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 aa second-class matter at the postoffice at AUSTIN, TEXAS Publications of the University of Texas Publications Committee : A. c. JUDSON C. HABTKAN E.C.BABXEB J. L. HENDEBSON 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, publica­tions on humanistic and scientific subjeets, bulletins prepared by thfl Department of Extension and by the Bureau of Munie. ipd Re11earch, and other bulletins of general educational in­tf:l'est. With the exception of special numbers, any bulletin will be aent to a citizen of Texas free on request. .All communica­tions about University publications should be ad·Jressed t.o the Editor of University Publications, University of Texas, Austin. A, C. BALDWIN a SONS, AUSTHI B 290--016-12h 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 as second-class matter at the postoffice at AUSTIN, TEXAS The benefits of education and of useful knowledge, generally diffused through a community, ai•e essential to the preservation of a free govern­ment. Sam Houston. Cultivated mind is the guardian genius of democracy. It is the only dictator that freemen ac­knowledge and the only security that freemen desire. President Mirabeau B. Lamar. PREFACE. The increasing number of histories of Texas and of books about Texas testify to the appeal which the history of the state has alike to its sons and daughters and to those who are foreigri to its soil. Texas has been under the flags of France, Spain, Mexico, the Republic of Texas, the Confederate States of Amer­ica and the United States, and the scroll which records these changing fortunes has attracted the novelist, the political his­torian, 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 always illustrative of either the prin­ciples 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 sug­gestion 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 com­plete 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 gq.tten out in a perfunctory way and merely to meet the minimum require­ments 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 sor.ely in need of change if the most elementary justice is to be done among men. If this financial history can arouse any in­terest 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 Recon­struction wer.e first published in the Quarterly of the Texas Bulletin of the University of T exas State His fo1·ical Association, and are inclnd :\'pt Rrceipts. 18-17-1915 ........ .... 405 ('\a-;sitit'd Taxes. 1846-191;) ........ ........... 409 Tax RatPs. 1846-191;) . . .... ................ . 412 ..:\ss('"sd Yalnes of Propert~·. 1846-191:) ........ 413 (i 1'1wraI Ht>nnne Fnnd. 18-17-1915. . . . . . . . . . . . 416 ..:haiL1hk Sehool Fnnd. 1847-1915 ... .......... 420 ('ost arn1 Lnss in _.\ss£>ssment and Collection, 188t1-1~)1;) .... ............... .. ....... . .. . 324 Puhlie Dt>ht. 1846-191;:5 . .. .. ... .. ........... . 426 \h·n1'rship of thE' State's Bondpd Debt, 1865­l~ll;) .. ' ..... .. .... ... .... .. ............ . 428 l·\1r T;1hlt• of C1)nfrdernte C'nrr~rn.·y Values.. . 429 Hihlil1~raphy 431 T:1.1 x 435 PART I. CHAPTER 1. THE SPANISH-MEXICAN PERIOD. On January 17, 1821, when Moses Austin was given permis­sion by the Spanish authorities to introduce three hundred fami­lies into Texas, that Spanish colonial possession was a wilderness except for roving Indian tribes. some monastic settlements" Spanish soldiers, and a few American sqnatters.1 Austin died soon after the favorable answer to his petition, and the work of carrying out the enterprise fell to his son, Stephen F. Aus­tin.2 Shortly after the latter's arrival in Texas in 1822, he was told by the Spanish governor at Bexar of the Mexican revolu­tion, and was advised to go to Mexico and get the concession confirmed. Austin had no sooner arrived in Mexico than an­other change in government occurred, by which Don Augustin Iturbide made himself emperor. A colonization law was en· ;icted January 24, 1823, and on February 18, 1823, the em­peror 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 con­firmation 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 coloniza­tion laws. and the influx of Americans into Texas began.3 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 Wooten, 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. Bitlletin of the Universi~y of Texas The finances and financial arrangements of this period of Texas history are very obscure.1 It appears from the laws and decrees that the revenue came from tithes,2 excise,3 stamp,4 and customs duties ;5 and from taxes on income6 and on the export of coin and silver bullion.7 Other sources were the sale of the right of cock pit locations,~ the monopoly of the sale of tobacco, 9 and taxes on billiard ta­bles,10 on the slaughtering of stock,11 and the capturing of mus­tangs and wild cattle.12 Forced loans also were employed on occasions.13 From most of these taxes the new American settlements were exempt for a period of from six to ten years.14 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. ' 0Decree 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 e:-:onption for s1x years. The colonization law of March 24, 1825, and the decree of February 9, 1828. governed the other colonies, and pro­vided for an exemption for ten years; ibid., pp. 130, 207. A Financial History of Texas also, on the ground that the dutiable articles were neceusi ties, or that the taxes would burden agriculture.1 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 labor.2 All the colonists were required to pay land dues, and were subject also to stamp taxes on legal documents giving title to property.3 The tobacco monopoly was in force throughout all the colonies. Six years after its beginning, customs duties be­came 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, itnd by the petition to the General Congress from the convention which met at _San Felipe de Austin, October 1, 1830.4 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 indis­pensable 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 ma­chinery and methods employed during this period. The col­lection of stamp taxes was in Austin's colony in the hands of Austin himself, and returns were made by him to the commis­sioner appointed by the governor of the state.6 After the 1Maize, 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. 2Article 22; Gammel, op. cit., vol. 1, p. 43. A labor was about 200 acres, a sitio about 4,400 acres. 'Decree No. 43; Gammel, op. cit., vol. 1, p. 207. •Edna Rowe, "The Disturbances at Anahuac in 1832," in The Quar­terly of the Texas State Historical Association, vol. 6, pp. 265-299. AlsG Garrison, Texas, p. 176. "Proceedings of the Convention; Gammel, op. cit., vol. 1, p. 485. 'Ibid., p. 18. Bulletin of the University of Texas organization of an ayuntamiento, or elective town council. in this and the other colonies, this body performed in connect ion with its other duties those of a fiscal character.1 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.2 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.3 The revenue during this period was 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 insuffi­ciency of public means.4 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 dur­ing the Revolution, and new expedients for raising revenue had to be found. The revenue from taxes must have been inconsid­erable 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. 3Decree 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 over­charged tariff"; House Journal, 1st Tex. Cong., First Session, p. 15. This statement and the petition 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, govern­mental 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, which 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 es­tablished on March 16, 1836, and exercised authority until Oc­tober 22, 1836, when General Sam Houston, the duly elected president of the republic, was installed. The separation from Mexico was begun under the Permanent Council. This body was without l'lesources, and its financial opera­tions were insignificant.1 Receipts under it amounted to $374.30, of which $316 was from loans and $58.30 from land dues.2 The entire amount was expended on the army. 'l'he receipts under the Consultation were larger on account of donations received. The agent at New Orleans reported sub­scriptions amounting to $7,000; and other donations aggregating $3,200 were made.3 A loan of $500 was also contracted with Thomas F. McKinney, a member of the Consultation body.4 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. Bulletin of the University of Texas appointed and his duties defined.1 The offices of audito·r and comptroller were also created, and it was made the duty of these officers to audit all claims, and to draw drafts on the treasurer, the auditor signing, the comptroller countersigning them.2 The main resource of Texas in her struggle for independence was her public lands. 'rhese 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.3 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.4 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. 5 A supplementary ordinance of December 15, 1835, imposed a tonnage duty of $1.25, and a specific duty of 121h cents a gallon on whiskey, American gin, rum, and brandy.6 On December 27, 1835, another law was passed. which levied 25 per cent and 15 per cent duties respectively upon goods en­titled 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.7 This early rev1s10n of the customs law was done primarily to safeguard the col­ 'Ordinances and Decrees, in Gammel, op. cit., vol. 1, p. 928. 2Ibid., p. 1003. "Ibid., pp. 926, 952, 991. 4The 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 lection of duties by requiring larger bonds from collectors and to prevent the delay in payment of duties permitted by the first act.1 The amount deriv0ed from these duties is unknown. It must have been small however, for the acts were anticipated by the merchants.2 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.3 Stamp duties, land dues, and the sale of public property were also sources of a small revenue.4 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 sympathetfo 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.3 An ordinance and decree of December 5, 1835, author­ized a loan of $1,000,000 and provided for three commissioners who should seek to negotiate it in the United States. The com­missioners 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 1Proceedings 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 of 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. • 1n their report on November 27, 1835, the committee on finance said: "Your committee have not been able to fix upon a project possess­ing in greater degree all the essential requisites of speedy operation, and c·ombining celerity and certainty in its accomplishment, than that suggested by a loan"; Proceedings of the General Council, in Garn· mel, op. cit., vol. 1, 596. Bulletin of the University of Texas delphia, New York, and Richmond in their dforts to place iht! loan.1 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 fiv.e years nor more than ten years.2 On the basis of this law two loans aggregating $250,000 were made in New Orleans in January, 1836. They were both subscribed by syndi­cates. 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.3 Although nominally loans, these were 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 loca­tion over all grants made after the date of the loan. Such oppo­sition 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 pro­posed to refund the money.4 Compromise was attempted and bickerings followed, but the matter was finally adjusted on the basis of a land payment.5 These two loans, with several smaller ones, yielded, it is estimated, about $100,000.6 Finally, on January 20, 1836, the issue of $150,000 of treasmy notes was authorized. The notes were 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.7 One of the last acts also of the 'Texas Diplomatic Correspondence, vol. 1, p. 111. 0Gammel, op. cit., vol. 1, p. 948. Texas Diplomatic Correspondence, vol. l, 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 per­sons 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 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.1 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 was 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.2 1 Proceedings of the Convention; Gammel, op. cit., vol. 1, p. 903. 2Letter 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. Proceed­ings of the General Council; ibid., p. 748. The loan commissioners, Austin, Archer, and Wharton, writing from Nashville, Tenn., to Gov­ernor Smith, on February 24, 1836, recommended the issue of treasury notes; Texas Diplomatic Correspondence, vol 1, pp. 71, 72. PART IL 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 Ja­cinto was fought on April 21, and the h'ero 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 in­augurated on the twenty-second. On February 16, 1846, Anson Jones, the last president, formally pronounced the Republic of Texas to be no more, and committed the ~overnment to th~ 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 nationi'l. 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 ow11 abroacl; 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 of settlement amounted to over $12,000,000. The white popn:lation of 'l'exas was probably not over thirty thousand in 1836 and about one hundred thousand in 1846.2 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 1852. 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 fl.res 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 The history of the republic is a chapter of difficulties and dis­appointments, and the ten years were rich in governmental ex­perience. There were few financial expedients whir.h were not resorted to. The key to its character and difficulties is to be 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 0 1 her warring Indian tribes to a number equal almost to one-third 0f the white settlers, Texas held defence to be of paramount im­portance. When the permanent government entered upon itl'l duties, the army, which numltered about two thousand men, was suffering privation, and the navy consisted of only one large vessel.1 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 maintena.nce.2 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.3 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.4 Mili­ 1Message of Burnet, October 4, 1836. See also Report of Committee on Naval Affairs; House Journal, 1st Tex. Cong., p. 97. 2Act of November 18, 1836, for the increase of the navy; Gammel, op. cit., vol. 1, p. 1090. Acts of December, 5, December 20, and Dllcember 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 re­fused to accept General Lamar who had been designated by the gov­ernment as their commander. This act of insubordination was also a consideration in the granting of the furloughs; Garrison, Texas, p. 232. Btllletin 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 repre~ the frequent Indian depredations during 1836, 1837, and 1838. As for the initial civil expenditures, the First Congress estab­lished 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 ;1 the vice-president, attorney general, and the commissioner of the g.eneral land office, each $3,000; the secre­taries of state, treasury, war, and navy, each $3,500; the post­master-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.2 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.3 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.4 President Houston's first administration extended from Octo­ber, 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 $~80,921, and expenditures £or the army and navy were $430,570.5 '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 Until the is.sue of treasury notes in the fall of 1837, appro­priations 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 ex­penditures, and especially those of a military and naval char­acter.1 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 sala­ries, but to additional departmental clerks, to increased con­tingent 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 Mexico 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 strengthening· the army.2 In 1833 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.3 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.4 1The 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. 2Message 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 success­ful and less costly. Bulletin of the UniVersity 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.1 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.2 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 $3,000.3 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.4 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.5 The appro­priations 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 ihe 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. 3Act 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 Pinancial History of Texas 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 ar­bitrary 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 ap­proval. 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.1 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 Con­gress was carried much farther. The Sixth Congress, or the first under HJouston 's second ad­ministration, 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 sal­aries from that of the president down. 2 'Yoakum, op. cit., vol. 2, pp. 321-331, gives an account of this expedi­tion. 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 Bulletin of the University of Texas The zeal of congress for retrenchment in the civil list ex­ceeded, however, that of the president. In his message of De­cember 20, 1841, Houston said that the time when retrenchment was necessary and important had gone by.1 He meant by this, doubtless, that the military and naval policy of the Lamar ad­ministration should never have been entered upon. In his message of June 27, 1842, also, he complained that his sugges­tions 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.2 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 ju deprecating the action of congress.3 No further reduction was recommended either in or out of congress, but the discon­tinuance of what were regarded as useless officers, such as, for example, foreign ministers, charge d 'affaires, and secretaries of legation, was advocated.4 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 1Executive Record, No. 40. 'Executive Record, No. 40. 'The following is a statement of salaries paid at the seat of govern­ment 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 al­most incredible, but the figures tally closely with those of the appropria­tion acts. 'The senate committee on finance believed in abolishing the for­eign 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 re­trenchment of civil expenditures. A Finan.ci.al History of Texas regard to )!exico, 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.1 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 )fexico. But, as a matter of fact, in March and September of 1842 there were two in>asions, and San Antonio, Refugio, and Goliad were occupied by the enemy. Fol­lowing the invasion in )larch, congress, in June, declared for an offensive war, and a large body of Texans rushed to arms. The invading armies with9.rew 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. )Iexico 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.2 The economy of Houston's second administration resulted in total expenditures of only $511,08:3 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 accou11t of the Indians was prepared by the comptroller in 1854 : 1837-1838 (Houston) .. . . .. ...... . . . ... . . $ 190,000 1839-1841 (La.mar) . . . . . . . . . . . . . . . . . . . . . 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. B-ulletin of the University of Texas The zeal of congress for retrenchment in the civil list ex­ 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 de­rived 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. Bulletin of the Univ'el'sity of Te.ras H. Miscellaneous and Unclassified Receipts. Except for the year 1839, the receipts of a miscellaneous char­acter were negligible. The receipts for this year were large because it was not found possible to classify the amount de­rived 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.1 I. 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.2 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' certifi­cates, 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 bis message of December 4, 1844, said that the amount appropriated for sustaining the post office during his second adminis tration was only $'.!9,000 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 through­out 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 re­ceipts 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 bow 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 is.sued by special acts of congress, were receivable for direct taxes after 1842. Treasury notes, including both the ''red-hacks'' issued before 1842 and the exchequer bills issued in 1842 and thereafter, made up the largest part of the receipts.1 After 184:3 the old issues of notes, or those before 1842, were not receivable for taxes, except in payment of arrears, and the new issues were receivablP only at their current market rates.2 The other forms which receipts took were bonds and land scrip, but they constituted only a small part of the receipts.3 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.• J. 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 pro­visions in the laws. The act of December 20, 1836, provided that the county board of commissioners should levy a tax suffi­cient 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.5 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.6 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. 3According 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, ma.de 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 govern­ment. 'Gammel, op. cit., vol. 1, p. 1206. 'Ibid., vol. 2, pp. 200, 577. Bulletin of the University of Texas should not exceed the county tax.1 From this restriction to one­fourth of the state taxes, the towns of Matagorda, Houston, Gal­veston, and San Antonio were excepted in 1844.2 'Ibid., p. 578. ZJbid., p. 942. CHAPTER 3. THE PUBLIC DEBT.1 Upon the establishment of the permanent government in October, 1836, the public debt was 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 in­crease 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 over­estimated the credit of their government, and their disillusion­ment soon followed. The following is a descriptive account of the debt: A. Ten Pc,. Cent Bonds of the 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 an.v time the amount of his loan in land at the minimum g-owrnment price. For the punctual payment of the interest anJ the final redemption of the loan, the public faith, the pro­<'Peds of the sales of public domain, and all taxes on land after H\:38, were pledged.2 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 beyoud 1851. 'Act of l\'ovember 18, 1836; Gammel, op. cit., vol. 1, pp. 1092-3. Bulletin of the University of Texas States to place the loan, but they met with no success.1 In May, 1838, another act was passed modifying slightly the pro­visions 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 addi­tion 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.2 In January, 1840, provision was made for a sinking fund which was to be con­stituted 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 "noth­ing was to prevent the government from applying a larger sum.'' It was to be used in purchases of the bonds at thei1• 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. " 3 In the fall of 1839 the commissioners succeeded in placing a part of the bonds with the Pennsylvania Bank of the United States. The amount obtained, for which 10% sterling bonds were given, was $457,380.4 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 \·isited the Hague, London, Paris, and Brussels. President Lamar reported in November 12, 1839, that the prospects of obtaining the full loan were ''cheering and satisfactory,'' and 1Messrs. Gilmer and Burnley were the first commissioners. In 1839 James Hamilton was appointed commissioner to succeed Gilmer. Presi­dent 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 Cor­respondence, vol. 1, pp. 111, 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 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. Tlw plan of using the proceeds to establish a great national bank was perhaps the most popular.1 Surcess was indeed very near in the summer of 1841, for the banking house of Lafitte and Com­pany of Paris was on the point of oprning its books to the flota­tion of the loan, when the French minister of finance came out in a st'mi-official note hostile to the proposition.2 Until 1843 hope was cntr1·t.ained by the Texas loan commissioners that the French g·ovrrnmrnt would aid in floating: the loan. It was believed that mere rrcoi:m ition by Franee and England of thr independence of Texas would enable Texas to get all the money she desired.3 The dntirs on French "·ines imported into Texas were abolished by proclamation for three years to "·in the favor of France, and Fnmre eonld have secured for her guarantee of a loan the com­mercial 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 adYerse to the guarantee was drclared to the Prench gowrnment by l\f. de Saligny,. the represmtative in Texas of that gowrnmC'nt." l\I. 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 kreper. 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 Corres­pondence, 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 Tele­graph and Texas Register, June 30, July 7, and .July 28, 1841. See also extracts from French newspapers in Maillard. The History of the Republic, 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. Bulletin of the University of Texas failure of l\f. de Saligny to secure extensive land grants for him­self and associates.1 The failure of Texas to place the loan any­where 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. 2 The panic of 1837 was a most inopportune event for the Republic of 'l'exas, 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 au­thorizing the five million loan,3 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 lanrls.-t 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.5 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, 1819, 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 Correspond­ence, vol. 3, p. 1482. "Report of the Comptroller, 1855. A Financial History of Texas duties, it fell within the provisions of the acts of Congress of September 9, 1850, and February 28, 1855. In its act of Jan­uary 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 anditorial 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.1 Another debt of the republic which was represented b~, bonds issued under the five million loan acts was the so-called naval debt. In accordance with the act of November 4, 1837, a con­tract was made in November, 1838, "·ith Frederick Dawson, of Baltimore, for vessels which were received in 1839. The original contract price was $280,000, payable in one year, but double that amount if payment should not be made at maturity. Payment was not made at maturit~., 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.2 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 pa:v at maturity resulted in the forfeitnre of 10% bonds to the amount of $195,907. The principal of the naval debt with interest to July 1, 1850, amounted to $1.622,404.70.3 Texas 1Act 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 M~sc. 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 No­vember 12, 1851. 'Report of the Comptroller, 1855. Bulletin of the University of Texas rated this debt at fifty cents on the dollar, but as the bonds Wt.·1\) ~ecnred by a pledge of import duties they were paid out of the $7, 750,000 reserved in the United States Treasury on the basis 0f 76 9110 cents on the dollar.1 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 \Vas 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 ex­penditures of the government, although there may be some ques­tion 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 aft.erwards 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 goYernment ad interim was in the form of treasury order,; or audited drafts, representing treasury obligations for supplies for the army and navy, for pay of officers and men, and for civil purposes.2 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,­ 468.43.3 This continued to be the main form which domestic indebtedness took until the issue of treasury notes began in Kovember, 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, a:n­ '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 Terns 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.1 'rhe a.mount of audited drafts funded under the provision of this act was $755,151.68.2 The amount of drafts issued to the be­ginning of Lamar's administration was $2,105,896.82; during his presidency of three years the amount issued waR $4,881,093.47, while during Houston's second term and Jones' administration the amount was only $694,791.81.3 These figures best illustrate the policy of expenditures followed by the several administra­tions. 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<,lr bonds of the aet of June 7, 1837, $45,600 was fonded in the lO'j(-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, 1851.4 l'ntil June 12, 1837, audited drafts were received by the gov­ermnent 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 thr act of December 14. 1837, they became no longer receivable for customs duties." By the act of January 16, 1840, they again heeamc receivable for all direct and license taxes, but after Feb­ruary 1, 1843, they were . not a tender for taxes, except in the case of arrears incurred before that date.6 There were in 1844, however, special acts of congress which provided for the issue 'Gammel, op. cit., vol. 1. pp. 1301-3. 2Reports of auditor and comptroller, December 27, 1849, and No­vember 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, Xovember 12, 1851. "Gammel, op. cit., vol. 1, pp. 1322, 1309. "Ibid., vol. 2, p. 727. 5-H Bulletin of the University of Texas of a small amount of drafts that were receivable for dire1~t 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.1 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 1859.2 Audited drafts were warrants drawn by the auditor and comp­troller of the republic upon its treasury, pursuant to the appro­priation 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.3 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. Re­port of the Auditor and Comptroller, December 27, 1849. •The appropriation acts, except the act of January 31, 1852, do not separate principal and inter.est. The statement of the amount paid does not distinguish, therefore, the principal from the interest pay­.ments. A Financial History of Texas C. Tr(}(Jsury Notes. The history of paper money has been enriched by the experi­ence of the Republic 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 bearin!? interest, called ''red-backs'': and exchequer bills.1 The act of June 9, 1837, started Texas upon her tempestuous experience with paper money. It authorized and required the 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 were pledged for their re­demption one-fourth of the proceeds of the sales of Galveston and Matagorda islands, 500,000 acres of land, all improved forfeited lands, and th~ faith and credit of the government. The notes were to be paid out only for the expenses of the civil departments of the government, except $100,000 for the purchase of horses and munitions of war, and they were re­ceivable in all payments to the government.2 Pr.esident Hous­ton's explanation of this issue was that Texas had just come out of a war of independence and, to quote his own words, ''the struggle had left us destitute and naked. There were no banks, there was no money; our lands could not be sold, and the public credit was of· doubtful character. To avoid the absolute dissolution of the government, it became neces$ary 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. " 3 'The interest notes were so called because of a five pointed star in the center of the face of the notes. The non-interest notes were called "red-backs" because of their red ground; Cralli!, Life and Select Lit­erary Remains of Sarn Houston. pp. 158, 162. 'Gammel, op. cit., vol. 1, p. 1309. 'Message of May 12, i838; House Journal, 2nd Tex. Cong., p. 119. Bulletin of the University of Texas The notes were not immediately issued, because the secretary of the treasury, Henry Smith, thought 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 custom! 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 1.1 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,2 Also the issue by individuals of printed or lithographed notes was prohibited, and customs duties ;were made payable only in specie or treasury notes.3 The amount of printed interest notes issued down to January 15, 1838, was $514,510.4 They were not reissued, and they experienced little or no depreciation.5 They were succeeded by the "engraved interest notes," whose issues from January 15 to November 3, 1838, amounted to $436,289, and from No­vember 3, 1838, to January 1, 1839, to $214,340.6 The amount 'Slatement 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 Reg­ister, 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. 1 Ibld., 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 in circulation on September 30, 1838, was $684.069.59, or $34,069.59 above the amount which had been contemplated by the government ;1 and on November 3, 1838, the estimated amount in circulation was $812,454.2 A bill to increase the issue to $1,000,000 was vetoed by President Houston on :\lay 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 l\Iay 18, 1838. a bill that called for the "reissue and continued reissue" of the notes until an appropriation of $450,000 should be met. 3 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.4 The eurrent prices of commodities at this time were high, hut they were scarcity prices rather than inflated ones.5 ·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 non­interest notes, authorized by the act of January 19, 1839.8 Further additions were authorized by the act of February 5. 'Report of the Secretary of the Treasury, S€ptember 30, 1838. Tele­graph 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 cir­culation. 1Gouge, op. cit., p. 269. 3Veto message ; House Journal, 2nd Tex. Cong., p. 119; Gouge, op. cit., pp. 79, 80. The president stated in the veto message that the out­standing 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. dt., 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. Bulleti11 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.1 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, 184;0, $1,983,­ 790, or a total, not including reissues, of $3,552,800.2 The estimated outstanding circulation was on September 30, 1839, $2,013,762. and on September 30, 1841. $2,920,860.75.3 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 dovm 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 moriey, said in his message of December 21, 1838, that the first issues of Texas had an­swered a Yaluable purpose as a temporary expedient, "but experience admonishes us that to urge it further. or continue it longer, would be equally injudicious and prejudicial.'' He fayored, 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. 3Reports of the secretary of the treasury, 1839 and 1841. Accord­ing 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 al­lowance for bond issues made in 1841, it is safe to infer that the treas­ury notes outstanding amounted to over $2,500,000. 'Anson Jones, Republic of Texas. p. 32. .A Financial History of Texas 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.' '1 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.2 The New Orleans quotations were for July 7, 1841, 11 to 13 cents; for September 22, 13 to 15 C('nts; for November 24, 12 to 13 cents; for December 15, 10 to 12 cents; and for January 5, 1842, 8 to 11 cents.3 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. 1849, gives the depreciation at the date of issue and for N'ovember, 1841. The de­preciation 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 loap. 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 1839 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. Bulletin of the University of Texas of 1840, when it paid them out at the prevailing rates of dis­count.1 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%.2 This was a short lived measure, however, for it was repealed in 1841.3 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.4 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.5 The notes could not be made a legal tender be­tween individuals because of the provision in the constitution which provided that "nothing but gold and silver shall be made a lawful tender. "6 The end of the interest notes and red-backs came in January, 1842, when they lost their legal tender power in payments of customs, direct and license taxes. They remained, however, a tender for land dues and for arrears of taxes previously as­sessed.7 They immediately sank in value, being current at from 1House Journal, 5th Tex. Cong., p. 41. Report of Auditor and Comp­troller, December 27, 1849. Congressional Globe, 33d U. S. Congress, 2nd Session, appendix, p. 159. 2Gammel, 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, Teported on January 5, 1839, that it deemed the bill "not only uncon­stitutional, but highly impolitic and inexpedient." At this same ses­sion 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 pay­ment of "all dues and appurtenances of their offices." Gammel, op. cit., vol. 2, p. 81. •Art. II, sec. 2. See also Rice v. Powell, reported in Dallam, 413 (1841). 