per cent of farm 
 land was improved and the percentage in 1910 was only 24.3. 
 But there was, of course, an enormous increase in the absolute 
 acreage of improved land. The acreage of such was 12,650,314 
 in 1880 and 27,360,666 in 1910. 
 
 Remarkable increases occurred in the value of farm property 
 'during the period 1880-1910. The values of lands and build- 
 ings were $170,468,886 in 1880, $399,971,289 in 1890, $691,773,- 
 613 in 1900, and $1,843,203,395 in 1910. The value of livestock 
 was $339,433,843 in 1910, as compared with $60,307,987 in 1880. 
 
 The statistics for manufacturing are not comparable farther 
 back than 1899.i The value of the products of manufactures 
 
 ^Beginning with 1899 the United States Census enumerated only 
 manufacturing establishments conducted under the factory system. 
 Before that date neighborhood, hand and building industries were 
 included. 
 
 16— H 
 
242 Bulletin of the University of Texas 
 
 increased from $92,894,000 in 1899 to $272,896,000 in 1909. In 
 1909 the number of persons ten years of age and over engaged 
 in manufacturing and mechanical industries was 184,396, as 
 compared with 934,140 in agriculture. The manufactures which 
 led in values of products in 1909 were those whose finished 
 products were not far removed from the raw material stage, 
 such as slaughtering and meat packing, flour and grist milling, 
 the manufacture of lumber and of timber products, and the 
 manufacture of cottonseed oil and .cake. There was not much 
 pure manufacturing carried on in 1909, by which is meant 
 manufactures which are far removed from the raw material 
 stage. The gross value of the products of mining enterprises — 
 that is, mines, quarries, and wells — was $10,742,150 in 1909. 
 Petroleum and natural gas accounted for $6,356,000, or 59.4 
 per cent of the total. The oil industry has developed mainly 
 since 1900. The value of the bituminous coal mined in 1909 
 was $3,136,004. 
 
 Though manufacturing and mining increased considerably 
 between 1880 and 1910, Texas was in 1910 predominantly 
 agricultural. In value of products, capital invested, and popu- 
 lation engaged, agriculture far outdistanced other occupations. 
 
 The growth of banking in Texas is one of the best evidences 
 of the material development of the state. In 1880 there were 
 in the state only 13 national banks, with a total capital of 
 $1,579,000. and deposits of $2,081,000. In 1890 the number of 
 banks was 189, the capital and surplus amounted to $25,760,000, 
 and deposits were $30,450,000. In 1900 the number of banks 
 had increased to only 223, with capital and surplus of $25,337,- 
 000 and deposits of $49,749,000. The greatest increase took 
 place after 1900, and was due to the modifications in the 
 national bank act in 1900. to the incorporation of state banks, 
 and to prosperous times. In 1915 there were 535 national 
 banks, with a combined capital and surplus of $81,208,000, and 
 with demand and time deposits of $185,100,000.^ 
 
 The incorporation of state banks began in 1905. An amend- 
 ment to the state constitution removed the ban which had 
 existed since 1876. The number grew rapidly on account of 
 
 ^Report of the Comptroller of the Currency, 1915, vol. 2, p. 351. 
 
A Financial History of Texas 243 
 
 the low minimum capital requirements ($10,000) and the law 
 guaranteeing demand deposits. In September, 1905, there were 
 29 state banks, with a capital and surplus of $1,936,000, and 
 demand and time deposits of $1,701,832. By 1915 there were 
 835 state banks and trust companies, their combined capital 
 stock and surplus was $39,575,738, and they had demand and 
 time deposits of $77,253,027.^ The development of banking has 
 made easier the taxation of loanable funds, inasmuch as such 
 funds are more readily reached when in the control of corpo- 
 rations than when they are in the hands of private lenders. 
 
 Railroad mileage amounted to 3,244 in 1880, 8,710 in 1890, 
 9,867 in 1900, and 15,635 in 1915. Though the absolute mileage 
 was very large in 1915, there were only 5.9 miles of line to 
 each 100 square miles of area of the state. In 1880 there were 
 1.2 miles of line to each 100 square miles of area. In 1882 the 
 policy of land grants by the state in aid of railroad construc- 
 tion came to an end. The important construction since 1880 
 was that which opened up the Panhandle and the southwest 
 and made possible the expansion of agriculture into those 
 sections. 
 
 ^MSS. Statement, September 2, 1915, department of insurance and 
 banking. 
 
Chapter 2. 
 
 expenditures. 
 
 An index of the development of a state is the growth and 
 character of its public expenditures. The eminent German 
 economist, Adolph Wagner, has stated what he calls the law 
 of the increase of public expenditures: "Increase is both 
 extensive and intensive; the central and local governments 
 constantly undertake new functions, while they perform both 
 new and old functions more efficiently and completely." The 
 public expenditures of Texas since 1880 exhibit the tendencies 
 asserted by Professor Wagner. While total net expenditures 
 increased from $2,349,973 in 1881 to $16,659,844 in 1915, or 
 by 609 per cent, those on account of education, charities and 
 corrections, and pensions and support of soldiers' homes in- 
 creased from $977,998 in 1881 to $13,866,269 in 1915, or 1317 
 per cent.^ 
 
 Expenditures of the kind which Herbert Spencer calls pro- 
 tective — in other words, those for the judiciary, for the bare 
 general and financial administrative functions of the govern- 
 ment, and for the militia — showed a percentage decrease, as 
 did also those for the legislature, public printing, and interest 
 on the public debt. Except in the case of the interest item, 
 there was an absolute increase in all expenditures, and it was 
 especially large in the items of general administration and 
 judiciary. 
 
 General administrative agencies in 1880 were the executive, 
 state, and attorney general's departments; the department of 
 insurance, statistics and history, the state health officer, and 
 the general land office. There has been a marked development 
 since 1880 in the establishment of those general administrative 
 agencies whose object it is to conserve directly the economic, 
 
 ^The only expenditures for the penitentiary which are included are 
 those made out of the general treasury of the state. The amounts 
 for education, charities and corrections, etc., are not net expenditures, 
 but are a combination of expenditures and warrants drawn on the 
 general treasury. 
 
A Financial History of Texas 245 
 
 physical and social welfare of the citizens. These have taken 
 the form of boards, commissions, and commissioners. 
 
 In 1881 a fish commissioner was authorized, and Kis duties 
 were concerned with the propagation and preservation of fish.^ 
 After 1885, and until 1895, this work was suspended, but in 
 1895 the office of fish and oyster commissioner was created, and 
 regulation of the fishing and the oystering in the bays and 
 coast waters of the state was begun.- In 1907 the duties of 
 this officer were extended to game protection, and his title 
 was changed to that of game, fish, and oyster commissioner.^ 
 This state service is self-sustaining as a result of taxes, fees, 
 and rents of oyster beds. In 1883 the office of state engineer 
 was created, and it lasted until 1886. It was the duty of this 
 official to inspect the railroads of the state to see that they 
 complied with the laws.* This and other laws enacted at this 
 time constituted the beginning of railroad regulation proper 
 in Texas, the culmination of which was the establishment in 
 1891 of a mandatory commission with supervision over rates, 
 service, and the issue of securities. "^ 
 
 In 1887 the bureau of agriculture was created and attached 
 to the department of insurance, statistics, and history, and its 
 function was defined as "to aid and advance the interest of 
 agriculture in Texas."*' In 1907 this bureau was made into a 
 separate department."^ In 1893 a livestock sanitary commission 
 was established to deal with quarantine and other sanitary 
 regulations affecting livestock, and in 1911 the office of state 
 sheep inspector was created.* The growing recognition by the 
 state of its duty to promote the agricultural and livestock 
 
 ^Laws of 1881, p. 83. 
 
 ■^Laws of 1895, Reg. Sess., p. 170. Laws of 1899, p. 312. Laws 
 of 1905, Reg. Sess., p. 128. Laws of 1907, Called Sess., pp. 233, 
 254. Laws of 1909, p. 325. 
 
 ^Laws of 1907, p. 254. Rev. Civil Stats., 1911, title 63, chap. 2. 
 Laws of 1911, p. 62. Laws of 1913, Reg. Sess., p. 297. 
 
 *Laws of 1883, p. 98. 
 
 "Laws of 1891, p. 55. Rev. Civil Stats., 1911, title 115, chap. 15. 
 
 "Laws of 1887, p. 98. 
 
 ^Laws of 1907, p. 127. Rev. Civil Stats., 1911, arts. 4435-4475. 
 
 "Laws of 1893, p. 70. Rev. Civil Stats., 1911, title 124, chap. 8. 
 Laws of 1911, p. 9. Rev. Civil Stats., 1911, title 136, Chap 1. 
 
246 Bulletin of the University of Texas 
 
 interests of the state was attested by the provision made in 
 1909 for the establishment of stations where experiments should 
 be conducted in agriculture, horticulture, and animal hus- 
 bandry, and by the provision made for teaching elementary 
 agriculture in the common schools, the state normals, and in 
 the summer schools of the Agricultural and Mechanical College, 
 the University, and the College of Industrial Arts.^ In 1911 
 provision was made for the establishment of rural high schools. 
 In 1914, following the outbreak of the European war and the 
 consequent difficulties experienced by the farmers in the mar- 
 keting of their products and in the securing of credit, provision 
 was made for the establishment of state warehouses and for 
 state assistance in the marketing of farm products.^ This state 
 service is under the supervision of the commissioner of insur- 
 ance and banking. Bearing also on the agricultural interests 
 were the creation in 1909 of the state levee and drainage board, 
 whose work looks to the reclamation for agricultural uses of 
 the overflowed, marsh and swamp lands in the state ; the 
 establishment in 1913 of a board of water engineers, which has 
 the administration of a general irrigation law, including the 
 control over the waters of the state which may be used for 
 irrigation purposes; and the creation in 1915 of the position 
 of state forester.^ In 1915 there was appropriated $100,000 
 for the payment of bounties for the destruction of wild animals 
 which are inimical especially to livestock.^ 
 
 In 1903 the bureau of vital statistics was established and the 
 title of the quarantine department was changed to that of the 
 state board of health and vital statistics.^ Appropriations have 
 increased as the scope of the board's functions have grown 
 and as the public has realized the important character of the 
 work. In the quarantine work, however, there has been some 
 
 ^Laws of 1909, pp. 332, 221. Laws of 1913, Reg. Sess., p. 339. Lawff 
 of 1913, Called Sess., p. 98. 
 
 -Laws of 1914, Second Called Sess., p. 2. 
 
 ^Laws of 1909, p. 136. Laws of 1911, p. 160. Laws of 1913, Reg. 
 Sess., pp. 292, 358. Laws of 1915, Reg. Sess., p. 88. 
 
 *Laws of 1915, Reg. Sess., p. 220. 
 
 "Laws of 1903, p. 220; Rev. Civil Stats., 1911, title 66, chaps. 1, 2. 
 Laws of 1911, p. 173. Laws of 1913, Called Sess., p. 191. 
 
A Financial History of Texas 247 
 
 needless duplication by the state of the work of the Federal 
 government. In 1907 the office of dairy and food commissioner 
 was created, thus aligning the state on the side of the pure 
 food movement/ In 1911 an anti-tuberculosis commission was 
 created and two tuberculosis colonies, now called a sanatorium^ 
 were established.'- In 1913 the state health department was 
 empowered to engage in statewide publicity work regarding- 
 the cause and prevention of communicable diseases, but while 
 the law was approved, the appropriation to make it effective 
 was vetoed by the governor.^ 
 
 . In 1907 a state mining board was established and provision 
 was made for the inspection of mines by a state inspector for 
 the purpose of securing the safety of those engaged in the 
 mining occupation.* In 1909 the bureau of labor statistics was 
 created, and the commissioner of the same was empowered to 
 ascertain violations of those laws which are intended to safe- 
 guard the health and safety of employees, and to collect sta- 
 tistics ''relating to all departments of labor in Texal, and 
 especially as affecting or bearing upon the commercial, social, 
 educational, and sanitary conditions of the employees and their- 
 families, the means of escape from dangers incident to their 
 employment, the protection of life and health in factories and[ 
 other places of employment, the labor of children and of women 
 and the number of hours of labor exacted of them."^ In 1903 
 a small appropriation introduced the study of manual training" 
 into the state normals, and in 1909 and 1911 aid was extended 
 to aid the introduction of the study into the common schools.*^ 
 In 1913 an employers' liability law was passed. This law pro- 
 vided for an industrial accident board, whose salaries are paid 
 by the state and whose duty it is to carry out the terms of the 
 law. 
 
 ^Laws of 1907, p. 62. Laws of 1911, p. 76. 
 
 -Laws of 1911, p. 136. Laws of 1913, Reg. Sess., p. 120. 
 
 ^Laws of 1913, First Called Sess., p. 191. 
 
 *Laws of 1907, p. 331. Rev. Civil Stats., 1911, title 93, chap. 2. 
 
 'Laws of 1909, Reg. Sess., p. 59. Laws of 1911, p. 17. Laws of 
 1913, Reg. Sess., p. 237. 
 
 "Laws of 1903, p. 66. Laws of 1909, Reg. Sess., p. 221. Laws of 
 1911, p. 34. 
 
248 Bulletin of the TJniversity of Texas 
 
 Upon the passage of the law authorizing the incorporation 
 of state banks and upon the establishment of the department 
 of agriculture, the old department of agriculture, insurance, 
 and banking was reorganized; resulting in the department of 
 agriculture and the department of insurance and banking. In 
 1909 the control of the state library was taken from the depart- 
 ment of insurance and banking and given to a state library 
 and historical commission/ 
 
 The state fire rating board of 1909 was succeeded by the state 
 insurance board of 1910 which in turn was succeeded in 1913 
 by the stat^ fire insurance commission.- The commission has 
 among its other duties that of fixing the rates of premiums 
 charged by the fire insurance companies. 
 
 In the field of financial administration the only new agencies 
 established since 1880 are the state revenue agent whose place 
 was created in 1891, the state purchasing agent for the eleemosy- 
 nary .institutions whose appointment and duties were defined in 
 1900, and the state tax board which dates from 1905.^ 
 
 The above described boards, bureaus, commissions, depart- 
 ments, etc., represent mainly new activities of the state, and they 
 are, with a few exceptions, merely beginnings in their respective 
 lines. They have not caused any very great addition to the ex- 
 penditures of the state, and they are more significant in poten- 
 tialities than they are in accomplishments. The poor showing in 
 the way of results of some of them is due partly to lack of ade- 
 quate financial support by the legislature and partly to the in- 
 competence of those charged with the performance of the services. 
 
 Social expenditures are those for education, including the dis- 
 l)ursements of the available school fund, those for the asylums, 
 the orphans' home, the reformatories and penitentiaries, and 
 those for pensions and for the Confederate veterans' and Con- 
 federate woman's homes. This group of expenditures is espe- 
 
 ^Laws of 1907, p. 127. Laws of 1909, Reg. Sess., p. 122. Rev. Civil 
 ■Stats., 1911, title 85, chap. 1. 
 
 =Laws of 1909, First Called Sess., p. 311. Laws of 1910, p. 125. Laws 
 of 1913, Reg. Sess., p. 195. 
 
 =^Laws of 1891, p. 87. Laws of 1899, p. 138. Laws of 1905, p. 351. 
 Rev. Civil Stats., 1911, arts. 7366, 7392, 7325-7338, 7407-7426. Laws of 
 1915, Reg. Sess., p. 193. 
 
A Financial History of Texas 249 
 
 eially significant, because it measures the solicitude of the state 
 for its future citizens, its old soldiers, and its unfortunate wards. 
 Expenditures for education increased from $828,192 in 1881 to 
 $9,446,222 in 1915, and whereas in 1881 they constituted 29.5 
 per cent of the state's total expenditures, in 1910 they were 66.9 
 per cent and in 1915 56 per cent. Expenditures for the asylums 
 and the correctional institutions increased from $147,969 in 1881 
 to $2,861,876 in 1915, or from 6 per cent of the state's total ex- 
 penditures to 17 per cent. Expenditures for pensions and for 
 the homes of the veterans and their wives increased from $1,837 
 in 1881 to $1,558,171 in 1915. This was an increase of from 
 seven-tenths of one per cent of the state's total expenditures to 
 9.2 per cent. This group of social expenditures made up over 
 82 per cent of the state's total expenditures in 1915 as compared 
 with about 36 per cent in 1881. 
 
 The act establishing the main branch of the University was 
 passed in 1881, and provision for the establishment of the medi- 
 cal branch at Galveston was made in 1890.^ The- school of mines 
 at El Paso was authorized in 1913.- In 1899 the North and the 
 Southwest Texas normals were established, in 1901 the College 
 of Industrial Arts and in 1909 the West Texas Normal.^ In 
 1915 three new state normals were authorized, $500,000 per year 
 for the two years 1916 and 1917 was appropriated out of the 
 general treasury to aid the country schools, and the appropria- 
 tions for the higher educational institutions were generously in- 
 creased.* In 1884 the office of superintedent of public instruc- 
 tion was created, but it was not until 1893 there was established 
 a department of education with the superintendent at its head 
 and supported out of the general revenue fund instead of out 
 of the available school fund.^ Notable provision was made in 
 1915 for the blind and for the feeble minded wards of the state. 
 An appropriation of $300,000 was made for a site and fire-proof 
 
 ^Laws of 1881, p. 79. Laws of 1889, p. 74. 
 
 *Laws of 1913, Reg. Sess., p. 427. 
 
 *Laws of 1899, pp. 74, 175. Laws of 1901, Reg. Sess., p. 306. Laws 
 of 1909, Reg. Sess., p. 235. 
 
 *Laws of 1915, Reg. Sess., p. 116. Laws of 1915, First Called Sess., 
 pp. 22, 113-114. 
 
 •Laws of 1893, p. 182. 
 
250 Bulletin of the University of Texas 
 
 buildings for the care of the blind, and an appropriation of 
 $100,000 was made for the establishment of a farm colony for 
 the feeble minded/ 
 
 In 1895 the Confederate veterans' home which had been con- 
 ducted by the John B. Hood camp of Confederate veterans and 
 maintained by private aid was taken over by the state, and in 
 1911 the Confederate woman's home which had been previously 
 privately maintained was taken over.- These homes care for the 
 indigent Confederate veterans and their widows. After the re- 
 peal in 1879 of the cash pension act of 1876, cash pensions to 
 veterans of the Texas Revolution continued to be paid under 
 old special acts, but the payments aggregated only a very small 
 amount. The land pension act of 1879 granted 640 acres to in- 
 digent veterans or their widows, but in 1881 a new land pension 
 act was passed which granted 1,280 acres and abolished the con- 
 dition that the recipient should be indigent.^ In 1883 and annual 
 cash pension of $150 was granted to indigent veterans of the 
 Texas Revolution, signers of the Texas Declaration of Inde- 
 pendence, or their widows.* In 1899 cash pensions to indigent 
 and disabled Confederate veterans or their widows were granted.^ 
 The law contemplated a pension of $8 per month payable quart- 
 erly, though it was provided that if the sum appropriated should 
 
 ^Laws of 1915, First Called Sess., p. 36. Laws of 1915, Reg. Sess., 
 p. 143. 
 
 -Laws of 1895, Reg. Sess., p. 42. Laws of 1911, Reg. Sess., p. 50. 
 The transfer of the Confederate Home was first provided for in 1891, 
 but the constitutionality of the act was regarded as doubtful, and an 
 amendment to the constitution was consequently adopted in 1894 
 which authorized the transfer. This amendment fixed the maximum 
 appropriation for the home at $100,000 year. Another amendment 
 adopted in 1910, making constitutional the establishment of a home 
 for the wives and widows of Confederate veterans, limited the total 
 appropriation for the two homes to $150,000 a year. Constitution, art. 
 3, sec. 51. 
 
 'Laws of 1881, p. 35. 
 
 ^Laws of 1883, p. 36. 
 
 'Laws of 1899, p. 182. Laws of 1903, Reg. Sess., p. 108. The con- 
 stitutional amendment authorizing pensions which was adopted in 1898 
 made the maximum appropriable for pensions $250,000 a year. The 
 amendment adopted in 1904 raised the maximum to $500,000. Consti- 
 tution, art. 3, sec. 51. 
 
A Financial History of Texas 251 
 
 be insufficient to pay a pension of this amount the appropria- 
 tion should be pro-rated among the pensioners. The practice 
 prevailed of pro-rating: the amount, and the appropriation in- 
 creased from $100,000 in 1889 to $500,000 in 1911. 
 
 An amendment to section 51 of article 3 of the constitution 
 was adopted in November, 1912, which authorized the levying 
 of an ad valorem tax not to exceed five cents on the one hundred 
 dollars valuation of property for the purpose of creating a spe- 
 cial fund for the payment of pensions to those who served in 
 the Confederate army and navy or in frontier organizations or 
 state militia during the Civil War or to their widows. This 
 amendment was carried into effect by the law of April 7, 1913, 
 and a tax of five cents was levied.^ The amount received by the 
 pension fund in 1915 was $1,277,669.46, and the amount dis- 
 bursed was $1,442,413.85.- 
 
 By the acts of February 20 and April 18, i879, 3,050,000 
 acres of public lands w^ere set aside to secure a state capitol. A 
 contract was entered into on January 18, 1882, whereby in re- 
 turn for 3,000,000 acres of land situated in the counties of Dal- 
 lam, Hartley, Oldham, Deaf Smith, Palmer, Castro, Bailey, 
 Lamb and Hockley, valued generally at the time at fifty cents 
 an acre, Matthias Schnell, of Rock Island, Illinois, agreed to con- 
 struct a capitol.^ The present magnificent granite structure was 
 brought to completion in 1888, and the chief money expense to 
 the state in connection with it was its furnishings and the repair 
 
 ^Laws of 1913, Reg. Sess., pp. 282, 95. Laws of 1911, p. 288. 
 
 "Report of the Comptroller, 1914, p. 15. The year 1914 was the 
 first one under the new pension law. To each pensioner on the total 
 disability list the annual pension was $100; to each pensioner not 
 on the total disability list the annual pension was $67.50. The pen- 
 sions were paid quarterly. Since the new law the number of pen- 
 sioners has nearly doubled. When the new law was passed it was 
 expected that each pensioner would receive a pension of $100 yearly; 
 Austin American, August 23, 1915. In January, 1915, there were 18,000 
 pensioners as compared with 11,000 in 1911. Of the 18,000, there wer« 
 1,280 who were totally disabled and who received $8 per month; the 
 remainder received $7.33 per month; House Journal, 34th Leg. Reg. 
 Sess., p. 53. 
 
 ^Contract for building the New State Capitol; Reports of Depart- 
 ments, 1881-1882. 
 
252 Bulletin of the University of Texas 
 
 of the grounds, for which $171,500 was appropriated in 1888 
 and 1889. In 1882 the old eapitol was destroyed by fire, and 
 the state was put to the expense of a special session of the legis- 
 lature and of the construction of a temporary eapitol, for which 
 latter purpose $50,000 was appropriated. Monuments have been 
 erected on the eapitol grounds and elsewhere to commemorate 
 the memory of those whose names are illustrious in Texas history ; 
 the battlefield of San Jacinto has been purchased and made into 
 a state park ; and the Alamo has been purchased to be converted 
 into a memorial worthy of its heroic associations. In connection 
 with public buildings and grounds may be mentioned the crea- 
 tion in 1911 of the office of state inspector of masonry, public 
 buildings and works.^ 
 
 The expenditures on account of the state militia and state 
 rangers decreased from $92,076 in 1881 to $57,815 in 1910 and 
 then increased ^:o $123,143 in 1915. A movable state police force, 
 known as the Texas rangers, dates from 1876. Following the 
 break-up of the Confederacy and lasting until the eighties there 
 was an outbreak of lawlessness in the state, and life and property, 
 especially in the west and southwest parts of the state, were im- 
 periled and subject to depredation. The state police of the Davis 
 administration was organized partly to meet this condition of 
 affairs, but not only was it not a movable force, but it was com- 
 posed in no small measure of ruffians, was a political machine, 
 and caused strife and disorder instead of suppressing it.- By 
 1879 protection from Indians and marauding Mexicans was en- 
 trusted to the United States Government and to Mexico, but 
 thieves and desperadoes contined to infest the frontier, and the 
 inefficiency of the county sheriff system to protect life and prop- 
 erty was apparent.^ A state ranger force of twenty-seven men 
 was again organized in 1879, and an annual appropriation of 
 $100,000 was made for each of the years 1880 and 1881 for the 
 purpose of suppressing lawlessness and crime. After 1880 ex- 
 
 ^Laws of 1911, p. 207. Laws of 1915, p. 253. 
 
 -Galveston News, October 13, 1882. The force organized in 1876 
 was composed of 53 men, and $150,000 was appropriated for it in 1877 
 and 1878. 
 
 ^Galveston News, January 30, 1879. 
 
A Financial History of Texas 253 
 
 penditures for tin's purpose decreased; though in 1884, on ac- 
 count of the outbreak of fence cutting and disorder in the west- 
 ern counties, a special appropriation of $50,000 was made, but 
 only $16,500 was expended. The disturbed conditions on the 
 Mexican border since 1910 have brought the rangers again into 
 prominence, and appropriations for the force have been in- 
 creased. The force may consist of not more than four com- 
 panies of mounted men, each company to consist of not more than 
 one captain, one first sergeant and twenty privates. The actual 
 number is much less, however. In January, 1915, the force con- 
 sisted of three captains and thirteen enlisted men.^ 
 
 Since 1880 expenditures for the volunteer guard have in- 
 creased, and after 1890 the cause of the increase has been the 
 cost of transportation and subsistence of the guard on the occa- 
 sions of annual encampments and camps of instruction. 
 
 The cost of the judiciary increased from $310,690 in 1881 to 
 $1,057,197 in 1915, but its proportion of total expenditures de- 
 creased from 12.6 per cent to 6.2 per cent. In 1880 the judiciary 
 was composed of one supreme court, one court of appeals and 
 thirty-three district courts. By 1901 there were a supreme court, 
 one court of criminal appeals, five courts of civil appeals, each 
 with three judges, and fifty-eight district judges. By 1915 the 
 courts of civil appeals had increased to nine, and district judges 
 numbered eighty-five. The responsibility for the absolute in- 
 crease in judicial expenditures is to be divided between new 
 courts, on the one hand, and fees and similar payments to sher- 
 iffs, clerks, county judges, constables, and attached witnesses 
 on the other. Fees and similar payments constituted 57.6 per 
 cent of judicial expenditures in 1881, 62.9 per cent in 1891, 63.6 
 per cent in 1895, but after 1897, and on account of the new fee 
 act of that year, their share fell off, being 60.6 per cent in 1900, 
 56.9 per cent in 1910, and 54.7 per cent in 1915. The fees of 
 sheriffs, clerks and attorneys in felony cases showed a marked 
 decrease as a result of changes in the fee laws. 
 
 ^House Journal, 34th Leg., Reg. Sess., p. 48. For governing law, see 
 Rev. Civil Stats., 1911, title 116, chap. 1. 
 
254 
 
 Bulletin of ilie TJniversity of Texas 
 
 Payments to attaelied 
 witnesses and fees of 
 county judges and others 
 in examinino- trials. Total 
 
 ; 172 
 
 $178,968 
 
 148,600 
 
 560,084 
 
 113,114 
 
 404,868 
 
 188,516 
 
 723,986 
 
 135,778 
 
 542,150 
 
 180,849 
 
 445,087 
 
 222,261 
 
 585,490 
 
 199,398 
 
 515,729 
 
 187,429 
 
 551,408 
 
 197,517 
 
 578,812 
 
 Fees to sheriffs, clerks 
 and attorneys in felony 
 cases. 
 
 1881 $178,796 
 
 1887 411,484 
 
 1891 291,754 
 
 1894 535,470 
 
 1895 406,372 
 
 1900 264,138 
 
 1905 363,229 
 
 1910 316,331 
 
 1914 363,979 
 
 1915 381,294 
 
 Legislation bearing on the payment of the expenses of attached 
 witnesses and fees to county judges and others was enacted in 
 1883 and was the most important legislation on the subject after 
 1876.^ Governor Ross called attention in 1889 to the immense 
 drain upon the treasury made by fees in felony cases, but only 
 slight and unimportant amendments were made.- The high 
 water mark of fee and similar payments was reached in 1894 in 
 the unprecedented sum of $723,986. The question was a very 
 live one in 1895; governors Hogg and Culberson directed at- 
 tention to it, and a determined effort was made to effect a re- 
 form, particularly in the direction of limiting the maximum sum 
 which county and district officers could receive.^ A fee bill, 
 known as the Mills Bill, was bitterly lobbied against, met parlia- 
 mentary obstructions, and finally died, and an innocuous bill 
 on the subject was passed.* The state Democratic platform of 
 1896 demanded a reform of the system and Governor Culberson 
 again attacked with great ability the abuses, with the result that 
 
 ^Laws of 1883, pp. 5, 22, and 117. Earlier legislation is found in 
 Laws of 1876, p. 284, Laws of 1879, Reg. Sess., p. 90, Laws of 1881, 
 p. 37. 
 
 ^Message of Governor Ross, January 10, 1889. Laws of 1889, p. 
 38. Laws of 1891, p. 138. 
 
 ^Message of Governor Hogg, January 11, 1895. Message of Governor 
 Culberson, January 16, 1895. 
 
 ^Houston Post, January 22, and April 22, 23, and 24, 1895. Laws of 
 1895, Reg. Sess., pp. 146, 148, and 182. 
 
A Financial History of Texas 255 
 
 the important law of 1897 was passed which reduced fees and 
 limited the total compensation of county and district officers.^ 
 The sheriffs, however, who were among the largest beneficiaries 
 of the old system, were powerful enough politically to escape 
 the maximum compensation provisions of the act, and though 
 the act reduced their fees, these officers were influential enough 
 to secure in 1901 a restoration of the fees to the former profitable 
 amounts.^ In 1913 there was revision of the fee law, and a maxi- 
 mum compensation was set for the sheriffs.^ 
 
 The amount payable out of the general treasury on account of 
 fees and similar payments fluctuates from year to year according 
 to the activity of prosecuting and other officers, and this has 
 given rise to more deficiency appropriations than any other ob- 
 ject of state expense, and has frequently worked a hardship upon 
 officers and witnesses.* 
 
 Beginning about 1911 dissatisfaction with the fee method of 
 compensating public officers has been on the increase, and the 
 press and governors' messages have expressed severe condemna- 
 tion of the method. It has been an incentive to the most despi- 
 cable injustice through false arrests and prosecutions of those 
 who are unable to protect themselves, and the state has been 
 robbed through padded witness and tax lists, through excessive 
 mileage charges by sheriffs for summoning witnesses and trans- 
 porting prisoners, and through extravagant compensation for 
 unskilled work.^ The cases of a justice of the peace who re- 
 
 ^Messages of Governor Culberson, May 25 and June 18, 1897, and 
 January 10, 1899. Houston Post, April 29, May 2, and May 28, 1897. 
 Laws of 1897, Called Sess., p. 5. 
 
 =Laws of 1901, Reg. Sess., p. 285. Other legislation on fees is found 
 in Laws of 1901, First Called Sess., p. 21, Laws of 1903, Reg. Sess., 
 pp. 219, 230, and Laws of 1907, p. 466. 
 
 ^Laws of 1913, Reg. Sess., pp. 246, 286. See also Laws of 1911, pp. 
 104. 107, and 109, and Laws of 1913, Called Sess., p. 20. 
 
 "Reports of the comptroller, 1898, 1899. 
 
 ■^See account of the so-called peonage cases which were tried in the 
 Federal District Court in Austin in January and February, 1911. See 
 articles by Lloyd Lochridge in the Austin Statesman, January 2-10 
 and 25-27, 1913. Message of Governor Colquitt, January 16, 1913. 
 Dallas News, January 7, 1914. Austin Statesman, June 25, 1914. 
 Austin American, December 6, 1914. Grand jury charge of Judge W. L. 
 Crawford, as reported in the Dallas News, January 6, 1916. Report of 
 the grand jury of Travis County, as reported in the San Antonio Ex- 
 press, April 30, 1916. 
 
256 Bulletin of the University of Texas 
 
 ceived in one year $9,576.35 and of a constable who collected 
 $9,157.40, and returned nothing as excess, show the extrava- 
 gance of the system.^ The state platform of the Democratic 
 party in 1914 called for the abolition of the fee method of pay- 
 ing peace officers.^ In case of officers like the attorney general, 
 county judges, county clerks, county and district attorneys, 
 and sheriffs, inasmuch as the constitution prescribes the fee 
 system for them, the method of their compensation can not be 
 changed to a straight salary basis without an amendment to the 
 constitution.'' The principle of maximum compensation is now 
 followed quite generally, though the way in which it is applied 
 does not remove the evils of the fee system. Since 1897 the 
 policy has prevailed of setting maxima to the amount of fees 
 which may be retained by the office holder, the maxima varying 
 according to the population of the county or the population of 
 the chief city of the county. If there is an excess above the 
 amount first set as the compensation of the officer and his as- 
 sistants, the officer may retain one-fourth of the excess until it 
 reaches certain amounts which also vary according to the popu- 
 lation of the county or chief city. For example, the collector of 
 taxes in a county which has a population of 38,000 or above or 
 which contains a city of over 25,000 inhabitants may retain fees 
 up to $2,750 and one-fourth of the excess up to $1,500, making 
 a possible total compensation of $4,250.* There are certain 
 vicious exceptions ta the present fee law, and, furthermore, as 
 the fund out of which assistants and deputies are paid must be 
 raised from fees, the officers are under all of the inducements 
 which give rise to the abuses characteristic of the fee system. 
 The penitentiaries have been a source of considerable expense 
 to the general treasury and their management has been the oc- 
 casion of much concern to the different administrations. From 
 1849 to 1870 the state operated the lluntsville penitentiary on its 
 own account, but from 1870 to 1883 the buildings and convicts 
 were leased, and the state was under no expense, except for 
 
 'Dallas News, March 29, 1914. 
 
 "Message of Governor Ferguson, January 20, 1915. 
 
 •'Report and Opinions of the Attorney General, 1912-1914, p. 246. 
 
 'Laws of 1913, Reg. Sess., p. 246. . 
 
I 
 
 I 
 
 A Financial History of Texas 257 
 
 buildings and for the transportation of the convicts. The 
 lessees during the period 1878-1883 paid the state $3.01 per 
 month per convict.^ The penitentiary located at Rusk was 
 brought to completion in the early eighties, and it and the Hunts- 
 ville properties and convicts were leased by the penitentiary 
 board in 1882 for fifteen years at $10,000 per year for each peni- 
 tentiary. This new lease was at once revoked by the legislature, 
 and the state resumed in 1883 the control and management which 
 it has exercised ever since. The two-fold system of leasing the 
 convicts in such numbers as the contractors desired and of em- 
 ploying those not leased upon the farms and in the industries 
 of the penitentiaries was thereafter adopted and was followed 
 until the investigations of 1909 led to the abolition of the lease 
 policy. Abolition of the contract or lease system became effective 
 January 1, 1914. The state farms and factories are now operated 
 by the convicts, but the institutions are not self supporting, and 
 in the past they have made heavy demands upon the general 
 revenues. On July 1, 1913, the debts of the system amounted 
 gross to $1,656,835. Even with the deduction of cash on hand 
 and bills receivable, the debt was well over one million dollars,^ 
 In view of the debts and the poor condition of the properties 
 the legislature in 1913 authorized the issue of $2,000,000 of 5 
 per cent bonds, to be secured by the penitentiary properties, 
 except the State Railroad, and designated $1,500,000 of the pro- 
 ceeds to be applied to the payment of the debts of the system, 
 and the remainder to addition and improvements.^ In spite of 
 large payments out of the general treasury in 1913 and 1914 
 the debt of the system was on January 1, 1915, $861,845, and 
 the house committee which investigated the penitentiary was 
 uncertain whether this was all of the debt.* In 1915 an appro- 
 priation of $465,000 was made to cover the current expenses and 
 debts during the year 1915.^ Debts which represent paying in- 
 vestments are productive, but those which are incurred to meet 
 running expenses are unproductive. Some of the indebtedness 
 
 'Biennial Report of the Penitentiary Board, 1880, p. 10. 
 'House Journal, 33rd Leg., First Called Sess., p. 53. 
 "Laws of 1913, Reg. Sess., p. 110. 
 'House Journal, 34th Leg., Reg. Sess., p. 439. 
 'Laws of 1915, First Called Sess., p. 114. 
 
 17— H 
 
"258 Bulletin of the University of Texas 
 
 of the penitentiary was due to the purchase of farms and other 
 productive property, but a large part was due to the failure of 
 the system to meet current expenses. Unfortunately, the books 
 of the penitentiary system have been so poorly kept from the 
 accountant's point of view that expert accountants and legisla- 
 tive investigating committees have never been able to ascertain 
 accurately the exact condition of affairs. 
 
 The possession of large industrial and agricultural properties 
 and the frequent undertaking of various industrial experiments 
 have complicated the finances of the system and have proved 
 costly to the penitentiary and state treasuries. At Rusk the 
 state owns iron ore lands, and between 1883 and 1909 the chief 
 industry of the penitentiary at Rusk was the iron industry. 
 Construction of the first iron furnace at Rusk began in 1883 
 and it started operations in February, 1884. Owing to faulty 
 construction, however, the product was only from eight to ten 
 tons of pig iron a day instead of an expected twenty-five or 
 thirty. The new lessees of the convicts and industries at Rusk 
 were forced to terminate their contract on account of the failure 
 of the furnace, and the furnace was blown out in September, 
 1884.^ In 1885 the legislature made an appropriation of $50,000 
 to assist the iron industry, and the furnace was started again in 
 November, 1885. Because of the insufficient demand in the state 
 for pig iron, foundries were established for the manufacture of 
 finished products. The cast iron pipe foundry began operations 
 in January, 1887, and a general foundry made castings, iron 
 fronts for buildings, sad irons, pots, kettles, sash weights, etc.- 
 
 Another blast furnace was erected at Ru.sk in 1897-1898, but 
 before this time the fundamental technical weakness of the East 
 Texas iron industry was apparent. This weakness was the 
 absence of fuel and limestone. When the industry was first 
 started the timber supply for the making of charcoal, which 
 was the fuel, was near, but in time the readily accessible supply 
 of timber was exhausted, and it became necessary to go farther 
 and farther away for- it. The lime rock, which was needed for 
 
 ^Biennial Report of the Penitentiary Board, 1884, p. 12. 
 -Ibid., 1888, p. 12. 
 
A Financial History of Texas 259 
 
 smelting, was also brought in from, a distance.^ In 1902 the 
 penitentiary board for the first time pointed out that the peni- 
 tentiary at Rusk was not making expenses, admitted that the 
 charcoal iron of East Texas could not compete with the coke 
 iron of other iron-producing centers, and recommended that 
 the iron industry should be abandoned by the state.- A change 
 of administration occurred, however, and instead of abandon- 
 ing the enterprise, the legislature appropriated $150,000 for 
 carrying it on, and a new fifty-ton furnace was erected. Ill 
 luck immediately attended the revival of the industry by the 
 failure of the blowing engine to work. In 1906 charcoal was 
 given up for coke, and this change of fuel made necessary a 
 rebuilding of the furnaces, which in turn led to a suspension 
 of operations for a time." Conditions for the iron industry 
 grew more unfavorable in 1907 and 1908, when freight rates 
 on coke advanced and the market for the iron products slumped 
 as a result of the panic of 1907. The result was that the pipe 
 foundry was closed, and the furnace was blown out.* Under 
 state operation these enterprises were financial failures, and 
 in order to make the showing that they did, the convicts were 
 overworked.^ During Governor Colquitt's administration the 
 furnace and pipe foundry were leased for $5,000 a year, but 
 the lessees surrendered their contract after having paid one 
 year's rental and having expended $30,000 on repairs.*^ The 
 iron industry at Rusk represents an investment of more than 
 $200,000, and it now stands an idle, rusting mass. 
 
 There was also erected at the Rusk penitentiary a factory 
 for the commercial manufacture of boxes and crates, and at 
 Huntsville there w^ere constructed a machine shop and foundry, 
 and factories for the manufacture of boilers, sheet metal, 
 wagons, and furniture. The box and crate factory at Rusk 
 were closed down in April, 1914. The furniture, wagon, and 
 cotton goods factories at Huntsville were burned in 1911, but 
 
 ^Ibid., 1896, p. 16. 
 
 -Ibid., 1902, pp. 11 and 106. 
 
 ^'Ibid., 1906, pp. 12 and 94. 
 
 *Ibid., 1908, p. 13; ibid., 1910, p. 17. 
 
 "^House Journal, 34th Leg., Reg. Sess., p. 299. 
 
 "Ibid., p. 444. 
 
260 Bulletin of the University of Texas 
 
 the furniture and Avagon factories were rebuilt in a temporary 
 manner and with much less producing capacity. Fires in the 
 penitentiaries in 1911 and 1913 wiped out many of the in- 
 dustries and caused property losses estimated at $390,892.^ 
 The penitentiary has had difficulty in marketing its products, 
 owing to the objections of the labor unions to prison-made 
 goods competing with the products of free labor. All of the 
 industries, other than the iron industry, are apparently capable 
 of successful operation at the penitentiaries, and the most 
 enlightened principles of prison management call for the 
 employment of the prisoners in some useful and instructive 
 occupations. 
 
 Besides the industries described above, the penitentiary 
 system owns and operates with convict labor a number of 
 farms. The legislature in 1885 authorized the purchase of a 
 farm or farms for the penitentiary system, and in that same 
 year the Harlem farm of 2,500 acres in Fort Bend County was 
 purchased. This Avas the beginning of the employment of 
 convicts upon state farms. In January, 1915, there were owned 
 by the penitentiary system seven farms, with an aggregate 
 acreage of 31,639, of which there were 19,509 in cultivation. 
 Besides these, the system had under lease eij^rht farms, with a 
 total acreage of 26,458, of which 18,996 acres were in culti- 
 vation.- During the year 1914 there were 4,600 bales of cotton 
 produced on these farms, and the value of the cane crop worked 
 into sugar and molasses was $125,000. On one of the state 
 farms is a sugar mill, and on another is a syrup mill, and 
 together they represent a large investment. The cultivation 
 of cane and the manufactui'e of sugar and molasses began about 
 1888. There is considerable diversity of opinion as to the 
 profitableness of cane cultivation on the state farms; but as 
 to the manufacture of sugar and molasses, its abandonment 
 has been recommended, if the conditions of withdrawal should 
 be favorable.^ 
 
 ^Ibid., pp. 37 and 52. 
 
 =Ibid., p. 40. 
 
 ^Report of Penitentiary Investigation Committee, July 24, 1913, in 
 House Journal, 33rd Leg., Reg. Sess., p. 72. Report of Committee to 
 visit State Prison Farms, February 1, 1915, in House Journal, 34th Leg., 
 Reg. Sess., p. 299. 
 
A Financial History of Texas 261 
 
 The railroad known as the State Railroad was built by con- 
 vict labor, and for twenty years it was administered as a part 
 of the property of the prison system. It was begun at Rusk 
 in 1893 or 1894, and the object in its construction was to secure 
 timber for the iron industry. Some seven miles were built by 
 1895.^ During the years 1899-1902 it was extended four miles.^ 
 But in the two years 1903-1904 seven miles of the road were 
 abandoned, and a new line was begun. The object still was 
 to reach timber for fuel for the iron industry. By 1905 twenty 
 miles were built, and in 1907-1908 the road was extended to 
 Palestine.^ It has a total length of 32.5 miles, and its value 
 on June 30, 1915, according to the state railroad commission, 
 was $528,544. At this date also there were bonds to the amount 
 of $100,000, and current liabilities of $539,529 outstanding 
 against the road. In 1913 the management of this railroad was 
 taken out of the hands of the prison commission and given to 
 a manager appointed by the governor."' The road has never 
 paid operating expenses, and it represents an unwise and un- 
 profitable expenditure of the state's money. ^ 
 
 It has been in connection with the penitentiaries that the 
 state has engaged in industrial enterprises. The other principal 
 enterprise w^as the attempt to do the state printing. Neither 
 on the operating side nor on the accounting side was the record 
 such as to. reflect credit on the state. There w^as a failure to 
 provide the capital necessary to put industries on their feet, 
 unwise experiments were made, changes in prison adminis- 
 tration with each change in the occupancy of the governor's 
 chair prevented continuity of policy and deprived the prison 
 system of trained service, obsolete machinery was used, cost 
 accounting was unheard of in the industries, and the book- 
 keeping and public reports were decidedly inadequate. 
 
 In the reorganization of the penitentiary system in 1910 
 it was provided that good conduct prisoners should receive 
 out of the earnings of the prison the amount of ten cents per 
 
 ^Biennial Report of the Prison Board, 1894, p. 17. 
 
 =Ibid., 1900, p. 66; ibid., 1902, p. 74. 
 
 ^Ibid., 1908, p. 14. 
 
 *Laws of 1913, Reg. Sess., p. 279. 
 
 '^House Journal, 34th Leg., Reg. Sess., p. 42. 
 
262 Bulletin of the University of Texas 
 
 day for the period of their confinement.^ This provision was 
 declared unconstitutional by the attorney general, however, 
 and was therefore abandoned. - 
 
 Besides the penitentiaries, there are two other corrective 
 institutions. In 1887 the reformatory, or as it is now called, 
 the state institution for the training of juveniles, was estab- 
 lished.^ In 1913 the state school for the training of dependent 
 and delinquent girls, known as the girls' training school, was 
 established.* 
 
 The expenditures of the state for general administrative 
 agencies have naturally increased with the growth of the state. 
 The civil servants of the state have grown greatly in numbers, 
 but in their selection for the most part the spoils system pre- 
 vails, and with each change in the governor or in the elective 
 heads of departments there is usually a turning out of em- 
 ployees from the janitor to the chief clerk. In 1879 the salaries 
 of all employees were reduced in order to help inaugurate the 
 Roberts ''pay-as-you-go" policy. Increases took place there- 
 after, but without any uniformity as to the departments 
 affected, until 1895, w^hen reductions were again made, owing 
 to the financial depression after the panic of 1893, and further 
 reductions were made in 1897. In 1901 some increases were 
 made, but there was no uniform advance until 1911, when the 
 effect of the rise in the cost of living upon the salaries of 
 employees seems to have been recognized by the legislature. 
 The compensation fixed originally in the constitution for tlie 
 governor, heads of departments, and members of the legislature 
 has remained unchanged, though conditions have materially 
 changed. At the time the Constitution of 1876 was framed 
 and adopted the country was in the depths of the depression 
 which followed the panic of 1873, and prices were low. The 
 salaries of heads of departments which are not laid down in 
 the constitution are more generous than those the constitution 
 prescribes, and this works an unwarranted discrimination 
 
 ^Laws of 1910, p. 143. 
 
 ^House Journal, 34th Leg., Reg. Sess., p. 42. 
 
 'Laws of 1887, p. 64. Laws of 1889, p. 193. Laws of 1911, p. 211. 
 
 ♦Laws of 1913, Reg. Sess., p. 289. Laws of 1913, Called Sess., p. 7. 
 
A Financial History of Texas 263 
 
 among the heads. The salary of the governor, which is $4,000, 
 ist even with the furnished mansion and an incidental fund^ 
 pitiably small for a state like Texas.^ There is little doubt 
 also but that a smaller legislative body, with none of the 
 present restrictions on the length of its sessions, and with the 
 members paid an annual salary, as are the members of Con- 
 gress, w^ould be a beneficial change from the present system. 
 
 ^Recent court decisions hold that the appropriations for groceries 
 and incidentals for the governor's mansion are unconstitutional. These 
 decisions were in the so-called "chicken salad" case, which originated 
 in an injunction obtained by W. C. Middleton to restrain Comptroller 
 H. B. Terrell from issuing treasury warrants to pay bills made by 
 Governor O. B. Colquitt for punch, salad, etc., used at a governor's 
 reception, and for other items connected with the upkeep of the 
 governor's mansion. The injunction was granted by the lower court, 
 and was upheld by the Fourth Court of Civil Appeals. See Dallas. 
 News, June 15, 1916, p. 10. 
 
Chapter 3. 
 receipts. 
 
 Equally noteworthy with the growth of expenditures is the 
 growth of receipts, and this is proof of the state's remarkable 
 material development since 1880. The net receipts of the state 
 government, including the proceeds of sales of land which 
 accrued to the permanent funds, increased from $3,076,402 in 
 1881 to $11,248,899 in 1910 and to $17,441,744 in 1914. But 
 in 1915 the amount was $15,492,308. Excluding the accounts 
 of the permanent funds, because they are capital and not income 
 funds, total net receipts attained the three million mark in 
 1880, the four million in 1886, the five million in 1888, the six 
 million in 1900, the seven million in 1905; the eight million 
 was reached and passed and the nine million attained by 1908, 
 the ten million in 1909, the twelve million in 1912, and the 
 seventeen million in 1914. Particularly marked has been the 
 increase since 1905, that for the ten years being about eight 
 million dollars as compared with less than three and one-half 
 million during the preceding twenty years. The increase after 
 1901 coincided with the entrance of the state upon new regu- 
 lative and developmental activities and the more liberal support 
 of the existing institutions. 
 
 Except in 1885, when $200,000 of bonds were sold in order 
 to supply deficiencies in the ordinary, revenues, there were no 
 receipts during this period from bond sales in order to meet 
 current ordinary expenditures. Receipts of an extraordinary 
 character — if not that, certainly of a fortuitous character — 
 ■were, to mention only the more important, refunds by the 
 United States Government on account of expenditures by the 
 state for frontier defense and on account of the debt of the 
 Republic of Texas, and penalties from corporations violating 
 the Texas anti-trust law. Refunds by the Federal government 
 amounted to $922,541 in 1888; $145,037 in 1891; $101,113 in 
 1898 ; and $375,418 in 1906 ; or a total of $1,544,109. Penalties 
 ♦collected of corporations have been more numerous, but the 
 
A Financial History of Texas 265 
 
 banner years were 1909 and 1910, when $1,958,815 was col- 
 lected on judgments. 
 
 Taxes and interest on investments, such as bonds and land 
 notes, constituted 86 per cent of the total receipts in 1881, 
 84.6 per cent in 1910, and 94 per cent in 1915. The percentage 
 which taxes furnished, however, declined from 81.4 in 1881 to 
 67.6 in 1910, but rose again to 80 in 1914 and 1915. The per- 
 centage of interest rose from 4.6 in 1881 to 17 in 1910 and 13.4 
 in 1915. 
 
 New sources of revenue, or sources that may be considered 
 new because of their marked modification, are many fees, 
 especially corporation charter and permit fees, fees and other 
 charges levied by educational, charitable, and penal institu- 
 tions; rents of lands belonging to the special funds; and cor- 
 poration and inheritance taxes. 
 
 Striking changes have taken place among the receipts from 
 taxes, and of these the growth of special taxes on corporations, 
 or on businesses usually conducted under the corporate form 
 of business organization, is the most notable. The proportion 
 of such special taxes of total tax receipts increased from 1.5 
 per cent in 1881 to 15.6 per cent in 1910, and was 11.9 per cent 
 in 1915. The share of general occupation taxes has decreased 
 from 18.5 per cent in 1881 to 10.9 per cent in 1910 and 7.1 per 
 cent in 1915. The proportion of poll taxes has fallen from 
 22.9 per cent in 1881 to 9.6 per cent in 1910 and 6.1 per cent 
 in 1915. The proportion of the property tax has increased 
 from 56.9 per cent of the total in 1881 to 62.5 per cent in 1910 
 and to 74.5 per cent in 1915.^ 
 
 The establishment of the office of state revenue agent in 1891 
 and of the state tax board in 1905 are the only provisions made 
 since 1880 of new agencies to deal with the revenue laws. The 
 purpose of the office of the state revenue agent is that "of securing 
 a better enforcement of the revenue laws of the state. ' '- A strong 
 fight was made in 1895 on the continuance of this office, but it 
 
 ^See Appendix, table 10, for statistics. The percentages are not 
 strictly of tax receipts, but some assessed taxes are included. 
 
 =^Laws of 1903, p. 87. Laws of 1899, p. 26. Rev. Civil Stats., 1911, 
 arts. 7366, 7392. 
 
266 Bulletin of the University of Texas 
 
 was not abolished, and the activities of the officer have been 
 mainly those of investigating the non-payment of occupation 
 taxes.^ 
 
 The state tax board was created in 1905, but its duties of a 
 general character were granted in 1907.- It was then given 
 authority to acquire '^ information that may in any manner aid 
 in securing a compliance with any tax or revenue law of this 
 stMe," ... of recommending "amendments, changes or 
 modifications of the laws of this state . . . necessary or 
 proper to remedy injustice or irregularity in taxation, and to 
 facilitate the collection of taxes and the collection of public 
 revenues." Practically the only work of the state tax board has 
 been, however, the administration of the intangible assets tax. 
 
 ^Houston Post, March 21, 1895. See biennial reports of the state- 
 revenue agent, 1892-1912. 
 
 -Laws of 1905, p. 351. Laws of 1907, p. 469. Rev. Civil Stats., 1911, 
 arts. 7407-7426. 
 
Chapter 4. 
 the operation of the property tax. 
 
 No modification of this tax in any of its essentials has taken 
 place since 1880. It remains a tax on property, applying an 
 equal and uniform rate to all real and personal property, except 
 such as is exempt.^ Though there have been no additions to the 
 list of legal exemptions, certain species of property have been 
 rendered exempt by being declared religious or charitable. On 
 the other hand, United States treasury notes and national bank 
 notes, both of which were exempt by national law in the preceding 
 period, became taxable in 1895 as a result of changes in the 
 Federal law, and also, the property of the International and 
 Great Northern Railroad which had been exempted in 1875 be- 
 came taxable in 1900.- 
 
 The lists of taxable property have been amended to include 
 new species of property ; for example, bicycles and tricycles were 
 added in 1895, and in 1905 automobiles were added to the tax- 
 able list." 
 
 Amendments of the laws exempting property have been made 
 with a view of defining more explicitly the exempt property of 
 religious, charitable, educational, and public corporations."^ Thus 
 in 1913 the property of the Young Men's Christian Association 
 and of the Young Women 's Christian Association, including their 
 endowments, when not used for profit, and the funds and prop- 
 erty of fraternal benefit societies, were exempted from taxation. 
 
 ^For interpretation of the meaning of the words "equal and uniform" 
 see Missouri, Kansas and Texas Ry. Co. v. Shannon, 100 Tex., 379 
 (1907). 
 
 -Laws of 1895, Reg. Sess., pp. 37, 49. Laws of 1899, p. 299. The 
 I. & G. N. exemption expired August 5, 1900, and the property was 
 assessed and taxed for the remainder of that year in the proportion 
 that the remaining part of the year was to the whole year. 
 
 ^Rev. Civil Stats., 1911, art. 7518. 
 