7Gammel, op. cit., vol. 2, p. 727. A Financial History of Texas ten cents to two cents on the dollar, and having no value at all in many parts of the state.1 $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.2 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, 1840.3 Up to September 1, 1851, $518,324 had been received in the collection of rev.enue 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 out­standing, $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, 1853.5 Pay­ments 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 destroyed. In the adjustment of this portion of the public debt. th0 rating given to the first issue, or the 10% printed notes, was par. This was done because their issue ceased before any de­preciation had taken place, and it was considered that the gov­ernment had received full value for them.6 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 deprecia­tion after issne.7 The non-interest notes or red-backs were given a rating of twenty-five cents on the dollar. The prillciple fol­ 'Gouge, op. cit., p 117. Crane, op. cit., p. 163. New Orleans quota­tions, as reported in the Telegraph and Texas Register, were on Felr 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 $772,439 stated to have been redeemed at the treasury. As this reduction was effected by giving new notes for old, the net issue is as above given. •Report of the Auditor and Comptroller, December 27, 1849. 'Report of the Auditor and Comptroller, November 12j 1851. 'Report of the Comptroller, 1852-3. 'Report of the Auditor and Comptroller, December 27, 1849. 'Ibid. Bulletin of the University of Texas lowed in this rating was to ascertain what the notes were valu"d at when last paid out, but as this was impossible in the case of the engraved interest notes and the red-backs, what was done was to strike an average of the depreciation. For example, in the case of the red-backs, the value was 371/2 cents when issued and 121/2 cents at the end of 1841, the average being 25 cents.1 These notes were a part of the revenue debt, however, and, therefore, came within the provisions of the acts of Congress of September 9, 1850, and February 28, 1855. Adjustment finally took place on the basis of 76 9-10 cents on the dollar under the provisions of the above act of February 28, 1855, and the assenting act of Texas of February 1, 1856. The par amount of each kind with interest to January 1, 1841, for which paymel'l.t was made in 1856 was: 10% printed notes .................$ 65,208.33 10% engraved notes . . . . . . . . . . . . . . 451,708.32 Red-backs ........................ 2,199,728. 64 Total .... ......... .. ...........$2,716,645.292 Sraled 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 taxes 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.3 Xo pledge "\Vas given for their redemption, but it was made the duty of the collectors of the revenue to redeem them with any specie on hand. They were simply demand notes, and it was expected that their value would be sustained by the proYision making them the only paper receivable for taxes, and by limiting the amount issued.4 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 the notes, however, did not materialize. Large importati()ns 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 mer­chants to pay their license taxes.1 Other circumstances un­favorable to the demand for the notes were the unsettled con­dition 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 gov­ernmental bodies in the state; and the payment of nearly $50,000 of the no~es 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 im­portant factor influencing the value of the notes, however, was 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.3 Notwithstand­ing 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.4 The result was the act of July 23, 1842, which made the bills receirnble in payment of taxes and postage at their current market value only.5 It was the tendency for the bills to seek the vicinity of the customs' houses, and their value varied at 'lbid., June 27, 1840; Executive, Record, No. 40. Report of the Secre­tary of the Treasury, November 1, 1842; House Journal, 7th Tex, Cong., app., p. 53. 0Report 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 DiplomaUc Correspondence, vol. 3, p. 1407. 3Gouge, op. cit., p. 118. Crane, op. cit, p. 168. 'Telegraph and Texas Register of June 8, 1842, says they were pass­ing in Houston and Galveston at from 40 to 50 cents on the dollar, See also message of Houston, June 27, 1842. Crane (p. 164) says, "specu­lators, 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 becom­ing a mock word and public credit an empty bubble." Bulletin ol the i.·niversify of Te.ras 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.1 But the president and the secre­tary 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.2 The measures adopted were to make the bills receiYable at par for direct and license taxes and postage,3 and to limit the amount in circulation at any one time to $50,000.4 The limitation of issue which was made possible by the policy of rigid economy, the diffused de­mand for the bills for taxes and postage, and growing confidence in the government led to a rise in the value of the bills in 1843.5 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., De­cember 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 ~ovember 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 mer­chants to their creditors abroad were made in these articles. 3Act 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 Histo1·y of Texas 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 ex­chequers outstanding should not exce€d $20,000.1 But deprecia­tion and fluctuation still continued, being influenced now by the prospects for the annexation of Texas to the United States.2 Houston was succeeded as president in December, 1844, by Anson 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. 3 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 pay­mC'nt of taxes and other public dues, specie should be the only public tender, except in the case of land dues and patents.4 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.5 From July, 1844, to August, 1845, the bills wer.e re­ceived at Galveston at from 80 to 95 cents, but at par in the eastem districts; those received subsequently were at par. The average discount on the bills received from July 31, 1844, to September 1, 1845, was 3%.6 Less than $10,000 of the .exchequers "·ere outstanding at the close of the republic, and they were all CYentually received by the state in the collection of revenue duR 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 12 lh 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. 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. In­terest was to be payable semi-annually in gold or silver, and the revenue from the license tax and the tax on personal prop­erty was set apart for this purpose. The bonds were to be used in the payment of the appropriations for 1840, and were re­ceivable for any debt to the government.1 The appropriations of the Fourth Congress were 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 \vas thought the interest provision woiJld result in a higher rating for the bonds, and in their supplanting the notes.2 The provision that the interest should be paid in specie was nothing short of a farc·e, in view of what had been the specie receipts of the government, and it is in­credible 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 ad of January 19, 1842, deprived them of their tender power in payment of debts to the government, except for land dues and patent fees.8 The amount issued was $849,900.4 They were depreciated from the beginning, the discount being from 85% to 75%.5 There were received in the collection of revenue and destroyed, $41,200, leaving $808,700, with accumulated interest, to be paid.6 'Gammel, op. cit., vol. 2, p. 241. 2Report 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 The average par value which the go,·ernment receiYed from them was estimated by the auditor and ccmptroller in the report of December 27, 1849, at 20 cents on the dollar, and this was the rating adopted by the state legislature.1 They came within the provisions of the acts of Congr.ess of September 9, 18;)0, and February 28, 1855, how.ever, and were therefore subject to pro­rata 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.2 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 un­audited claims led to the passage of the act of June 7, 18:37. 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 pro­vided for, of a denomination of $100, bearing lOo/c interest, and redeemable at the pleasure of the government after September l , 1842.3 Funding under this act continued until January 1, 1840.4 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 scrip $1,500, and $10,000 was received in the collection of revenue.5 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.6 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. Bulletin 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 $1,687,594.80.1 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 be­tween the scaled rate and par.2 F. E ·ight and Ten Per Cent Bonds of Februa1·y 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 provid.ed for an issue of bonds in denominations of $100, $500, and $1,000, to an amount nec.essary to fund the notes and audited liabilities of the government. The bonds bore 10% interest payable in specie, and were redeemable at the pleasure of the government after June 30, 1845. Treasury notes presented aft.er July 1, 1840, however, were fundable only in bonds bearing 8% interest.3 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 gov­ernment, ·were transferable only on the books of the stock com­missioners, and were not employed in funding treasury notes; while the former had no special provision for the payment of interest, except that it should be paid in specie, were not re­ceivable 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.4 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% interest ther.e 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. 3Gammel, op. cit., vol. 2, p. 453. •Act of February 4, 1841; ibid., p. 639. .A Financial History of Te.i::as there were issued only $27,080.1 The auditorial board confessed to the impossibility of ascertaining with anything approaching exactness the value received by the government from the lia­bilities funded, and arbitrarily rated the bonds at 30 cents on the dollar.2 The original principal and interest to July 1, 1850, amounted to $1,674,380.42.3 In accordance with the acts of Con­gress of September 9. 1850, and February 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. rnder the ordinance and decree of December 5, 1835. au­thorizing a. loan of $1,000,000, there were t\YO loans made of investors in }\'.ew Orleans. The histor~· of these loans has al­ready been given,4 and it is sufficient only to note here that the Triplett loan of January 20, 1836, from which $20,070 was de­riwd 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 Januar~· 11, 1836, was settled on the same basis b;v the act of :'.\lay 24, 1838.5 Advances by l\IcKinney and "Tilliams, of Texas, during the strn~gle for independence, to the amount of $54,408.11 WC're also settled in land scrip at the rate of 50 cents an acre.6 These and such portions of its floating debt as were settled by the republic itself were thus pa.id in land sci:ip or in other Hidences of debt. snch as treasur~' notes or bonds. H. Recapitulation. The total amount of specie or sperie equivalent received by the Republic of Texas from loans was $457,380, and if to this 'Report of the Auditor and Comptroller. Xovember 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 :\Jay 9 at from 6 to 8 cents. 'Report of the Comptroller, 1855. ·.A~te, p. 16. 'Gammel, op. cit., vol. 1, pp. 1289, 1498. 'Act of February 5, 1844; ibid., vol. 2, p. 1007. 6-H Bulletin of the University of Texas are added the proceeds of loans made by the revolutionary gov­ernmental bodies the total receipts amount to $524,370.1 The revenue debt, or that "·hich came under the provisions of the acts of the United States Congress of September 9, 1850, and February 28, 1855, amounted, original principal and in­terest 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, ap­propriated $60,000 to compensate certain creditors for the dif­ference between the scaled and the par ratings, which bronght the basis of settlement of this revenue debt to something more than the 76 9-10 cents.2 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 Fnited 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 liabili­ties 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 la~t 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 receiYed by the state in the collection of revenue due the republic. SUl\lMARY: 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 1G<>uge, 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.1 In 1843 overtures were again made and a treaty of annexation 'ms signed, hut \\'as rejected b.v the United States Senate in April, 1844.2 The expedient of a joint resolution was then adopted by the friends of Texas in Con­gress, and on March 1, 1845, the United States proposed annex­ation. 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, 1845.3 Annexation was consummated by the joint resolution of the rnited States, December 29, 1845; and on February 19, 184-6, President Jones turned over the government of the republic to the officers of the new state. The first cha pter 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 which 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 cenU 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. 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. Gal­veston 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 was fourth with 1,298, and Marshall was fifth with 1,189. The total number of people in the twenty­three Texas towns listed in the United States Census of 1850 was only 20,209. Only five of the twenty-three towns 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 eight­tenths 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 navig-able waterways, but transportation was nevertheless largely by means of the ox wagon. Railroad building began before the middle of the fifties, but the to-wns affected by it were com­paratively 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, lfi7 in 1857, 205.5 in 1858. 284.5 in 1859, and 306 in 1860.1 The estimated cost of C'Onstrnction of the 306 miles was $11,232,345.2 'Eighth Census of the United States. 1860. Vol. Mortality and Mis­cellaneous 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 . iS 2,185 16,193 :Eighth Census of the United States. 1860. Vol. Mortality and Miscellaneous Statistics, p. 328. A Financial History of Texas 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 was 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.l per cent in 1860. The balance of the land area was unoccupit•d 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 was 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 1859.1 The averai:re price per pound for upland cotton was 12.3 cents in 1849, and 11 cents in 1859.2 ::\Ianufactures 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 manu­facturing 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 $6,577,202.3 The value of home manufactured products was $266,984 in 1850, and $584,­217 in 1860.' 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 Cenaus, No. 131, p. 82. The average price for the period 1846-1860 was 11 cents per pound. 3Twelfth 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. Down 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 legis­lature, and the administration of the general land office. To­gether 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 multi­plied. 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 gen­eral land office 'vas the most costly of the departments of general administration, and receipts from lands did not counter­balance 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 pay­ment 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.1 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 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 avail­able. 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.1 $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 relin­quished from 1852 to 1858 to the connties 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 187!) the bonded debt of Texas counties was only $2,030,907.2 But the use of the bond9 jn 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 t0> 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 hrn 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 extrava:?ant, and the explanation of the flight of the bonds lies rather in the rewnue policy followed.3 After 1853 the salaries of those in the senice of the state were 'Message of Governor Bell. November 10, 1851. 'Tenth Census of the United States, vol. i, p. 756. 'The Galveston News, January 24, 1854, comments on a tendency to extravagance in expenditures. Sam Houston in a letter of May 1, 1860, published in the State Gazette of July 21, 1860, criticizes the ad­ministration of 1858 and 1859 as not having managed the government economically. Bulletin of the University of Texas increased, but $3,000 for the governor and the supreme court judg:es, $2,250 for district judges, $1,800 to $2,000 for heads of departments, and $900 to $1,200 for clerks were not unreason­able compensations.1 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 Con­gress 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 univer­sity fund was borrowed in 1860. The seriousness of this ex­pense 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 appro­priations 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.2 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 beads; 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 institution decreased after the factory got into operation, and during the Civil 'Yar the factory was a most important aux­iliary of the government.1 lTntil 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 acr.es of land.2 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. Indush'ial expenditures were for 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 un­questioned 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.3 It was not unusual to find in state constitutions which were drawn up at about the time Texas adopted hers a provision that enjoined eueouragement to internal improvements. A similar injunction was lacking in the Texas Constitution of 1845, and the only pro­visions 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. 2Laws 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. Bulletin of the University of Texas be made for internal improvements without the concurrence of 1wo-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.1 During the :first years of statehood railroad companies 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 other­wise 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 pro­vide means of transportation forced the question of state assist­ance 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. 2 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.3 The city of San Antonio and Bexar County each sub­scribed $100,000, and these were the only municipal subsidies given in Texas before the Civil War.4 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.5 During the years from 1852 to 1856, which was a period of discussion, three plans for secur­ing 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 improve­ments. The railroads were to be built and owned by the state. 'Art. 7, secs. 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 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 11ufficient to meet the interest should be realized from the sale of the publ.ic lands or from the profits on the constructed works.1 The advocates of this plan thought that by it the state would 1ecure parate columns the names alphabetically arranged of the tax­a hle persons; the amount and description of their property; the value of the property; and the amount of taxes. On or be­fore July 1 three copies of the rolls were prepared, one of which was kept by the assessor, one was deposited with the county rlerk, and one was forwarded to the comptroller. The assessor simply certified to the rolls; he was not required to swear that h<> had done bis 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 h~, 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.. Bullet·in ol the University ol 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.1 In 1848 the law was changed so that payment of taxes should be made by November 1 and returns to the treasury by December 1.2 The inconvenience to farmers of the date ~ovember 1 led in 1850 to a change to March 1, and to the December 1 following for non-residents..3 The provisions in regard to payments into the state treasury \Yere also changed. Reports were required to be made to the comptroller every three months as to the col­lections of state taxes, and the assessor and collector was sub­ject 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 col­lections were required to be in by July 1 until 1854, when June 1 became the date. 4 l.Tntil 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 were legal tender in payment of taxes, but after 1850 only specie was receivable.5 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 residenee of the O\Yner, 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 onl:v in the county of the situs of the property or to the comptroller. The comptroller trans­mitted 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 proYided for in 1846. 'Laws of 1846, pp. 352, 355. 'Laws of 1848, pp. 200, 201. 3Report 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. 105 A Financial History of Texas 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.1 Execution was made by the assessor and collector, and his ta-s: list was credited to be sufficient au­thority 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 la·w 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 costs of sale; but in 1850 the prriod 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 with­out property, except for a little personalty, so that not only would collection work a hardship but also the amount which mi.ght . be colleeted would not repay the trouble. The legislation of 1846 and the years closely following· has been ginn 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 deseription '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 the University of Texas of the legislation is therefore followed by an account of the property tax in operation.1 The rate of taxation for state purposes was low and the per­centage 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.2 Contemporaneous with 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 12% cents rate, the increase was 60%. A number of circumstances 2In 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 treas­urer. The receipts from all taxes are lumped together in the report1r 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 indi­viduals, 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 the 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. Mor­tality and :!l!iscella'Jeous 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 total 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 dif­ference between the census figure of assessed values and the comp­troller's figure was due probably to the difference in time of taking: the two official records. A Financial History of Texas contributed to explain the increase in assessed values. Th(l 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 relinquish­ment to the counties of nine-tenths of the state taxes between 1852 and 1858 reduced the general weight of taxation. The in­crease was due largely, however, to the growth of population and wealth. Between 1850 and 1860, the white population in­creased 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 con­stituted only nine-tenths of one per cent of the total assessment in 1849, and 1.4 per c®t 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 ta..x, but as a license tax. This was not a hard tax to bear since the interest rate varied from lO'i{ to 20%.1 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 $3,330,038.2 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. Xor was corporation taxation a problem. The ~eneral property tax was the only business tax, except the ordinary license taxes upon those en­gaged 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 pre­scribed for these, but their assessments under the general prop­erty tax were not particularized, and so details as to their taxa­ 'Texas Almanac, 1858, pp. 61, 65; ibid., 1859, p. 182. 'Reports ot the comptroller, 1849, 1859. Bnlletin of the University of Te.ras tion are not ascertainable. The incorporation of state banks 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. According to the United States Cen­sus of 1860, there was only one bank in Texas, and that was a small one in Galveston.1 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.2 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 re­quired to make a separate return to the comptroller of the rendi­tions of outside holdings, accompanying the returns with a de­scription of each piece of land rendered.3 Each assessor was 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 'rnre 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 un­rendered 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 imper­fect! The chaotic situation was taken advantage of by 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 owners and evasion was rife. In 1849 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.1 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 in­creased 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.2 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 existej 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 nmlervalnation.3 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 laws 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 or 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 the University of Texas courts would not sustain the title.1 The frequency with which they were not sustained contributed to neglect of rendition and of payment.2 The failure of land which was assessed outside the county of situs to pay its share of the taxes became a sub­ject 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.3 An estimate of arrearages and of costs of assessment and col­lection of ad valorem taxes can be made by comparing assess­ments 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 13% per cent; delinquency amounted to from 12112 per cent to 161/2 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 121/2 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 inas­much as many of the counties were 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 re­linquished to the counties where the tax was assessed, the re­ 1Yenda 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 assess­ments would not be paid and would have to be secured by a sale of property. 'House Journal, 7th Leg., p. 483. A Financial History of Texas maining one-tenth to be paid into the state treasury for the benefit of the school fund.1 Again in 1854 and 1855 relinquish­ment was made to the counties where the taxes were assessed, hut in 1856 and 1857 relinquishment was made for the benefit of the counties where the property was situated.2 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 bound­aries profited unjustly at the expense of the counties in which the property was located.3 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 pur­poses 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 cou~ties. 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.5 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 refllsal 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 of 1848, p. 203. Laws of 1850, p. 218. 112 Bulletin of the University of Texas tax for each month in which the business was engaged in with­out a license, and recovery of this penalty was by suit brought in a court of proper jurisdiction.1 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, $50.2 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.3 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.4 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 prop­erty, including the stock in trade, of the taxpayers.5 The imme­diate result 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 1Aulanier v. the Governor, 1 Tex., 653 (1846); State v. Bock, 9 Tex., 369 (1853). 'Laws of 1846, p. 146. 3Report 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 year an anti-liquor movement over the state cut down retail establishments and lessened the receipts from the liquor taxes.1 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.2 C. The Poll Tax. From 1846 to 1848 a poll tax of $1.00 was levied uplOn every free male person between the ages of 21 and 60, Indians and persons non compos mentis excepted.3 In 1848 the age limits were made 21 and 55.4 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 'l'exas 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 approxi­mately 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, $21,332.6 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, $1,944.7 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 Mis­cellaneous Statistics, p. 511. 8-H Bulletin of the University of Texas -can be put in the amount reported for towns and cities, for it is -0bviously 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 from 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. They amounted to $125,993, and are to be compared with about $58,000 of receipts on account of state revenue laws.1 The state received from 1846 to 1856 on account of the revenue laws of the republic, $161,722 in specie.2 As the first years of statehood ·were very lean years, these specie receipts came in most opportunely.3 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.4 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 l\lemphis, El Paso and Pacific grant, where the price was 1 ln Cocke v. Calkin, 1 Tex., 542 (1846), it was decided that the Iaw.s 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. 2Classification 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 Te.ra·s $2 per acre.1 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.2 Pr.e-emption privileges were accorded by the laws during this period, except between August 15, 1856, and February 10, 1858. 'l'he 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 rail­roads. 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.3 The expense of surveying the lands fell upon the railroads, and in this way the state secured without expense the surve;v of the alternate sections which it retained. The act of February 3, 1854, granted land for the construction of sea vessels in the state.4 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. " 5 In 1856 the approval of the commissioner of claims was required for all bounty and donation certificates w~ich had not been patented, and in 1858 it was provided that all claims for land for military services should be presented to the commis­sioner 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, 1861.6 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. Bulletin of the 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, 1854.1 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 1866.2 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.8 The fees chargeable by the secretary of state, the commis­sioner of the general land office, the comptroller, treasurer, and attorney general were prescribed in 1848.4 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. 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 annex­ation of Texas.1 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 Cnited 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 $9,949,007.3 Until 1852 the settle­ment 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 governors, Henderson and Wood, and lengthily considered by the legislature, was to sell the unappropriated lands to the United States. 4 What the advan­tages of this arrangement ·would be to Texas were obvious. 'Texas Diplomatic Correspondence, vol. 2, pp. 278, 32S. 'House Misc. Doc. No. 17, 33rd Cong., 2nd Sess., JJ. 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.. Jl. 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 Xovember 6, 1849; House Journal, 3rd Leg., p. 17. Bulletin of the University of Texas It would avoid the cost in time and money of the survey of the lands and would provide immediately proceeds which other­wise 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. " 1 The alternative to this plan of sale was that payment of the debt should be made in land.2 A third plan was that of refunding the debt in state bonds.8 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. 4 Ac­cordingly 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.' '5 The report of these officials was submitted ol'l January 1, 1850.6 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 receiwd at the time of issue amounted to $5,600,696.7 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. Mes­sage 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 wrote 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 adminis­tration, when Red Backs were issued at 8 for 1. Thus you will perceive that the United States will not in equity be bound to redeem the liabilities of Texas at a higher rate than what they were issued. "1 Governor Wood declared in 1849 that 'neither vood faith nor the most fastidious conception of morality" rPqnired the state to pay more than the equivalent value that the republic received.2 To the advocates of scaling, the all­snfficient reasons for it were that the liabilities had been issued at varying rates of discount and were largely held outside the st11t.e and by others than the original owners.3 The advocates of paying the debt at its face value were few; they had no place on the legisllltive committee considering the debt,-at least they left no evidence of their membership by minority reports or protests; and their motives were impugned 11s having origin "if not in individual gain, at least in a desire for moral fame which leaps over the boundaries prescribed by thr ethics of this utilitarian age. " 4 \\.,.ith 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., JJ. 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; Homle 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 Ga­zette, May 31, June 28, August 2, September 20, October 4, and No­vember 15, 1851. 'Message of Governor Bell, December 26, 1849; House Journal, 3rd Leg., p. 343. The Galveston Weeldy News favored payment at full value. See issues of May 6 and July 15, 1851. Bulletin of the University of Te:i:as provision was made by the act of February 11, 181.>0, for pay­ment in land at the rate of fifty cents an acre.1 It was provided 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.2 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 p'rovided 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.3 The use of armed force against the United 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 l\Iissouri, 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 daims 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. 2Gouge, op. cit., p. 169. 3Message 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. A Financial History of Texas 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.1 This contemplated cession of new territory involved the bill in the slavery controversy, and on January 29, 1850, Henry Clay imbmitted to the Senate eight resolutions of a compromise na­ture, one of which provided that for the relinquishment by Texas of all claims to any part of New l\Iexico the United States would pa:'· that part of the debt of the Republic of Texas which was secured by import duties.2 The resolutions were referred to the Committee of Thirteen, the report of which was made by l\Ir. Clay on l\fay 8, 1850.3 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.4 The "Omnibus Bill," of which the bill containing these provisions was a part, broke down. As an independent solntion 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 in­demnity to Texas $10,000,000 in five per cent bonds, and in­corporated 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 9.6 Texas accepted this act on Xovember 25, 1850.7 As an imme­diate result of it, she ceded 67.000,000 acres of public land, and came into possession of $5,000,000 in United States bonds. Pro­vision for payment of the debt was deferred, ho"·ever, because of the large amount of unascertained claims and of the need of 'Cong. Globe, vol. 21, pt. 1, p. 166. 'Ibid., p. 245. 0 Ibid., p. 945. 'Ibid., p. 947. 'Ibid., vol. 21, pt. 2, p. 1520. 6lbid., pp. 1555, 1764. 'Laws of 1850. Second Session, p. 4. Bulletin of the University of Texas construction of the proviso relating to the five millions rest'rved in the United States Treasury. The contentions of Texas were that she alone was qualified to define what constituted the revenue debt, that payment 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.1 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.2 The Secretary of the Treasury, Mr. Corwin, ruled, however, that the section in the act of the Republic 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 negoti­ated prior to that act, and that all public loans and all the liabili­ties receivable for public dues were therefore debts for which duties on imports were specifically pledged. The ruling was approved by President Fillmore, September 13, 1851:3 The effect of this rule was to include all bonds, except the 8% and lO~lc funding bonds of the act of February 5, 1840. But this interpretation of the revenue debt was modified in 1853 by Mir. Cushing, the Attorney General of the United States. He con­strued 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 ac­cepted financial sense.4 The effect of l\fr. Cushing'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 Govrrnor Bell, November 10, 1851. Speech of Mr. Bell; Conf;. Globe. vol. 28. pt. 3, p. 595. 'Report of the Jo;nt 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 Histo1·y of Texas notes.1 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 mling of Secretary Corwin that none of the re.served bonds would 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, 1852.2 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 re­served 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 pregcribed within which filing should take place, the state could be held up b~· tardy creditors and the state treasury would be deprived of the funds expended for an unnecessarily long timc.3 At the sa11,1e time this ruling protected the l'nited 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 Go'\'ernor Pease, December 23, 1853. 