 "Laws of 1905, p. 314. Laws of 1907, p. 302. In 1910 state farms 
 on which the convicts are worked were made taxable for county pur- 
 poses only; Laws of 1910, Fourth Called Sess.. p. 122. Lav/s of 191o, 
 Reg. Sess., pp. 153, 234. Rev. Civil Stats., 1911, art. 7507. 
 
268 Bulletin of the University of Texas 
 
 State taxes have been released or donated to counties and cities 
 suffering public calamity from fire, flood, and cyclones.^ The re- 
 leases were for only a year, except that in 1903 all of the state ad 
 valorem taxes, three-fourths of the occupation taxes, and all of 
 the revenue poll taxes accruing within the county of Galveston 
 were donated for a period of fifteen years to the city of Galveston 
 to be applied to a trust fund to pay the interest and contribute 
 towards the sinking fund of the debt incurred for raising the 
 grade of the city.- 
 
 Under the laws of 1876 and 1879 assessment took place between 
 January 1 and June 1, and collection began October 1 and pay- 
 ment was voluntary until March 1, except that taxes of non- 
 residents were payable to the comptroller by January 1. In 
 1887 the date after which forced collection took place was changed 
 from March 1 to January 1, except that the payment of taxes 
 of non-residents at the comptroller's office was voluntary until 
 February 1.^ It was believed that more money was in circula- 
 tion on January 1 than on March 1 and that payment would 
 thus come easier, especially to farmers, at the earlier date. In 
 1897 the time for voluntary payment was extended from January 
 1 to January 31. and in 1909 the time of assessment was changed 
 so as to occur between January 1 and April 30.* The law at 
 present (1915) then is that assessment shall take place between 
 January 1 and April 30 and that taxes are due October 1 and 
 are voluntarily payable until January 31. '^ 
 
 A subject of unending, confused, and, for the most part, in- 
 effective legislation has been that dealing with unrendered lands 
 and delinquent taxes. The provision in the Constitution of 
 1876 for the annual sale of land for delinquent taxes and the 
 legislation thereunder in 1876 and 1879 were expected to solve 
 the difficulties of enforcement of payment and to lead to a " golden 
 flood" into the treasury. In 1879 the task was imposed upon 
 the comptroller of compiling lists which would enable the com- 
 missioners' courts of the organized counties to ascertain lands 
 
 ^Laws of 1881, pp. 25, 106. Laws of 1882, p. 31. Laws of 1893, p. 169. 
 
 =Laws of 1901, Reg. Sess., p. 298. Laws of 1903, p. 10. 
 
 -Laws of 1887, p. 127. 
 
 *Laws of 1897, Reg. Sess., p. 132. Laws of 1909, p. 372. 
 
 'Rev. Civil Stats., 1911, arts. 7508, 7615, 7692. 
 
A Financial History of Texas 269 
 
 unrendered for taxes between 1871 and 1876. By 1882 the lists 
 of only forty counties had been compiled, and these were so 
 defective because of inaccuracies in the records that the collection 
 of the taxes was suspended until more accurate lists could be 
 furnished. Forced sales on the basis of the inaccurate records 
 would have resulted in clouds upon land titles which only ex- 
 pensive litigation could remove.^ The comptroller stated that it 
 was impossible to compile accurate lists, so in 1884 it was left 
 to the owners or agents of unrendered lands between 1871 and 
 1876 to render them, — a confession of the state's inability to 
 reach them and of its withdrawal from the attempt.^ 
 
 In the case of lands assessed but delinquent since January 1, 
 1870, the legislation of 1876 and 1879 provided for their seizure 
 and sale, and that if they should not be purchased by individuals 
 at the tax sales, they should be bid in by*the state. In 1879 it 
 was made the comptroller's duty to forward to the tax collector 
 of each county on or before January 1 a complete list of all real 
 estate that had been sold to the state for taxes assessed since 
 December 31, 1876. The state apparently withdrew from the 
 attempt to collect forcibly those assessed prior to January 1, 
 1877. A large amount of land sold for taxes in 1877 was bid in 
 by the state and under the provisions of the law it should have 
 been sold at the end of two years as public land. But before 
 sale could be made, legislation in 1879 extended the time for re- 
 demption and these relief acts were almost as regularly passed 
 as the legislature met. No successful effort to enforce the pay- 
 ments of taxes on land bid in by the state was made between 1876 
 and 1895-7. Many of the sales to the state were erroneous, be- 
 cause taxes had been paid on the land, but through ignorance of 
 the owner or agent, they had been paid in the name of the wrong 
 grantee. . Owners w^aited, counting on more favorable induce- 
 ments to redeem, and in the meantime they enjoyed the use of 
 the land without payment of either taxes or rent. The exacting 
 requirements of the courts as to the description of lands for 
 assessment, in advertisements for tax sales, and in conformity to 
 all the minute details precedent to seizure and sale, destroyed 
 
 ^Laws of 1882, p. 39. 
 
 ^Comptroller's Report, 1881-2. Laws of 1884, p. 35. 
 
270 Bulletin of the University of Texas 
 
 confidence in tax titles, and taxpayers were not prompted to 
 payment, therefore, through fear of purchase by individuals.^ 
 
 The amount bid in each year by the state is affected somewhat 
 by commercial conditions; but for years the laws were unques- 
 tionably impotent, and the amount of taxes for which land was 
 taken over by the state increased from $38,588 in 1883 to $100,017 
 in 1890 and to $184,101 in 1895. The subject was vigorously 
 attacked in 1895, and what is known as the .Colquitt delinquent 
 tax law was passed.- This law was amended in 1897, and was 
 responsible for an increase in redemptions and a decrease in sales 
 to the state.^ The amount bid in by the state was $145,063 in 
 1896 and $107,185 in 1899. In 1900 there was the enormous 
 amount of $379,346, but it declined to $99,915 in 1906 ; since then 
 it has not fallen below $100,000. The right of a delinquent tax- 
 payer to plead the sta1;ute of limitation as a defence against the 
 payment of taxes was taken away in 1895.* The features of the 
 legislation of 1895 and 1897 were to substitute for the old pro- 
 cess of seizure and sale by the collector the process of suit for 
 the taxes in the district court in the name of the state, and if 
 foreclosure were ordered, an order of sale followed and sale took 
 place as in other cases of foreclosure. The law applied only to 
 delinquent taxes since January 1, 1885, those before that date 
 being relinquished because of the application of the statute of 
 limitations.*^ 
 
 From 1881 to 1893 the rate of interest chargeable on back 
 taxes at redemption was 8 per cent. In 1893 it was reduced to 
 6 per cent. Delinquents took advantage of the low interest rate 
 
 'Comptroller's Report, 1881-2. Message of Governor Ross, Janu- 
 ary 20, 1887. Comptroller's Report, 1888. Galveston News, April 
 5, 1889. Comptroller's Report, 1889. Report of the State Revenue 
 Agent, 1884. Message of Governor Culberson, January 16, 1895. 
 
 ^Houston Post, February 12, 1895. Laws of 1895, Reg. Sess., p. 50. 
 Comptroller's Report, 1896. 
 
 ^Laws of 1897, Reg. Sess., p. 132. Comptroller's Report, 1898. 
 
 *Laws of 1895, Called Sess., p. 6. Rev. Civil Stats., 1911, art. 7662. 
 The act of July 4, 1879 (Laws of 1879, Called Sess., p. 15), however, 
 denied application of the statute of limitation to taxes due the state, 
 a county, city, or town. See Millinger v. City of Houston, 68 Tex., 
 37 (1887). 
 
 ■^Rev. Civil Stats., 1911, arts. 7683-7699 and 7709. 
 
A Financial History of Texas 271 
 
 to defer payment and lend at the higher commercial rates the 
 money which they should pay for taxes. The Colquitt law left 
 the rate at 6 per cent, but added a penalty of 10 per cent on the 
 entire amount of accrued taxes, and otherwise sought to rob 
 delinquency of its financial profitableness. In 1899 the financial 
 profitableness was further discouraged iDy the provision that re- 
 demption might take place after one year only upon payment 
 of double the amount of taxes, interest and penalty, and all costs. ^ 
 This double liability continued until 1907, when it was thought 
 to be a deterrent to redemption, and was replaced by the pro- 
 vision that payment of the taxes for which sale was made, with 
 interest at 6 per cent, all costs and a penalty of 10 per cent on 
 the amount of the taxes would secure redemption for lands sold 
 to the state or any city or town.^ But for lands sold for taxes 
 and bought in by individuals the law was not changed and re- 
 demption may take place within tw^o years upon payment of 
 double the amount paid for the land.^ 
 
 Since 1895 there, has been a growing confidence in tax titles as 
 attested by an increase in the number of sales to individuals of 
 property foreclosed for taxes.* The anomalous situation exists, 
 however, that in the case of lands bid in by the state there is no 
 statutory provision for their sale, except in the case of lands of 
 non-residents of unorganized counties.^ It is alleged that the 
 insufficient compensation of county and district attorneys when 
 they bring suit and their exclusive power over enforcement ha:ve 
 resulted in negligent enforcement of the lien of the state on real 
 property.® It was enacted in 1879 that all real and personal 
 
 ^Laws of 1899, p. 63 
 
 -Laws of 1907, p. 282. Laws of 1909, p. 400. Laws of 1913, Called 
 Sess., p. 25. Also Laws of 1905, p. 317, and Laws of 1901, p. 400. 
 In 1902 thirty-six counties had not compiled records of delinquent 
 as called for in the act of 1897, and in 1905 it was made their duty 
 to do so. Laws of 1905, p. 318. Rev. Civil. Stats., 1911, arts. 7695, 
 7697. Comptroller's Report, 1902. 
 
 ^Rev. Civil Stats., 1911, art. 7696. 
 
 ^Comptroller's Report, 1899. 
 
 '^Report on Audit, Organization and Methods, 1909, pp. 79, 90, 91. 
 It appears also that a tax title to unpatented school lands is a very 
 cloudy one, and that the state's lien on such lands is very defectively 
 secured. Ibid., p. 79. 
 
 •Ibid. 
 
272 Bulletin of the University of Texas 
 
 property of a person was liable for the state and county taxes 
 due by him, including taxes on real estate and personal property, 
 and the poll tax.^ 
 
 Delinquency and insolvency constitute waste and loss to the 
 state in the assessment and collection of taxes because assessors 
 are compensated for the assessment of the property. It is de- 
 sirable that delinquency especially should be vigorously combated. 
 It is desirable also that the expense of getting the taxes into the 
 treasury, or that the expenses of assessment and collection, should 
 be at a minimum. In 1883 the compensation of assessors and 
 collectors was graduated, but no maximum to what such officers 
 could receive was pre^scribed.- With the growth in taxable values 
 and taxes collected, their pay became excessive in many instances.^ 
 A reduction in collectors' fees was made in 1895.* In the general 
 revolt in 1897 against the abuses of the fee system, the fees of 
 these officers Avere changed, and a maximum compensation was 
 fixed. ^ The maxima are graded roughly according to popula- 
 tion of the counties, but in order that there may be an incentive 
 for assessment and collection after the maxima have been reached, 
 it is stipulated that each officer shall get one-fourth of the excess 
 fees, the remaining three-fourths accruing to the county treasury. 
 
 The waste, loss, and cost incident to asso-sment and collection 
 of taxes — including poll and occupation — was 18 per cent of the 
 taxes assessed in 1882; 19.6 per cent in 1887; 18.4 per cent in 
 1891 ; 22.3 per cent in 1895 ; 23.8 per cent in 1900 ; 16.5 per cent 
 in 1905 ; 16.2 per cent in 1910, and 16.1 per cent in 1915. The 
 high percentages in 1895 and 1900 were due to the great increase 
 in delinquent and insolvent ad valorem and poll taxes, and the 
 
 ^Laws of 1879, Reg. Sess., p. 6. Rev. Civil Stats, of 189.5, art. 5176; 
 Rev. Civil Stats., 1911, art. 7630. This article reads as follows: "All 
 real and personal property held or owned by any person in this state 
 shall be liable for all state and county taxes due by the owner thereof, 
 including taxes on real estate, personal property and poll tax; and 
 the collector of taxes shall levy on any personal or real property to 
 be found in his county to satisfy all delinquent taxes, any law to the 
 contrary notwithstanding." See also art. 7528. 
 
 -Laws of 1883, pp. 35, 101. 
 
 ^Report of State Revenue Agent, 1894. 
 
 "Laws of 1895, Reg. Sess., p. 180. 
 
 "Laws of 1897, Called Sess., p. 5. 
 
A Fmancial History of Texas 273 
 
 improvement since has been due to the reduction in expenses, 
 delinquency and insolvency. The per cent of expenses, which 
 are mainly the commissions paid for assessment and collection, 
 to gross collections on the tax roll, by which is meant assessed 
 taxes less erroneous assessments and insolvent and delinquent 
 taxes, was 10.4 in 1887; 10.6 in 1891: 11.7 in 1895; 7.6 in 1900; 
 7.3 in 1905; 9.1 in 1910, and Q.Q in 1915. The effect of the fee 
 legislation of 1897 is evident in the decline after 1895. 
 
 The compensation of assessors is based on the total of assessed 
 taxes, one-half of which is paid by the state and one-half by the 
 county. The fee of five cents for assessing each poll, is paid by 
 the state. The history of the division of costs is that in 1850 the 
 county tax was limited to one-half of the state 's, and the division 
 of the costs on an equal basis of half and half was thought to be 
 reasonable. This continued to be the rule until 1861, when a 
 change was made, but in 1866 it was again provided that each 
 should pay the same. Under the Constitution of 1869 the fees 
 of assessment and collection might be added to the taxpayer's 
 bill, and though this was enacted, it was repealed immediateljj 
 and a division of the costs was made, one-third to be borne by the 
 county and two-thirds by the state.^ This division remained the 
 rule from 1871 until 1897, when the present apportionment of 
 half and half was enacted. This division was fair enough as 
 long as the state and county rates were equal or nearly so, but 
 since county rates have increased beyond the state rates the state's 
 share of the expense is unduly large. It would seem fairer that 
 the expense should be prorated according to the interest which 
 each has in the services rendered. It is asserted that the com- 
 pensation of collectors in the richer counties is more than ade- 
 quate, in the poorer counties less than sufficient; and that the 
 surplus fees turned into the county treasury enable some counties 
 to be at no expense for the collector's office.^ Furthermore, the 
 graduation of the collector's fees, compensating them highly (5% 
 and 4%) for the first and easiest collections and much less (1%) 
 
 'That part of the act of April 22, 1871, which imposed as an additional 
 tax the fees of a justice of the peace for making assessment was repealed 
 by the act of November 29, 1871. 
 
 *Report on Audit, Organization and Methods, 1909, pp. 80-1. 
 
 18— H 
 
274 Bulletin of the University of Texas 
 
 in the larger totals which are accomplished by some effort aacl 
 unpleasantness usually deters collection of delinquent taxes. ^ 
 It is apparent that some reform is needed, and those suggested 
 are putting the officers on a salary basis, or having the entire 
 expense borne by the counties, or separating state and local sources 
 of revenue.- 
 
 Also there is loss to the state and, in addition, injustice to tax- 
 payers as a result of failure to list property and of undervaluation 
 of that which is listed. Both non-rendition and undervaluation 
 ll^ve characterized the operation of the property tax throughout 
 the period 1880-1915.^ 
 
 In the assessment of real estate there has been perennial 
 undervaluation. The United States Census of 1890 gave as the 
 true valuation of taxable real estate, $1,130,341,854, but the 
 assessed value of the same was $523,893,098, or 46.3 per cent. 
 In 1904 the true value as given by the census was $1,554,714,941, 
 and the assessed value of all taxable real property was $705,- 
 
 ^See special articles by Lloyd P. Lochridge in the Austin Statesman, 
 January 2, 3, 4, 5, 7, 8, 9, 10, 25, 26, 27, 1913. For legislation of 1913 
 relating to the fees of assessors and collectors see Laws of 1913, Reg. 
 Sess., p. 246. See also Rev. Civil Stats., 1911, arts. 3871, 3881-3883. 
 
 -Report of the grand jury of Travis county, in the San Antonio 
 Express, April 30, 1916. The grand jury favored putting all officers 
 on a salary basis, and cited the activity of the fee officers at the 
 1915 session of the legislature. See discussion fee system, ante. 
 
 ^Messages of Governor Ireland, January 15, 1885, and January 11, 
 1887. Message of Governor Ross, January 20, 1887. Report of the 
 Comptroller, 1888. Supplementary Report of the State Revenue Agent, 
 1892. Galveston News, February 11, 1893. Report of the Comptroller, 
 1898. Report of the State Revenue Agent, 1898. Messages of Gov- 
 ernor Sayers, January 10, 1901, and January 16, 1903. Report of the 
 Special Tax Commission, 1899. Reports of the comptroller, 1902 and 
 1904. Message of Governor Lanham, January 12, 1905. Messages of 
 Governor Campbell, January 16 and April 16, 1907, and January 14^ 
 1909. Messages of Governor Colquitt, January 18 and February 22, 
 1911, January 16, 1913, and January 12, 1915. Flagrant undervaluation 
 Is illustrated in the case of a farm purchased by the prison commis- 
 sioners. The state, through the commissioners, paid $100,000 for 2,715 
 .acres, but the entire tract of 7,831 acres out of which the state's pur- 
 chase was taken had been rendered for taxes at only $53,080; House 
 Journal, 34th Leg., Reg. Sess., p. 442. 
 
A Financial History of Texas 275 
 
 738,721, or 45.3 per cent/ In 1912 tlie estimated true value of 
 all real property was $3,608,063,739, while the assessed value of 
 all taxable property was $1,650,198,381, or 45.6 per cent.- It 
 has long been the practice of county assessors and commissioners' 
 courts to protect their counties against state taxation by low 
 valuations and high county rates, or by such valuations as are 
 sufficient at the existing rates to yield the necessary county 
 revenue. Non-rendition of money, credits and securities is the 
 result of the intangible character of such property and of the 
 high rates of taxation. 
 
 The escape of money, credits and securities from assessment 
 can not be statistically shown, though it can be roughly estab- 
 lished in the case of money. The law considers deposits subject 
 to sight check as cash.^ Deposits of individuals along with the 
 cash in pocket or in the cash drawer are assessed as money on 
 hand. Continuous statistics of deposits are available only for 
 the national banks. Since 1905 the amounts of individual de- 
 posits in state banks are available, but before that date deposits 
 in the few state banks chartered in the Reconstruction period 
 and in private banks were not reported except partially, un- 
 officially, and very occasionally by the Comptroller of the Cur- 
 rency. By comparing the amount of individual deposits in na- 
 tional banks at the date nearest to January 1 with the assess- 
 ment of money on hand January 1, the evasion of money is con- 
 clusively, though roughly, established.* 
 
 ^Special Report of the U. S. Census on Wealth, Debt and Taxation, 
 1907, p. 41. It will be noted that the census does not give the real 
 value of taxable real property, but' only that of all real property, 
 and this latter amount includes the value of some real property 
 which is exempt from taxation. This must be held in mind in com- 
 parisons with 1890, and in judging of the escape of real property from 
 taxation. 
 
 -Report of the U. S. Census on Wealth, Debt, and Taxation, 1913, 
 vol. 1, pp. 23 and 748. It should be noted that in 1913 as in 1904 
 the census does not permit comparisons with 1890. 
 
 ^Campbell v. Wiggins, 2 Texas Crim. App., 1 (1892). 
 
 *The demand deposits of individuals in state banks on December 31, 
 1909, were $28,940,000, which added to those in national banks made 
 a total of $184,718,000. Assessed money on hand was only 13 per cent 
 of this total. The deposits of individuals in state banks on January 
 
276 Bulletin of the University of Texas 
 
 Individual 
 
 Index Deposits in Index 
 
 Money on Hand. No. National Banks. No. 
 
 1880 $7,276,000 100 $ 1,832,000 100 
 
 1885 12,435,000 170 8,285,000 452 
 
 1890 14,264,000 197 25,889,000 1.413 
 
 1895 10,689,000 146 36,242,000 1,978 
 
 1900 8,900,000 122 54,246,000 2,961 
 
 1905 11,749,000 161 103,149,000 5.630 
 
 1910 24,546,000 337 169,263,000 9,239 
 
 1914 22,242,000 305 203,855,000 11,127 
 
 Goods, wares and merchandise are a species of property, 
 which though visible are because of their complexity impossible 
 of assessment by the assessor. The following table shows the 
 amount assessed at selected dates. 
 
 Index No. 
 
 1880 $ 16,302,000 100 
 
 1885 27,043,000 165 
 
 1890 . ; 29,322,000 179 
 
 1895 31,427,000 192 
 
 1900 37,461,000 229 
 
 1905 50,390,000 309 
 
 1910 88,401,000 542 
 
 1915 100,109,000 614 
 
 Even the proverbial person who does not get out of the rain 
 knows that the value of merchants' stocks in 1915 were more 
 than 6.14 times greater than the.y were in 1880. 
 
 13, 1914, the same date as the report of the national banks, were 
 $79,697,000, and the aggregate of national and state deposits was 
 $283,552,000. Assessments of money were about 7 per cent of this. 
 When one takes into consideration the money not on deposit in the 
 banks, the amount assessed in proportion to the amount assessable 
 was much below 7 per cent. The writer fully realizes the limitations 
 applying to the use of these statistics, and the amounts and per- 
 centages are not given as exact demonstrations of the escape of money. 
 The bank deposits of non-residents of the state are not assessable here, 
 nor are public deposits, the deposits of exempt institutions, nor the 
 deposits of other banks assessable. 
 
A Financial History of Texas 277 
 
 The laws have been amended from time to time to close loop- 
 holes and these changes reveal some of the ways by which taxes 
 were evaded. In 1888 the practice of removing property tem- 
 porarily from the state in order to avoid taxation was covered 
 by law, and in 1891 the device of converting upon the books of 
 banks taxable money into non-taxable treasury notes was made 
 illegal.^ Livestock in pastures lying in more than one county 
 had their situs defined in 1887, and in 1905 there was legisla- 
 tion to prevent the escape from taxation of timber on public 
 lands leased or sold.^ The current method of evading taxes on 
 money is to have the same converted into New York exchange 
 just preceding January 1, despite the fact that the method is 
 declared to be unlawful. 
 
 Reliance, however, has been placed upon strengthening the 
 oaths which taxpayers, assessing officers, and boards of equaliza- 
 tion must make.^ The most notable of all efforts of this character 
 was made in 1907 in the so-called "Full Rendition Act."* This 
 act defined the standard of valuation of property to be its ''rea- 
 sonable cash market value," or in case it should have no "market 
 value" its "real or intrinsic value." The duty was devolved 
 upon assessors and county boards of equalization to permit no 
 property to be assessed except at these values; they were put 
 under oath to discharge this duty, and neglect or refusal on their 
 part to comply constituted malfeasance in office for which they 
 could be removed from office upon suit brought by the attorney 
 general or under his direction. In 1909 it was made the duty 
 of boards of equalization to see that property was rendered at a 
 "fair market value. "^ As a res\.lt mainly of the "full rendition 
 act" there was an increase of $588,825,000 in the assessed values 
 of 1908 over those of 1907. The number of acres of land as- 
 sessed increased by 2,383,000; the assessed value of rural real 
 
 ILaws of 1888, p. 3. Laws of 1891, p. 39. Laws of 1897, Reg. 
 Sess., p. 203. Rev. Civil Stats., 1911, art. 7545. 
 
 =Laws of 1887, p. 109. Laws of 1889, p. 29. Laws of 1905, p. 72. 
 
 ^'Laws of 1897, Reg. Sess., p. 293. Laws of 1907, p. 459. 
 
 *Laws of 1907, p. 459. 
 
 ''Laws of 1909, p. 372. Rev. Civil Stats., 1911, art. 7564. Arts. 7530 
 and 7569 carry* the obsolete expressions "true and full value" and 
 "reasonable cash market value." 
 
278 Bulletin of the University of Texas 
 
 property increased $290,330,000, the assessed value of town and 
 city real property increased $118,620,000. The total increase in 
 the assessed value of real estate was $408,929,000. Of the re- 
 mainder of the increase in 1908, railroad property made up $50,- 
 039,000 ; credits of others than banks and bankers, $15,076,000 ; 
 goods and merchandise $15,049,000 : national bank shares, $13,- 
 245,000; horses and mules, $12,418,000: miscellaneous and other 
 items, $24,065,000. While assessed credits of individuals in- 
 creased $15,076,000, money assessed decreased $4,734,000. The 
 act thus affected chiefly real property, railroads, tansrible per- 
 sonalty, and such intangible personalty, like bank stock, 
 as is easily reached. Though designed to correct underval- 
 uation of real property and though resulting in a very 
 large increase in the assessed value of such property, it 
 has not been successful. A comparison of the average true 
 value of agricultural land in each county as, given by the Thir- 
 teenth Census with the average assessed value of lands and 
 buildings as given in the report of the state comptroller for 
 1911, shows that in only six counties were assessed values as 
 much as 90 per cent of true values ; in seven counties they were 
 between 80 per cent and 90 per cent ; in thirteen between 70 per 
 cent and 80 per cent; in twenty-seven between 60 per cent and 
 70 per cent ; in forty-three between 50 per cent and 60 per cent ; 
 in sixty- four between 40 per cent and 50 per cent ; in thirty-nine 
 between 30 per cent and 40 per cent : in thirty between 20 per 
 cent and 30 per cent; and in six they were under 20 per cent.^ 
 Five of the six counties which were assessed at 90 per cent and 
 over were in East Texas and had comparatively small popula- 
 tion and wealth, while the wealthier counties, the famed black 
 land counties, fell as a rule under 50 per cent. The varying per- 
 centages of assessed to true values result in unequal taxation 
 for state purposes, and they clearly show the need of some cen- 
 
 ^The census excludes some lands which if included would diminish 
 the average true value, but it does not include, as does the comptroller, 
 the value of farm buildings. If buildings were included, the average 
 true value would be much larger. The percentage of underassessment 
 is, therefore, really much greater than is shown above, because of 
 the omission of buildings from the census figtires. The census figures 
 are not accepted as accurate, but as nearly accurate as can be obtained. 
 
A Financial History of Texas 279 
 
 tralized or state control or supervision of the assessing ofificers 
 and county boards of equalization, if the real property tax is to 
 be retained for state purposes/ This need becomes greater as 
 the general revenue rate increases and as special state taxes, like 
 the school and the pension taxes, come to be employed. 
 
 In 1913 and 1914 in some of the counties persons were era- 
 ployed by the commissioners' courts to unearth unrendered 
 property, especially vendor's lien notes. The contracts with 
 these ''tax ferrets" or "tax adjusters" were held illegal, and 
 the money collected through their activity was refunded.^ 
 
 ^Bulletin of the University of Texas, No. 236, "Some Corporation and 
 Taxation Problems of the State," p. 124. Dallas News, June 12, 1912. 
 -San Antonio Express, February 15, 1914. 
 
Chapter 5. 
 the rates of the property tax. 
 
 (1) State Bates. 
 
 One of the theories advanced in explanation of the breakdown 
 of the general property tax as applied to intangible property is 
 that the high rates induce many owners of such property to 
 evade the taxes. A review of the rates is, therefore, pertinent. 
 
 In 1881 the rate of taxation for state purposes, including pub- 
 lic schools, was reduced from 50 cents to 40 cents on the one 
 hundred dollars' valuation of property. In 1883 the constitu- 
 tion was amended to provide that the state rate, exclusive of 
 the tax necessary to pay the public debt, should never exceed 35 
 cents, and that a separate tax, not to exceed 20 cents, should be 
 levied for the benefit of the public free schools.^ In 1912 the 
 constitution was amended so as to authorize a special pension 
 tax of not more than 5 cents on the one hundred dollars' valua- 
 tion of property.^ 
 
 The average rate during the thirty-five years, 1880-1915, was 
 33.25 cents for state and school purposes combined. The average 
 for the state or general revenue purposes alone was 17.80 cents, 
 and the average for school purposes was 15.45 cents. In 1888 
 the rate for general revenue purposes was reduced from 25 cents 
 to 10 cents, owing to a large refund by the Federal government, 
 but it rose to 20 cents in 1889. In 1908 the rate was reduced to 
 6.25 cents, in 1909 to 5 cents, and in 1910 to 4 cents, as a result 
 partly of increased valuation and partly of the huge fines col- 
 lected from the Waters-Pierce Oil Company and other penalized 
 corporations. In 1911 the rate went up to 12.50 cents, in 1913 
 to 23 cents, and in 1915 to 30 cents. "^ Since 1913 a special pen- 
 
 ^Laws of 1884, p. 5. Constitution, art. 8, sec. 9, and art. 7, sec. 3. 
 
 'Laws of 1911, Reg. Sess., p. 288. 
 
 'See Appendix, table 11, for tax rates. The tax rate of 55 cents in 
 1915 was forcefully and convincingly defended by Governor Ferguson 
 in his Waco speech of June 10, 1916, as reported in the Austin 
 American, June 11, 1916. 
 
A Financial History of Texas 281 
 
 sion tax of 5 cents has been levied, as well as the special school 
 tax. 
 
 As showing the importance of the tax among the sources of 
 the state's total tax receipts, the property tax constituted 56.9 
 per cent of the total in 1881, 66.8 per cent in 1887, 65.2 per cent 
 in 1891, 61.3 per cent in 1901, 62.5 per cent in 1910, and 74.5 
 per cent in 1915. 
 
 (2) Local Rates. 
 
 Numerous changes have been made since 1880 in the taxing 
 powers of counties, towns, cities, and other subordinate units. 
 In 1880 the constitutional tax limit of counties was 75 cents, 
 outside of taxes on account of interest and sinking funds, and 
 except in the case of coast counties. The limits for towns and 
 cities were, according to their class, 25 cents, 75 cents, and 
 $2.50, except in the case of coast cities and except in the case of 
 taxes for debts incurred prior to 1876. 
 
 In 1883 section 9 of article 8 of the constitution was amended 
 so as to give counties, towns, and cities the power to levy a tax 
 not to exceed 15 cents for roads and bridges. Also, it reduced 
 the tax which might be levied for public buildings from 50 cents 
 to 25 cents, and added streets, sewers and other permanent im- 
 provements to the purposes for which this 25 cents could be 
 levied. The constitutional tax limit of counties became as a re- 
 sult of this amendment 65 cents as compared with 75 cents form- 
 erly, with the usual exception of taxes for debts incurred prior 
 to the adoption of the amendment and taxes in coast counties 
 for seawalls, etc. The statutory limit was accordingly changed 
 and was fixed in 1884 at 65 cents.^ 
 
 In 1885 and 1887 cities and towns incorporated under the gen- 
 eral law were authorized to levy a tax not to exceed 25 cents for 
 the construction or purchase of public buildings, water works, 
 sewers, streets and other permanent improvements, but it was 
 not until 1891 that in conformity with the amendment of 1883 
 were they authorized to levy a tax not to exceed 15 cents for 
 roads, street and bridge purposes.^ The total taxing powers of 
 
 ^Laws of 1884, p. 67. See also Laws of 1885, p. 105. 
 
 'Laws of 1885, p. 99. Laws of 1887, p. 37. Laws of 1891, p. 135. 
 
282 Bulletin of the University of Texas 
 
 general law cities of 10,000 population and under became thus 
 fixed by statute in 1891 at 65 cents, except the tax for debts in- 
 curred before 1883/ In 1889, however, a new class of general law 
 cities was provided for under authority of article 11, section 5 
 of the constitution, namely, cities of more than 10,000 popula- 
 tion. General law cities constituting this class were authorized 
 to levy a tax not to exceed $1.75, 25 cents of which was for the 
 purpose of taking up any floating debt contracted prior to 
 January 1, 1889.- In 1901 the provision of the constitution 
 permitting coast cities to construct seawalls and breakwaters, 
 was given statutory effect, and a tax not to exceed 50 cents, 
 when voted by a two-thirds majority of the property taxpaying 
 voters, was authorized.^ Legislation since 1901 affecting cities 
 and towns has changed the population requirements of specially 
 chartered cities and the method of adoption and amendment of 
 charters. Until 1909 only cities having a population of more 
 than 10,000 could be chartered by special act, but the amendment 
 to the constitution adopted in 1909 makes it possible for cities 
 having more than 5,000 population to be so chartered.* Cities 
 of 5,000 or less may be chartered by general law only.^ An 
 amendment to article 11, section 5, adopted in 1912, gave cities 
 of more than 5,000 population the power to adopt or amend 
 their charters, subject to such limitations as may be prescribed 
 by the legislature, and limited the tax which they may levy to 
 $2.50. The Thirty-third Legislature in 1913 carried this into 
 effect by the so-called Enabling Act.^ The commission form of 
 government may be adopted by any general law city, and it may 
 be secured by special law cities through adoption or amendment 
 of their charters, but the taxing power of no city is changed by 
 its adoption." A town or village which has more than 500 and 
 
 ^Rev. Civil Stats., 1911, art. 925. 
 
 "Laws of 1889, p. 3. Rev. Civil Stats., 1911, art. 926. 
 
 •^Laws of 1901, First Called Sess., p. 23. Rev. Civil Stats., 1911, 
 art. 5585. 
 
 ^4rt. 11, sec. 5. 
 
 '^Art. 11, sec. 4. 
 
 "Laws of 1913, Reg. Sess., p. 307. 
 
 'Rev. Civil Stats., 1911, title 22, chap. 15. Laws of 1913, Reg. Sess., 
 p. 36. 
 
A Financial History of Texas 283 
 
 less than 10,000 inhabitants may be incorporated as a town or 
 villas'c, and it may levy a property tax, not to exceed 25 cents.^ 
 
 The taxing power of counties has been increased considerably 
 since 1883. In 1890 article 8, section 9 of the constitution was 
 amended so as to empower the legislature to authorize an addi- 
 tional road and bridge tax not to exceed 15 cents, and its levy 
 was made subject to a majority vote of the qualified property 
 taxpayino- voters. This was carried into effect in 1891.- In 
 1901 the provision of the constitution permitting coast counties 
 to construct seawalls and breakwaters was given statutory effect, 
 and a tax not exceeding 50 cents when voted by a two-thirds 
 majority of the qualified property taxpaying voters, was author- 
 ized.^ In 1906 article 8, section 9 was amended to permit a jury 
 tax of 15 cents, and this w^as given statutory effect in 1907.* 
 The present (1915) taxing powers of counties is, except for debts 
 incurred prior to the amendment in 1883 and except in coast 
 counties, 95 cents, 15 cents of which is subject to majority vote 
 of the property taxpaying voters.^ 
 
 A feature of local taxation within recent years is the appear- 
 ance of special districts of various kinds. Until the consti- 
 tutional amendment of 1883, the legislature was limited in the 
 creation of independent school districts to cities and towns. 
 Where there w^as not an independent district the community 
 school system, with no special taxing power, was in effect. The 
 amendment of 1883 gave the legislature the power to form 
 school districts within the counties of the state and to authorize 
 a tax not to exceed 20 cents on the $100 valuation to be levied 
 in such districts upon vote of two-thirds of the qualified 
 property taxpaying voters.® In 1908 article 7, section 3, was 
 amended, and the maximum tax which could be levied bv an 
 
 ^Rev. Civil Stats., 1911. art. 1050. 
 
 ^'Laws of 1891, p. 51. Laws of 1913, Reg. Sess., p. 30. 
 
 ^'Laws of 1901, First Called Sess., p. 23. 
 
 *Laws of 1907, p. 39. 
 
 ^Rev. Civil Stats., 1911, art. 2242. 
 
 «Art. 7, sec. 3. Laws of 1884, p. 38. In 1884, 53 counties were ex- 
 empted from the provisions of the district system; in^l885, 90 counties; 
 in 1888, 88 counties. Since 1888 the number exempted has declined. 
 In 1909 the community system was abolished; Laws of 1909, p. 17. 
 
284 Bulletin of the University of Texas 
 
 independent school district was increased to 50 cents. The 
 employment of this tax was made subject to a majority vote 
 of the qualified property taxpaying voters/ Article 7, section 
 3, was again amended in 1909. The limit of the taxing power 
 remained at 50 cents, but it was provided that districts could 
 be composed of territory wholly within a county or in parts 
 of two or more counties.- It was provided in the amendments 
 of 1883, 1907 and 1909 that the limitation upon the school 
 district tax did not apply to incorporated cities or towns which 
 were independent school districts. Since 1905 their limit has 
 been 50 cents, subject to a two-thirds majority vote of the 
 property taxpaying voters.^ 
 
 Pursuant to an amendment in 1904 of article 3, section 52, 
 of the constitution, special districts for various purposes have 
 been authorized with power to issue bonds and to levy and 
 collect taxes to pay the interest and to contribute to a sinking 
 fund of such bonds. In 1905 drainage districts and irrigation 
 districts, and in 1909 road districts, navigation districts, and 
 levee and overflow districts were provided for by statute.* 
 
 The taxing powder for any or all of these purposes is limited 
 by the constitutional provision that the debt created shall not 
 exceed one-fourth of the assessed valuation of real property 
 of the district, and that the total bonded indebtedness of any 
 city or town shall not exceed the limits imposed by other 
 provisions of the constitution.^ School and other districts which 
 
 ^Laws of 1909, p. 17. 
 
 ^'Laws of 1911, Reg. Sess., p. 200. The tax limit of both common 
 school and independent school districts is the same. Rev. Civil Stats., 
 1911, title 48, chaps. 15 and 16. 
 
 ^ev. Civil Stats., 1911, title 48, chap. 17. 
 
 *Laws of 1905, pp. 212, 235. Laws of 1909, p. 23. Laws of 1907, p. 
 78. Laws of 1909, pp. 32, 140, 185. Laws of 1909, p. 271. Laws of 
 1911, Reg. Sess., p. 245. Levee and overflow districts are called "im- 
 provement districts." Laws of 1913, Called Sess., p. 89. 
 
 'Art, 3, sec. 52. The other provisions of the constitution here re- 
 ferred to are the tax limits of the several classes of towns and cities 
 which are $2.50 for special law cities and 25 cents for general law 
 cities. The issue of bonds and taxation therefor in the case of all 
 districts is conditional upon a two-thirds majority vote of the property 
 taxpaying voters. 
 
A Financial History of Texas 285 
 
 are subdivisions of counties and which make use of the county 
 assessor for assessing district taxes can not employ higher valu- 
 ations than those for state and county purposes, but this limi- 
 tation does not apply when they have different assessing and 
 collecting officers from the county.^ 
 
 It is not possible to state the total tax rate which may be 
 imposed upon property, because of the undefined taxing power 
 for debts, the different taxing powers of the coast and interior 
 counties, the several classes of towns and cities, and the in- 
 clusion of cities and counties within districts. The average 
 ad valorem tax per $100 of assessed valuation may be found, 
 however, though it gives but an idea of the real weight of 
 taxation, because the ratio of assessed to true values of property 
 has varied from decade to decade. The average ad valorem 
 tax rates for both state and local purposes per $100 of assessed 
 value and per $100 of estimated true value were as follows: 
 
 Assessed value. True value. 
 
 1860 $0.20 
 
 1870 0.75 
 
 1880 1.43 $0.55 
 
 1890 1.26 0.47 
 
 1902 1.34 0.53 
 
 1912 1.30 0.50 
 
 ^Miller v. Vance, 180 S. W. Rep., 739 (1915). See Rev. Civil Stats., 
 1911, arts. 2862 and 2853. 
 
Chapter 6. 
 
 business property taxes. 
 
 The general property tax applies to business property, but 
 in the cases of the property of railroads, insurance companies, 
 and banks, rules of administration differ from those applying 
 to other property. 
 
 A. Rmlroads. 
 
 The special administrative rules applying to the tangible 
 values of railroads have not been essentially changed since 
 1876. A defect in the earlier legislation was the lack of pro- 
 vision for review of rolling stock values by the board of equali- 
 zation of the county where it was rendered in gross; but this 
 was remedied in 1885.^ It was also enacted then that interstate 
 railroads should render in this state such proportion of their 
 total rolling stock as the mileage of road in this state was to 
 the total mileage of the road. 
 
 The assessment of the tangible values has remained un- 
 changed in the hands of the county assessors. An effort was 
 made in 1895 to devolve upon the railroad commission the duty 
 of furnishing the assessors with the value of the road in each 
 county and other information that might be useful to them in 
 their assessment of the properties, but the bill to this end failed 
 of passage.^ 
 
 Under the existing system of taxation, each railroad company 
 on or before April 30 delivers to the assessor of each county 
 and incorporated city or town through which any part of its 
 road runs or in which it owns real estate, a sworn statement 
 which specifies the number and values of acres of land, the 
 length of road and value per mile, including right of way, 
 roadbed, superstructure, depots and f^rrounds, all shops and 
 
 ^Comptroller's Report, 1881-2. Laws of 1885, p. 30. In 1883 bills 
 were introduced for the equalization and different assessment of rail- 
 road property, but none met with success. The agitation was warm 
 and the lobby was strong; Galveston News, February 3, 1883. 
 
 'Houston Post, March 21, 1895. 
 
A Financial History of Texas 287 
 
 fixtures, and all personal property except rolling stock. This 
 rendition is subject to revision by the county board of equali- 
 zation.^ The physical and personal properties of a road situ- 
 ated in an unorganized county are rendered to the state comp- 
 troller. On or before April 1 each railroad must deliver to 
 the assessor of the county in which its principal office is located 
 a sworn statement giving the mileage of the road in each county 
 and the value of all the rolling stock. The valuation of the 
 rolling stock is reviewed by the county board of equalization 
 and, if approved, is certified to the state comptroller, who pro- 
 rates it among the counties served by the road on the basis of 
 the mileage in each, and each county's share is added by the 
 assessor to the assessment roll. Subdivisions of counties, such 
 as school districts, can not use the tax on rolling stock.- 
 
 In 1899 and 1900 the franchises of certain railroads were 
 assessed separately under the property tax, but upon being 
 tested in the courts the assessment was disallowed.^ 
 
 In 1905 was enacted the most important railroad tax legis- 
 lation since that of the passenger earnings tax of 1879. By 
 the Intangible Assets Law. provision was made to tax railroads 
 on their intangible property, which is declared to be the differ- 
 ence between the whole value of the property and the value 
 of the tangible property. For the determination of the intan- 
 gible values a state tax board was created, composed of the 
 comptroller, the secretary of state, and the state tax commis- 
 sioner. Railroad companies are required by this law to fill out 
 sworn statements of the data with which the board works. 
 The intangible values ascertained for each road are certified 
 to the county assessors, the share of each county being in 
 accordance with its proportion of the mileage of the road, and 
 they are placed on the state and county rolls and are taxed 
 
 ^Laws of 1909, p. 372. Rev. Civil Stats., 1911, arts. 7524-7525. 
 
 ^Biennial report of Attorney General, 1912-14, p. 632. 
 
 'State V. Austin and Northwestern R. R. Co., 94 Tex. 530 (1901). 
 The court held that in this case to tax the franchise separately would 
 result in double taxation. It did not hold that the franchise was non- 
 assessable, but that it had presumably already been assessed in con- 
 nection with the other property. See also City of Dallas v. Street R. R., 
 95 Tex., 268 (1902). 
 
288 Bulletin of the University of Texas 
 
 at the same rate as other property.^ For the first year of the 
 operation of this law intangible assets to the amount of $152,- 
 827,000 were ascertained, but the county boards of equalization 
 reduced the amount actually assessed to $30,803,000, or to 20 
 per cent of the amount found by the tax board.^ The law was 
 consequently amended in 1907 and it was made obligatory upon 
 tax assessors to put on the rolls the values ascertained by the 
 tax board and these values were removed from review or 
 change by the board of equalization.^ This law has added a 
 very large amount of property to the tax rolls.* It has been 
 held, however, that intangible property can not be taxed at a 
 higher per cent of its true value than is other property.** 
 
 ^Laws of 1905, p. 351. Rev. Civil Stats., 1911, arts. 7414-7426. The 
 law was sustained in M. K. and T. Ry. Co. of Texas v. Shannon, 
 100 Tex., 379 (1907). It was held (1) that intangible values are not 
 such property as is required by the constitution to be assessed by 
 the county assessor, but that they constitute one of the "other sub- 
 jects" of taxation for the taxation of which the legislature is au- 
 thorized to provide by art. 12, sec. 17. It was held (2) that the act 
 confers not judicial but quasi-judicial powers upon the comptroller 
 and the secretary of state. And it was held (3) that the equal and 
 uniform provision of the constitution is not violated by the act, be- 
 cause this provision does not mean that the same method of ascertain- 
 ing the value of property shall be adopted in all cases. 
 
 -Report of the Tax Commissioner, 1906. 
 
 •'•Laws of 1907, p. 469. Lively v. M. K. & T. Ry. Co. of Texas, 102 
 Tex., 345 (1909). 
 
 *The amounts assessed were: 
 
 1906, $31,499,000 
 
 1907, $171,990,000 
 
 1908, $173,403,000 
 
 1909, $174,100,000 
 
 1910, $174,862,000 
 
 1911, $174,757,000 
 
 1912, $162,363,000 
 
 1913, $168,106,000 
 
 1914, $162,644,000 
 
 1915, $156,518,414 
 
 'Lively v. M. K. & T. Ry. Co. of Texas, 102 Tex., 545 (1909). Also 
 see M. K. & T. Ry. Co. of Texas v. Kone, 122 S. W. Rep., 424 (1909), 
 and M. K. & T. Ry. Co. of Texas v. Hassell, 57 Texas Civil App., 522 
 (1909). 
 
A Financial History of Texas 289 
 
 Some of the Texas railroads are assessed for taxation at a 
 higher valuation per mile than their capitalization per mile or 
 their valuation per mile by the Texas railroad commission. 
 For example, the Houston and Texas Central Railroad had in 
 1915 stocks and bonds per mile of $25,942 and was valued by 
 the railroad commission at $24,005 per mile, but was assessed 
 for taxation at $28,808 per mile.^ In the case of a number of 
 the roads the railroad commission's valuation is less than the 
 assessed value for taxation, and both amounts are less than the 
 capitalization per mile of line. The overcapitalization of many 
 of the Texas lines explains why the stocks and bonds so greatly 
 exceed the valuations by the commission and by the tax officials, 
 though it is probable that this excess over the commission's 
 valuations would not be so great if a revaluation of the roads 
 should be made. Some of the valuations were made over twenty 
 years ago. It has been contended that there should be the same 
 basis for capitalization, for rate making, and for taxation.^ 
 This contention can not be accepted, however, because the pur- 
 poses of the valuations are quite different, and the valuations 
 are governed by quite different principles. Particularly is it 
 true that a road may be taxed at a higher figure than that for 
 which it may be capitalized, inasmuch as the selling value — 
 which is also the taxable value — is made up of all the physical 
 and intangible elements, while for capitalization and rate 
 making some of the intangible elements should be excluded. 
 This question has not been raised for adjudication in Texas, 
 but the courts of other states tend to hold that franchises which 
 cost the public service corporations nothing, good will, and 
 other intangible values which do not represent actual invest- 
 ment should not be the bases for charges or securities.^ 
 
 ^Report of the Texas Railroad Commission, 1915. 
 
 -C. S. Potts, Railroad Transportation in Texas, p. 195. Report of the 
 Texas Welfare Commission, 1912, p. 48. 
 
 ■''Comparatively recent cases bearing on this question are Cedar 
 Rapids Gas Light Co. v. City of Cedar Rapids, 223 U. S., 655 (1912), 
 and Public Service Gas Co. v. Board of Pub. Ut. Comm., et al. (N. J.), 
 94 Atl. Rep., 634 (1915). 
 
 -H 
 
290 Bulletin of the University of Texas 
 
 B. Insurance Companies. 
 
 Insurance companies, both domestic and foreign, are, except 
 fraternal or benevolent companies, subject to taxation by the 
 property tax on their real and personal property ; but on account 
 of the need of the definition of their debts and also on account 
 of the requirement of the deposit of securities with the state 
 treasurer, special legislation has been found to be necessary to 
 define what personal property is taxable and what its situs is 
 for taxation. 
 
 Interest in this state in the taxation of insurance companies 
 has increased greatly since 1903, when there began the prolific 
 insurance legislation. In 1903 companies for mutual insurance 
 against loss or damage by fire, lightning, and storms were au- 
 thorized to be chartered, and it was provided that no other tax 
 should be required of such companies than one of one-half of one 
 per cent on all gross premiums.^ Fraternal beneficiary associa- 
 tions, domestic or foreign, are declared to be charitable and 
 benevolent institutions and all their funds and assets, except real 
 estate and office equipment, are exempt from state, county, and 
 municipal taxation.- Domestic life, accident, and health com- 
 panies, and domestic co-operative life insurance companies are 
 taxable on their real and personal property less reserve.^ 
 
 Foreign fire insurance companies must either file a bond or de- 
 posit securities, and domestic life, accident, health, fidelity, guar- 
 anty, surety, and casualty companies, and domestic mutual fire, 
 storm and lightning companies must deposit securities with the 
 state treasurer as a condition precedent to doing business in the 
 state. But it is specifically provided only in the case of domestic 
 life, accident, and health companies that the situs of all personal 
 property for state, county, and municipal taxation shall be at 
 the home office.^ 
 
 In 1907 the condition was imposed upon all domestic or foreign 
 stock or mutual life companies to invest not less than 75 per cent 
 
 ^Laws of 1903, p. 166. 
 =^Laws of 1909, p. 357. 
 
 'Laws of 1909, pp. 192 and 285. Rev. Civil Stats., 1911, arts. 4764 and 
 4825. 
 
 *Laws of 1909, p. 192. Rev. Civil Stats., 1911, art. 4749. 
 
A Financial History of Texas 291 
 
 of their legal reserve against policies of Texas citizens in Texas 
 securities or Texas real estate.^ 
 
 All insurance companies, except domestic life, fraternal benefit 
 associations, and mutual fire companies are, in addition to the 
 taxes on their real and personal property, subject to an occupa- 
 tion tax on their gross receipts from premiums upon property 
 and persons in this state." 
 
 C Banks and Bankers. 
 
 Until 1905, when as a result of an amendment to the constitu- 
 tion state banks were authorized to be incorporated, the only 
 banks in the state were national banks, private banks, and the 
 state banks chartered under the Constitution of 1869. Special 
 definition of the taxable personal property of banks has been 
 found to be necessary. Under the legislation of 1876 they w^re 
 taxable on their real estate and tangible personalty, and on so 
 much of their other personal property as remained after de- 
 ducting the sum of deposits, accounts payable, bonds or other 
 securities exempt by national and state laws, from the sum of 
 money on hand, in transit, or in the hands of others subject to 
 draft, checks, and other cash items, bills receivable and other 
 credits due or to become due, and stocks and bonds of every kind.^ 
 The statutes in 1879 erroneously failed to include bills receivable 
 and other credits, and this was not corrected until 1883.* In 
 1883 separate provision was made for national banks. It was then 
 required that some officer of a national bank should furnish the 
 assessor with a list of the shareholders and the amount of the 
 shares of each, and that shareholders should render to the 
 assessors the number and value of their shares. National banks 
 were required to render all real estate and personal property 
 
 ^Laws of 1907, p. 316. Rev. Civil Stats., 1911, art. 4775. 
 
 *Laws of 1911, Reg. Sess., p. 216. 
 
 ^Laws of 1876, p. 279. 
 
 ^Comptroller's Report, 1881-2. Laws of 1883, p. 111. 
 
292 Bulletin of the University of Texas 
 
 except such as was exempt by the laws of the United States.^ 
 The method of taxing shareholders was unsatisfactory and was 
 changed in 1885. It was then provided that each share of a 
 national or of a state bank should be taxed only for the difference 
 between its actual cash value and the proportionate amount per 
 share at which the real estate was assessed.^ The Revised Statutes 
 of 1895 made no distinction between state and national banks, 
 but there was later an amendment to cover this error. ^ There 
 was frequent complaint that banks, especially private banks, 
 evaded taxation, but in 1897 a penalty was provided applying 
 only to national banks for failure or refusal to furnish to the 
 assessor a statement of the assets and liabilities of the bank.* 
 
 Though the chartering of state banks, savings banks, and trust 
 companies was authorized in 1905, there were no corresponding 
 changes made in the tax laws until 1911. State and private banks 
 were taxed by one method, national banks by another. In 1911, 
 however, the same method was applied to both state and national 
 banks, which is that the real estate is taxable to the banks, while 
 the shares are taxable to the shareholders at their actual value 
 less the proportionate amount per share at which the real estate 
 is taxed.^ Bank shares may not be assessed at a greater percentage 
 of their true value than other property is assessed. Because of 
 the ease of assessment of bank shares, there is no form of in- 
 tangible property which is so completely reached for taxation as 
 
 'Exempted by the laws of the United Statea were United States 
 bonds, United States notes, and national bank notes. Rev. Stats, of 
 U. S., 3701. In 1894 United States notes and national bank notes 
 were declared subject to taxation under state laws. 28 U. S. Stats. L., 
 278. Restrictions on the taxation of national bank shares were that 
 it should not be at a greater rate than was assessed upon other monied 
 capital in. the hands of individuals and that the shares owned by 
 non-residents of a state should be taxed only in the city or town of 
 the location of the bank. 13 U. S. Stats. L., 99; 15 U. S. Stats. L., 34. 
 U. S. Rev. Stats., 5219. 
 
 =Laws of 1885, p. 106. Rosenberg v. Weekes, 67 Tex., 578 (1887). 
 Gillespie v. Gaston & Thomas, 67 Tex., 599 (1887). 
 
 ^Laws of 1895, Reg. Sess., p. 38. 
 
 *Com-*roller's Report, 1888. Laws of 1897, p. 157. 
 
 ^127 S. W. Rep., 1083. "Instructions to the Tax Assessors," issued by 
 the comptroller's department, 1911. Rev. Civil Stats., 1911, arts. 7521- 
 7522. 
 
A Financial History of Texas 293 
 
 are they. The growth of banks in the state has been phenomenal 
 and has tended to simplify the taxation of monied capital.^ 
 
 D. Other Businesses. 
 
 The intangible assets tax of 1905 was made to apply not only 
 to railroad, ferry, bridge, and turnpike or toll road companies, 
 but also to wharf, telegraph, interurban railroad, express, packing 
 house and pipe line companies, chair and all other car companies, 
 except sleeping, palace and dining car companies. It was pro- 
 vided, however, that upon compliance with this tax law the gross 
 receipts tax law should not apply.- The companies other than 
 the railroad generally elected to comply with the gross receipts 
 law. The difficulties experienced by the state tax board ii;i determ- 
 ining the intangible property of the companies and the greater 
 simplicity of the gross receipts tax led to a change in the law in 
 1907, by which only railroad, ferry, bridge, and turnpike or toll 
 road companies remained subject to the intangible assets tax, the 
 other companies being brought under the gross receipts tax.^ 
 
 ^Year No. of na- Capital stock No. state banks Capital stock 
 
 tional banks. and surplus. and trust cos. and surplus. 
 
 1866 4 $ 452,000 ... 
 
 1875 10 1,460,000 ... 
 
 1880 13 1,579,000 ... 
 
 1885 68 8,882,000 ... 
 
 1890 189 25,760,000 ... 
 
 1895 214 26,325,000 ... 
 
 1900 223 25,337,000 ... 
 
 1905 440 * 42,756,000 29 $ 1,936,000 
 
 1910 519 65,745,000 621 22,821,000 
 
 1912 515 72,096,000 728 31,176,096 
 
 ^Message of Governor Lanham, January 12, 1905. Laws of 1905, p. 
 351. 
 
 'Laws of 1907, p. 469. Report of the Tax Commissioner, 1906 and 1908. 
 The franchise and other intangible properties of the companies not 
 subject to the intangible assets tax are taxable, though there is no 
 special method provided for ascertaining apd assessing -them. Laws 
 of 1905, p. 357. Rev. Civil Stats., 1911, art. 7414. Dallas v. Street 
 Railway. 95 Tex., 268 (1902). 
 
Chapter 7. 
 general occupation or license taxes. 
 
 IThtil 1907 Texas had a very extensive system of license taxes. 
 There was considerable increase of these taxes in 1879 over the 
 rates prevailing in 1876, and in 1881 when a reduction of tax- 
 ation became possible, reduction was made in the ad valorem 
 rather than in the license taxes.^ General revisions of the rates 
 were made in 1881, 1882, 1889 and 1897. As some one hundred 
 and twenty-five different items were concerned, it is impossible 
 to follow the changes in each one. 
 
 The famous Bell Punch Law enacted in 1879 to apply ta 
 liquor dealers was a failure and a scandal and was repealed in 
 1881.2 Keplacing it were fixed license charges of $300 and $200, 
 according as liquor was sold in quantities of less than one quart, 
 more than five gallons, and one quart and less than five gallons, 
 and a charge of $50 for the sale of malt liquor only.^ In 1897 
 the privilege of selling liquor upon prescription in local option 
 territory was made taxable at $200.* In 1907 the rates for deal- 
 ers of liquor in any quantity, including those selling upon pre- 
 scription, were raised to $375 and the rate for malt dealers ex- 
 clusively was increased to $62.50.'' 
 
 The tax of $200 on commercial travelers, known as ''the Drum- 
 mers' Tax," and imposed in 1879, was reduced to $50 in 1881 
 and $35 in 1882, and was severed of any connection with the 
 occupation tax on merchants. In 1888 it was held by the Su- 
 
 ^Message of Governor Roberts, January 13, 1881. For criticism see 
 Galveston News, January 14, 1881. 
 
 *Laws of 1881, p. 21. Galveston News, January 14, 1881, speaking 
 editorially of this law said the urgent thing was "to get rid of the 
 enormous scandal of its corpse putrefying in the midst of the state's 
 statutes and administrative functions and polluting far and wide the 
 moral atmosphere." See also the message of Governor Roberts, Jan- 
 uary 11, 1881. 
 
 ^Laws of 1893, p. 177. Francois Giozza v. Patrick Tiernan, 148 
 U. S., 657 (1893). 
 
 ^Laws of 1897, Reg. Sess., p. 223. 
 
 ''Laws of 1907, p. 258. Rev. Civil Stats., 1911, art. 7427. 
 
A Financial History of Texas 295 
 
 preme Court of the United States to be an unconatitulional in- 
 terference with interstate commerce, in so far as it applied to 
 drummers representing' foreign houses or houses doing business 
 in other states.^ It was not re-enacted so as to apply only to 
 drummers of domestic houses doing a state business. 
 
 The tendency of legislation dealing with the license taxes has 
 been to reduce the taxes on the so-called useful occupations and 
 to increase those on pursuits which smack of quackery and 
 charlatanry or which are regarded as socially harmful. The 
 taxes on merchants were decreased in 1881 and 1882, and until 
 1889 there were seven classes of merchants on the basis of the 
 amounts of their purchases of merchandise. In 1889 four classes 
 were added and the maximum tax was made $300 instead of $125. 
 There remained eleven classes with rates varying from $3 to 
 $300 until the taxes were repealed in 1907. The other occupa- 
 tions relieved in 1907 of a license tax were bankers and brokers ; 
 cotton, wool, and hide buyers; dealers in cotton seed products; 
 dentists in the county of their residence ; grain elevators ; hacks: 
 and other vehicles for hire; local insurance agents; land agents; 
 steam laundries; lawyers; livery and feed stables; photograph 
 galleries ; toll bridges ; and wagon yards.- The receipts from the 
 taxes on the occupations thereafter exempt amounted in 1907 to 
 $249,175. The tax on resident physicians and surgeons was re- 
 pealed in 1899. The taxes which remain may be divided into 
 five general classes: 
 
 (1) Those on occupations supplying amusements or pleasure. 
 Under these fall nine and ten pin alleys, baseball parks, cir- 
 cuses,^ concerts, exhibitions of acrobats, menageries, wax works, 
 sleight-of-hand performances, exhibitions given by medicine,, 
 electric belt and such like vendors; flying jennies, phonograph, 
 graphophone, and motion picture shows; knife, cane, doll and 
 othei" such racks; race tracks, shooting galleries, skating rinks,, 
 and theaters. The arguments in support of the taxation of these 
 occupations are that those engaged in them have tax ability 
 
 ^Ex-parte Asher, 23 Texas Crim. App., 662 (1887). Asher v. Texas, 
 128 U. S., 129 (1888). 
 
 ^Laws of 1907, p. 57. Rev. Civil Stats., art. 7355. 
 ^Laws of 1911, p. 142. 
 
296 Bulletin of the University of Texas 
 
 which cannot be reached by the property tax, and that in the 
 case of several they are occupations which need either discourage- 
 ment or slight repression. Exhibitions by associations for the 
 promotion of art, science, and charity, concerts given for charit- 
 able or literary purposes, and museums composed entirely of the 
 products of Texas are exempt from the payment of occupation 
 taxes. 
 
 (2) Those on peripatetic occupations. Among these are ped- 
 dlers; canvassers; traveling vendors of patent medicines; trav- 
 eling medical specialists, surgeons, oculists, and other specialists ; 
 and itinerant merchants selling bankrupt stocks. Peddlers 
 of literature, poultry, vegetables, fruits or other country pro- 
 duce exclusively are exempt, as are also salesmen for merchants 
 engaged in the wholesale drug business. The act of 1897 ex- 
 empted from the peddlers' tax the blind, deaf and dumb, 
 wounded persons, those who had lost a hand or a foot, and ex- 
 Confederate and ex-Federal soldiers; but these exemptions were 
 held to be in violation of the "equal and uniform" provision 
 of the constitution and therefore invalid.^ 
 
 The explanation for these taxes is that the occupations are not 
 easily reached by the property tax" and that they compete with 
 
 ^Ex-parte Jones, 38 Texas Crim. Rep., 482 (1897). That part of the 
 act of 1897 taxing peddlers of clocks, cooking stoves, washing machines, 
 churns, wagons and other veliicles $350 and exempfing from this special 
 tax merchants who had paid the merchants' occupation tax of less 
 amount was declared unconstitutional; Ex-parte Overstreet, 39 Texas 
 Crim. Rep., 474 (1898). The occupation tax act was amended 'n 1899 
 to conform to these decisions. Traveling vendors of tinware and 
 earthenware were dropped from the exempt list by this amendatory 
 act; Laws of 1899, p. 201. A tax which was first levied by the oc- 
 cupation tax law of 1881 and which applied to solicitors of orders for 
 photographs, enlarged crayon pictures and the like, was declared an un- 
 constitutional interferences with interstate commerce when applied to. 
 solicitors of a foreign corporation; Ex-parte Holman, 36 Texas Crim. 
 Rep., 255 (1896). It was also held in French v. State, 42 Texas Crim. 
 Rep., 222 (1900), that a peddler of organs for an organ company of 
 another state was not liable for a state occupation tax when he sold 
 organs in the original package as it were; but this decision was over- 
 ruled in Saulsburry v. State, 43 Tex. Crim. Rep., 90 (1901), the court 
 following Emert v. Missouri, 156 U. S., 296 (1894). 
 
A Financial History of Texas 297 
 
 the established local business houses and the settled professional 
 men. 
 
 (3) Those on persons engaged in the commission business, on 
 cotton brokers, merchandise brokers, electric light companies, 
 gas companies, ice dealers, credit associations, insurance adjust- 
 ers, industrial insurance agents, lightning rod dealers, auction- 
 eers, money lenders, pawnbrokers, sewing machine dealers, ship 
 brokers, street railways, and water works.^ Revenue is the chief 
 consideration in the imposition of these taxes, and in the case 
 of many of them there is tax ability, but little property to be 
 reached by the property tax. There are also certain charges 
 levied in connection with the state regulation of the fish and 
 oyster business which are to be considered as occupation taxes 
 rather than as license fees, and which fall under the present class 
 of occupation taxes. The regulation of coast fishing and oyster- 
 ing goes back to 1895, and there have been many changes in the 
 restrictions and charges imposed. Until 1903 the occupation 
 tax upon any one fishing for the market within the public coast 
 waters was on the basis of the fathoms of seines and nets used, 
 and the charge upon those engaged in gathering oysters was on 
 the basis of the pairs of tongs used.- The act of 1903 adopted 
 as a basis the weight of the fish and oysters. In 1903 also there 
 was introduced an annual license charge of $1 for each person 
 engaged in the business of fishing, but in 1905 this was succeeded 
 by a license charge of $10 per fishing boat.^ In 1909 a tax upon 
 wholesale dealers in fish and oysters was introduced.* The 
 charges in effect in 1914 were a tax of one-fifth of one cent per 
 
 ^The tax in the act of 1897 upon cotton, wool and hide buyers, bui 
 exempting merchants who had paid the occupation tax on merchants, 
 was declared to be lacking in uniformity and therefore unconstitutional; 
 Poteet V. State, 41 Texas Crim. Rep., 268 (1899). A tax on barbers 
 imposed in 1907 was held to be unconstitutional as being an occupation 
 tax on a mechanical pursuit; Jackson v. State, 55 Texas Crim. Rep., 
 557 (1909). The tax imposed by the act of 1897 on sewing machine 
 peddlers when the merchant dealer was exempted was held to be 
 unconstitutional; Ex-parte Fritz Bockhorn, 62 Texas Crim. Rep., 651 
 (1911). 
 
 ^Laws of 1895, Reg. Sess., p. 170. Laws of 1899, p. 312. Laws of 
 1903, p. 189. 
 
 'Laws of 1905, p. 128. This tax was upheld in Raymond v. Kibbe, 
 43 Texas Civ. App., 209 (1906). Laws of 1907, p. 233. 
 
 *Laws of 1909, p. 325. 
 
298 Bulletin of the University of Texas 
 
 pound on all fish, turtle, terrapin, and shrimp taken for market 
 from the public coast waters; a tax of two cents per barrel on 
 oysters gathered from the natural reefs or private oyster beds 
 within the public coast waters ; a chargfe of $1 for a boat license 
 to eng^age in the business of fishing or of gathering oysters; and 
 a tax upon wholesale dealers in fish and oysters of $1 for each 
 one thousand pounds of fish and of one cent per barrel of 
 oysters/ These taxes were payable to the game, fish, and oyster 
 commissioner or his deputies, and by him were turned over to the 
 state treasury. 
 
 Hunting licenses began to be required in 1907. The charge 
 upon a non-resident of the state was $15, payable to the game, 
 fish, and oyster commissioner; the charge for hunting outside 
 one's county was $1.75, payable to the county clerk, who in turn 
 remitted all but twenty-five cents to the game, fish, and oyster 
 ccmmissioner.- 
 
 Neither the report of the game, fish, and oyster commissioner 
 nor the report of the comptroller itemizes the receipts as to 
 sources, and it is therefore not possible to separate taxes, fees, 
 fines, and rents. The total receipts in 1914 were $42,540; the 
 total disbursements were $41,258. 
 
 (4) Those on occupations which are regarded as socially 
 harmful or in need of regulation. These include billiard and 
 pool halls, beer and liquor saloons, cigarette dealers, selling pools 
 on horse races and other contests, clairvoyants, mesmerists and 
 fortune tellers. Revenue and sumptuary considerations prevail 
 in the taxation of these occupations. 
 
 (5) Those on occupations which are to be repressed.^ These 
 
 ^Laws of 1913, Reg. Sess., p. 297. Laws of 1913, Called Sess., p. 33. 
 
 ^Laws of 1907, p. 356. Laws of 1909, p. 456. 
 
 ^Besides the taxes enumerated below there were at one time a tax 
 of $500 upon the occupation of selling the Illustrated Police News, 
 the Kansas City Sunday Sun, and like publications, and a tax of $500 
 upon fights staged between animals. These taxes were omitted from 
 the Revised Civil Statutes of 1911, inasmuch as the Penal Code, art. 
 509, prohibits directly the dissemination of the' literature which it 
 was sought indirectly to repress through taxation, and as art. 1510 
 of the Penal Code prohibits directly fights staged between animals. 
 For the tax on the undesirable publications see Thompson v. the State, 
 17 Texas Crim. App., 253 and the Report of the Attorney General, 
 1895-1896, p. 5. 
 
A Financial History of Texas 299 
 
 are a tax of $250 in each county upon the peddling of cook- 
 stoves, washing machines, churns, wagons and other vehicles,^ a 
 tax of $500 upon the occupation of selling cannon fire crackers 
 and toy cartridge pistols,- the tax of $4,000 on those soliciting or 
 taking orders for liquor in local option territory;^ the tax of 
 $2,000 on a "cold storage";* the tax of $5,000 upon an office de- 
 livering C. O. D. liquor packages;^ the tax of 50 per cent upon 
 the gross receipts of pistol dealers;'^ and the tax of $2,000 on 
 any retail dealer in non-intoxicating malt liquors."^ 
 
 The only graduation attempted in the present occupation 
 taxes is for gas, water, and electric light companies; wholesale 
 dealers in ice; cotton factors; commission merchants; and 
 theaters; in all of which cases the taxes vary according to the 
 population of the town or city.^ The tax on peddlers varies ac- 
 cording as they are on foot or have one or more horses or oxen. 
 The taxes on many of the occupations which were relieved of 
 taxation in 1907 had been graduated according to population, 
 
 ^Rev. Civil Stats., 1911, art. 7355, sec. 12. Peddlers of clocks and of 
 agricultural implements are subject to this tax. 
 
 -Rev. Civil Stats., 1911, art. 7356. 
 
 nhid., art. 7479. 
 
 nbid., art. 1480. 
 
 =Ibid., art. 7483. 
 
 "Ibid., art. 7380. Sustained in Caswell & Smith v. the State, 148 
 S. W. Rep., 1159 (1912). For a time a popular method of evading this 
 tax was to lease pistols for a; lump sum equal to the price of the pistol. 
 This practice was pronounced an illegal and invalid evasion of the law. 
 See Report and Opinions of Attorney General, 1912-1914, p. 670. 
 
 ■Rev. Civil Stats., 1911, art. 7476. A tax of $5,000 imposed in 1905 
 upon persons dealing in the unearned wages of another was declared 
 unconstitutional, because of certain exemptions; Owens v. the State, 
 53 Texas Crim. Rep., 105 (1908). The act of 1907 levying a tax of 
 $2,000 upon dealers in non-intoxicating malt liquors was held to be 
 unconstitutional because of the exemption of druggists and certain 
 other classes of dealers; Ex-parte Woods, 52 Texas Crim. Rep.. 575 
 (1908). But this law was re-enacted in 1909, and was upheld in Ex- 
 parte Townsend, 64 Texas Crim. Rep., 350. From 1879 to 1897 a 
 tax of $1,000 rested on nine and ten pin alleys, and from 1889 to 
 1897 a tax of $1,000 stood against fortune tellers. 
 
 ''Rev. Civil Stats., 1911, art. 7355. 
 
300 Bulletin of the University of Texas 
 
 while those on merchants had been graduated according to the 
 probable purchases during the year. 
 
 There has been considerable evasion of the occupation taxes. 
 The law contemplates that the county collector of taxes shall 
 demand the tax and if the person fails or refuses to pay, it be- 
 comes the collector's duty to file complaint before a justice of 
 the peace. It is a misdemeanor, punishable by a fine of from 
 $50 to $500, for the collector not to collect or endeavor to col- 
 lect the tax. Laxity, however, long characterized collections, and 
 collectors have been charged with favoring their friends.^ 
 
 The general occupation or license taxes have constituted next 
 to ad valorem taxes the source of largest tax receipts. Their 
 percentage and even absolute amount among receipts are on 
 the decline, however. Exclusive of the fish and oyster taxes, they 
 made up 25.6 per cent of total tax receipts in 1881 ; 21 per cent 
 in 1887; 21.8 per cent in 1891; 20.2 per cent in 1901; 14.9 per 
 cent in 1907; 10.8 per cent in 1910, and 7.1 per cent in 1915. 
 On account of the repeal in 1907 of a large number of the taxes 
 and because of the spread of liquor prohibition, the net receipts 
 to the state decreased from $1,070,882 in 1907 to $852,490 in 
 1910, but there has been an increase since 1910.^ The taxes on 
 liquor dealers have always been the most remunerative ones, 
 and next to them since 1907 have been those on billiard and pool 
 halls. Those on liquor dealers provided in 1915 85.7 per cent 
 of the total occupation tax receipts, and those on liquor, billiard 
 and pool establishments provided together 90.4 per cent of such 
 receipts.^ The payment of a general occupation tax does not 
 exempt the occupation from the property tax or other taxes. 
 
 ^Report of the State Revenue Agent, 1898. Report of the Special 
 Tax Commission, 1899, p. 32. In 1898 out of 27,169 merchants in Texas 
 reported by Bradstreet, 20,311 paid an occupation tax, and in 1900 
 out of 4,000 lawyers only 2,010 paid the license tax; Report of the 
 State Revenue Agent, 1898 and 1900. Circuses attempted evasion of 
 the taxes on them by calling themselves "exhibitions" and "shows," 
 by pretending to have a continuous performance, and by selling 
 tickets for 49 cents and 99 cents instead of at 50 cents and $1.00, 
 but these subterfuges did not succeed; Report of Special Tax Com- 
 mission, 1899, p. 28; Report of the State Revenue Agent, 1910. 
 
 ^See Appendix, table 10. 
 
 ^Based upon table No. 11 of the Report of the Comptroller, 1915. 
 
Chapter 8. 
 
 CORPORATION OCCUPATION TAXES. 
 
 The development of special taxes applj^ing to corporations or 
 to businesses conducted customarily under the corporate form 
 is the most striking feature in the history of taxation in the 
 state since 1880. In 1880 the only taxes of this character were 
 on life, fire, and marine insurance companies; express com- 
 panies ; palace, sleeping and dining car companies ; railroad com- 
 panies ; gas companies ; and the steamboat and stage coach busi- 
 ness. Receipts from all these amounted in 1881 to only $30,542, 
 which was 1.2 per cent of the total tax receipts. At the present 
 time every important commercial business, except chiefly the 
 mercantile and general manufacturing, is subject to special oc- 
 cupation taxes which in 1910 brought in $770,698 or 9.8 per 
 cent of the total tax receipts and in 1915 $1,071,473 which was 
 8 per cent of total tax receipts. The businesses selected for this 
 special taxation are mainly those engaged with transportation, 
 transmission, and insurance. The development is best shown by 
 taking up the principal businesses in order. 
 
 A. Bailroads. 
 
 The 1 per cent tax on the gross receipts from passenger travel 
 within the state which was first levied in 1879 was reduced to 
 one-half of 1 per cent in 1882. There Avas agitation within the 
 legislature in 1888 to increase the tax to 1 per cent on passenger 
 and freight receipts, but the only result was to restore in 1889 
 the tax on passenger receipts of 1 per cent.^ The tax of 1 per 
 cent on passenger earnings only was retained until 1905.^ The 
 act of 1905 imposed a tax of 1 per cent upon the gross receipts 
 from the passenger, freight, and baggage business of railroads.^ 
 In the case of an interstate road the tax to be paid was to be 
 ''equal to such proportion of the said one per centum of its 
 
 ^Galveston News, April 19, 1888. 
 
 ^In 1895 a strong effort was made to increase the rate to two per cent, 
 but it failed; Houston Post, March 6 and 7, 1895. 
 'Laws of 1905, p. 336. 
 
302 Bulletin of the University of Texas 
 
 gross receipts as the length of the portion of such line within the 
 state bears to whole length of such line, ' ' though it was permitted 
 to the comptroller to substitute for this mileage rule any other 
 rule which would be more fairly* representative of the state 's 
 share of the total gross receipts. It was also provided that any 
 road which paid the tax on intangible assets should be exempt 
 from the payment of the gross receipts tax. The employment 
 of this tax was denied to counties, tow^ns, cities, and other local 
 taxing units. Though levied exclusively as a state tax it was in 
 addition to the state tax on the real and personal property of a 
 railroad. 
 
 The test suit which determined the fate of the gross receipts 
 tax was filed by the attorney general of Texas against the Gal- 
 veston, Harrisburg and San Antonio Kailway Company et al., 
 in 1905, and resulted in a judgment in the district court in favor 
 of the state, except as to penalties and forfeitures. The com- 
 panies appealed and on March 21, 1906, a court of civil appeals 
 held the statute unconstitutional.^ Upon being carried to the 
 supreme court of the state, that court held the act to be con- 
 stitutional, except as to penalties and forfeitures, which were 
 declared to be excessive.- The case was removed to the Supreme 
 Court of the United States in December, 1906, and on May 18, 
 1908, that court reversed the decision of the supreme court of 
 Texas and held the act to be unconstitutional as an attempt to 
 regulate interstate commerce.^ 
 
 ^Galveston, H. and S. A. Ry. Co. v. Davidson, 93 S. W. Rep., 436 
 (1906). 
 
 ==100 Tex.. 153 (1906). 
 
 ^210 U. S., 217 (1908). The statute provided that railroads should 
 pay an annual tax "equal to one per centum" of their gross receipts, 
 and the Interpretation of the state supreme court that this was 
 an occupation tax whose operation in; interstate commerce was in- 
 cidental, not direct, was accepted by Chief Justice Fuller and Justices 
 Harlan, ^ White and McKenna of the U. S. Supreme Court who dis- 
 sented from the majority decision. The distinction between the Texas 
 tax and the Maine tax, which was sustained in 142 U. S., 217, seems 
 to be that the Maine tax was in the nature of a "commutation" tax 
 in lieu of all other taxes upon the roadbed of the railroad, while the 
 Texas tax was in addition to all other taxes; State and Local Taxa- 
 tion, 1911, pp. 188-192. 
 
A Financial History of Texas 303 
 
 Railroads are taxed at present only by the property tax on 
 their real and personal property, including intangible. Tliey 
 are exempt from payment of the franchise tax.^ 
 
 B. Sleeping, Palace, and Dining Car Companies. 
 
 In 1880 these companies were subject to an ad valorem tax 
 of one-half of one per cent upon the value of their property in 
 the state. In 1881 it was provided that "from every person, 
 firm or association of persons owning or running any palace, 
 sleeping, or dining-room cars not owned by the railway com- 
 pany, on any railroad in this state, there shall be collected 
 an annual tax of $2 per mile for each and every mile of any 
 and all railroads in this state over which such cars may run." 
 This tax was to be in lieu of all other taxes, and could not be 
 employed by any county or municipality. Upon being tested 
 in the courts, it was declared unconstitutional, because it did 
 not apply to all persons owning and running such cars.- In 
 1882 this defect in the law was cured and the tax was reduced 
 to 50 cents. The tax was paid by the Pullman Company, up 
 to August 31, 1884, but from then until August 31, 1886, none 
 was paid and from 1886 to 1894 only $83 was paid annually 
 and that by the H. & T. C. Railroad on one car between Austin 
 and Houston. The companies declined to pay the tax on the 
 ground that it was an interference with interstate commerce, 
 and no action was taken by the state to test it. In 1893 a tax 
 of 25 cents on each $100 of the capital stock of such companies 
 employed within the state was enacted.^ The method of com- 
 puting the state's share of the capital stock as laid down in 
 the statute was that it should be "such proportion of the 
 capital of such company, after deducting therefrom the amount 
 shown to be invested in real estate, manufacturing plants, 
 materials and properties, other than such sleeping, palace, or 
 dining cars and their equipment or properties used in con- 
 nection with the operation of such cars, as the miles over which 
 it runs its cars in this state bear to the whole number of miles 
 
 ^Rev. Civil Stats., 1911, art. 7403. 
 
 ^The Pullman P. C. Co. v. State of Texas, 64 Tex., 274 (1885), 
 
 ^Laws of 1893, p. 156. Rev. Civil Stats., 1911, art. 7375. 
 
304 Bulletin of the University of Texas 
 
 in this state and other states over which such cars may run." 
 This tax was in addition to other taxes in force, but no occu- 
 pation tax could be levied upon such companies by any county, 
 city, or town. Upon data furnished by the companies to the 
 comptroller, the latter computes the tax. This tax has been 
 paid regularly by the Pullman Company. In 1897 a tax of 10 
 cents for each 100 miles over which cars ran within the state 
 was enacted to replace the one of 50 cents per mile, but two 
 weeks after enactment it was repealed and succeeded by a tax 
 of 2y2% on the gross receipts from passenger travel originating 
 and ending within the state. This tax was payable quarterly 
 to the state treasurer. This gross receipts tax was in addition 
 to the one of 25 cents on the capital stock. It was denied to 
 a county, city, or town to levy an occupation tax upon a com- 
 pany doing this business.^ In 1905 the rate was raised to 4% 
 on gross receipts, except those from buffet service, and in 1907 
 to 5%. In 1910 the proceeds of the gross receipts tax were 
 $33,845; those of the capital stock tax, $2,908. In 1915 the 
 projceeds w^ere, respectively, $39,628 and $5,157. 
 
 C. Express Companies. 
 
 In 1880 an express company was subject to a fixed annual 
 occupation tax of $750, but $250 of this amount was appor- 
 tioned by the comptroller among the counties according to the 
 business done in each, and there could be no other county or 
 municipal occupation taxes upon such companies. In 1881 the 
 full $750 was made to accrue to the state, and it was still not 
 permitted to counties and municipalities to levy an occupation 
 tax on the express business. The fixed annual tax was de- 
 creased to $500 in 1882, but was raised to $1,000 in 1889. In 
 1895 it was replaced by a tax of 114% on gross receipts.- In 
 1905 the rate was increased to 2i/2%- Express companies are 
 also subject to the property tax and to the franchise tax. In 
 1910 the gross receipts tax amounted to $64,620; in 1915, 
 $73,081. 
 
 ^Laws of 1897, Reg. Sess.. p. 168. Rev. Civil Stats., 1911, art. 7390. 
 
 -The Mills Bill proposed a tax of 2 per cent, but the senate finance 
 committee recommended one of 1* per cent; Houston Post, January 
 27, February 1, March 6 and 7, 1895. 
 
A Financial History of Texas 305 
 
 D. Telegraph Companies. 
 
 In 1880 the occupation tax on a telegraph company v^as one 
 cent for each full rate message and one-half cent for each 
 message less than full rate. Railroad messages in operating 
 trains and company messages were exempt. County and mu- 
 nicipal occupation taxes on the companies were not permitted. 
 This tax was contested and was declared unconstitutional be- 
 cause it taxed interstate messages.^ In 1882 the same rates 
 were made to apply only to intrastate messages. This remained 
 the occupation tax on the companies until 1905, when it was 
 succeeded by a tax of 3% on the gross receipts from all sources 
 within the state. In 1907 the rate was reduced to 2%%. Tele- 
 graph companies are subject also to the property tax and to 
 the franchise tax, except when operating under a Federal fran- 
 chise. In 1910 the gross receipts tax amounted to $14,659; 
 in 1915, $24,272. 
 
 E. Telephone Compujiies. 
 
 The first occupation tax imposed by Texas on telephone 
 companies Avas in 1882, and w^as a state tax of $50 and a 
 county tax of $10. The state tax was, unlike the other corpo- 
 ration occupation taxes, collected by the county collector. In 
 1892 the receipts from it w^ere $200. In 1893 a state tax of 
 25 cents on each telephone in use replaced the fixed tax, and 
 it was denied to counties and municipalities to levy any occu- 
 pation tax on the business. This state tax was payable to the 
 state treasurer, and it produced in 1894 $1,158. This remained 
 the method of taxation until 1905, when a tax of 21/2% on gross 
 receipts was enacted. In 1907 the rate was reduced to 1%%, 
 payable quarterly to the state treasurer.- Telephone companies 
 are subject to the property tax and the franchise tax, but to 
 no county or municipal occupation taxation. In 1910 the gross 
 receipts tax produced $81,350 ; in 1915, $150,728. 
 
 ^W. U. Tel. Co. V. State of Texas, 105 U. S., 460 (1881). See also 
 55 Tex., 314 (1881), and 62 Tex., 630 (1884). 
 *Rev. Civil Stats.. 1911, art. 7382. 
 
 20— H 
 
306 Bulletin of the University of Texas 
 
 F. Steamboats and Stage Coaches. 
 
 In 1880 there was a tax of 1% on the gross passenger receipts 
 of steamboats and stage coaches. In 1882 it was reduced to 
 three-fourths of 1%, but was increased to 1% in 1889. The 
 stage coach tax disappeared in 1897, and that on steamboats 
 in 1898. The taxes produced insignificant receipts. 
 
 G. Street Railways. 
 
 The first occupation tax laid by Texas upon street railways 
 was in 1897 and was one of $2 per mile of track owmed. It w^as 
 collected by the county collector and total receipts were $567 
 in 1906. In 1907 it was enacted that street railways in or con- 
 necting cities of from 10,000 to 20,000 inhabitants should pay 
 a tax of one-half of 1% on their gross receipts, and those in 
 cities of more than 20,000 inhabitants three-fourths of 1%.^ 
 This is in addition to the tax of 1897. Street railways and 
 interurbans are not subject to the franchise tax, and there is 
 no county or municipal occupation taxation permitted.- It is 
 payable quarterly to the state treasurer. In 1910 it amounted 
 to $39,197; in 1915, $62,590. 
 
 H. Gas, WateVf and Electric Companies. 
 
 Only gas companies w^ere subject to an occupation tax in 
 1880. It was one of $50 and applied only to plants in cities 
 of 10,000 or more inhabitants. It w^as collected by county 
 collectors, and its use was permitted to counties, towms, and 
 cities. In 1881 the tax was made to apply in all towns and 
 cities irrespective of population ; but in 1882 the tax for plants 
 in cities of 10,000 or more was made $35, in cities under 10.000, 
 $20. These remained the rates and method of taxation until 
 1905. In 1889 electric light plants, and in 1897 water plants 
 became taxable after the manner and to the amount that gas 
 plants were. In 1904 the total tax paid by all was $4,665. 
 In 1905 a tax of one-fourth of 1% on the gross receipts was 
 enacted to apply to all. Counties and municipalities are not 
 permitted to employ the tax. In 1907 the rate was changed 
 
 *Rev. Civil Stats., 1911. arts. 7378 and 7355, sec. 34. 
 'Dallas Con. Elec. St. Ry. Co. v. State, 102 Tex., 570 (1909). 
 
A Financial History of Texas 307 
 
 to one-fourth of 1% in cities with a population of from 10,000 
 to 25,000, and one-half of 1% in cities having a population of 
 25,000 and over.^ The tax is in addition to all other taxes, and 
 companies are subject to the property tax and the franchise 
 tax. In 1910 the gross receipts tax paid amounted to $22,924; 
 in 1915 it was $44,007. 
 
 /. Insurance Companies. 
 
 (a.) Life. In 1880 life insurance companies were subject 
 to a state occupation tax of $300, payable annually to the 
 comptroller, and to a county tax of $10. The county tax was 
 reduced to $7 in 1882, but was increased to $10 in 1889. In 
 1893 a tax of 1^/4% on gross premium receipts within the state 
 was enacted. It was made payable to the state treasurer, and 
 the levy of an occupation tax on companies was denied to any 
 county, city, or town.- In 1895 a strong effort was made to 
 increase the tax, but the result was to impose an occupation 
 tax of $50 on general agents and one of $7 on local agents of 
 the life companies, and one of $2 on agents of industrial life 
 companies."^ In 1897 the gross receipts tax was increased to 
 2%, and the tax on local agents was reduced to $5.* In 1905 
 there w^ere two enactments, but the later and prevailing one 
 levied a tax of 2i/4% on gross premium receipts, and provided 
 for a reduction to I/2 of 1% and 14 of 1% should the companies 
 invest as much as one-quarter and one-half of their entire assets 
 in Texas real estate or Texas securities.^ Fraternal insurance 
 orders were exempt. The ''Robertson Law" of April 24, 1907, 
 required companies doing a life insurance business in Texas 
 to invest and keep invested in Texas real estate and Texas 
 securities not less than 75% of their legal reserve on account 
 of policies written on the lives of citizens of Texas. In 1907 
 
 ^Rev. Civil Stats., 1911, art. 7355, sees. 25, 26, 27. 
 
 -The feeling about this tax as expressed by the Austin correspondent 
 of the Galveston News in the issue of February 18, 1893 was that "it 
 salts the life companies, and they have few enthusiastic friends." 
 
 'Houston Post, March 14, 15, and 21, 1895. 
 
 *The increased rate was urged by the governor; Houston Post, March 
 24, 1897. 
 
 'Laws of 1905, p. 373. 
 
308 Bulletin of the University of Texas 
 
 the gross receipts tax was increased to 3%, but any company 
 complying with the Robertson Law was subject to a tax of 
 only 1%; also if any company should invest as much as 25% 
 of its entire assets in Texas securities or Texas real estate, the 
 tax became 1%, and if it should invest as much as 50%, the 
 rate became % of 1% on its gross premium receipts.^ Fraternal 
 orders were exempt. Companies which failed to subscribe to 
 the law became subject to a penalty of $5,000 and double the 
 amount of the tax for each year delinquent. This tax was in 
 lieu of all other occupation taxes. In 1907 were repealed the 
 occupation taxes on local and general agents of insurance 
 companies, except industrial life. In 1909 a distinction was 
 made in the methods of taxing domestic and foreign life com- 
 panies. Domestic life companies, or those incorporated by this 
 state, were relieved of an occupation tax and became taxable 
 only by the property tax, the base of the tax being the value 
 of their real estate and personal property less reserve.^ Foreign 
 insurance companies remained subject to the tax of 3% upon 
 gross premium receipts, and it was provided that if as much 
 as 30% of the total Texas reserves should be invested in Texas 
 real estate securities, the tax should be 2.6% ; if as much as 
 60%, 2.3% ; if as much as 75%, 2%. The requirement that at 
 least 75% of the Texas reserves should be invested in Texas 
 real estate or Texas securities remained unchanged.^ This re- 
 quirement, which was first made in 1907, led to the withdrawal 
 from the state of the leading old line companies, and the merits 
 of the requirement have been hotly debated.* 
 
 (b.) OfJier Insurance Companies. Fire and marine insur- 
 ance companies were subject until 1882 to a state annual occupa- 
 tion tax of $200 and toi a county tax of $10. In 1882 guaranty, 
 
 ^Laws of 1907, p. 482. Metropolitan Life Ins. Co. v. T. B. Love, 
 101 Tex.. 444 (1908). Report of the Attorney General, 1906-8, p. 44. 
 Kansas City Life Ins. Co. v. Love, 101 Tex., 531 (1908) refers to a tem- 
 porary exemption to companies which had to deposit in their home 
 state securities covering their entire reserve. 
 
 =Laws of 1909, p. 192. Rev. Civil Stats., 1911, arts. 4764, 4825. 
 
 ^Laws of 1909, p. 264. Rev. Civil Stats., 1911, art. 4779. 
 
 ^Message of Governor Ferguson, April 29, 1915; House Journal, 34th 
 Leg., First Called Sess., p. 7. 
 
A Fi)ui}winl History of Texas 309 
 
 accident, health, and livestock insurance companies were added 
 to the taxable list, and the state tax was made the same as that 
 on fire and marine companies, though the county tax was made 
 $7 for all companies, including fire and marine. 
 
 These rates remained unchanged until 1893, when a tax of one- 
 half of 1% upon gross premium receipts within the state was 
 enacted to apply to all insurance companies. In 1895 occupation 
 taxes of $50 on general agents and $7 on local agents were en- 
 acted. In 1897 the rate on fire insurance companies was left at 
 one-half of 1%, while that on others was increased to 1%. In 
 1905 the tax on the gross receipts of surety and guaranty com- 
 panies was increased to 2% ; on the gross receipts of fire and 
 other insurance companies, 1%%.^ The rate applicable to these 
 insurance companies was subject to reduction as in the case of 
 the life companies, according to the proportion of assets invested 
 in Texas real estate and securities. The legislation of 1907 which 
 required at least 75% of the reserve on Texas policies to be in- 
 vested in Texas was applicable only to life companies. In 1907, 
 however, the gross receipts tax on all companies other than life 
 was increased to a flat rate of 2%. In 1911 it was increased to 
 2 6/10%, subject to reduction to 1% if the company invested as 
 much Bs one-fourth of its entire assets in Texas real estate or 
 other legal investments, and to one-half of V/( if as much as one- 
 half of the entire assets should be invested.'- Purely co-operative 
 or mutual fire insurance companies were not made taxal)le, and 
 no distinction was made between domestic and foreign companies, 
 as was made in the case of life companies. In 1909 a Fire 
 Rating Board was established with the power to regulate the 
 rates of fire insurance. It was provided that the expenses of 
 the board should be, assessed upon the companies in the propor- 
 tion which the gross premium receipts of each bore to the aggre- 
 gate of premium receipts. Though the assessment is called a 
 tax, it is not technically a tax."^ 
 
 The taxes on insurimce companies have always been the most 
 productive of all the special occupation taxes, except the gross 
 
 ^Fire Assn. of Phila. v. Love. 101 Tex., 376 (1908). 
 
 ^General Laws, 1911, p. 216. 
 
 ^'See Firemen's Fund Ins. Co. v. Von Rosenberg, 103 Tex., 571 (1910), 
 
310 Bulletin of the University of Texas 
 
 passenger earnings tax in its early days. In 1881 insurance 
 companies paid $13,466 or 44 per cent of the total received by the 
 state from special occupation taxes ; in 1891, $33,716, or 34.6 per 
 cent; in 1895, $63,783, or 47.6 per cent; in 1900, $115,455, or 56.4 
 per cent; in 1905, $204,422, or 53.gi per cent; in 1910, $364,825, 
 or 47.3 per cent ; in 1915, $486,371, or 45.3 per cent. 
 
 J. Other Occupations. 
 
 Credit agencies were first taxed by Texas in 1889. and the tax 
 was $250 annually, but no county or city taxation of them was 
 permitted. This was increased to $300 in 1897 and remained at 
 that amount until 1905. 
 
 In 1905-7 the occupations which became subject to the gross 
 receipts method of taxation were, with the rate of the tax, as 
 follows: collecting or commercial agencies and commercial re- 
 porting credit agencies, % of 1% ; car companies, 3% ; dealers in 
 futures, lVi%; oil producers, i/o of 1%;^ pipe line companies, 
 2% f pistol dealers, 50% f publishers of school text books and law 
 books, 1%; terminal companies, 1%; wholesale dealers in oil 
 refined from petroleum, 2% ;* wholesale liquor dealers, % of 1%:^ 
 As dealing in futures was prohibited in 1907 the tax on such 
 dealers disappeared in 1907.® Wholesale liquor dealers, pistol 
 dealers and terminal componies were first taxed in 1907.*^ 
 
 ^The Texas Co. v. Stephens, 100 Tex., 628 (1907). 
 
 ^^Ibid. 
 
 ^Eppstein v. State, 138 S. W. Rep., 1124. Caswell & Smith v. State, 
 148 S. W. Rep., 1159. 
 
 'The Texas Co. v. Stephens, 100 Tex., 628. Southwestern Oil Co. v. 
 State of Texas, 100 Tex., 647, and 217 U. S., 114 (1910). Report of 
 Attorney General, 1904-6, pp. 32-33; 1906-8, pp. 34-35; 1908-10, p. 41. 
 
 ''For amendatory act see Laws of 1913, Reg. Sess., p. 33. 
 
 «Laws of 1907, p. 172. 
 
 ^For the taxes based on gross receipts see Rev. Civil Stats., 1911, 
 arts. 7369-7392. 
 
Chapter 9. 
 
 corporation franchise taxes. 
 
 Prior to 1893 there was no special taxation of franchises, but 
 they were subject to taxation as property under the property 
 tax. Governor Hogg suggested in 1891 an annual franchise tax, 
 but it was not until 1893 that one was enacted.^ It was then 
 provided that each domestic corporation and every foreign cor- 
 poration doing business in Texas should as a condition precedent 
 to doing business pay an or before May 1 to the secretary of 
 state an annual franchise tax of $10. Corporations organized 
 for the purpose of religious worship, or for holding burial places 
 not for private profit, or for school purposes, or for purely public 
 charity were exempt. In 1897 graduation of the tax on domestic 
 corporations from $10 to $50 according to the amount of capital 
 stock was introduced.- Different graduation and higher rates 
 were applied to foreign corporations, and there was no maximum 
 payment fixed for them as was done for domestic corporations. 
 Railroad corporations paying the gross passenger earnings tax, 
 and corporations organized for the purpose of holding agricultural 
 fairs and encouraging agricultural pursuits were added to the 
 list of exempt corporations. Greater refinements of graduationi 
 which resulted in an increase in the tax were made in 1905, and 
 it was also provided then that the tax should be computed upon 
 the basis of the authorized capital stock, unless the aggregate 
 amount of the capital stock issued plus the surplus and undivided 
 profits exceeded the authorized capital stock, in which case the 
 
 ^Messages of Governor Hogg, January 21, 1891 and January 12, 1893. 
 Laws of 1893, p. 156. 
 
 "Laws of 1897, Reg. Sess., pp. 140, 168. Report of Secretary of 
 State, 1898, p. 4, and 1904, p. 5. Report of the Attorney General, 1898, 
 p. 11; 1900, p. 12. Arkansas Building and Loan Asso. v. J. W. Madden, 
 91 Tex., 461 (1898). 
 
312 Bulletin of the University of Texas 
 
 larger amount should be the basis. ^ In 1907 the rates were 
 changed and increased." 
 
 The rates on domestic corporations enacted in 1907 which are 
 still in effect are 50 cents on each $1,000 of authorized capital 
 stock up to and including $1,000,000, and 25 cents on each $1,000 
 of stock in excess of $1,000,000. Should the total amount of 
 capital stock issued and outstanding plus the surplus and un- 
 divided profits exceed the authorized capital stock, the tax is 50 
 cents on each $1,000 of stock, surplus, and undivided profits. The 
 minimum tax on domestic corporations is $10. The rates on 
 foreign corporations are $1 on each $1,000 of authorized capital 
 stock up to and including $100,000; $2 on each $5,000 of stock 
 over $100,000 and up to and including $1,000,000; $2 on each 
 $20,000 of stock over $1,000,000 and up to and including $10,- 
 000,000 ; and $2 on each $50,000 of stock in excess of $10,000,000. 
 Should the capital stock issued and outstanding plus the surplus 
 and undivided profits exceed the authorized capital stock, the 
 rates on the combined amount remain the same as above except 
 that $2 is levied on each $1,000 up to and including $100,000. 
 The minimum tax on a foreign corporation was fixed at $25. In 
 addition to corporations organized for religious worship, for 
 providing places of burial not for private profit, for the purpose 
 of holding agricultural fairs and encouraging agricultural pur- 
 suits, or for purely public charity, there are exemptions of cor- 
 porations which have no capital stock and which are organized 
 for the exclusive purpose of promoting the public interest of any 
 city or town. Insurance companies, surety, guaranty, fidelity 
 companies, transportation companies, and sleeping, palace and 
 dining car companies which pay the gross receipts taxes are ex- 
 empt from the franchise tax. Fraternal organizations also are 
 
 ^Laws of 1905, pp. 21, 100. Gaar Scott and Co. v. O. K. Shannon, 
 52 Tex. Civ. App., 634 (1909); 223 U. S., 468 (1911). Report of the 
 Attorney General, 1904-6, p. 34; 1906-8, p. 35; 1908-10, p. 42. The Scott 
 case does not involve the question of the right of Texas to levy a 
 franchise tax upon a corporation engaged in interstate commerce but 
 merely the right of a company engaged only in interstate commerce to 
 recover the tax when it had been voluntarily paid. 
 
 ^'Laws of 1907, p. 502. See also Laws of 1911, Reg. Sess., p. 91. 
 Rev. Civil Stats., 1911, arts. 7393-7406. 
 
A Financial History of Texas 313 
 
 exempt. To these exemptions specifically made in the act should 
 be added those corporations which operate under Federal fran- 
 chises, such as national banks. The Western Union Telegraph 
 Company was judicially declared exempt, because the tax would 
 constitute a burden on interstate commerce.^ 
 
 The future of the franchise tax is seriously threatened in a 
 case in which there is contested the right of the state to tax a 
 foreign corporation on the basis of all of its capital stock instead 
 of on such amount only as is employed within the state. A Fed- 
 eral district court granted a preliminary injunction restraining 
 the collection of the tax on the ground that ' ' an imposition which 
 is based, whether in whole or in substantial part, on the value 
 of the property outside of the state, or on interstate or foreign 
 commerce engaged in, so that the amount of it grows in exact 
 proportion to the growth of such property or commerce, is a 
 burden on such property or commerce."^ 
 
 In 1915 the receipts from domestic franchises were $401,367, 
 and those from foreign franchises were $112,618. 
 
 Summary of Corpoffition Taxation. 
 
 The history of special corporation taxation in Texas reveals 
 that until 1893 only railroads, steamboats, and stage coaches were 
 taxed by the gross receipts method, while other corporations were 
 taxed lightly by fixed annual payments. The period 1893-1897 
 was one of deep commercial and financial depression. The popu- 
 list party, which was strong and aggressive, advocated the heavier 
 taxation of corporations, and the feeling was general that the 
 taxation of insurance, express, and sleeping car companies was 
 extraordinarily light. Governors Hogg and Culberson favored 
 an increase of corporate taxation, and the result was the extension 
 of the gross receipts method and the introduction of franchise 
 
 ^Western U. Tel. Co. v. The State, 103 Tex., 306 (1910). A company 
 shipping its manufactured goods into the state, whether sold before 
 or after arrival in the state, is engaged in interstate commerce, 
 and needs no permit to do business in the state; Miller v. Goodman, 
 M Tex., 41 (1897). A foreign manufacturing corporation whose prod- 
 ucts are sold merely on commission by local merchants is engaged in 
 interstate commerce and does not need to secure a permit to do 
 business in the state; Allen v. Tyson-Jones Buggy Co., 91 Tex.. 22 (1897). 
 
 ^Crane Co. v. Looney, 218 Fed. Rep., 260 (1914). 
 
314 Bulletin of the University of Texas 
 
 taxation/ A period of quiet followed until 1905-1907, when the 
 gross receipts method was further extended and the rates carried 
 by it as well as those of the franchise tax were increased. The 
 extension and increases in these taxes which occurred in 1895-7 
 and 1905-7 were coincident with a condition of deficiency in the 
 general revenues. 
 
 The financial significance of special occupation taxes has stead- 
 ily grown. Their amount and per cent of total tax receipts at 
 selected dates were r 
 
 Date. Amount. Per cent. 
 
 1881 $ 30,542. 1.2 
 
 1887 40,338 1.2 
 
 1891 97,406 2.5 
 
 1901 231,854 4.6 
 
 1910 770,698 9.8 
 
 1915 1,071,473 , 7.9 
 
 The constitution directs that not less than one-fourth of the 
 proceeds of the special occupation taxes shall accrue to the avail- 
 able school fund for the benefit of the public free schools.^ One- 
 fourth is the share customarily set aside.* The ease of adminis- 
 tration of this method of taxation commends it, though consid- 
 erable unfairness may result unless the various rates are care- 
 fully devised so as to impose equal taxation.^ The financial 
 significance of the franchise tax also has increased. The amount 
 and per cent of total taxes at selected dates were :^ 
 
 ^Message of Governor Hogg, January 12, 1893. Galveston News, 
 January 13, 1893. Houston Post, February 27, and March 6, 7 and 15, 
 1895, and March 24, 1897. Messages of Governor Culberson, April 29 
 and March 5, 1895, and June 18, 1897. 
 
 ^See Appendix, table 10. The percentages are slightly greater than 
 here stated, because ad valorem, poll, and general occupation taxes 
 are given in gross, not net, amounts. 
 
 ^Art. VII, sec. 3. 
 
 *Rev. Civil Stats., 1911, art. 2725. 
 
 "^Evasion of the tax was charged in 1908; Report of the State Tax 
 Commissioner, 1908, p. 16. 
 
 ^See Appendix, table 10. The percentages which franchise taxes are 
 of total tax receipts are, as in the case of the special occupation taxes, 
 greater than here given, because the ad valorem, poll, and general 
 occupation tax amounts are gross amounts, while the special occupation 
 and franchise tax amounts are net amounts. 
 
A Financial History of Texas 315 
 
 Date. Amount. Per cent. 
 
 1894 $ 23,350. 0.6 
 
 1910 449,667 5.7 
 
 1915 513,986. ., 3.8 
 
 The franchise tax is a state tax; exclusively and the proceeds 
 accrue wholly to the general revenue account. 
 
 There has been an important growth not only in the revenue 
 derived from corporations by means of occupation and franchise 
 taxes, but also in the receipts from corporation fees and from 
 the property tax. The proportion which receipts from corpora- 
 tions are of total state revenue can not be exactly stated, but as 
 well as can be ascertained, the proportion was 3.6 per cent in 
 1882, 8.5 per cent in 1895, and 21.5 per cent in 1915.^ The per- 
 centage which corporation taxes were of all tax receipts was 4.7 
 in 1882, 10.5 in 1895, and 24.6 in 1915. Does this growth repre- 
 sent a tendency to put the weight of taxation on corporations, or 
 does it represent the growing importance of the corporation as a 
 form of business organization? The answer probably lies be- 
 tween. On account of the special taxes applying to corporations, 
 it is likely true that they are more nearly taxed in accordance 
 with their ability to pay than are individuals. 
 
 ^No assessments of banks or bank stock are given in the comp- 
 troller's reports for 1882 and 1895, so taxes on them can not be in- 
 cluded among corporate taxes. They are included in the statement for 
 1915, but if they are excluded, the percentage is 19.7 instead of 21.5. 
 The United States Bureau of Corporations found that in 1912 the 
 proportion of corporate receipts to total receipts in Texas was 20.3 
 per cent; Report of the Commissioner of Corporations on the Taxation 
 of Corporations in the Southern and Southwestern States, pp. 313-314 
 (1915). See also the Report of the Texas Welfare Commission, 1912, 
 p. 46 et seq. 
 
Chapter 10. 
 the poll tax; 
 
 In 1881 the poll tax levied by the state was $2, $1 of which 
 was for general revenue purposes and $1 for the benefit of the 
 public free schools. Counties and cities were each permitted to 
 levy a tax of $1. The total poll tax which might be levied was 
 $4. In 1882 the state tax was fixed at $1.50, $1 of which was 
 for the public free schools and 50 cents for general revenue 
 purposes. The tax which counties might levy was fixed at 25 
 cents.^ It is not permitted to towns to levy a poll tax, but that 
 which cities can levy is $1.- These rates have not changed 
 since 1882. 
 
 The state and county tax is payable between October 1 and 
 February 1 by every male person between the ages of 21 and 60 
 who has resided in the state on the fii'st day of January preced- 
 ing its levy. Those exempted from its payment other than by 
 reason of age and sex are Indians, persons insane, blind, deaf, 
 or dumb, and those who have lost a hand or foot or are perma- 
 nently disabled.^ Active members of the national guard are 
 exempt from the tax of 50 cents for general revenue purposes. 
 
 That payment of the poll tax should be a prerequisite to voting 
 was proposed by Senator A. W. Terrell in 1883, but this was not 
 enacted into law until 1903.* The Terrell Election Law of 
 1903-5 seeks to prevent the payment of the poll tax by another 
 and selfishly interested person.^ Violations of this feature of 
 the law sometimes come to light. ** Because the payment of the 
 tax is made a prerequisite to the exercise of the suffrage, it is 
 
 ^Laws of 1882, p. 18. Rev. Civil Stats., 1911, art. 7354. 
 
 ^Morris v. Cummings, 91 Tex., 618 (1898). Perry v. City of Rock- 
 dale, 62 Tex., 451 (1884). Rev. Civil Stats., 1911, art. 927. 
 
 'Laws of 1905, p. 520. Bigham v. Clubb, 42 Tex. Civ. App., 312 (1906). 
 
 *Laws of 1903, p. 133. Laws of 1905, p. 520. Rev. Civil Stats., 1911, 
 arts. 2938-2963. Galveston News, February 2 and 15, 1883. 
 
 "Solon V. The State, 54 Texas Crim. Rep., 261 (1908). 
 
 'The Corpus Christi Caller, September 3-18, 1915, for the report of 
 the Federal grand jury on Nueces County election frauds, and for 
 8) report of the trial. 
 
A Financial History of Texas 317 
 
 sometimes called a fee. In the contemplation of the law, how- 
 ever, it is a tax, for it is expected that every male person within 
 the age limits shall pay it. In intention it is a compulsory pay- 
 ment levied upon persons for the common benefit and so is a tax. 
 For the payment of the poll tax there is a lien on the poll 's real 
 and personal property, except the homestead.^ 
 
 Evasion of the poll tax has taken place to a great extent.- In 
 1890 the number of polls assessed was 382,534; the number of 
 these who were insolvent, delinquent, or erroneously assessed 
 was 111,190 or 29 per cent. As the United States Census of 
 1890 reported 490,632 males between the age of 21 and 60, those 
 who were finally liable for the tax were only 55 per cent of those 
 who were assessable. Padding of the rolls by the assessor in order 
 to get the fee for assessment explains to some extent the great 
 number of those who are insolvent, delinquent or erroneously 
 assessed.^ In 1900 polls assessed numbered 525,823, but of this 
 number 179,028, or 34 per cent, were insolvent, delinquent or 
 erroneously assessed. The census reported 674,697 males within 
 the poll tax age limits, so that those whom the tax finally reached 
 were only 51 per cent of those assessable. In 1910 polls assessed 
 numbered 705,832, those insolvent, delinquent, and erroneously 
 assessed were 170,713, or 24 per cent, leaving 535,119 as the net 
 number taxed. The census gave the male population between 
 the ages of 20 and 59 to be 932,500, and of this number those 
 taxed constituted 57 per cent.^ On account of the different age 
 limits of the population compared and because those who were 
 exempted on other grounds than age were not deducted, 60 per 
 cent would perhaps be nearer correct as showing what proportion 
 of those who are liable to the tax paid it. The percentage was 
 
 ^Ring V. Williams, 13 Tex. Crim. App., 609 (1896). In this case 
 was upheld the seizure and sale of a sewing machine belonging to the 
 delinquent poll, though he owned not more than two hundred and fifty 
 dollars worth of household and kitchen furniture. 
 