124: Bulletin of the University of Te.ras 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 iecretary '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.1 In the Senate on August 26, 1852, there failed a proposed amendment to a foreign rela­tions bill which would have permitted the issue of bonds to Texas as fast as releases were filed.2 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.3 The creditors contended that the responsibility of the United States arose when Texas lost through annexation the right to impose the customs duties which 'vere pledged for the payment of the public loans, and they contended further that this responsibility was virtually admitted by the ''Boundary Act'' in the proviso reserving the $5,000,000 of bonds.4 The contention of the creditors was accepted in the two reports of the Senate Finance Committee to which the mem­orials were referred, and "·as the basis of the later action of Congress.5 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 be divided equally among the holders of the revenue debt.6 The Thirty-Second Congress expired without any action being taken. The question was reopened in the first session of the Thirty­Third 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. 3lbid., 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. 23-28. 01\Ir. 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 Financial History of Texas bill by Senator Thompson, of Kentucky, which proposed the dis­tribution of $8,333,000 in 3% bonds among the revenue debt creditors.1 The Senate Finance Committee, to which it was re­ferred, reported it on June 15, 1854, with a substitute which pro­posed a pro rata distribution of $6,500,000 in cash.2 This sub­stitute did not meet the approval of the chairman and of other members of the eommittee and it was recommitted to the com­mittee 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.3 This amount was equal to the face value of $5,000,000 of reserved bonds with interest to maturity! An amendment by )fr. 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 l\fr. Chase, of Ohio, to reduce the amount to $6,­iiOO.OOO was defeated.6 The amount proposed by Mr. Chase and later by the House was the reserved $5,000,000 with premium and with interest to date.6 The bill with the Bright Amendment passed the Senate July 21, 1854, by a vote of 27 to 19.7 The first session ended, however, without any action being taken by the Hom;e. At the second session the House made seven amend­ments. They were, principally, that the sum to be appropriated should he 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.8 The bill as amended passed the House February 7, 1855, by a vote of 153 to 43.9 The Senate disagre-rd to the amendments and the hill went to conference.10 In the ronference the Senate with­dre"· 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. 6Ibid., p. 1844. 'Ibid., p. 1845. • cong. Globe, vol. 30, pt. 1, pp. 618, 619. "Ibid., p. 619. ' 0Ibid., pp. 719, 743. Bulletin of the University of Te.ras amount to be appropriated was agreed upon at $7,750,000.1 The conference bill was accepted by the Honse by a vote of 123 to 77 and by the Senate by a vote of 30 to 14. The bill was approved February 28, 1855.2 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 Corn·in and Attorne~' General Cushing·. 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 :3 Texas rating on the Scaled Description of debt. Par amount. dollar. amount. Ten per cent funding bonds, act of June 7, 1837.. . . . $1,6 57,803.33 .70 $1,160,462.33 Ditto, issued to Swartwout 29,291.47 1.00 29,291.47 Ten per cent bonds author­ ized by the five million loan acts: Dawson debt . .. .. .. .. . 1,211,000.00 .50 605,500.00 Holford debt .. . . ..... . 411,404.70 .50 205,702.35 Pennsylvania B a n k of the United States. .. . . 960,498.00 .8745 839,955.50 Ten per cent funding bonds, act of February 5, 1840 1,627,784.16 .30 488,335.24 Eight p e r c en t funding bonds, act of February 5, 1840 . . . . . .... .. . . . . . 46,596.26 .30 13,978.87 Eight per cent treasury bonds, act of February 5, 1840 .. ... . .. . ... . .. . 1,417,680.00 .20 283,536.00 Ten per cent treasury notes, first issue .... .. .. . .. . 65,208.33 1.00 65,208.33 Ditto, second issue . .. ... . 451,708.32 .50 225,854.16 Non-interest treasury notes 2,199,728.64 .25 549,932.16 Total. .. ..... . .... . ...$ 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 qurstion 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 Pi11ancial History of Texas out of over 45,000 who voted in the election expressed th~mselves as to the proposition submitted.1 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 ques­tion independent consideration. Within the legislature the con­test 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 con­senting to the Boundary Act she thereby admitted the participa­tion of' the United States; and, third, that it was important that the "troublesome business should be settled upon terms satisfactory to the creditors.' '2 The arguments against acc,eptance 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 speeulator''; and, third. that there would be a financial los.s to the state to accept this act in lieu of the Boundary Act.3 The minority report of the house committee on public debt fig­ured 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 re­served 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. '~1inority Report of the House Committee on Public Debt, December 1, 1855; House Jqurnal, 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. Bulletin of the University of Texas the total of $11,550,000 the amount of the revenue debt ~aled which according to their statement was $4,467 ,756. This finan­eial loss to the state was the principal basis of the opposition. The bill passed and became the act of February 1, 1856.1 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.2 In the legislatu~e 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 com­mittee itself investigated, but it failed.8 The $7,750,000 prorated among the holders of the $10,078,703 revenue debt gave each credit-0r about seventy-six and nine-tenths cents on the dollar. This settlement was very acceptable to the majority 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 seeurities as a speculation. The securities were held mainly ont­side the state-in Delaware. Kentucky, Pennsylvania, and South Carolina.4 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 thirt~·-fiye cents on the dollar, and a block of 45,000 of the bonds changed hands at that price.5 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 ~fisc. Doc. No. 17, 33d Cong., 2nd Sess. 'The Texas State Gazette, April 13, 1850. A Financial History of T e.ras than they were settled for by the united States under the act of 1855. When the question of settlement was under considera­tion in Congress thir;; difference was noted as an objection to the pa~age 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 1855.1 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 pay­ment of $997,042.90 of revenue debt, that amount being at the rate of thirty cents on the dollar.2 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 Jost $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 be­tween the scaled and par amounts of their debts.3 The amount paid to them was $57,768.82.4 The refosal 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 ex­ceedingly 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 repudia­tion 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. 9-H Bulletin of' the Unive1·sity 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 would have committed, because the passage of the act of 1855 was a de facto acknowledgment of the responsibility felt for this debt. The amount appropriated to be pro-rated was unconnected with the $5,000,000 of rnited States bonds reserved in the United States Treasury under the act of 1850 or with any other logical basis, and was merely 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 which stated that the revenue debt amounted to $4,500,000.1 But this was only the amount of the bonds upon whose face the customs duties were pledged in name. Since the original act contemplated an amount which 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 l\fonday in November, 1849, should be post­poned.2 The act of February 8, 1850, extended the time to the first Monday in September, 1851, and barred all claims not pre­sented by that time. Later acts, however, extended the time to June 1, 1861.3 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.4 Congress extended the time for presenting the revenue debt 'Cong. Globe, vol. 28, pt. 3, p. 1846. 2Laws of 1848, p. 208. 3Laws 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. •Gouge, op. cit., p. 225. A Financial History of Texas 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 oYer 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 l7nited States refunded that amount in 1856 and 1857. leaving $1,257,605.30 as the net amount paid by T·exas. 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 TJnited States in 1857, leaving the net amount of the debt discharged in this way at $288,263.16. The amounts of pay­ments 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 'ms $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..... . . . .. ... .... .. ... .. .. ... . . . 15,000.0.0 Total. .... . .. .. .. .. . .. .............29,498.13 B nlletin of the University 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 anti­debt sentiment.1 The provision was that "the aggregate amount of debt hereafter contracted by the legislature shall never ex­ceed the sum of $100,000 except in case of war, to repel in­vasion, 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.' '2 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 pe'riod 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 be­cause 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 bor­rowed 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 Constitu'tion of 1845. A. Financial History of Texas SUMMARY. The first period of statehood began and ended with the gen­eral treasury in financial difficulties, and but for the opportune receipt of the $5,000,000 of United States bonds and the as­sumption 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 re­ceipt of the bonds enabled the state during eight years out of the fourteen of the period to pay a large and harassing debt, to en­dow the school fund generously, to construct public buildings, to meet the or.dinary expenses of the government, to aid in the con­struction 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 indemnit~-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 accnstomed to taxation as a method of supporting the government, and a habit of de­pending upon other sources was thereby fostered. The begin­nings of this habit had really been made during the period of the republic, because the republic lived on credit. Tlw purely agricultural character of the population and tlw frontirr condition existing throughout the state were reflected not onl~· in the general attitude towards education but also in the expenditure, revenue and debt policies. There was a tencl­enc.v to confine expenditures to the support of the narrow pro­tective functions of government; poll and occnpation taxes ·whirh would fall on those engaged in husiness "·ere 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. Full 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 par­tially 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 ex­penditures, swollen fictitiously by the depreciation of the paper money in which they were payable, mounting 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 year ending August 31, 1861, has been in­cluded not because the finances reflect the war but on account of the legislation which made the initial financial provision for the struggle. A. Financial Histo1·y ol Texas 1:35 August 31, 1861, to June 8, 1865. were $4.863,790.55. 'rhe 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 )fay 28, 1864, civil appropriations and those for the support of soldiers' families were payable in treasury warrl\nts. 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 ic; 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.1 At the beginning of the war all expenditures were made through the state comptroller and tlie state treasurer and were pursuant to specific legislative appropriations. In December, 1861, Judah P. Benjamin, Secretary of the Confederate Treas­ury, 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.2 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 continuouq and adaptable character than the legislature led to the creation 'Report of the Comptroller, 1863-1865, p. 14. :J\fSS. Record of Military Board No. 101, p. 5. Bulletin of the University of Texas <>n January 11, 1862, of the Military Board.1 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.2 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 :3 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 manu­facturing 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 Con­federate 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 board. 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. F·inancial History of Texas 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 a8 arms, cartridge boxes, powder fl.asks, powder, shoes, cotton cards, quinine, etc. Most 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 gov­ernment received from the l\Iilitary 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 purchl:tse 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 l\lilitary Board.1 Of the 634 bonds the Old Board received 364 with 3,311 interest coupons of $23 each.-a total par value of $546,775.00. These bonds and coupons were sent to l\lexico and Europe for disposition, but fear of their repudiation resulted in but few of them heing 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 cou­pons. 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.2 Nineteen bonds and 80 coupons were turned over by Governor :'.\lnrrah to an agent to be disposed of for medicine and cotton cards. There is no evidence of any such purchase, however, and t.he 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. Bnlletin of the University of Texas been given denied that he received them of the agent.1 The remainder of the bonds to the number of 109 and 959 coupons were returned to the treasury upon the institution of the Pro­visional Government. The Old Board erected a state foundry in Austin for the manufacture of cannon, also a factory for the making of per­cussion caps. The foundry cost, including expenses of oper­ation, $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.2 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 en­trusted 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.3 The penitentiary was not a source of expense to the general treasury during this period, but was self-sustaining. The ex­penditures 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 sup­port of the indigent families of Texas soldiers.~ The county courts were the agencies of distribution, and beginning in May 'Repor~ of Pease and Palm, p. 4. "~!SS. Report of Military Board, March, 1865; File Case No. 55. 3The 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 De­cember 15, 1863; Laws of 1863, p. 21. A Financial History of Texas of 1863 and extending to the close of the war the assistarrce 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 was to come in before the end of the fiscal year was estimated to fall far short of the deficiency.1 Each subsequent year saw de­ficiencies. 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 de­veloped consisting of property and poll taxes, salary and occupa­tion taxes. A. The Property Tax. The ad valorem rate of the general property tax remained, against the counsel of the governor, at 12% 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 b~~ the act of April 8, 1861.2 In 1862 the rate for all purposes 'Message of Governor Houston, February 5, 1861; House Journal, Sth Leg., Extra Sess., p. 17. ' Laws of 1861, p. 39. A. Financial History of Texas lH was raised to 25 cents, and in 1863 to 50 cents, which ·~yas 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 $335J90,700.00, 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 dnring 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.1 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 1865.2 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 1,065,600.3 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.4 The assessments were as follows: 1861 . ................................ . $28,521.00 1862...... .......... .................. 66,776.00 1863. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,798.00 1864. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,204.00 1865. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,529.00 'Ibid., p. 33. 'Report of the Acting-Provisional Comptroller, 1866. 3Report of the Comptroller, 1868-9, pp. 110-111. •Laws of 1862, p. 50. Bulletin of the University of Texas C. Business Taxes. ~.\.n extensive system of occupation taxation was begun by the act of January 13 1862.1 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 re­ceived for sale. By the act of March 6, 1863,2 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 De­cember, 1863, but was reimposed in November, 1864, as were also the license taxes upon doctors and lawyers.3 A system of taxes on the sales of distilled spirits, fermented liquors and wines was adopted December 15, 1863.4 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 known as ''income'' taxes. By the act of De­cember 16, 1863, those engaged in the sale of merchandise were subject to a tax of 50 cents on each $100 proceeds of sales, and merchandise was subject to no other state taxation. This was known 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 ap­plied. Wholesale merchants were subject to a tax of $300 and 1 per cent on gross receipts; retail merchants, druggists~ and auc­tioneers, $100 and 1 per cent. Those keeping a billiard hall or nine, or ten pin alley, doing a storage business, and cotton com­ 1 Ibid. 'Laws of 1863, Called Sess., p. 25. 3Act 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 14;: pressing and insurance companies, were subject to a tax of $100 and 2 per cent on gross receipts. Railroad companies were sub­ject 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. D. 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 salar~·, whether as a public officer or by private contract, 25 cents on each $100 of such salary over $500.1 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, 'vhich ap­plied the principle of income or receipts taxation to the merchan­dise business, as it had been applied to the liquor business in the act of December 15, 1863. It was not until November 15, 186-1, 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. jeet to a tax of 2 per cent on the gross receipts from their profes­sions, and presidents, directors, conductors, engineers, secretariest 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.1 No changes were made in the prices of the lands in the islands and in the railroad and other surveys. With the hope of getting more revenue and in order to offset the deprecia­tion 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 tlie price of other lands was advanced to $5.00.2 The acts of December 15, 1863, and November 7, 1864, authorized grants of land to any one erecting and putting into successful operation by March 1, 1865, machinery for the manu­facture 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.3 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 receiv­able in payment of land.4 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.5 'Laws of 1861-1862, p. 22. 'Laws of 1863, Extra Sess., 9th Leg., p. 11. 3Laws 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 Bulletin of tlie University of Texas The act of December 16, 1863, however, made treasury warrants, bonds and interest coupons of the state reeeivable in payment of railroad indebtedness to the school fund.1 The great depreciation of Confederate notes led in the spring -Of 1864 to the law which 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.2 The purpose of this legislation was to compel the fund­ing 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 re­quirements of the $1,000,000 loan issue of 1861 was provided fo1· by a special specie tax.3 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.4 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 Confeder­ate notes was restricted, except for about $30,000, to the payment 1Laws 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 re­ceivable 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 H7 of military appropriations.1 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 pay­able in notes.2 In the spring of 1864 the Confederate currency was rated in specie at from 20 to 30 cents on the dollar.3 The state recognized by the act of May 27, 1864, a depreciation of 331/3 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.4 The constitutionality of the issue of treasury warrants which would perform some of the functions of money was ques­tioned, 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 com­panies.6 The bulk of receipts during the war period was in Confederate notes and treasury warrants. During the five years 1861-1865, $948,711.34 of treasury warrants was received, distributed as foHows: 1861............................. ....$ 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. • ff. & T. C. R. R. Co. v. Texas, 177 U. S., 83 (1899). Bulletin of the University of Texas No distinction was made in the financial reports betw1itn Con­federate 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 re­ceipts amounted to only $163,647.37, the most of which was oredited to the special loan account and was secured for this account by the Military Board. The specie receipts were dis­tributed as follows : 1863 ..................................$72,149.97 1864. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,323.4~ 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 Table1 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, was 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.2 'For Fox Table, see Appendix, table 18. 2The 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, how­ever, $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 war­rants issued for the protection of the frontier from Indian and Mexican depredations.1 This funding act was repealed January 11, 1862, after $16,000 of warrants had been funded. The important loan act during the war 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.2 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.3 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 Con­vention 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. 2Laws of 1861, p. 39. •Laws of 1862, p. 37. 150 Bitlletin of the University of Texas amount outstanding of $899,000. The net amount for which the Military Board was responsible was $578,000.1 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.2 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 in­terest amounted at the close of the war to $211,130.83.3 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. 4 0 f these there was issued a total of $320,367.13, all of which was held by the school fund.5 The 8 and 7 per ~ent 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 ex­changed 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. 1The 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 re­moving 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. 3Report 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 Te:ras The cotton growing part of the state was divided into dillfricts 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 ewn date.1 The interest on the 7 and 8 per <.'ent 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.2 The provision in the 8 per cent loan act for a sinking fund was not observed in respect to a specie fund. Treasury warrants outstanding at the close of the war amounted to $2,068,997.90, about $180,000 of which were 10 per cent inter­est warrants. In 1863 and 1864 these had a value in specie of 8 and 10 cents on the dollar.3 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 payment.4 The state was indebted to special trust funsls to the amount of $1,455,913.86 on account of United States bonds and specie used and for evidences of state indebtedness received in the collection of revenue. The school fund was due $1,137,406.05, the univer­sity fund, $283,514.22, and other special funds, $34,892.49.5· The amount due soldiers and for supplies was estimated at $3,150,000; the unpaid debt of the republic at $110,613.23; mis­ 'MSS. Record of Military Board, No. 101. On November 26, 1~62, 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 *' 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. 2Message 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. Bulletin of the University of Texas cellaneous debt at $199,176.1 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. 1Ibid., 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 August 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 com­panies 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 s_tate 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 there­fore 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.1 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). Bulletin of the Unive1'sity 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. Re­ceipts of this fund from land sales during the four years 1862­1865 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 being recognized. The bonds thus credited re­mained 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 by 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 WaB made up of $2.908,038.34 in Confederate notes, $445,07 4.37 in state paper, and $15,397 .36 in specie. Only $362,548.11 of the Confederate notes were actually in the treas­ury, the remainder, $2,535,490.23, were 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 follows­mute witnesses of the end of a disastrous struggle and of the temporary dissolution of state government. Social disorder at­tended 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 lo~, except for something less than $5,000 in specie, was not serious. PAR'r 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 ap­propriated 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 military rule, but predominantly military. A. J. Hamilton, who had been appointed on June 17 provisional gov­ernor 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 en­dorsing President Johnson's policy for the restoration of the state governments, headed by J. W. Throckmorton, was success­ful, 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 policy. 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 went again under a provisional form of government which lasted from August 8, 1867, to January, 1870. Again, also, the process of emergence from the provisional form of govern­ment was gone through with, and another constitution was adopt­ed 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. 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 in­crease of 35.5 as compared with 184.2 during the decade 1850­1860. The United Sta~es 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 cit­izenship 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 was 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 misgovern­ment 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 ~414,800.1 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. Bulletin of the University of Texas in agriculture.1 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 1860­1870. 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.2 :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 establish­ments numbered 983 in 1860 with a value of products of $6,577,­ 202, and in 1870 they numbered 2,399 with products valued at $11,517,302.3 As to banking, there was only one chartered bank in Texas in 1860. It was located in Galveston and had a capital of about $100,000.4 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 sur­plus amounted to $575,000; their deposits to $617,000, and their loans to $532,000.5 The Constitution of 1869 abandoned the policy of prohibiting state banks which had been followed 1Ninth 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 Financial History of Texas since 1846, and a number of such banks were organized.1 F'or the state as a whole the supply of credit facilities during this period was in the hands o.f 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, howeYer, 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 institu­tions was not given by the commissioner until 1876. The number of state banks and savings banks reported in 1876 was 101, with a com­bined capital of $3,302,388, and deposits of $4,713, 759; Report of the Secretary of the .Treasury (U. 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 warrants drawn were de­mands upon the treasury which were eventually met, the table represents the policy pursued with respect to expenditures. The cost of administering the state &"overnment was fluctuat­ing, 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 con­tingent 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 ill­timed 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 op­portnnities 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 sions were frequent and long and were taken up largely with private legislation which could haTe been avoided to a great extent by a general corporation law.1 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. ExpensiYe chamber furniture and other furnishings, and champagne and cigars to enable com­mittees 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. Ther€ were. though, improper expenditures which were cloaked under the blanket appropriation for contingent expenses; pet partisan newspapers were generously subscribed for; and the mileage and per diem proYided were unprecedentedly liberal.2 While the state departments and the legislature explain a part of the growth of exp~nditures after 1870, the bulk of the growth is ascribable to other objects. The cost of the judiciary more tlum 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 was marked, but the fee system was no more abused at this time than under later administ1·ations. After 1871 disbursements from the available school fund took a leading place among the state 's expenditrires. The use of the assets of the school fund dnring-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. Begin­ning in 1871 the protection of the frontier settlements against. marauding Indians and )fcxicans called for large annual outlays. The need of protection became manifest im.mediately after the war, and failure of the Federal government to extend it forced '!\Iessage 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. 0Reconstruction 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 Bulletin of the University of Texas the state to perform the duty. Despite expenditures duriug the four years, 1871-1874, of $524,963, the protection extended was held to be inadequate.1 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 be­tween 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, how­ever, in connection with the purchase of supplies for the asylums and the repairs of public buildings.2 Except in 1869, when a large amount was expended for support, the penitentiary was not an expens~·ve institution. The ,expediency of leasing it and the labor of the convicts was suggested in 1868 and was earried 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 per­sonnel of the police body, their abuse of authority, and the fact that they performed functions which belonged to the local gov­ernments, led to the abolition of the system by the Democratic legislature in 1873,3 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 bl'trdens to the states. The constitution of 1866 empowered the legislature to guarantee the bonds of railroad 1The 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. 3Ramsdell, Reconstru.ction in Texas, pp. 302, 312. A Financial History of Texas companies to any amount not exceeding the sum of $15,000 per mile. No resort was made to this provi~ion because the Constitu­tion 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, ex­cept in case of war, to repel invasion, or suppress insurrection.1 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 npon 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 t-0 works of internal improvement should not exceed $12,000,000.2 An act carrying :i snbsidy 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.3 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.4 It was provided in the act chartering and subsidizing the Pacific road that when the state should have power under the consti­tution to grant lands in aid of internal improvements, a land !!rant should be substituted for the bond subsidy, and this sub­stitution was made in 1873, following the adoption of an amend­ment to the constitution authorizing land donations. Bonds of the snbsidy to the International road were signed by the gov­ernor. but when presented to the comptroller to be countersigned and registered, that officer refused. The company thereupon brought suit to compel the sjgnature of the comptroller, but the supreme court of the state reversed the judgment of the district court awarding a peremptory mandamus and dismissed the case '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. 3House Journal, 12th Leg., p. 1688. 'House Journal, 12th Leg., p. 881. Bulletin of the 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.1 Un­blushing 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.2 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.3 Except for the increase in salaries under the Throckmorton government and the wastefulness of the constitutional conven­tion of 1868, the expenditures to 1870 were not excessive. This is not true, however, for the period of the Reconstruction there­after. 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 eco­nomic 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 pnblic finances.4 2Bledsoe 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. The 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 'ms 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 impos­sible, owing to the opposition of the people to military author­ity, to secure an assessor and collector. In 1868, for example, thirty-nine counties ont of one hundred and twenty-five had vacancies in the office. It was not infrequent, too, that those who qualified were inexperienced, inefficient, or corrnpt.1 De­spite 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 burden­some rates.2 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 'ms favored by the provision of the laws which permitted its ren­dition either in the county of its situs or in the county of resi­dence 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. Bulletin of the University of Te:cas seeming impossibility for assessors and collectors to com ply 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.1 Further, the tax year ended December 1, which re­sulted in the collection of taxes during the summer or fall, or the seasons of greatest scarcity of money for the farmers.2 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.3 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.4 Subsequent attempts were of the nature of com­mutation 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 home­stead should not be sold for taxes except for taxes due thereon.5 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 121/z 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/z. 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 H1'story of Texas income>, salary. poll, and occupation taxes, and city taxes.1 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.2 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 $4,584,275.3 All of our statistics indicate an increase in taxation that was enormous. Assuming 10 per cent as a low aYerage rate of interest on loanable capital, state and county taxf's of $2.17 would be equivalent to an income tax of 21 per eent. l\o 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 "·ere held in a number of counties. and as a culminating protest a convention of the tax­payers of the state was held in Austin on September 22, 23 and 2i5, 1871, with two hundred and seventeen delegates present representing ninety-four counties.4 This convention was called by the radicals, "a body of sulks and soreheads," but these epithets ill apply to ex-governors fl'hroekmorton, 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 certa,in Federal taxes need to be con­sidered. 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. Bulletin of the University of Texas troller was authorized to effect settlement if possible by setting off against the amount due the amount owed 'l.1exas 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.1 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.2 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 eollection by the act of Congress of July 28, 1866, there was credited to Texas $180,841.51, leaving the amount uncollected $174,265.16.3 More burdensome than the direct tax was the Federal tax upon cotton which was levied from 1864 to 1867. It was 2 and 3 cents a pound and its collection was rigidly enforced. The total paid by Texas was $5,502,401.4 B. Income and Salary Taxes. The income tax levied during the war "\Vas 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.5 His suggestions were carried out in the act of November 6, 1866.6 This act provided .tLaws of 1866, p. 37. ~Laws of 1866, p. 257. 3House 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 of the state. 45lst Cong. First Sess., House Report, No. 683. ~House Journal, 11th Leg., Reg. Sess., p. 79. Laws of 1866, p. 91. A. Financial History of T exas ] 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 there­after, an annual income tax, as follows: on the first $1000 of nPt 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 rent.'' This tax "·as known as the "income 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 JO 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.1 It is to he 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). B·ulletin of the University of Texas one out of one hundred and thirty-three counties; in 1868 110 incomes were assessed in sixty-one out of one hundred and thirty-six counties, and no salaries in one hundred and fifteen counties.1 C. Business Taxes. The business taxes levied during this period were the cus­tomary specific occupation taxes, the income tax as described above, and the special tax upon the receipts of railroad, tele­graph 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 rep­resented 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 busi­ness particularly showed violent fluctuations. There were de­fects 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.2 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 two per cent upon the gross receipts of railroad, insurance, and telegraph companies.3 In 1871 this was changed, and railroad and tele­graph 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. 2Report of the Comptroller, 1874, p. 56. 