 ^Report of the State Revenue Agent, 1894. Report of the Comptroller, 
 1898. Report of the Special Tax Commission, 1899, p. 111. 
 
 'Lloyd P. Lochridge, in the Austin Statesman, January, 1913. 
 
 *The age limits of the census population are not the same as those 
 of the poll tax and the comparison is thereby violated to a certain 
 extent. The census population would be smaller if the poll tax age 
 limits were used. 
 
318 Bulletin of the IJniversity of Texas 
 
 higher in 1910 than in either 1900 or 1890, and this was without 
 doubt due to the requirement of the payment of the tax in order 
 to vote. But this requirement has not cured evasion, and the 
 condition exists in this state that only owners of real property 
 are sure to be reached. 
 
 Elections and agitation of the liquor question have stimulated 
 payment of the poll tax by others than real property owners. 
 In some years campaigns were carried on in the larger cities to 
 secure poll tax payments, and in these campaigns numerous 
 agencies were employed to combat the customary forgetfulness, 
 indifference, and evasion of the average citizen. On the surface 
 it seemed that these campaigns were evidences of rivalry among 
 the cities, but it was charged that the movements were inspired 
 by the liquor interests of the state, and the attorney general's 
 department rendered an opinion that commercial organizations 
 exceeded their charter powers in conducting such campaigns.^ 
 
 The requirement of the payment of the poll tax as a pre- 
 requisite to voting has been attacked recently by organized labor 
 as constituting an "unjust burden upon the wage worker," and 
 its repeal has been called for.- In the United States the poll 
 tax has been very generally abandoned as a state tax, and in 1913 
 in only about twenty out 9f forty-nine states was it levied as a 
 state tax. In only six of the twenty states was the tax used for 
 general purposes; in the others it was principally for school 
 purposes. In only four states, Arkansas, Mississippi, Tennessee 
 and Texas, was its payment a prerequisite to voting.^ Without 
 a marked changed either in the administration of the law or in 
 the attitude of the average citizen toward taxation, the break- 
 ing of the bond between the poll tax and the vote would be sure 
 to result in the non-payment of the tax except by such property 
 owners as were reached for property taxation, and these would 
 of course be mainly real property owners. The payment of a 
 direct tax by each citizen is advocated by some eminent authori- 
 
 ^Austin American, January 8, 1916. This opinion was disregarded by 
 some organizations. 
 
 -Proceedings of the Texas State Federation of Labor, 1914, p. 118. 
 Austin American, April 28, 1916, 
 
 'U. S. Census on Wealth, Debt, and Taxation, 1913, vol. 1. 
 
A Financial History of Texas 319 
 
 ties as causing a livelier interest on the part of the citizen in the 
 expenditures of the government and as making the "people feel 
 that the payment of a tax is a necessary accompaniment of the 
 enjoyment of civil rights."^ Since under the present methods 
 of taxation the poll tax is the only direct tax paid by many 
 citizens, the repeal of the tax would result in many eligible tax- 
 payers escaping taxation altogether. The tax is not burdensome, 
 except perhaps in cities which levy a poll tax. In such cases the 
 total tax — state, county and city, is $2.75. In 1913 out of 91 
 Texas cities with a population of 2,500 and over 69 employed 
 the poll tax.^ 
 
 State poll tax receipts show a decreasing financial import- 
 ance. In 1881 they constituted 22.9 per cent of total tax re- 
 ceipts; in 1891, 10.4 per cent; in 1901, 10.2 per cent; in 1915, 
 6.1 per cent. 
 
 ^Bullock, Selected Readings in Public Finance, p. 309, quoting Leroy- 
 Beaulieu. 
 -U. S. Census on Wealth, Debt, and Taxation, vol. 2, p. 546. 
 
Chapter 11. 
 the inheritance tax. 
 
 The taxation of inheritances was adopted by Texas in 1907. 
 The tax applies to "all property within the jurisdiction of this 
 state, real or personal, corporeal or incorporeal, any interest 
 therein, whether belonging to inhabitants of this state or not, 
 which shall pass, absolutely or in trust by will or by the laws 
 of descent of this or any other state, or by deed, grant, sale or 
 gift, made or intended to take effect in possession or enjoyment 
 after the death of the grantor or donor, . . . passing to or 
 for the use of any person except the father, mother, husband, 
 wife or direct lineal descendant, ... or any public cor- 
 portation or charitable, educational or religious organization 
 within this state . . . to be used within this state. "^ 
 
 There are three schedules and their rates differ according to 
 the degree of relationship and the amount of the bequest. The 
 schedules are as follows : 
 
 12 3 
 
 - o q 
 
 Lineal ascendant, s t^ § 
 
 brother, sister, § S ^ ^ 
 
 lineal descendant of ^^ '^ o fl 
 
 brother or sister. "^ I 'o ^ S° 
 
 p.c. p.c. p.c. 
 
 Above $ 500— not above $10,000... .. .. 4 
 
 Above 1,000— not above 10,000 3 
 
 Above 2,000— not above 10.000.. 
 Above 10,000— not above 25,000.. 
 Above 25,000— not above 50,000.. 
 Above 50,000— not above 100,000.. 
 Above 100,000— not above 500,000.. 
 
 Above 500,000 5 8 12 
 
 The tax is thus one on collateral heirs, and the rates are mod- 
 
 2 
 
 . . 
 
 
 21/2 
 
 4 
 
 51/2 
 
 3 
 
 5 
 
 7 
 
 31/2 
 
 6 
 
 81/2 
 
 4 
 
 7 
 
 10 
 
 'Laws of 1907, p. 496. Rev. Civil Stats., 1911, arts. 7487-7502. 
 
A Financial History of Texas 321 
 
 erate. It does not avoid double taxation of a vicious sort. Resi- 
 dents of the state are taxable on all tangible property within the 
 state and on all intangible property wherever located, the latter 
 being in accord with the rule that personalty follows the owner 
 for purposes of taxation. Non-residents of the state are taxable 
 on both tangible property and intangible property within the 
 state". This taxation of intangible property of a non-resident is 
 clearly in violation of the rule that personalty follows the owner. 
 Probably a non-resident w^ould be taxed on the shares of stock 
 of a Texas corporation, even when the shares are held outside 
 the state. 
 
 The tax is collectible by the county collectors, and they receive 
 one per cent of the amount collected. It is a state tax exclusively, 
 and the receipts accrue to the general revenue fund. During 
 seven years operation the receipts from this tax have averaged 
 only $32,709 a year. The smallness of the receipts is prima facie 
 evidence that the state is losing some revenue through a failure 
 of efficient administration of the law. The loss has been esti- 
 mated at $500,000 annually, but this is no doubt an exaggera- 
 tion.^ The loss is attributed mainly to the failure of the pro- 
 bate judge to certify to the tax collector the amount of the tax 
 due. The law, it seems, does not provide a fee for the probate 
 judge for certifying the amount, and this oversight of the law- 
 makers results in a lightening of judicial labors and a lessening 
 of state revenues. 
 
 ^Report of the grand jury of Travis County, in the San Antonio 
 Express, April 30, 1916. Comptroller H. B. Terrell stated in a speech 
 lit Rockwall, Texas, June 24, 1916, that in one county there were 53 
 estates on which inheritance taxes were unpaid, and he estimated that 
 as least $1,000,000 was due throughout the state as a whole; San 
 Antonio Express, June 25, 1916. 
 
 H 
 
Chapter 12. 
 
 FEES. 
 
 There are administrative, judicial, and educational fees col- 
 lected. The departments or branches of the state government 
 which receive fees which accrue to the general treasury are the 
 state, comptroller's, attorney general's, banking and insurance, 
 and public health and vital statistics departments, the depart- 
 ment of agriculture, the land office, the railroad commission, the 
 game, fish, and oyster commissioner, the state library, and the 
 higher courts. The main University and the medical branch 
 collect fees of matriculates which accrue to the available funds 
 of the institutions. The asylums also collect charges, classed 
 as fees, of their non-indigent residents. There are also num- 
 erous state boards which are self-sustaining because of the fees 
 of fixed amounts which they are permitted to charge. These 
 hoards are the state board of mine examiners; the boards of 
 examiners of those desiring to teach in the public free schools, 
 to practice law, medicine, pharmacy, veterinary medicine, den- 
 tistry, embalming, and nursing; and the board of inspection of 
 hides and animals and of feed stuffs. Except in the case of the 
 last, there are not only no payments into the treasury, but no 
 reports of the amounts collected and retained by the members 
 of the boards. There are maximum amounts of fees which dis- 
 trict and other local officers can receive, and any collections in 
 excess go into the county treasury. 
 
 The oldest and until 1893 the most productive fees were those 
 charged by the general land office for patents, certified copies, 
 etc. Continuously since 1893, on account of corporation charter 
 and permit fees, the state department has been the most im- 
 portant single source of fee receipts. 
 
 There was no change in the fee law of 1879 until 1883, when 
 express companies w^ere added to the list of corporations whose 
 minimum charter fee was $100, and an increase of $25 for each 
 $100,000 of capital stock above $100,000 was provided for in 
 the case of railway, telegraph, street railway, and express com- 
 
A Financial History of Texas 323 
 
 panies.^ The minimum fee of other private corporations for 
 profit was left at $25, but an increase of $5 for each $10,000 of 
 capital stock above $10,000 was introduced. The fee for religious 
 and similar corporations was increased to $10. 
 
 In 1887 a foreign corporation was required to file with the 
 secretary of state its articles of incorporation and to take out a 
 permit, and in 1889 permit fees were adopted varying from $25 
 to $200 according to the amount of capital stock of the corpora- 
 tion.^ The fees for foreign corporations were lower than for 
 domestic corporations, except in the cases of railway, telegraph, 
 street railway, and express companies. Thus a foreign corpora- 
 tion with a capital stock of $100,000 paid a fee of $25, while a 
 domestic corporation with an equal amount of stock paid $70. A 
 foreign corporation with a capital stock of $2,000,000 paid a fee 
 of $200 while a domestic, corporation of that size paid $1,020.^ 
 Following the discovery of oil in South Texas the discrimination 
 came to be felt, but there was no remedial change made until 
 1905.* 
 
 In 1907 a great increase in charter and permit fees was made 
 but without any discrimination between domestic and foreign 
 corporations.^ In 1909 the fee for corporations not organized 
 for private profit was reduced from $50 to $10. At the same 
 time certain other fee changes were adopted.^ The minimum 
 fee chargeable to a foreign building and loan company was made 
 $250; a maximum fee of $10,000 was stipulated for a foreign 
 corporation engaged in the manufacture, sale, rental, lease or 
 operation of all kinds of cars and for a foreign telegraph com- 
 pany; and the maximum for a foreign company doing a loan 
 business was fixed at $1,000. Subject to the above, the charter 
 and permit fees in effect in 1915 were as follows: For each 
 charter or amendment of a charter of a private railroad, tele- 
 graph, express, or street railway company a fee of $200 was 
 prescribed, and if the capital stock exceeded $100,000, an addi- 
 
 ^Laws of 1883, p. 72. 
 
 =^Laws of 1889, p. 87. "* 
 
 ^Reports of the secretary of state, 1898, 1900, 1902, 1904. 
 
 *Laws of 1905, p. 135. 
 
 ''Laws of 1907, p. 500. 
 
 «Laws of 1909, p. 266. Rev. Civil Stats., 1911, arts. 3837-3858. 
 
324 Bulletin of the University of Texas 
 
 tional fee was charged of fifty cents for each $1,000 of author- 
 ized capital stock or fractional part thereof after the first. The 
 charter fees of other corporations organized for private profit 
 was $50, but if the authorized capital stock exceeded $10,000, 
 there was an additional fee of $10 for each additional $10,000 of 
 the authorized capital stock or fractional part thereof after the 
 first. Each foreign corporation in obtaining a permit to do busi- 
 ness in the state had to pay a fee of $50 for the first $10,000 of its 
 authorized capital stock, and $10 for each additional $10,000 or 
 fractional part thereof.^ The so-called "Blue Sky Law" passed 
 in 1913, imposed upon corporations subject to its provisions the 
 filing of a descriptive document with the secretary of state be- 
 fore it was permitted to sell or to contract to sell any stock, and 
 the filing fee for this document was made $20.^ 
 
 The domestic charter fees received in the office of the secre- 
 tary of state during the fiscal year ending August 31, 1915, 
 amounted to $96,778; the permit fees of foreign corporations 
 were $22,025, and the stock permits under the Blue Sky Law 
 were $520.^ In 1881 fees, exclusive of those of the office of sec- 
 retary of state, amounted to $105,572, and of this amount the 
 fees of the general land office made up $94,665. The fees of the 
 secretary of state's office were not important at this time. In 
 1910 all fees, including those of the state department, amounted 
 to $430,155.* Those of the state department furnished $313,214 
 of this amount, and those of the general land office contributed 
 $32,377. 
 
 ^Rev. Civil Stats., 1911, art. 3837. 
 
 'Laws of 1913, First Called Sess., p. 66. 
 
 ^MSS. Report in the office of the secretary of state. The total re- 
 ceipts of the office as given in the manuscript statement are subject 
 to an addition of $28 and to a deduction of $1,217.24. 
 
 ^Included in this amount are all of the receipts of the game, fish, 
 and oyster commissioner, not all of whose receipts were fees. 
 
Chapter 13. 
 
 the public lands. 
 
 The history of the public lands since 1880 is difficult to follow 
 because of the frequent changes in the land leg"islation, the com- 
 plexity of such legislation, and the numerous court decisions af- 
 fecting it. For convenience of treatment the public lands are 
 divided into : first, the unappropriated lands and those reserved 
 for the payment of the public debt and for the building of a new- 
 state capitol, and, second, the lands belonging to the public free 
 school, university, and asylum funds. 
 
 A. TJie JJ unappropriated Larvds and the Deht and Capitol 
 Reservations. 
 Under the policy of free grants to railroads, war veterans, 
 homesteaders, and to the public free school fund, th« unap- 
 propriated public domain was rapidly passing from state owner- 
 ship. During the years 1879-1880 the general land office issued 
 certificates for 21,287,408 acres of the public lands, and the 
 estimated amount of free land remaining was, exclusive of Greer 
 County, 17,391,810 acres.^ In 1881 there were extensions of 
 this policy. A grant of 1,280 acres was made to each disabled 
 Texas Confederate veteran and to the unmarried widows of 
 those killed in the Confederate service;- the grant of 640 acres 
 which was provided in 1879 for each indigent veteran of the 
 Texas Revolution was increased to 1,280 acres ;^ and 300 leagues 
 (1,328,400 acres) were reserved for the benefit of the free 
 schools of unorganized counties, each county to receive upon or- 
 ganization four leagues.* During the years 1881-1882 certifi- 
 cates were issued by the general land office to 25,206,505 acres. 
 The total area for which certificates were issued during the four 
 years 1879-1882 was 46,493,913 acres, or 48 per cent of the free 
 public domain on September 1, 1861. 
 
 ^Land Office Report, 1879-1880. 
 'Laws of 1881, p. 122. 
 'Laws of 1881, p. 35. 
 *Laws of 1881, p. 65. 
 
326 Bulletin of the University of Texas 
 
 The first halt to the policy of abundant giving away oi' the 
 lands was called in 1882, when all laws granting land for the 
 construction of railroads, canals, and ditches were repealed/ It 
 was believed that there was not enough unappropriated land to 
 justify a continuance of such grants.- The last railroad grant 
 made by the national government was in 1871. The reasons for 
 -the discontinuance of national aid were that the land was needed 
 for future homesteaders and that the growth of population had 
 made government aid less necessary. Such reasons doubtless in- 
 fluenced the action of Texas in 1882. The policy of donation of 
 land in aid of internal improvements had been followed since 
 1854, except during the years 1869-1873. The important rail- 
 way lines whose construction Avas aided by land grants are the 
 Houston and Texas Central ; the Southern Pacific ; the Gulf, Col- 
 orado and Sante Fe ; the Missouri, Kansas and Texas ; the Texas 
 and Pacific ; the International and Great Northern ; and the St. 
 Louis Southwestern. The net grants to railroads approximated 
 32,400,000 acres; the grants to other internal improvements 
 amounted to 4,088,000 acres, making -a total of 36,488,000 acres.* 
 The laws required the railroads to alienate the lands granted, 
 but this requirement was evaded in some instances under the 
 guise of transfers or by the formation of land companies com- 
 posed of the railway stockholders.* The abuses, however, were 
 minor, and the land grant policy by encouraging the construc- 
 tion of railroads indirectly but powerfully promoted the growth 
 of population and industry in the state.^ 
 
 The land reserved in 1879 for the purpose of securing a new 
 state eapitol was not sold piecemeal by the state, but a contract 
 was made whereby a syndicate built the eapitol in return for 
 3,000,000 acres. 
 
 The sale of the land of the public debt reservation at only 
 fifty cents an acre turned out badly for the state. The bonds of 
 the state could not be obtained except by purchase in the open 
 
 ^Laws of 1882, p. 3. 
 
 =The Report of the Land Office for 1881-2 gave 7,814,695 acres to be 
 the amount by which the grants exceeded the available public domain. 
 ^Report of the Land Office, 1910. 
 ^Message of Governor Culberson, January 16, 1895. 
 "The Galveston News, April 14, 1882. 
 
A Financial History of Texas 327 
 
 market, and there they commanded a high premium. The high 
 premium Avas partly due to the demand of the school fund for 
 the bonds. Half of the proceeds of the sale of the lands in the 
 public debt reservation went to the school fund, and the fund 
 was restricted to investment in United States and State of Texas 
 bonds. As long as this restriction existed, there was competi- 
 tion between the state and the school fund in the purchase of 
 the bonds, the state wishing to cancel them, the school fund to 
 secure them as an investment. The urgent need of a change in 
 the price of the lands and in the purpose to which the proceeds 
 of sale Were devoted were presented by the governor to the 
 special session of the legislature in 1882, but the interest in con- 
 gressional redistricting and the strength of the land lobby re- 
 sulted in no change being then made by the legislature.^ 
 
 The recovery of industry from the panic of 1873 was ob- 
 servable in 1879, and the upward swing of enterprise in the 
 years 1881, 1882 and 1883 was pronounced, showing itself in 
 Texas among other ways in feverish land speculation. As a 
 result of the ''Fifty Cents Law" and the imperfect legislation 
 respecting the lands of the school and other special funds, the* 
 public lands were the center of the land speculation. The inade- 
 quacy of the land laws to protect the interest of the state and 
 of its trust funds was realized, and until the laws could be over- 
 hauled the legislature in 1883 withdrew all the public lands from 
 sale.^ The inroads which were being made upon the unapprop- 
 riated public domain by the act granting 1,280 acres to disabled 
 Confederate soldiers were checked by the repeal of the act.*'' 
 Under this land pension law 1,979,852 acres were granted.* The 
 mistakes of the "Fifty Cents Law" as to the price of the land 
 and the disposal of the proceeds of sale were stopped by a re- 
 grant of the lands remaining in the public debt reservation. 
 One million acres were given to the State University and one 
 million to the public free school fund.^ The total number of 
 acres sold for the payment of the public debt was 1,660,936.* 
 
 'Galveston News, November 19, 1882. 
 -"l^ws of 1883, pp. 2 and 3. 
 ^Laws of 1883, p. 13. 
 'Land Office Report, 1910, p. 30. 
 •''Laws of 1883, p. 71. 
 
 «Land Office Report, 1910, p. 30. The proceeds of sale were $884,786 r 
 Land Office Report, 1899, p. 30. 
 
328 Bulletin of the University of Texas 
 
 In 1887 the act of 1881 gTanting land to veterans of the Texas 
 Revolution was repealed.^ The veterans received under the law 
 of 1881 1,169,382 acres. 
 
 In 1898 the state awoke to the fact that not only was the un- 
 appropriated land exhausted but that the school fund had not 
 received by several million acres the half of the unappropriated 
 domain existing in 1876 which the Constitution of 1876 had 
 given to it.^ This discovery led in 1899 to the abandonment of 
 the homestead policy. Under this policy each head of a family 
 without a homestead was entitled to receive free 160 acres and 
 €ach single person 80 acres of the vacant and unappropriated 
 public lands, provided they had lived on the land three years 
 and had paid the surveying and land office fees which together 
 amounted to between $15 and $20. Under this law 4,847,136 
 acres were granted as homesteads.^ An accounting between the 
 «tate and the school fund was made in 1899 and it was found 
 that the school fund was short its quota of land by 5,902,076 
 acres.^ In part settlement of this deficiency the school fund 
 received all the unsurveyed and unappropriated public lands, 
 except those included in lakes, bays, and islands.^ This ap- 
 propriation to the school fund in 1899 brought to a close the 
 experience of the state with its unappropriated public lands.^ 
 
 ^Laws of 1887, p. 6. 
 
 -Land Office Report, 1898. Hogue v. Baker, 92 Tex., 58 (1898). 
 
 =Land Office Report, 1910. 
 
 *Report of the Commissioner of the General Land Office upon the 
 Findings of the Special Commission Appointed under the Act of March 
 2, 1899. Laws of 1899, p. 14. Land Office Report, 1901-2. 
 
 "^Laws of 1899, p. 123. Laws of 1900, p. 29. The special commission 
 of 1899 reported the unappropriated domain to be 5,167,075 aores 
 ■of which 1,722,880 acres were in lakes, bays, etc. The school fund re- 
 ceived 4,444,195 acres. 
 
 *Since 1895 the state has charged a rental for the use of oyster 
 l)eds planted or located within the public coast waters. Though called 
 :a tax in the statute, the charge was more properly a rental. In the 
 law of 1895 it was ten cents an acre per year for the first five years 
 and twenty-five cents for each year thereafter; Laws of 1895, Reg. 
 'Sess., p. 170. In 1899 the charge was made fifteen cents per ncre 
 per year for the first four years twenty-five cents during the next 
 four years, and $1 per acre thereafter. In 1907 the charge of $1 
 was changed to seventy-five cents. The rents are payable to the 
 game, fish, and oyster commissioner. The amount received cannot 
 be ascertained from any official reports. 
 
A Financial History of Texas 329 
 
 B. Lands of the Puhlic Free School Fund. 
 
 The bulk of the landed domain of the state has gone to an 
 endowment of education, and it has been in connection with the 
 administration of this land endowment that the most serious 
 problems of administering the public lands have arisen. In giv- 
 ing an account of the administration of the lands of the school 
 and other special funds, it is most convenient to divide the lands 
 into agricultural, including grazing, and timbered and mineral 
 lands. 
 
 a. Agricultural Lands. 
 
 Until 1883 there were two sets of acts governing the sale of 
 school lands ; one act related to the alternate sections which had 
 been surveyed by railroad companies and other agencies of in- 
 ternal improvement, w^hile the other act referred to the remain- 
 ing lands. The legislation of 1879 provided that the agricultural 
 lands in the alternate sections belonging to the school fund 
 should be sold at not less $1.00 per acre ; that not less than 160 
 acres and not more than one section of arable land or three 
 sections of grazing land should be sold to any one person; and 
 that one-tenth of the purchase money should be paid down, the 
 balance to be paid in nine installments with interest at 10 per 
 cent. Interest was payable on January 1 of each year, and if 
 payment should not be made by March 1 the law stated that 
 the land should be forfeited. The provisions in this law which 
 related to forfeiture are illustrative of the lack of care which 
 characterized the laws relating to the public lands. In the first 
 place, the law of 1879, like that of 1874, made no provision for 
 forfeiture on account of the non-payment of the principal at 
 the time of final payment.^ In the next place, forfeiture on ac- 
 count of non-payment of interest took place only after pro- 
 ceedings looking to forfeiture were instituted by the county or 
 district attorney; but it was not made mandatory upon these 
 officers to institute proceedings, nor was any compensation 
 provided for them for instituting such proceedings. The result 
 of these imperfections in the laws was that the officers, having no 
 
 ^Land Office Report, 1898. 
 
330 Bulletin of the University of Texas 
 
 pecuniary incentive to act, did nothing.^ Another and principal 
 defect of the law of 1879 was that the county surveyor was vir- 
 tually the classifier, valuer, and seller of the public lands. He 
 was free under the act not to inspect the land or even to know 
 its locality. He had it in his power to favor whomsoever he 
 might, and the only central control over his actions was the 
 rather negative power of the commissioner of the general land 
 office to withhold or withdraw the lands from the market.^ 
 These defects were not cured in 1881 when the law governing 
 the sale of the school lands was amended. The changes made in 
 1881 were several.^ The district surveyor was made the ap- 
 praiser of the value of the lands in unorganized counties, and 
 the commissioner of the general land office was empowered to 
 correct the valuations put upon lands by the district and county 
 surveyors. The district surveyor was required to make an affi- 
 davit that he had personally inspected the land appraised by 
 him. The maximum of grazing lands not Avithin five miles of 
 the geographical center of any county or upon any water front 
 which could be purchased was raised from three sections to 
 seven. The maximum amount of other land purchasable re- 
 mained at 160 acres. The terms of credit also were liberalized 
 by the provision that one-twentieth of the purchase money could 
 be paid down and the balance in nineteen annual installments 
 with interest at 8 per cent. Any payment of principal except 
 the first could be deferred one or more years. 
 
 The provisions in the Revised Statutes of 1879 relating to the 
 school land dealt with the lands other than the alternate sections 
 which had been surveyed by railroads and other agencies of in- 
 ternal improvement. These provisions were that as soon as the 
 lands were surveyed they should be sold, but at not less than 
 $1.50 per acre. Appraisal of the value should be made by three 
 disinterested commissioners appointed in each county by the 
 governor. After valuation the sale of the lands should take place 
 
 ^Message of Governor Ross, January 10, 1889. In 1882 the provisions 
 for tlie enforcement of the contract through forfeiture were dropped; 
 Laws of 1882, p. 36. 
 
 =Land OfHce Report, 1882, p. 6. 
 
 ^Laws of 1881, p. 119. 
 
A Financial History of Texas 331 
 
 imder the supervision of the county surveyor. Preference in 
 purchase was given to actual and prospective settlers. Pros- 
 pective settlers were required to promise to settle upon and im- 
 prove the land within twelve months from application for pur- 
 chase. Land not purchased by an actual or prospective settler 
 within two years from date of notice of sale could be purchased 
 by any one. The maximum amount purchasable was 160 acres, 
 the minimum 80 acres. One-tenth of the purchase price was 
 payable down, the balance bore ten per cent interest, and the 
 interest and one-tenth of the principal were payable March 1 
 each year. Failure to pay either interest or the installment of 
 the principal worked forfeiture.^ 
 
 In 1882 there was feverish land speculation. The advent of 
 the Gould and the Palmer- Sullivan systems of railroads was a 
 fillip to enterprise and speculation, and contributory factors in 
 the promotion of speculation were the ''Fifty Cents Law" and 
 the imperfect land laws. All the abuses possible under the land 
 laws made their appearance. The only object of the "Fifty 
 Cents Law" was revenue, but this was not the only purpose in 
 the sale of school lands. The limitation in the laws of the amount 
 of school land which any one person could purchase from the 
 state was in the interest of the settler ; but there was evasion of 
 the provision through the use of borrowed names and the names 
 of the wife and children of the applicant for land, and vast 
 tracts of lands of from 100,000 to 1,000,000 acres were acquired. 
 Wealthy individuals and corporations acquired these vast bodies 
 for pasture purposes or for speculation.- The interests of the 
 actual settler were in this way defeated, but the other purposes 
 of the legislation, that is, to swell the school fund and increase 
 the basis of taxation, wxre accomplished.^ Another abuse dur- 
 ing the period was that practiced by the so-called ''county seat 
 rings." The persons composing the "rings" would by the use 
 of borrowed or fictitious names file application for the valuable 
 sections of land in the county. The land filed on would be with- 
 drawn from the market for ninety days, but if at the expiration 
 
 ^Rev. Civil Stats., 1879, title 81, chap. 3. 
 
 ^Land Office Report, 1911-12, p. 26. 
 
 ^Land Office Report, 1882. The Galveston News, April 6 and 8, 1882. 
 
332 Bulletin of the University of Texas 
 
 of that time the "file" was not sold to a bona fide purchaser 
 members of the ring- would file anew. This practice was repre- 
 hensible chiefly because bona fide purchasers were forced to make 
 terms with the ringsters.^ The fact that the ringsters were able 
 to extort a bonus from intending bona fide purchasers was proof 
 of the undervaluation of the land and of a resulting financial 
 loss to the school fund. The interests of the school fund suf- 
 fered also from the undervaluation and improper classification 
 of the lands. 
 
 Another abuse during the period was the free use of the school 
 lands for pastures. This was the ' ' free grass ' ' policy which had 
 always been followed in Texas. An unsuccessful attempt was 
 made in 1881 to introduce the lease system.- The attempt was 
 again made in 1882 to end the '^free grass" policy, but it was 
 bitterly opposed by the stockmen and defeated.^ The interests 
 of the school fund, the stockmen, and the farmers were involved 
 in the proposed change in policy. While there should have been 
 no free grass, the cattle industry was too important to the state 
 to be discouraged. The ranches represented great wealth to the 
 state, and their owners had been the pioneers of law and order 
 in their dealings with the Indians, marauding Mexicans and 
 other thieves. The stockmen contended that if the lease policy 
 should be adopted, it should be one of long leases, otherwise 
 they would not be justified in digging wells on the unwatered 
 lands or of building fences and in other ways making the land 
 suitable for use. Long leases under this policy, however, would 
 retard settlement and condemn the cattle country to a meager 
 population and incomplete development.'* The school fund was 
 interested in getting as much revenue as possible, and since sale 
 to settlers would be slow the largest immediate revenue would be 
 gained by leasing to stockmen or selling immense tracts to land 
 corporations. There was general opposition, however, to the 
 sale of lands to land corporations. 
 
 These defects in the land laws and policies confronted the lepr- 
 islature which met in 1883. The act of February 8, 1883, with- 
 
 ^The Galveston News, May 19, 1882. Land Office Report, 1882. 
 =The Galveston News, February 22, 1881. 
 
 ^The Galveston News, March 22, 24, April 22, and May 19, 1882. 
 *The Galveston News, September 27, 1882. 
 
A Finmicial History of Texas 333 
 
 drew from sale all the school lands, and the act of April 12, 1883, 
 established a new system for the classification, sale and lease 
 of the lands, and did away with the necessity of consulting two 
 different acts as had been necessary during the preceding four 
 years. The changes made affected principally the prices of land, 
 the maximum amounts purchasable, and the lease of pasture 
 lands. ^ The administration of the lands was given to a board 
 called the State Land Board, which was made up of state offi- 
 cials acting in an ex-officio capacity.^ Agricultural and pasture 
 lands were to be classified into watered and unwatered, and the 
 minimum price put on watered land was $3 per acre, on un- 
 watered land, $2 per acre. The maximum of agricultural or 
 watered land w^hich could be purchased by one person was fixed 
 at 640 acres, and the maximum of unwatered land at 4,480 acres. 
 The minimum amount which could be purchased was 160 acres 
 of agricultural land and 80 acres of timber land. A corpora- 
 tion was not permitted to acquire title to more than 640 acres of 
 land in any one county. Agricultural land could be sold only 
 to settlers, and purchasers of such land w^ere required to swear 
 that they would settle upon the land within six months. The 
 actual occupancy, use, and improvement of the land for three 
 consecutive years were required of a purchaser before a patent 
 was issuable to him ; though it was provided that the purchaser 
 could sell after the payment of the first installment of the prin- 
 cipal, and it was not specifically stated that the vendee should 
 be an actual settler. The land board inserted as a part of the 
 contract for purchase that the purchaser should occupy the land 
 within ninety days after the award of the land to him, that occu- 
 pation should continue for three consecutive years, and that 
 abandonment of the land or sale to other than an actual settler 
 during the three years of required occupancy should work a for- 
 feiture of the land and payments.^ The land board appointed 
 
 ^Laws of 1883, p. 85. 
 
 ^The constitutionality of the land board was upheld in Arnold v. 
 State, 71 Tex., 239 (1888). For the resolutions passed by the land 
 board see Sayles, op. cit., pp. 363-390. 
 
 ^Report of the State Land Board, 1885, p. 8. In 1889 the legislature 
 validated the titles of venders and assignees in cases where the original 
 purchaser failed to comply with the law and the requirements of the 
 land board as to settlement; Laws of 1889, p. 107. 
 
334 Bulletin of the University of Texas 
 
 some one to represent the state in each county or land distri(it. 
 Bids for the purchase of land were made to this representative, 
 and the land went to the highest bidder.^ One-thirtieth of the 
 purchase price was payable down, and the remainder was pay- 
 able in twenty-nine installments with interest at 5 per cent. 
 Failure to settle upon the land within the prescribed six months 
 worked a forfeiture of the land and of the money paid on it. 
 Forfeiture occurred also if the interest should not be paid by 
 March 1, but there was nothing to prevent the postponement of 
 the payment of the annual installments of the principal until the 
 whole sum was due. 
 
 The legislation of 1883 provided also for the leasing of the 
 public lands for pastures. The minimum rental was fixed by 
 law at four cents an acre, and the maximum period of a lease 
 at ten years; and the leased land was made subject at any 
 time to purchase for settlement. These conditions for leasing 
 fell short of what the stockmen wanted. They had asked for 
 a maximum rental of two cents an acre and a minimum period 
 of lease of twenty years.- 
 
 The legislation of 1883 was primarily for the benefit of the 
 small settler and not for the large speculative buyer and the 
 cattleman. This purpose was indicated by the limitations on 
 the amount of land which could be purchased and by the pro- 
 visions in the law in regard to leases. The provisions of the 
 law were not proof, however, against large holdings, since these 
 could be accumulated through purchase by friends, relatives 
 and figureheads, and by transfers subsequent to the statutory 
 three years. ^ So insufficient was the legislation to ensure good 
 faith on the part of purchasers for settlement that the land 
 board in 1883 refused to put on the market the watered lands. '^ 
 
 ^The first method of bidding prescribed by the land board was one 
 of written bids registered with the surveyor of the county and open 
 to inspection; Resolution No. 1, October 23, 1883. This method was 
 succeeded by one of competitive bidding at public outcry; Resolution 
 No. 7, February 9, 1884. A sale under the first method was held to 
 be void. 
 
 -Proceedings of the Stockmen's Convention, in the Galveston News, 
 February 7 and 10, 1883. 
 
 ^The Galveston News, April 25, 1883. 
 
 ^Report of the State Land Board, 1885. 
 
A Financial History of Texas 335 
 
 It limited to 1,280 acres the amount of pasture land which one 
 person could purchase. 
 
 The first leasing of the public lands took place in January, 
 1884, and was at the minimum rental of four cents an acre. 
 The land board decided that the competition under whic,h the 
 leasing took place was a farce, because the cattlemen, either 
 by agreement or the force of custom, respected one another's 
 ^'ranges." The land board, therefore, in February, 1884, ad- 
 vanced the minimum rental to eight cents an acre for unwatered 
 lands and twenty cents an acre for watered lands.^ The refusal 
 to lease at less than eight cents an acre precipitated a struggle 
 with the cattlemen which is notable in Texas history. The 
 cattlemen — described popularly as free-grass barons — defied the 
 land board and refused to pay anything, and on account of 
 sympathetic juries escaped conviction for violation of the law.^ 
 Farmers and other freeholders in the stock country complained 
 of being so enclosed by the barbed wire fences of the ranches 
 that they had no entrance to or egress from their holdings, 
 and there broke out in the latter part of 1883 an epidemic of 
 wire cutting. The oifenses committed by the cattlemen and 
 the fence cutters made necessary a special session of the legis- 
 lature, which met in January, 1884.^ Fence cutting w^as made 
 an offense punishable by confinement in the penitentiary, the 
 opening of roads through pastures was required, and the un- 
 lawful fencing of, or herding upon, the public lands was made 
 a misdemeanor.* Though the acute stage of the controversy 
 passed and violence ceased, intimidation of those who would 
 settle as farmers upon the ranges continued, as did also un- 
 law^ful free use of the public grass.^ It was found in 1887 that 
 
 ^Report of the State Land Board, 1885. Land Office Report, 1886. 
 Galveston News, July 5, 1888. This action of the land board in 
 adopting a minimum higher or other than that laid down in the law- 
 was declared unconstitutional in Smisson v. State, 71 Tex., 222 (1888). 
 
 ^Land Office Report, 1886. 
 
 ^Proclamation of Governor Ireland, October 15, 1883. The Galveston 
 News, June 17, 1883, and January 22, 23, 30, February 7, 12, April 10, 
 and June 26, 1884. 
 
 ^Laws of 1884, pp. 34 and 68. 
 
 "Laws of 1885, p. 83. 
 
336 Bulletin of the University of Texas 
 
 over three and a half million acres of the public lands were 
 unlawfully fenced or used by the "free-grass barons," so an 
 act was passed which defined more exactly the offence and 
 increased the penalties for the unlawful use of the public lands/ 
 As late as 1899 the unlawful free use continued, and two agents 
 were 'appointed to investigate.- After this the unlawful prac- 
 tice disappeared. In 1887 the maximum term of a lease was 
 made five years, the rental was fixed at four cents an acre, and 
 it was provided that lands classified as grazing could not be 
 sold during the period of lease. These conditions of leasing 
 w^ere more satisfactory to the cattlemen than the former ones. 
 These changes in the system of leasing were only a part of 
 the changes made in 1887 in the land laws. The administration 
 of the lands by the land board worked badly, confusion existed 
 because of the many changes by the board in the methods of 
 selling and leasing, and the provision for the classification of 
 the lands was very imperfect.^ So in 1887 a complete revision 
 of the land laws was made.* The land board was abolished 
 and control was concentrated in the hands of the commissioner 
 of the general land office, subject to approval by the governor. 
 It was provided that a more careful classification of the lands 
 should be made by state agents. Under former laws the county 
 surveyor was entrusted ^ith the responsibility of classification. 
 The maximum of unwatered pasture land purchasable by one 
 person was reduced from 4,480 acres to 2,560 acres. The maxi- 
 mum of agricultural land purchasable by one person Avas fixed 
 at 640 acres, the minimum at 160 acres, except in the case of 
 scrap lands. It was required of a purchaser of agricultural 
 land to swear that he "desired to purchase the land for a 
 home," that he was buying for himself and was not acting in 
 collusion with any other person. The purchaser was required 
 to reside upon the land three years before the state would pass 
 
 ^The Galveston News, July 5, 1888. Laws of 1887, p. 83. This un- 
 lawful free use resulted in an estimated loss of over $567,000 to the 
 school and other special funds. 
 
 ^Laws of 1899, p. 176. Land Office Report, 1900-2. 
 
 'Message of Governor Ireland, January 11, 1887. Message of Governor 
 Ross, January 20, 1887. 
 
 *Laws of 1887, p. 83. 
 
A Financial History of Texas 337 
 
 title to him, but he could be absent from the land as much as 
 six months a year. The act of 1887 was more specific in these 
 respects than was the act of 1883. This residence provision of 
 the law has been a part of all subsequent legislation and has 
 been the occasion of "untold perjury."^ Sale to a corporation 
 was strictly prohibited. The period allowed for the payment 
 of the principal of the purchase money for agricultural land 
 was extended to forty years, but the rate of interest on the 
 unpaid installments was left at 5%. It was provided also that 
 forfeiture should occur only upon failure to pay the interest 
 by August the first each year. This restored the provision for 
 forfeiture which had been repealed in 1885. 
 
 Under the provisions and amendments of the acts of 1883 
 and 1887, 11,837,389 acres of school lands were sold, but 7,684,- 
 503 acres were forfeited, leaving 4,152,886 as the net amount 
 sold. The number of acres leased was 6,505,403, but of this 
 amount only 77,437 acres were university lands. There had 
 been surveyed for the University under the act of 1879, 984,960 
 acres, and under the act of 1883, 1,087,917 acres.^ The univer- 
 sity lands surveyed under these acts were located in Tom Green, 
 Pecos, Crockett, Upton, Irion, Andrews, Ward, Martin, Loving, 
 Winkler, Crane, Ector, Schleicher, Presidio, and El Paso coun- 
 ties.^ The new university lands and the poorer school lands 
 were not well situated with respect to population and were 
 not supplied with water, and these unfavorable conditions 
 called for leasing terms which were different from those which 
 applied to the better school lands. Accordingly in 1889 it was 
 provided that university lands could be leased at three cents 
 an acre and for as long a period as ten years, and that school 
 and asylum lands lying north of the Texas and Pacific Railroad 
 and east of the Pecos could be leased for a period of six years, 
 and those south of the railroad and west of the river for ten 
 years. This was the beginning of the ''lease line." The rental 
 of the school and asylum lands was fixed at four cents an acre, 
 
 ^Land Office Report, 1907-8. 
 
 *Land Office Report, 1901-2. The siirvej^s under the acts of 1839 
 and 1856 amounted to 216,805 acres. 
 *Land Office Report, 1901-2, pp. 34-7. 
 
 22— H 
 
338 Bulletin of the University of Texas 
 
 and no grazing land under lease was subject to purchase. 
 Purchasers of lands were allowed until the January first follow- 
 ing the preceding August first to pay interest past due, but a 
 penalty of 50% on the past due amounts was fixed. This was 
 a method of relief from the forfeiture provisions of the law, 
 and the extension of such relief has been rendered necessary 
 more than once by the protracted drouths from which the 
 western parts of the state have suffered. 
 
 Other features of the land legislation of 1889 were the lower- 
 ing of the minimum of agricultural land purchasable from 160 
 acres to 80 acres and the repeal of the pre-emption law.^ As 
 the privilege of pre-emption was being abused by men who 
 were interested in speculating in land and in forming large 
 holdings instead of in settling upon the land, the repeal of the 
 privilege became necessary.^ 
 
 The years 1889 and 1890 were years of active settlement and 
 material development of the state, and these conditions were 
 favorable to an increase in land sales and leases under the new 
 legislation. At the end of 1888 only 77,437 acres of university 
 lands were under lease, but at the end of 1890 there were 
 247,997 acres. School lands leased increased from 6,327,966 
 acres in 1888 to 7,130,434 in 1890. Receipts from land sales 
 by the various funds increased from $187,235 in 1888 to $540,735 
 in 1890. 
 
 In 1891 the time allowed for the payment of interest on land 
 purchases was extended from November 1 to April 1, and the 
 lease line was slightly changed.^ The drouth in 1892 resulted 
 in the date for the payment of interest being extended from 
 April 1 to November 1.* 
 
 In 1895, in response to a demand from the West, a general 
 revision of the land laws occurred.^ This was th^ first general 
 revision after 1889. The minimum amount of agricultural land 
 which could be purchased was reduced from 80 acres to 40 
 acres and the maximum amounts were one section of as'ri- 
 
 *Laws of 1889. p. 16. 
 ^Land Office Report, 1888. 
 ^Laws of 1891, p. 180. 
 *Laws of 1893, p. 30. 
 •Laws of 1895, pp. 63 and 7.5. 
 
A Financial History of Texas 339 
 
 cultural and three sections of grazing lands. The minimum 
 prices fixed were $2.00 per acre for agricultural land and $1.00 
 per acre for grazing lands. Though the period of credit re- 
 mained forty years, the interest rate was reduced to three per 
 cent. Watered agricultural lands could be leased for five years 
 and unwatered lands and grazing lands for ten years. Unlike 
 the acts of 1887 and 1889, the law of 1895 did not stipulate 
 the absolute lease prices, but prescribed a minimum rental of 
 three cents an acre for agricultural and watered lands and two 
 cents an acre for grazing lands, and provided that the lands 
 should be leased to the highest bidder.^ The control of the 
 university lands was vested in the board of regents of the 
 University, with the condition that these lands should not be 
 sold for less than the same class of lands belonging to the other 
 funds. - 
 
 The changes in the land laws in 1897 are historical because of 
 the loss which the school fund suffered.^ The minimum amount 
 of agricultural land which could be purchased was increased from 
 forty acres to eighty acres ; and though the maximum amount of 
 agricultural and grazing land which could be purchased together 
 remained at four sections, two of these sections could be of agri- 
 cultural land. The price of agricultural land was reduced from 
 $2 per acre to $1.50 per acre. Land which had been erroneously 
 classified could be reclassified upon the certificate of the comir.is- 
 sioners' courts. Leased lands were subject to sale at any time, 
 except where the lessee had made substantial improvements, and 
 except within certain territory described in the statute. The 
 operation of the legislation of 1895 and 1897 was injurious to the 
 interest of the school fund in the following way : As a forfeiting 
 purchaser had a preference right for ninety days to repurchase 
 his land after it had been forfeited for non-payment of interest, 
 the reduction in price and the reclassification provided for in the 
 acts of 1895 and 1897 encouraged forfeiture and crooked reclass- 
 ification. Land which had been classified as agricultural and sold 
 
 ^The Houston Post, March 12 and 14, 1895. 
 
 -Laws of 1895, p. 19. The control of the university mineral lands 
 was not given to the board of regents until 1901; Laws of 1901, Reg. 
 Sess., p. 266. 
 
 ^Laws of 1897, p. 184. 
 
340 Bulletin of the University of Texas 
 
 at $2 and $3 per acre was forfeited, its reclassification as grazing 
 land was effected, and it was repurchased by the forf (dting pur- 
 chaser at $1 an acre. The loss to the school fund caused by this 
 fraudulent reclassification was estimated to be between eight and 
 twelve million dollars.^ 
 
 In 1898 it was found that the school fund had not received 
 5,902,076 acres to which it was entitled by the provision of the 
 Constitution of 1876. This shortage Avas due to the fact that 
 except in the case of railroads surveys for such purposes as home- 
 stead, military, and other grants had not been accompanied by 
 surveys of equal amounts for the school fund.^ In settlement of 
 the deficiency there was appropriated to the school fund all of 
 the lands which had been or which might be recovered from rail- 
 way companies and other sources, amounting to 1,440,701 acres ; 
 all of the unsurveyed and unappropriated public lands, except 
 those included in lakes, bays, and islands, amounting, as then 
 estimated, to 4,444,195 acres, and $17,180, this being the value 
 at $1 per acre of the number of acres necessary to complete the 
 amount due.'"' The land included in this appropriation was in 
 general the poorest of the western lands, and the conditions under 
 which it could be sold were different from those which attached to 
 other school lands. A minimum price of $1.00 per acre was 
 stipulated, amounts of 640 acres or less could be purchased for 
 cash only and without the condition of settlement, and preference 
 rights of purchase were accorded first to settlers and second to 
 leaseholders.* 
 
 In 1901 a general revision of the law governing the sale of 
 school and asylum lands was made.^ The principal changes were 
 that applications for purchase or lease should be filed with the 
 county clerk, instead of with the commissioner of the General land 
 
 ^Land Office Report. 1899-1900, 1901-2. Message of Governor Sayers, 
 January 10, 1901. 
 
 ^Land Office Report, 1901-2. 
 
 'Laws of 1899, p. 123. Laws of 1900, p. 29. Since 1900 small tracts 
 of unappropriated land have been discovered which have resulted in 
 the school fund receiving 555,283 acres more than the 4,444,195 
 acres; Land Office Report, 1901-2, p. 8. 
 
 ^Laws of 1900, p. 29. 
 
 •■^Laws of 1901, p. 292. 
 
A Financial History of Texas 341 
 
 office, as was formerly the requirement; and that four sections 
 of land could be purchased by one person regardless of whether 
 the land was agricultural or grazing land. 
 
 Under the laws of 1895, 1897, and 1901 the lessee had at the 
 expiration of his lease a, prior right to purchase as a settler the 
 land which he had leased. This gave lessees an advantage over 
 others, and it was often abused so as to force homeseekers to pay 
 a bonus to speculating lessees or to other speculators who had 
 inside information as to the time leases expired. Even some 
 lessees who were ignorant of the time their leases expired were 
 compelled to pay large bonuses to the members of the courthouse 
 rings, or to the lawyers and land agents who infested the Pan- 
 handle and West Texas and who were ever on the alert to file on 
 land which was coming on the market. The competition to file 
 on land which was coming on the market was so keen that violence 
 and bloodshed resulted in some cases. So acute for a time was 
 the danger of trouble and so farcical was the opportunity for the 
 peaceful homeseeker to secure land that the legislature in iy03 
 suspended for ninety days the privilege of filing on lands which 
 were coming on the market through the expiration of leases.^ 
 There was no revision of the law, however, until 1905. 
 
 In the revision of 1905 the very important innovation was 
 made of requiring that school and asylum lands under lease 
 -should be widely advertised before they became subject to sale, 
 that written bids for the purchase of the land should be sub- 
 mitted to the commissioner of the general land office, and that 
 the land should be sold to the highest competitive bidder, pro- 
 vided that the price bid should not be less than the appraised 
 value fixed by the commissioner.- Unsurveyed vacant school 
 lands of which there was no record on the official maps of the 
 land office, unsurveyed swamp lands, and unsurveyed vacant 
 tracts of between 80 and 640 acres of which there was a record 
 on the official maps but wliich were entirely surrounded by valid 
 surveys, could be purchased for cash or on forty years time and 
 five per cent interest, and without the conditions of residence and 
 improvements upon the land which were imposed upon purchasers 
 
 ^Laws of 1903, p. 242. 
 'Laws of 1905, p. 159. 
 
342 Bulletin of the University of Texas 
 
 of other lands. Unsurveyed tracts of 80 acres or less could be 
 purchased only for cash. The maximum amount of land which 
 could be purchased by a person remained four sections, including 
 former purchases, except that eight sections in the extreme west- 
 ern counties could be purchased. 
 
 Land which was not in demand for settlement could be leased, 
 and the original lessee or assignee was given the preference in 
 securing another lease, provided he paid the highest bid which 
 could not be less than three cents an acre. Original lessees or the 
 assignees of leases were given the preference in buying land out 
 of their leased land, though this privilege was limited to the 
 existing leaseholders or their assignees. This preference privilege 
 was abused by cattlemen who because they were not permitted 
 by Jaw to purchase for themselves as much land as they wanted 
 lirst assigned their leases to their sons and daughters and em- 
 ployees who fulfilled the conditions of purchase and then sold to 
 the former lessees — the cattlemen. This practice tended to de- 
 feat the settlement purpose of the law.^ Amendments to the law 
 which were made in 1907 were intended to minimize the possibility 
 of abuses arising under the law. The amendments of 1907, 1913, 
 and 1915 modified a lessee's privilege to purchase out of his 
 lease, defined anew the conditions as to settlement, provided in 
 the case of some lands for purchase without settlement, and lim- 
 ited the privilege of transferring land which had been bought on 
 condition of settlement.^ 
 
 h. Timber Lands and Timber. 
 
 Texas is one of the principal yellow pine lumber states, and 
 the timber lands which are the source of supply of this valuable 
 product were not so very long ago a part of the public domain. 
 The history of the timber lands up to 1880 shows that a very 
 loose policy was pursued by the state. Through fraudulent class- 
 ification or through careless valuation the lands were sold for less 
 
 ^Land Office Report, 1907-8. 
 
 -Laws of 1907, Called Sess., p. 490. Laws of 1909, Second Called 
 Sess., p. 429. Rev. Civil Stats., 1911, arts. 5405-5459. Laws of 1911, 
 Reg. Sess., p. 154. Laws of 1913, Reg. Sess., p. 336. Laws of 1915,. 
 Reg. Sess., p. 256. 
 
A Financial History of Texas 343 
 
 than their value, and wholesale theft of timber went on un- 
 checked.^ 
 
 The legislation of 1879 with respect to timber lands was Yery 
 loose. The only reference to them in the act of 1879 providing 
 for the sale of the school lands was to prohibit the cutting of the 
 timber until the purchase price of the land had been paid in fulL 
 The law stated no limit to the amount of timbered land which one 
 person could purchase, and prescribed no other minimum value 
 than the one dollar an acre for school land in general.^ The 
 glaring defects of this legislation were that valuation was left to 
 the county officials, that there was no adequate minimum value 
 fixed, and that it was permitted to purchase timbered lands on 
 credit. The legislation of 1881 did nothing towards correcting 
 these defects, except that it authorized the commissioner of the 
 general land office to approve or disapprove the values put upon 
 land by the surveyor and county commissioners.^ The commis- 
 sioner of the general land office said in his report of 1882 that ''in 
 most of the counties the surveyor and county commissioners have 
 declined to increase the valuations, and in others the increase did 
 not meet my expectations, and the result is that this wealth of: 
 pine remains the property of the common schools, and awaits the* 
 further action of the legislature." 
 
 In 1882 it was enacted that no pine timbered land should be 
 sold for less than $5.00 an acre.* This land had been selling at 
 $1.00, $1.50, and $2.00 an acre, and the school fund had been the 
 sufferer and individuals and lumber corporations had been the 
 chief beneficiaries." The law was still defective, however, in that 
 it failed to recognize the different classes of timber land and per- 
 mitted the purchase of such land on time. In 1883 it was pro- 
 vided that one who was a settler on timbered land on January 1, 
 1883, could purchase the same for cash in quantities of not less 
 than 80 acres and of not more than 320 acres at the minimum 
 price ($5 per acre for good timbered land and $2 per acre for 
 
 ^Land Office Report, 1878. 
 ^Laws of 1879, Called Sess., p. 23. 
 
 ^Laws of 1881, p. 119. Special Report of the Commissioner of the 
 General Land Office, 1882, p. 7. 
 ^Laws of 1882, p. 36. 
 ^Letter of Commissioner Walsh, in the Galveston News, March 1, 1882, 
 
344 Bulletin of the University of Texas 
 
 other timbered land).' Other purchasers of timber land were 
 required to be settlers, and they were permitted to buy not less 
 than 160 acres nor more than 640 acres, at a price of not less than 
 $5 an acre. But cash payment was not required of these pur- 
 chasers. It was also provided in 1883 that the timber could be 
 sold for cash at $5 an acre. Kegarding the operation of the legis- 
 lation of 1883, the commissioner of the general land office wrote 
 in his report of 1886 that the "pine lands remain practically tied 
 up under the acts of 1882-3, which place all timber land at a 
 minimum of $5 per acre, without regard to the quantity or quality 
 of timber. As a result depredators are at work, and legitimate 
 timber cutting proportionately checked." 
 
 In the reorganization of the administration and the new land 
 legislation which occurred in 1887, a classification of the timber 
 land was authorized, the minimum price established for the better 
 land was $5 an acre and that for the poorer $2 an acre,^ After 
 1887 nothing of importance was done affecting timber lands until 
 1899, when agents were authorized to investigate the theft of 
 timber on the school lands. These agents and the prosecuting 
 officials of the state put a stop to the depredations which had 
 theretofore gone on practically unchecked.^ 
 
 In 1905 the present system of selling the land or the timber to 
 the highest of competitive bidders was introduced.* This com- 
 petitive bidding system differed from former ones in that its ad- 
 ministration, including the fixing of minimum valuations, was 
 left with the commissioner of the general land office. By 1905, 
 however, the state had very little timber land left. At the close 
 of the year 1902 there were only 31,978 acres of timber lands 
 which were unsold and on the market, and it was doubtful if as 
 much as half of this acreage had on it timber of marketable value.^ 
 The state's officers at that time did not know how much of it was 
 marketable, and their predecessors also had lacked sufficient 
 knowledge of the extent and value of the timber resources to 
 
 ^Laws of 1S83, p. 85. 
 