3Laws of 1870, Called Sess., pp. 199, 216. A Financial History of Texas ] 71 $500, fire and marine insurance companies to one of $250.1 A few days later a tax of one per cent upon gross receipts was sub­stituted for the one per cent tax upon net receipts. This com­bined use of the property and the receipts tax was thought to operate unfairly upon railroads as compared with telegraph com­panies because of the greater amount of tangible property owned by the railroads, and an increase in the tax upon telegraph com­panies to five per cent of their gross receipts was suggested.2 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.3 The result of this difference of opinion between the governor and legislature was the repeal of the re­ceipts tax. leaving only the ad valorem property tax applicable.4 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 n01i compos rnentis. 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 95,895.6 '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. B1tlletin of the 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 ad­ministration, however, the issue and sale of bonds began. Re­ceipts from s~Je 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 hun­dred and sixty, single men to eighty, acres.1 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-emp­tion was continued by the act of August 12, 1870, which provided that any actual settler in good faith upon the vacant public do­main 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 '\Vere made to railroads, and nine of the roads chartered during 1873 and 187 4 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 Reconstruc­tion 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. 2 '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. 2Art. 5, sec. 6. CHAPTER 4. EDUCATION.\L FUKDS. A. The School Fund. At the beginning of this period the assets to the credit of thC' 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. The amended Constitution of 1866 reserved to the school fund its former endowments of securities and lands, but it did not pro­vide, 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. Endow­ment;; theretofore made were confirmed, and all of the proceeds of the public domain, one-fourth of the annual revenue from tax­ation, 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 fnnd and an available fund was made. Under the new tax pro­visions 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 vary­ing between $1.81 and $1.95. As there was little local taxation to supplement the state apportioned funds, the school facilities af­forded 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.1 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) . Biilletin of the University of Texas fun\.l. The act of November 10, 1866, gave the companies the privilege of paying the interest due in installments, the last pay­ment 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.2 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 prin­cipal, 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 ob­tained from this sale was $130,000.3 As a result of this default and forced sale the school fund lost the sum of $165,800 principal and $178,970 interest.4 The Houston and Texas Central and the Southern Pacific were authorized to exchange for their indebted­ness new 7 per cent bonds, and the Central was further favored by having credit allovved it for the sums paid for interest in treasur~r warrants during the fiscal years 1864 and 1865.5 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.6 The validity of the payments in state warrants during the war was subsequently legally conti'lsted, however, and was settled in favor of the railroads.7 Interest payments were resumed by the companies in 1870, but the ex­perience was responsible for the constitutional provision that 1Report of the Comptroller, 1868-9. 20rdinances of the Constitutional Convention, 1868, pp. 46, 77, 35, 36. 3Report 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. 6Message of Governor Roberts, January 11, 1881. 7H. & T. c. R. R. Co. v. Texas, 177 U. S., 66-103 (1899). A Financial History of Tc.ras future investments of the school fund should be in l'nited 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 l'nited 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 "·ere exeeuted to the school fund during the war in exchange for state treasury \\·ar­rants received from railroads in payment of the interest and principal of their indebtedness, "·ere not rC'eog11izC'd as a rnlid debt during this period.1 D. 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 certifieate of indebtedness, both of \Yhich were of doubtfnl val­idity. The Constitution of 1866 reserved to university purposes the previous grant, but the Constitution of 1869 made no refer('llce whatewr to the subject. The act of November 12, 1866, provided for thC' issu(' to the fund of $134,472.26 of 5 per eent state honcls to replace the United States bonds and interest on same \\·hich were appropriated in 1860. Xo interest was paid on this dC'bt, however, during this period. l\Ieasures were passed in 1870 and 1871 authorizing the sale of the university lands. bnt they wC're vetoed by G-Overnor 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, 11owever, and thC' rC'ceipts under this act are the only ones accruing to the fund from any source during the Reconstruction period. C. Ag1·ic11Uural 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 '~iessage of Governor Davis. August 6, 1870. "Veto message of ~Jay 29, 1871. Bulletin of the University of Texas acres for the purpose of establishing an agricultural and mechan­ical college. This scrip was sold in 1871 at 87 cents an acre, the amount realized being $156,600. 'l'his 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.1 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 loca­tion of the ~ollege, but the money was loaned and the comptroller held unpaid notes for it; $21,096 also was expended for a worth­less foundation for the main building.2 1The San Antonio Daily Herald, April 14, 1871. 2House Journal, 14th Leg., p. 119. CHAPTER 5. PUBLIC DEBT. The first official statement of the debt ineurred during the war was made in October. 1865. A. J. Hamilton was appointed pro­visional governor of Texas by President Johnson on January 17, 1865, and ex-Governor Pease and Swante Palm "·ere appointed by the provisional governor to report on the finances of the state since secession. Their report was made under date of October 30, 1865.1 The following analysis of the debt is based on their report and on the state statutes: Item I. 8 per cent state bonds. Anthorized by the act of March 20, 1861, entitled '' An Ac·t to pro­ vide for the funding of the debt contracted for the protection of the frontier2 •••• •••••• ••• ••• ••••$ 16,000.00 Item II. 8 per cent state bonds. Authorized by the act of April 8, 1861, entitled ''An Act au­thorizing a loan and imposing a specific tax to mret the principal and interest thereof " 3 ••.. $ 899,000.004 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' '3 211,130.83 '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. 3Laws 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 Bulletin of the 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, 1860.1 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, 1862.2 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 in­curred is essential to an understanding of later legislative action on it. The 8 per cent bonds of item I were issued to fund treas­ury 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 1Laws 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. A Financial History of Texas 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' fam­ilies. 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-interest­bearing debt of the Republic of Texas. There existed an appro­priation for the payment of such of this debt as had been audited.1 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 warrants 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 ~s eseheated 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 char­acter, 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 l\farch 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 Jannary 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. Bulletin of the University of Texas by Governor Houston for the protection of the frontier priul'. to March 2, 1861.1 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~ession of the state or which might 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 legisla­ture 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.2 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.3 The arguments advanced in support of repudiating the civil debt were: first, that it consisted largely of treasury war­rants 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.4 Opposing argu­ments were based on the injustice to those who had furnished their services and goods to the state institutions and civil depart­ments, and on the effect the repudiation would have on the credit of the state.5 The convention appears to have acted, however, in accordance with what it conceived to be the President's restoration policy. 1Ibid., p. 46. 2Jbid., p, 45. 3Journal of the Convention of 1866, p. 356. 'Ramsdell, Reconstruction in Texas, p. 102. •9onvention Journal, 1866, p. 117. House Journal, 11th Leg., p. 193. A Financial History of Texas ''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. " 1 Xo record has been found of a suggestion by President Johnson to tl1e provisional governor or to the conwntion of this repudia­tive action. He had, however, in the previous ~·ear made the suggestion to Provisional Governor Holden of North. Carolina that "Every dollar of the debt created to a id the rebellion fl;?llinst the l'nited States should be repudiated finally and for­ ever. ''2 The provisional government of Texas <:>eased and a restored state government went into effect August 20, 1866. An act of November 9, 1866, entitled" An Art to llsrcrtain the amount of. and adjusting and funding the State debt. and to state any and all accounts between the State and individuals.'' created an audi­torial board ''for the purpose of auditing all rlaims for money al!llinst the state and rcauditini:r all the audited liabilities of the statr not inhibited b? the Constitution.'•:: The prinripal work of the hoard consisted in separating from the debt inrnrred between .fan11ar~· 28, 1861. and August 5, 1865. that part incurred on account of expenditures authorized before January 28, 1861. Thr artion of the board ceased December 1, 1867.4 An . imal~·sis of its report shows the following: Item I. 8 per cent bonds of ~larch 20. 1861. Amount issued, $16,000.00. Amount rejected, $86.04. Amount of principal recognized or esti­mated valid, $15,913.96; interest, $1.319.60. Total $17,233.56. Amount audited, $4,133.56. Balanrt' outstanding .. . ... . . . ... .. .... . . . ... .. .......$ 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, ''01. 1, pp. 364-8. Bulletin of the 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 Financial History of Texas 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, such 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.1 Bonds of the state to the amount of $82,168.82, bearing date of January 1, 1867, were accordingly debited to the school fund.2 This same act of November 12, 1866, in obedience to the requirements of ordi­nance 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, 1861.3 This transfer of the United States bonds was 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 uni­versity 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 legis­lature had any authority to assume or proviknowledge their validity, as it did the other debt authorized in 1866. throws doubt on their validity after the overthrow of civil government in 1867. Neither the legislature nor the au­ditorial board of 1871 took any cognizance of these 5 per cent state fonds, and this appears to have been fatal to their po­sition, for they were classed as doubtful or worthless in every comptro11er 's report after 1870, except that of 18~1-2. The p11ssagc 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 revie"'ed 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 pairl on them and their date of maturity passing without payment, until 1883. By this act of February 23, 1883, they w0re vali­dated and were ordered paid with accrued interest. 2 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. 2Laws of 1883, p. 15. Bulletin of the University of Texas the debt of doubtful validity the 6 per cent state bon.Js datc1l May 13, 1865, and the comptroller's certificate of iu tcht1~due~s dated June 8, 1865, the bonds being held by the school tuntl, and the certificate by the university fund. As has b1.\1Jn explained these were specifically declared void as war debts ju 1866, and they were not validated until 1883. Their validation and pay­ment under the act of February 23, 1883, was, as far a.s legal obligation was concerned, a pure gift under the :.!Hise of payment of a debt. The failure of the state -µp to 188~) to pay the inbr­est or the principal of the above obligations helil by thP. school and university funds was therdore 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 therwise met the conditions of the chartering act. The blocking -0f 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 presumptious. In the .adjustment of the matter a very respectable ele~ent favored a subsidy and thought that this kind of aid generally would be the most effective in securing railroads. The 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. 1~fossage of Governor Coke, February 10, 1874. Warrant& 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. 2House Journal, 12th Leg., Second Sess., p. 435. Message of Governor Davis, January 14, 1873. Message ofl Governor Coke, February 10, 1874. aAct of March 7, 1874; Laws of 1874, p. 239. A Financial History of Texas CONCLUSION. The salient features of the Reconstruction financial period of Texas history are the large growth of expenditures, the great in­crease 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 ;1 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 instru­mental 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 de­fence 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,­ 116.00.1 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 harassin~ 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 clari­fication 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 com­mercial forces which had been depressed by the war, the Recon­struction, and the prostrating panic of 1873. Additional taxa­tion as a way out was inexpedient in view of the already un­popular height of the tax rate, and bonds could not be immediate­ly 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 baRis, however, until the spring of 1879. Each year betwern 1874 and 1879 saw treasury deficits, the 'Message of Governor Coke, February 10, 1874. A Financial History of Te.ras state's warrants at a discount, the maintenance of the same high tax rate, an increase in the bonded debt to meet the ordinary ex­penses of government, and parsimony in expenditures for char­itable, 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 up­ward movement indicating the completion of industrial recovery from the panic of 1873.1 'l'he population of the state grew from 818,579 in 1870 to 1,591,749 in 1880. This was a percentairn of inereRse 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 dmsity of population remained small, though there "·as an increase from 3.1 in 1870 to 6.1 in 1880. Agriculture eng-aged 68.8 per cent of the population ten years of age and over employed in all occupations. Agl'icnlture showed a marked improvement in condition in 1880 over 1870. Thou).!h the number of farms increased 185 per cent and the acrea).!e in farms increasPd 97 .:1 pPr cPnt, the percPntage increase in the improv<.' 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.6 The land legislation of 1879 shows small results until after 1880. The receipts under the fifty cents act were only $5,718.77 up to Sep­tember 1, 1880. The receipts from sales of land belonging to the school, uni­versity and asylum funds were: 1874 .. . .. .. ...... . ............... ..$ 1,572.46 1875 39,843.89 1876 .................. . ...... . ... . 125,546.78 1877-8 . . ..... . ..... . ........ . .. . ... . 203,745.89 1879-80.............................. . 254.241.89 Total. ....... .....................$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. 3Laws of 1874, p. 169. Ibid., p. 185. Laws of 1875, p. 22. Ibid., p. 77. 'Sayles, op. cit., p. 297. 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. Bulletin of the Unfoersity of Texas Over one-half of the receipts, or $322,450, was from sales of university lands set apart in 1839 and lying in Callahan, Collin, Cooke, Fannin, Grayson, Hunt, Lamar, McLennan, and Shackel­ford counties. CHAPTER 5. SCHOOL AND UNIVERSITY FUNDS. During 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 1md 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, anJ was the amount which was applicable an­nually to the support of the public free schools.1 These funds eould not be appropriated to any other purpose. The Constitu­tion 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 $1.2 The Con­stitution of 1876 gave to it the ''funds, lands, and other prop­ert~r 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 whatsoever; one-half of the public domain of the state." This was consti­tuted 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" was defined to be the available fund.3 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 war and put at the disposal of the l\Iilitary 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, secs. 2 and 3. 15-H Bulletin of the University of Texas sions of $39,216 on contracts for recovery, netted $300,023. Xeither 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, onl~· $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 ex­clusion of the pnblic: hut 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 reYenue 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 J.Jegislatu:re to reduce the share during 1880 and 1881 to either one-sixth or one-eighth of the revenues.1 Neither branch of the legislature was willing to meet the public with such a reduction, however, and it remained for the governor to veto the item ap­propriating one-fourth. At the special session though, in 1879, one-sixth of the ad valorem and orcupation tax receipts was ap­propriated.2 It was contemplated, of course, that this reduction should be only temporar~·.3 The per capita apportionments from the available fund were as follows: Total. 187 4 .............. .........$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. 2Laws 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 un­audited claims of school teachers for services rendered prior to July 1, 1873. In 187 4 $400,000 of the available fund not other­wise 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.1 No sc·hool 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.2 The amount paid on their account was through 1883, $404,536, and an addi­tional appropriation of $15,000 was made in 1883. Claims con­tinued 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 mone~' appropri­ated out of the general revenue, either for the university for negroes or for buildings for the University of Texas.3 It called for an immediate appropriation of $40,000 for the completion of the buildings and the furnishings of the Agricultural and Me­chanical College.4 Provision was made in 1876 for the establish­ment of a negro agricultural and mechanical college, but in 1879 this 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 universit~·. The Con­stitution 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. Comp­troller's Report, 1875. Message of Governor Coke, April 19, 1876. 'Art. 7, secs. 10 and 14. 'Art. 7, sec. 13. Bulletin of' the Unil'crsity of' Te.ms wrsity of one-tenth of the alternate sections of lands donated to railroads by the act of 1858, but gave one million of the un­appropriated lands as a substitute land endowment. The new lands given were located in the western part of the state and -.vere not as valuable as the lands taken away.1 Suit was also brought during this period which resulted in the loss to the uni­versity fund of valuable land in l\IcLennan 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 15.3.2 '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. \Vhen the Coke administration succeeded the Davis on January H, 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 $36,173, 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 require­ments, 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.1 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 l\Iarch 4, 1874, the issue of bonds to the amount of $1,000,000, bearing 7'/c 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 Janu­ary 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 were receivable at par in payment for any bonds of the state. The 'Message of Governor Coke, February 10, 18H. '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 amend­atory acts stipulated gold. Bulletin of' the University 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 $834,436.1 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 a.ct of December 2, 1871.2 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 bring­ing 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 l\'.1-arch 4, 1874, a total of $1,900,000 was added to the bonded debt; the gross amount received was $1,fi51,137, or an average of 86.9 cents on the dollar; commis­sions 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.3 The net proceeds of the sales were disposed of as follows: $607,357 to the payment of ·warrants on account of indebted­ness incurred prior to January 15, 1874, excluding the warrants outstanding against the available school fund; $354,562 to Vtilliams 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 legislature of 1870 granted very liberal pen­sions 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, bear­ing 10'/c; interest, payable 20 years after date, but redeemable at the pleasure of the state within five years.1 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 .:\lay 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.2 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. :\'rw bonds to the amount of $413,600 were issued. making a total outstanding on August 31, 1876, of $50:3,400.'1 These bonds werr payable ten years after Janu­ary 1, 1874, but were redeemable at the pleasure of the state at flny time aft<>r three years from their date. The important feature of debt legislation in 1875 was the settlement of the International Railroad bond subsidy contro­versy. The question of the subsidy was rPopened by the legis­lature immediately upon convening in 1875 by the introduction in the senate of a bill which "'ould limit the subsidy to $3,000,000. This hill passed the senate by the narrow vote of 14 to 12.4 In the honsr of reprrsentrn<>d and canceled, but after 1874 the fund was not main­tained, 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 establish­ment 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 rnorP than two p<>r centnm of the public debt. " 2 The bond act of July 6, 1876, provided for the establishment of a sinking fund of 2 per cent. This provision, though man­datory npon the treasurer, was not carried out. The item ap­peared in the appropriation bills, but no funds were reserved in 1876, 1877, or 1878. In 1879 Governor Roberts vetoed the ap­propriation 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 his suggestions were adopted he approved the debt items.3 In 1879 and 1880 $200,000 was set aside for the fund, but it was not applied to bonds, but to the payment of deficiency warrants.4 'Galveston News, March 12, 1879. This had the effect of lowering the discount; message of Governor Roberts, January 11, 1881. 'Art. 3, sec. 48. 3Galveston News, April 24, May 8, 31, 1879. The veto was not taken in the financial world to signify a repudiation sentiment; the Commer­cial 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. 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 change state banks and trust companies, their combined capital stock and surplus was $39,575,738, and they had demand and tim<' deposits of $77,25:~,027.1 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 corpo­rations than when they are in the hands of private lenders. Railroad milea{;?e amounted to 3,24-1 in 1880. 8,710 in 1890, !1,Hfi7 in l!lOO, and 15,635 in 1915. Thoug-h tll<' 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 construc­t.ion 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 a~ricultnre into those iwctions. '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 W'agner, 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 in­creased from $977,998 in 1881 to $13,866,269 in 1915, or 1317 per cent.1 Expenditures of the kind which Herbert Spencer calls pro­tective-in other words, those for the judiciary, for the bare general and financial administrative functions of the govern­ment, 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, 1The 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 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 his duties were concerned with the propagation and preservation of fish.1 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.2 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.3 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 Iaws.4 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." Iu 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.' '0 In 1907 this bureau was made into a separate department.7 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.8 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, !54. Laws of 1909, p. 325. 3Laws 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, char>. 8. Laws of 1911, p. 9. Rev. Civil Stats., 1911, title 136, Chap. 1. Bulletin of' tlte University vf' Te.ras 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 hus­bandry, 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.1 In 1911 provision ''1 as 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 mar­keting 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.2 This state service is under the supervision of the commissioner of insur­ance 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.3 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.5 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. Laws 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. Pi11a11cial History ol Te.ras 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.1 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.a 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 safe­guard the health and safe~y of employees, and to collect sta­tistics "relating to all departments of labor in Texas, 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.6 In 1913 an employers' liability law was pass<>d. This law pro­vided for an industrial accident board, whose salaries are paid hy 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. St>ss., 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 or 1913, Reg. Sess., p. 237. "Laws of 1903, p. 66. Laws of 1909, Reg. Sess., p. 221. Laws or 1911, p. 34. Bnlletin of the University 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 depart­ment of insurance and banking and given to a state library and historical commission.1 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 state :fire insurance commission.2 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 1905.3 The above described boards, bureaus, commissions, depart­ ments, etc., represent mainly new activities of the state, a:nd 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 Jis­ bursements 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 1Laws of 1907, p. 127. Laws of 1909, Reg. Sess., p. 122. Rev. Civil :Stats., 1911, title 85, chap. 1. 2Laws of 1909, First Called Bess., p. 311. Laws of 1910, p. 125. Laws of 1913, Reg. Sess., p. 195. 3Laws 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 2-!9 cially 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 Univ.ersity was passed in 1881, and provision for the establishment of the medi­cal branch at Galveston was made in 1890.1 The school of mines at El Paso was authorized in 1913.2 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.3 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 appropria­tions for the higher educational institutions were generously in­creased.~ In 1884 the office of snperintedent of public instruc­tion 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.5 Xotable 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. Bess., p. 427. 'Laws of 1899, pp. 74, 175. Laws of 1901, Reg. Bess., p. 306. Laws of 1909, Reg. Bess., p. 235. 'Laws of 1915, Reg. Bess., p, 116. Laws of 1915, First Called Sess., pp. 22, 113-114. 'Laws of 1893, p. 182. 250 Bnlletin 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 freble minded.1 In 1895 the Confederate veterans' home which had been con­ducted 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.2 These homes care for the indigent Confederate veterans and their widows. After the re­peal 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 in­digent veterans or their widows, but in 1881 a new land pension act was passed which granted 1,280 acres and abolished the con­dition that the recipient should be indigent.3 In 1883 and annual cash pension of $150 was granted to indigent veterans of the Texas Revolution, signers of the Texas Declaration of Inde­pendence, or their widows.4 In 1899 cash pensions to indigent and disabled Confederate veterans or their widows were granted.11 The law contemplated a pension of $8 per month payable quart­erly, though it was provided that if the sum appropriated should 1 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. 3Laws 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. Pinaucial History of' Tc.ras 231 be insufficient to pay a pension of this amount the appropria­tion should be pro-rated among the pensioners. The practice prexailed of pro-rating the amount, and the appropriation in­e~ased from $100,000 in 1889 to $500,000 in 1911. An amendment to section 51 of article 3 of the constitution was adopted in ~ovember, 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 spe­cial 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 ammdment was carried into effect by the law of April 7, 191;3, and a tax of five cents was levied.1 The amount received by the pension fund in 1915 was $1,277,669.46, and the amount dis­lmrsed was $1,442,413.85.2 By the acts of February 20 and April 18, 1879, 3,050,000 acres of public lands were set aside to secure a state capitol. A contract was entered into on January 18, 1882, whereby in re­turn for 3,000,000 acres of land situated in the counties of Dal­lam, Hartley, Oldham, Deaf Smith, Palmer, Castro, Bailey, Lamb and Hockley, valued generally at the time at fifty cents an arre, 7\latthias Schnell, of Rock Island, Illinois, agreed to con­struct a capitol.3 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 pen­sions were paid quarterly. Since the new law the number of pen­sioners 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 were 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. 3Contract for building the New State Capitol; Reports of Depart­ments, 1881-1882. 252 Bulletin of the University of 1'exas of the grounds, for which $171,500 was appropriated in 1888 and 1889. In 1882 the old capitol was destroyed by fire, and the state was put to the expense of a special session of the legis­lature and of the construction of a temporary capitol, for whieh latter purpose $50,000 was appropriated. Monuments have been erected on the capitol 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 crea­tion in 1911 of the office of state inspector of masonry, public buildings and works.1 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 to $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 im­periled 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 com­posed in no small measure of ruffians, was a political machine, and caused strife and disorder instead of suppressing it.2 By 1879 protection from Indians and marauding Mexicans was en­trusted 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 prop­erty was apparent.3 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 1Laws 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. 3Galveston News, January 30, 1879. A Financial History of Texas 253 penditures for this purpose decreased; though in 1884, on ac­count of the outbreak of fence cutting and disorder in the west­ern 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 in­creased. The force may consist of not more than four com­panies of mounted men, each company to consist of not more than one captain, one first sergeant and twenty privates. The actual number is mlJCh less, however. In January, 1915, the force con­sisted of three captains and thirteen enlisted men.1 Since 1880 expenditures for the volunteer guard have in­creas<>d, and after 1890 the cause of the increase has been the cost of transportation and subsistence of the guard on the occa­sions 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 de­creased 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 conrt, one court of criminal appeals, five courts of civil appeals, each with three judges, and fifty-eight distrirt judges. By 1915 the courts of civil appeals had increased to nim>, and district judges numbered eighty-five: The responsibility for the absolute in­crease in judicial <>xp<>nditures is to b<> divided between new courts, on the one hand, and fees and similar payments to sher­iffs, clerks, county judges, constables, and attached witnesses on the other. Fees and similar paym('llts 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. 1 House Journal, 34th Leg., Reg. Sess., p. 48. For governing law, see Rev. Civil Stats., 1911, title 116, chap. 1. Bulletin of the University of Texas Payments to attached Fees to sheriffs, clerks witnesses and fees of and attorneys In felony county judges and others cases. m examining trials. Total 1881 ......... $178,796 $ 172 $178,968 1887 .. ... .... 411,484 148,600 560,084 1891 ......... 291.754 113,114 404,868 1894 ......... 535,470 188,516 723,986 1895 ... ...... 406,372 135,778 542,150 1900 ......... . 264,138 180,849 445,087 1905 ......... 363,229 222,261 585,490 1910 .......... 316,331 199,398 515,729 1914 ......... 363,979 187,429 551,408 1915 ......... 381,294 197,517 578,812 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 1876.1 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.2 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 at­tention to it, and a determined effort was made to P.ffect a re­form, particularly in the direction of limiting the maximum sum which county and district officers could receive.3 A fee bill, known as the I\Iills Bill, was bitterly lobbied against, met parlia­mentary obstructions, and finally died, and an innocuous bill on the subject was passed.4 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. 3Message 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 Fina11rial History of Te:ras the important law of 1897 was passed which reduced fee:> 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 politirally to escape th<' maximum compensation provisions of the act, and though the act reduced their fees, these officers were intiuential enough to spe·ure in 1901 a restoration of the fees to the former profitable amounts.~ In 1913 there was revision of the fee law, and a maxi­mum compensation was set for the sheriffs.3 The amount pa~·able out of the general treasury on account of ft•t•s and similar payments fluctuates from year to year according to the activity of ·prosecuting and other offirers, and this has giwn rise to more deficiency appropriations than any other ob­.kct of state expense, and has frequentl.v worked a hardship upon officns and witnesses.4 Brginning about 1911 dissatisfaction with the fee method of compensating public officers has been on the increase, and the pr<'ss and governors' messages have expressed severe condemna­tion of the method. It has been an incentive to the most despi­cahlc injustice throul-!h false arrests and prosecutions of those who are unabk to protect themselves, and the state has been robbed through padded witncs8 and tax lists, throug·h excessive mileag-e charges by sheriffs for summoning witnesses and trans­porting prisoner!'!, and through extrava)!ant 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, Rt>g. 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 Ex­press, April 30, 1916. Bulletin of the University of Texas eeived in one year $9,576.35 and of a constable who collected $9,157.40, and returned nothinO' as excess show the extrava­ "' ' ganee of the system.1 The state platform of the Democratic party in 1914 called for the abolition of the fee method of pay­ing peace officers.2 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 <.'Onstitution,3 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 ma.y 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 as­sistants, the officer may retain one-fourth of the excess until it reaches certain amounts which also vary according to the popu­lation of the county or chief eit~r. 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 ma~r retain fees up to $2,750 and one-fourth of the excess up to $1,500, making a possible total compensation of $4,250.4 There are certain vicious exceptions to 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 oc­casion of much concern to the different administrations. From 1849 to 1870 the state operated the Huntsville penitentiary on its own account, but from 1870 to 1883 the buildings and convicts were leased, and the state "·as under no expense, except for 'Dallas ~ews, :March 29, 1914. ':'.\Iessage of Governor Ferguson, January 20, 1915. 3Report and Opinions of the Attorney General, 1912-1914, p. 246. 'Laws of 1913, Reg. Sess., p. 246. 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.1 The penitenti:iry located at Rusk was brought to completion in the early eighties, and it and the Hunts­ville properties and convicts were leased by the penitentiary board in 1882 for fifteen years at $10,000 per year for each peni­tc>ntiary. 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 <'Onvicts in such numbers as the contractors desired and of em­ploying 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 owr one million dollars.2 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 pe1· cent bonds, to bl' 1:wcured b~· the penitentiary properties, exeept the Sta~e R;:iilroad, and designated $1,500,000 of the pro­c·ePds to be appli<'d to the paymmt of the debts of the system, and th<' renrnimlpr to addition and improvements.3 ln spite of larJ?<' payments out of the general treasury in 1913 and 1914 the debt of the system was on Januar~· 1, 1915, $861,845, and the house committee which investigated the penitentiary was 1111c<•rtain wheth<'r this was all of th<' dPbt.• In 1915 an appro­priation of $465.000 was made to cowr the current expenses and tkbts during the y<•ar 19li'l.5 D<'hts whieh represent paying-in­wstments are productive, but those which Hre inc11rred to meet running expm.ses are nnproduc~iw. Rome of the indebtedness 'Biennial Report of the Penitentiary Board. 1880, p. 10. 'House Journal, 33rd Leg., First Called Sess., p. 53. ' Laws of 1913. Rfg. Sess., p. 110. 'House Journal, 34th Leg., Reg. Sess., p. 439. 'Laws of 1915, First Called Sess., p. 114. 17-H Bulletin of tlte University of Te.ras of the penitentiary was due to the purchase of farms and (·ther 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. Const:ruction 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, 1884.1 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.2 Another blast furnace was erected at Rusk 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 1Biennial Report of the Penitentiary Board, 1884, p. 12. -'Ibid., 1888, p. 12. A Financial History of Texas smelting, was also brought in from a distance.1 In 1902 the penitentiary board for the first time pointed out that the peni­tentiary 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.2 A change of administration occurred, however, and instead of abandon­ing 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.3 C, 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 prop­erty 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. 3Rev. 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 pur­poses only; Laws of 1910, Fourth Called Sess.. p. 122. Laws of 191.:::, Reg. Sess., pp. 153, 234. Rev. Civil Stats., 1911, art. 7507. 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.1 The re­leases 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.2 Under the laws of 1876 and 1879 assessment took place between January 1 and June 1, and collection began October 1 and pay­ment was voluntary until March 1, except that taxes of non­residents 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 1.3 It was believed that more money was in circula­tion 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 l and are voluntarily payable until January 31.5 A subject of unending, confused, and, for the most part, in­effective 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 com­missioners' 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. 3Laws 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 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 jn clouds upon land titles which only ex­pensive litigation could remove.1 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.2 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 wal!! 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 re­demption and these relief acts were almost as regularly passed as the legislature met. No successful effort to enforce the pay­ments 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, be­cause 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 waited, counting on more favorable induce­ments 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. Bulletin of the University of Texas confidence in tax titles, and taxpayers were not prompted to payment, therefore, through fear of purchase by individuals.1 The amount bid in each year by the state is affected somewhat by commercial conditions; but for years the laws were unques­tionably 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.2 This law was amended in 1897, and was responsible for an increase in redemptions and a decrease in sales to the state.3 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 tax­payer to plead the statute of limitation as a defence against the payment of taxes was taken away in 1895.4 The features of the legislation of 1895 and 1897 were to substitute for the old pro­cess of seizure and sale by the collector the process of suit for the taxes in thB 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 -0f 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.5 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 1 Comptroller's Report, 1881-2. Message of Governor Ross, Janu­ary 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. 3Laws 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 tate 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 by the provision that re­demption might take place after one year only upon payment of double the amount of taxes, interest and penalty, and all costs.1 This double liability continued until 1907, when it was thought to be a deterrent to redemption, and was replaced by the pro­vision 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.2 But fo.r: lands sold for taxes and bought in by individuals the law was not changed and re­demption may take place within two years upon payment of double the amount paid for the land.3 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 i>tatutory provision for their sale, except in the case of lands of non-residents of unorganized counties.5 It is alleged that the insufficient compensation of county and district attorneys when they bring suit and their exclusive power over enforcement have resulted in negligent enforcement of the lien of the state on real property.6 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. 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.1 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 i.s de­sirable 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 prescribed.2 With the growth in taxable values and taxes collected, their pay became excessive in many instances.8 A reduction in collectors' fees was made in 1895.4 In the general revolt in 1897 against the abuses of the fee system, the fees of these officers were changed, and a maximum compensation was fixed.5 The maxima are graded roughly according to popula­tion 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 tb -Rsse.'lsmeut 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 1895, 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 t.:ontrary 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. Financial History of Texas 273 improvement since has been due to the reduction 111 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 6.6 in 1915. Th€ 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 rounty 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 immediate!~~ and a division of the costs was made, one-third to be borne by the county and two-thirds by the state.1 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 connty 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. Ii would seem fairer that the expense should be prorated according to the interest which each has in the senices rendered. It is asserted that the com­pensation of collectors in the richer counties is more than ade­quate, in the poorer counties less than sufficient; and that the surplus fees turned into the county treasnry enable some counties to be at no expense for the collector's office.2 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 Bulletin of the University of Texas in the larger totals which are accomplished by some effort and unpleasantness usually deters collection of delinquent taxes.1 It is apparent that some reforrp. is needed, and those suggested a.re putting the officers on a salary basis, or having the entire expense borne by the counties, or separating state and local sources of revenue.2 Also there is loss to the state and, in addition, injnstict' to tax­payers as a result of failure to list property and of undervaluation of that which is listed. Both non-rendition and undervaluation have characterized the operation of the property tax throughout the period 1880-1915.3 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, ~913. 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. 2Report 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. 8Messages 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 Gov­ernor 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 commis­sioners. 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 pur­chase was taken had been rendered for taxes at only $53,080; House Journal, 34th Leg., Reg. Sess., p. 442. A P.inancial History of Texas 738,721, or 45.3 per cent.1 In 1912 the 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.2 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 estab­lished in the case of money. The law considers deposits subject to sight check as cash.3 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 de­posits 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, un­officially, and very occasionally by the Comptroller of the Cur­rency. By comparing the amount of individual deposits in na­tional banks at the date nearest to January 1 with the assess­ment of money on hand January 1, the evasion of money is con­clusively, though roughly, established.4 '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 com­parisons 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. 3Campbell 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 they 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 Te.ras 277 The laws have been amended from time to time to close loop­holes and these changes reveal some of the ways by which taxes were evaded. In 1888 the practice of removing property tem­porarily 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.1 Livestock in pastures iying in more than one county had their situs defined in 1887, and in 1905 there was legisla­tion to prevent the escape from taxation of timber on public lands leased or sold.2 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 equaliza­tion must make.3 The most notable of all efforts of this character was made in 1907 in the so-called '' Fnll Rendition Act.' '4 This act defined the standard of valuation of pro pert~' to be its '' rea­sonable cash mark.et 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 the:v could be removed from office upon suit brought by the attorney general or under his direction. In l!l09 it was mafle the dnty of boards of equalization to see that propert:v was rendered.at a "fair market value. " 5 As a resl.lt mainly of the "full rpndition act'' there was an increase of $5:31-l.825,000 in the assessed values of 1908 over those of 1907. The number of acres of land as­sessed increased by 2,383,000 ; the assessed valne of rural real 'Laws of 1888, p. 3. Laws of 1891, p. 39. Laws of 1897, Reg. Sess., p. 203. Re-..;. 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 tlie Univer.111'.ty 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 re­mainder of the increase in 1908, railroad property made up $50i­039,000; 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 in­creased $15,076,000, money assessed decreased $4,734JOOO. The act thus affected chiefly real property, railroads, tangible per­sonalty, and such intangible personalty, like bank stock, as is easily reached. Though designed to correct underval­uation 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 avera.ge true value of agricultural land in each county as given by the Thir­teenth Census with the average assessed value of lands and buildings as 1?iven 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.1 Five .of the six counties which ·were assessed at 90 per cent and over were in East Texas and had comparatively small popula­tion and wealth, while the wealthier counties, the famed black land counties, fell as a rule under 50 per cent. The varying per­centages of assessed to true values result in unequal taxation for state purposes, and they clearly show the need of some cen­ 1The 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 average­true value would be much larger. The percentage of underassessment. is, therefore, really inuch greater than is shown above, because of the omission of buildings from the census figures. The census figures are not accepted as accurate, but as nearly accurate as can be obtained. A Financial History of Texas tralized or state control or supervision of the assessing officers and county boards of equalization, if the real property tax is t<> he retained for state purposes.1 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 em­ployed by the commissioners' courts to unearth unrendered property, especially vendor's lim notes. The contracts with these "tax ferrets" or "tax adjusters" were held illegal, and the money collected through their activity was refunded.2 1 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 Rates. 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 pub­lic schools, was reduced from 50 cents to 40 cents on the one hundred dollars ' valuation of property. In 1883 the constitu­tion 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.1 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' valua­tion of property.2 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 col­lected 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.3 Since 1913 a special pen­ ~Laws of 1884, p. 5. Constitution, art. 8, sec. 9, and art. 7, sec. 3. 2La.ws of 1911, Reg. Sess., p. 288. 2See 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 im­provements to the purposes for which this 25 cents could be levied. The constitutional tax limit of counties became as a re­sult of this amendment 65 cents as compared with 75 cents form­erly, 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.1 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.2 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. Bnlletin of the University of Te.ras general la.w cities of 10,000 population and nnder became thl1s. fixed by statute in 1891 at 65 cents, except the tax for debts in­<'nrred before 1883.1 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 popula­tion. 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 .Jannar.v 1, 1889.2 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. "·as anthorized.3 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 amendmmt to the constitution adopted in 1909 makes it possible for citi.es having more than 5,000 population to be so chartered.4 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.6 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 1 Rev. Civil Stats., 1911, art. 925. 2Laws of 1889, p. 3. Rev. Civil Stats., 1911, art. 926. ~Laws of 1901, First Called Sess., p. 23. Rev. Civil Stats., 1911, fl ~t. 5585. 'Art. 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 Tc:ras less than 10,000 inhabitants may be incorporated as a towu or village, and it may levy a property tax not to exceed 25 cents.1 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 addi­tional road and bridge tax not to exC'eed 15 cents, and its levy was made subject to a majority vote of the qualified property taxpaying voters. This was carried into effect in 1891.2 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 author­ized.a In 1906 article 8, section 9 was amended to permit a jur~' tax of 15 cents, and this was given statutory effect in 1907.4 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 appear­ance of special districts of various kinds. Until the consti­tutional amendment of 1883, the legislature was limited in the creation of independent school districts to cities and towns. Where there was 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 Yoters.6 In 1908 article 7, section 3, was amended, and the maximum tax which could be levied by 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 WE-re ex­empted from the provisions of the district system; in 1885, 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. Bulletin of' the University of Texas independent school district was increased to 50 cents. 'l'he employment of this tax was made subject to a majority vote of the qualified property taxpaying voters.1 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.2 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.3 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.4 The taxing power 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.5 School and other districts which 1Laws of 1909, p. 17. 2Laws 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. 3Rev. 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 "im­provement districts." Laws of 1913, Called Sess., p. 89. •Art. 3, sec. 52. The other provisions of the constitution here re­ferred 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 are subdivisions of counties and which make use of the county assessor for assessing district taxes can not employ higher valu­ations than those for state and county purposes, but this limi­tation does not apply when they have different assessing and collecting officers from the county.1 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 in­clusion 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. Railroads. 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 pro­vision for review of rolling stock values by the board of equali­zation of the county where it was rendered in gross; but this was remedied in 1885.1 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 un­changed 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.2 Under the existing system of taxatidn, 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 grounds, all shops and 1Comptroller's Report, 1881-2. Laws of 1885, p. 30. In 1883 bills were introduced for the equalization and di1Terent assessment of rail­road 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 equali­zation.1 The physical and personal properties of a road situ­ated in an unorganized county are rendered to the state comp­troller. 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 pro­rates 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.2 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.3 In 1905 was enacted the most important railroad tax legis­lation 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 differ­ence between the whole value of the property and the value of the tangible property. For the determination of the intan­gible values a state tax board was created, composed of the comptroller, the secretary of state, and the state tax commis­sioner. 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 non­assessable, but that it had presumably already been assessed in con­nection with the other property. See also City of Dallas v. Street R. R., 95 Tex., 268 (1902). Bulletin of the University of Texas at the same rate as other property.1 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 equaliz-ation reduced the amount actually assessed to $30,803,000, or to 20 per cent of the amount found by the tax board.2 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.3 This law has added a very large amount of property to the tax rolls.4 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.15 1Laws 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, be­cause 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. 3Laws 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, $16B,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 bad 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.1 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.2 This contention can not be accepted, however, because the pur­poses 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 value­which 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 bas not been raised for adjudication in Tex·as. hut 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 invest­ment should not be the bases for charges or securities.8 '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. 3Comparatively rect>nt 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 At!. Rep., 634 (1915) . 19-H Bulletin of the University of Texas B. Insurance Companies. Insurance companies, both domestic and foreign, are, exeept 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 au­thorized 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.1 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. 2 Domestic life, accident, and health com­panies, and domestic co-operative life insurance companies are taxable on their real and personal property less reserve.3 Foreign fire insurance companies must either file a bond or de­posit securities, and domestic life, accident, health, fidelity, guar­anty, 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 1Laws of 1903, p. 166. 2Laws 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 of their legal reserve against policies of Texas citizens in Texas securities or Texas real estate.1 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 occupa­tion tax on their gross receipts from premiums upon property and persons in this state.2 C. Banks and Bankers. Until 1905, when as a result of an amendment to the constitu­tion 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 were taxable on their real estate and tangible personalty, and on so much of their other personal property as remained after de­ducting 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.3 The statutes in 1879 erroneously failed to include bills receivable and other credits, and this was not corrected until 1883.4 In 1883 separate provision was made for national banks. Itwas 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. Xational 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. Bulletin of the University of Texas except such as was exempt by the laws of the United Statel3.1 The meth-0d of taxing shareholders was unsatisfactory and wafl changed in 1885. It was th.en 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.2 The Revised Statutes of 1895 made no distinction between state and national banks, but there was later an amendment to cover this error.3 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.4 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.5 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 in­tangible property which is so completely reached for taxation as 'Exempted by the laws of the United .States 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). 3Lawi;: 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 Fina11cial History of Tei:as 293 are they. The growth of banks in the state has been phenomenal and has tended to simplify the taxation of monied capital.1 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 pro­vided, however, that upon compliance with this tax law the gross receipts tax law should not apply.2 The companies other than the railroad gene.rally elected to comply with the gross receipts law. The difficulties experienced by the state tax board in determ­ining the intangible property of the companies and the greater simplicity of the gross receipts tax led to a change in the la\\' 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.3 'Year No. of na-Capital stock No. state banks Capital stock tlonal 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,GOO 728 31,176,096 2Message of Governor Lanham, January 12, 1905. Laws of 1905, p. 351. 3Laws 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 and 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. Until 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 tax­ation became possible, reduction was made in the ad valorem rather than in the license taxes.1 General revisions of the rates were made in 1881, 1882, 1889 and 1897. As some one hundred and twenty-live different items were concerned, it is impossible to follow the changes in each one. The famous Bell Punch Law enacted in 1879 to apply to liquor dealers was a failure and a scandal and was repealed in 1881.2 Replacing 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.3 In 1897 the privilege of selling liquor upon prescription in local option territory was made taxable at $200.4 In 1907 the rates for deal­ers of liquor in any quantity, including those selling upon pre­scription, were raised to $375 and the rate for malt dealers ex­clusively was increased to $62.50. 5 The tax of $200 on commercial travelers, known as ''the Drum­mers' 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 1Message of Governor Roberts, January 13, 1881. For criticism see Galveston News, January 14, 1881. 2Laws 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, Jan­uary 11, 1881. 8Laws 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 unconHtitutional in­terference with interstate commerce, in so far as it applied to drummers representing foreign houses or houses doing business in other states.1 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 b~n to reduce the taxes on the so-called useful occupations and to increase those on pursuits which smack of quackery and eharlatanry 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 occupa­tions 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; st<>am laundries; lawyers; livery and feed stables; photograph galleries; toll bridges; and wagon yards.2 The receipts from the taxes on the occupations thereaft<>r exempt amounted in 1907 to $249,175. The tax on resident physicians and surgeons was re­pealed 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 all<>ys, baseball parks, cir­cuses,3 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 other 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, ii. 142. 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 discourage­ment or slight repression. Exhibitions by associations for the promotion of art, science, and charity, concerts given for charit­able 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 ped­dlers; canvassers; traveling vendors of patent medicines; trav­eling medical specialists, surgeons, oculists, and other specialists i and itinerant merchants selling bankrupt stocks. Peddlers of literature, poultry, vegetables, fruits or other country pro­duce exclusively are exempt, as are also salesmen for merchants engaged in the wholesale drug business. The act of 1897 ex­empted from the peddlers' tax the blind, deaf and dumb, wounded persons, those who had lost a hand or a foot, and ex­Confederate 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.1 The explanation for these taxes is that the occupations are not easily reached by the property tax and that they compete with 1Ex-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 vehicles $350 and ex<:lmpt-ing 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 'Vas :lm1mded 1n llS99 to conform to these decisions. Traveling vendors of tinware and earthenware were dropped from the exempt list by this a/llendatory act; Laws of 1899, p. 201. A tax which was first levied by the oc­cupation tax law of 1881 and which applied to solicitors of orders for photographs, enlarged crayon pictures and the like, was declared an un­eonstitutional interferences with interstate commerce when applied to solicitors of a foreign corporation; Ex-parte Holman, 3 6 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 over­ruled 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 pmfessional 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 adjust­ers, industrial insurance agents, lightning rod dealers, auction­eers, money lenders, pawnbrokers, sewing machine dealers, ship brokers, street railways, and water works.1 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 oyster­ing 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.2 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.3 In 1909 a tax upon wholesale dealers in fish and oysters was introduced! 'fhe 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, but 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 Clv. 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 mal'lcet from the public coast waters; a tax of two cents per barrel on uysters gathered from the natural reefs or private oyster beds within the public coast waters; a charge of $1 for a boat license to engHge in the business of fishing or of gathering oysters; ane 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.1 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 eommissioner.2 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.3 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. 3Besides 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 are a tax of $250 in each county upon the peddling of cook­stoves, washing machines, churns, wagons and other vehicles,1 a tax of $500 upon the occupation of selling cannon fire crackers and toy cartridge pistols,2 the tax of $4,000 on those soliciting or taking orders for liquor in local option territory ;3 the tax of $2,000 on a ''cold storage'' ;4 the tax of $5,000 upon an office de­lin·ring C. 0. D. liquor packages:5 the tax of 50 per cent upon the gross receipts of pistol dealers ;6 and the tax of $2,000 on any retail dealer in non-jntoxicating malt liquors.7 The only graduation attempted in the present occupatwn 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.8 The tax on peddlers varies ac­cording 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. 3lbld., art. 7479. 'Ibid., 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 lllegal 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 Ex­parte 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 Univer,~ity 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 be­comes 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 col­lect the tax. Laxity, however, long characterized collections, and collectors have been charged with favoring their friends.1 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 1910.2 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.3 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 applying 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 com­panies; palace, sleeping and dining car companies; railroad com­panies; gas companies; and the steamboat and stage coach busi­ness. Receipts from all these amounted in 1881 to only $30,i'i42, which was 1.2 per cent of the total tax receipts. At the present time every important commercial business, except chiefly the mercantile anu general manufacturing, is subject to special oc­cupation 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 receipt.s. 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. Railroads. 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 was 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.1 The tax of 1 per cent on passenger earnings only was retained until 1905.2 The act of 1905 imposed a tax of 1 per cent upon the gross receipts from the passenger, freight, and baggage business of railroads.3 .fn 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. 2In 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. Bulletin of the Univers1~ty 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, towns, 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 Gal­veston, Harrisburg and San Antonio Railway 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 com­panies appealed and on March 21, 1906, a court of civil appeals held the statute unconstitutional.1 Upon being carried to the supreme court of the state, that court held the act to be con­stitutional, except as to penalties and forfeitures, which were declared to be excessive.2 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.8 1Galveston, H. and S. A. Ry. Co. v. Davidson, 93 S. W. Rep., 436 (1906). '100 Tex.. 153 ( 1906). 3210 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 in­cidental, not direct, was accepted by Chief Justice Fuller and Justices Harlan, White and McKenna of the U. S. Supreme Court who dis­sented 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 Taxa­tion. 1911, pp. 188-192. A Financial History of Texas Railroads are taxed at present only by the property tax on their real and personal property, including intangible. They are exempt from payment of the franchise tax.1 B. Sleepi,ng, 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 com­pany, 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.2 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.3 The method of com­puting the state's share of the capital stock as laid down in the statute was th-at it should he ''such proportion of the capital of such company, after deducting therefrom the amount shown to be invested in real !'state, manufacturing plants, materials and properties, other than such sleeping, palace, or dining cars and their equipment or properties used in con­nection with the operation of such cars, as the miles over which it runs its cars in thi<; 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. Bulletin of the University of Texas in this state and other states over which such cars may run." This tax was in addition. to othet taxes in force, but no occu­pation 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 C"ars 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 2%% on the gross receipts from passenger travel originating and ending within the state. This tax was payable quarterly to the state treasurer. This gross rooeipts tax was in additiou 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 com­pany doing this business.1 In 1905 the rate was raised to 4% on gross receipts, except those from buff et 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 proceeds were, respectively, $39,628 and $5,157. C. Express Cornpanies. In 1880 an express company was subject to a fixed annua] occupation tax of $750, but $250 of this amount was appor­tioned 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 de­creased to $500 in 1882, but 'vas raised to $1,000 in 1889. In 1895 it was replaced by a tax of 1%% on gross r.eceipts.2 In 1905 the rate was increased to 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. 1Laws 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 21, February l, March 6 and 7, 1895. A Pinanciul History of Tc.cus D. Telegraph Companies. In 1880 the occupation tax on a telegraph company was 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 mu­nicipal occupation taxes on the companies were not permitted. This tax was contested and was declared unconstitutional be­cause it taxed interstate messages.1 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 23,4%· Tele­graph companies are subject also to the property tax and to the franchise tax, except when operating under a Federal fran­chise. In 1910 the gross receipts tax amounted to $14,659; in 1915, $24,272. FJ. Telephone Companies. The first occupation tax imposed by Texas on telephone companies was in 1882, and was a state tax of $50 and a county tax of $10. The state tax was, unlike the other corpo­ration occup-ation taxes, collected by the county collector. In 1892 the receipts from it were $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 occu­pation 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 2%% on gross receipts was enacted. In 1907 the rate was reduced to 11/2%, payable quarterly to the state treasurer.2 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 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. 0. Street Railways. The first occupation tax laid by Texas upon street railways was in 1897 and was one of $2 per mile of track owned. It was -collected by the county collector and total receipts were $567 in 1906. In 1907 it was enacted that street railways in or con­necting 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%.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.2 It is payable quarterly to the state treasurer. In 1910 it amounted to $39,197; in 1915, $62,590. H. Gas, Water, and Electric Companies. Only gas companies were 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 was collected by county collectors, and its use was permitted to counties, towns, 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, Rnd 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 wa.<; $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 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.1 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. I. 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 114 % 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.2 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 eompanies.3 In 1897 the gross receipts tax was increased to 2~:{, and the tax on local agents was reduced to $5.4 In 1905 there were two enactments, but the later and prevailing one levied a tax of 21,4% on gross premium receipts, and provided for a reduction to % of 1 % and % 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.5 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, secs. 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 aalti;i 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. 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 1h of 1% on its gross premium l'eceipts.1 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 com­panies. 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.2 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 sho_uld 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.3 This re­quirement, 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.4 (b.) Other Insurance Companies. Fire and marine insur­ance companies were subject until 1882 to a state annual occupa­tion tax of $200 and to, a county tax of $10. In 1882 guaranty, 1Laws 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 tem­porary 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. 3Laws 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 Fina11cial History ol Te.ras accident, health, and livestock insurance companies were added to the taxable list, and the state tax was made the same a.s 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 one­half 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 en­acted. 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 com­panies was increased to 2% : on the gross receipts of fire and other insurance companies, 1%%.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 i·eserve on Texas policies to be in­vested 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 as one-fourth of its entire assets in Texa,; real C'state or other legal investments, and to one-half of 1 '/i if as much as one­half of the entire assets should be investetV Purely co-operative or mutual fire insurance companies were not nrn ;:::I ;:::I i:: tlS brother, sister, '1:l '1:l ""' '"O 0 lineal descendant of aS g ~ ....... ~ ....... brother or sister. ~ Cl.) ~ i::l ~ i:: bri:::s ;::::! p.c. p.c. Above $ 500-not above $10,000 ... Above 1,000-not above 10,000 ... 3 Above 2,000-not above 10,000... 2 Above 10,000-not above 25,000 ... 2% 4 51/2 Above 25,000-not above 50,000 ... 3 5 7 Above 50,000-not above 100,000 ... 31/z 6 8% Above 100,000-not above 500,000 ... 4 7 10 Above 500,000 .... . ................ 5 8 12 The tax is thus one on collateral heirs, and the rates are mod­'Laws of 1907, p. 496. Rev. Civil Stats., 1911, arts. 7487-7502. A Financial History of Texas erate. It does not avoid double taxation of a vicious sort. Hesi­dents 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 dearly in violation of the rule that personalty follows the owner. Probably a non-resident would 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 esti­mated at $500,000 annually, but this is no doubt an exaggera­tion.1 The loss is attributed mainly to the failure of the pro­bate 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 law­makers 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 at 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. 