 ^Laws of 1887, p. 83. Laws of 1889, p. 50. 
 ^Land Office Report, 1901-2, p. 24. 
 
 ^Laws of 1905, p. 159. Laws of 1907, Called Session, p. 490. Rev. 
 Civil Stats., 1911, arts. 5429-5431. 
 ''Land Office Report, 1903-4, p. 8. 
 
A Financial History of Texas 345 
 
 administer them efficiently. It was not the fault of the commis- 
 sioners of the land office, but it was due to the niggardly policy 
 of the legislatures and governors that the timber resources were 
 parted with under conditions of erroneous or false classification 
 or undervaluation of the lands and timber.^ The classification 
 and valuation of the lands were entrusted either to county 
 officers or to equally inexpert outsiders. The valuation of timber 
 lands or of the timber thereon called for expert knowledge, but 
 not only was no provision made for securing the services of 
 experts, but there was no appropriation during the greater part 
 of the period that would permit the commissioner of the general 
 land office to inspect the forests or lands whose valuation he was 
 required by law to approve or disapprove. 
 
 c. Mineral Lands and Minerals. 
 
 The mineral resources of Texas are varied and rich and since 
 so much of the land in which minerals have been found belonged 
 at one time to the school fund, and since there is left so much 
 unsold mineral land whose mineral rights have been reserved by 
 the state, the history of the disposition of these lands is one of 
 interest and importance. 
 
 Under the laws of Spain and Mexico all mines belonged to the 
 sovereign. The Republic of Texas by the act of June 3, 1837, 
 provided against the location of any land grants on mineral land, 
 and in the act of January 20, 1840, adopting the Common Law 
 and repealing certain Mexican laws, the laws relating to the re- 
 tention by the state of mines and minerals were excepted from 
 repeal. In the case of Cowan v. Hardeman, decided in 1862, 
 the supreme court upheld the right of the state to minerals in 
 the soil.^ 
 
 In 1866 a change of policy was adopted when by an ordinance 
 of the constitutional convention the state released to the owner 
 of the soil any minerals in the soil. This was readopted in the 
 constitutions of 1869 and 1876. This provision in the Constitu- 
 tion of 1876 reads: ''The State of Texas hereby releases to the 
 owner or owners of the soil all mines and minerals that may be 
 
 ^Land Office Report, 1901-2, p. 21. 
 ^26 Tex.. 217. 
 
346 Bulletin of the University of Texas 
 
 on the same, subject to taxation as other property. ' '^ Thiii clause 
 was construed in 1912 to effect a release of minerals in only the 
 land with which the state had parted ownership prior to the 
 adoption of the Constitution of 1876.- 
 
 Until 1883 nothing was done by the state in the way of con- 
 serving the mineral resources of the state or of promoting their 
 development ; the mineral lands were classified and valued only 
 as agricultural or grazing lands, and were disposed of under such 
 false classification.'^ But in 1883 there appeared for the first 
 time in the land sale acts a clause which reserved to the fund to 
 which the land belonged the minerals which were found in such 
 lands."* The act of 1883 did not provide for the sale of mineral 
 lands as such but provided only for the sale of the minerals.^ It 
 was enacted that the fund to which the land belonged should 
 receive a royalty of five per cent of the gross receipts from the 
 operation of the mine. Only $12.25 was received from this 
 royalty up to the year 1887.^ 
 
 The law of 1883 was thus practically inoperative, and the 
 whole situation with respect to the mineral lands was badly in 
 need of change. Prospectors felt insecure as against the owners 
 of the land so long as the release clause of the constitution was 
 unconstrued; there was need of a mineral survey of the public 
 lands in order that the mineral lands might be known and classir 
 fed as such, and need of a provision either for their sale or for 
 their withdrawal from the market.' 
 
 The administration of the mineral lands during the years 
 1883-1895 was especially full of blunders. In 1887 a new land 
 sale act was passed and the Land Board which had been estab- 
 lished in 1883 was abolished, but the omission in the act of any 
 reference to mineral lands had the effect of repealing the min- 
 eral land legislation of 1883.^ The state was left thereby with- 
 
 'Art. 14, sec. 7. 
 
 =Cox V. Robinson, 105 Tex., 438 (1912). 
 
 "Land Office Report, 1881-2, p. 6. 
 
 'Laws of 1883, p. 85. 
 
 ^■Laws of 1883, p. 100. 
 
 *^^Report of the State Land Board, 1886, p. 6. 
 
 'Land Office Report, 1888, p. 9. 
 
 *Heil V. Martin, 70 S. W. Rep., 430 (1902). 
 
A Financial History of Texas 347 
 
 out any express provision for the reservation or protect io a of 
 the mineral lands or of the minerals in them.^ 
 
 Under the law of 1883 the classification and sale of mineral 
 lands were not provided for, but the retention of these lands by 
 the state and their operation by private persons upon the pay- 
 ment of a royalty to the state was the policy adopted. The pol- 
 icy which had been followed up to 1883 had been to withhold 
 known mineral lands from sale and to make no provision for the 
 sale of the minerals. In 1889 provision was made for the sale 
 of mineral lands as such.- Mining claims on lands containing 
 gold, silver, cinnabar, lead, tin, copper or other valuable min- 
 erals were limited to twenty-one acres, and the purchase price 
 of the land was fixed at $25 an acre. Mining claims on lands 
 containing coal, iron ore, oil, natural gas, fine clay, marble, or 
 other deposits were limited to oAe hundred and sixty acces for 
 individuals and to six hundred and forty acres for associations 
 which had expended as much as $5,000 in developing the claim, 
 and the purchase price of the land was fixed at $10 and $20 
 an acre according as it was or was not situated within ten miles 
 of a railroad. Purchasers of mineral lands were given five years, 
 within which to pay for them. In 1888 a geological and min- 
 eralogical survey of the state was authorized, and it was ex- 
 pected that this survey would enable the state to classify the 
 mineral lands; but the work of the survey was incomplete and 
 lands which were really mineral lands continued to be classified 
 as grazing land and sold at $1.00 and $1.50 an acre.^ 
 
 In 1895 a new mining law was passed.* Some of the changes 
 made by it were that the prices of the land containing the less 
 .valuable metals were fixed at $10 and $15 instead of $10 and 
 $20, and that ten years credit with interest at 4 per cent was 
 allowed to purchasers of such lands. 
 
 Under the credit provisions of the laws of 1889 and 1895 
 there were easy opportunities for the exploitation of a claim 
 without adequate payment, and valuable deposits were worked 
 
 ^Mining Co. v. Rogan, 68 S. W. Rep., 155 (1902). 
 
 ==Laws of 1889, p. 116. 
 
 'Laws of 1888, p. 10. Land Office Report, 1899-1900, p. 28. 
 
 *Laws of 1895, p. 197. 
 
348 Bulletin of the University of Texas 
 
 in El Paso, Presidio and Brewster counties without any pay- 
 ment to the school fund/ With a view to correcting the de- 
 ficiencies due to imperfect classification of the public lands, min- 
 eral surveys were authorized in 1901 and 1903, but like the sur- 
 very of 1888, their work was stopped before it was completed, 
 and the school fund has apparently never been the beneficiary 
 of any of the work of the several surveys. The loose and care- 
 less policy respecting classification and sale explains why the 
 receipts to the school fund from the sale of mineral lands be- 
 tween 1883 and 1905 were only $17,972.2 
 
 Amendments were made to land laws in 1905, the most im- 
 portant one being that the commissioner of the general land 
 office should set the price upon the land, subject to a minimum 
 of $25 per acre.^ Other important changes made were on ac- 
 count* of defects in the act of lB95 and were that one-fifth of the 
 purchase price of the lands containing valuable minerals together 
 with interest on the unpaid installments should be paid annually, 
 and that one interested in a forfeited claim should not be eligible 
 to relocate or have any interest in a relocation. 
 
 In 1907 a very important change in the law was made when 
 it was provided that land classed as mineral could be sold for 
 agricultural or grazing purposes, but upon the express condi- 
 tion that the minerals were reserved to the fund to which the 
 land belonged.* The significance of this provision for blanket 
 classification can be best understood in the light of the history 
 of certain portions of the different acts from 1883 to 1907. All 
 of the acts reserved to the fund to which the land belonged 
 the minerals in the land, and the acts from 1889 on reserved 
 from sale or other disposition except as mineral lands all lands 
 containing minerals, and a person in applying to purchase any 
 land was required to certify that to the best of his belief there 
 were no minerals in the land. 
 
 The reservation clause in the act of 1889, as well as that in 
 the act of 1883, was nullified by the Revised Statutes of 1895 
 
 ^Land Office Report, 1901-2, p. 42; 1903-4, p. 10. 
 
 =Land Office Report, 1903-4. 
 
 *Laws of 1905, p. 148. 
 
 *Laws of 1907, First Called Sess., p. 495. 
 
A Firmncial History of Texas 349 
 
 which in article 4041 released to the owner or owners of the 
 land the minerals in the land/ Though by this article the state 
 released its mineral rights in land parted with prior to the 
 adopt i'on of the Revised Statutes of 1895, by article 3495 of the 
 same statutes there were reserved the minerals in lands dis- 
 posed of after the adoption of the Revised Statutes. 
 
 The state contended in the case of Schendell v. Rogan that 
 the reservation clause reserved the minerals not only in lands 
 classified as mineral lands, but also in lands classified and sold 
 as agricultural, grazing, or timbered. The decision of the court, 
 however, was that when land had been classified and sold by 
 the commissioner of the general land office as agricultural or 
 grazing land, even though it contained minerals, the action of 
 the commissioner was conclusive upon the state.^ Since, there- 
 fore, in order for the reservation clause to be effective the land 
 must be classified as mineral, the provisions in the law of 1907 
 for a double classification and for a reservation of the minerals 
 make it possible to dispose of the land without impairing the 
 right of the state to the minerals in it. 
 
 Despite more than seventy-five years of ownership and man- 
 agement of the public lands, the state in 1912 had a most un- 
 satisfactory mineral land law on the statute books. The com- 
 missioner of the general land office wrote regarding the situation 
 that valuation of mineral lands was ''simply guess work, and 
 purely arbitrary. A precious mineral location might be rich in 
 ore and the owner extract large quantities in a short while, ex- 
 haust the deposit and abandon it in a year or so without liability 
 in excess of the nominally appraised value. As yet few have 
 found mining on school land profitable. In the case of the baser 
 minerals, such as oil, coal, etc., the average prospector does not 
 prospect, but waits for his neighbor to develop. He is likewise 
 slow to do much real prospecting before buying (the land), lest 
 something should be found, and the price fixed proportionately."^ 
 
 The imperfections of the law of 1907 for promoting mining 
 development and the need of some provision for the sale of 
 
 ^Heil V. Martin, 70 S. W. Rep., 430 (1902). 
 
 -94 Tex., 585 (1901). 
 
 'Land Office Report, 1911-12, p. 13. 
 
350 Bulletin of the University of Texas 
 
 minerals found on land which had been sold but the mineral 
 rights to which had been reserved to the state led to the legisla- 
 tion of 1913/ The law of 1913 provides that the prospector for 
 oil or gas shall take out a permit, the possession of which gives 
 him the exclusive right for a certain period of prospecting on 
 the land. In the event of the discovery of oil or gas in com- 
 mercial quantities, the owner of the permit has the right to 
 lease the land and operate the well or wells upon payment of $2 
 per acre per annum in advance and of a royalty annually of one- 
 eighth of the value of the gross production of the oil or of 10 
 per cent of the meter output of the gas sold. In the case of land 
 which has been sold by the state with a reservation of the min- 
 erals, the annual charge to the prospector for the permit to pros- 
 pect for oil or gas, amounting to twenty-cents an acre, accrues 
 to the owner of the land. There are no similar permit fees for 
 prospecting for other minerals and no absolute lease charge per 
 acre in addition to the royalty. The royalty payable in the 
 case of coal is six cents a ton ; for lignite, four cents a ton ; and 
 for other minerals, stones, etc., five per cent of the value of the 
 gross output. 
 
 d. Summary. 
 
 The advertising and. bidding methods introduced in 1905 re- 
 sulted in an estimated gain of $20,783,882 to the school fund 
 during the seven years 1906-1912 over the old methods of sale.^ 
 Some land which would have sold at from $1 to $2 per acre 
 under the old system sold under the new at from $12 to $22 per 
 acre. However, the average sale price of the western lands per 
 acre was low — between $1.50 and $3.00 — because these lands were 
 suitable only for dry farming or for grazing. 
 
 The first school land sales were under the act of 1858, as 
 amended in 1860^ and amounted to 10,506 acres. The next land 
 sale act was in 1874, and under it sales totaling 317,107 acres 
 were made. Under the acts of 1879 and 1881 6,596,069 acres 
 were sold. Up to 1883, therefore, the number of acres sold 
 
 ^Rev. Civil Stats., 1911, arts. 5433, 5904-5922. Laws of 1913, Reg. 
 Sess., p. 409. Laws of 1913, Called Sess., p. 26. 
 ^Land Office reports, 1906-1912. 
 
A Financial History of Texas 351 
 
 amounted to only 6,923,682. Under the acts of 1883, 1887, 1895 
 and 1910 and their amendments there were sold up to September 
 1, 1900, 21,778,395 acres. On account, however, of forfeitures 
 and cancelations amounting- to 10,256,714 acres, the total acre- 
 age either patented or whose sales were in good standing at 
 the land office in 1900 under all the acts was 18,444,975.^ As 
 the amount of the land unsold in 1900 was 20,613,527 acres, this 
 added to the 18,444,975 acres gives 39,058,502 as the land en- 
 dowment of the school fund up to 1900. More than five million 
 acres were added as a result of the settlement between the state 
 and the school fund under the terms of the act of 1900, so that 
 the school fund received in land approximately 45,000,000 acres. 
 There remained in 1912 only 1,636,176 acres. The purchase 
 movement after 1900 was very heavy, the amount sold being 
 nearly as much as that for the entire period 1858-1900.- The 
 unsold land lies between the Pecos and Rio Grande rivers; it 
 is classified mainly as mineral-grazing land, and because of its 
 extreme aridity some of it is not suitable even for grazing. Only 
 377,018 acres were under lease in 1912. A small revenue is de- 
 rived from the sale of guayule and candalilla growing on these 
 western lands, these shrubs having a commercial value in the 
 manufacture of products possessing the qualities of rubber 
 and wax. 
 
 An idea of the financial significance of the lands to the school 
 fund may be derived from an examination of some of the items 
 of the permanent school fund. On August 31, 1914, this fund 
 owned $18,204,363 of state, county, and other bonds of value, 
 and $35,028 in cash, and approximately all of this amount was 
 derived from land sales. The fund held also the notes of pur- 
 chasers of land for $47,067,427, and the interest on these notes 
 during 1914 amounted to $1,409,491. The receipts from leases 
 in 1914 were only $1,388.^ 
 
 ^Land Office Report, 1899-1900. 
 
 ==There were put on the market in 1914, 3,769,281 acres of school 
 lands. This is the sum of the amount unsold in 1912 plus the for- 
 feitures since 1912, 
 
 ^Report of the State Treasurer. 1914, pp. 35-36. 
 
352 Bulletin of the University of Texas 
 
 C. University Lands. 
 
 Until 1895 the university lands were administered by the 
 general land office, and their administration was characterized 
 by the merits and shortcomings of the public land legislation 
 and administration up to that time. The regents of the Uni- 
 versity recommended as early as 1886 that they should be given 
 the control and management of the lands belonging to the Uni- 
 versity, but this was not done until 1895.^ 
 
 The fifty leagues of land granted to the University in 1839 
 were surveyed to the amount of 226,122 acres in Callahan, Col- 
 lins, Cooke, Fannin, Grayson, Hunt, Lamar, McLennan and 
 Shackelford counties. There were conflicts of surveys in the 
 ease of 21,762 acres of these lands, and the University lost there- 
 by over 7,022 acres in McLennan County and 8,022 acres in 
 Grayson County, and the loss in the latter case has not been 
 made good by the state. ^ Sales of the land received from this 
 grant began before the Civil War, and by 1888 there were only 
 14,148 acres unsold.^ By 1899 only 5,095 acres were unsold, and 
 it was believed that the title had been lost to most of these.* 
 
 The western lands, or those surveyed for the University under 
 the acts of 1879 and 1883, are situated in the western and south- 
 western parts of the state. On account of their quality and the 
 deficiency in rainfall, they are fit only for grazing. Of the more 
 than two million acres of the western lands of the University 
 only one sale of 640 acres has ever been perfected. It has been 
 the policy of the board of regents not to sell the western lands 
 but to lease them for grazing purposes until they are more valu- 
 able. The greatest number of acres under lease before 1895 was 
 685,280 in 1892. By 1898, as a result mainly of the efforts of the 
 land agent of the University, the number of acres under lease rose 
 to 1,384,632, and the annual rental amounted to $40,408, as com- 
 pared with $17,186 in 1892-3. On August 31, 1915, there were 
 2,067,105 acres vinder lease at from two and a half to fifteen 
 
 ^Report of the Board of Regents, 1886, p. 22. Laws of 1895, p. 19. 
 Rev. Civil Stats., 1911, arts. 2633-2634. 
 
 -Report of the Board of Regents, 1888, p. 6; 1892, p. 7. Lane, 
 History of Education in Texas, p. 138. Laws of 1897, p. 265. 
 
 ^Report of the Board of Regents, 1888, p. 6. 
 
 'Report of the Board of Regent*?, 1899, p. 42. 
 
A Financial History of Texas 353 
 
 cents an acre, and the amount received from leases during 1915 
 was $169,057. Also on August 31, 1915, the permanent uni- 
 versity fund held land notes to the amount of $26,572.77, and 
 the annual interest on the notes amounted to $1,135.16/ 
 
 It can never cease to be a source of regret to the friends of 
 higher education in Texas that the framers of the Constitution 
 of 1876 took away from the University the land appropriation 
 made in 1858 and substituted therefor one million acres of west- 
 ern lands. The grant made in 1858 of one section for every ten 
 granted to railroads would have been a princely endowment,, 
 and would have amounted, it has been estimated, to not less than 
 1,600,000 acres in 1886, worth at least $8,000,000.^ The present 
 western land endowment of over 2,000,000 acres is worth as 
 grazing land not more than $3,000,000.^ 
 
 D. Asijlnm Lands. 
 
 The asylum lands^ granted by the act of 1856, were surveyed 
 in Callahan, Comanche, Eastland, Jones, Shackelford, Stephens, 
 Taylor, and Tom Green counties.* Instead of there being 100,- 
 000 acres surveyed for each of the asylums, there appears to 
 have been surveyed for the Blind Asylum, 104,457 acres; for 
 the Deaf and Dumb Asylum, 102,259 acres; for the Orphan 
 Asylum, 102,359 acres; for the Lunatic Asylum, 101,618 acres.^ 
 The asylum lands are under the administration of the general 
 land office and the history of their disposition is similar to that 
 of the school lands. On August 31, 1902, only 4,846 acres of 
 the asylum lands were unsold, and on August 31, 1912, all ap- 
 pear to have been sold, though the several asylum funds held 
 notes for $172,199 for 122,578 acres sold and not paid out.« 
 
 ^MSS. Report of the auditor of the University. 
 
 ^Report of the Board of Regents, 1886, p. 7. J. J. Lane, History of 
 Education in Texas, p. 143. 
 
 ^The value of these lands is placed at $1,346,971 in the balance sheet 
 of the University in 1912; Report of the Board of Regents, 1910- 
 1912, p. 107. 
 
 *Land Office Report, 1878, p. 19. 
 
 ^Land Office Report, 1901-2, p. 38. 
 
 ''The amount of land notes held by the several asylum funds on 
 August 31, 1914, was $158,661; Report of the State Treasurer, 1914^ 
 pp. 36-37. 
 
 23— H 
 
"354 Bulletin of the Universitij of Texas 
 
 E. Conclusion. 
 
 Since 1880 there has taken place not only the complete ap- 
 propriation of the free public domain bnt also the disposal by 
 sale of the easily cultivable school, university, and asylum lands. 
 On Au^st 31, 1880, the unsold land belono^inor to the special 
 funds, including the capitol lands, amounted to 29,528,150 acres, 
 and the amount of free land belono^ing^ to the state was estimated 
 at 19,069,890, makino- a total of 48,598,040 acres to be disposed 
 of. As there were no free public lands in 1912 and as the amount 
 unsold belonging: to the special funds was about four million 
 acres, nearly forty-five million acres had been parted with by 
 the state and the special funds since 1880. Not all of New Eng- 
 land and Delaware together equal in land area the amount of 
 land parted with. Though the best lands for cultivation are 
 gone, Texas has a coast line of some four hundred miles, and 
 lying along it are many acres of unsurveyed and undrained land 
 which belong to the state. Drainage of these lands and the re- 
 clamation and mining of the western lands may make the re- 
 maining public lands valuable and useful. 
 
Chapter 11 
 
 THE PUBLIC DEBT. 
 
 The four things which stand out prominently in the history 
 of the public debt since 1880 are the reduction in the amount 
 of the debt, the refunding operations, the acquirement of the 
 bonded debt by the school and other special funds, and frequent 
 deficiencies in the general revenue resulting in harassing float- 
 ing debts. 
 
 The bonded debt, exclusive of 'Hhe debt of doubtful valid- 
 ity" held by the school and university funds, was reduced from 
 $5,029,920 in 1880 to $3,976,200 in 1915, making a reduction 
 of $1,053,720. If "the debt of doubtful validity" be included, 
 the reduction for the period amounted to $1,892,066. The pay- 
 ments made in 1881, 1882 and 1883 amounted to $1,680,244. The 
 so-called debt of doubtful validity consisted of the five per cent 
 bonds issued to the school and university funds under authority 
 of the act of November 12, 1866, the six per cent bonds issued 
 to the school fund in 1865, and a comptroller's certificate of 
 indebtedness issued to the university fund in 1865. All of these 
 obligations were validated in respect to both principal and 
 accrued interest and w^ere ordered paid by the act of February 
 23, 1883.^ The principal and accrued interest of these old debts 
 amounted to $738,346. $688,054 of the amount was paid in 
 1883. but on account of insufficient means the remainder was 
 not paid ufitil 1885. Payments of the public debt which have 
 been made since 1885 were $243,000 in 1892, $2,700 in 1893, 
 $2,585 in 1899, $45 in 1900, $11,900 in 1910, and $1,300 in 1911— 
 a total since 1885 of $261,530. The debt paid during these years 
 was that held mainly by individuals and not that held by the 
 trust funds of the treasury. 
 
 In 1909, as a result of the penalty of $1,718,009 paid to the 
 state by the Waters-Pierce Oil Company, the legislature ap- 
 propriated $1,068,900 to pay the state debt maturing in 1909. 
 This debt consisted of the 5% thirty year bonds issued in 1879, 
 
 'Laws of 1883, p. 15. 
 
356 Bulletin of the University of Texas 
 
 and the trust funds held $933,500 of the amount. The appro- 
 priation was vetoed, however. The reasons for the veto given 
 by the governor were, first, that the method of debt payment 
 required by the constitution (art. 3, sec. 48) was through the 
 accumulation of a two per cent sinking fund ; and, second, that 
 granting constitutionality, payment as contemplated would lay 
 in one year a too heavy burden of taxation upon the people.^ 
 The constitution not only does not enjoin the method of pay- 
 ment by a sinking fund, but the history of debt payment sub- 
 sequent to 1876 does not support the first ground for the veto. 
 The large payments made in the early eighties were mainly 
 out of the proceeds of land sales under the ''Fifty Cents Law," 
 and out of the general revenue fund.- A sinking fund was 
 provided for in 1879, to which there was transferred from the 
 general revenue fund $100,000 in 1880, $150,000 in 1881, and 
 $100,000 in 1882, or a total of $350,000, out of which disburse- 
 ments were made through 1883 of $346,639.73.^ Contrasted 
 with this amount paid through the agency of a sinking fund 
 are $740,589.90 paid out of the proceeds from land sales under 
 the act of July 14, 1879, $192,664.62 out of the general revenue 
 in 1881, and $852,424.79 out of the general revenue in 1882. 
 The total payments on the funded debt out of the sinking fund, 
 the land sales act, and the general revenue amounted during 
 the three years 1881-1883 to $2,132,379. The difference between 
 this amount and $1,680,244, which was the amount of debt paid, 
 is $452,135, and this difference represents premiums and com- 
 missions paid by the state. 
 
 The debt paid in the early eighties was the 6% and 7% bonds 
 maturing in 1892, 1904, 1909, and 1910. All of these bonds 
 commanded a very high premium in the market. The 7% bonds 
 due in 1904 were bought at a premium of $40 on the $100 ; the 
 7's redeemable at the pleasure of the state in 1890 brought a 
 premium of $30 and $31 ; the 6's due in 1892 brought a premium 
 
 ^Laws of 1909, p. 536. 
 
 ^Laws of 1881, p. 51. 
 
 'In the Report of the Comptroller, 1879-1880, the general revenue 
 gives $200,000 as the amount transferred to the sinking fund, but the 
 latter fund gives only $100,000 as the amount received. The latter 
 figure appears to be the correct one. 
 
A Financial History of Texas 357 
 
 of $25; and the 5's due in 1909 were bought at a premium of 
 $14 and $15.^ In spite of the high premium paid, the gain to 
 the state through interest saved was considerable.- At the 
 same time the premiums were more than they should have been. 
 Their height was due partly to the attractiveness to private 
 investors of the interest rates which the bonds bore, but more 
 especially to the unnecessary competition between the state to 
 secure the bonds for payment and the school fund and the 
 counties to secure the bonds as investments. Until 1884 the 
 permanent school fund was restricted by the constitution in 
 its investments to United States and State of Texas bonds only, 
 and the large amount of proceeds accruing to the fund from 
 sales of land at a time when both the Federal and the state 
 governments were engaged in debt reduction worked a hard- 
 ship upon the fund and made the cost of debt payment use- 
 lessly dear to the state.^ In 1883 a constitutional amendment 
 was adopted which permitted the investment of the permanent 
 school fund in county bonds, and this permission became statute 
 law in 1884.* 
 
 The trust, or special, funds in the treasury, consisting of the 
 permanent school fund, the permanent university fund, the 
 Agricultural and Mechanical College fund, and the several 
 asylum funds, have come to hold since 1880 the entire bonded 
 debt of the state. In 1880. 34.45% was held by them; in 1890, 
 71% ; in 1900, 81.99% ; and in 1911, 100%. 
 
 The policy of the state's trust funds to hold the bonded debt 
 has made possible the refunding of the state debt on practically 
 a three per cent basis. In 1891 $201,000 of the 7% "frontier 
 defense" bonds of 1870 held by individuals were refunded into 
 
 ^House Journal, 17th Leg., Called Sess., p. 112. The Commercial and 
 Financial Chronicle, vol. 34, p. 379, and vols. 32-39 passirji. 
 
 Hn the case of the 7's which were not payable until 1904, the interest 
 on a one hundred dollar bond from 1882 was $154, and the $40 premium 
 deducted leaves a net gain of $114. 
 
 «The Galveston News, April 10, 1881; April 6, 12, June 27, July 1, 
 November 19, and December 14, 1882. Report of the Comptroller, 
 1881-1882, and 1884. Message of Governor Roberts, January 10, 1883. 
 House Journal, 18th Leg., p. 10. 
 
 *Laws of 1883, p. 131. Laws of 1884, p. 38. 
 
358 Bulletin of the University of Texas 
 
 5% bonds; in 1893 $486,500 of the 6's and 7's maturing in 
 1890 and 1891 and held by the trust funds were refunded into 
 4% and % bonds; in 1903 $288,000 of 7's held by the trust 
 funds were refunded into 3's; in 1905 $1,647,000 of 6's held 
 by the trust funds were refunded into 3's, and in 1910 $1,353,- 
 700 5's and 7's held by the trust funds were refunded into 3's. 
 In 1880 43.4% of the debt bore 7% interest; 34.2%, 6% ; 22.2%, 
 5%; ; and only one-ninth of one per cent bore as low as 4% 
 interest. In 1912 82.7% bore 3% interest; 8.4%o bore 4% ; and 
 8.8% bore 5% interest. The annual interest charge has as a 
 result of debt payment and refunding decreased from $312,389 
 in 1880 to $129,691 in 1915. 
 
 There has been no increase in the bonded debt of the state 
 since 1879 except in 1885, when a deficit in the general revenue 
 led to the issue of $200,000 of state bonds.^ Not classified by 
 the comptroller as a part of the public debt of the state, how- 
 ever, is the bonded debt of the prison system, and for the 
 reason that the bonds are not a charge upon the general reve- 
 nues of the state but upon the revenues of the prison system. 
 As the prison system is a part of the state government, its 
 debts are really state debts, and certainly no account of the 
 public debt should omit mention of them. The prison system 
 is the only division of the state government which has been 
 authorized by the legislature to issue bonds or which has been 
 permitted to incur at will a floating indebtedness. The indus- 
 trial activities of the system has made necessary an extensive 
 use of its credit. On December 31, 1911, there were outstanding 
 against the railroad, which was a part of the prison system, 
 $100,000 of 5% bonds. These were called Texas State Railroad 
 bonds and were held by the permanent school fund.^ In 1913 
 the prison commission was authorized to issue bonds to the 
 
 ^An issue of bonds for deficiency purposes was authorized in 1889, 
 but the issue did not have to be made. Laws of 1889, p. 81. 
 
 -Message of Governor Colquitt on Prison Affairs, January 30, 1913. 
 Laws of 1913, p. 65. The amount originally issued and purchased by 
 the permanent school fund in 1908 was $150,000. These were redeemed 
 in 1909, and an issue of $200,000 was purchased by the fund. On 
 August 81, 1914, the fund held $100,000 of the bonds. 
 
A Financial History of Texas 359 
 
 amount of two million dollars ($2,000,000) to pay its debts^ 
 erect buildings, equip factories, and the like.^ 
 
 A constitutional amendment was voted upon by the people 
 and defeated in 1913 which proposed to empower the legislature 
 to authorize the issue of bonds for the purpose of purchasing 
 additional ground and of erecting buildings for the University 
 of Texas and for the purpose of erecting buildings for the 
 different state institutions.- The proposed amendment provided 
 that the income of the permanent university fund should be 
 available to meet the interest on, and provide a sinking fund 
 for, the university bonds. 
 
 Deficiencies in the general revenue have led to a floating debt 
 in the form of warrants outstanding at the close of the fiscal 
 years 1894, 1895, 1904, 1905, 1906, and 1913. The amounts were 
 as follows: 
 
 . 1894 $452,313 
 
 1895 760,121 ^ 
 
 1904 815,168 
 
 1905 721,250 ; 
 
 1906 348,956-. . J 
 
 1913 242,529' 
 
 Deficiencies at other times than at the close of the fiscal year 
 appeared in other years. ^ 
 
 The prison system has had a floating indebtedness throughout 
 its history, but there are no records of its true amounts. The 
 indebtedness of the system on account of losses by fire and 
 freezes, railroad losses, increased operating costs and the like 
 was $1,528,458 on January 1, 1913.^ 
 
 Treasury deficiencies have been accepted with entire equa- 
 nimity by the legislature and the people of the state, despite 
 the fact that they are in the end costly to the state and work 
 a hardship upon its creditors. The creditors of the state have 
 
 ^Laws of 1913, p. 110. 
 
 =Laws of 1913, p. 457. 
 
 ^1886, 1896, and 1914 are some of the years in which such deficiencies 
 have occurred. 
 
 ^Report and Findings on the Penitentiary Investigating Committee,, 
 July 24, 1913, p. 1. 
 
360 Bulletin of the Vniversity of Texas 
 
 usually been forced by reason of their financial circumstances 
 to have their warrants discounted, and the discount and the 
 loss of the use of their money suffered by the creditors are 
 losses which are to the discredit of the state. A state which 
 permits losses of this character to recur again and again is 
 either ignorant or dishonest, or both. The most obvious method 
 of preventing loss to creditors would be to have all warrants 
 bear a good rate of interest until they were called for payment. 
 This was done in 1860 and 1874 and would seem therefore to 
 be constitutional; but if it is not constitutional, it should be 
 made so. Another method of caring for deficiencies in the 
 general revenue is to sell short time deficiency bonds. Unless 
 they could be sold in anticipation of a deficiency, this method 
 should be supplemented by the preceding method. The present 
 constitution limits the debt which may be created to pay de- 
 ficiencies to $200,000. This is wholly inadequate. A consti- 
 tutional amendment to raise this limit to $500,000 was defeated 
 in 1913. It* is perhaps well that it was defeated, because the 
 amount would have been insufficient; it would not have been 
 sufficient, at least, for the deficiency in 1913-1914. Another 
 method of handling deficiencies in the current revenues is for 
 the treasury to have a large working balance. This is the least 
 desirable method, since it would require the state to raise a 
 larger amount of revenue by taxation than it would ordinarily 
 have use for and would constitute a constant temptation to 
 political governors and legislatures. 
 
Chapter 15. 
 
 PUBLIC EDUCATION. 
 
 A. The Permanent School Fund. 
 
 The permanent school fund had in bonds and cash on August 
 31, 1880, $3,542,126 ; and on August 31, 1914, it had $18,030,326 
 in bonds and cash, and $47,067,427 of promissory notes of the 
 purchasers of school lands/ Superficial comparison of these 
 amounts shows a very large growth in the principal of the fund, 
 but as a matter of fact the growth represents the conversion of 
 the land endowment into bonds and cash. There were 24,850,629 
 acres of unsold school land in 1880, and the amount in 1914 was 
 1,847,445 acres. The total amount of cash received by the perma- 
 nent school fund from land sales during the period 1880-1914 
 was about seventeen million dollars. Owing to the defective 
 administration of the school lands during the larger part of this 
 period, however, the permanent fund received little of the in- 
 crease in the value of the lands after 1880. 
 
 The rapid accrual of the proceeds of the sale of the lands 
 necessitated changes in the law regulating the investment of the 
 permanent school fund. Until 1883 investment was restricted to 
 United States bonds and State of Texas bonds. The pressure 
 of trust funds seeking investment in United States and the 
 state 's bonds on the one hand, and on the other hand the activity 
 of the United States and the state during the early eighties to 
 secure their bonds for payment forced the permanent school fund 
 and the other trust funds of the state to pay large premiums on 
 all bonds w^hich they bought. For example, the par value of the 
 bonds purchased in 1881 and 1882 for the educational and asylum 
 funds of the state was $894,836, but on account of premiums the 
 cost was $1,146,260.^ A constitutional amendment was proposed 
 
 ^The amount of land notes held by the fund in 1880 is not published 
 in any of the state's reports. Table number three of the Report of 
 the Comptroller for 1914 gives as the amount of railroad bonds held 
 by the fund $1,703,317. This figure is a wholly obsolete one; the 
 actual amount, including $100,000 of state penitentiary railroad bonds, 
 was $368,884. Report of State Treasurer, 1914, p. 36. 
 
 'The Galveston News, February 13, 1883. 
 
362 Bulletin of the University of Texas 
 
 and adopted in 1883 which provided that investment should be 
 in the State of Texas and United States bonds, bonds of counties 
 in this state and in such other securities as the legislature might 
 direct.^ County bonds were the only new investments authorized 
 by the legislature.- On August 31, 1884, the permanent school 
 fund held $1,602,298 of county bonds ; and on August 31, 1915, 
 it held $9,188,575. In 1885 it was enacted that no bonds which 
 bore less than six per cent interest, other than those of the State 
 of Texas or of the United States should be purchased by any 
 trust fund of the state, nor, w^ith the same exception, should more 
 than par be paid for any bond.^ 
 
 In 1891 Governor Hogg advocated that the first mortgage bonds 
 of railroads which might thereafter be constructed in the state 
 should be added to the legal list of investments of the permanent 
 school fund.^ This proposal ranked in popular interest next to 
 the proposed creation of a railroad commission.^ It was argued 
 in favor of the proposal (1) that existing provisions relating to 
 investments were not sufficient to prevent a surplus from ac- 
 cumulating in the permanent fund ; (2) that investments in county 
 bonds were encouraging a spirit of extravagance in the counties ; 
 (3) that needed railroad construction would be fostered, and (4) 
 that previous investments of the fund in railroad securities had 
 been satisfactory.^ In opposition it was stated (1) that the 
 security would be inadequate; (2) that speculative railroad build- 
 ing would be stimulated ; and (3) that there were more important 
 objects than railroads which needed to be encouraged.^ Substi- 
 tute proposals were (1) that loans should be made to the people 
 on real estate security, or (2) that the state should borrow the 
 money at a low rate of interest and apply the proceeds to meet- 
 ing current expenditures, thereby reducing taxes; or (3) that 
 
 ^Laws of 1883, p. 131. Laws of 1884, p. 1. 
 
 =Laws of 1884, p. 39. 
 
 "Laws of 1885, p. 41. 
 
 'House Journal, 22nd Leg., Reg. Sess., p. 113. 
 
 ''The Galveston News, February 1, 1891. 
 
 ^Message of Governor Hogg, January 21, 1891; House Journal, 22nd 
 Leg., Reg. Sess., p. 113. 
 
 'See Galveston News, January 28, and February 1, 1891. The News 
 itself seemed to favor Governor Hogg's proposal. 
 
A Financial History of Texas 363 
 
 investments in the securities of towns and villages organized as 
 school districts should be authorized/ 
 
 None of the foregoing proposals was adopted, but instead an 
 amendment to the constitution was proposed and adopted in 
 1891 which authorized the legislature to transfer annually from 
 the permanent school fund to the available school fund not more 
 than one per cent of the permanent school fund, and in 1892 a 
 law was enacted Avhich provided for an annual transfer of one 
 per cent." The purpose of this amendment and statute was to 
 help the available school fund in its effort to carry out the con- 
 stitutional mandate that the public free schools should be main- 
 tained each year for a period of not less than six months.^ The 
 law was repealed March 1, 1899, after a total of $1,336,461.68 was 
 transferred. The amounts transferred each year were small in 
 proportion to the size of the available school fund. The small 
 benefit to the available fund of the transfer and the impairment 
 of the principal of the permanent fund by this diversion call for 
 an unfavorable judgment upon the legislation. 
 
 In 1893 investment in county bonds bearing not less than five 
 per cent interest was authorized to the permanent fund.* By 
 1899 money was accumulating in the fund beyond its ability under 
 the law to invest it. Consequently the bonds of incorporated 
 cities were made legal investments of the fund, and the state 
 board of education was given an option of ten days on all bonds 
 afterwards issued by the counties and incorporated cities of the 
 state.^ The purchase of bonds bearing as low as three per cent 
 interest was authorized, and it was further provided that should 
 a premium be paid an amount equal to the premium should be 
 transferred to the permanent school fund out of the interest on 
 the bonds when received by the available school fund. This pro- 
 
 ^See Galveston News, January 28 and February 1, 1891. See letter 
 signed "Progressive Texan" in the News of February 1, 1891. 
 
 ^Laws of 1891, p. 195. Laws of 1892, p. 8. This amendment has 
 been called the "Jester Amendment." 
 
 ^Message of Governor Hogg, March 14, 1892; House Journal, 22nd 
 Leg., Called Sess., p. 19. 
 
 *Laws of 1893, p. 184. 
 
 ^Laws of 1899, pp. 143 and 231. Message of Governor Sayers, Jan- 
 uary 16, 1903. 
 
364 Bulletin of the University of Texas 
 
 vision wa^ designed to prevent an impairment of the principal 
 of the fund similar to what had been done in the early eighties. 
 If bonds were purchased at a discount, the law required that 
 the discount should be turned over to the available school 
 fund when the bonds were paid. In 1901 the bonds of inde- 
 pendent school districts were made legal investments, and in 1909 
 the bonds of common school, road, drainage, irrigation, naviga- 
 tion and levee districts were added to the list.^ On August 31, 
 1915, the permanent school fund held $6,454,613 of city and school 
 district bonds. 
 
 According to the comptroller's report for 1915 the permanent 
 school fund had on hand August 31, 1915, $1,703,317 of railroad 
 bonds. Of these $1,603,317 were purchased under the act of 
 1856 and $100,000 were state penitentiary railroad bonds. The 
 actual amount of the bonds purchased under the act of 1856 which 
 were in good standing was $263,533.- The railroads which had 
 borrowed of the school fund under the act of 1856, with the 
 exception of the Houston Tap and Brazoria which was sold under 
 foreclosure proceedings by the state in 1871, made payments of 
 interest and sinking fund in accordance with the act of August 
 13, 1870. The Houston and Texas Central acting for the Wash- 
 ington County Railroad stopped payments to the school fund on 
 the debt of the Washington County Railroad on November 1, 
 1879, claiming that the debt to the fund was paid. 
 
 The contention of the Houston and Texas Central was that 
 the state warrants which had been received by the state for the 
 interest and sinking fund obligations of the Washington County 
 Railroad were valid tender and that the amount of the payments 
 in such tender added to the payments since 1870, together with 
 payments at other times, constituted a full discharge of the debt.^ 
 
 ^Laws of 1901, p. 312. Laws of 1909, p. 216. In 1910 Galveston 
 County Causeway bonds were admitted to the list of legal investments. 
 Special Laws of 1910, pp. 53, and 161. Rev. Civil Stats., 1911, art. 2736. 
 
 -Report of the Comptroller, 1915, p. 18. The amount given in table 
 three of this report should be changed to fit the facts. See also 
 Report of the State Treasurer, 1914, p. 36. 
 
 ^'Message of Governor Roberts on the Special School Fund Loaned 
 to Railroad Companies, January 11, 1881. Report of the Comptroller, 
 1891, p. XIX. 
 
A Financial History of Texas 3(55 
 
 The state did not contest the refusal of the railroad to make 
 further payments. In 1883, however, when the state made pro- 
 vision for the payment of the bonds which had been executed to 
 the school fund under the act of November 15, 1864, it was en- 
 acted that the interest and sinking fund payments on the amounts 
 paid in warrants by the railroads in 1864 and charged as principal 
 in 1870, which payments the railroads were making under pro- 
 test, should thereafter constitute a part of the revenue of the 
 state. ^ The amount paid over by the available school fund dur- 
 ing the ten years 1885-1894 was $90,957.46. The Houston and 
 Texas Central and the Galveston, Harrisburg and San Antonio 
 railroads made payments up to November 1, 1893, of the interest 
 and sinking fund on their own debts to the school funds, but 
 they stopped payments at that date and claimed that their debts 
 to the fund were fully paid. This claim was based, like that in 
 behalf of the Washington County Railroad, upon the validity of 
 the payments in state warrants in 1864 and 1865. The state 
 brought suit to compel further payments, and the district and 
 the supreme courts of the state found in favor of the state. The 
 state courts held that the payments in treasury warrants in 1864 
 and 1865 were null and void. But the Supreme Court of the 
 United States reversed the decision and held that the payments 
 in state warrants were valid.- The Southern Pacific (the old 
 Texas and Pacific) and the Texas and New Orleans were the only 
 roads indebted to the school fund which were not involved in 
 this decision. The Southern Pacific completed payment on its 
 debt in 1898, and the railroad bonds held by the permanent school 
 fund were accordingly reduced $150,000 in amount. The Texas 
 and New Orleans was the only road on August 31, 1915, which 
 was indebted to the permanent fund under the act of 1856, and 
 this was to the amount of $263,533." 
 
 The policy of investment for the permanent school fund since 
 
 ^Laws of 1883, p. 15. 
 
 -H. & T. C. R. R. V. Texas, 177 U. S., 66-103 (1899). Report of the 
 Comptroller, 1898, p. XI, and 1902, p. 5. 
 
 ^The reports of the comptroller, however, contain tables of the 
 obsolete Indebtdness of the Galveston, Harrisburg and San Antonio, 
 the Houston and Texas Central, and the Washington County railroad 
 companies. See Report of the Comptroller, 1915, pp. 19-20. 
 
366 Bulletin of the University of Texas 
 
 the Civil War has been to restrict the investments to public securi- 
 ties, and this has been a wise policy. The success, with one ex- 
 ception, of the investments in railroad bonds under the act of 
 1856 does not ensure the success of similar investments today. 
 The old investments were made before the days of overcapitaliza- 
 tion abuses, and though railroad capitalization is regulated in 
 Texas today, this regulation has not prevented roads built subject 
 to the law from getting into serious financial difficulties. The re- 
 strictions imposed upon the issue of public bonds and the broad- 
 ness of their security make them the safest investments for trust 
 funds. 
 
 In 1883 the state ''debt of doubtful validity" held by the per- 
 manent school fund was validated and ordered paid with accrued 
 interest of $111,414.45.^ The 6% bonds to the amount of $320,- 
 367.13 which had been held by the school fund since May 13, 1865, 
 were paid with accrued interest in 1883 ; but the principal of the 
 $82,168.82 5% bonds,- which had been carried by the fund since 
 1868, were not paid until 1885, though the accrued interest on 
 them was paid in 1883. 
 
 In addition to the state permanent school fund there are county 
 permanent school funds which are based on the land grants made 
 to the counties for educational purposes. The sale of the lands 
 and the investment of the proceeds have been vested in the county 
 commissioners' courts, subject, however, to a modicum of state 
 regulation. On August 31, 1914, the several county permanent 
 school funds amounted as follows r 
 
 Land notes $ 5,379,899 
 
 Bonds and other securities 4,709,604 
 
 Cash 449,975 
 
 Unsold lands (estimated value) 2,085,448 
 
 Total $12,624,927 
 
 The income of the county funds in 1914 was $545,816. 
 
 ^Laws of 1883, p. 15. 
 
 ^MSS. Report of the Superintendent of Public Instruction, 1913- 
 1914. No statistical report of the superintendent of public instruction 
 was published for 1913-1914. For a brief account of the legislation to 
 1890 relating to county school lands see Sayles, op. cit., pp. 411-417. 
 
A Financial History of Texas 367 
 
 B. The Available School Fund. 
 
 The available school fund has had an enormous growth since 
 1880. In 1880 the receipts to the fund from taxes were only 
 $497,166.40 and from interest on the permanent school fund, 
 $198,317.79 ; and the combined receipts from these two principal 
 sources of revenue were $695,484.19. The receipts from the per- 
 manent fund were $18,672.45 from interest on land sales and 
 $179,645.34 from interest on state and railroad bonds. On August 
 31, 1915, the receipts to the available fund from taxes were 
 $5,851,761.82, and from the permanent fund $2,147,297.35, a 
 total of $7,999,059.17. Interest on land sales provided after 
 taxes the largest revenue, amounting to $1,319,401.20 in 1915 ; 
 interest on county and common school district bonds came next 
 with $385,767.20; then, in order, interest on city and independent 
 school district bonds, $323,922.67 ; interest on state bonds, $87,- 
 605 ; interest on railroad bonds, $16,052.40 ; interest on state pen- 
 itentiary railroad bonds, $5,000 ; interest on deposits, $1,751.16 ; 
 land leases, $669.53, and unclassified, $7,127.69.^ 
 
 The receipts from taxes during the thirty -two years 1880-1912 
 were $64,549,279.31 and from interest on the permanent fund and 
 lease of lands, $38,996,079.38. The constituents of the receipts 
 from the permanent fund were $18,785,708.73 from interest on 
 land sales; $7,465,427.75 from interest on county, city and school 
 district bonds; $6,910,707.97 from lease of lands; $3,868,581.63 
 from interest on state bonds; $1,546,193.91 from interest on rail- 
 road bonds; $371,018.24 from state and railroad bonds not sepa- 
 rated in amounts ; $31,376.55 from interest on state penitentiary 
 railroad bonds; and $17,064 from interest on deposits. 
 
 Owing to the reduction of the available school fund 's share of 
 the general revenue in 1880 and 1881 to one-sixth, the years 
 1880 and 1881 make the poorest showing as to the amount of the 
 available fund and per capita apportionment for any years since 
 1877. The amount apportioned in 1880 was $679,317, the per 
 capita apportionment was $3.00, and the scholastic ages were from 
 eight to fourteen. One-sixth of the general revenue rate was 
 equivalent to a school tax rate of six and two-thirds cents in 1880 
 and five cents in 1$81. The school tax rate in 1915 was 20 cents, 
 
 'Report of the Comptroller, 1915, p. 6. 
 
368 Bulletin of the University of Texas 
 
 the .amount apportioned was $8,772,109, the per capital appor- 
 tionment was $8.00, and the scholastic ages were from seven to 
 sixteen.^ But between 1880 and 1915 a number of changes were 
 made which related to the available fund. 
 
 The share of the general revenue going to the available school 
 fund was restored to one-fourth for 1882 and 1883, and this was 
 equivalent to an ad valorem rate of 7% cents each year. 
 
 The early eighties were critical years in the history of the 
 available school fund. There was then a considerable number 
 of people in the state who were hostile to public education and 
 opposed to any system better than the one that was then in 
 operation.- There were also those people who looked forward 
 to a marvelous growth of the permanent school fund which would 
 provide such an income to the available fund as would render 
 unnecessary any taxation for educational purposes.^ But the 
 educational situation in the early eighties in Texas was lament- 
 able. The average school term in 1880 was seventy-two days, 
 though the constitution contemplated one hundred and twenty 
 days.^ The average salary of white male teachers was $34, that 
 of female teachers, $28. There were no local school taxes levied 
 in the state in 1880, except in two or three independent city dis- 
 tricts,^ so that the support of the schools was solely the meager 
 dole of the state out of the available school fund. 
 
 Friends of public education realized that to rely upon the 
 income from the permanent fund to provide an adequate system 
 of public common schools was a delusion and that the only way 
 to secure such a system was by state and local taxation.^ The 
 state platform of the Democratic party in 1882 called for the 
 submission of a constitutional amendment providing for a special 
 
 'Owing to failure to collect all of the revenues, the school board 
 was unable to apportion the full amount agreed upon, $8,772,109. 
 About $7 was paid out in 1915, and the remaining $1 was paid in 1916. 
 
 'See the Galveston News, April 7, 1881. 
 
 ^See the Galveston News, July 2 and 8, 1882. 
 
 ^Biennial Report of the State Board of Education, 1879-1880, p. 3. 
 
 'Ibid., p. 6. Report of the Superintendent of Public Instruction, 
 1897-1898, p. V. 
 
 ^Galveston News, July 2, 1882. Biennial Report of the State Board 
 of Education, 1879-1880, p. 6. 
 
A Financial History of Texas 369 
 
 school tax,^ and in 1883 an amendment was adopted which au- 
 thorized a special state school tax not to exceed twenty cents ou 
 the one hundred dollars' valuation. ^ At the same time the oppor- 
 tunity for local taxation was enlarged by the authority granted 
 to form school districts within the counties and to levy a district 
 tax not to exceed twenty cents on the one hundred dollars ' valua- 
 tion.^ 
 
 A state school tax of 121/2 cents was adopted for 1884 and 
 that rate was unchanged until 1895.* But reliance upon the 
 income from the permanent fund rather than upon taxation and 
 also the defective or inefficient administrative handling of the 
 available fund resulted in numerous temporary deficiencies in 
 the fund. Teachers already poorly paid had their salaries dimin- 
 ished by having to sell their salary warrants at a heavy discount. 
 
 One cause of the deficiencies which commonly made their ap- 
 pearance during the late summer and early fall months was the 
 exhaustion of the balance carried over from the previous fiscal 
 year and the practical absence of any tax payments during these 
 months.^ Another cause was the fluctuation in the receipts from 
 interest on land sales and from lease of lands.® For example, 
 the receipts from interest on land sales fell from $455,379 in 1885 
 to $340,166 in 1886, and from $616,284 in 1893 to $282,823 in 
 1894. A drought would parch the western part of the state, as 
 Avas the case in 1888, and the legislature would very justly grant 
 to delinquent purchasers several months extension for the pay- 
 ment of interest, but this would cause a deficiency in the avail- 
 able school fund. There were deficiencies in 1887, 1888 and 
 1889, and in 1888 the available school fund was loaned $504,000 
 out of the general revenue in order that the outstanding war- 
 rants against the fund could be paid.' $254,000 of this amount 
 
 ^Galveston News, September 12, 1882. See also issues of February 
 22 and March 3, 1883. 
 
 =Laws of 1884, pp. IV and 38. 
 
 ^Laws of 1884, p. 38. 
 
 *Laws of 1884, p. 67. 
 
 'Report of the Superintendent of Public Instruction, 1887-1888. p. 19. 
 
 ^Reports of the comptroller, 1887, 1888, Galveston News, April 24, 
 1888. Message of Governor Culberson, January 16, 1895; House Jour- 
 nal, 24th Leg., p. 52. 
 
 'Laws of 1888, p. 7. 
 
 24 — H 
 
370 Bnlletin of the University of Texas 
 
 was a loan without interest and was to be returned not later 
 than January 1, 1895, if the condition of the available fund at 
 that date should warrant it. It was not returned. The other 
 $250,000 was the loan of a sinking fund for the state bonds 
 maturing in 1890 and 1891. It. too, was never repaid. But in 
 spite of this loan there was a deficit in the following year, 1889.^ 
 
 The vicissitudes of the school fund during the latter eighties 
 explain the adoption of the "Jester Amendment" by which one 
 per cent of the permanent school fund was transferred. The 
 first transfer was made in 1892, the last in 1898, and a total of 
 $1,336,461.68 was transferred. But this law was ineffective to 
 prevent deficiencies, and on August 31, 1894, the amount of the 
 deficiency was $659,468.50.- During the preceding A^ears of 
 financial depression and of inefficient administration, there ac- 
 cumulated arrears of interest on land sales and of lease payments 
 estimated to amount to $1,000,000 on January 1, 1895.=* To 
 meet the bad conditions the state school tax rate was fixed at 20 
 cents for 1895 and at 18 cents thereafter. The rate remained at 
 18 cents until 1907 when it was again fixed at 20 cents, but from 
 1907 through 1912 it was 16% cents. In 1913 the rate was 17 
 cents and in 1914 and 1915 it was 20 cents. The increase in the 
 rate for 1907 was to compensate for the loss to the fund from the 
 expected repeal of the license taxes upon the so-called useful 
 occupations.* 
 
 The school tax- rate has been fixed since 1907 by the automatic 
 tax rate board. ^ The board fixes a rate which will produce $4 
 per capita of the children within the scholastic ages, provided 
 the rate does not exceed the constitutional limit of twenty cents. 
 In 1908 the constitutional maximum of the independent school 
 district tax was raised to 20 cents.^ Local taxes for public 
 schools increased from $469,392 in 1891 to $5,642,482 in 1911." 
 
 ^Galveston News, April 4, 1889. 
 
 ^Report of the Superintendent of Public Instruction, 1893-1894, 
 p. IX. 
 
 ^Message of Governor Culberson, January 16, 1895. 
 
 "Laws of 1907, p. 141. 
 
 "Laws of 1907, p. 465. 
 
 *Laws of 1909, p. 18. * 
 
 ^The statistics for 1911 are taken from the Report of the United 
 States Commissioner of Education, 1912, vol. 2, p. 14. 
 
A Financial History of Texas 371 
 
 The system of distribution of the available school fund among 
 the counties of the state has been frequently criticized.^ Ap- 
 portionment on the basis of scholastic population operates to 
 cause a certain inequality between the counties which have a 
 large margin between school attendance and scholastic popula- 
 tion and the counties which have a small margin. The com- 
 pulsory education law will be one remedy for this inequality, 
 while another remedy would be to base apportionment on the 
 number in attendance on the schools the previous year. An- 
 other inequality charged against the present system of distribu- 
 tion is that some of the wealthier counties take out of the fund 
 more than they contribute in taxes. This is rank injustice, but 
 it is due rather to the weakness in the state's system of assess- 
 ing property for state purposes than to the method of appor- 
 tionment of the school funds. 
 
 Though Texas has the largest permanent school fund of any 
 state in the Union and though the available school fund bulks 
 large in absolute amount, the state ranks low in educational 
 standards. Progress is being made, however, as is shown by the 
 increase in the expenditures per capita of population and in the 
 growth in the per cent of the scholastic population enrolled in 
 the public schools.^ In 1915 a compulsory education law was 
 adopted, and an appropriation of $500,000 a year for two years 
 in aid of the country public schools was made.^ These were 
 epochal measures and will promote greatly the educational pro- 
 gress of the state. 
 
 Per cent of school 
 Expended per capita of population. population enrolled. 
 
 1879-1880 $0.65 42.40 
 
 1889-1890 1.42 59.50 
 
 1899-1900 1.46 64.67 
 
 1909-1910 3.02 67.24 
 
 1910-1911 2.96 65.66 
 
 ^Report of the Superintendent of Public Instruction, 1885-1S86, p. 14; 
 1897-1898, p. XV. 
 
 ^Report of the United States Commissioner of Education, 1912, vol. 
 2, pp. 8 and 15. 
 
 •''Laws of 1915, Reg. Sess., p. 92. Laws of 1915, Spec. Sess., p. 22. 
 
372 Bulletin of the University of Texas 
 
 C. The University of Texas. 
 
 In 1880 Texas did not expend out of the general revenue as 
 much as one cent on higher education. There was disbursed, 
 however, out of the university land sales fund and the Agri- 
 cultural and Mechanical College fund $35,754.99 for the Agri- 
 cultural and Mechanical College and the Prairie View Normal. 
 In 1915 $1,219,093.91 was expended out of the general revenue 
 and $328,215.57 out of the special funds— a total of $1,547,- 
 309.48— for higher education.^ This growth in expenditures for 
 higher education has attended the establishment and develop- 
 ment of the University of Texas, four normals, and the Girls' 
 Industrial College, and the expansion of the Agricultural and 
 iMechanical College and the Prairie View Normal. 
 
 In 1880 there was one active university account upon the books 
 of the treasury and it was called the "University Land Sales 
 Account"; another account called the ''University Fund" was 
 inactive and was made up only of the state bonds of doubtful 
 validity, amounting to $134,472.24 Into the university land 
 sales account went the receipts from the sale of university 
 lands and from the interest on bonds. The* receipts from land 
 sales were invested in State of Texas bonds, as required by the 
 constitution (art. 7, sec. 11), while the interest receipts were 
 expended in 1880 for a clerk in the state treasury department, 
 for surveying the university lands, and for the maintenance of 
 the Agricultural and Mechanical College and the Prairie View 
 Normal. 
 
 In 1882 the "University Land Sales Account" was succeeded 
 upon the books of the treasury by the "Permanent University 
 Fund ' ' and the ' ' Available University Fund. ' '^ The permanent 
 fund is, in the language of the constitution (art. 7, sec. 11), 
 made up of "all lands and other property heretofore set apart 
 and appropriated for the establishment and maintenance of the 
 University of Texas, together with all the proceeds of sales of 
 the same, heretofore or hereafter to be made, and all grants, 
 
 ^The amount given as expended out of the general revenue was the 
 amount of warrants drawn on that fund. 
 
 'The two other funds, the University Fund and the University Fund 
 Expense Account, disappear after 1883. 
 
A Financial History of Texas 378 
 
 donations and appropriations that may hereafter be made by 
 the State of Texas, or from any other source." In 1882 the 
 permanent university fund received from the university land 
 sales account $332,435.66 in State of Texas bonds, a comptrol- 
 ler's certificate of indebtedness for $10,300.41 and $986.61 in 
 cash. The available university fund received from the land 
 sales account $34,464.34 in bonds. 
 
 The constitution requires that the permanent fund shall be 
 invested in State of Texas bonds, but if they should not be ob- 
 tainable, in United States bonds. In 1889 when the general 
 revenue account was threatened with a deficiency it was enacted 
 that 5 per cent bonds of the state should be sold at par to the 
 permanent university fund, these bonds to be redeemable at 
 the pleasure of the state.^ This measure, passed as it was to pro- 
 vide for an emergency, has not been repealed, though as a 
 standing method of increasing the state debt it is doubtless un- 
 constitutional.2 The permanent fund held in 1915 $429,700 of 
 3 per cent state bonds and $173,900 of 5 per cent state bonds. 
 The fund could be invested to better advantage than in 3 per cent 
 state bonds. City, county, and school and other special district 
 bonds are issued which bear 5 per cent, 5V2 per cent and 6 per 
 cent interest, and if these are acceptable investments for the 
 permanent school fund they should be for all the permanent 
 funds. 
 
 The state debt of doubtful validity was validated and ordered 
 paid with accrued interest in 1883.^ The total received by the 
 university funds was $256,272.57, of which $144,772.65 was of 
 the nature of the principal of a debt. The available university 
 fund received of this payment $132,056.16 in 1883 and 1884. 
 
 With the exception of the payment of the debt of doubtful 
 validity the history of the permanent university fund since 1 880 
 has been uneventful. From 1880 through 1915 the total re- 
 ceived by the fund from sales of land was $291,711.34, and this 
 sum represents, with one exception, the payments on the pur- 
 chase price of the lands contained in the old endowment of fifty 
 
 ^Laws of 1889, p. 81. 
 
 ^Revised Civil Stats., 1911, art. 2652. 
 
 ^Acts of 1883, p. 15. House Journal, 17th Leg., Called Sess., p. 27. 
 
374 Bulletin of the TJniversity of Texas 
 
 leagues/ The western lands of the University have not been on 
 the market for sale during this period. In 1881 there were 
 32,335 acres of the fifty leagues grant unsold and the unpaid 
 balances on the notes given in purchase amounted to $155,000 ;^ 
 by 1915 all of the fifty leagues were sold and there was $26,- 
 572.77 in land notes.^ 
 
 The interest on the bonds and other interest-bearing assets of 
 the permanent fund goes into the available university fund and 
 is expended under the direction of the legislature. In 1880 the 
 disposable income amounted to $24,515 and was classified as de- 
 rived from interest on state bonds.* In 1915 the available fund 
 received $228,850.32 exclusive of legislative appropriations. 
 $169,057.11 of this amount was derived from lease of lands; 
 $34,855.86 from student fees; $21,586 from interest on state 
 bonds; $1,135.16 from interest on land notes; and $2,216 from 
 interest on rentals past due.^ Until 1897 interest on state bonds 
 was the leading source of income to the available fund, but in 
 that year lease of lands took the lead. Receipts from lease of 
 university lands began in 1887 when they amounted to $451.20. 
 
 The available university fund has been drawn upon by the 
 legislature from time to time for appropriations to the Agri- 
 cultural and Mechanical College and the Prairie View Normal 
 School. From 1880 through 1889 $55,600 was diverted to 
 Prairie View and from 1880 through 1899 $65,000 was approp- 
 riated to the Agricultural and Mechanical College. In 1861 
 and 1862 the state used $11,307.02 of the university fund for 
 which no restitution was made in 1883. So in 1888 when Texas 
 received nearly one million dollars from the United States as in- 
 
 ^The reports of the comptroller for 1905 and 1906 are wholly er- 
 roneous as to the receipts from sale of university lands, and the re- 
 ports since 1909 do not classify the receipts to the available university 
 fund from interest on land sales, etc. The data for these years have 
 been obtained from the reports of the board of regents. 
 
 'Report of the Board of Regents, 1882, p. 6. 
 
 'See chapter on public lands for a further account of the university 
 lands. 
 
 *There is no information as to the amount of interest on land notes. 
 
 •These statistics were obtained from the manuscript report of the 
 auditor of the main University. They differ from those in the comp- 
 troller's report for 1915. 
 
A Financial History of Texas 375 
 
 demnity for expenses in protecting* the frontier the claims of 
 the University were presented for funds diverted and for losses 
 on account of Confederate notes received in payment of land 
 during- the Civil War. Under the guise of a loan which was to 
 be repaid on or before January 1, 1910, the available fund re- 
 ceived $125,000 which was stated to be in full satisfaction of all 
 claims of the University for money drawn by the state/ 
 
 The disbursements of the available university fund from 1882 
 through 1915, excluding $150,000 received by the fund from 
 the general revenue and the $50,000 of the fund appropriated 
 to the Agricultural and Mechanical College, amounted to $3,- 
 373,896.70. In this same period there was disbursed for the Uni- 
 versity out of the general revenue fund of the state $4,349,860.99.- 
 Appropriations out of the general treasury have shown a ten- 
 dency since 1900 to be more liberal ; at the same time they have 
 not grown with the needs of the institution if the reports of 
 the board of regents -are to be trusted. In recent years the Uni- 
 versity has felt keenly the need of more buildings. The con- 
 stitution (art. 7, sec. 14) prohibits any appropriation of money 
 out of the general revenue for university buildings. This limi- 
 tation is one of the many archaic financial provisions of the 
 present constitution. In 1881 it was circumvented by an ap- 
 propriation under the guise of a loan, but in 1891 an appropria- 
 tion for a building was made outright. The legislature has since 
 1891 provided for buildings for the University and the Agri- 
 cultural and Mechanical College, but the items have been vetoed 
 on constitutional grounds, though the veto has not been con- 
 sistently applied in the case of either institution and especially 
 in the case of the Agricultural and Mechanical College, which 
 is legally a branch of the University of Texas. In 1913 a con- 
 stitutional amendment was submitted to the people which pro- 
 posed to empower the legislature to authorize the issue of bonds 
 for the purpose of purchasing additional grounds and of erect- 
 inor buildings for the University, but the amendment was un- 
 
 ^Laws of 1888, p. 19. J. J. Lane, History of Education in Texas,, 
 p. 142. 
 
 =This is the amount of warrants drawn. Because of typographical 
 errors in the reports of the comptroller's department one cannot be 
 sure that this amount is correct. 
 
376 Bulletin of the University of Texas 
 
 fortunately too plenary in its proposed grant of power to in- 
 crease debt, though its defeat was actually accomplished by a 
 factional spirit and by the blind "no debt, lighter tax" senti- 
 ment.^ The principal of the proposal is incontestably correct, 
 however, and it has been adopted by the state in the case of the 
 penitentiary system. 
 
 D. TJie Agricultural and Mechanical College. 
 
 The permanent fund of the Agricultural and Mechanical Col- 
 lege has consisted up to the present time of the $209,000 of state 
 bonds in which the proceeds of the sale of original land endow- 
 ment by the Federal government were invested. Since by the 
 Constitution of 1876 (art. 7, sec. 13) the College is a branch of 
 the University of Texas the permanent university fund is in a 
 way the permanent fund also of the College. And in the grant 
 to the University of one million acres of land in 1883 the act 
 specified that this land endowment was for the University and 
 its branches, including the branch for the education of negroes.- 
 
 The income from the Agricultural and Mechanical College 
 fund constitutes but a fraction of the receipts of the college. In 
 1915 it amounted to only $6,150. From 1880 to 1890 the uni- 
 versity fund constributed substantially to the maintenance of 
 the college and from 1880 through 1899 the total of the uni- 
 Tersity funds appropriated to the college was $65,000. Since 
 1900 there has been a tendency for more liberal treatment of 
 the institution by the legislature. The total disbursements out 
 of the general treasury for the College and the experiment sta- 
 tions during the period 1880-1915 was $3,618,210.^ The amount 
 
 ^Laws of 1913, p. 457. 
 
 ^J. J. Lane, History of Education in Texas, p. 135. As a result of an 
 agreement between the governing boards of the two institutions the Uni- 
 versity has turned over to the A. and M. a share of the permanent 
 fund in the form of land notes, but this has not proven to be satis- 
 factory. A constitutional amendment was defeated in July, 1915, which 
 provided for a division of the land endowment and for a repeal of the 
 constitutional provision against appropriations out of the state treas- 
 ury for buildings for the University. 
 
 ^This is the amount of warrants drawn on the general treasury of 
 the state. 
 
A Financial History of Texas 377 
 
 derived during this period from the permanent fund of the in- 
 stitution was over $515,000.^ The Agricultural and Mechanical 
 College is the beneficiary of the experiment station acts of the 
 Federal government, and in addition, it has received the fees 
 for the state inspection of animal foodstuffs and state control of 
 fertilizers.- 
 
 E. Other HigJier Educational Institutions. 
 
 The other state institutions for higher education, consisting 
 of the Girls' Industrial College, the Sam Houston Normal, the 
 North Texas State Normal, the Southwest Texas State Normal, 
 the West Texas State Normal, and the Prairie View Normal were 
 all, with the exception of the last, established since 1880. The 
 Girls' Industrial College dates from 1901 and up to 1915 it had 
 received $756,410.54 out of the general treasury. The great 
 growth in the expenditures for the white normals dates from 
 1900. Between 1900 and 1915 three of them were established 
 and disbursements increased from $40,499.73 to $251,769.19. 
 The total disbursed for the white normals since 1880 and through 
 1915 was $2,771,168.39. In 1915 provision was made for ttie 
 establishment of three more normals. The Prairie View Normal 
 for negroes is under the control of the Agricultural and Me- 
 chanical College and the College shares with the normal the funds 
 received from the Federal government. The university fund 
 contributed $55,600 to the support of Prairie View between 1880 
 and 1890. From 1880 through 1915 the disbursements out of 
 the general treasury for this normal amounted to $747,688.47.* 
 
 ^The exact amount cannot be derived from the comptrollers' reports 
 because of their failure to separate investment disburt^emeuts from 
 other disbursements. The gross total of the disbursements is $536,- 
 947.37. 
 
 ^Owing to the way in which the financial statements are drawn up in 
 the reports of the board of directors of the College it has not been 
 possible to include in this study any other receipts or expenditures 
 than those given in the reports of the comptroller. This excludes the 
 amounts received from fees and from the Federal government. 
 
 'The amounts given for all of these institutions are of warrants 
 drawn on the general treasury of the state. 
 
378 Bulletin of the University of Texas 
 
 F. A Special Tax. 
 
 A special tax for the benefit of all the higfher educational 
 institutions has been earnestly urged by the friends of public 
 higher education. The constitution (art. 3, sec. 48) legalizes 
 a tax for the support of the institutions, with the exception of 
 the normals. It reads that the legislature shall have the right 
 to levy taxes for ''the support of public schools, in which shall 
 be included colleges and universities established by the state; 
 and the maintenance and support of the Agricultural and Me- 
 chanical College of Texas." But the possible conflict between 
 this provision and article 7, section 14, which prohibits the use 
 of the funds of the general treasury for buildings for the Uni- 
 versity and the exclusion of the normals, makes a new constitu- 
 tional grant of special taxation desirable to the University and 
 the Agricultural and Mechanical College and the normals. An 
 adequate special tax is pressingly needed in order that the 
 institutions may be spared the biennial scramble for appropria- 
 tions, and in order that they may plan an orderly development 
 and with sureness work to the realization of their highest possi- 
 bilities. 
 
Chapter 16. 
 
 FINANCIAL ADMINISTRATION. 
 
 The governor is required by the constitution to "present 
 estimates of the amount of money required to be raised by 
 taxation for all purposes."^ It has long been the practice for 
 the comptroller to receive from the departments and insti- 
 tutions of the state estimates of their needs, and such estimates 
 are usually itemized. These are published in the report of the 
 comptroller, and they constitute the data from which the legis- 
 laj:ure works in making appropriations for the ensuing two 
 years. 
 
 Upon the appointment of the appropriation committee of the 
 house of representatives and of the finance committee of the 
 senate, work upon the general appropriation bill begins. Be- 
 sides the general appropriation act, which deals with over sixty 
 departments and institutions, there are separate acts which carry 
 appropriations. The appropriation committee has jurisdiction 
 over all bills appropriating money. It is impossible for the 
 two large committees, the appropriation committee and the 
 finance committee, to deal intelligently during the short time of 
 a legislative session with the data submitted at the beginning of 
 the session, and the practice prevails of appointing sub-commit- 
 tees to examine the institutions and report upon their needs. 
 The reports of the sub-committees are practically final so far as 
 the work of the larger committees is concerned. When a bill ap- 
 propriating money is reported to the house of representatives, 
 the house resolves itself into a committee of the whole house for 
 the consideration of the bill. This rule has been disregarded in 
 many instances.^ 
 
 It is customary for the appropriation bills to itemize minutely 
 the grants to the various state departments and most of the state 
 
 ^Art. 4, sec. 9. 
 
 -House Journal, 32nd Leg., Reg. Sess., p. 1482. 
 
380 Bulletin of the University of Texas 
 
 institutions. The exceptions from minute itemization Lave been 
 the higher educational institutions and the penitentiary.^ 
 
 The constitution provides that "if any bill presented to the 
 governor contains several items of appropriation, he may object 
 to one or more of such items, and approve the other portion of 
 the bill."^ Though a veto may be overridden by a two-thirds 
 majority of the members present of each branch of the legisla- 
 ture, the fact that the appropriation bill is one of the last to be 
 passed and that the governor has ten days in which to consider 
 it, results in a veto remaining unchallenged. The more minute 
 the itemization, the greater is the check by the governor upon 
 appropriations. The veto right has been frequently exercised. 
 The system of biennial appropriations, combined with the veto 
 prerogative and the constitutional prohibition of appropriations 
 out of the general treasury for the construction of university 
 buildings not only have proved a handicap to the development 
 of any permanent policy by the higher educational institutions 
 but also have resulted at times in serious jeopardy even to the 
 maintenance of the institutions along existing lines of activity. 
 
 Since 1899 there has been a considerable increase in the length 
 of the appropriation act through the introduction of provisos and 
 limiting conditions which refer to the transfer of surpluses, the 
 creation of deficiencies, and such. Since 1905 there has been 
 regularly incorporated in it a provision against the diversion of 
 a surplus from one account to another and against the creation 
 of deficiencies by any department or institution. The provisions 
 against deficiencies have not, however, repealed or impaired the 
 enactment of 1897 which controls the creation of deficiencies.^ 
 That enactment provides that the state's officers or agents shall 
 
 ^In 1903 the appropriations of the University and the Agricultural 
 and Mechanical College were itemized, though those of the normals 
 were not, A failure, or refusal, of the legislature to itemize the uni- 
 versity appropriation for 1915 led to the vetoing of the appropriation 
 by Governor Colquitt. The item amounted to $700,250. The state 
 Democratic platform of 1914 called for itemization of all appropriations, 
 and this was done in the appropriation act of 1915. 
 
 'Art. 4, sec. 14. 
 
 ^Laws of 1897, Reg. Sess., p. 46. Laws of 1910. Third Called Sess., 
 p. 39. Rev. Civ. Stat., 1911, art. 4342. 
 
A Finayicial History of Texas 381 
 
 at lea^t thirty days before a deficiency occurs make out a s^vorn 
 estimate of the amount necessary to cover such a deficiency until 
 the meeting of the next legislature. The estimate shall be filed 
 with the governor and when approved by him shall be filed 
 with the comptroller. Fees and dues for which the state is liable 
 under general law, — for example, judicial fees, are not subject to 
 the provisions of this act; and another exception is that when 
 any injury or damage shall occur to any public property from 
 flood, storm or any unavoidable cause, the estimate may be filed 
 at once. After estimates have been filed and approved, de- 
 ficiency warrants shall be issued by the comptroller, and unless 
 there is existing a deficiency* appropriation, the warrants shall 
 remain unpaid until the legislature meets and makes an appro- 
 priation. 
 
 From 1909 to 1913 it was incorporated in appropriation acts 
 that any unexpended portion of an appropriation for one year 
 for maintenance and support, for the erection, remodeling, equip- 
 ment or repair of buildings or for any institution of the state 
 shall not lapse but shall be available for the following year. 
 There are no permanent appropriations, the constitution provid- 
 ing that no appropriation of money may be made for a term 
 longer than two years.^ The practice has prevailed, however, to 
 keep open unexhausted appropriations for a longer period.- 
 
 From 1879 to 1901 the fiscal year ended August 31, at which 
 date the accounts of officers, departments, and institutions were 
 closed and report of the transactions and activities of the year 
 made, while the appropriation year ended February 28. In 
 making estimates of needs it was necessary to consider either a 
 part of two appropriation years, or a part of two fiscal years ; and 
 as the legislature was in session as a rule every two years at the 
 close of the appropriation year and as the appropriation bill 
 was usually passed at a date later than February 28, it was not 
 uncommon for the state government to have to run on credit until 
 the appropriation bill was passed.^ Despite complaints and the 
 
 ^Art. 8, sec. 6. 
 
 -Report on Audit, Organization and Methods, 1909, p. 151. The 
 practice was condemned in this report. 
 
 ^In 1897, for example, there were no appropriations to pay state 
 expenses from March 1 to June 20. 
 
382 Bulletin of the University of Texas 
 
 regular biennial recommendations by the comptroller for a chan^je 
 this situation was not corrected until 1901, when the appropria- 
 tion year was made to end August 31, thus coinciding with the 
 tiscal year/ Recently it has been advocated that the fiscal year 
 and the taxpaying year should be made to coincide and they 
 both should conform to the calendar year.- It is contended that 
 a change of this kind will prevent the recurrence of treasury 
 deficits. It is difficult to see how this would be an inevitable re- 
 sult, unless the state should adopt at the same time the policy of 
 maintaining a large working balance in the treasury. 
 
 No thought was taken until 1907 — or at least none that led to 
 any results — as to whether or not 'the state's business was or- 
 ganized and conducted as efficiently as its importance and magni- 
 tude demanded. In 1907 a board of state accounting was created 
 whose duty it was to investigate the methods employed in ac- 
 counting and transacting business in the departments of the 
 state treasurer, comptroller, general land office, and in the peni- 
 tentiaries, and in other departments as might be determined 
 upon, and to recommend changes in the interest of economy and 
 efficiency.^ A firm of certified accountants was employed and 
 their report, covering only the departments of the treasurer, the 
 comptroller, and the general land office, was made under date of 
 January 22, 1909. As a result of their recommendations, the 
 treasury department was reorganized and changes made in the 
 general land office in 1909, and the comptroller's department 
 was reorganized in 1910.* The appropriation for the treasurer 
 and seventeen clerks was $24,270 in 1908 ; it was $11,400 for the 
 treasurer and six clerks in 1910 ; for the comptroller and forty- 
 three clerks the appropriation for salaries in 1909 was $53,745, 
 in 1912 it was $37,815 for the comptroller and twenty-eight clerks. 
 The work of the school land department of the treasury which 
 
 ^Laws of 1901, Reg. Sess., p. 8. Report of the State Revenue Agent, 
 1897-1898. Before 1879 both years ended August 31, but in order to 
 meet an emergency which existed in 1879, and which was peculiar to 
 that year only, the appropriation year was made to begin March 1. 
 See Report of the Comptroller, 1884. 
 
 -Report of the State Treasurer, 1914, p. 4. 
 
 "Laws of 1907, p. 52. 
 
 *Laws of 1909, pp. 429, 438. Laws of 1910, Third Called Sess., p. 37. 
 
A Financial History of Texas 383 
 
 engaged ten clerks in 1908 was transferred to the general land 
 office. The force of the general land office in 1908 was the com- 
 missioner and forty-nine clerks, and the salaries paid amounted 
 to $63,990; in 1910 it was composed of the commissioner and 
 fifty-three clerks and salaries paid were $69,290. The reduction 
 in the number of employees in the comptroller's department was 
 too drastic, however ; its new clerical strength was inadequate to 
 keep up with the demands made upon it, and in 1912 additional 
 help had to be authorized. 
 
 Until 1907 the rates of state taxation for general revenue and 
 for public free school purposes were fixed by the legislature. 
 It took into consideration the assessed values, the revenue from 
 other sources than the ad valorem tax, the probable changes in 
 the assessed values, the cost and loss involved in assessment and 
 collection, and the appropriations for the ensuing two years. In 
 1907 there was established what is known as the Automatic Tax 
 Board to which was entrusted the calculation of the state rates. ^ 
 As amended in 1909 the law makes the governor, the comptroller, 
 and the treasurer a board for calculating the ad valorem tax 
 for general revenue and school purposes. The assessors report 
 to this board by July 15 of each year the tentative assessments 
 in their counties,^ and the total of these is the base of the. ad 
 valorem taxes. The method of arriving at the sum to be raised 
 is as follows : the revenue from sources other than the ad valorem 
 tax for state purposes derived during the first half of the cur- 
 rent calendar year and the latter half of the preceding calendar 
 year is deducted from the total of the appropriations for the 
 following fiscal year. The remainder plus 20 per cent is then 
 divided by the total of the assessed values, and the quotient 
 divided by one hundred gives the general revenue rate in cents 
 on the $100 valuation. The board fixes a rate for public free 
 school purposes that will produce $4 per capita of the children 
 within the scholastic age as shown by the latest school census. 
 These rates are then certified to the assessor. The commisioners ' 
 courts are directed to calculate the county rates wdth respect 
 to the taxable values shown by the assessment rolls. 
 
 ^Laws of 1907, pp. 195, 464. Laws of 1909, p. 371. Rev. Civil Stats. 
 1911, arts. 7351-7353. 
 
384 Bulletin of the University of Texas 
 
 An obvious defect in this law is that the 20 per cent margin 
 is insufficient to cover the contingencies of large deficiency ap- 
 propriations, the fluctuations in revenues from, other than the 
 ad valorem tax, and the fluctuations in the cost and loss in the 
 assessment and collection of taxes. The poll tax is a very un- 
 certain source of revenue and delinquency in the payment of the 
 ad valorem tax likewise varies from year to year. Thus the 
 per cent of cost and loss to' assessed taxes, including poll and 
 general occupation, was 16.2 in 1910, 23.8 in 1900, 22.3 in 1895, 
 and 18.7 in 1891. Deficiency appropriations vary greatly from 
 session to session and occur to a degree that disarranges the best 
 laid plans of the tax board. If the state treasury were provided 
 with a good working balance, it could be drawn upon in cases 
 of emergency; but as the system now is there is absolutely no 
 flexibility, and the most recent result was that the state treasury 
 entered in March, 1913, upon a disgracefully long period of de- 
 ficiency. There were deficiencies in the treasury under the old 
 system, and to return to it without modifications is not to be 
 recommended. To the creditor of the state there is as little 
 choice between the old and the present one as there is between 
 the frying pan and the fire.^ Another objection to the Auto- 
 matic Tax Law is that it makes it possible for the governor to 
 play politics with the tax rate. By vetoing appropriations, and 
 with no opportunity for the legislature to pass them over his 
 veto, he is able to manipulate the rate with a view to its effect 
 on his future political ambitions. On the whole, however, the 
 new arrangement is superior to the old. Its purpose is a more 
 careful determination of the tax rate, and if the treasury had ^ 
 greater power in providing for emergencies there would be no 
 deficits. Some curbing of the gubernatorial veto power would 
 meet the last objection to the law. 
 
 'Governor Colquitt criticized the law in his messages of February 
 22 and July 31, 1911, as unconstitutional in that it delegated to a 
 board a legislative function. 
 
Chapter 17. 
 
 CONCLUSION. 
 
 Attention may now be directed to some of the financial needs 
 of the state. The growing importance of government is shown 
 in Texas in the growth of state expendit^ures. Though there is 
 complaint about public expenditures, Tex^s is not doing as much 
 as some other states in proportion to her ability. The following 
 table, compiled from the United States Census, shows the rela- 
 tive standing of some selected states in 1913, and the amounts 
 given are the combined expenditures of the state, counties, towns 
 and other local subdivisions per $1,000 of taxable wealth at its 
 full or true value. 
 
 Con- 
 servation, 
 Sanitation, 
 and Public 
 Healtli 
 
 I Education, 
 Charitable I Libraries, 
 
 and I and 
 Correctional! Recreation 
 
 Highways 
 
 Protection 
 
 to Persons 
 
 and 
 
 Property 
 
 California .— 
 Massachusetts 
 
 Tennessee 
 
 Wisconsin ._. 
 
 New York 
 
 Georgia 
 
 Missouri 
 
 Colorado 
 
 Texas 
 
 Oklahoma _ — 
 
 Complaints as to expenditures are in some cases unintelligent 
 and are mouthed about for political effect, but in the majority 
 of instances the complaints do not so much represent antipathy 
 to the purposes of the expenditures as they do dissatisfaction 
 with the revenue system and public officials. By reason of the 
 breakdown of the general property tax, the weight of taxation 
 falls increasingly on the owners of real property, until in the 
 cities the description of taxes as burdens is not inappropriate. 
 Real property owners feel that there is injustice in this, and con- 
 sequently oppose propovsals which will mean additional taxation 
 whose benefits are not obvious, immediate, and personal. Public 
 officials are too frequently looked upon as mere ' ' office-holders, ' ' 
 and there is lack of confidence in their ability to get for the 
 
 25— H 
 
•386 Bulletin of the University of Texas 
 
 public the most out of the money raised for public use. The two 
 greatest financial problems which Texas has are to secure an 
 equitable system of taxation and an efficient body of administra- 
 tors. These are the problems of orovernment in all of the Amer- 
 ican states and cities, but Texas has been more indifferent to- 
 ward them than have many other states. 
 
 The present state constitution is becoming a patchw^ork, and 
 an entirely new one should be framed. The constitutional pro- 
 visions relating to taxat^ion, the public debt, and the selection and 
 compensation of public officials wxre laid down in 1875. At that 
 time intangible personal property was relatively less important 
 than it is now, the corporation was not as great a factor as at 
 present, the urban element in the population was much smaller 
 than now, and the conditions generally for the successful opera- 
 tion of the general property tax were, while bad enough, more 
 favorable than they now are. In that year also, owing to the 
 •effects of the Civil War, the Reconstruction, and the panic of 
 1873, economy of the narrow^est kind, in both public and private 
 affairs, was a grinding necessity, and this w^as reflected in the 
 binding restrictions upon the taxing and debt creating powers 
 of the state government. In continuing to adhere to the general 
 property tax, with its uniform rate upon all classes of property 
 and with its decentralized system of administration, Texas is in 
 the rearguard of the American states as respects methods of tax- 
 ation. It is almost incomprehensible that in this year of the 
 twentieth century there should be a state in which the compli- 
 cated properties of railroads are assessed for the most part in 
 piecemeal by local assessors, and in which there is no state super- 
 vision of these assessors in their assessment of the property of 
 either individuals or corporations. 
 
 Various proposals have been made in and out of the legislature 
 to cure the evils complained of. As a remedy for the varying 
 proportions of assessed to true values among the counties separa- 
 tion of state and local revenues has been more advocated in 
 Texas than h^ any other remedy. Only the complete withdrawal 
 of the state from the taxation of real estate would make this 
 remedy effective against the particular defect of the tax system 
 to which it is applicable, but in view^ of state support of the 
 public free schools, and the desirabilitv of the continuance and 
 
A Financial History of Texas 387 
 
 extension of snch support, abandonment of the real estate tax 
 by the state does not seem likely. Separation of sonrees of 
 revenue is not a reform measure which is employed to any great 
 extent by other states, and the tendency seems to be away from 
 it rather than towards it. Even if it were a desirable reform 
 measure for Texas, it would not be possible without a constitu- 
 tional amendment. 
 
 If the property tax is retained as a state tax, some system of 
 state control over assessments should be adopted. Decentraliza- 
 tion of administration has failed in taxation in Texas as it failed 
 in the administration of the public lands. Centralization should 
 succeed decentralization, and the state board or commission 
 should have the power to supervise asseSvSments of property for 
 state taxation, should have authority over assessors and col- 
 lectors, and should assess the property of corporations which, 
 like railroads, express companies, telegraph and telephone com- 
 vpanies, do a state-wide business. The present state tax board 
 is deficient in power and is w^rongly constituted. 
 
 A central tax board or commission wnll not remedy the evil 
 of the escape of personal property, especially of intangible per- 
 sonalty, from taxation. The weakness of the system which em- 
 ploys property as an index of ability to pay taxes is nowhere 
 better exhibited than in connection with the taxation of per- 
 sonal property. Some of it should not be subject to taxation 
 at all, for there results therefrom a vicious variety of double 
 taxation. The taxation of vendor's lien notes and of the prop- 
 erty which secures them, for example, is double taxation of an 
 indefensible kind. Texas avoids similar double taxation in other 
 eases; thus the shares of stock of domestic corporations are not 
 liable to assessment when the property of the corporation is 
 subject to assessment in the state, and there is no double taxation 
 of bafik stock and bank property. The Texas laws do not carry 
 out the principle of exemption to its logical conclusion, for there 
 is no valid reason for treating differently stocks on the one 
 hand, and bonds and credits, such as vendor's lien rotes, on the 
 other. An interesting- situation will exist as a result of the pro- 
 vision in the Federal Farm Loan Act which exempts from Fed- 
 eral, state and other taxation any mortgage executed to a Fed- 
 
388 Bulletin of the University of Texas 
 
 eral land bank. If this exemption provision stands, some farm 
 mortgages will be taxable while others will be exempt. 
 
 Property as a measure of ability to pay taxes is inferior to 
 income, and tax systems will work injustice until income takes 
 the place of property as a basis. An income tax should dis- 
 tinguish between income from property and income from per- 
 sonal exertion, and, in accordance with modern notions of jus- 
 tice in taxation, the former and all funded income should be 
 taxed at a higher rate than the latter. Real property should also 
 continue to be liable for special assessment for improvements 
 which are directly beneficial to it, and a moderate use of the 
 land increment tax would be in accord with modern tendencies. 
 The greatest obstacle to income taxation in the United States 
 is inefficient administration, but Wisconsin is setting an ex- 
 ample to the other states with her central supervisory board and 
 her district assessors appointed according to the merit system. 
 The assessors should be removed from local influences, but they 
 should have the benefit of the knowledge of local boards. There 
 should be co-operation between the state and national govern- 
 ments in the assessment of the income tax, and there should be 
 a division of the yield of the tax between the state and local 
 governments. 
 
 The constitution of Texas provides for an income tax, but in 
 general the tax provisions of the constitution are obsolete. They 
 do not permit separation of sources, or classification of property 
 for purposes of taxation, or state supervision of assessment, or 
 other methods of tax reforms which have been employed by the 
 states of the United States and foreign countries. Another tax 
 reform which has been advocated in Texas is ''home rule" or 
 "local option" in taxation. This would permit towns and cities 
 to adopt such taxes as they saw fit. The state cannot afford to 
 disassociate itself from all concern with local taxation, q^ this 
 reform proposes, and for the reason principally that it must 
 protect its own sources of revenue. Those proposing this reform 
 are, as a rule, single taxers or advocates of partial exemption of 
 improvements from taxation, neither of which proposals is just 
 in the eyes of those who believe that every person should con- 
 tribute to the support of the government in accordance with 
 his ability, and that income is the best index of ability. The 
 
A Financial History of Texas 389 
 
 single tax is not a tax measure, but is a social reform measure 
 which includes the feature of government confiscation of the 
 rent of land. It is not to be judged, therefore, as a fiscal meas- 
 ure, but those who insist that it should be so judged must meet 
 the objections that it is a confiscatory measure and that the 
 concept of income as a basis for taxation is more comprehensive, 
 just, and adequate. 
 
 The exemption of the homestead from taxation is another 
 proposed reform. The homestead law of Texas is already too 
 liberal without this addition. Under a system of taxation in 
 which the income tax is the principal tax and the property tax 
 is a supplementary tax, it might be desirable to exempt real 
 property up to a certain amount, but exemption under any 
 other condition would be difficult to defend. Under the exist- 
 ing methods of taxation in Texas the small property owner is 
 undoubtedly discriminated against, but the remedy is not the 
 exemption of his homestead, but it is, so long as the property tax 
 is retained, the fuller taxation of the larger owner and the aband- 
 onment of the discrimination in favor of acreage property and 
 vacant lots. 
 
 The provisions of the Texas constitution relating to the state 
 debt reflect the political, economic, and financial conditions 
 which existed in 1875. Distrust of the legislative and executive 
 branches of the government is shown in the small amount of debt 
 which may be incurred, except under extraordinary conditions of 
 war, insurrection, or invasion. This amount, $200,000, reflects 
 also the hard times existing in 1875. There should be some 
 provision against the frequent deficits in the treasury which 
 work such hardships upon the employees and creditors of the 
 state. Authority should be given the treasury to make temporary 
 loans to an amount sufficient to avoid deficiencies, or the war- 
 rants of the state should draw interest until they are called for 
 payment. 
 
 A more sensible sj^stem of appropriations should be adopted, 
 and to this end the governor and representatives of both branches 
 of the legislature should act together as a budget council or com- 
 mittee in arriving at the needs of the various institutions and 
 departments of the public service, in estimating the future 
 revenue, and in framing the appropriation measure. The re- 
 
390 Bulletin of the University of Texas 
 
 suit of their work would be a budget which should be submitted 
 to the legislature, and there should be limitations in the changes 
 which the legislature might make and on the veto powers of 
 the governor. There certainly should be a change from the ex- 
 isting arrangement under which the appropriation measure is 
 one of the last measures to pass the legislatiire before final ad- 
 journment, with the result that the governor's veto of items 
 goes unchallenged. 
 
 However laudable the purposes of public expenditures and 
 however generous the provision for them, there will be waste 
 and ineffective service, unless the public officials are honest and 
 capable. There will never be satisfactory public officials until 
 the ''spoils system" is done away with, and the public service 
 is looked upon as a profession. Those who follow this profes- 
 sion should be trained for it, they should be chosen for their 
 fitness, and they should have security of tenure. The accounts 
 of public officials who handle public funds should be regularly 
 audited, and for this work an expert force of auditors is neces- 
 sary. These auditors might also be expected to study methods 
 of organiaztion and conduct of the public business. 
 
 In conclusion, it may be observed that the responsibility for 
 the shortcomings of the financial system and of government gen- 
 erally and the hope of their betterment lie with the average citi- 
 zen. He has no one to blame but himself, and there will be no 
 important reform until he ceases to be individualistic, ignorant,, 
 and indifferent as regards public affairs. 
 
APPENDIX. 
 
 
 
 TABIiZ: 1. 
 
 Revenues of the Republic. 
 
 
 
 
 Direct 
 Taxes 
 
 (Tustoms 
 
 Licenses 
 
 Land and 
 Land Dues 
 
 Mis- 
 cellaneous 
 
 nrotal 
 
 1836-1838— 
 1839— 
 
 1840 
 
 1841— 
 
 1842-1844- _. 
 
 $ 100,455 
 
 58J30 
 
 179.503 
 
 80,335 
 
 27,561 
 
 $ 133.649 
 122.169 
 164,789 
 K)1.990 
 3W,177 
 340,306 
 
 
 
 _ — -_- 
 
 42.686 
 16,503 
 15,140 
 
 $ 21,123 
 
 218^250 
 
 68,025 
 
 $ 5.552 
 
 65.621 
 
 141 
 
 429 
 
 502 
 
 1,815 
 
 $ 260.780' 
 187.791 
 453,235 
 442,63& 
 157,51* 
 
 1844-1846 
 
 
 
 385,02$ 
 
 TABI.E 2. 
 
 Expenditures of the Republic. 
 
 1836 $ 495,295 
 
 1837 945,961 
 
 1838 831 ,401 
 
 1839 1,504,173 
 
 1840 2,174,752 
 
 1841 1 ,176,288 
 
 1842 198,051 
 
 1843 147,274 
 
 1844 1J7,850 
 
 1S45 243,5.38 
 
 TABI.E 3. 
 Classified Appropriations of the Republic. 
 
 1836- 
 
 TABtE 4. 
 Public Debt of the Republic. 
 $l,'>50,000 ■ 
 
 TABLE 
 
 Treasury Note 
 
 1838 
 
 1830 
 
 1 1840 
 
 ! 1841 
 
 i 1846 
 
 5. 
 Circu 
 
 lation. 
 
 $ 684, Oe9' 
 
 1837- 
 
 1838 
 
 1 ,090,984 
 
 1,886,425 
 
 „_. 2,013,762 
 — _ 3,287,962 
 _— 2,920,860 
 .— 2,674.44r 
 
 1839. 
 1840. 
 1841- 
 
 3,855,900 
 
 6,241,409 i 
 
 7,446,740 1 
 
 1846. 
 
 9,949,007 ' 
 
 
392 Bulletin of the Universiti/ of Texas 
 
 Explanatory Notes, Table 1. 
 
 The sources from which the statistics for revenues are drawn 
 do not always make clear whether the receipts are gross or net. 
 The amounts given in Table 1 are net as nearly as it is possible 
 to obtain them. The period covered is from September 30, 
 1836, to January 1, 1846. 
 
 The amount given for direct taxes for the three years ending 
 September 30, 1838, includes some receipts from land dues and 
 license taxes, while the amount given for land and land dues 
 includes some license taxes. Miscellaneous for the year ending 
 September 30, 1839, includes direct taxes, land and land dues, 
 and license taxes. 
 
 Explanatory Notes, Table 2. 
 
 The statistics for 1836 and 1837 are the amounts of warrants 
 •drawn during the calendar years ; those for other years are for 
 the fiscal years ending September 30, 
 
 Explanatory Notes, Table 4. 
 
 1836. Morfit to Forsyth, September 4, 1836, in House Ex- 
 ecutive Document, 24th Congress. Second Session, No. 35. 
 
 1837. Gouge, Fiscal History of Texas, p. 73. Yoakum (Ilis- 
 tory of Texas, Vol. II, p. 218) says about $1,000,000 of unaudited 
 claims should be added. 
 
 1838. Report of the Secretary of the Treasury, September 30, 
 1838, as published in the Telegraph and Texas Register, Novem- 
 ber 17, 1838. The amount of this debt was made up as follows : 
 audited claims, $775,255; funded debt. $427,100; treasury notfs 
 in circulation, $684,069. Unaudited claims are not mentioned 
 Jin the report of the secretary. 
 
 1839. Report of the Secretary of the Treasury, September 
 30, 1839, as published in the Telegraph and Texas Register, 
 December 18, 1839. This amount is made up as follows : funded 
 debt, $738,019 ; naval debt, $755,907 : treasury notes, $2.013,762 ; 
 audited claims, $348,241. 
 
A Financial Historij of Texas 393 
 
 1840. Gouge, Fiscal History of Texas, p. 275. To the amount 
 given by Gouge is added the principal of the naval debt. Ac- 
 crued interest on liabilities is not included because no statement 
 of the amount of it is anywhere given. The debt was made up 
 as follows : funded debt, $1,617,069 : treasury notes and eight 
 per cent bonds in circulation, $3,387,962; loan from the Pennsyl- 
 vania Bank of the United States, $305,261; naval debt, $755,- 
 907; audited claims, $175,209. 
 
 1841. Report of the Secretary of the Treasury, September 
 30, 1841, as published in the Telegraph and Texas Register, 
 December 15, 1841, gives a total of $5,782,788; Gouge (p. 275) 
 gives $7,704,328. The amount in Table 4 is compiled from both 
 sources, and is made up as follows: funded debt, $1,672,300; 
 treasury notes and eight per cent bonds in circulation, $3,770,760; 
 loan from the Pennsylvania Bank of the United States, exclusive 
 of accrued interest, $310,037 ; audited claims, $193,643 ; estimated 
 naval debt, $1,000,000; estimated unaudited claims, $500,000. 
 The last two estimates are those given by the secretary of the 
 treasury. 
 
 1846. Statement of the comptroller, March 28, 1846. The 
 amount is made up as follows : funded debt, $2,486,800 ; treasury 
 notes, $2,674,447; loan from the Pennsylvania Bank of the 
 United States, $400,000; naval debt, $740,029; audited clai;ns, 
 $156,905 ; estimated unaudited claims, $822,000 ; accrued interest 
 on liabilities, $2,668,824. 
 
;^9^ 
 
 Bulletin of the University of Texas 
 
 TABI.X: 6. 
 Retail Prices in the Houston (Texas) Market. 
 
 (Compiled from the Telegraph and Texas Register.) 
 
 Aug. Sept. I Dec. 
 19, 1837 1, 1838 25, 1839 
 
 Bacon, per lb._. $ 
 Coffee, per lb. .-I 
 
 Corn, per bu 
 
 Flour, per bbl... 
 
 Lard, per lb 
 
 Rice, per lb 
 
 Sugar, per lb... 
 
 Nails, per lb 
 
 Lumber, per m. 
 
 .20 
 
 30.00 
 .20 
 .12 
 .20 
 
 70.00 
 
 .$ .18 !$ .50 
 .45 
 4.00 
 30.00 
 .75 
 .30 
 .42 
 .35 
 110. OO 
 
 1.50 
 20.00 
 .18 
 .20 
 .17 
 .18 
 75.00 
 
 Sept. Oct. Sept. 1 Aug. I Aug. 
 9, 1840 6, 184114, 1842 30, 1843 28, 1844 
 
 .16 
 
 .17 
 
 1.35 
 
 10.00 
 
 .08 
 .125 
 
 30.00 
 
 .15 
 .16 
 .75 
 
 11.00 
 .14 
 .06 
 .10 
 .10 
 
 30.00 
 
 .10 
 
 .15 
 
 1.30 
 
 11.00 
 
 .12 
 
 .10 
 30.00 
 
 .09 
 .15 
 .875 
 8.00 
 .125 
 .06 I 
 
 .105 
 .375 
 8.00 
 .125 
 .08 
 
 .10 
 
 18.00 18.00 
 
 3, 1845 
 
 .125 
 1.00 
 8.00 
 
 .09 
 
 18.00 
 
A FDiaiiclal History of Texas 
 
 395 
 
 
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A Financial History of Texas 397 
 
 Explanatory Notes, Table 7. 
 
 This table is intended to approximate as nearly as is possible 
 a classification of the total expenditures of the state. The class- 
 ification is only an approximate one, because of the failure of 
 the financial reports of the state to give a classification of the 
 expenditures of the general revenue fund. There is in the 
 report of the comptroller a classification of the warrants drawn 
 on the general revenue fund, but there is nowhere any classifi- 
 cation of warrants paid. The amount of warrants drawn dur- 
 ing the fiscal year rarely coincides with the amount of war- 
 rants paid, so that a classification of the former is not the equiv- 
 alent of a classification of the latter. The classification of war- 
 rants drawn is, however, the nearest one can come to a classi- 
 fication of the expenditures of the general revenue fund, and in 
 this table that classification is adopted. As the expenditures of 
 the general revenue fund are only a part of the total expendi- 
 tures of the state, it is necessary in order to get the total 
 to add to the amount of warrants drawn on the general revenue 
 fund the expenditures of the available school, the available 
 university, the Agricultural and Mechanical College and the 
 other active funds. Table 7 is thus a hybrid of warrants drawn 
 on the general revenue fund and of warrants paid by the other 
 active funds. 
 
 Until 1883 there is in the report of the comptroller no classi- 
 fied summary of the warrants drawn upon the general revenue 
 fund, and it was necessary, therefore, to compile the classifica- 
 tions. The normal difficulties of the task were increased by the 
 typographical errors of the reports. Because of these errors 
 the total of the items after classification did not agree in many 
 instances with the total given in the report. In Table 7 the 
 total used is that given in the report of the comptroller, and 
 not the one ascertained by the writer, and for this reason the 
 total in the last column is not in some instances the sum of 
 amounts in the preceding columns. Beginning with 1883 the 
 summary of the warrants drawn which is found in each report 
 of the comptroller is used. 
 
398 Bidletin of the Universify of Texas 
 
 From 1848 to 1860 the classifications arc of biennial statements 
 of warrants drawn, but beginnino- with 1868 the classitications 
 are of annual statements. There are no classifications ol)tainable 
 for 1847, 1860, 1861, 1862, and 1863. The statement for 1863- 
 1865 is for more than one fiscal year and for less than two. 
 and that for 1865-1866 is for less than one year. 
 
 The table is incomplete by reason of the omission of the peni- 
 tentiary expenditures and of certain expenditures by the Agri- 
 cultural and Mechanical College. The only penitentiary expen- 
 ditures included are those out of the general revenue fund of the 
 state. The accounts of the agricultural and industrial opera- 
 tions of the penitentiary have not been published in a form that 
 made possible their incorporation here. The Agricultural and 
 Mechanical College receives certain moneys from the Federal 
 government and under laws of the state regulating feedstuffs 
 and fertilizers which are not accounted for in the reports either 
 of the state comptroller or of the state treasurer or of the Col- 
 lege. Some of these funds appear every other year in the reports 
 of the state treasurer. 
 
A Financial History of Texas 
 
 81)9 
 
 TABZ.I: 8. 
 
 Net Expenditures. 
 
 Year 
 
 Genera] Fund 
 
 1847- 
 18-18- 
 1849- 
 1850- 
 1851- 
 1852. 
 18.53. 
 1854. 
 1855- 
 1856. 
 1857. 
 1858- 
 185<>- 
 ■i860_ 
 1861. 
 18(i2- 
 1863. 
 1864- 
 1865- 
 ISSfi- 
 1867- 
 1868- 
 186<>. 
 1870. 
 1871- 
 1872- 
 187:^. 
 1874. 
 1875- 
 1876- 
 1877- 
 1878- 
 1879. 
 1880- 
 1881- 
 
 1883- 
 1884. 
 1885- 
 1886. 
 1887. 
 1888. 
 1889. 
 1890. 
 1891- 
 1892. 
 1883- 
 1894- 
 1895- 
 1896- 
 1897. 
 1898. 
 1899. 
 190O. 
 1901. 
 1902. 
 1903, 
 1904. 
 1905- 
 1906. 
 1907- 
 1908. 
 1909. 
 .1910- 
 1911. 
 1912. 
 1913- 
 1914- 
 1915- 
 
 Avallable 
 School 
 Ftind 
 
 Available 
 
 University 
 
 Ftinds 
 
 127,677 
 
 115,972 
 
 82,232 
 
 148,055 
 
 115,372 
 
 1,282,578 
 
 460,405 
 
 474,245' 
 
 241,379 
 
 593,642 
 
 279,427 
 
 644,604 
 
 370,346 
 
 718,616 
 
 467,082 
 
 998,809 
 
 1,039,998 
 
 1 ,775,085 
 
 600,997 
 
 233,089 
 
 479,-528 
 
 349,968 
 
 370,792 
 
 .599,155 
 
 581,415 
 
 940,598 
 
 936,370 
 
 1,236,043 
 
 1,125,688 
 
 1,091,-571 
 
 1,250,496 
 
 1 ,224,739 
 
 1,446,636 
 
 1,342,794 
 
 1,434,918 
 
 2,4.31,389 
 
 1,911,332 
 
 1,730,068 
 
 1,841,698 
 
 1,565,904 
 
 1,916,315 
 
 2,057,221 
 
 2,265,879 
 
 1,908.727 
 
 2,080,909 
 
 2,-552,1-56 
 
 2,376,811 
 
 2,146,832 
 
 1,991,091 
 
 2,843,876 
 
 2,2-54,228 
 
 2,153,650 
 
 2,376,054 
 
 2,732,8-56 
 
 2,804,296 
 
 3,183,717 
 
 3,405,688 
 
 3,562,971 
 
 3,115,072 
 
 4,175,422 
 
 3,561,743 
 
 3,805,694 
 
 4,148,157 
 
 4,862,098 
 
 4,628,198 
 
 5,n9,.'>53 
 
 5,347,845 
 
 6,998,816 
 
 7,103,213 
 
 All Other 
 
 Funds 
 
 27,136. 
 95,130. 
 
 106,125;. 
 
 105,332 . 
 
 118,465,. 
 
 110,100'. 
 
 110,5111. 
 50,954- 
 24, 697 j- 
 23,734. 
 10,850 . 
 
 1,416 
 
 3,210 .. 
 61,060!.. 
 32,771 - 
 
 497,238.. 
 
 194,904.. 
 
 790,121 -. 
 
 620,205,-. 
 
 609,841 _. 
 
 499,185 .. 
 
 682,4801- 
 
 983,689L. 
 
 733,559.. 
 
 790,577,-. 
 
 913.750!? 
 1,148,835 
 1,485,549 
 1,956,025 
 2,420,986 
 2,265,937 
 2,544,728 
 2,205,3.^0 
 2,303,562 
 2,609,648 
 2,-5-^5.047 
 3,052,589 
 2,432,604 
 2,544,066 
 2,902,-562 
 3,233,289 
 3,069,912 
 3,232,445 
 3,081.471 
 3,488,261 
 3,564,498 
 3,809,640 
 3,848,584 
 3,971,922 
 4,218,3a3 
 4,388,254 
 5,389,944 
 5,658,473 
 6,507,075 
 6,308,287 
 6,783,459 
 7.0-53,4S7 
 7,348,823 
 7,692,144 
 
 15,140 
 46,827 
 
 121,792 
 61,412 
 63,821 
 64,062 
 53,245 
 
 116,067 
 90,914 
 90,716 
 94,064 
 68,427 
 60,480 
 44,706 
 .56,598 
 
 83,087 
 101,429 
 105,607 
 98,52» 
 44,736 
 171,681 
 135,502 
 129,405 
 136,229 
 194,827 
 160,566 
 154,489 
 127,731 
 223,386 
 198,103 
 221 ,203 
 118,293 
 321,950 
 
 6,000 
 46,586 
 40,502 
 72,696: 
 
 913 
 
 90,956 
 
 272,688 
 198,138 
 121,451 i 
 468,646 
 199,323 
 514,936 
 
 26,W& 
 
 878,483 
 236,012 
 394,431 
 568,562 
 66,321 
 125,560 
 19,119 
 32,833 
 37,607 
 40,743 
 32,229 
 124,525 
 48,469 
 51,296 
 57,623 
 44,118 
 18,009 
 24,135 
 19,964 
 18,440 
 21 ,814 
 17,114 
 14,254 
 14,676 
 10,618 
 13,319 
 -57,-516 
 23,975 
 44.067 
 
 77,673 
 33,762 
 20,724 
 23,. 390 
 842,291 
 1,573,111 
 
 Total 
 
 127.677 
 
 115,072 
 
 82,232 
 
 143, 05-^ 
 
 115,372 
 
 1,282,578 
 
 460,405 
 
 474,245 
 
 268,516 
 
 688,772 
 
 385,552 
 
 749,936 
 
 488,81? 
 