21-H CHAPTER 12. FEES. There are administrative, judicial, and educational fees col­lected. 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 depart­ment 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 availabie funds of the institutions. The asylums also collect charges, classed as fees, of their non-indigent residents. There are also num­erous state boards which are self-sustaining because of the fees of fixed amounts which they are permitted to charge. These boards 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~ den­tistry, 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 member!!! of the boards. There are maximum amounts of fees which dis­trict 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 im­portant single source of fee receipts. There was no change in the fee law of 1879 until 1883, when express companies were 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 panies.1 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 corpora­tion.2 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 corpora­tion 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 $1,020.3 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.5 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.6 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 com­pany; 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, tele­graph, 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. Bulletin of the University of Texas tional fee was charged of fifty cents for each $1,000 of author­ized 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 busi­ness 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.1 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 be­fore it was permitted to sell or to contract to sell any stock, and the filing fee for this document was made $20.2 The domestic charter fees received in the office of the secre­tary 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 $520.3 In 1881 fees, exclusive of those of the office of sec­retary 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 $430,155.4 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. 2Laws of 1913, First Called Sess., p. 66. 3MSS. Report in the office of the secretary of state. The total re­ceipts 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 legislation, the com­plexity of such legislation, and the numerous court decisions af­fecting 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. The Unappropriated Lands and the Debt and Capitol Reservations. Under the policy of free grants to railroads, war veterans, homesteaders, and to the public free school fund, the unap­propriated public domain was rapidly passing from state owner­ship. 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.1 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 ;2 the grant of 640 acres which was provided in 1879 for each indigent veteran of the Texas Revolution was increased to 1,280 acres ;3 and 300 leagues (1,328,400 acres) were reserved for the benefit of the free schools of unorganized counties, each county to receive upon or­ganization four leagues! During the years 1881-1882 certifi­cates 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. 1Land Office Report, 1879-1880. 'Laws of 1881, p. 122. 'Laws or 1881, p. 35. 'Laws of 1881, p. 65. Bulletin of the University of Texas The first halt to the policy of abundant giving away of the lands was called in 1882, when all laws granting land for the construction of railroads, canals, and ditches were repealed.1 It was believed that there was not enough unappropriated land to justify a continuance of such grants. 2 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 haJ made government aid less necessary. Such reasons doubtless in­fluenced 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 rail­way lines whose construction was aided by land grants are the Houston and Texas Central; the Southern Pacific; the Gulf, Col­orado 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.a 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 com­posed of the railway stockholders.4 The abuses, however, were minor, and the land grant policy by encouraging the construc­tion of railroads indirectly but powerfully promoted the growth of population and industry in the state.5 The land reserved in 1879 for the purpose of securing a new state capitol was not sold piecemeal by the state, but a contract was made whereby a syndicate built the capitol 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 1Laws of 1882, p. 3. 2The 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_ 3Report of the Land Office, 1910. •Message of Governor Culberson, January 16, 1895. "The Galveston News, April 14, 1882. 327 A Financial History of Texas market, and there they commanded a high premium. 'l'he high premium was 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 liecure 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 11ulted in no change being then made by the legislature.1 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.2 Thr 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.3 lTnder 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.' Thf' total number of acres sold for thr payment of the public debt was 1,660,936.~ 'Galveston News, November 19, 1882. 'Laws of 1883, pp. 2 and 3. 'Laws of 1883, p. 13. 'Land Ofllce Report, 1910, p. 30. 'Laws of 1883, p. 71. 'Land Ofllce Report, 1910, p. 30. The proceeds of sale were $884,786; Land Oft!ce Report, 1899, p. 30. Bulletin of the University of Texas In 1887 the act of 1881 granting land to veterans of the Tex as Revolution was repealed.1 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 un­appropriated land exhausted but that the school fund had not received by several m_illion acres the half of the unappropriated domain existing in 1876 which the Constitution of 1876 had given to it.2 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 each 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.3 An accounting between the state 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.4 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.5 This ap­propriation to the school fund in 1899 brought to a close the .experience of the state with its unappropriated public lands.6 'Laws of 1887, p. 6. 2Land Office Report; 1898. Hogue v. Baker, 92 Tex., 58 (1898). *Land Office ll.eport, 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 a~res .of which 1,722,880 acres were in lakes, bays, etc. The school fund re· ceived 4,444,195 acres. 6Since 1895 the state has charged a rental for the use of oyster beds planted or located w!thin 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 fir.;;t 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 ~1cre 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, fl.sh, and oyster commissioner. The amount received cannot be ascertained from any official reports. A Financial History of Texas B. liJ.nds of the Public 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 giv­ing 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 in­ternal improvement, while the other act referred to the remain­ing 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.1 In the next place, forfeiture on ac­count of non-payment of interest took place only after pro­ceedings 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. Bulletin of the University of Texas pecuniary incentive to act, did nothing.1 Another and principal defect of the law of 1879 ·was that the county surveyor was vir­tually 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.2 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.3 The district surveyor was made the ap­praiser 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 affi­davit that he had personally inspected the land appraised by him. The maximum of grazing lands not within five miles of the geographical cente:r 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 re­mained 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 in­ternal 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 'Mes-3age of Governor Ross, January 10, 1889. In 1882 the provisions for the enforcement of the contract through forfeiture were dropp<'d; Laws of 1882, p. 36. 2Land Office Report, 1882, p. 6. 3Laws of 1881, p. 119. A Financial History of Texas under the supervision of the county surveyor. Preferen~e in purchase was given to actual and prospective settlers. Pros­pective settlers were required to promise to settle upon and im­prove the land within twelve months from application for pur­chase. 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.1 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 cnly 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.2 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, were accomplished.3 Another abuse dur­ing the period was that practiced by the so-called ''county seat rings.'' The persons composing the '' ring-s'' 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 with­drawn from the market for ninety days, but if at the expiration 'Rev. Civil Stats.. 1879, title 81, chap. 3. 2Land Office Report, 1911-12, p. 26. 3Land Office Report, 1882. The Galveston News, April 6 and 8, 1882. 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 repre­hensible chiefly because bona fide purchasers were forced to make terms with the ringsters.1 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 suf­fered 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.2 The attempt was again made in 1882 to end the "free grass" policy, but it was bitterly opposed by the stockmen and defeated.8 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 dealing~ 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 leg­islature which met in 1883. The act of February 8, 1883, with­ 1The Galveston News, May 19, 1882. Land Office Report, 1882. 2The Galveston News, February 22, 1881. sThe Galveston News, March 22, 24, April 22, and May 19, 1882. 'The Galveston News, September 27, 1882. A Fimvncial History of Texas 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.1 The administration of the lands was given to a hoard called the State Land Board, which was made up of state offi­cials acting in an ex-officio capacity.2 Agricultural and pasture lands were to he classified into watered and unwatered, and the minimum price put on watered land was $3 per acre, on un­watered land, $2 per acre. The maximum of agricultural or watered land which could he purchased by one person was fixed at 640 acres, and the maximum of unwatered land at 4,480 acres. The minimum amount which could he purchased was 160 acres of agricultural land and 80 acres of timber land. A corpora­tion 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 were 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 i'>Suable to him; though it was provided that the purchaser could sell after the payment of the first installment of the prin­cipal, and it was not specifically stated that the vendee should be an actual settler. The land board inserted as a part of the contraet for purchase that the purchaser should occupy the land within ninety days after the award of the land to him, that occu­pation 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 for­feiture of the land and payments.3 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. Bulletin of the Universi,ty of Texas some one to represent the state in each county or la ad. distriet. Bids for the purchase of land were made to this representative, and the land went to the highest bidder.1 One-thirtieth of the purchase price was payable down, and the remainder was pay­able 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 installm.ents 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.2 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 pro­visions 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.3 So insufficient was the leg-islation 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.4 1The 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. l, 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. 3The Galveston News, April 25, 1883. 'Report of the State Land Board, 1885. A Financial History of Texas 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 which 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, ad­vanced the minimum rental to eight cents an acre for unwatered lands and twenty cents an acre for watered lands.1 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.2 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 offenses committed by the cattlemen and the fence cutters made necessary a special session of the legis­lature, which met in January, 1884.3 Fence cutting was made an offense punishable by confinement in the penitentiary, the opening of roads through pastures was required, and the un­lawful fencing of, or herding upon. the public lands was made a misdemeanor.4 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 un­lawful 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 Jaw was declared unconstitutional in Smisson v. State, 71 Tex., 222 ( 1888). 2Land Ofllce 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. Bulletin of tke 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.1 As late ~s 1899 the unlawful free use continued, and two agents were appointed to investigate.2 After this the unlawful prac­tice 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 were 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.3 So in 1887 a complete revision. of the land laws was made.4 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 with 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 maxi­n1ltm of agricultural land purchasable by one person was 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 1The Galveston News, July 5, 1888. Laws of 1887, p. 83. This un­lawful free use resulted in an estimated loss of over $567,000 to the school and other special funds. 2Laws of 1899, p. 176. Land Office Report, 1900-2. 11\fessage of Governor Ireland, January 11, 1887. Message of Governor Ross, January 20, 1887. •Laws of 1887, p. 83. A Financial History of Texas 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." 1 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 5o/c . 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.2 The univer­sity lands surveyed under these acts were located in Tom Green, Pecos, Crockett, Upton, Irion, Andrews, 'Vard, Martin, Loving, \Vinkler, Crane, Ector, Schleicher, Presidio, and El Paso coun­ties.3 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 Jong a period as ten years, and that school and asylum lands lying north of the Tex-as 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 surveys under the acts of 1839 and 1856 amounted to 216,805 acres. 1Land Office Report, 1901-2, pp. 34-7. 22-H Bulletin of the University of Texas and no grazing land under lease was subject to purd1ase. Purchasers of lands were allowed until the January first follow­ing 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 lower­ing of the minimum of agricultural land purchasable from 160 acres to 80 acres and the repeal of the pre-emption law.1 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.2 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.3 The drouth in 1892 resulted in the date for the payment of interest being extended from April 1 to November 1.4 In 1895. in response to a demand from the West, a general revision of the land laws occurred.5 This was the 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 agri­ 1Laws of 1889. p. 16. 'Land Office Report, 1888. 3Laws of 1891, p. 180. •Laws of 1893, p. 30. 5Laws of 1895, pp. 63 am:l 75. A Financial Hislory of 1'exas :339 cultural and three sections of grazing lands. The m1111mum prices fixed were $2.00 per acre for agricultural land and $1.00 per acre for grazing lands. Though the period of credit re­mained 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.1 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.2 The changes in the land laws in 1897 are historical because of the loss which the school fund suffered.3 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<:nltural land. The price of agricultural land was reduced from $2 per acre to $1.50 per acre. Land which had been erroneously dassified could be reclassified upon the certificate of the comn•.is­sioners' 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 reclass­ification. Land which had been classified as agricultural and sold 'The Houston Post, March 12 and 14, 1895. 2Laws 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. 3Laws of 1897, p. 184. Bulletin of the University of Texas at $2 and $3 per acre was forfeited, its reclassification as grazill.g land was effected, and it was repurchased by the forfeiting pur­chaser 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.1 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 was due to the fact that except in the case of railroads surveys for such purposes as home­stead, military, and other grants had not been accompanied by surveys of equal amounts for the school fund.2 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 rajl­way 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.3 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.4 In 1901 a general revision of the law governing the sale of school and asylum lands was made.5 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 1Land Office Report, 1899-1900, 1901-2. Message of Governor Sayers, January 10, 1901. 2Land Office Report, 1901-2. 3Laws 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 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 Pan­handle 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 1903 suspended for ninety days the privilege of filing on lands which were coming on the market through the expiration of leases.1 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 sub­mitted to the commissioner of the general land office, and that the land should be sold to the highest competitive bidder, pro­vided that the price bid should not be less than the appraised value fixed by the commissioner.2 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 which 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. 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, <1nd the original lessee or assignee was given the preference in Sf>CUring another lease, provided he paid the highest bid which eould 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 bw to purchase for themselves as much land as they wanted iirst assigned their leases to their sons and daughters and em­ployees who fulfilled the conditions of purchase and then sold to the former lessees-the cattlemen. This practice tended to de­feat the settlement purpose of the law.1 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 lim­ited the privilege of transferring land which had been bought on condition of settlement.2 b. 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 class­ification or through careless valuation the lands were sold for less 'Land Office Report, 1907-8. =Laws of 1907, Ca1led 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 than their value, and wholesale theft of timber went on un­checked.1 The legislation of 1879 with respect to timber lands was very 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.2 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.8 The commis­sioner 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. 4 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 stil1 defective, however, in that it failed to recognize the different classes of timber land and per­mitted the purchase of such land on time. In 1883 it was pro­vided 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 Otnce Report, 1878. 'Laws of 1879, Called Sess., p. 23. 'Laws of 1881, p. 119. Special Report of the Commissioner of the General Land Otnce, 1882, p. 7. •Laws of 1882, p. 36. 'Letter of Commissioner Walsh, in the Galveston News, March 1, 1882. Bulletin of the University of Texas other timbered land) .1 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 pur­chasers. It was also provided in 1883 that the timber could be sold for cash at $5 an acre. Regarding the operation of the legis­lation 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 1egislation 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.2 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.3 In 1905 the present system of selling the land or the timber to the highest of competitive bidders was introduced.4 This com­petitive bidding system differed from former ones in that its ad­ministration, 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.5 "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 1Laws of 1883, p. 85. 'Laws of 1887, p. 83. Laws of 1889, p. 50. 3Land 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 administer them efficiently. It was not the fault of tlre commi3­sioners 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.1 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.2 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. 226 Tex., 217. Bulletin of the Unive1·sity of Texas on the same, subject to taxation as other property.' '1 'rhfa 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 1876.2 Until 1883 nothing was done by the state in the way of con­serving 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.=1 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.4 The act of 1883 did not provide for the sale of mineral lands as such but provided only for the sale of the minerals. 5 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 1887.6 The law of 1883 was thus practically inoperative, and the whole situation with respect to the mineral lands was bad]y 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 classi­fied as such, and need of a provision either for their sale or for their withdrawal from the market.7 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 estab­lished in 1883 was abolished, but the omission in the act of any reference to mineral lands had the effect of repealing the min­eral land legislation of 1883.8 The state was left thereby with­ 1Art. 14, sec. 7. 2cox v. Robinson, 105 Tex., 438 (1912). 3Land 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. 7Land Office Report, 1888, p. 9. 6Heil v. Martin, 70 S. W. Rep., 430 ( 1902). A Financial History of Texas out any express provision for the reservation or protection of the mineral lands or of the minerals in them.1 Under the law of 1883 the i;lassification and sale of mineral lands we:r:e not provided for, but the retention of these lands by the state and their operation by private persons upon the pay­ment of a royalty to the state was the policy adopted. The pol­icy 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.2 Mining claims on lands containing gold, silver, cinnabar, lead, tin, copper or other valuable min­erals 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 one hundred and sixty acres 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 min­eralogical survey of the state was authorized, and it was ex­pected 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.3 In 1895 a new mining law was passed.f 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 <'redit 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). =r...aws of 1889, p. 116. 'Laws of 1888, p. 10. Land Office Report, 1899-1900, p. 28. 'Laws of 1895, p. 197. Bulletin of the University of Texas in El Paso, Presidio and Brewster counties without any pay­ment to the school fund.1 With a view to correcting the de­ficiencies due to imperfect classification of the public lands, min­eral surveys were authorized in 1901 and 1903, but like the sur­very 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 care­less policy respecting classification and sale explains why the receipts to the school fund from the sale of mineral lands be­tween 1883 and 1905 were only $17,972.2 Amendments were made to land laws in 1905, the most im­portant 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.3 Other important changes made were on ac­count of defects in the act of 1895 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 condi­tion that the minerals were reserved to the fund to which the land belonged.4 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 1La.nd Office Report, 1901-2, p. 42; 1903-4, p. 10. 2La.nd Office Report, 1903-4. 3La.ws of 1905, p. 148. •Laws of 1907, First Called Sess., p. 495. A FiMncial History of Texas which in article 4041 released to the owner or owners of the land the minerals in the land.1 Though by this article the state released its mineral rights in land parted with prior to the adoption of the Revised Statutes of 1895, by article 3495 of the same statutes there were reserved the minerals in lands dis­posed 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.2 Since, there­fore, 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 man­agement of the public lands, the state in 1912 had a most un­satisfactory mineral land law on the statute books. The com­missioner 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, ex­haust 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.' '3 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). 3Land Office Report, 1911-12, p. 13. 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 legisla­tion of 1913.1 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 com­mercial 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 one­eighth 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 min­erals, the annual charge to the prospector for the permit to pros­pect 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 char~e 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 re­sulted in an estimated gain of $20,783,882 to the school fund during the seven years 1906-1912 over the old methods of sale.2 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 l:md 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 1Rev. 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 Financiai Histo1·y of Texas 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 acre­age either patented or whose sales were in good standing at the land office in 1900 under all the acts was 18,444,975.1 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 en­dowment 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 1858-1900.2 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 de­rived 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 pur­chasers 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 $1,388.8 '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 amou.nt unsold In 1912 plus the for­feitures since 1912. 'Report of the State Treasurer, 1914, pp. 35-36. Bulletin of the Universi,ty of Texas C. University Lands. Until 1895 the university lands were administered l1y the general land office, and their administration was charaeterized by the merits and shortcomings of the public land legislation and administration up to that time. The regents of the Uni­versity recommended as early as 1886 that they should be given the control and management of the lands belonging to the Uni­versity, but this was not done until 1895.1 The fifty leagues of land granted to the University in 1839 were surveyed to the amount of 226,122 acres in Callahan, Col­lins, Cooke, Fannin, Grayson, Hunt, Lamar, McLennan and Shackelford counties. There were conflicts of surveys in the case of 21,762 acres of these lands, and the University lost there­by 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.2 Sales of the land received from this grant began before the Civil War, and by 1888 there were only 14,148 acres unsold.3 By 1899 only 5,095 acres were unsold, and it was believed that the title had been lost to most of these.4 The western lands, or those surveyed for the University under the acts of 1879 and 1883, are situated in the western and south­western parts of the state. On account of th<>ir 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 onl:v 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 valu­able. 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 com­pared with $17,186 in 1892-3. On August 31, 1915, there were 2.067,105 acres under 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. 2Report of the Board of Regents, 1888, p. 6; 1892, p. 7. Lane, History of Education in Texas, p. 138. Laws of 1897, p. 265. 3Report of the Board of Regents, 1888, p. 6. 'Report of the Board of Regentil, 1899, p. 42. A Fina,ncial History of Texas cents an acre, and the amount received from leases during 1915 was $169,057. Also on August 31, 1915, the permanent uni­versity fund held land notes to the amount of $26,572.77, and the annual interest on the notes amounted to $1,135.16.1 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 west­ern lands. The grant made in 1858 of <111e 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 $8,000,000.2 The present western land endowment of over 2,000,000 acres is worth as grazing land not more than $3,000,000.3 D. Asylum Lands. The asylum lands, granted by the act of 1856, were surveyed in Callahan, Comanche, Eastland, Jones, Shackelford, Stephens, Taylor, and Tom Green counties.4 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.5 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 A nirnst 31, 1912, all ap­pear to have been sold, though the several asylum funds held notes for $172,199 for 122,578 acrrs sold and not paid ont.6 1 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, 19 i4, pp. 36-37. :?3-H Bulletin of the Univers·ity of Texas E. Conclusion. Since 1880 there has taken place not only the completl~ ap­propriation of the free public domain bnt also the disposal h~· sale of the easily cultivable school, university, and asylum lands. On August 31, 1880, the unsold land belonging to the special funds, including the capitol lands, amounted to 29,528,150 acres, and the amount of free land belonging to the state was estimated at 19,069,890, making 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 Eng­land and Delaware together equal in land al·ea 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 re­clamation and mining of the western lands may make the re­maining public lands valuable and useful. CHAPTER 14. 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 float­ing debts. The bonded debt, exclusive of "the debt of doubtful valid­ity" 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 pay­ments inade 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 were ordered paid by the act of February 23, 1883.1 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 until 1885. Payments of the public debt which have hern 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 1911­a total since 1885 of $261,530. The debt paid during these years was th·at 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 ap­propriated $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. Bulletin of the University of Texas and the trust funds held $933,500 of the amount. The appro­priation 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.1 The constitution not only does not enjoin the method of pay­ment by a si:Ilking fund, but the history of debt payment sub­sequent 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.2 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 disburse­ments were made through 1883 of $346,639.73.3 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 com­missions 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 • 1Laws of 1909, p. 536. 2Laws 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 of $25; and the 5 's due in 1909 were bought at a premium of $14 and $15.1 In spite of the high premium paid, the gain to the state through interest saved was considerable.2 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 ib~ 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 hard­ship upon the fund and made the cost of debt payment use­lessly dear to the state.3 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 1884.4 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, 81.99o/c ; 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 passim. 'In 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 l, 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. 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 f1mds 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% 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.1 Not classified by the comptroller as a part of the public debt of the state, how­ever, is the bonded debt of the prison system, and for the reason that the bonds are not a charge upon the general reve­nues 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 indus­trial activities of the system has made necessary an extensive u,se 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.2 In 1913 the prison commission was authorized to issue bonds to the· 1An issue of bonds for deficiency purposes was authorized in 1889, but the issue did not have to be made. Laws of 1889, p. 81. zMessage 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 31, 1914, the fund held $100,000 of the bonds. A Financial History of l'exas amount of two million dollars ($2,000,000) to pay its debts, erect buildings, equip factories, and the like.1 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.2 The proposed amendment provided th-at 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 1913 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242,529 Deficiencies at other times than at the close of the fiscal year appeared in other years.3 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 equa­nimity 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. 2Laws 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. Bulletin of the UniverS'ity of Texas usually been forced by reason of their financial circumstances to have their warrants discounted, and the discount and the lvss 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 187 4 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 p·ay de­ficiencies to $200,000. This is wholly inadequate. A consti­tutional 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.1 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 perma­nent 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 in­crease 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 which 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 $1,146,260.2 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 ls 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. Bulletin of the University of Texas and adopted in 1883 which provided that investment should l>e in the State of Texas and United States bonds, bonds of counties in this state and in such other securities as the legislature might direet.1 County bonds were the only new investments authorized by the legislature.2 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, with the same exception, should more than par be paid for any bond.3 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. 4 This proposal ranked in popular interest next to the proposed creation of a railroad commission.5 It was argued in favor of the proposal (1) that existing provisions relating to inYestments were not sufficient to prevent a surplus from ac­cumulating 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 inv-estments of the fund in railroad securities had been satisfactory.6 In opposition it was stated (1) that the security would be inadequate; (2) that speculative railroad build­ing would be stimulated; and (3) that there were more important objects than railroads which needed to be encouraged.7 Substi­tute proposals were (1) that loans should be made to the people on real estate security, or (2) that the state should borrow the moue~· at a low rate of interest and apply the proceeds to meet­ing 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 Texa:; investments in the securities of towns and villages organized as school districts should be authorized.1 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 which provided for an annual transfer of one per cent.2 The purpose of this amendment and statute was to help the available school fund in its effort to carry out the con­stitutional mandate that the public free schools should be main­tained each year for a period of not less than six months.3 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.4 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.5 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, Jan­uary 16, 1903. Bulletin of the University of Texas vision was designed to prevent an impairment of the pri1wipal 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 inde­pendent school districts were made legal investments, and in 1909 the bonds of common school, road, drainage, irrigation, naviga­tion and levee districts were added to the list.1 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 191~ 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 $263,533.2 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 Wash­ington 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.3 1Laws 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. sMessage 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 The state did not contest the refusal of the railroad to make further payments. In 1883, however, when the state made pro­vision for the payment of the bonds which had been executed to the school fund under the act of :November 15, 1864, it was en­acted 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 pro­test, should thereafter constitute a part of the revenue of the state.1 The amount paid over by the available school fund dur­ing the ten years 1885-1894 was $90,957.46. The Houston and Texas Central and the Galveston, Harrisburg and San Antonio railroads made payments np 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.2 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 $263,5:33.3 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 lndebtdness 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. 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 ex­ception, of the investments in railroad bonds under the a.ct of 1856 does not ensure the success of similar investments today. The old investments were made before the days of overcapitaliza­tion 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 re­strictions imposed upon the issue of public bonds and the broad­ness of their security make them the safest investments for trust funds. In 1883 the state "debt of doubtful validity" held by the per­manent school fund was validated and ordered paid with accrued interest of $111,414.45.1 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 $82,168.82 5% bonds, which had been carried by the fund since 1868, were not paid until 1885, though the accrued interest on them was paid in 1883. In addition to the state permanent school fund there are county permanent school funds which are based on the land grants made to the counties for educational purposes. The sale of the lands and the investment of the proceeds have been vested in the county commissioners' courts, subject, however, to a modicum of state regulation. On August 31, 1914, the several county permanent school funds amounted as follows :2 Land notes ..............................