 828,726 
 
 577,593 
 
 1,0.55,773 
 
 1,111,281 
 
 1,8;39,323 
 
 684,545 
 
 233,089 
 
 481,858 
 
 . 352,051 
 
 464,9.59 
 
 660,2-5 
 
 886,874 
 
 1,633,975 
 
 1,252,726 
 
 2,494,812 
 
 1,945,216 
 
 2,216,349 
 
 1,749,681 
 
 1,907,220 
 
 2,351,000 
 
 2,t>22.342 
 
 2,349,973 
 
 3,747,246 
 
 3,509,353 
 
 3,253,114 
 
 3,802,002 
 
 3,872,647 
 
 4,111,603 
 
 4,520,485 
 
 4,458,663 
 
 4,162,960 
 
 4,722,623 
 
 5,0.55,922 
 
 5,385,541 
 
 4,525,-500 
 
 4,438,029 
 
 5,-5.57,803 
 
 5.389,075 
 
 5,140.261 
 
 5,542,216 
 
 5,7.54,218 
 
 6,220,642 
 
 6,619,264 
 
 7,212,991 
 
 7,372,131 
 
 7,047,565 
 
 8,-385.447 
 
 7,956,769 
 
 9,257,356 
 
 9,829,333 
 
 10,868,-388 
 
 11,052,088 
 
 11,969,594 
 
 12,581,080 
 
 15,113,188 
 
 10,. 5.59, 84 4 
 
400 Bulletin of the University of Texas 
 
 Explanatory Notes, Table 8. 
 
 In tlie construction of this table there is included among the 
 expenditures of the general fund the interest paid on state bonds 
 held by the special funds; but this interest is not included in 
 the total. This explains why the amount in the ' ' total column ' ' 
 is not the sum of the amounts in the preceding columns. Trans- 
 fers among the funds are the principal items excluded in ar- 
 riving at net expenditures. Refunds should also be deducted, 
 but these are rarely itemized in the reports. Under available 
 university funds are included the available fund proper and the 
 endowment and available funds of the medical branch. 
 
 1877-1878. The item of interest on state bonds held by the 
 school and other special funds in the treasury first appears in 
 the financial report of 1877-1878. In the biennial report of 
 the comptroller for these years the receipts and expenditures of 
 the special funds, except the available school fund, are not given 
 by years and, in the case of the available school fund, the 
 receipts from interest on state bonds are not separated from 
 those from interest on other bonds. The total net expenditures 
 of the accounts for which there are not separate 3'early state- 
 ments were $251,555.76, and of this amount $194,453.39 was 
 for the payment of debt. These funds received as interest on 
 state bonds $61,143.33 in cash and $35,000 in state bonds. The 
 net expenditures of these funds are not included in this table, 
 for the reason that they cannot be ascertained. 
 
 The amounts of interest on state bonds Avhich are included 
 among the net expenditures of the general revenue fund and 
 excluded from the total for all the funds Avere by years as 
 follows : 
 
 1879 $105,804 1889 ; 169,357 
 
 1880 32,495 1890 172,473 
 
 1881 111,535 1891 183,176 
 
 1882 : 1892 173,815 
 
 1883 166,605 1893 163,583 
 
 1884 150,617 1894 172,040 
 
 1885 182,694 L895 185,453 
 
 1886 197,184 1896 262,742 
 
 1887 167,.545 1897 185,616 
 
 1888 172,317 1898 185,853 
 
A Financial Ilistorij of Texas 401 
 
 1S99 186,153 1908 142,916 
 
 1900 186,530 1909 131,786 
 
 1901 187,550 1910 206,190 
 
 1902 187,942 1911 >. . 101,547 
 
 1903 188.695 1912 152,246 
 
 1904 185,545 1913 64,845 
 
 1905 182,155 1914 194,536 
 
 1906 202,105 1915 130,575. 
 
 1*907 212,032 
 
 1881. $73,898.57 expended by the university land sales ac- 
 count for bonds is not included in this table. 
 
 1882. In the available school fund interest from state bonds 
 is not separated from interest from other bonds. Only $37,465^ 
 of interest received by other funds is deducted. 
 
 1895. Included amon^r the university expenditures is a 
 transfer of $500 to the Agricultural and Mechanical College 
 fund; but the amount is excluded from total expenditures. 
 Five hundred dollars was transferred in each of the years 1896^ 
 1897, and 1898, and $1,000 in 1900, and they were treated as 
 above. 
 
 1909. The condensed character of the report of the comp- 
 troller renders it nearly useless as an exhibit of the financial 
 operations of the state government. Omitted from it are the 
 statements of all funds, except the general revenue, the avail- 
 able school, and the permanent school funds. These omissions 
 make it impossible to state completely net expenditures. The 
 statistics for the available university fund are taken from the 
 report of the board of regents for 1909-1910. 
 
 1914. The report of the comptroller for 1914 is so poorly 
 compiled that it is impossible to ascertain from it the amount 
 of interest on state bonds received by the different trust funds 
 of the treasury. The amounts were obtained directly from the 
 comptroller's office. The large increase in the amount of ''all 
 other funds" was due to the pension fund. Under all other 
 funds is included $48,153.14 transferred from the^pure feed 
 fund to the Agricultural and Mechanical College. The pure feed 
 fund appears only in the report of the state treasurer, and as 
 this report appears only every other year and covers only the 
 year in which it appears, the statistics for this fund are obtain- 
 able only occasionally. The fact that this fund and that of 
 
 26— H 
 
402 Bulletin of the University of Texas 
 
 the prison commission are found only in the treasurer's report 
 and the further fact that the treasurer's report covering one 
 year is published only every other year, while the report of the 
 Agricultural and Mechanical College does not contain an itemi- 
 zation of receipts, show the lack of system in making public 
 the state's financial operations. 
 
 1915. Included under ''all other funds" is $77,964.18 trans- 
 ferred by the pure feed fund. This fund is made up of fees for 
 the inspection of feed for livestock, and the proceeds accrue 
 to the Agricultural and Mechanical College. The very great 
 increase in the size of the amount under ''all other funds" was 
 due to the pension expenditures. These alone amounted to 
 $1,442,413.85. 
 
 The expenditures of the state on account of the penitentiary 
 include only those out of- the general treasury. On account of 
 the absence of reports or of the defectiveness of those published, 
 it was not found possible to include in these tables any other 
 penitentiary expenditures. 
 
A Financial History of Texas 403 
 
 TABLE 9. 
 
 Expenditures for Higher Education. 
 
 1883 $ 96,204 1900 368,936 
 
 1884 189,496 1901 346,050 
 
 1885 164,650 1902 486,653 
 
 1886 84,876 1903 474,303 
 
 1887 91,659 1904 735,420 
 
 1888 96,691 1905 621,274 
 
 1889 228,443 1906 602 930 
 
 1890 134,216 1907 583,817 
 
 1891 140,173 1908 749,090 
 
 1892 207,805 1909 698,110 
 
 1893 174,300 1910 837,669 
 
 1894 259,160 1911 922,211 
 
 1895 196,152 1912 1,203,124 
 
 1896 203,222 1913 1,596,012 
 
 1897 376,681 1914 1,645,209 
 
 1898 245,745 1915 1,547,309 
 
 1899 229,065 
 
404 Bulletin of the Univemity of Texas 
 
 Explanatory Notes, Table 9. 
 
 This table is compiled from the reports of the comptroller, 
 and the amounts given are the total of the disbursements of the 
 university funds and the Agricultural and Mechanical College 
 fund, and of the warrants drawn on the general revenue fund 
 for the University, the Agricultural and INIechanical College, the 
 state experimental stations, the College of Industrial Arts, and 
 the normals. The amounts are gross amounts, as it was not 
 possible to ascertain all refunds and deduct them from disburse- 
 ments. If the amounts given in this table are deducted from 
 the amounts in the column headed Education in Table 8, the 
 expenditures of the state for common school education can be 
 obtained. 
 
 The statistics for 1909 are incomplete because of the condensed 
 character of the comptroller's report for that year. The expen- 
 ditures of the Agricultural and Mechanical College fund are 
 omitted, but those of the available university fund were obtained 
 from the report of the board of regents. 
 
A Financial History of Texas 
 
 405 
 
 TABI.Z: 10. 
 
 Classified Net Receipts. 
 
 Year 
 
 Taxes 
 
 1847_- 
 1848- 
 1849- 
 1850- 
 1851-. 
 1852_. 
 185S- 
 1854- 
 1855- 
 1856- 
 1857- 
 1858- 
 
 1861- 
 1862- 
 1868. 
 1864- 
 1865- 
 1866- 
 1867. 
 
 1869. 
 1870- 
 1871- 
 
 1872. 
 1873- 
 1874. 
 IMo- 
 1876- 
 1877. 
 1878- 
 1879. 
 1880. 
 1881- 
 
 1884 
 
 1887.- 
 
 1889- 
 1890- 
 1891- 
 
 1894. 
 1895- 
 
 1897—. 
 
 1900. 
 1901. 
 1902- 
 1903. 
 1904. 
 1905- 
 1906. 
 1907- 
 1908- 
 1909. 
 1910- 
 1911- 
 1912- 
 1913- 
 1914- 
 1915- 
 
 58,653 
 91,905 
 93,670 
 
 101,625 
 93,337 
 
 119,724 
 34,061 
 15,419 
 18,348 
 24,162 
 24,940 
 23,637 
 
 211,148 
 
 317,204 
 
 Sale of 
 Bonds 
 
 79 
 1,812 
 708 
 341 
 328 
 408 
 578 
 436 
 523 
 954 
 1,175 
 1,347 
 1,230 
 1,339 
 1,596 
 1,746 
 2,048 
 2,293 
 2,506 
 2,632 
 2,439 
 2,141 
 2,419 
 3,013 
 3,274, 
 3,111 
 2,277 
 3,120, 
 3,430 
 3,334 
 3,286, 
 3,192 
 3,229 
 4,517, 
 4,032 
 4,353 
 4,497 
 4,579 
 4,501. 
 4,828, 
 4,967, 
 5,059. 
 5,225. 
 6,043, 
 6,784. 
 7,494. 
 7,019, 
 7,607. 
 7.274. 
 9,475. 
 9,254, 
 13,944, 
 12,546, 
 
 ,9oo: 
 
 ,740 
 ,503i 
 ,971 i 
 ,;367 
 ,678 
 ,304 
 ,214 
 ,113 
 ,196 
 ,540 
 ,759 
 ,350 
 ,1:^7 
 ,389 
 ,470 
 ,279 
 ,850 
 ,944 
 ,117 
 ,547 
 ,741 
 ,500 
 ,131 
 
 165,545 
 18,450 
 
 Sale or 
 Land 
 
 2,498 
 1,< 
 
 10,931 
 4,516 
 
 9,898 
 
 264,834 
 447,813 
 151,502 
 542,587 
 V19,236 
 590,840 
 101,125 
 
 '206^031 
 
 776,677 
 
 9,25fi 
 
 1,000 
 
 1,000 
 
 200,000 
 
 013 
 751 
 8<Hi 
 
 ms 
 
 619i 
 
 415 
 
 30,166 
 18,677 
 27,541 
 76,357 
 26,038 
 
 3,956 
 
 52,454 
 
 148, 6&t 
 
 9,323 
 
 ,215|, 
 
 ,160i 
 
 543! 
 
 ,0981 
 
 ,871 !, 
 
 ,997 
 
 156 
 
 051 
 
 903 
 
 907 
 
 763 
 
 354 
 
 013 
 
 067 
 
 900 
 
 782 
 
 061 
 
 866 
 
 591 
 
 468 
 
 418 
 
 148 
 
 1 ,240 
 
 2,226 
 
 3,673 
 
 3,228 
 
 327 
 
 1,415 
 
 1,572 
 
 3'.), 843 
 
 115,^16 
 
 32,957 
 
 45,418 
 
 99,896 
 
 158,964 
 
 308,408 
 
 823,803 
 
 1,874,685 
 
 411,226 
 
 192,324 
 
 310,144 
 
 376,915 
 
 214,049 
 
 328,800 
 
 570,310 
 
 647,591 
 
 314,475 
 
 305,034 
 
 130,877 
 
 186,972 
 
 221,644 
 
 199,458 
 
 371,133 
 
 498,549 
 
 699,230 
 
 807,972 
 
 1,168,268 
 
 704,213 
 
 605,300 
 
 461,169 
 
 938,678 
 
 1,004,292 
 
 60Cr,534 
 
 825,466 
 
 909,943 
 
 575.046 
 
 586,115 
 
 690,379 
 
 553,607 
 
 254,642 
 
 Lease of 
 Land 
 
 Interest 
 
 $ 81,000 
 
 25,228 
 227,560 
 241,272 
 266,272 
 319,673 
 260,465 
 19J,6.37 
 189,727 
 179,527 
 225,547 
 279,240 
 361,205 
 469,102 
 542,148 
 480,522 
 543,806 
 44^5,854 
 .390,458 
 ■406,871 
 354,457 
 300,083 
 228,964 
 193,839 
 103,869 
 
 99,733 
 116,737 
 158,409 
 144,702 
 180,501 
 
 327 
 192 
 272 
 181 
 186 
 178 
 162 
 144 
 128 
 59 
 19 
 
 Fees 
 
 500 
 566 
 100 1 
 4001 
 4211 
 516 i 
 460: 
 788 
 726 
 2791 
 5001 
 
 705! 
 
 54,641 
 6.230 
 
 139,530 
 
 144,910 
 
 169,046 
 
 147,979 
 
 1.56,756 
 
 1.54,437 
 
 187,918 
 
 l'")6,396 
 
 ia3,966 
 
 198,317 
 
 142,187 
 
 258,843 
 
 365,254 
 
 616,728 
 
 674,082 
 
 563,871 
 
 707,943 
 
 695,096 
 
 833,231 
 
 720,836 
 
 991,071 
 
 921,612 
 
 960,068 
 
 573,844 
 
 755,001 
 
 579,339 
 
 704,437 
 
 671,277 
 
 578,711 
 
 672,130 
 
 725,340 
 
 840,726 
 
 869,970 
 
 943,777 
 
 1,026,604 
 
 1,096,632 
 
 1,202,362 
 
 1,438,443 
 
 1,. 585, 044 
 
 1,917,667 
 
 1,970,046 
 
 2,019,460 
 
 2,246,690 
 
 2,084,113 
 
 2,085,659 
 
 377 
 991 
 2,584 
 5,124 
 4,712 
 4,686 
 
 Miscel- 
 laneous 
 
 6,279 
 1,505 
 
 4,' 
 
 5,2t)0 
 
 6,1.56 
 
 6,921 
 
 9,478 
 
 19,354 
 
 28,271 
 
 41,919 
 
 .55,919 
 
 74,253 
 
 67,350 
 
 56,573 
 
 54,337 
 
 74,060 
 
 in6,4:-7 
 
 102,969 
 
 96,595 
 
 105,689 
 
 103,168 
 
 78,918 
 
 105,702 
 
 78,674 
 
 39,386 
 
 45,553 
 
 40,840 
 
 36,383 
 
 36,584 
 
 .36,329 
 
 33,854 
 
 29,989 
 
 28,882 
 
 41,. 370 
 
 39,746 
 
 49,461 
 
 65,694 
 
 80,653 
 
 91,796 
 
 89, 461 1 
 
 102, 325 j 
 
 161,338 
 
 289,0801 
 
 241, 063 1 
 
 2.59,660! 
 
 473,474! 
 
 468,9451 
 
 403,981; 
 
 373,134! 
 
 .566,873! 
 
 570,6691 
 
 126,147 
 
 11,877 
 
 10,198 
 
 7,747 
 
 4,358 
 
 ,013,833 
 
 5,035 
 
 25,998 
 
 39,945 
 
 313,887 
 
 29,456 
 
 10,718 
 
 30,714 
 
 24,072 
 
 349,112 
 
 328,486 
 
 874,492 
 
 ,686,964 
 
 ,126,759 
 
 144,045 
 
 13,885 
 
 3ai 
 
 44,858 
 
 20,868 
 
 10,745 
 
 29,099 
 
 5,081 
 
 17,795 
 
 15,286 
 
 15,760 
 
 8,731 
 
 8,475 
 
 3,280 
 
 2.601 
 
 3.S^5 
 
 4,537 
 
 3,lt)8 
 
 6,394 
 
 235,981 
 
 424,034 
 
 144,223 
 
 927,063 
 
 60,683 
 
 107,767 
 
 244,305 
 
 216,090 
 
 .353,983 
 
 2.38,677 
 
 293, 5a5 
 
 230,176 
 
 322,274 
 
 451,500 
 
 160,222 
 
 196,459 
 
 351,805 
 
 418,917 
 
 268,710 
 
 290,601 
 
 321 ,628 
 
 729,525 
 
 58,374 
 
 138,760 
 
 ,855,478, 
 
 2.36,883 
 
 31,241 
 
 .32,095 
 
 555,103 
 
 148,028 
 
 125,187 
 
 Total 
 
 ; 184,80^3 
 
 106,657 
 
 106,491 
 
 111,956 
 
 152,7.51 
 
 5,470,287 
 
 -46,249 
 
 313,518 
 
 239, 6'. )4 
 
 524,471 
 
 263,079 
 
 215,493 
 
 414,192 
 
 546,361 
 
 434,4.30 
 
 555,727 
 
 1,025,137 
 
 3,655,1.37 
 
 1,846^559 
 
 362,667 
 
 402,279 
 
 421,375 
 
 631,4.56 
 
 467,. 576 
 
 951,012 
 
 1,-596,045 
 
 1,581,077 
 
 2,o:w,]97 
 
 2,217,171 
 2,290,227 
 1,994,554 
 2,053,142 
 2,546,363 
 3,504,56'^ 
 .^.076.4'>'7 
 3,823,700 
 4,780,475 
 3,362,539 
 3,824,698 
 4,390,8.54 
 4,634,032 
 5,254,192 
 3,781,275 
 4,8.31,-304 
 5,674,101 
 5,083,442 
 5,1-36,536 
 4,367,472 
 4,678,102 
 5,804,240 
 5,566,-391 
 6,2.50,359 
 6,244,329 
 6,7-38.-586 
 6,932,387 
 7,881,276 
 7,348,453 
 7,388,-362 
 7,543,954 
 9,323,646 
 9,638,259 
 10,142,667 
 11,739,272 
 11 ,248,899 
 10,419,879 
 12,6.33,981 
 13,279,310 
 17,441,744 
 15,492,-308 
 
406 Bulletin of the University of Texas 
 
 Explanatory Notes, Table 10. 
 
 1851. $36,000 received by the general revenue account from 
 the sale of state bonds to the school fund is included as a net 
 receipt. 
 
 1852. Under miscellaneous is included the $5,000,000 in 
 United States bonds received from the United States under the 
 terms of the Boundary Act. 
 
 1856. Under miscellaneous is included $298,421 refunded by 
 the United States for that amount of the revenue debt of the 
 republic paid by Texas. 
 
 1861. The interest coupons on the United States bonds held 
 by the school fund are counted as cash receipts. State warrants 
 received in the collection of revenue are not counted as the equiv- 
 alent of cash receipts. 
 
 It is impossible to separate taxes from fees and miscellaneous, 
 receipts and all are included under miscellaneous. 
 
 1862-1863. The bulk of taxes is under miscellaneous. 
 
 According to a statement in the report of the comptroller for 
 1868-1869 the total received from sales of land during the Civil 
 War was $373,923.84. This is $133,466.79 greater than the sum 
 of the items in Table 9 for 1861-1865, and the difference is due 
 to defects in classification of receipts as given in the reports of 
 the state treasury. According to the report of the comptroller 
 the following funds received the proceeds of land sales; the 
 university fund, $137,344.44: the school fund, $11,910.50; the 
 general revenue fund, $224,668.90. Only $225.52 of the receipts 
 w^as in specie, while $43,502 was in state warrants and $330,- 
 196.32 was in Confederate currency. 
 
 1877-1878. In the report of the comptroller only the gen- 
 eral revenue, the available school and the permanent school funds 
 are given separately by years. The net receipts for the two years 
 to the funds which are not separated by years are as follows: 
 
 From sale of state bonds $136,269.15 
 
 From sale of land 125,380,10 
 
 From interest '. . 295.16 
 
 From taxes 4.30 
 
 From miscellaneous 56.42 
 
 Total $262,005.13 
 
A Financial History of Texas ^i07 
 
 This failure of the report to separate the receipts by years 
 vitiates the statistics in Table 10 for 1877-1878. Another de- 
 fect in the report is the failure to separate the interest on state 
 bonds held by the permanent school fund from the interest .on 
 the other bonds held by that fund. 
 
 1885. $215,837.55 of the receipts under miscellaneous was 
 from the Land Board, and the report does not state whether they 
 were from sales or from lease of land. 
 
 1886. $415,000 of the receipts under miscellaneous was from 
 the Land Board. 
 
 1887. $125,000 of the receipts under miscellaneous was from 
 the Land Board. 
 
 1888. In miscellaneous is included a refund by the United 
 States of $922,541.52 expended by Texas on frontier defence. 
 
 Interest on state bonds and interest on land sales of the 
 asylum funds were not separated by the comptroller, and the 
 amount given is not included in Table 10. 
 
 1889. There is a failure again of the comptroller to classify 
 the receipts of the asylum funds, and, consequently, their re- 
 ceipts are not included in Table 10. No classification of these, 
 receipts was made in the report of 1890. 
 
 Beginning in 1889 and extending through 1915 the receipts' 
 by the state department are not classified in the comptroller's 
 report of the receipts from that department, and as their class- 
 ification in the report of the secretary of state is not for the 
 same fiscal period as are the receipts given in the report of the 
 comptix)ller, the receipts by the secretary of state are classified 
 under miscellaneous, except since 1906. 
 
 1906. Miscellaneous receipts are large because of a refund by 
 the United States Government of $375,418.94 for expenses in- 
 curred in frontier defence before the Civil War. 
 
 1907. Beginning with 1907 the classification found in the 
 report of the secretary of state is followed, although the total of 
 the receipts differs from the amount given by the comptroller. 
 The amounts given by the secretary of state were received in his 
 office during the fiscal year, but they were not all paid into 
 the general treasury during the fiscal year. The comptroller 
 gives only the amounts paid into the general treasury by the 
 
408 Bulletin of the University of Texas 
 
 secretary of state. An inteliigent system of state accounting 
 would enable one to find somewhere in the state reports a classi- 
 fied statement of this latter amount, but it cannot be found in 
 a«iy of the Texas reports. The receipts from corporation fran- 
 chise taxes and from charter and permit fees are too large to 
 be classified under miscellaneous, and this is the justification in 
 following the report of the secretary of state since 1906. It was 
 only in 1906 that his report became satisfactory enough to fol- 
 low even to this extent. 
 
 1909. Miscellaneous receipts are large because of the heavy 
 penalties collected by the state from companies adjudged to have 
 violated the anti-trust act of the state. Receipts from the office 
 of the attorney general amounted in 1909 to $1,770,212, all of 
 which has to be classified under miscellaneous. 
 
 The report of the comptroller for 1909 omits the statements 
 of the special treasury funds, except the available. school fund. 
 A fit of executive economy caused a foolish condensation of the 
 report of the comptroller, the result of which was a withholding 
 of the statistics which an enlightened state should provide for 
 its citizens and for those outside the state who are interested 
 in state finances. The report of the board of regents of the 
 University fortunately, though by accident, contains the statis- 
 tics of the available university fund. The reports of the comp- 
 troller since 1908 are very defective in their statements of 
 the university funds, but the blame for this should be divided 
 with the general land office. The latter in making its deposits 
 does not distinguish between land rentals and interest on land 
 sales. The reports of the regents in 1909 and 1910 contain a 
 correct statement of the available university fund, but this state- 
 ment is omitted since 1910 and only an income and expenditure 
 account is given. The latter account is followed for this table, 
 though it is not just what is desired. 
 
 1912. There is a typographical error of $600 among the items 
 •of receipts of the general revenue fund, and $600 is added to 
 miscellaneous to make up for this omission. 
 
 1914. The interest on land notes held by the available blind, 
 . deaf and dumb, lunatic and orphans' asylum funds can not be 
 ascertained from the comptroller's report, but the amounts were 
 obtained from the comptroller's office. 
 
A Financial History of Texas 
 
 409 
 
 TABZ.X: 11. 
 Classified Taxes. 
 
 Year 
 
 Ad- 
 valorem 
 Taxes 
 
 Poll 
 Taxes 
 
 Income 
 Tax 
 
 Salary 
 Tax 
 
 General 
 Occupa- 
 tion 
 Taxes 
 
 Special 
 Occupa- 
 tion 
 Taxes 
 
 Fran- 
 chise 
 Taxes 
 
 Inheri- 
 tance 
 Tax 
 
 1846 
 
 $ 64,727 
 
 75,125 
 
 95,294 
 
 92,199 
 
 76,071 
 
 85,609 
 
 121,476 
 
 149,393 
 
 191 ,143 
 
 225,270 
 
 242,969 
 
 $ 15,310 
 17,372 
 21,429 
 21,288 
 il,520 
 12,040 
 14,253 
 16,687 
 18 338 
 
 
 
 $ 13,830 
 27,739 
 21,013 
 17,872 
 16,528 
 23,369 
 
 
 
 
 1847 
 
 
 
 
 
 
 1848 
 
 
 
 
 
 
 1849 
 
 
 
 
 
 
 1850 
 
 
 
 
 
 
 1851 
 
 
 
 
 
 1852 
 
 
 
 
 15,855 
 22,081 
 37,033 
 27,570 
 28,993 
 26,940 
 
 
 
 1853 
 
 
 
 
 
 1854 
 
 
 
 
 
 1855 
 
 20,982 
 
 99.4-13 
 
 
 
 
 
 1856 
 
 
 
 
 
 1857- 
 
 276,663! 24,463 
 244,158! 25,597 
 282,939 26.787 
 
 
 
 
 
 1858 
 
 
 27,115 
 33,633 
 52,280 
 43,097 
 
 
 """■ ! 
 
 1859 
 
 ■ 
 
 
 
 
 1860 
 
 367,894 
 
 465,494 
 
 700,609 
 
 1.675,953 
 
 1,790,959 
 
 150,992 
 
 153,436 
 
 255,861 
 
 214,883 
 
 224,508 
 
 257,800 
 
 1,212,741 
 
 1,100,655 
 
 1,117,934 
 
 1,222,509 
 
 1,254,354 
 
 1,288,246 
 
 1,504,828 
 
 1 Klfi 19^ 
 
 27,746 
 
 28,521 
 
 66,776 
 
 53,798 
 
 75,20-? 
 
 56,529 
 
 58,048 
 
 99,484 
 
 95,743 
 
 95,895 
 
 103,858 
 
 171,378 
 
 158,291 
 
 168,254 
 
 179,714 
 
 198,322 
 
 211,084 
 
 464,808 
 
 500,211 
 
 531,778 
 
 542,604 
 
 575,446 
 
 439,564 
 
 464,120 
 
 473,495 
 
 
 
 
 
 
 1861 
 
 
 
 
 
 
 lg6,9 
 
 
 
 
 
 
 
 1863 
 
 $ 56,275 
 121,739 
 136,302 
 
 
 13,932 
 
 57,275 
 
 172,279 
 
 
 
 
 1864 
 
 
 
 
 
 1835 
 
 
 
 
 
 1866 
 
 
 
 
 
 
 1867 
 
 38,901 
 14,600 
 22,791 
 27,325 
 
 $ 1,187] 133, TOl 
 1,087 118,936 
 1,015 146.023 
 
 
 
 
 18f!8 
 
 
 
 
 
 1869 
 
 
 
 
 1870 
 
 1,346 
 
 148,149 
 262,406 
 207,330 
 
 
 
 
 1871 
 
 
 
 
 187' 
 
 
 
 
 
 
 1873 
 
 
 
 
 
 
 1874 
 
 
 
 361,228 
 295,012 
 
 
 
 
 1875. 
 
 
 
 
 
 
 1876 _. 
 
 
 
 
 
 
 1877 
 
 
 
 385,943 
 377,934 
 
 
 
 
 1878 
 
 
 
 
 
 
 1879 1.519 f;16 
 
 
 
 425,229 
 
 
 
 1880 . 
 
 1,594,853 
 1,428,000 
 1,259,844 
 1,582,612 
 1,809,182 
 
 
 
 608,919 
 472,858 
 608,054 
 617,606 
 806,468 
 
 $ 27,660 
 30,542 
 48,558 
 40,430 
 61,283 
 
 
 
 1881 
 
 
 
 
 
 188^ 
 
 
 
 
 
 1883- 
 
 
 
 
 
 1884 _ 
 
 
 
 
 
 1885 
 
 
 
 
 
 1886 
 
 2,265,836 
 2,186,283 
 2,225,511 
 1,486,596 
 2,228,948 
 2,563,146 
 2,343,557 
 2,192,780 
 2,226,177 
 2,180,248 
 3,556,475 
 2,985,583 
 3,159,176 
 2,169,998 
 3,294,206 
 3,053,769 
 3,404,289 
 3,458,084 
 3,601,176 
 3,705,375 
 4,344,869 
 4,595,407 
 5,193,861 
 4,945,003 
 4,910,406 
 4,696,362 
 6,776.399 
 7,142,402 
 11,455,906 
 9,873,880 
 
 342,418 
 354,668 
 372,878 
 371,429 
 395,013 
 409,384 
 427,305 
 446,619 
 455,572 
 471,645 
 484,091 
 472,126 
 508,817 
 516,140 
 530,873 
 544,805 
 561,358 
 633,501 
 683,797 
 642,353 
 723,777 
 688,905 
 772,491 
 759,061 
 804,066 
 830,113 
 844,349 
 " 808,243 
 920,127 
 812,339 
 
 
 
 676,630 
 688,535 
 565,363 
 662,323 
 7.59,111 
 857,531 
 912,743 
 892,962 
 822,000 
 792,100 
 835,659 
 779,471 
 941,701 
 916,800 
 918,981 
 1,009,506 
 1,057,464 
 1,014,140 
 941,302 
 922,429 
 970,365 
 1,070,882 
 1,199,582 
 948,147 
 852,490 
 982,^ 
 905,800 
 1,017,182 
 980,104 
 953,431 
 
 39,809 
 
 40,338 
 
 47,940 
 
 53,676 
 
 88,839 
 
 97,406 
 
 92,595 
 
 93,146 
 
 128,485 
 
 133,791 
 
 126,908 
 
 136,810 
 
 174,397 
 
 184,077 
 
 204,524 
 
 231,854 
 
 299,148 
 
 303,663 
 
 315,424 
 
 381,480 
 
 578,583 
 
 576,469 
 
 720,698 
 
 714,268 
 
 770,698 
 
 796,401 
 
 807,765 
 
 961,477 
 
 1,026,610 
 
 1,071,473 
 
 
 
 1887 
 
 
 
 
 
 1888 
 
 
 
 
 
 1889 
 
 
 
 
 
 18fl0 
 
 
 
 
 
 1891 
 
 
 
 
 
 1892 
 
 
 
 
 
 1893 . - 
 
 
 
 
 
 18^4 
 
 
 
 $ 23,350 
 
 44,609 
 
 111,042 
 
 ^ 207,663 
 140,695 
 153,534 
 
 i 301,795 
 
 I 430,532 
 239,173 
 397,062 
 425,217 
 449,667 
 466,065 
 494,417 
 521,019 
 537,449 
 513,986 
 
 
 18r>5 
 
 
 
 
 18')6 
 
 
 
 
 1897 
 
 
 
 
 1898 
 
 
 
 
 1899 
 
 
 
 
 1900 
 
 
 
 
 1901 
 
 
 
 
 1902. - 
 
 
 
 
 1903- _- 
 
 
 
 
 1904 
 
 
 
 
 1905 
 
 
 
 
 1906 
 
 
 
 
 1907 
 
 
 
 
 1908 
 
 
 
 "" 
 
 1909 
 
 
 
 $ 7,595 
 67,396 
 16,068 
 
 47 579 
 
 1910 
 
 1911 . 
 
 
 
 
 1919 
 
 
 
 1913 
 
 1914 
 
 1915_ 
 
 
 
 
 
 24.333 
 43,105 
 22, 896 
 
 
 
 
 
410 Bulletin of tJw University of Texas 
 
 Explanatory Notes, Table 11. 
 
 The purpose in presenting this table is to give an approximate 
 idea of the financial importance of the different taxes employed 
 by the state government. In the causes of the ad valorem, the 
 poll, the income and the salary taxes the statistics are of assessed 
 taxes only; but figures for assessed taxes are imperfect because 
 they are subject to deductions for errors in assessment, for costs 
 of assessment, collection, and remittance, and for losses through 
 the insolvency or the delinquency of the persons assessed. Up 
 to 1882 the amounts of these deductions are not given nor are the 
 deductions anywhere made in the financial reports of the state. 
 Since 1882 the amounts are given, except those for costs of as- 
 sessment and collection of each of the taxes. Since 1907 the 
 cost of the collection of the poll tax has been separately itemized, 
 but there is no separation of the costs of the assessment and 
 collection of the ad valorem, general occupation, and inheritance 
 taxes, and this is one of the prime defects of the report of 
 the comptroller, because it makes it impossible to tell the net 
 amount Avhich the general revenue fund receives annually from 
 each of these taxes. 
 
 The amounts of assessed taxes after each year in the table 
 represents down to 1885 the assessments made that year. Be- 
 ginning with 1886, however, the amounts are the assessments 
 of the preceding year with deductions for insolvency, errors, 
 and delinquency, and with the addition of the amounts received 
 during the year from redemptions and from collections by the 
 comptroller. The receipts from the special occupation taxes, 
 the franchise taxes, and the inheritance tax are net. The table 
 is thus a hybrid, but any other sort of a table is impossible 
 because of the character of the financial reports of the state. 
 
 The collection of the franchise tax is by the office of the 
 seeretaiy of state. The practice of the state department of 
 reporting its collections to the comptroller as well as the way 
 in which the collections are listed in the report of the secretary 
 of state make it impossible to co-ordinate the receipts from the 
 franchise tax with the pther receipts of the general revenue fund. 
 
A Financial History of Texas 411 
 
 Down to 1907 there is no uniformity whatever in the periods for 
 which receipts are reported by the state department. The 
 periods and amounts were as follows : 
 
 January 18, 1895-December 1, 1896 $ 44,609 
 
 December 1, 1896- January 1, 1899 111,042 
 
 January 1, 1899-December 31, 1900 207,663 
 
 January 1, 1901-August 31, 1901 140,695 
 
 September 1, 1901-Au^st 31, 1902 153,534 
 
 January 1, 1903- August 31, 1904 301,795 
 
 September 1, 1904- August 31, 1906 430,532 
 
 Only in 1908 and 1910 is it possible to ascertain from the 
 report of the secretary of state and the report of the comp- 
 troller the exact amount received by the general revenue fund 
 from the several sources of revenue administered in the office 
 of the secretary of state. The amounts given for the years after 
 1908 are the receipts during the fiscal year to the state depart- 
 ment, but as one month's receipts are not reported to the comp- 
 troller until the following month, and then with unclassified de- 
 ductions for refunds and exchange, the receipts to the general 
 revenue fund and those classified in the report of the state de- 
 partment cannot be harmonized. The state department in its 
 report to the comptroller's department makes no attempt at class- 
 ification of the receipts, but includes them all under the mean- 
 ingless item ''office collections," and they appear under this title 
 in the comptroller's report. 
 
 In 1909, 1910, and 1911 the ad valorem taxes on property in 
 unorganized counties are the assessed, not the collected, amounts. 
 The latter are not given by the comptroller. Beginning with the 
 report of the comptroller for 1911 there are no separate tax 
 statistics of any kind for the unorganized counties. Fortunately 
 the receipts of this character are small, less than $3,000, so 
 that the receipts as given in Table 11 from ad valorem taxes are 
 not much affected by the omission. 
 
412 
 
 Bulletin of the University of Texas 
 
 
 
 TABI.I: 12. 
 
 Tax Rates. 
 
 
 
 Year 
 
 General 
 
 Revenue 
 
 Ad Valorem 
 
 Cents 
 
 School 
 
 Ad Valorem 
 
 Cents 
 
 General 
 . Revenue 
 Poll 
 
 School 
 Poll 
 
 Confederate 
 
 Ad Valorem 
 
 Cents 
 
 1846 
 
 20 
 
 20 
 
 20 
 
 20 
 
 15 
 
 15 
 
 15 
 1 15 
 
 15 
 
 15 
 
 15 
 
 15 
 
 12.5 
 
 12.5 
 
 12.5 
 . 16 
 
 25 
 
 50 
 
 50 
 
 12.5 
 
 20 
 
 20 
 
 15 
 
 15 
 
 15 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 50 
 
 40 
 
 30 
 
 30 
 
 17.5 
 
 25 
 
 25 
 
 25 
 
 10 
 
 20 
 
 20 
 
 16.66 
 
 15 
 
 15 
 
 15 
 
 25 
 
 20 
 
 20 
 
 20 
 
 20 j 
 
 16.66 1 
 
 16.66 1 
 
 16.66 
 
 16.66 
 
 16.66 
 
 20 
 
 20 
 
 12.5 
 
 6.25 
 
 5 
 
 4 
 12.5 
 10 
 23 
 
 12.5 
 30 
 
 
 $ 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 l.OO 
 
 1.00 
 
 1.00 
 
 1.00 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 .50 
 
 
 
 T817 
 
 
 
 
 1848 
 
 
 
 
 1849 
 
 
 
 
 1850 
 
 
 
 
 1851 
 
 
 
 
 1852 
 
 1853 
 
 
 
 
 
 
 
 1854 
 
 
 
 
 1855 
 
 
 
 
 1856 
 
 
 
 
 1857 
 
 
 
 
 1858 
 
 . 
 
 
 
 1850 
 
 
 
 
 I860 
 
 
 
 
 1861 
 
 
 
 
 1862 
 
 
 
 
 181"3 
 
 
 
 
 1^4 
 
 
 
 
 1865 
 
 
 
 
 1868 
 
 
 
 
 1867 - 
 
 
 
 
 1868 
 
 
 
 
 186» 
 
 
 
 • 
 
 1870 
 
 
 
 
 1871 
 
 
 
 
 1S72 
 
 
 
 
 1873 
 
 
 
 
 1874. 
 
 
 
 
 1875 
 
 
 
 
 1S76 
 
 
 
 
 1877 
 
 
 $ i.66 
 
 1.00 
 1.00 
 1.00 
 l.OO 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 1.00 
 
 1.00 ; 
 1.00 ! 
 
 1.00 
 
 1.00 ! 
 
 1.00 
 1.00 
 1.00 
 
 1.00 ! 
 
 1.00 i 
 
 1.00 1 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 1.00 
 
 
 
 1878.. 
 
 
 
 
 1879 
 
 
 
 1880 
 
 
 
 1881 
 
 
 
 im 
 
 
 
 1883 
 
 
 
 1884 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.5 
 
 12.3 
 
 12.5 
 
 20 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 18 
 
 20 
 
 16.66 
 
 16.66 
 
 16.66 
 
 16.66 
 
 16.66 
 
 17 
 
 20 
 
 20 
 
 
 1885 
 
 
 
 
 
 
 
 
 1887 
 
 
 
 
 1888 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1894 
 
 
 
 1895 
 
 
 
 1896... 
 
 
 
 T897 
 
 
 
 taoQ 
 
 
 1 aoo 
 
 
 1900....^!" "I 
 
 
 
 
 
 
 
 IQfVQ i 
 
 
 1904 
 
 
 
 
 
 
 1907 1 
 1908 : 
 
 
 
 
 1910 
 
 
 1911 
 
 
 
 
 1913 
 
 _.-. 
 
 1914 
 
 5 
 
 1915 
 
 5 
 
 
 5 
 
A Financial History of Texas 
 
 413 
 
 
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414 
 
 Bulletin of the University of Texas 
 
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A Financial History of Texas 415 
 
 Explanatory Notes, Table 13. 
 
 The taxable values presented in this table are compiled from 
 the oriofinal published reports of the comptroller and from pub- 
 lished abstracts of the reports of that officer. Because of typo- 
 graphical errors in the reports the totals of the years are in 
 some cases different from the sum of the classified items, but 
 these differences are not important. 
 
 There was included under real property from 1846 to 1865 
 only rural real estate; town lots and land certificates were put 
 among miscellaneous property. After, and including- 1865, the 
 class of real property includes all land and improvements and 
 land certificates. There was no separate statement of the as- 
 sessed value of railroads before 1874, and it seems probable that 
 railroads were assessed })efore that date under the head of real 
 property. 
 
 Only the total values for 1862 and 1863 can be given, and 
 these are taken from the synopsis of the report of the comp- 
 troller as given in the Texas Almanac for 1864. The almanacs 
 of 1863 and 1864 contain tables of the assessed value of the 
 different kinds of property, but their sums fall so far short of 
 the totals given in the table that classification is not attempted 
 for these years. The assessed value of land in 1862, as reported 
 in the Almanac, was $80,810,890, and in 1863, $108,125,716, 
 but these are below the real amounts. 
 
 Beginning with 1909 all of the intangible assets are included 
 under railroad values, except in 1913, w^hen the report" of the 
 state tax commissioner is followed and all but $181,945 of the 
 intangible assets are assessed to the railroads and except in 
 1914 and 1915 when the amounts given by the comptroller in 
 a special table are followed. 
 
416 
 
 Bulletin of the U)iiversity of Texas 
 
 TABLE 14. 
 
 General Revenue Fund. 
 
 Year 
 
 T847- 
 1848. 
 1849- 
 1850- 
 1851. 
 1852. 
 
 1853. 
 
 1854- 
 
 1855- 
 
 1856. 
 
 1857. 
 
 1858. 
 
 Receipts 
 
 Cash 
 Bonds 
 
 1861- 
 1862. 
 
 1865. 
 
 1864- 
 
 1865- 
 
 1867- 
 1868- 
 1869- 
 T870. 
 1871. 
 1872- 
 1873. 
 1874- 
 1875- 
 1876. 
 1877. 
 1878. 
 1879. 
 1880. 
 1881- 
 
 Cash 
 Bonds 
 
 Cash 
 Bonds 
 Cash 
 Bonds 
 
 T884. 
 1885. 
 1886. 
 1887. 
 
 1892. 
 1893- 
 1894. 
 
 1897. 
 1888- 
 1899- 
 
 Cash 
 Note 
 
 ^ 178, 
 97, 
 96, 
 101, 
 141, 
 1,273 
 5,000 
 230 
 
 250, 
 
 "ns' 
 
 Expenditures 
 
 127 ,677 
 116,161 
 82,232 
 148,007 
 115,084 
 674,542 
 608,000 
 463,155 
 
 Trans- 
 fers 
 
 Cash 
 Bonds 
 
 474,245 
 
 2,000,000 
 
 244,879 
 
 275 Cash 
 Bonds 
 
 115 
 
 480,797 
 115,000 
 280,247 
 
 1,335 
 
 Total 
 Disburse- 
 ments 
 
 127,677 
 116,161 
 82,232 
 148,065 
 115,372 
 
 ,282,580 
 464,490 
 
 ,474,245 
 244,879 
 
 322 
 
 "zso 
 
 lob Cash 
 -..iBonds 
 660 Cash 
 Bonds 
 
 1,567,204 
 
 373, 
 414, 
 529, 
 409, 
 538, 
 941, 
 9:32, 
 1,304, 
 1,531, 
 1,006, 
 1,298, 
 1,291, 
 1,752, 
 1,904, 
 2,080, 
 2,168, 
 1,759, 
 1,544, 
 1,792, 
 2,097, 
 2,287, 
 3,063 
 1,444 
 2,125, 
 2,561 
 2,069 
 2,192 
 2,008, 
 2,011 
 2,966, 
 2,235, 
 2,916, 
 
 321,529 
 427,000 
 175,214 
 205,000 
 366,907 
 359,000 
 467,836 
 419,154 
 579,655 
 
 1,100,308 
 56,150 
 
 1.830.617 
 
 674,978 
 
 233,089 
 473,613 
 
 285 
 
 ,774 
 
 9,841 
 
 748,815 
 
 380,214 
 
 725,907 
 467.836 
 
 158,458 
 ,830,617 
 
 684,753 
 
 233,089 
 
 4a'?,45.-> 
 
 Balance at end of year 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Specie 
 
 Confed. Notes 
 Specie 
 
 Confed. Notes 
 Specie 
 
 Confed. Notes 
 Specie 
 Confed. Notes 
 
 350,208 
 371,106 
 
 -- 
 
 350,208, 
 371,177 
 
 508,498 
 
 1,308 
 
 509,807 
 
 581,830 
 
 
 561,830 
 
 941 ,213 
 
 
 941,213 
 
 938,760 
 
 
 938,760 
 
 1,248,146 
 
 56,845 
 
 1,304,991 
 
 1,422,095 
 
 
 1,422,095 
 1,199,062 
 
 1,091,626 
 
 107,455 
 
 1,250,692 
 
 10,094 
 
 1,260,786 
 
 1,225,689 
 
 
 1,225,689 
 
 1,486,170 
 
 115,263 
 
 1,601,434 
 
 1,344,360 
 
 113,811 
 
 1,458,172 
 
 1,436,002 
 
 159,089 
 
 1.595,092 
 
 2,534,290 
 
 300,577 
 
 2,834,868 
 
 1,911,648 
 
 29,029 
 
 1,940,677 
 
 1,738,769 
 
 6,041 
 
 1,744,810 
 
 1,843,802 
 
 8,874 
 
 1,852,677 
 
 1,567,111 
 
 52,011 
 
 1,619,123 
 
 1,918,067 
 
 43,556 
 
 1,961,624 
 
 2,056,050 
 
 637,280 
 
 2,693,330 
 
 2,272,347 
 
 3,143 
 
 3,275,491 
 
 1,906,727 
 
 26,311 
 
 1,935,039 
 
 2,167,498 
 
 5,506 
 
 2,173,095 
 
 2,555,927 
 
 70,760 
 
 2,626,688 
 
 2,428,219 
 
 27,415 
 
 2,455,634 
 
 2,149,124 
 
 8,248 
 
 2,157,372 
 
 2,021,606 
 
 
 2,021,606 
 2,844,700 
 2,295,910 
 
 2,864,700 
 
 
 2,295,910 
 
 
 2,153,766 
 
 994 
 
 2,154,761 
 
 2,375,607 
 
 3,470 
 
 2,379,077 
 
 Cash 
 Note 
 
 ^ 51,238 
 
 32,287 
 
 46,564 
 
 1 
 
 25,890 
 
 624,677 
 
 3,575,000 
 
 390,301 
 
 3,575,000 
 
 166,062 
 
 1,575,000 
 
 39,748 
 
 1,575.000 
 
 154,226 
 
 1,263,000 
 
 16 
 
 1,230,000 
 
 956 
 
 546,000 
 
 106,402 
 
 305,000 
 
 77,934 
 
 50,000 
 
 36,262 
 
 2,454 
 
 105,628 
 
 659 
 
 15,160 
 
 1,496 
 
 1,539,338 
 
 2,703 
 
 2,420,582 
 
 111,357 
 
 1,320 
 
 82,938 
 
 241,607 
 
 51,043 
 
 7.692 
 
 7,761 
 
 1,301 
 
 373 
 
 109,778 
 
 6,764 
 
 44,554 
 
 110,113 
 
 261,106 
 
 707,189 
 
 1,192,438 
 
 526,545 
 
 345,154 
 
 145,298 
 
 84,841 
 
 563,463 
 
 868,970 
 
 1,259,126 
 
 428,410 
 
 618,622 
 
 1.007,198 
 
 450,332 
 
 187,425 
 
 38,443 
 
 28,072 
 
 109,753 
 
 49,787 
 
 811,279 
 
 1,092,807 
 
A Financial History of Texas 
 
 417 
 
 TABIii: 14 — Continued. 
 G-eneral Revenue Fund. 
 
 Year 
 
 ReceipLs 
 
 Expenditures 
 
 Trans- 
 fers 
 
 Total 
 Disburse- 
 ments 
 
 Balance at end of year 
 
 1900 
 
 Cash $2,800,578 
 
 Note 450 
 
 2,865,238 
 
 $2,733,781 
 
 $ 17 
 
 $2,733,798 
 
 Cash 
 Note 
 Cash 
 Note 
 Cash 
 Note 
 Cash 
 Note 
 Cash 
 
 $1,159,587 
 3,40* 
 
 1901 
 
 2,851,455 
 
 
 2,851,455 
 
 1.173,370 
 0,773: 
 
 
 
 1902 
 
 3,148,468 
 
 3,187,382 
 
 
 3,187,382 
 
 1,134,455 
 "> 728- 
 
 1903 
 
 2,808,582 
 
 3,408.523 
 
 5 
 
 3,406,528 
 
 529.510 
 
 1,515 
 
 . • 62.86# 
 
 1,000 
 
 77,111 
 
 800^ 
 
 1904 
 
 3,099,756 
 
 3,566,401 
 
 
 3,566,401 
 
 
 
 
 Note 
 Cash 
 Note 
 
 1905 
 
 3,135,486 
 
 3,121,239 
 
 
 3,121,239 
 
 1906 
 
 ])K>7 
 
 4,203,837 
 4,161,587 
 4.003,223 
 5,013,272 
 4,046,040 
 3,624,208 
 5,148,962 
 5,269,531 
 9,582,206 
 6,028,990 
 
 4,184,982 
 3,564,898 
 3,806,851 
 4,159,011 
 4,364,607 
 4,528,450 
 5,131,653 
 5,366,348 
 6,9<)8,816 
 7,195,506 
 
 42 
 
 4,185,025 
 3,564,898 
 3,806,851 
 4,150,056 
 4,364,607 
 4,635,725 
 5,131,653 
 
 95,92S 
 692 612" 
 
 1908 
 
 
 888,985 
 
 1909 
 
 1910 
 
 45 
 
 1.743,20& 
 1,424.641 
 
 1911 
 
 191 *> 
 
 107,274 
 
 413,124 
 430,433- 
 
 1913 _- 
 
 
 5,366,348! 
 8,194,2141 
 7,195,506 
 
 333,615 
 
 1,721 ,60» 
 
 555,103 
 
 1914 
 
 1915 
 
 1,195,397 
 
 
 
 
 
 
 
 27— H 
 
418 Bulletin of the University of Texas 
 
 Explanatory Notes^ Table 14. 
 
 Transfers to the school funds are excluded from both the 
 credit and debit sides of the general fund as given in this table, 
 because such transfers represent neither a net receipt to, nor a 
 net expenditure of, the fund. An appropriation out of the gen- 
 eral fund to the school fund as, for example, that of $2,000,000 
 of United States bonds in 1854, is counted among the expendi- 
 tures of the general fund. Receipts in the form of the paper 
 liabilities of the republic or of the state are also excluded. 
 The following were the amounts of the paper liabilities of the 
 republic which were received : 
 
 1847 $101,045.60 1853 9,042.16 
 
 1849 34,961.24 1854 1,122.49 
 
 1850 32,220.15 1855 1,047.47 
 
 1851 7,750.74 1856 •. . . . 89.01 
 
 1852 34,771.90 1859 20,187.05 
 
 The following were the amounts of state warrants: 
 
 1851 $ 1,604.54 1867 9,348.25 
 
 1861 604.01 1875 25,284.54 
 
 1862 11,493.87 1876 2,077.47 
 
 1863 289,769.66 1877 611.98 
 
 1864 138,254.51 1878 28.60 
 
 1865 66,990.25 1879 95.75 
 
 1866 122,944.82 
 
 1852. To the $572,000 of United States bonds expended in 
 payment of the debt of the republic there is added $36,000 
 used in canceling state bonds held by the school fund. 
 
 1856. The report of the treasurer gives $290,000 as the 
 amount received by the state from the United States as a re- 
 fund for the revenue debt of the republic paid by Texas. It 
 is ascertained from the biennial report of the comptroller that 
 the refund amounted to $298,421.72 and that the $8,421.72 was 
 expended in securing the refund. This amount is added to 
 receipts and expenditures in this table. A transaction involving 
 $115,000 of Ignited States bonds is not shown in the condensed 
 form of the report of the treasurer which is used, and this amount 
 is added to expenditures. 
 
 1858. Because of the change from October 31 to August 31 
 as the end of the fiscal year, this fiscal year has only ten months. 
 
 1860. Included among receipts are $100,000 of United States 
 
A Financial History of Texas 419 
 
 bonds and $9,472.26 in specie transferred from the unii^ersity 
 fund. 
 
 1861. The biennial report of the comptroller for 1860-1861 
 gives $8,520 as the amount of debt paid in 1861, while the ab- 
 stract of the treasurer's report in the Texas Almanac for 1861 
 states erroneously that $8,470 was the amount paid. 
 
 1862. The item bonds among receipts refers to United States 
 bonds and interest coupons which were taken from the school 
 fund for use for military purposes. 
 
 1865. The period covered is that from August 31, 1864, to 
 June 8, 1865. The balance on hand on June 8, 1865, is stated 
 by the comptroller to be $353,614.82, but this includes $3,375.33 
 of state warrants and excludes $2,073,046.76 of Confederate notes 
 of old issues which had been sent to the treasury of the Con- 
 federate government to be exchanged for notes of new issues. 
 
 1866. The period covered is that from October 13, 1865, to 
 August 13, 1866. Included among receipts is $7,683.67, which 
 was the amount recovered from the treasury vault and broken 
 safes after the robbery on the night of June 11, 1865. 
 
 1867. The period covered by the report is from August 14, 
 1866, to July 31, 1867. 
 
 1868. The report of the comptroller begins with September 
 1, 1867. ■ 
 
 1874. A typographical error in the report of the comptroller 
 results in the total of the classified items of receipts being $2,000 
 less than the total given in the report. 
 
 1875. The report for this year gives as the balance on hand 
 at the beginning of the year an amount w^hich is fifty cents 
 greater than the balance reported at the close of the preceding 
 year. 
 
 1882. On account of a typographical error the total of the 
 receipts is larger by $1,000 than the total given by the comp- 
 troller. 
 
 1911. There is a typographical error of ninety cents on the 
 side of disbursements, and this amount is added to the amount 
 disbursed in payment of warrants. 
 
 1912. A typographical error results in the omission of $600 
 from itemized receipts, but the total of the comptroller is fol- 
 lowed in this table, and for classification purpo.ses, $600 is added 
 to miscellaneous. 
 
420 
 
 Bulletin of the University of Texas 
 
 TABI.I: 15 
 Available School Tund. 
 
 Year 
 
 Receipt 
 
 s 
 
 Ordinary 
 Disburse- 
 ments 
 
 Other 
 Disburse- 
 ments 
 
 Total 
 Disburse- 
 ments 
 
 Balance at End of Year 
 
 1847 
 
 1848 
 
 1849 
 
 1850 
 
 1851 
 
 $ 5,885 
 9,636 
 9,981 
 11,005 
 11,542 
 
 
 
 
 
 % 5,8So 
 
 
 
 
 15 521 
 
 
 
 
 25,503 
 
 
 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bond? 
 
 Cash 
 
 Bonds 
 
 36,509 
 
 :.::-_- 
 
 $ 36,000 
 
 $ 36,0OOi 
 
 12,051 
 
 
 36,000 
 
 1852 
 
 
 13,922 
 
 
 17,000 
 
 17,000 
 
 8,974 
 
 
 53,000 
 
 1853 
 
 
 20,219 
 
 
 
 
 29,193 
 
 
 
 
 53,000 
 
 1854 
 
 Cash 
 Bonds 
 
 63,511 
 
 2,000,000 
 
 124,629 
 
 
 
 
 92,70.1 
 
 
 
 
 2,053,00(1 
 
 1855 
 
 $ 27,136 
 
 
 27,136 
 
 190,lf>7 
 2,053,00(1 
 
 
 1856 
 
 
 128,350 
 
 95,130 
 
 
 192,130 
 
 126,418 
 
 
 2,150,000 
 
 1857 
 
 
 170,784 
 
 106,125 
 
 46,000 
 
 152,125 
 
 145,077 
 2,196,000 
 
 1858 
 
 
 151,690 
 
 ] 05, 332 
 
 65,000 
 
 170,3:32 
 
 126,436 
 2,261,000 
 
 1859 
 
 
 174,400 
 
 118,465 
 
 48,000 
 
 166,465 
 
 134,870 
 
 2,309,000 
 
 1860 
 
 207,756 
 
 119,606 
 
 85,000 
 
 204,6t)6 
 
 137,520 
 
 2,394,000 
 
 186] 
 
 Cash 
 
 Warrants 
 
 Int. Coupons 
 
 Cash 
 
 Warrants 
 
 Int. Coupons 
 
 Cash 
 
 Int. Coupons 
 
 85,489 
 8,518 
 17,675 
 63,336 
 2,72] 
 19,500 
 51,876 
 4,150 
 
 123,120 
 
 23,500 
 
 146,620 
 
 Specie 
 
 Bonds 
 
 Warrants 
 
 Cash 
 
 Warrants 
 
 Bonds 
 
 Cash 
 
 Warrants 
 
 Bonds 
 
 Cash 
 
 W^arrants 
 
 Bonds 
 
 Specie 
 
 Confed. Notes 
 
 Warrants 
 
 Bonds 
 
 Cash 
 
 Warrants 
 
 Cash 
 
 76,389 
 2,4t7,500 
 
 
 
 
 
 8,518 
 
 1862 
 
 50,954 
 
 637,175 
 
 688,129 
 
 81,251 
 
 11,2.39 
 
 1,834,980 
 
 1863 
 
 24,697 
 
 66,668 
 
 91,365 
 
 49.9i2 
 11,2:39 
 
 
 
 
 
 1,780,980 
 
 1864 
 
 Confed. Notes 
 Warrants 
 
 184,118 
 214,619 
 
 28,041 
 
 
 28,041 
 
 205,989 
 225,8.18 
 
 
 
 
 
 1,780,1)80 
 
 T865 
 
 Cash 
 
 68,452 
 
 10,850 
 
 
 10,850 
 
 6,927 
 
 
 
 256 063 
 
 
 
 
 
 
 11 ,239 
 
 
 
 
 
 
 2,073,684 
 
 1866 
 
 Cash 
 Warrants 
 Cash 
 Warrants 
 
 Cash 
 Bonds 
 
 25,904 
 
 8,251 
 
 55,662 
 
 930 
 
 7,616 
 
 2,045 
 
 38,030 
 
 168,868 
 
 412,080 
 
 12,000 
 
 514,133 
 
 
 
 
 25,904 
 
 
 
 
 
 19,490 
 .54,533 
 
 1867 
 
 27,032 
 
 
 27,082 
 
 
 
 
 1868 
 
 2,086 
 
 3,210 
 
 208 
 
 68,271 
 
 532,230 
 
 
 2,086 
 
 3,210 
 
 61,060 
 
 68,271 
 
 532,230 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 Cash 
 
 Bonds 
 
 60,144 
 
 1869 
 
 
 .58,979 
 
 1870. 
 
 187T- 
 
 60,851 
 
 85,950 
 136,096 
 
 1872 
 
 
 15,896 
 
 
 
 12,000 
 
 1873 
 
 194,910 
 
 
 194,910 
 
 335,116 
 
 12,000 
 148,744 
 
 10,500 
 108,260 
 
 10,500 
 108,095 
 
 10,500 
 274,834 
 
 10,500 
 
 320,428 
 
 1,000 
 
 140,721 
 
 77,693 
 
 59,123 
 197,738 
 424,961 
 
 
 
 1S74 
 
 602,432 
 
 790,304 
 
 
 790,304 
 
 
 
 1875. 
 
 579,722 
 
 620,205 
 
 
 620,205 
 
 
 
 1876 
 
 612,702 
 
 609,960 
 
 2,907 
 
 612,868 
 
 1877 
 
 
 706,707 
 
 499,185 
 
 40,782 
 
 539,968 
 
 1878- 
 
 745,138 
 
 ' 682,480 
 
 26,563 
 
 709,043 
 
 1879. 
 
 188iIIII" 
 
 1?S^ 
 
 1883 
 
 i 
 1 
 
 889,793 
 707,351 
 770,006 
 1,111,633 
 1.?77.P4« 
 ].52',428 
 2,009,191 
 
 983,689 
 733,559 
 
 787,582 
 
 913,750 
 
 1.1fiO,625 
 
 1,485,54;) 
 
 1,!)56,025 
 
 36,810 
 
 84,819 
 
 2,995 
 
 59,267 
 
 1,020,500 
 
 768,379 
 
 790,577 
 
 973,018 
 
 1,150,625 
 
 1,401,41] 
 
 ],«79,83(i 
 
 1SS4 
 
 i>S8r> 
 
 5,861 
 23,8]0 
 
 454,979 
 484,334 
 
A Financial History of Texas 
 
 421 
 
 TABl^E 15 — Continued. 
 Available School Fund. 
 
 
 
 Ordinary 
 
 Other 
 
 Total 
 
 
 Year 
 
 Eeceipts 
 
 Disburse- 
 
 Disburse- 
 
 Disburse- 
 
 Balance at End of Year 
 
 
 
 ments 
 
 ments 
 
 ments 
 
 
 1886 
 
 $2,132,189 
 
 $2,422,005 
 
 $ 18,537 
 
 $2,440,543 
 
 $ 175,980 
 
 1887 
 
 2,109,694 
 
 2,265,987 
 
 10,956 
 
 2,276,895 
 
 8,779 
 
 T888 
 
 2,630,259 
 
 2,541,488 
 
 13,600 
 
 2,555,088 
 
 83,949 
 
 1889 
 
 2,197,»19 
 
 2,205,330 
 
 22,196 
 
 2,227,526 
 
 54,242 
 
 1890 
 
 2,297,954 
 
 2,303,730 
 
 8,199 
 
 2,311,930 
 
 40,266 
 
 1891 
 
 2,694,053 
 
 2,609,348 
 
 8,336 
 
 2,617,684 
 
 117,536 
 
 ]892 
 
 2,792,936 
 
 2,535,052 
 
 7,876 
 
 2,542,928 
 
 367,543 
 
 1803 
 
 2,844,458 
 
 3,052,589 
 
 7,719 
 
 3,060,309 
 
 151,692 
 
 1894 
 
 2,334,163 
 
 2,431,425 
 
 3,0SO 
 
 2,434,456 
 
 51,399 
 
 1895 
 
 2,626,145 
 
 2,544,066 
 
 
 2,544,066 
 
 133,479 
 73,060 
 
 1896 
 
 2,843,433 
 
 2,901,982 
 
 1,870 
 
 2,903,852 
 
 1897 
 
 3,273,007 
 
 3,233,314 
 
 
 3,233,814 
 
 112,758 
 
 97,789 
 
 1898 
 
 3,054,948 
 
 3,069,912 
 
 
 3,069,912 
 
 1899 
 
 3,151,409 
 
 3,232,624 
 
 
 3,232,624 
 
 16,574 
 
 1900 
 
 3,318,276 
 3,369 002 
 
 3,081,471 
 3 4SS fi'JS 
 
 
 3 a«i 47T 
 
 253,379 
 133,844 
 
 1901 
 
 „| 3^488^628 
 
 1902 
 
 3,636,891 3,565,244 
 
 2,8011 3,568,045 
 
 202,690 
 
 1903 
 
 3,868,069! 3,809,677 
 
 4,069; 3,813,746 
 
 257,012 
 
 1904 
 
 3,724,442; 3,848,496 
 
 118 3,848,614 
 
 132,840 
 
 1905 
 
 3,983,931 
 
 3,971,922 
 
 3,971,922 
 
 144,849 
 
 1906 
 
 4,109,683 
 
 4,218,383 
 
 88 4,218,421 
 
 36,110 
 
 1907 
 
 4,449,020 
 
 4,388,254 
 
 4,388,254 
 
 96,877 
 
 1908 
 
 5,404,913 
 
 5,389,934 
 
 10 5,389,944 
 
 : 111,846 
 
 1909 
 
 5,883,691 
 
 5,658,473 
 
 i 5,658,47J 
 
 ! 337,065 
 106,491 
 
 1910. 
 
 6,276,502 
 
 6,507,075 
 
 6,507,075 
 
 1911____-_ 
 
 6,211,655 
 6,838,394 
 7,204,406 
 
 6,308,287 
 6,783,459 
 
 __! 6,306,287 
 
 9,858 
 
 1912 
 
 6,783,459 
 
 64,798 
 
 1913 
 
 7,053,487 
 
 I 7,053,487 
 
 i 215,713 
 
 1914 
 
 7,149,680 
 7,999,059 
 
 7,348,323 
 7,692,144 
 
 1 7.348.323 
 
 i 17.070 
 
 1915 
 
 
 ; 7,692,144 323.984 
 
422 Bulletin of the University of Texas 
 
 Explanatory Notes^ Table 15. 
 
 Until 1852 one-tenth of the annual revenue of the state was 
 set aside for educational purposes, but thereafter one-tenth of 
 the annual revenue arising from direct taxation was set aside. 
 
 1851. The $36,000 among disbursements was for that amount 
 of 5 per cent state bonds authorized to be issued by an act of 
 December 2, 1850. In 1852 these state bonds were replaced 
 by 5 per cent United States bonds and additional United States 
 bonds to the amount, of $17,000 were secured of the general 
 revenue fund. 
 
 1854. By an act of January 31, 1854, establishing a system of 
 schools, $2,000,000 of 5 per cent United States bonds were ap- 
 propriated by the state to a fund entitled the special school 
 fund. Only the interest of this fund could be used, and it was 
 to be distributed for the support of these schools. 
 
 1856. An act of August 29, 1856, authorized the state treas- 
 urer to transfer to the general revenue fund the specie to the 
 credit of the general school fund and to replace the same with 
 5 per cent United States bonds, and on July 1 of each year 
 thereafter the specie to the credit of the school fund derived 
 from one-tenth taxes was to be exchanged for United States 
 bonds. The following were the amounts of specie exchanged for 
 bonds under the provisions of this act: 
 
 1856 $97,000 
 
 1857 33.000 
 
 1858 65,000 
 
 1859 36,000 
 
 1860 71,000 
 
 1861 19,000 
 
 The act of 1856 also consolidated the two school funds into 
 one entitled the school fund. 
 
 1857. The acts of August 13 and August 26, 1856, provided 
 for the investment of the school fund in the bonds of railroad 
 companies incorporated by the state. It authorized the exchange 
 of the United States bonds and the specie of the fund for ten 
 year 6 per cent railroad bonds. In this table only the specie 
 used is counted among the .disbursements, and in 1857, $13,000 
 
A Fina7icial History of Texas 423 
 
 of specie was so expended. In 1859 $12,000 ; in 1860, $14,000 ; 
 in 1861, $45,000. The transactions in which United States bonds 
 were exchanged for railroad bonds are not introduced into this 
 table. 
 
 1862. The $637,175 among disbursements was a transfer to 
 the general revenue fund of $544,480 of United States bonds, 
 $35,175 of interest coupons from United States bonds, and 
 $57,520 of cash. Such a long period of time elapsed before the 
 school fund was repaid that the transfer is treated for practical 
 purposes as a disbursement. The condition of the fund can be 
 best shown by this treatment of the transaction. 
 
 1863. The $66,668 among disbursements was a transfer to the 
 general revenue fund of $54,000 of United States bonds, $4,150 
 of interest coupons, and $8,518 in cash. The explanation of 
 treating this as a disbursement is the same as above. 
 
 1865-1867. There are no reports covering fully these years 
 but, as in the case of the general revenue, the reports are for 
 very unequal periods. 
 
 1870. In the report of this year there appears for the first 
 time the division of the school fund into the permanent and the 
 available funds. 
 
A Financial History of Texas 425 
 
 Explanatory Notes, Table 16. 
 
 This tabic is compiled from data found in the reports of the 
 comptroller, and such data are found fully only since 1886. 
 The statistics are those of the cost, loss and waste in the assess- 
 ment and collection of taxes assesed and collected by county 
 assessors and collectors. The table does not include the taxes 
 assessed or collected at the office of the comptroller, except that 
 collections by the comptroller are given beginning" with the re- 
 port of 1912. The tables in the report of the comptroller from 
 which the compilations are made are those summarizing the 
 accounts of tax collectors and ex-collectors. 
 
426 
 
 Bulletin of the University of Texas 
 
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A Financial History of Texas 427 
 
 Explanatory Notes^ Table 17. 
 
 The amount of the debt in 1846 is that reported by the comp- 
 troller to the legislature, March 28, 1846. 
 
 The amounts in 1849 and 1851 are those contained in the 
 reports of the auditor and comptroller in those years. 
 
 The debt given for 1861 is the amount of the deficiency re- 
 ported by Governor Houston, January 19, 1861. That for 1862 
 is the debt statement on January 1, 1863, as contained in Gov- 
 ernor Lubbock's message of February 5, 1863. The amount for 
 1865 is that reported by Messrs. Pease and Palm to Provisional- 
 Governor Hamilton, October 30, 1865. 
 
 The amounts given for the public debt from 1867 to 1883 con- 
 tain the amounts of the bonds of doubtful validity, including 
 the comptroller's certificate of indebtedness held by the uni- 
 versity fund, but they do not contain the accrued interest on 
 the debt of doubtful validity. The latter interest, cannot be 
 followed in its accrual. 
 
 The statement for 1879 is for the date January 21, 1879, and 
 that for 1881 is for January 1, 1881. 
 
 The floating debt in 1894, 1895, 1904, 1905. and 1913 is 
 simph^ the amount of the excess of warrants drawn over war- 
 rants paid. There are other years in whicli there was a similar 
 excess, but in these other years there w^ere sufficient funds in 
 the treasury to take up the excess. There were deficiencies also 
 during fiscal years which were removed before the end of the 
 vear. 
 
428 
 
 Bulletin of the University of Texas 
 
 TABI.Z: 18. 
 
 Ownership of tlie State Bonded Debt. 
 
 Year 
 
 Owned by 
 Trust Funds in 
 the Treasury 
 
 Owned by 
 Individuals 
 
 Year 
 
 Owned by 
 Trust Funds in 
 the Treasury 
 
 Owned by 
 Individuals 
 
 1865 
 
 $ 320,367.13 
 
 320,367.13 
 
 320,367.13 
 
 537,008.21 
 
 537,008.21 
 
 537,008.2! 
 
 537,008.21 
 
 711,008.21 
 
 711,008.21 
 
 711,008.21 
 
 711,008.21 
 
 1,586,008.21 
 
 2,342,108.21 
 
 2,584,108.21 
 
 2,643,268.82 
 
 2,797,408.82 
 
 2.965,640.00 
 
 2,991,900.00 
 
 3,017,100.00 
 
 3,017,100.00 
 
 3,017,100.00 
 
 3,218,140.00 
 
 3,226,540.00 
 
 $ 805,762.88 
 
 
 1893 
 
 3,235,040.00 
 3,241,540.00 
 3,241,540.00 
 3,244,540.00 
 3,245,040.00 
 3, 2.>4, 040.00 
 3,261,200.00 
 3,291,200.00 
 3,272.200.00 
 3,301,600.00 
 3,318,600.00 
 3,372,600.00 
 3,372,600.00 
 3,.S85,6O0.00 
 • 3,849, .500.00 
 3,853,000.00 
 3,951,000.00 
 3,976,200.00 
 3,976,200.00 
 3,976,200.00 
 3,976,200.00 
 3,976,200.00 
 3,976,200.00 
 
 756,990.00 
 
 1866 
 
 1894 
 
 750,490.00 
 
 1867 
 
 
 1895 
 
 750,490.00 
 
 
 
 1896- 
 
 747,490.00 
 746,990.00 
 
 18<)0 
 
 125,100.00 
 
 1897 
 
 1870 
 
 1893 
 
 737,990.00 
 
 1S71_ 
 
 602^600^00 
 630,100.00 
 1,319,800.00 
 3,933,588.00 
 3,826,373.80 
 3,224,820.00 
 1,992,530.00 
 1,476,630.00 
 1,322,490.00 
 1,272,000.00 
 1,245,830.00 
 1,220,630.00 
 1,220,630.00 
 1,220,630.00 
 1,019,590.00 
 768,190.00 
 
 1899 
 
 728,245.0") 
 
 187"' 
 
 1900 .. 
 
 718, ''OO 00 
 
 1873 
 
 1874 
 
 1901 
 
 1902 
 
 717,200.00 
 687,800.00 
 
 1875 
 
 1908 
 
 670,800.00 
 616 800 00 
 
 1876 
 
 1904 
 
 1880 
 
 1905 
 
 1906 
 
 610^300 00 
 
 1882 
 
 603,800.00 
 
 1883 
 
 1907 
 
 139,900.00 
 
 1884 
 
 1908 -- - 
 
 136,400.00 
 37,900 
 
 1886 
 
 1909 
 
 1910 
 
 1887. 
 
 1,300 
 
 1888 
 
 1911 
 
 T889 ... 
 
 19"2- - 
 
 
 1890 
 
 1913 
 
 
 1891 
 
 1914 
 
 
 1892 
 
 1915 
 
 
 
 
 
A Financial History of Texas 429 
 
 Table 19. 
 
 The Tri-WeeMy Telegraph under date of July 15, 1864, con- 
 tains the Fox Table of currency values. It saj^s: ''The follow- 
 ing table showing the fluctuations in the gold market here 
 (Houston) has been furnished us by Mr. Henry S. Fox, a re- 
 liable merchant of this city. One dollar in gold has been worth 
 the following amounts in Confederate treasury notes at the times 
 mentioned:" 
 
 1861. 
 
 Sept 1-30 par. 
 
 Oct. 1-31. 1.05 
 
 Nov. 1-30 1.10 
 
 Dec. 1-15 1.25 
 
 Dec. 15-30 1.50 
 
 1862. 
 
 Jan. 1-Feb. 8 1.50 
 
 Feb. 8-Apr. 8 1.75 
 
 Apr. 8-20 2.00 
 
 ADr. 20-May 12 2.50 
 
 May 12-22 2.75 
 
 May 22-June 12 3.00 
 
 June 12-19 3.25 
 
 June 19-Aug. 9 , 3.50 
 
 Aug. 9-Sept. 14 3.75 
 
 Sept. 14-Oct. 31 4.00 
 
 Nov. 1-30 3.75 
 
 Dec. 1-31 4.00 
 
 1863. 
 
 Jan. 1-5 4.00 
 
 Jan. 5-18 4.50 
 
 Jan. 18-Feb. 9 4.75 
 
 Feb. 9-Mch. 19 5.00 
 
 Mch. 19-Apr. 5 4.75 
 
 Apr. 5-14 5.00 
 
 Apr. 14-May 3 5.25 
 
 May 3-7 6.00 
 
 May 7-17 7.00 
 
 May 17-June 20 8.00 
 
 June 20-July 4 7.00 
 
 July 4-7 8.00 
 
 July 7-8 8.50 
 
 July 8-10 9.00 
 
 July 10-Aug. 6 9.50 
 
 A-ag. 6-Sept. 9 10.00 
 
 Sept. 9-24 11.00 
 
430 Bulletin of the University of Texas 
 
 Sept. 24-Oct. 5 12.00 
 
 Oct. 5-12 11.00 
 
 Oct. 25-Nov. 7 12.00 
 
 Nov. 7-13 11.50 
 
 Nov. 13-16 12.50 
 
 Nov. 16-17 13.25 
 
 Nov. 17-20 15.00 
 
 Nov. 20-25 , 15.50 
 
 Nov. 25-Dec. 6 16.00 
 
 Dec. 6-14 .; 17.50 
 
 Dec. 14-16 18.00 
 
 Dec. 16-31 19.00 
 
 1864. 
 
 Jan. 1-3 19.00 
 
 Jan. 24-31 24.25 
 
 Feb. 1-4 2*4.00 
 
 Feb. 16-22 20.00 
 
 Feb. 22-Mch. 4 21.00 
 
 Mch. 24-Apr. 5 ,. . . 22.75 
 
 Apr. 20-May 5 26.00 
 
 May 25-31 ,. . . 44.00 
 
 June 1-3 43.00 
 
 June 30 i 28.00 
 
 July 1 31.00 
 
A Financial History of Texas 431 
 
 BIBLIOGBAPHY. 
 
 Barker, E. C. ''The Finances of the Texas Revolution. " In 
 the Political Science Quarterly, vol. 19, pp. 612-635. 
 
 Barker, Potts, and Ramsdell, A School History of Texas. 
 Chicago, 1912. 
 
 Comptroller's Ledger, 1861-1865. Mss. Archives of Comptrol- 
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 Comptroller's Warrant Register, 1861-1871. Mss. Archives of 
 Comptroller's Department. 
 
 Congressional Globe, 1849-1856. 
 
 Crane, W. C. Life and Select Literary Remains of Sam Houston. 
 Philadelphia, 1884. 
 
 Dallam, J. W. A Dig:est of the Laws of Texas. Reprint, St. 
 Louis, 1882. 
 
 Debates of the Texas Convention, 1845. Houston, 1846. 
 
 Deussen, A. ''The Beginnings of Texas Railroad System." 
 In the Transactions of the Texas Academy of Science, vol. 
 9, pp. 42-74. 
 
 Dunbar, C. F. "The Direct tax of 1861." In the Quarterly 
 Journal of Economics, vol. 3, p. 450. 
 
 Executive Records, Nos. 39 (1838-1841), 40 (1841-1844), 279 
 (1861-1863), 280 (1863-1865), 281 (1865-1866). Mss. Ar- 
 chives of the Texas State Department. 
 
 Fleming, W. L. Documentary History of Reconstruction. Cleve- 
 land, 1906-7. 
 
 Gammel, H. P. N. Laws of Texas, 1822-1902. Austin, 1898- 
 1902. 
 
 Garrison, George P. Texas. New York, 1903. 
 
 Garrison, George P. Texas Diplomatic Correspondence. 3 
 vols. Washington, 1907-8. 
 
 Gouge, W. ]\I. The Fiscal History of Texas. Philadelphia, 
 1852. 
 
 House Executive Document, No. 35. 24th United States Con- 
 gress, Second Session. (1836-1837). 
 
 House Executive Document, No. 159. 49th United States Con- 
 gress, Second Session. (1887). 
 
432 Bulletin of the University of Texas 
 
 House Miscellaneous Document, No. 17. 33rd United States 
 
 . CongTess, Second Session. (1855). 
 House Keports, vol. 3, No. 683. 51st United States Congress, 
 
 First Session. (1891). 
 Jones, Anson. The Republic of Texas. New York, 1859. 
 Journal of the Convention of 1866. Austin, 1866. 
 Journal of the Permanent Council. In the Quarterlj^ of the Texas 
 
 State Historical Association, 1904. 
 Journal of the Reconstruction Convention, 1868-1869. Austin, 
 
 1870. 
 Journal of the State Constitutional Convention, 1845. Austin, 
 
 1845. 
 Journal of the State Constitutional Convention. 1875. Galves- 
 ton, 1875. 
 Journals of the House of Representatives of the Republic of 
 
 Texas. 
 Journals of the House of Representatives of the State of Texas. 
 Journals of the Senate of the Republic of Texas. 
 Journals of the Senate of the State of Texas. 
 Kennedy, W. Texas. London, 1841. 
 
 Lane, J. J. History of Education in Texas. Washington, 1903. 
 Lester, C. E. Sam Houston and his Republic. New York, 1846. 
 Lubbock, F. R. Six Decades in Texas. Austin, 1900. 
 Maillard, N. D. The History of the Repu])lic of Texas. Lon- 
 don, 1842. 
 Miscellaneous Papers on Military Affairs, 1861-1865. Mss. 
 
 Archives of State Department. 
 Newspapers: Austin American, 1915. 
 
 Austin Daily Journal, 1871-1874. 
 
 Austin Democratic Statesman. 1871. 
 
 Austin Statesman, 1913. 
 
 Dallas News, ,1899-1915. 
 
 Flake's Daily Bulletin, 1865-1868 (Galveston). 
 
 Flake's Weekly Bulletin, 1866. 
 
 Galveston News, 1876-1899. 
 
 Galveston Weekly News, 1851-1856. 
 
 Houston Daily Teleo:raph, 1871-1875. 
 
 Houston Post, 1895-1897. 
 
A Financial History of Texas 433^ 
 
 San Antonio Daily Herald, 1867-1875. 
 
 San Antonio Express, 1913-1915. 
 
 Telegraph and Texas Register, 1836-1845 (Hous- 
 ton). 
 
 The Texas State Gazette, 1849-1861 (Austin). 
 
 The Tri-Weekly Telegraph, 1861-1865 (Houston). 
 
 The We-ekly Southern Intelligencer (Austin). 
 Poore, B. P. The Federal and State Constitutions. Washing- 
 ton, 1877-8. 
 Proceedings of the Taxpayers' Convention at Austin, 1871. 
 Ramsdell, C. W. '^ Texas in the Confederacy." In the South 
 in the Building of the Nation, vol. 3. Richmond, 1909- 
 1913. 
 Ramsdell, C. W. Reconstruction in Texas. New York, 1910. 
 Records of the Military Board. Mss. Archives of the State De- 
 partment. 
 Report on Audit, Organization and Method, 1909. 
 Report of the Special Tax Commission, 1899. 
 Reports of the Attorney General. 
 
 Reports of the Board of Regents of the University of Texas. 
 Reports of the Commissioner of the General Land Office. 
 Reports of the Comptroller. 
 Reports of the Secretary of State. 
 Reports of the Secretary of the Treasury of the Republic of 
 
 Texas. 
 Reports of the State Board of Education. 
 Reports of the State Land Board. 
 Reports of the State Revenue Agent. 
 Reports of the State Treasurer. 
 
 Reports of the Superintendent of Public Instruction. 
 Reports of the Tax Commissioner. 
 Reports of the Texas Courts of Civil Appeals. 
 Reports of the Texas Court of Criminal Appeals. 
 Reports of the Texas Supreme Court. 
 
 Report of the Texas Welfare Commission. Fort Worth, 1912. 
 Reports of the United States Census. 
 
 28— H 
 
434 Bulletin of the University of Texas 
 
 Report of the United States Commissioner of Corporations on the 
 
 Taxation of Corporations in the Southern and Southwestern 
 
 States. Washington, 1915. 
 Keport of the United States Commissioner of Education, 1912. 
 Reports of the United States Supreme Court. 
 Revised Penal Code of Texas, 1911. 
 Revised Statutes of Texas, 1879, 1895, 1911. 
 Rovre, E. ''The Disturbances at Anahuac in 1832." In the 
 
 Quarterly of Texas State Historical Association. 1903. 
 Sayles, J. and H. Laws of Texas relating to Real Estate. 
 
 2 vols. St. Louis, 1890-2. 
 Senate Miscellaneous Document, No. 169. 59th United States 
 
 Congress, First Session. (1906), 
 Session Laws of Alabama, 1835-1837, 
 Session Laws of Louisiana, 1820-1846. 
 Session Laws of the State of Texas. 
 Smith, E. A. The History of the Confederate Treasury. Har- 
 
 risburg, Pa., 1901. 
 The Commercial and Financial Chronicle (New York), vols. 
 
 32-39. 
 The Texas Almanac, 1858-1865. Galveston. 
 United States Statutes at Large, vols. 9 and 10. 
 Yernon's Sayles' Annotated Civil Statutes of Texas. 5 vols. 
 
 Kansas City, 1914. 
 Wooten, D. G. A Comprehensive History of Texas. 2 vols. 
 
 Dallas. 1898. 
 Yoakum, H. History of Texas. New York, 1856. 
 
INDEX. 
 
 Administration, financial, 11, 32, 360, 379-384. 
 
 Ad valorem tax, see Property tax. 
 
 Agriculture, 85, 157, 158, 197, 241. 
 
 Agriculture, bureau of, 25. 
 
 Agricultural and Mechanical College, 175, 200, 372, 374, 375, 376-377, 
 
 398, 401, 402, 404. 
 Amusements, taxation of, 10, 46-47, 142, 215. 
 Anahuac, disturbances at, 11. 
 Annexation, 30, 77, 83, 117. 
 Appropriation committee, 379. 
 Appropriations of the republic, 391. 
 Appropriation year, 381, 382. 
 Archer, Branch T., 15. 
 Army, 14, 19, 21, 22, 23, 25, 26. 
 Artesian wells, land for, 115. 
 
 Assessed values, 106, 141, 165, 210, 213, 274, 413-414. 
 Assessor, 39, 40, 101, 165, 204-205, 273. 
 Audit, organization and methods, report on, 382. 
 Auditorial board, 118, 181, 186. 
 Austin, Moses, 9. 
 Austin, Stephen, 9, 11, 15. 
 Automatic tax rate board, 370, 383. 
 Available school fund, see School fund. 
 
 Banks, growth of, 158-159, 198, 242, 293; incorporation of, 108, 158, 
 215, 242, 248; proposed for the republic, 61, 70; taxation of, 108, 215, 
 291-293. 
 
 Bell, Governor, 86, 87, 90, 91, 119, 120, 122, 123. 
 
 Bell Ptinch Law, 216, 294. 
 
 Benjamin, Judah P., 135, 137. 
 
 Benton, Senator, 120. 
 
 Blind Institute, 89, 249. 
 
 Boards of equalization, 102, 210, 211, 277, 287, 288. 
 
 Bond sale receipts, 405. 
 
 Boundary dispute, 120, 406. 
 
 Bounties on wild animals, 246. 
 
 Bribery, charge of, 164, 195. 
 
 Bridge companies, taxation of, 293. 
 
 Bright, Senator, 125. 
 
 Budget. 389. 
 
 Burnley, 60. 
 
 Burnet, President, 12, 17, 19. 
 
 Business taxes, forms of, 10, 37, 43, 107, 111, 142-143, 168-171, 214-219, 
 288, 293, 294, 301, 303, 311. 
 
436 I)idex 
 
 Campbell, Governor, 274. 
 
 Canals, 92. 
 
 Capital stock tax, 303. 
 
 Capitol, 89, 223, 251. 
 
 Car companies, taxation of, 217, 218, 293, 303-304, 310. 
 
 Centralized administration, 48, 210, 214, 279, 330, 333, 336, 341, 343, 344, 
 
 387. 
 Charities and corrections, 385, 395-396. 
 Charter fees, 220, 265, 322-324. 
 Chase, Senator, 125. 
 "Chicken Salad Case," 263. 
 
 Cities, population of, 83, 114; taxes of, 57, 113, 211-212, 281-283. 
 Civil War, period of, 134-155. 
 Classified net receipts, 405. 
 Clay, Senator, 121. 
 
 Coke, Governor, 164, 166, 194, 196, 201, 209, 213, 227, 229, 233, 236. 
 Collecting agencies, taxation of, 310. 
 Collection of taxes, 11, 12, 32, 42, 44, 48, 101. 103, 104, 165, 205, 2^^C, 
 
 268, 273. 
 Colquitt, Governor, 255, 263, 270, 274, 358, 380, 384. 
 Commercial treaties, 29, 35. 
 Comptroller, 14, 103, 104, 108, 118, 136, 160, 163, 174, 187, 188, 189, 191, 
 
 194. 199, 205, 207, 214, 217, 218, 268, 269, 287, 288, 304, 379, 381, 382, 
 
 383; reports of, 184, 188, 189, 193, 203, 237. 278, 298, 356, 361, 364, 365. 
 
 400, 401, 404, 406, 407, 408, 410, 411, 415, 418, 419, 425. 
 Confederate notes, 136, 138, 139, 141, 145-148, 151, 155. 419. 429. 
 Confederate States' taxes, 144. 
 Confederate veterans' home, 250. 
 Conservation, 385. 
 Constitution, defects of, 386. 
 Constitutional convention of 1866, 179-181. 
 Corporations, taxation of, 107, 265, 286-293. 301-315. 
 Corwin, Secretary, 122, 123, 126. 
 Cost, loss and waste in assessment and collection of taxes, 110, 272-27o, 
 
 424. 
 Cotton operations of the military board, 136, 150-151. 
 Cotton tax, Federal, 168. 
 County taxation, see Taxation. 
 Credit agencies, taxation of, 310. 
 Credits, taxation of, see Intangible property. 
 Culberson, Governor, 254, 255, 313, 314, 326, 369, 370. 
 Gushing, Attorney General, 122, 126. 
 Custom duties, see Tariff. 
 
 Dairy and food commissioner, 247. 
 
 Davis, Governor E. J.. 157, 161, 166, 167, 171, 175, 193, 194, 200. 
 
 Deaf and Dumb Institute, 89. 
 
A Financial History of Texas 437 
 
 Dealing in futures, taxation of, 310. 
 
 Debt of the republic, amount of, 17, 18, 59, 82, 117, 118, 126, 391; assump- 
 tion by the United States, 117, 118, 124-126; audited drafts, 64, 65; 
 barring claims, 130; depreciation of, 23, 69, 71, 72, 75, 77, 78, 81, 128; 
 Erwin loan, 16, 53, 81; general, 15, 20, 23, 25, 29, 62; McKinney 
 loans, 13, 53, 181; naval debt, 63; ownership of, 119, 128; payment of, 
 63, 83, 123, 131, 149; payment of in land, 53, 115, 117, 118, 120; Penii 
 sylvania Bank of the United States, 60, 62, 63; rating ot claims, 66, 
 73, 74, 79, 81, 118, 123, 124. 129; refunding, 118; treasury notes, 67-77, 
 stoppage of interest on, 130; Triplett loan, 13, 53, 181. 
 
 Debt of the state, 117-132, 149-152, 177-194, 229-239, 355-360, 389; amount 
 of, 132, 193, 238, 355, 426; Civil War, 149-152, 177-179; constitutional 
 provisions, 132, 174, 185, 232, 233, 237; depreciation of, 139, 151, 229, 
 236; floating, 132, 140, 149, 151, 193, 196, 227, 229, 231, 426, 427; price 
 at issue, 191-192, 230, 233-234, 239; payments on, 395-396; Reconstruc- 
 tion, 193, 230; repudiation, 179-181, 186, 190; to special funds, 153-154, 
 173, 174, 178, 183, 188-189, 236. 
 
 Defaulting officials, 165, 195. 
 
 Deficiency warrants, 381. 
 
 Deficits of treasury, 140, 149, 192, 196, 227, 235. 359. 
 
 Density of population, 84, 158, 197, 241. 
 
 Direct taxes of republic, receipts from, 391. 
 
 Direct tax of 1866, 167-168. 
 
 Direct versus indirect taxation, 32, 34, 36, 47, 49. 50. 
 
 Discriminating taxes, 30, 35, 36, 37, 38. 45, 46. 
 
 Districts, see Independent taxing districts. 
 
 Donations, 14, 15. 
 
 Double taxation, 321, 387. 
 
 Drummers' tax, 216, 294-295. 
 
 Education, 26, 87, 94-98, 154, 157, 161, 209, 225-228, 244, 249, 361-37S, 
 
 385, 395-396. See also Higher education, School funds, University, 
 
 Agricultural and Mechanical College, and Normals. 
 Electric companies, taxation of, 306. 
 
 Equalization, agencies of, 102. See also Boards of equalization. 
 Evasion of taxation, 45, 107-109, 113, 141, 144, 165, 169, 170, 206, 207, 
 
 209, 213, 219, 274, 277, 292, 300, 317, 321. 
 Exchequer bills, see Treasury notes. 
 Excise, 9, 12, 44. 
 Exemption from taxation, 10, 11, 12, 14, 38, 99, 100, 194, 204. 218, 290, 
 
 292, 296, 307, 308, 311, 312, 313, 316, 389. 
 Exemption of improvements, 138, 388. 
 Expenditures, 18-27, 61, 65, 70, 76, 78, 86-93, 96, 134-139, 153, 160-164, 
 
 199-202, 385, 391. 
 Experiment stations, 246. 
 Export tax, 10. 
 Express companies, taxation of, 217. 218, 293, 304. 
 
438 Index 
 
 Factories, state, 88, 138, 259. 
 
 Farms, state, 260. 
 
 Fee system, 161, 253-256. 
 
 Fees for assessment and collection of taxes, 33, 40, 101, 205. 
 
 Fees of departments, etc., 116, 220, 265, 322-324, 377, 405. 
 
 Fence cutting, 25l 
 
 Ferguson, Governor, 256, 280, 308. 
 
 Ferry companies, taxation of, 293. 
 
 Fifty Cents Law, 327, 331. 
 
 Fillmore, President, 122. 
 
 Financial administration, cost of, 395-396. See also Administration. 
 
 Fire insurance commission, 248. 
 
 Fiscal year. 381, 418. 
 
 Fish commission, 245. 
 
 Forced loan, 10. 
 
 Forester, state, 246. 
 
 Fox Table, 429-430. 
 
 Franchises, taxation of, 287, 293, 303, 304, 311-313, 314, 315, 409. 
 
 Free grass, 332, 335-336. 
 
 Frontier defence, 88, 191. 201. 
 
 Full Rendition Law, 277-278. 
 
 Funding of debt, 229-231, 236, 238. 
 
 Game, fish and oyster commissioner, 245, 298. 
 
 Gas companies, taxation of, 217, 306. 
 
 General administration, cost of, 395-396. 
 
 General land office, 55, 83, 209, 220, 322, 325, 330, 336, 341, 344. 345, 352, 
 
 353, 382, 408. 
 General property tax, see Property tax. 
 General revenue fund, 87. 188, 192, 198, 200, 201, 203, 213, 21 9, 
 
 226, 230, 236, 238, 315, 355, 356, 358, 359, 369, 372, 375, 397, 
 
 399, 400, 410, 411, 416, 417, 423. 
 Geological survey, 89, 200. 
 Gilmer, 60. 
 Gross receipts, taxes on, 142-144. 170-171, 218, 293, 301-310, 313, 314. 
 
 Hamilton, A. J., 177. 
 
 Hamilton, .lames, 60, 61. 
 
 Health and vital statistics, board of, 2 46. 
 
 Henderson, Governor, 117. 
 
 Higher education, 97, 98, 175. 227, 372, 403. 
 
 Highways, 385. 
 
 Hogg, Governor. 254, 311, 313, 314, 362, 363. 
 
 Home rule, 3 88. 
 
 Homesteads, land grants for, 52, 115-116, 172, 222, 328. 
 
 Homestead, tax on, 166, 389. 
 
A Financial History of Texas 439 
 
 Houston, Sam, 18, 19, 20, 21, 23, 24, 25, 30, 32, 33, 34, 47, 48, 50, 
 
 54, 56, 62, 65, 67, 69, 70, 75, 77, 87, 109, 118, 140, 427. 
 Hubbard, Governor, 209, 235. 
 Hypothecation of state bonds, 172, 191, 193. 
 
 Hliteracy, 97, 157, 228. 
 
 Income tax, 10, 99, 142, 143, 144, 168-170, 388, 409. 
 
 Indemnity bonds, 86, 95, 110, 121, 133. 
 
 Independent taxing districts, 212, 228, 283-285, 287, 368, 369. 
 
 Indians, 19, 20, 21, 24, 25, 26, 49, 88, 141, 161. 
 
 Industrial accident board, 247. 
 
 Inheritance tax, 320-321, 409. 
 
 Insurance companies, taxes on, 142. 143, 170. 217. 290-291. 307-310. 
 
 Insurance, statistics and history, department of, 200. 
 
 Intangible assets tax, 266, 287-288, 293. 
 
 Intangible property, 107, 170. 204, 206, 275-276, 279,-387, 413. 
 
 Interest on funds, 220, 265, 405. 
 
 Interest on warrants, 64, 149, 178, 182, 185, 186, 194, 227, 229, 
 
 236. 360. 
 Interna] improvements, 26, 87, 89-93, 95, 223, 231. 
 International Railroad subsidy, 163, 194, 231-232. 
 Investment of special funds, 220, 233, 327, 357, 361-364, 372, 373. 
 Ireland, Governor, 274, 335, 336. 
 Iron industry at Rusk, 258-259. > 
 
 Jester amendment, 363, 370. 
 
 Johnson, President, 156, 181. 
 
 Jones, Anson, 18, 41, 32, 48, 65, 70, 77, 83. 
 
 Judiciary, 86, 161, 253, 395-396. 
 
 Labor statistics, bureau of, 247. 
 
 Labor unions, 260, 318. 
 
 Lamar, Mirabeau B., 19, 21, 23, 30, 31, 47, 50, 56, 60, 65, 69, 70, 78. 
 
 Land, dues and fees from, 11, 13, 15, 53-54, 2 20; grants to asylums, 
 89, 116, 172, 222, 353; grants to education, 26, 53, 95, 116, 223, 
 225, 228, 325, 327, 376; grants to factories, 145; grants for home- 
 steads, 52, 115-116, 172, 222; grants to immigrants, 51, 52; grants for 
 military and naval service, 14, 51; grants for pensions, 201, 250, 
 325, 327; grants to railroads, 53, 89, 90, 92, 11-5, 163, 172, 223.. 
 326; grants for state capitol, 223, 251, 326, 340; interest on pur- 
 chase notes, 226, 329, 330, 331, 334, 337, 339, 341, 347; lease of, 
 95, 226,/ 332, 334-337, 339. 342, 405; mineral, 345-350; pre-emption 
 policy, 54, 55, 115, 172, 223, 338; prices on, 114. 145, 145, 329, 330, 
 333, 339, 340, 343, 344, 347. 348; receipts from sale of, 54, 154, 
 172, 223, 226, 338, 350-351, 361, 391, 405, 406; sale of ta 
 United States, 117; school, 114, 172, 222, 329-352; sale of scrip, 
 54; timber, 342-345; university, 97, 116, 172, 222, 327, 337, 338.. 
 339, 352-353. 
 
440 Index 
 
 Lanhara, Governor, 274, 293. 
 
 Legislature, 83, 160, 263, 395-396. 
 
 Levee and drainage board, 246. 
 
 Library, state, 248. 
 
 License taxes, see Occupation taxes. 
 
 Liquor taxes, 28, 29, 31, 37, 43, 44, 112, 142, 143, 144, 215, 216, 218, 
 
 298, 299; 300, 310. 
 Livestock, assessed values of, 413. 
 Livestock sanitary commission, 245. 
 Loan commissioners, 15, 60, 62. 
 Loans, see Debt. 
 Lochridge, Lloyd, 255, 274, 317. 
 Lubbock, Governor, 145, 147, 427. 
 
 McKinney, Thomas F., 13, 53. 
 
 Manual training, 247. 
 
 Manufacturing, 85, 158, 197, 241. 
 
 Merchandise, assessed values of, 413. 
 
 Mileage basis of apportioning taxes, 214, 286, 287, 302, 303. 
 
 Militia, state, 252, 253, 395-396. 
 
 Military board, 136-138, 146, 148, 149, 150, 153, 155. 
 
 Mineral lands and minerals, see Land. 
 
 Minimum valuations for taxation, 39. 49, 109. 
 
 Mining, 197, 242, 247, 349. 
 
 Money, taxation of, see Intangible property. 
 
 Mortgages, taxation of, 204, 387. 
 
 Murrah, Governor, 137, 144, 147, 151. 
 
 Navy, 19, 21, 22, 23, 25, 26. 
 
 Negro normal, 227. 
 
 Negro population, 83, 157, 197, 228, 240. 
 
 Non-resident taxpayers, 37, 38, 46, 100, 108, 141, 165, 206, 213. 268, 
 
 271, 276, 292. 
 Normal schools, 227, 249, 372, 377. 
 
 Occupation taxes, general, 37. 43, 44, 75, 99, 107, 111-113, 133, 
 142, 170, 203, 215-217, 294-300, 391, 409; corporation, 142-143, 
 170-171, 217, 218, 301-310, 409. 
 
 Oil dealers, taxation of, 310. 
 
 Oil producers, taxation of, 310. 
 
 Oyster beds, rental of, 3 2 8. 
 
 ^Oyster commissioner, 245. 
 
 Palm, Swante, 177, 4 27. 
 Tanic of 1837, 62. 
 
 Panic of 1873, 196, 199, 262, 327, 386. 
 Panic of 1893, 313, 370. 
 
A Financial History of Texas , 441 
 
 Pearce, Senator, 121, 124. 
 
 Pease, Governor, 88, 90, 91, 95, 96, 111, 113, 127, 129, 136, 138. 
 151, 167, 177, 427. 
 
 Penalties, 264, 408. 
 
 Penitentiary, 26, 88, 138, 162, 201, 244, 256-262, 358, 398, 402. 
 
 Pensions, 89, 200-201, 231, 238, 249, 250-251, 281, 325, 327, 
 395-396. 
 
 Permanent appropriations, 381. 
 
 Permanent school fund, see School fund. 
 
 Permit fees, 32 3. 
 
 Personal property, taxable, 46, 204, 206. See also Intangible prop- 
 erty and Property tax. 
 
 Pipe line companies, taxation of, 310. 
 
 Pistol dealers, taxation of, 310. 
 
 Poll tax, 45, 46, 113, 133, 141, 171, 173, 203, 219-220, 265, 316-319, 
 409, 412. 
 
 Population, 9, 18, 83, 157, 197, 240. 
 
 Port fees, 35. 
 
 Postal service, 31, 56. 
 
 Prairie View Normal, 372, 374, 377. 
 
 Pre-emption policy, see Land. 
 
 Prices, 69, 71, 139, 148, 394. 
 
 Property tax, ad valorem rates of, 36, 37, 106, 140-141, 165, 166, 
 211, 280-281, 383, 412: delinquency, 42, 105, 166, 207, 208. 
 269-272, 274; discriminatory rates based on jurisdiction, 36, 37, 
 38, 45. 46; discriminatory rates based on quantity, 37, 46; exemp- 
 tions, 38, 99, 100, 194, 204, 267; false rendition, 41; forced sale, 
 42, 105, 141, 166, 208, 209, 269-270; importance of, 49, 203, 265; 
 lien under, 105, 208, 271; modified as a business tax, 214-215, 
 280-294; oath required, 41, 101, 102; operation of, 45, 49, 
 106-111, 141, 267-269; place of assessment, 39, 49, 100, 141, 
 206; property enumerated, 36, 100, 267; receipts from, 409; 
 redemption of property sold for taxes, 42, 105, 141, 270; releases from, 
 268; scope of, 99, 204, 267; specific rates, 36, 37, 99; statute of limita- 
 tions, 270; time of assessment, 100, 209, 268; unrendered property, 40. 
 100, 101. 102, 207, 208^209, 268-269; valuation, 39, 101, 102, 106, 109, 
 210, 277. 
 
 Protection to persons and property, expenditures on, 385. 
 
 Protective tariff, 31. 
 
 Public buildings and grounds, 395-396. 
 
 Public printing, 395-396. 
 
 Publishers, taxation of, 310. 
 
 Pullman Company, taxation of, 303. 
 
 Railroad commission, 245, 289. 
 
 Railroad, state, 261, 358. 
 
 Railroads, aid to, 89, 92, 96, 115, 153, 162, 172, 173-175, 
 
442 Index 
 
 194, 231, 362; mileage of, 84, 158, 198, 243; taxation of, 100, 
 
 107, 194, 214, 286-289, 301-303, 413. 
 Rangers, 252-253. 
 
 Real property, assessed values of, 413. 
 Receipts, general, 140, 203, 264. 
 Reciprocity, 29, 35. 
 Reconstruction period, 156-19 5. 
 Reformatories, state, 262. 
 
 Refunds by United States Government, 129, 162, 264, 407, 418. 
 Relinquishment of state taxes, 87, 110, 268. 
 Republic of Texas, see Debt, Property tax, etc. 
 Repudiation, see rating and repudiation under Debt. 
 Revenue, payable in what, 14, 34, 50, 55, 5 6-5 7. 65, 7 2, 7 5, 7 6, 7 7, 
 
 80, 104, 114, 145, 146. 
 Revenue agent, 248. • 
 
 Revolution, the Texas, 12, 13-17. 
 Roberts, Governor, 174, 216, 218, 219, 226, 228, 235, 236, 237, 238, 
 
 294, 357, 364. 
 Robertson Law, 308. 
 
 Ross, Governor, 254, 270, 274, 330, 336. 
 Royalties, 346, 350. 
 Runnels, Governor, 109. 
 Rural high schools, 246. 
 Rural population, 84, 241. 
 
 Salaries, 20, 22, 23, 24. 33, 83, 87-88, 139, 160, 164, 199, 262-263. 
 
 Salary tax, 143. 169-170, 409. 
 
 Saligny, M. de, 61, 62. 
 
 Sam Houston Normal, 227. 
 
 Santa Fe Expedition, 71. 
 
 Sayers, Governor, 274, 340, 363. 
 
 School districts, 212. 
 
 School fund, amount of, 173, 225; apportionment of, 96, 173, 226, 
 371; available, 173, 212, 219, 225, 229, 314, 363, 367-371, 399, 
 420-421, 423; Civil War. 135, 137, 146, 151, 153; endowment of, 
 87, 94, 173, 225, 422; expenditures of, 96, 138, 153; loan of to 
 railroads, 91, 92, 95-96, 145-146, 150, 173-175; permanent, 173, 
 220, 225, 340, 351, 361-366, 423; Reconstruction, 161, 173-175, 
 180, 183. 188-190; taxation for, 94, 96, 173, 198, 226, 367, 422. 
 
 School taxes, 97. 113, 228, 283. 
 
 Sea vessels, land for, 115. 
 
 Reparation of sources of state and local revenues, 3 8 6-3 87. 
 
 Sheep inspector, office of, 245. 
 
 Single tax, 388. 
 
 Sinking fund, 60, 140, 151, 191, 192, 233, 237, 238, 356, 359, 370. 
 
 Slaves, 83, 141, 165. 413. 
 
 Smith, Henry, 34, 68. 
 
A Financial Ilistonj of Texas 443 
 
 Smuggling, 31, 33. 
 
 Social expenditures, 24 8. 
 
 Special taxes, 251, 279, 280, 378. 
 
 Specie tax, 140, 145, 146, 149. 
 
 Specie, scarcity of, 7 6, 7 8, 14 6. 
 
 Spoils system, 2 62, 3 90. 
 
 Stamp duties, 10, 11, 15. 
 
 State engineer, 2 4 5. 
 
 State enterprises, 88, 13 8. See Factories and Farms.- 
 
 State land board, 333. 
 
 State lylice, 162. 
 
 Steamboats and stage coaches, taxes on, 306. 
 
 Street railways, taxation of, 306: 
 
 Subsidies, see Land and Internal improvements. 
 
 Sumptuary taxes, 47, 215, 298. 
 
 Superintendent of public instruction, 249. 
 
 Swisher, J. M., 138. 
 
 Tariff, arguments for, 32; dutiable articles, 11, 14, 28, 31; free list, 
 14, 29, 30; general, 10, 11, 12; opposition to, 31-32; purpose, 31, 
 rates, 14, 28, 30, 31; receipts from, 15, 30, 33 34, 391. 
 
 Tax board, 248, 266, 287, 293, 387. 
 
 Tax ferrets, 279. 
 
 Tax rates, 370, 383. See also Property tax and Tariff. 
 
 Taxpayers' Convention of 1871, 167, 173. 
 
 Taxation, constitutional provisions, 28, 99, 173, 204, 206, 210, 211, 
 212, 214, 215, 219, 227, 280, 281-284, 314, 370, 378. 
 
 Taxation, importance of, 12, 49, 110, 133, 140, 165, 203. 
 
 Taxation, local, 57, 58, 166, 173, 215, 217, 281-285, 368, 370. 
 
 Taxation, weight of, 12, 144. 166-167. 
 
 Tax lien, 166, 219, 271. 
 
 Tax titles, 109, 166, 265, 271. 
 
 Taxes, receipts from, 405. 
 
 Telegraph companies, taxation of, 170-171, 214, 217, 218, 293, 305. 
 
 Telegraph and telephone property, assessed values of, 413. 
 
 Telephone companies, taxation of, 305. 
 
 Terminal companies, taxation of, 310. 
 
 Terrell, H. B., 263, 321. 
 
 Thompson, Senator, 12 5. 
 
 Throckmorton, Governor, 144. 156, 167. 
 
 Timber lands and timber, see Land. 
 
 Tithes, 10. 
 
 Tobacco monopoly, 10, 11. 
 
 Tonnage dues, 14, 35-36. 
 
 Treasury notes, 16, 20, 22, 23, 32, 34. 55, 57, 67-77, 122, 391. 
 
 True values of property. 106, 165, 209, 274. 
 
 Tuberculosis sanatorium. 2 4 6. 
 
 Twelfth Legislature, 164, 186. 
 
444 hidex 
 
 Undervaluation of property, 106, 10.8, 109, 165, 209, 213, 274. 
 Uniform rule in taxation, 99, 215, 267, 288, 296, 297, 299, 303. 
 University, 53, 87, 97, 98, 132, 151, 154, 175, 180, 183-184, 188-190, 
 
 222,-224, 227-228, 233, 249, 327, 337, 338, 339, 352-353, 359, 
 
 372-376, 380, 399, 404. 
 Unorganized counties, 205, 206, 208, 209, 211, 214, 271, 287, 330. 
 
 Veto, governor's, 111, 226, 237, 247, 356, 375, 380, 384. 
 
 Warehouse regulation, 24 6. 
 
 Warrants, classification of, 395-396. 
 
 Warrants, state, 135, 139, 145, 147, 149, 151, 174, 180, 19*4, 227, 
 
 229, 236, 359, 369, 370. 
 Water engineers, board of, 246. 
 Water companies, taxation of, 306. 
 Wharton, William, 15. 
 White and Chiles, 137. 
 Wood, Governor, 117, 118, 119, 120. 
 
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