$ 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. 1Laws of 1883, p. 15. 'MSS. Report of the Superintendent of Public Instruction, 1913­1914. 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 B. Tke Available Sch-Ool Fund. The available school fund has had an enormous growth 8ince 1880. In 1880 the rec-eipts 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 per­manent 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 pen­itentiary railroad bonds, $5,000; interest on deposits, $1,751.16; land leases, $669.53, and unclassified, $7,127.69.1 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 rail­road bonds; $371,018.24 from state and railroad bonds not sepa­rated 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, anrl the scholastic agrs \\'Pre from eight to fourteen. One-sixth of the j!'enrral rcY('nue rate \HIS equivalent to a school tax rate of six and t\\·o-thirds eents in 1880 and five cents in 1881. The sehool tax rate in 1915 was 20 eents, 'Report of the Comptroller, 1915, p. 6. Bulletin of the University of Texas the amount apportioned was $8,772,109, the per capital ap1·wr· tionment was $8.00, and the scholastic ages were from seven to sixtcen.1 But between 1880 and 1915 a number of changes were maJ~ which related to the available fund. The share of the general revenue going to the available school fond 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.2 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 mrnecessary any taxation for educational purposes.3 But the educational situation in the early eighties in Texas was lament­able. The average school term in 1880 was seventy-two days, though the constitution contemplated one hundred and twenty days.4 The average salary of white male teachers was $34, that of female teachers, $28. There were no local school taxes lfvied in the state in 1880, except in two or three independent city dis­tricts,5 so that the support of the schools was solely the meaizer 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.6 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 sc~ool 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 tbe Galveston News, April 7, 1881. 3See the Galveston News, July 2 and 8, 1882. •Biennial Report of the State Board of Education, 1879-1880, p. 3. "Ib'.d., 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 Histo1·y of Texas school tax,1 and in 1883 an amendment was adopted which au· thorized a special state school tax not to exceed twenty cents on the one hundred dollars' valuation.2 At the same time the oppor­tunity 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' valua­tion.3 A state school tax of 121/2 cents was adopted for 1884 a.nd that rate was unchanged until 1895.4 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 dimin­ished by having to sell their salary warrants at a heavy discount. One cause of the deficiencies which commonly made their ap­pearance 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.5 Another cause was the fluctuation in the receipts from interest on land sales and from lease of lands.6 For example,. the receipt-s 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 we.stern part of the state, as was the case in 1888, and the legislature would very justly grant to delinquent purchasers several months extension for the pay­ment of interest, but this would cause a deficiency in the avaiI­a ble 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 war­rants 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 Jour­nal, 24th Leg., p. 52. 'Laws of 1888, p. 7. 24-H Bulletin 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, 1889.1 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 $659,468.50.2 During the preceding years of financial depression and of inefficient administration, there ac­cumulated arrears of interest on land sales and of lease payments estimated to amount to $1,000,000 on January 1, 1895.8 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.4 The school tax rate has been fixed since 1907 by the automatic tax rate board.5 The board fixes a rate which wiJl produc-e $4 per capita of the children within the scholastic ages, provided the rate does not exceed the constitutional limit of twenty eents. In 1908 the constitutional maximum of the independent school district tax was raised to 20 cents.6 Local taxes for public schools increased from $469,392 in 1891 to $5,642,482 in 1911.7 1Galveston News, April 4, 1889. 2Report of the Superintendent of Public Instruction, 1893-1894, p. IX. 3Message of G.overnor Culberson, January 16, 1895. • Laws of 1907, p. 141. 'Laws of 1907, · p. 465. • Laws of 1909, p. 18. TThe 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.1 Ap­portionment 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 popula­tion and the counties which have a small margin. The com­pulsory 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. An­other inequality charged against the present system of distribu­tion 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 assess­ing property for state purposes than to the method of appor­tionment 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.2 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.3 These were epochal measures and will promote greatly the educational pi:o­ 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, 1885-1886, 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. 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 Agri­cultural and Mechanical College fund $35,754.99 for the Agri­cultural 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 $1,54 7 ,­ 309.48-for higher education.1 This growth in expenditures for higher education has attended the establishment and develop­ment of the University of Texas, four normals, and the Girls' Industrial College, and the expansion of the Agricultural and :Mechanical 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. "2 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 37il 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 comptrol­ler'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 ob­tainable, 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.1 This measure, passed as it was to pro­vide for an emergency, has not been repealed, though as a standing method of increasing the state debt it is doubtless un­constitutional.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, 5% per cent and 6 per cent interest, and if these are acceptable investments for the permanent school fund they should be for all the per.manent funds. The state debt of doubtful validity was validated and ordered paid with accrued interest in 1883.3 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 1880 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. Bulletin of the University of Texas leagues.1 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 ;2 by 1915 all of the fifty leagues were sold and there was $26,­ 572.77 in land notes.3 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 de­rived from interest on state bonds.4 In 1915 the available fund received $228,850.32 exclusive of legislative appropriations. $169,057.11 of this amount was darived 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.5 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 Agri­cultural and Mechanical tollege and the Prairie View Normal School. From 1880 through l889 $55,600 was diverted to Prairie View and from 1880 through 1899 $65,000 was approp­riated 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 er­roneous as to the receipts from sale of university lands, and the re­ports 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. 3See 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 comp­troller's report for 1915. A Financial History of Texas 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 re­ceived $125,000 which was stated to be in full satisfaction of all claims of the University for money drawn by the state.1 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 $3,­3i3,896.70. In this same period there was disbursed for the Uni­versity out of the general revenue fund of the state $4,349,860.99.2 Appropriations out of the general treasury have shown a ten­dency since 1900 to be more liberal; at the same time they have not grown with the needs of the institntion if the reports of the board of regents are to be trusted. In recent years the Uni­versity has felt keenly the need of more buildings. The con­stitution (art. 7, sec. 14) prohibits any appropriation of money out of the general revenue for university buildings. This limi­tation is one of the many archaic financial provisions of the present constitution. In 1881 it was circumvented by an ap­propriation under the guise of a loan, but in 1891 an appropria­tion for a building was made outright. The legislature has since 1891 provided for bnildings for the L'niversity and the Agri­cultural and Mechanical College, but the items have been vetoed on constitutional grounds, though the veto has not been con­sistently applied in the case of either institution and especially in the case of the Agricultural and )fechanical College, which is legally a branch of the University of Texas. In 1913 a con­stitutional amendment was submitted to the people which pro­posed to empower the legislatnre to anthorize the issue of bonds for the purpose of pnrchasing additional gronnds and of erect­ing buildings for the University, but the amenrlment 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. Bulletin of the University of Texas :fortunately too plenary in its proposed grant of power to in erease debt, though its defeat was actually accomplished by a factional spirit and by the blind ''no debt liC7hter tax'' senti­ • ' 0 ment.1 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. The Agricultural and Mechanical College. The permanent fund of the Agricultural and Mechanical Col­lege has consisted up to the present time of the $209,000 of state bonds in which the proceeds of the sale of original land endow­ment by the Federal government were invested. Since by the Constitution of 1876 (art. 7, sec. 13) the Coll.age 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.2 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 uni­versity fund constributed substantially to the maintenance of the college and from 1880 through 1899 the total of the uni­versity 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 sta­tions during the period 1880-1915 was $3,618,210.3 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 satis­factory. 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. 3This is the amount of warrants drawn on the general treasury of the state. A. Financial History of Texas derived during this period from the permanent fund of the in­stitution was over $515,000.1 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.2 E. Other Higher 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 the establishment of three more normals. The Prairie View Normal for negroes is· under the control of the Agricultural and Me­chanical Colleg~ 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 $747,688.47.3 'The exact amount cannot be derived from the comptrollers' reports because of their failure to separate inv(>stment dlsbur~ements from other disbursements. The gross total of :he 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. 1The amounts given for all of these institutions are of warrants drawn on the general treasury of the state. Bulletin of the Univers1:ty of Texas F. .A. Special Tax. A special tax for the benefit of all the higher 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; a.nd the maintenance and ·support of the Agricultural and Me­chanical 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 Uni­versity and the exclusion of the normals, makes a new constitu­tional 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 appropria­tions, and in order that they may plan an orderly development and with sureness work to the realization of their highest possi­bilities. 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. " 1 It has long been the practice for the comptroller to receive from the departments and insti­tutions 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 legis­lature 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. Be­sides 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 prevail~ of appointing sub-commit­tees 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 ap­propriating 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.2 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. Bulletin of the Universi,ty of Tex1i.s institutions. The exceptions from minute itemization have been the higher educational institutions and the penitentiary.1 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.' '2 Though a veto may be overridden by a two-thirds majority of the members present of each branch of the legisla­ture, 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 universit~ 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.8 That enactment provides that the state's officers or agents shall 1In 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. 3Laws of 1897, Reg. Sess., p. 46. Laws of 1910, Third CaUed Sess., p. 39. Rev. Civ. Stat., 1911, art. 4342. 381 A Financial History of Texas at least thirty days before a deficiency occurs make out H sworn 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 th€ state is liable under general law,-for example, judicial fees, are not subject to the provisions of this act; and another exc€ption 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, de­ficiency warrants shall be issued by the comptroller, and unless there is existing a deficiency appropriation, the warrants shall r€main 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 lon~\~r tlian two years.1 The practice has prevailed, however, to kPt>P open nnexhausted 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 e.stimates of needs it was necessary to consider either a part of two appropriation years, or a part of two fiscal years; and as the legislatur€ 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 1Art. 8, sec. 6. 'Report on Audit, Organization and l\Iethods, 1909, p. 151. The practice was condemned in this report. 3ln 1897, for example, there were no appropriations to pay state expenses from March 1 to June 20. Bulletin of the University of Texas regular biennial recommendations by the comptroller for a change this situation was not corrected until 1901, when the approprla-· tion year was made to end August 31, thus coinciding with the fiscal year.1 Recently it has been advocated th.at the fiscal year and the taxpaying year should be made to coincide and they both should conform to the calendar year.2 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 re­sult, 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 or­ganized and conducted as efficiently as its importance and magni­tude demanded. In 1907 a board of state accounting was created whose duty it was to investigate the methods employed in .ac­counting and transacting business in the departments of the state treasurer. comptroller, general land office, and in the peni­tentiaries, and in other departments as might be determined upon, and to recommend changes in the interest of economy and efficiency.3 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 1910.4 The appropriation for the treasurer and sevente.en clerks was $24,270 in 1908; it was $11,400 for the treasurer and six clerks in 1910; for the comptroller and forty­three 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 1Laws 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. 3Laws of 1907, p. 52. 'Laws of 1909, pp. 429, 438. Laws of 1910, Third Called Sess., p. 37. A Financial History of Texas :l83 engaged ten clerks in 1908 was transferred to the general land office. The force of the general land office in 1908 was the com­missioner 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 inadequatf:' 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.1 As amended in 1909 the law makes the governor, the comptroller, and the treasurer a board for calcU:lating 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 cur­rent calendar year and the latter half of the preceding calendar year is deducted from the total of the al?propriations 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 with respect to the taxable values shown by the assessment rolls. 1La.ws or 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 ap­propriations, 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 un­certain 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 1895t 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 de­ficiency. There were deficiencies in the treasury under the old system, and to return to it without modifications is not to be recommended. 'l'o 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.1 Another objection to the Auto­matic Tax Law is that it ;makes it possible for the governor to play politics with the tax rate. By vetoing appropriations1 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 politicai 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. 1Governor Colquitt criticized the law in his messages of February 22 and July 31, 1911, as unconstitutional in that it delegated to t. 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 expenditures. Though there is. complaint about public expenditures, Texas 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 rela­tive standing of some selected states in 1913, and the amounts given are the combined expenditures of the state, counties, towns and other local subdiYisions per $1,000 of taxable wealth at its full or true value. ~~ I i servation, : ! Education, 1 Protection Sanitation. • Charitable Libraries. I Highways to Persons1 and Heu lth I Correctional'. Recreation i and Publfc 1 and , and . Property _ _ ______:_ ___ •_____1_____•_____ California _______ ____ ;$ .30 $ .SS$ 4.95 $ 1.16'$ 2.66 Massachusetts '______ : l .FJ, 2.38. 4.51. 1.77' 3.88 Tennessee ------------1 .33i 1.39; 3.48. 1.04 2.06 Wisconsin ----------' .38. LOSi 3.07: .66 1.90 3.25 Georgia --~----------· .60 .v·2 · 2.89 1.82 New York------------i .78~ 1.2'2 : ~.00 1.07 2.21 .;o; ~.16 2.31> Missouri -------------: . ~-'~' ·: :i:1 .55" 2.11 2.49 Colorado -----------­ Texas _______________ ; .JS Av. 1..'!6. .74' I.~ Oklahoma -----------.O\i .~4 : .83 .201 1.29 I I 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 con­sequently oppose proposals whieh 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 Bulletin of the University of Texas public the most out of the money raised for public use. 'rhe two greatest financial problems which Texas has are to secure an equitable system of taxation and an efficient body of administra­tors. These are the problems of government in all of the Amer­ican states and cities, but Texas has been more indifferent to­ward them than have many other states. The present state constitution is becoming a patchwork. and an entirely new one should be framed. The constitutional pro­visions relating to taxation, the public debt, and the selection ~md compensation of public officials were 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 opera­tion 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 narrowest kind, in both public and private affairs, was a grinding necessity, and this was 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 tax­ation. It is almost incomprehensible that in this year of the twentieth century there should be a state in which the compli­cated properties of railroads are assessed for the most part in piecemeal by local assessors, and in which there is no state super­vision 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 separa­tion of state and local revenues has been more advocated in Texas than has 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 desirability of the continuance and A Financ·ial History of Te.ras 387 extension of such support, abandonment of the real estak tax by the state does not seem likel~-. Separation of som·ces of r<'venue 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 rrform measure for Texas, it would not be possibl<' without a constih1­tional amendment. If the property tax is retained as a state tax, some system of state control over assessments should be adopted. Decentraliza­tion of administration has failed in taxation in Texas as it failed in the administration of the public lands. Cmtralization should succeed decentralization, and the state board or commi8sion should have the pow<'r to supervise asse8.. .105 .12;; Corn, per bu.___ ________ 1.00 4.00 1.35 .7l> 1.30 .875 .375 1.00 Flour, per bbL_ 30.00 20.00 30.00 10.00 11.00 11.00 8.00 8.00 8.00 Lard, per lb.____ .20 .18 .7;; .i5 .14 .12 .125 .125 -------­Rice, per lb..._.1 .12 .20 .30 --------.06 .08 .os J .oo Sugar, per lb... .20 .17 .42 .08 .10 .09 .08 1 .09 .09 Nails, per lb..... ·-····-· .18 .35 .125· .JO .10 ,JO '---------------­Lumber, per m. 70.CO 75.00 1110.00 30".00 ! 30.00 30.00 18.00 J 18.00 18.00 1 1 1 1 I r.eneral A------­ l!® ____ ___ l:>f) .».~ 1882__ ___ __ 154,619 lAA;I__ _____ Hl6,!l60 1884_______ 171 , 781} 188-5____ --­ 149,456 lSSj)__ _____ 129,583 1887------­ 133,266 1888..__ ___ 154,040 ]88<)___ _ ___ l!(l ,677 1!'!1)_______ 204 .9QO 1891___ ____ 2J2,735 J8'l2 -----­ 237,9731893_______ 281 .724 1894 _______ 217 263 Public I Ij Finandal Build-I Admlnls- Lcgisla­ lngs and Publfc tratfon ture Grounds Printing Mffftla Judiciary TABLE 7. Claa•lll.catlon of Warrant• Drawn on the General :Revenue rand and of Dl•bUl'llementa of' Special E"und•. Charities: I I and IPensions· I 15,110$ 9,343 $ 53,654 16,838 14,404 63,601 20,749 87,589 72,341 16,790 7,643 :iS,15G 40,253 75,989 IOl .019 30, 259 103,533 H6,!l02 10,246 1,635,233 84 ,S.16 36,148 8 ,49'.! 107 ,4i7 2W ----------, 121 ,420 9,405 ---------­7,675 ---------· 00,544 15,000 48,211 19,398 55,2911 24,888 18.292 3.1,418 13,f>42 57,69'2 44,635 3.1.w 20,916 ~.681 18,648 29,4q<) 20,625 30,82'2 46,106 38,474 J7 .001 38,152 -14,100 31,S.17 ·> 37,3-5 Ednca­tlon ~ 27,136 201,2:;5 238,024 :l9,863 2,U83 3,342 223 30 383 Correc­tfons $ 19,004,$ 12,9961 40,345 56, 129 94 ,500 48,911 1,492,950 26,505 49,092 160,781 64,740 92,789 and . Mis-Homes Debt Icellaneous . I 1,643 ------------$ 6,590 1,218 -----------! 30,253 1,271' 818,9701 42,205 1,459 22!,1861 38,028 1,836 121 ,575, 108,674 2,772 234,613 2,450 85,7321 106,330 26,815 1,541 877 2,441 =====~~~=~~ 6201 12,727 1,8'25 ------------! 20,246 ll,R.391 6,748j 29,775 1,7~1 112,9Hi 37,4811 $ 11,260, 16,46.1 16,370 35,889 37 ,976 39,179 34,866 14,460 20,555 26,600 29,738 31,819 34,084 ::J5,!5!)2 51,700 39,811& 4Cl,628 :N.383 39.272 34 ,2.'i.1 54 ,42!1 .JIL 14 1: 60,903 66,651 7-0,812 80,735 71,778 68,610 68,368 70,594 68,723 82,816 97,768 87,488 00,902 " 43,812. 100$ 114,428 5,996 78,418 183,SU 76,596 168,908 124,638 119,979 67,256 112,293 174,779 279 ,872 256,796 214,44' ZR.~.755 ~.866 ---~~~~I 135,471 4,484 f>!) .·~o:> 42,414 99,115 43,001 78,225 29,262 5,521 5,925 2,830 27,288 39,041 10,965 4,753 13,382 13,603 9,76;! 6,216 2 ,669 6,782 2,298 2,?.R~ 4,457 110,131' ---------· 46,954 84,719 150, __________ 10'2,354 43 ,200 104,067 2,23!; 11-0,690 51,972 163,645 , 1,0-. 1 12,362 20,202 161,531 m.11~ 26,863 24,518 30,568 30,888 405 ,645 , 429, 779. 224,5001 192,915, 281),247 16!i,961 162:,438 16.j,624 187,941 82,2341 m.0761 28,7'92 6!1 ,534 87 ,143 6-0,678 45,739 46,723 34,794 34,289 43,14Q 5l,227 ' 62,4fil 2'25,600 246,~19 275,813 364 ,5lfi 2!15, 186 2H3,5~5 104 ,000 1i3.90:J 209,197 305,~4 310,b'llO 574.155 395,898 481,558 •>23,044 614,784 738,675 844 ,197 778,232 !;66,4-02 642,855 794,417 oro'.w.131 189,977 796,510 661,134 637 ,933 57!1, 971 727,700 1,003,584 777, 728 8'28, 192 !J774,281 1 1,5ii0 l,57;j 2,.57!; 21 ,37ri 21,470 213,542 23,125 1,837 1,337 45,776 103,899 89,625 57,825 55,637 55,217 56,79....5 70,875 86,810 93,330 91,674 88,4. !l9 'l'otal $ 199,186 266,943 1,396,350 739 ,055 1,084,524 1,233,327 3, 768,621 195,851 352,292 556,231 590, 553 1,263,301 1,S.'!6,329 1,383,435 2,273,28.9 1,909,412 2,446,072 1,825,380 1 • 863 • 865 2,650,268 2,155,072 2,450,215 3,633, 427 3,842,913 3,390,836 3,997,869 4,073.00R 3,481,051 4,657,866 4,641,772 4,281,369 4,936,1~2 5,223.9!U 5 • !)84 • 3711 5,I 45,128 159,467 204,697 341,057 430,195 36.1,fJ69 387,629 1,294,582 723,836 1,320,310 923,942 206,338 266,637 256,776 259,030 261,372 234,785 277,582 250,511 41)2,048 226, 797j 289,So'-!) f)8, 777 35,304 14,023 42,300 4 ,437 26,175 37 ,061 50,537 112,364 212,395 8,504 161,371 37,585 39,179 Tl,973 35,513 19,852 62,784 51 ,00?i 21,863 2,30!1 --·----·- ­ Yea rs lffic;_______ 1896------­ 18' 17 -----­ 1898------­ ,gro______ 1000__ ----­ }!)()]_ ______ rno-2 _______ l !>J~------­ J!)()L ______ .100.;_______ moo__ __ ___ J!Xl7_ __ ____ mos ______ ]!)09_______ rn1 o_______ 191L ______ HH2_____ __ l!ll3 _______ l!llL ______ 1915------­ ~ TABLE 7-Continued. ClaHification of Warrants Drawn on the General :a.venue Pund and of c: Diabunementa of Special Punda. - Public Build- I Financial Adminis­ f'~neral Admini•- J.egisla-ings and Public tration ture Grounds Printing Militiatra tion $ 88,062 $ * 164 ,500 84,104 163,358 llit,48-1 W ,407 76,946 175,906 80,845 188,885 86,934 213,097 93,149 ZI2,29'2 238,166 96,881 m,H30 2.!4 ,417 93,311 231,189 !l5,31i7 221,04] 227 ,ll39 106,J.18 2.=j(; ,&17 9()' 400 288,182 102,882 102,562 318 ,303 85,804 437,160 394,622 73 ,092 74 ,077 491,336 1:-A,!;97 78 ,"42 94 ,006 lil'.S,876 89,145 824,496 122,961 $ 22,039 ](;8,040 5,266 146,810 51,959 167,681 50,13:? 152 ,48' 2,862 174,0!iO 21,358 17'.1,947 9,131 198,524 68,685 180,9&5 25,816 219,881 20,072 301,6791 45,545 22,362 $ Zl,374 $ 23,194 2!!,W I 24,491 28,069 28,420 28,432 42,483 4'>,!142 31,061 52,27'J 41,614 43,599 45,472 39,077 41 ,592 46,0'27 62,047 73,478 64,246 ~.611 Judiciary ~ 852.093 ~0,441 832.275 602,777 752,175 733,102 698,614 tl87 ,635 817,09'l Educa-tion 12.750,561 3,105,205 2,412,079 3 ,339,209 3,47a,234 3,48.1,972 3,849,505 4,068,678 4,301,184 743,536 ' 4,604,820 985,129 4,611,309 4,840,392 vl,530 . 808,!JOl' 29,755 4,988,404 21,866 54,0051 804,251 6,158,147 34,363 58,415 , 847 ,002 6,39'2,257 33,193 42,676, 881, HE 7 ,417 ,150 888,177 36,886 57,815i 7,317 ,086 32,008 50,734, 898,984 8,020,636 60,896 953,439 59,257 55,&701 1,013,3481 8,774,858 51,541 63,723 1,003,983 9,161 ,881 35,463 · Charities and Pensions Oorrec­ and tions Home• ·---­ !S 546,188$ 80,318 539,223 452,732 587 ,078 607,701 8'28,828 814,865 963,249 1,048,75.9 1,354,624 963,689 1,024,770 943,577 1,009,621 1,015,152 1,364,066 1,214,384 1 ,555,S.52 1 ,766 ,244 2,100,030 123,143 l ,057,1971 9,446,22212,861,876 84,840 n,102 88,24!' 111,034 f,3, i84 204,!18() 238,674 298,102 316,003 375,487 369, 740 4!J8 ,!19-I 697,561 601 ,3c>9 (j84 ,897 470,736 lill ,73!; tla0,S.'l6 627,892 864 ,f,(Ji 1.558,171 23,484 28,4118 34,241 29,543 29,724 32,429 26,649 25 .77[, 21,236 27 ,426 30,5120 31,885 33,339 29,142 40,274 78,732 53,720 38,87·1 51,226 41,97ll Mi8­ Debt celinneou11 .~ 222,6111. 33,385 $ 220,56( 228,481 2-23,8'!l 228,00C !~4.(;74 225,326 224 ,069 224 ,41Gi 219,263! 213,772 : 197 ,305: 179,09'l ](;2,7371 179,HYl 169,690' 102,.'i161 l!il ,Ofi6 64,8451 194,536 129,691 1 27 ,066 31,611i 7!1,411. !15,673 15,449 29,231 00 ,010 45,686 75,183 70,753 56,778 20,065 74,642 274,305 68 ,180 47 ,337 46 ,000 ]12,623 lli4,882 26-2,821 Total 6,649,306 5,170,313 4,537 ,302 5,333,Cit 8 5 ,728,556 6,941,490 6,458',005 6,815,848 7 ,06,G3~ 7 ,804,803 7 ,932,532 7 ,894 ,600 8,189,876 9,392,048 10,088,310 11 ,092,523 11 ,017,760 12,175,:187 13,293,131 14,535,340 16 ,819,798 t;tj ~ .... .... -"' ~· c .... ~ c::j ~ ~· "'"'i ';2 _ ..... c - ~ '"'3 a. 8 ~ 397 A Financial History of Texas EXPLANATORY XOTES, TABLE 7. This table is intend.ed to approximate as nearly as is possible a classification of the total expenditures of the state. The class­ification 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 classifi­cation of warrants paid. The amount of warrants drawn dur~ ing the fiscal year rarely coincides with the amount of war­rants paid, so that a clfissification of the former is not the equiv­alent of a classification of the latter. The classification of war­rants drawn is, however, the nearest one can come to a classi­fication 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 expendi­tures 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 aYailable school, the available universit~', the Agricultural and Mechanical College and the other actin~ funds. Table 7 is thus a hybrid of warrants drawn on the general revenue fund and of warrants paid by the other active funds. Fntil 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 t~·pog-raphical 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 repo1·t. In Table 7 the total used is that giv.en 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 snm of amounts in the preceding columns. Beg-innin?: with 1883 the summary of the warrants drawn which is found in each report of the eomptroller is used. Bulletin of the University of Te.ras From 1848 to 1860 the classifications arC' of bi<,nnial statements of warrants drawn, bnt beginning with 1868 the classifications ar.e of annual statements. There 11re no classifications obtainable for 1847, 1860, 1861. 1862, and 1863. The statement for 1863­186;) 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 incomple~e by reason of the omission of the peni­tentiary expenditures and of certain expenditures by the Agri­cultural and :Mechanical Coll~ge. The only penitentiary expen­ditures included are those out of the general revenue fund of the state. The accounts of the agricultural and industrial opera­tions of the penitentiar~' have not been published in a form that made possible their incorporation here. The Agricultural and l\fechanical College receives certain mone~'S from the Federal gOYCl'llIDCnt 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 Col­lege. Some of these fnnds appear every other year in the reports of the state treasurer. A Financial History of Texas TABLE 8. lll'et ExpenditurH. Available I Available Year General Fund School Uni\·ersity 1· All Other Total Fund Funds Fnnds -----I1 _____, ----­ i~~:::::::::i$ m:~~:::::::::::::::::::::::::::::::::,:::::::::::::::: $ ii~:~~~ 1849________ -I 82. ~32 ________________ .________________ , _ __________ _____ s-2. ~32 1830---------, 148,05;; ---------------------------------------------"--HS,05:; im~~~~~~~~~I l .~~E1~~~~~~~~~~~~~~~~:~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~, l.?,~~!~! i~:::::::::I ~~:~~1$ ro:i~g,:::::::::::::::: ::::::::::::::::: ~:;~ i~:::::::::' ~~:~ i~:~~~i:::::::::::::::: ::::::::::::::::: ~N:~~ i:~::::::::: ~r~:~~~ m:~::::::::::::::::: ::::::::::::::::i ~:~~: i:~::::::::: ~:~ 1~:~1:::::::::::::::: $----------6~009 l ,&~~:~¥iJ.863_________ 1,039,998 24,697j----------------46,586 1,111,281 1864_________ ) '775,08.3 23,734.----------------40,502 1,839,323 1865_________ 600,997 10,850,----------------72,696j 684,545 1866_ --------233 ,089 ----------------. --------------------------------233 ,oso 18117_________ 479,528 1,416·________________ 913: 481,858 1868_________ 349,968 2,083 --------------------------------: 33!!,051 1861)_________ 1 370,79'2 3,210 ----------------90,95611 464,!!59 l8i0_________ 599. ] :)5 6l ,o6o~----------------·---------------600,~ ";} 187J____ __ ___ 581,415 32,771 ----------------272,688 886,8i4 1872_________ 940,598 497 ,23S ----------------196,138' 1,633,975 1873---------'1 936,370 194,904i----------------121,451 i l,25'l,726 1874-________ 1,236,043 790,121 J----------------468,6~1 ~.494,812 1875_________ 1,125,688 620,2051----------------199,328] 1,945,216 1876_________ , 1,091,571 609,8411________________ 514,900 2,216,349 1877~--------i 1,250, 496 400 ,185,________________ ----------------1,749,681 1878---------1 1,224,739 682.48/l -------------------------------1,907,220 187!)_________ 1 1,446,686 IJ83,6891_______________ 216,6'1& 2,351,000 i:~::::::::: i:::!:~~~ ~:~~1::::::::::::::::1' ~~:&~ g~~.~; 188"2____ _____ 2,4i;J,:JS,q ~ll3,7ii0 ~ 1:;,140 3fl4,431 :l,747.~Jfi 1883_________ 1,911,332 1,148,835 46,827" 568,562 3,509,353 1884-________ 1,730,008 1,485,549 121,792 66 ,321 3 ,253,114 1885---------1,P.H,698 1,956,025 61,412 125,560 3,802,00'" 1886_________ 1,565,904 2,420,986 63,821 19,119 3,872,647 1887_________ 1,916,31:3 2,265,937 64,00l! 32,833 4,111,603 1888---------2,057,221 2,544, 728 53,245 a7,e07 •.5~0.485 1889_________ 2,265,879 2,205,330 116,067 40,743 4,458,663 1890---------1,908,727 2,808,562 90,llU 82,229 4,162,960 189L________ 2,080,909 2,609,648 90,716 124,525 4,722,623 18!!2 _________ 2,502,lliii 2,fi.% ,047 !>4,064 48.w.i 5,0ii5,!l22 1893---------2,376,811 S,062,589 68,427 61,296 15,886,541 1894_________ 2,146,8.12 2,432,604 60,480 57,623 4,525,500 1895_________ 1 ,991,001 2,544,066 44,706 44,118 4,438,029 18.'lfL________ 2,843,87fi 2,!»2 ,562 56,5\18 18,000 5,fi,)7 ,803 11~~-----_-_-__--_-__-i, 2,254,2"..8 3,233,289 "1,538 24,135 5,389,0'iii o= 2,153,650 3,069,912 83,087 19,964 5,140.~61 1~_ __ __ 2,376,051 101,429 5,542,216 ......_-----_--_-_-_ ! 3,232,445 18,440 1...,., 2.732,8.'ili 3,0Rl .471 105,607 21,814 5,7ii4,~18 190L________ ; 2,804,296 8,488,261 98,529 17,lU 6,220,642 1902_________ ! 3,183,717 3,664,498 44,736 14,254 6,619,264 1903 __ ______ _1 3,405,688 3,809,640 111,681 14,676 7.~rn.991 1904---------1 3,562,971 3,848,584 135,502 10,618 7 ,372,131 1905_________ 3,115,072 3,971,92'l 129,405 13,319 7,047,065 1906---------: 4.17'1 , 422 4,218,38.~ 136,229 57,516 8,38.'i,4471907 ______ ___ , 3,561,748 4,888,254 194,827 23,975 7,956,769 ~==========1' ~:~:~~ ~:!::~ f~:= ----------~:~~ ~:~~~:~~ 1910_________ 4 ,362,098 6,.507 ,075 127, 731 77 ,673 10,868,388 191L________ 4,628,198 6,308,287 223,386 33,762 ll ,O!l-2,088 HIJ2_________ 5.119,1;53 6,783,459 198,103 20,724 11,009,594 rn13_________ ii.347,845 7,o53,4i>7 221,2m 23,3'l0 i2.!i81 ,oso 1914_________ 11,998,816 7,848,823 118,2911 !Ull,291 15,118,188 1915____ _____ 7,Hl3,213 7,69'2,144 :l'll,950 1,573,111 16,559,844 -!UU Bulletin of the l../nivcrsity of l'c.cas ExPL\N.\TORY ~OTES, 'LrnLE 8. In the 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. Trans­fers among the funds are the principal items excluded in ar­rh·ing 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 bi.ennial report of the comptroller for these years the receipts and expenditures of the special funds, exc.ept 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 fr.om those from interest on other bonds. The total net expenditures of the accounts for which there are not separate yearly state­ments were $251,555.76, and of this amount $194,453.39 was for the payment of debt. These funds re0eived 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 b.e ascertained. The amounts of interest on state bonds which are included among the net expenditures of the genE>ral rE>venue fund and E>xdnded from the total for all the funds w<.>re by years as follo"·s: 1879 .. .... . . ' $105,804 1889 .. .' ... . . 169,357 1880 . . . . . . ­.. . . . . . . 32,495 1890 .. .. . 172,473 IS81 .. ' -. . . .. 111,535 1891 .. .. . . . . . . . . . 183,176 1882 . . .. . . . . . . . ..' --­ 1892 ... .. . . . . . . . .. . . 173,815 1883 . . . . . . .. 166,605 1893 .. . ' . '. . ....... . 163,583 l 884 . . . .. .. . . 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 History of Terns 1899 ..... .............. 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 1907 ......... .. .... .... 212,032 1881. $73,898.57 expended by the university land sales ac­count 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 among 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 comp­troll.er 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 avail­able school, and the permanent school funds. These omissions make it impossible to stat.e 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 impossibl.e 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 p.ension fund. Und€r all other funds is included $48,153.14 transferred from the pure feecr fund to the Agricultural and Mechanical College. The pure food fnnd appears only in the report of the state treasurer, and as t.his report appears only ev€ry other year and covers only the year in which it appears, the statistics for this fund are obtain­able only occasionally. The fact that this fund and that of 26-H B11lleii11 of the University of' 1'c.ras the prison commission are found only in the treasurer's rfpol't 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 l\Iechanical College does not contain an itemi­zation 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 trans­ferred 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 $1,442,413.85. The expenditures of the state on account of the penitentiary include only those out of the general treasury. On account of the absence of reports or of the defectiveness of those published, it was not fonnd possible to incln77 8!16 3'.i20::'i63 ::::~:::::; 3,430,619 _______ ___! 3,334,415 ----------' 3,286,2-28.---------­ 3, Ht2 .215)___ _.----­3 ,229,160,__ ___ ·---­4, 517,543 •__________ 4 ,032,098;__ _______ _ 4,353 ,87L_________ 4,497 ,997·-----· ---­4,579,156:-----·---­ :::i:::gk:::::::: 4 ,967 ,9071----··---­ 5,059,76.1 _______ ___ 5,225,354 6,043,013 6,78',067 7,494,900 7,019,782 7,607,061 7,274,866 9,475,591 9,254,468 1,632 --------------------1 991 ------------------------------· 2,584 J0,931 --------------·-----1 5,124 4,516 ----------.$ 3'27,5001 4,712 9,898 ----------! 192,566 4,686 ====~~~~~ ~~~~~~~~~~: I~~~i~~~~~~~~~~1 18,677 ----------\ 162,460:---------­27,541 ----------· 144,788___________ 76,357 ----------J 128,726;---------­ ~J:~~ ::::::::::i ~~:~:;;::---··i;:139 79,7401 18,4501 52,454 ----··--------------'---------­ 1,812,503[----------1 148,68-1 __________ 705 6,279 ll,81. 10,198 7,747 4,358 5,013,833 a,035 3 fi~~I 10,718 30,714. 24,072' ~::!M 874,492 1,686,964 ~~:i);~':::::: ~::: __ ___::~~ :::::::::: ::::::::::!_____ ~'.~~ l,~~:~~ 328,678---------·I 337 ----·--·--54,6Hi 4,736 13,883 40ll,304 ----------' 1,240 -----·-··· 6,2301 5,200 309 578,214 ----------1 2,226 ---·----------------1 6,156 44,858 3,673 ---------­3,228 ---------· 3~ -------·-­1,4151---------­1,572.---------­a~1.s1:~ ---------· 115,546 ---------­32,957 -------·-­45,418 ---------­99,896 --------·­158,964 ----·----­308,498 -----·---­823,803 -----·--· 1,874,685 ---------­411,226' 81,000 192 ,324 ---------­310,144 ---------­376,915 25,228 214,049 227 ,560 3'?8 800 241 ?:i' 570:310 200:212 647,501 319,673 314,475 260,465 305,034 Jll l ,637 130,677 189,727 186,972 179,527 221,644 2-25,547 100,408 279,240 371,133 361,205 498,549 469,102 6!J9,230 542,148 ·---------6,9"21 20,868 139,530 9,478 10,745 144,910 rn,354 29,009 169,046 28,271 5,061 147,979 41,919 17,795 156,756 !l;;,n19 15,~ 154,437 74,253 15,760 187,918 67,350 8,731 196,396 56,573 8,475 133,966 54,337 3,280 198,317 74,060 2.601 U·~ ,1117 100,4·'7 3.AA'i 258,843 102,969 4,537 365,254 96,595 3,108 616,728 105,689 6,894 674,082 100,168 235,981 563,871 78,918 424,034 707,943 105,702 144,223 695,096 78,674 9'l7 ,003 S.13 231 1 39 3861 60 683 720:836 i 45:553 101: 767 991,071 1 40,840 244,305 ~21,612• 36,383 216,000 960 068· 36,584 353,983 573:8441 36,329 238,677 755,001 33,854 293,585 579,339, 29,989 230,176 28,882 3'22,274704,4371 671,277 41,370 451,500 578,711 39,746 160,222 869,970, 268, 710 704,213 445,854 91, 7961 605,300 399,458 89,461 290,001 94-1,7771 461,16!) 400,871 1,026,604 102,325, 321,628 1,096,632 161,338: m,525 354,457 938,678 300,083 -1,20-2,362 1,004,292 68,374 289,0801 1 ,438,443 600,5.~4 228,964 241,063 138,760 193,839 1,585,044 825,466 200,6601 1,855,478 1,917,667 473,474 236,883 109,943 103,869 99,733 575,046 1,970,046 468,945j 31,241 2,019,460 "586 ,115 116,737 403 ,9811 32,095 2,246,690 690,379 158,409 373,134, 555,103 144,702 2,084,113 5.53,607 066,8731 148,028 254 ,642 180,501 2,il!5,659 570,669\ 125,187 'l'otal 184 ,800 106,65; 106,491 111,956 152,751 5,470,287 $ :-16,249 313,518 239,6!1-l 524,m 263,079 ~15,493 414,192 546,361 434,430 555,727 1,025,137 3,6'>5,137 1,846,559 362,667 40Z,27!l 421,375 631,4-56 467 ,576 951,012 1,596,045 1,531,077 2,0;H),]97 2,217 ,171 2,290,2-27 1,994,554 2,053,142 2,546,363 :J,;,04,:)ff; ~.076.4')·~ 3,823,700 4, 780,475 3,3&2,539 3,824,698 4,300,854 4,634 ,03"~ 5,254,192 3 781 275 4'.831:304 5,674,101 5,083,442 5,136 ,5.16 4,361.472 4,678,102 5,804,240 5,566,391 6,250,3'."Jll 6,244,3'.!9 672,130 49 ,4611 196,4591 6,738,586 725,340: 65,694 351,805 6,932,38i f!IYl,972 480,5221 543,806 1 ,168,268 8-l(),726i 80,653j 7 ,881,276 418,9171 7,348,45.1 7,388,362 7,543,954 9,3'23,646 9,638,259 10 ,142 ,6(17 11,739,272 11,248 ,8!l!l 10,419,879 12,633,!lSI 13,279,310 17,441 ,744 15,492,3~ Bulletin ol the University of Texas EXPLANATORY ~OTES, TABLE 10. 1851. $36,000 receiwd by the g-eneral revenue account from the sale of state bonds to the school fnnd is included as a net receipt. 1852. Under miscellaneous is included the $5,000,000 in Fnited States bonds received from the United States under the terms of the Boundary ..Act. 1856. Under miscellaneous is included $298,421 refnnded by the United States for that amount of the revenue debt of the republic paid b~' Texas. 1861. The interest coupons on the United States bonds held by the school fnnd are counted as cash receipts. State warrants received in the collection of revenue are not counted as the .equiv­alent 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 'Var was $373,923.84. This is $133,466.79 greater than the sum of the items in Table 9 for 1861-1865, and the diffe:r.ence is due to defects in classification of receipts as given in the reports of the state treasnry. According to the report of the comptroller the following funds received the proceeds of land sales; the university fnnd, $137,344.44: the school fund, $11,910.50: the general revenue fnnd, $224,668.90. Only $225.52 of the receipts was in specie, while $43,502 was in state warrants and. $330,­ 196.32 was in ConfedE:'rate currenc~' · 1877-1878. In the report of the comptroller only the geR­eral revenue. the available school and the permanent school funds olkction of the franchise tax is by the office of the sP•·1·dar,1· of state. The practice of the state department of rrporting its collections to the comptroller as well as the way in which the collections are listed in the report of the secretary of state make it impossible to co-ordinate the receipts from the franchise tax with the other receipts of the general revenue fund.. A Financial llisforu of' l'c.rns 4ll Down to 1907 there is no uniformity whatever in the periods for which reeeipts are reported by the state department. The periods and amounts were as follows: January 18, 1895-December 1, 18fl6 .... . .. . .. . . . . . ...$ 44,609 December 1, 1896-January 1, 189!1 . . .. . . . .. . .. .. . . ... 111,04~ January 1, 1899-December 31. 1900 ......... ........ . 207,663 January 1, 1901-August 31, 1901. .. . . . . ......... .... 140,695 September 1, 1901-August 31, 1902 ... . .... . . . .. .. . .. 153,534 .January 1, 1903-August 31, 1904 . . .. . ...... .. . ... . . . 301,79;) 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 comp­troller 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 depart­ment, but as one month's receipts are not reported to the comp­troller until the following month, and then with unclassified de­ductions for refunds and exchange, the receipts to the general revenue fund and those classified in the report of the state de­partment cannot be harmonized. The state department in its report to the comptroller's department makes no attempt at class­ification of tlw receipts, bnt includ0s them all undrr the mean­ingless 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 assess.ed, 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 rer<'ipts as given in Tabk 11 from ad valorem taxes ar<' not much affected by the omission. Bulletin of' the Uniucrsity o/ 'l'c.rns TABLE 12. Tax Bates. General [' Revenue School General YN1r Art Valorem I Ad Valorem Revenue Cents Cents 18#;===--9-0___1______, Poll $ 1.00 T817 __________ W 1:::::::::::::::: 1.00 1.00 1.00 1.00 1.00 {i~~~~~~~~j ~ ! l~~-~---==_=~-~~~-~-~-~-~-~-~-=-­ 1.00 1352----------! 15 1.00 1.00 1.00 1.00 if~~~~~~~~~~~,i u \~~~~~~~~~~~~~~~~ 1.00 .50 .50 1860__________ , 12.5 ---------------­ ~====::::::: i~:: 1::::=::::::::::: .50 18(;1 __________ 16 ---------------­ .50 1~2----------, 25 ---------------­ 1.00 11~:13__________ 50 ---------------­ J.00 la>!__________ 50 ---------------­ I.00 186i;__________ , 12.0 ---------------­ 1.00 1.00 ~~:::::::=::/ ~ ---------------­ 1.00 1.00 ~=::::::::::! ~~ i:=:::::::::::::: 1.00 1.00 {~~:::::::::: ~ !:::::::::::::::: 1.00 187~----------50 ·---------------­ 1.00 1873__________ 50 1.00 1874__________ 50 1.00 1875_ ---------50 !---------------­ 1.00 l P.itL________ 50 1.00 1877 __________ , 50 !---------------­ 1.00 School Poll $ 1.00 Confederate Ad Valorem Cents 1Si8__________ 50 I.00 1.00 I··--------------­ 18i9__________ 50 I.00 l.00 !---------------­ 1880__________ 50 J.00 1.00 1881__________ 40 1.00 1.00 188'2__________ 30 .50 l .00 J.883__________ 30 .50 1.00 1884__________ 17 .5 _______ .._------­ 12.5 .50 1.00 1885__________ 25 12.5 .50 1.00 1881;__________ 25 12.5 .50 1.00 1887__________ 25 12.5 .50 1888__________ 10 12.5 .50 1.00 1889__________ 20 1.00 1---------------­ 12 .5 . 50 1.00 1!!00__________ 20 12.5 .50 1.00 18!!1._________ 16 .00 12.5 .51) 1.00 1&)'2__________ 15 12.5 .50 1.00 ----------.-----­ lS 12. 5 .50 1.00 1894. ---------15 12.5 . 50 1.00 IS!loj __ ________ ; 25 20 .5\1 1.00 1soo____ ______ I 20 18 .50 1.00 -----------·---­ J,W,__________ 20 18 .!\O 1.00 18 .50 1.00 ~=::::::::::! ~ }8 .50 1.00 ]!)()()_________ _: 16.flll 18 .50 1.00 ----------------,. l!lm __________ : 16.00 18 .50 1.00 ]!)()-! __________ , 16.66 18 .50 1.00 l\lOO __________ , 16.66 18 .50 1.00 l!lOL _____ ____ , 16.66 .50 1.00 U)():l__ ________ i 2-0 18 18 .50 1.00 HXY.i____ ______ 20 18 .50 1.00 H)ftj __________ [ 12.5 20 .50 1.00 1!)(}8__ ________ 6.2.J rn.co .50 1.00 l'l!Y.l __________ , 5 J6.(i6 . !;() T.00 1910.. ________ I 4 16.66 .!;() 1.00 l!llL_ ________ 12.5 16.f.6 .50 1.00 191~----------10 16.66 . 50 T.00 ---------------.. 191:L •• -------23 17 .50 ] .00 5 l'lH__________ 12 .5 20 .50 1.00 5 191~----------30 20 .50 1.00 5 TAB:r.• 18. AHHa•d Tala•• of Proper1:7. Money, Oredlh i Telegraph Other Year Real Property Negro Slaves Livestock and Securities Merchandise Railways ;and Telephone Property Total --~~~~1~~~~~-1-~~~~ llWL______ $ 17,776,101 $ 10,142,198 1847________ 17,826,994 12,174,593 1848________ 20,777,412 13,398,490 11149________ 20,874,641 14,608,887 11!5()________ 21,B,755,991 ---------______ _! 122,749,123 ====:~~~~~~;;;;;~~~~~~~[~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~1----1r~~r~ -----------------------' 37.727 ,029 6,000,245' 9,467 ,912 --------------------------------10,548,383 170,005,545 1867-J06,211,9761 1868________ 91,417,148 ---------------­18Ct)________ 97,165,327 ---·-----------­1.870________ 100,7!1!,16:; -------·-------­1871_ -------138,777 ,3471---------------­1872_____ ---127,323,643[---------------­ 1873_ -------139,li00,801 1---------------­ \87!_____ ___ 149,793,361 ---------------­1875________ 153,752,173 ---------------­1876________ 157,645,6681---------------­1877________ 197,606,9'l9 ---------------­1878--------187,830,837 ---------------­ 1879________ 188,586,367 ______ c ________ _ 1880________ 204, 784, 779 ---------------­1881-_______ 223,413,857 ---------------­1882__ ______ 250,157,004 ---------------­1883________ 299,002,905 ---------------­ 29,919,778 27 ,329,29331,036,661 43,582,007 37,979,743 . 37,458,027 36,520,12938,888,734 40,731,850 44,988,530 45,711,027 4,666,094 4 ,548,380&,768, 761 10,774,653 10,423,448 11,497 ,670 ~.677,9889,287,485 10,604,436 8,824,503 6,607,984 8,244,0811----------------1---------------­8,530,485 ----------------1---------------­12,009,568 ---------------­---------------­15,~7.077J-------------------------------­13,387,213 -------------------------------· 14,354,3671-----------------------------­-­4,371),9371$ 17,514,865 ---------------­11,942,662 16,605,122 $ 134,233 13,403,320 16,577,508 134,233 17,761,317 15,040,643 150,800 15,571,525 15,229,082 138,937 10,013,200 12,091,90114,860,633 14,0ll'l,989 18,806,479 20,504,066 32,683,2li820,243,350 18,&34,994 34,455,711 32,112,020 144 ,260. 244 149,666,386 171,818,986 222.504.073 208, 508,372 223,410,920 244,510,568 250,853,759 257 ,632,009 318,935, 766 303 ,202. 424 44,253,237 45,917 ,480 54,078,950 72,805,214 6,573,153 7,276,479 8,860,263 9,794,312 14,896,019 16,300,735 19,236,409 22,311,922 14,117,2331 16,048,087 20,800,554 30,410,350 125,301 182,072 176,001 280,2431 34,637,897 28,458,704 30,41l8,341 34,277,111 303,800,'JIYT 318,970,736 357,000,000 419,9'l5,476 110,738,?.85 12,178,169 26,400,181 39,630,568 467,016· 40,001,226 627. 537 ,390 TABLE 13-Contl.nued. A•ae•sed Values of Property. I I I Telegraph OtherMoney, Credits Property TotalRailways and TelephoneMerchandise and Securities Livest ock Negro SlavesPn•pertyYear IReal I $ 600,060,fil7~ 506,7201884___ _____•$ 347,846,953 29,347 ,9Sl $ 40,451,874$ 12,635,066 $125,510,195 46,820,34T ---------------$ 49,082,970 621, 011, 989 534,198 27,043,371 42,723,76212,435,729111,301,3651885--------1 875,890,594 48,568,72D 630. 525, 123 520,855 27,545,009 44.<>26.03912,436,641 102,215,586 42.1,004, 327 1886-------­395,206,678 !887________ ~6,362 48,49'l,794 660,412,401 1888________ 28,393,104 48,274,237 11,827,284 443,934,499 91,242,293 66!},646 681,084.9045(1.230. 595 28,363,459 55,779,31811,445,84187,626,773188.9________ 729,175,fl64 54,586,664600,609 28,956,576 59,057,11113,682,37192,047 ,551480, 154 ,682189()______ __ 782,111,883741,694 58.98'l ,339 6"2,106,88729,322 ,39314,264,694524 ,302,196 92. 4-02 .6801891-_______ 73,067,776 856,200,283(;5,732,268 755,20033,225,967 H,192,084 1~)2__ 94,589,941577 ,!;;l7 ,038 00,7i4,313 856.626,600775,02068.205.90431,659,86987,011,658ff.n ,346,S!JS 11,812,9381 1893______ __ 886 ,175,395 839,209 71,708,72870,536,174 12,851,534 32,539,215 31, 763,486 89,747,138007,953,397 865,120,981 8"21, 793 71,254,70070,514,88011,294,18979,601,356 599,870,497189±--------1 18!)',,________ , 860,fil0 ,567 863,737 72,956,779 70,420,925 1896________ 31,427 .570 10,681,383 75,418,674 599,134,400 1 67,664,043 850,809.246 70,826,256 927,40131,920,960 12,495,57578,914, 721587,500,471 1897 _____ ___ 854 ,894, 775 1,128,688 51,940.~ 71,247 ,485 31,472,249 28,265,255 78,365,500 592,474,70'2[1l98-_____ __ ! 854,619,366 49,346,809 1,255, 742 71,~235 31,000,600 89,248,469581,068,483 31,666,9301 922,927,23188,692,8021899___ _____ 1,585,060 33,824,391 77,469,85137,157,55797,001,322 1 587 ,216,258 86,563,348 946,320,2581,810,231 37,461.779 81,~.283 39,362,848105,171,309094 •602 ' 460 2,039,070 59,327,475 982,187,865 41,262,901 84,186,43149, 725,654 119,944,579625,701,755 [9()2_ __ _____ : 1,017 ,571, 732 ~~========i 2,509,380 60,974,48187 ,652 ,527 46,100,~ 50,570,380117,162,675 652,001,661 1,064,948,037 3,055,103 68,098,43692,516,512 I!l(X!_____ __ _ , 47,978,27751,58!,538 110,465,844691,250,327 1,082,779,775 69,445,4333,585,61190,229 ,945 HJ()L ____ ___ 48,542,23656,0!!9,751104,150,632 705, 737,167 1,139,022,730 4,116,882 68,315,36597,861,2051905 ________! 50,390,833 66,533,351108,246,878 ~43,559,216 1,221,159,869 4,610,182 70,716,3411006 ___ _____ 131,544 .46367 ,056,219 71,320,568111,049,840 774,862,256 1,635,297 ,115 5,496,123 86,6:lO. 5831907_______ _ 280. 290.76365,324,112102,517,126 131,663,947963,382,461 ----··----------­ lW,213,844 2,174 ,122,480 7,070,004 330,403,7411908__ ______ 80,373,911 130,691,066148,058,2721,372 ,311,612 2,309,803,6268,072,290 110,880,2881909 __ _____ 333,938,16785 ,10'2 ,125136,104,811152,888,790 1,482,817,155 2,388,500,1248,995,996 119,422,396340,164 ,1211910 __ ____ __ 88,401,17R155,860,810 140.262. 2941,535,392,372 9,230,140 2,515,632, 745 191J _____ ___ 129,636,828345,140,268 92,518,023153,746,890 163,006,598 1,622,253,998 10,877 ,352 134,5!17 ,481 2,532 . 710,050 lfil2 ____ ____ 337.670.57293,464,760149,879,4.93 156,022,0111,650,198,381 10,400,768 148,947 ,462 2,680,907 ,991 349, 17 4. 0171913__ ___ ___ 99,250,135 161,109,708169,l fil,621 1,742,844,170 \91{___ ___ __ 11 ,249,382 156,260,295 2,743,078,976 342,728,103 106,659,508 165,648,891178,567 ,9611, 781,975,356 2,756,171,793 12 ,990,252 33!}, 9H , 21l2 168. 246. 3041915 ___ ___ __ 100,109,5411152,220,2971,803,2()(),948 ----------------1 178,463,187 A Financial History of Texas 415 EXPLANATORY NOTES, TABLE 13. The taxable values presented in this table are compiled from the original published reports of the comptroller and from pub­lished abstracts of the reports of that officer. Becanse of typo­graphical errors in the reports the totals of fhe years are in some cases different from the ~mm of the classified items, but these differences are not important. 'l'here was included under rral property from 1S46 to 1865 only rural real estate; town lots and land crrtificates werr pnt among miscellaneous property. After, and inclnding 186G, the class of real property includes all land and improvements and land certificates. There was no separate statemc·nt of the as­sessed value of railroads before 1874, and it seems probable that railroads were assrs.~ed beforr that date under thr head of rral property. Only the total values for 1862 and 1863 can be given, and these are taken from the synopsis of the report of the comp­troller as given in thr Texas Almanac for 1864. The almanacs of 1863 and 1864 contain ta blrs 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 Yalue of land in 1862, as reported in the Almanac, was $80,810,890, and in 1863, $108,126,716, but these are below the real amounts. Beginning with 1909 all of the intangible assets are included under railroad values, except in 1913, when 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. B11llcti11 of' iii<' U11iversity of' T1•.1·<1s TABLE 14. General Bevenue rund. Total Trans- Dlsburse- Year Receipts Expenditures fers ments Balance at end of year $ 61,2881847______ $ 178,915 $ 127.677 ----------$ 127,677 82,2871848_____ _ 97 ,21l II6,161 II6,16l 184!1______ 96,510 82,232 ---------­ 82,232 46,664 1850______ 101,491 148,007 $ 47 148,065 1 1851______ 141,w.! 115,()8;1 287 115,372 25,890 1852 Cash 1,273,365 674,642 ----------Oash 624,677 Bonds 5,000,000 608,000 _______ _.__ 1,282,580 Bonds 3,676,000 890,801 1853_____ _ -----------=~:~:~ -----------~::~-----~:~~ ---~:~~ ~~~s 3,675,000 1854_____ _ ! 250,006 Oash 474,246 --------------------Cash 166,062 !__________________ Bonds 2,000,000 ---------­2,474,245 Bonds 1,576,000 1855------! ll8,565 244,879 ---------­ 244,879 Cash 39,748 1-----------------­ --------------------------------------Bonds 1,675,000 1856___ ---' 595,275 0 ash 480,797;__________ ----------Cash 164,226 '------------------Bonds l15,000 ___ ______ _! __________ Bonds 1,263,000 1857______ 126,II5 280,247 ----------'----------Cash 16 ------------------1-----------------------"--------------Bonds 1,230,000 l&'i8___ ___ 32'2 ,755 Cash 321,529 285 ----------Cash 956 _________________ _!Bonds 427,000 ----------748,816 Bonds 546,000 1850______ 280,660 Oash 176,214 --------------------Cash 106,40'2 -------------~---Bonds 205,000 ----------380,214 Bonds 306,000 1860------Cash 388,439 366,907 --------------------Cash 77,934 Bonds 104,000 359,000 ----------726,007 Bonds 50,000 1861_ _____ 426,164 467,836 ----------467,836 86,262 lSffi______ Cash 400,976 419,164 --------------------Specie 2,464 Bonds 579,655 679,666 ----------008,809 Oonfed. Notes 105,628 JS& ______ Cash 1,00S,O!l5 1,100,808 --------------------Specie 669 Bonds 58,150 liS,150 ----------l,158,4li8 Oonfed. Notes 15,160 1864______ 3,355,632 1,830,617 ----------1,830,617 Specie 1,496 --------------------------------------------------------Oonfed. Notes 1,639,888 1865______ 1,667,204 674,978 9,774 684,?U Specie 2,708 --------------------------------------------------------Confect. Notes 2,420,682 1866______ 336,196 233,089 ----------233,089 111,367 1867______ 378,424 473,613 9,841 483,455 1,326 1~-----414,001 350,208 ----------350,208· 82,938 1869______ 529,846 371,106 70 371,177 241,007 1870______ 409,243 598,498 l,~ 699,807 51,048 1871____ __ 538,479 681,830 ----------681,830 7,692 1872______ 941,283 941,213 ----------941,213 7,761 1873______ 932,300 938, 760 ----------938, 760 1,301 1874------. 1,304,063 1,248,146 66,845 1,30!&,991 878 1875_ _____ 1,531,501 1,422,()95 __________ 1,422,096 109,778 1876______ 1,006,067 1,001,626 I061 $1,100,587 1.11i:~ l,134,455 2,728 52i'.:~~~ 62,S64 7gic:;> 95,:: 692,612 888,986 1,743,208 1,424,641 413,124 430,433 333,615 1,721,609 555,103 Bulletin of' the University of Texas EXPLANATORY NOTES, T .\BLE 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 gen­eral fund to the school fund as, for example, that of $2,000,000 of United States bonds in 1854, is counted among the expendi­tures of the general fund. Receipts in the form of the paper liabilities of the r.epublic or of the state are also excluded. The following were the amounts of the paper liabilities of the republic which were r.eceived: 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 fnnd. 1856. The report of the treasurer g-ives $290,000 as the amount received by the state from the United States as a re­fund for the revenue deht 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 United 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 ehang.e from October 31 to August 31 as the end of the fiscal year, this fiscal :vear has only ten months. 1860. Included among· receipts ar<' $100,000 of United States A Fi?tancial History of Texas bonds and $9,472.26 in specie transferred from the university 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 r.ecovered 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 b.egins 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 which is fifty cents greater than the balance reported at th.e 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 comp­troller. 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 to~al of the comptroller is fol­lowed in this table, and for classification purposes, $600 is added to miscellaneous. Bulletin o/ tho U11,iversity of 1'oxas TABLE 15 Available School l'und. I I I Ordinary Other •rota! I Year Receipts Disburse-Disburse-Di•bnrse- Balance at End of Year ments ments ments 18H----=I ,----$5,s85=-=-== ======== $ 5,8&> }84$______ 9,0361------------------------------i 15,521 ~~:::::: {),981i------------------------------25,503 1851_____ _1 i~:~~l::::::::::,$·-·35;000 ii---36;ooo:cash ~~:l: 1 :::::::!~~~::::::::_:,~~:ili~=:~~~-=:~ ~~~~,~~ ~:~~.,~~:~ Ji 18.55------! 124,629 * 27,136 ----------27 ,136 iCash 190,191 :----------------------------------------------__________ ,Bonds 2,053,000 1S56..----: 128,350 95,130 ----------19'2,IHO!Cash 126,418 :--------------------------. --------___________ ----------!Bonds 2, 150 ,()()()1857______ , 170,7$4 106,125 46,()()() 152,125'Cash 145,077 !----------------------------------------------__________ 'Bonds 2,196,000 1858------' 151,690 105,332 65,000 170,332iCash 126,436 ;__________________________ ------------------------------'Bonds 2,261,000 1859..•...: 174,400 118,465 48,000 166,465 Cash 134,370 '--------------------------------------------------------Bond• 2,309,000. 1860·-----J___________________:~~:~ ---=~~:~ ----~~~ ---=~~:~ ~~~ds 2j~~:~ 186L.----IC!'sh 85,489 123,120 23,500 146,6"20 Specie 76,389 1Warrants 8,518 ------------------------------.Bonds 2,417,500 Int. Coupons 17,675 --------------------__________ 1Warrants 8,518 1862______ Cash 63,336 50,954 637 ,175 688,12.Jl,145 2,544,066 ----------12,544,066 2,843,433 2,901,98"2 1,870,1 2,903,8523,273,007 3,233,3141__________ 3,233,314 3,054,948 3,069,912 ---------­1 3,069,912 3,151,409 3,232 ,624 ---------­3,232,6"241 83,949 64,242 4-0,266 117 ,536 367,543 151,692 51,399 133,479 73,060 112,753 97,789 16,574 IOOL----1 1902------: 19().'L----i 1904------1 }9()5______ , 1906------, 1907______ , 1908------1 1900_____ _ 1910_____ _ 1911_____ _ 1912_____ _ 1918_____ _ 1914,_____ _ 1915-----­3,318,276. 3,0Sl,4711··--------' 3,081,4711 3,369,09'21' 3,488,~28 ----------j 3,488,628[' 3,636,891 3,565,-441 2,801, 3,568,045, 3,868,0691 3,809,677: 4,069 3,813,746; 3 ,724,442 3,848,496 1;8, 3,848,614 , 3,983,931 3,971,92! ----------' 3,971,92.21 1 4,109,683 4,218,3831 ss· ~.218,4ZI: 4,449.~20 4,388,254 __________ ; 4,388,25-f 1 5,404,913 5,389,934 10: 5,38.9,944[ 5,883,611.1 5,658,473 __ ___ _____ : 5,658,4731 6,276,50'2 6,507,075 ----------. 6,507,075: 6,211,655 6,308,287 j··--------· 6,308,2871 6,838.~ 6,783,4591----------6,783,400 7,204,4-06 7,053,487 ----------7,053,4871 7 ,149,680 7,348,323 :----------7 ,348,323 7 ,999,0591 7,692,144:----------7,69'2,1441 253,379 133,844 202,690 257,012 132,840 144,849 ~6,110 96,877 111,846 337,065 106,491 9,858 64,793 215,713 17,070 323,964 Bulletin of the Unfoe1'sity 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 w.ere 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 flind 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 treas­urer to transfer to the general revenue fund the specie to the credit of the g.eneral sch-001 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 fnnd. 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 Financial History of Texas 423 of specie was so expended. In 1859 $12,000; in 1860, $11,000; 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 Stat.es bonds, $35,175 of interest conpons 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. Year 1886____ 1887---­1888---­ 1889___ 1800 --­1800--­189'1'..--­ ll~XL-­ 1894---­ 1896.--­1896..-­18117--­1898.--­ 1809____ JOO()____ 190L-­190'Z--­1008..-­ 1904 ____ 1906..--­ 19()(1____ um____ Ul08---­ 1909___ 1910___ 1911---­1912..--­1913---­ 1914____ 1910..--­ ! a I • Insolnnt, Delinquent, Receipts andErrone- From In­ ously solvents and GrOllll From Re- Ad Valorem Assessed Ad Valorem demptlon 1 and S Taxes Taxes of Lands Less 2 Assessed I $ 125,978.96 $ 11,213.20' 2,214,009.19 $ $ 2,328, 794.95 2,299,450.21) 2,374,791.86 1,518,816.74 2,288,605.71 2,400,837 .oo 2,4612,M .29 2,316,500.98 2,386,357.72 ~ 346 flJT 10 8:881:815:26 3,009,983.24 3,252,702.79 3,247.~.72 3,810,491.92 3,277 ,864.26 3. 513, 736. 99 3,637,067.62 3,699,471.31 3.773,006.912 4,360, 700.18 4,646,807.08 5,370,315.43 5,034,432.80 4,964,432.92 4,799,844.21 7,075,613.07 6,802. 783. 79 12,016,451.82 10,376,833 .00 185,090.98 21,49'J,86 2,136,303.08 166,400.69 34,875.841 2,143,261 .00 97,334.11 27,199.561 1,448,682.18 147,888.16 ,33,528.101 2,174,245.66 83,922.14 2,500, 759.67 161,382.39 186,7117.74 25,444.6' 2,300,943.59 187,103.!n 2, 165. 440. 43 3&,953.42i 220,075.15 33,846.91 2,200,129.48 229 710 11 39 800 671 2 165 790 66 76:397:79, 3:518:346:67 389:366:38 1()7,318.88, 2,968,824.96 348,477.16 206,108.05 3,138,144.33 S'l0,006.51 3,147,051.18 297. 403.78 196,500.24 729,186.4( 193,308.30 3,274,613.78 196,496.90 3,034,776.43 439,58'. 73 294,809.16 167,!155. 72 3,386,583 .55 171,946.89 3,443,840.19 265,173.3'2 274,972.23 163,330.21 3,587,8'.!9.29 266,574.42 184,880.54 3,69'l,813.04 23'l,286.69 4,329,889.28 263,100.59 203 ,974.05 4,581,342.82 269,438.31 369,774.13 186,487.63 5,186,028.93 294,294.09 197,736. 42 4,9'J7,875.22 235,018.63 4,00S,569.61 295,881.94 4,693,220.59 194,166.40 300,790.02 193,910.16 6,776,399.51 493,123. 72 7,142,402.74 339,618.95 445,007. 98 315,762.01 11,456,906.44 876,307.39 380,082.30i 9,873,880.48 8$,034.84 'J!.f.Jl%.Jll 18. Oollt and Lo.. bl. .a.1....mellt aa4 OoilleoUOll. • 10 6 I 7 8 Insolvent, Delinquent, and Erron- ReceiptsReceipts Gross Poll Tax Assessed 511,388.« $ 518,005.00 618,906.80 528,66,q.30 5&2,343.00 573,801.50 593,890.00 615,189.00 649,218.00 677 205 00 110:400:00 733,442.00 779,970.54 768,129.54 788,735.62 !MlO,484.08 869,516.16 898;898.77 948,360.23 9'J3.042.26 ~.268.62 968,948.50 1,000,277 .00 1,030,4l6.14 1,058,761.83 1,078,923.14 1,125,279.61 1,130.656_.75 1,100,500.61 1,128,946.17 ously From Mis-From 5 and 7Asses!\00 Insolvent Occupation cellaneous Poll Tax Polls Less 6 Taxes Receipts 168,900.64,------------' 342,'18. 634,910.40 ------------$ 80..1 11 lS 11 lt Oommlss.lons Per for Assessin&' Sum of Per Cent 11 Mls­and 2, 6, 11, is, Cent 1318 of 1,cellaneous Sum of 4, s, Exchanre Oollectln~ and 14. Total and 14 '3,5,7,9,Deductions 9, and 10 Paid Taxes cost and loss Is of 12 and 10 1-----l·-----1-----­ $ 310,141.20. 612,400.49 9.8 17.6 4,004 .50 $ 3,191,368.39. 8,305.99 354,668.70 646,149.98 --------------5,235.75 3,137,121.76 163,336.30 146,028.32 372,878.48 547 ,478.98 --------------4,363. 76 3,063,618.46 157.~.06 371,429. 25 661,168.45 ------------62,688.06 2,481,279.88 395,013.1 8 700;111.20$ 29,481.64 16,719.56 3,357,859.&7 167,329.82 857,531.60 ______________ 16,998.36 3,767,676.01 409,384 .7 4 $ 2,369.49 166,786.25 171,985.06 5,400.50 ·i21 ,31>5.44 912,743.40 ---------------18,632.48 3,640,99'2.48 172,356.« 3,787.25 446.,619. 81 892,962.85:-------------19,613.91 3,506,023.09 5,500.00 199,241.50 456,672. 45 822,000. 75 --------------20,383.14 3,477. 702.68 211 309 41 5 ToO 00 471,645 59 792,100.40 -------------21,012.56 3,419,500.66 232:986:34 6:600:25 484,091.91 835,659.84 --------------12,805.72 4,838,098.42 4,699.81 256,015.26 472,726.93 779,471.60 --------------2.60 4,221,023.49 7,665.73 278,819.13 508;817.14 9U,701.08 -----------------------------4,588,662.55 6,183.44 258,172.71 516,140.27 916,ill0.53 --------------3.35 4,579,991.98 630,873.50 918,981.98 _______________ 21.55 4,724,469.26 10,680.83 268,542.85 8,843.42 264. 622. 61) 644,805.00 1,009,006.18---------------------------4,589,087.61 317,996.60 9,840.10 561,358.66 1,057,464.25 -----------------------------6,®,400.46 10,396.37 276,'TlM.Ol 633,501.13 1,014,140.38 ----------------------------5,001,481.70 7,076.41 271,639.81 683,797 .33 941,302 .80 -----------------------------5,212,929.42 6,783.09 297 ,472.00 $4-2,363.35 922,429.60 -----------------------------6,267,595.00 10,183.15 270,674.60 723, 777 .27 970,366.08 --------------------------6,004,031.63 5,2912 .00 286,335.55 688,906.58 1,070,882.63 ----------------------------6,341,131.00 6,163.45 253,949.50 772,491.57 1,199,582.04 --------------------------7,158,102.54 4,47'5.68 '159,061.32 948,147.95 4,0U.99 228.63 6,649,~26.48 275,830.50 '259,692.50 4,998.14 804,066.97 852,490.03 68,953.06 --------------6,6'29,079.67 ~.435.60 3,62'>.81 830,113.35 932, 738.96 16,5&.29 --------------6,472,625.19 284,852.26 3,922.31 844,349.66 905,!MJ0.'19 35,451.10 -------------8,562,001.06 6,703.51 808,243.89 1,017,182.34 44,402.72 514.22 9,012,231.69 3?.9,116.37 246,806.93 7,397.65 900,127.13 980,104.33 67,566.33 132,806,06 13,423,704.23 S,351.SC 812,339 .01 953,431.18 24,370.94 !17,176.99 11,664,0'2.l.61 319,959.021 3,757.08 . 2,367.89 1,356.!n 1,874.69 1,569.03 1,561.10 1,303.57 2,064.69 s 321 41 3:453:23 2,666.30 2,717.47 2,581.69 2,841.52 2,563.47 2,700.90 2,901.69 2,999.46 2,968.95 3,324.65 3,615.oo 1,995.47 1,5$.61 2,169.90 3,!57.05 6,386.36 8,409.11 13,009.!a 12,060.30 822,580.29 324,41n'.78 WT,587.50 856,914.32 379,674.tl'l 300,171.75 398,294.37 393,853.43 896 697 67 403:2:u: 36 883,500.91 397,~.77 341,663.30 359,778.14 354,381.19 376,300.08 382,161.40 393,668.31 395,310.33 424,882.84 49'2,745.68 581,164.96 601,764 .68 606,877.63 619,935.27 669,146.20 691,000.67 792,171.49 763.2.58. 78 683,103.40 647,498.48 626,099.69 690,726.44 726,500.48 772,148.05 778,672.26 837,117 .96 851 061 06 1,041:836:os 990,750.48 998,289.88 B00,824.83 1,360,8'10.50 1,061,051.89 991,862.74 9126.030.42 943,169.31 961,326.00 962,005.48 1,051,136.19 1,206,884.16 1,173,676.51 1,164,&Zl.47 1,176,417.94 1,400 ,608.63 1,474,103.36 2,061,101.10 2,075,489.98 10.4 10.3 12.7 10.7 10.6 10.8 11., 11.4 11 '1 8.4 9.1 8.7 7.5 7.6 7.7 7.5 7.5 7.6 7.3 7.1 7.9 8.1 9.0 9.1 9.6 7.8 7.7 5.9 6.6 19.6 18.6 Z2.8 18.7 18.4 19.3 20.1 21.4 22 s 19.0 20.4 19.2 17.6 23.8 20.0 17.8 16.4 16.3 16.6 14.6 15.2 15.5 16.2 16.2 16.7 15.5 16.7 14.l 16.1 A Pinancial History of Texas EXPLANATORY ::\OTES, TABLE 16. This table 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 assess­ment 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 colleetions by the comptroller are given beginning with the re­port 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. TABLE 17. Pabllc Debt. ------------· ---------------------------­Year 3% 4% 5% 6% 7% 8% 10% Floating Debt Total I mt::::::::::::~~~~=~=== :::::::::::::::t========~:~:::::::::::::::: :::::::::::::::: :::::::::::::::: :::::::::::::::: :::::::::::::::: ~--=!~~:~~~ J851__ _-------------------------------------------------------------------------------------------------------------------------------------12' 436,991.34 ~:~-·:~-.~:::~-~::___:: --:_:~=.~=·-~:~ :•!:•~:!~;·~ ;:!!:~~;~~;;;;~:~;;~~~~ ;;:-;;;_~-~[-.~:~~•[[:.m ·::!:~~-~ i:i:i:! 1872----------------------------------------:d6,641 489,967 350,000 ----------------~ 257,000 945,277 .40 2,258,885.61 1873________ --------------------------------216,641 517,467 350,000 ----------------257,000 1,054,184.57 2,395,192. 78 }874________ ----------------1----------------216,641 520,367 947,000 ----------------346,800 1,565,126. 72 3,615,934.93 1875________ --------------------------------216,641 59.0,367 2,197 ,000 ----------------1,710,588 624,6'26.77 5,269,222 .98 1876________________________!_______________ 216,641 1,395,367 2,197,000 ----------------1,603,374 345,000.36 5,757,382.57 1878.. _______ ----------------,----------------~16,641 2.045,867 2,192,000 ----------------1,116,600 62,974.46 5,634,091.67 1879________ --------------------------------216,641 2,042,367 2,19'2,000 ----------------1,115,8671 10,300.41 5,577,175.62 1880________ ----------------$ 4,620 1,333,9411 2,042,367 2,186,000 ----------------1----------------10,300.41 5,677 ,2'JS.6Z 188L_______ ----------------i 4,620 l ,333,941 2,042,367 2,153,000 --------------------------------10,300.41 5,544,228.62 1882________ ----------------2,730 1,285,541 2,034,367 1,254,000 --------------------------------10,300.41 4,586,ll38.62 1883________ ----------------2,630 1,151,068 1,712,200 1,254,000 --------------------------------,----------------4,119,898.82 188!________ ----------------2,630 1,151,068 1,712,200 1,254,000 ------------------------------------------------4,119,898.82 ii~~~~~~~~~~~~~~~~~~~~~~~ !~m tm~m t~~m i:e~m ~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~ i~m~s~B 1$94________ ----------------337,130 1,421,900 1,647,000 586,000 --------------------------------413,800.24 4,405,899.24 1895------------------------337 ,13:> l,4U,900 1,647 ,000 586,000 --------------------------------693 ,004.53 4,685,624.53 i5:::::::: :::::::::::::::: m:~ U~t5 tE~::! it5:::::::::::::::: :::::::::::::::::::::::::::::::: i:5::tl:~ 1904________ • 288,000 334,500 1,421,900 1,647,000 298,000 --------------------------------180,793.82 4,170,193.82 1905--------288,000 334,600 1,421,900 1,647,000 298,000 --------------------------------003,191.90 4,662,591 .90 1906--------1,935,000 334,500 1,421,900---------------298,000 -----------------------------------------------3,989,400.00 m~======= g::~ ~:::: 1,~:::: =============== --------~~~ :=============== ================ ================ ~:~:::::: ~St:::::: i::i:~~ lli:E i~i:5,:::::::::::::::: :::::::::::::::: ~::::::::::::::r::::::::::::::!======~~~=~=~ t~1::t: cl Financial History of 1'exas 42i EXPLANATORY NOTES, TABLE 17. The amount of the debt in 1846 is that reported by the comp­troller to the legislature, March 28, 1846. The amounts in 1849 and 1851 are those containrd in the reports of the auditor and comptroller in those years. The debt given for 1861 is the amount of the deficiency re­ported by Governor Houston, January 19. 1861. That for 186~ is the debt statement on January 1, 1863, as contained in Gov­ernor Lubbock's message of February 5, 1863. The amount for 1865 is that reported by :Messrs. Pease and Palm to Provisiomil­Gm·ernor Hamilton, October 30, 1865. The amounts given for the public debt from 1867 to 1883 con­tain the amounts of the bonds of doubtful validity, inclnding the comptroller's certificate of indebtedness held by the uni­versity fund, but they do not contain the accrued int.f>rest. 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, aud that for 1881 is for January 1, 1881. The floating debt in 1894, 1895, 1904, 1905, and 1913 is simply the amount of the excess of warrants drawn over war­rants paid. There are other years in which there was a similar rxcess, but in these other years there were sufficient funds in the treasury to take up the excess. There were deficiencies also dnring fiscal years which were removed before the end of the year. Bulletin of the University of Texas TABLE 18. Ownership of the State Bonded Debt. I Owned by Owned by I Year l'l'rust Funds fa '1 Owned by Year Trust Funds in Owned by the Treasury _r_n_d_l•_i_d_u_aI_s______ the 'l.'reasury I Indiv-idua_::_ 1 1is.;5___=::=::1 $-320,367.13°$ 805,762.881$93___________ 3,235,040.00, 736,900.00 ~~t:::::::::1 ~~::Hi\:::::::::::::::: t5:::::::::::, HH:Eg:~i ~~:!~:~ 1&<1-----------1 537,008.21 ·1 125,100.00 1897___________ 1 3,245,040.()(); 746,900.00 1s10___________ .. 537,008.21----------------1893___________ 3,2.54,040.00I 737,ooo.oo 1871-__________ 1 537 ,008.211----------------1899___________ 3,261,200.001 7:l8,245.Q.1 1872__________ _1 711,008.21, 002,600.00 l!l(]()___________ 3,291,200.00, 718,200.00 ls;3___________ ! 111,oos.211 630,100.00 Hl01___________ 3,212,200.ooj 111 ,200.00 18/L____.______ i 711,008.21 1,319,800.00 1902___________ 3,301,600.00 687,800.00 JSi>-----------1' 711,008.211 3,933,588.00 )!JOO___________ 3,318,(l()().00: 670,800.00 1876___________ 1,585,008.21 3,826,373.80 1904-__________ 3,372,600.00, 616,800.00 1880___________ 2,342,108.21, 3,2-24,820.00 1005___________ 3,372,fiOO.OO: 610,300.00 1 188:2_____--_-_-_-_-_-_-_-_I 2,584,108.211 1,992,530.00 l!l06___________ 3,:185,600.00I 603,800.00 1883 2,643,268.82'1 1,476,630.00 1907___________ 3,849,500.00 139,900.00 )884___________ 2,797,408.82 1,322,490.00 1908___________ 3,8.">3,000.00 136, 400.00 1880. __________ 2,965,640.001 1,272,090.00 1900___________ 3 ,951,000.00 37 ,900 1ss;-----------2,991,000.ool 1,245,830.00 uno___________ 3,976,200.00 1,300 J&.<;s___________ 3,017,100.00 1,220,630.00 UHL__________ 3,976,200:00 ---------------­ ·;gsq___________ 3 ,017 ,100.001 1,220,630.00 l\r2-__________ 33·.~,6•• 200200 .. 0000 --------=------==----==--= ]l)l)\)___________ 3,017,100.00 1,220,630.00 1913___________ "'° ]8\)l___________ 3,218,140.00 1,019,590.00 1914___________ 3,976,200.00 ---------------­1&r2___________ 3,226,540.00 768,100.oo un:;___________ 3,976,200.00 ---------------­ A ]t'inancial History of Texas 42!) 'l'ABLE 19. The Tri-Weekly Telegraph under date of July 15, 1864, con­tains the Fox Table of currency values. It says: "The follow­ing table showing the fluctuations in the gold market here (Houston) has been furnished us by 1\lr. Henry S. Fox, a re­liable merchant of this city. One dollar in gold has been worth the following amounts in Confcderat€ 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 Apr. 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. 14-0ct. 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 Aug. 6-Sept. 9..................................... 10.00 Sept. 9-24 ........... .. ... . ... . ................... 11.00 430 Bulletin of the University of Texas Sept. 24-0ct. 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 . ..... .. .... ... . .. . .. . ........ . . ... ....... 24.00 F'eb. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.00 July 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.00 A Financial Hisf01·y of Te:ras 431 BIBLIOGRAPHY. Barker, E. C. ''The Finances of the Texas Revolution.'' In the Political Science Quarterly, vol. 19, .pp. 612-633. Bnrker, Potts, and Ramsdell, A Sc110ol Histor~· of Texas. Chicago, 1912. Comptroller's Ledger, 1861-1865. l\Iss. Archin~s of Comptrol­ler's Department. Comptroller·s Warrant Re~istc>r, 1861-1871. ":\lss. Archives of Comptroller's Departmmt. Congressional Globe, 1849-1856. Crane, W. C. Life and Select Literary Remains of Sam Houston. Philadelphia, 1884. Dallam, J. W. A Digest of the Laws of Texas. Reprint, St. Louis, 1882. Debates of the Texas Convention, 1845. Houston, 1846. D{'ussen, A. ''The Beginning-s 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 R«>ords, Nos. 39 (1838-1841), 40 (1841-1844), 279 (1861-1863), 280 (1863-1865), 281 (1865-1866). l\Tss. Ar­chi.-es of the Texas State Department. Fleming, W. L. Documentary History of Reconstruction. Cleve­land, 1906-7. Gammel, H. P. X Laws of Texas, 1822-1902. Anstin, 189R­1902. Garrison, George P. Texas. New York, 1903. Garrison, George P. Texas Diplomatic Corrrspondenec. 3 vols. Washing-ton, 1907-8. Gouge, W. ::u. The Fiscal History of Texas. Philadelphia. 1852. Honse Executive Document, N"o. 35. 24th Pnitee­partment. 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. Bulletin of the University of Texas Report of the United States Commissioner of Corporations on the Taxation of Corporations in the Southern and SouthwC'stcrn States. Washington, 1915. Report of the United States Commissioner of Education, 1912. Reports of the United States Supreme Court. Revised Penal Code of T.exas, 1911. Revised Statutes of Texas, 1879, 1895, 1911. Rowe, E. ''The Disturbances at Anahuac in 1832.'' In the Quarterly of Texas State Historical Association. 1903. Sayles, J. and H. Laws of Texas r.elating 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. Har­risburg, 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. Vernon's Sayles' Annotated Civil Statutes of Texas. 5 vols. Kansas City, 1914. Wooten, D. G. A Compr.ehensive 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, 316-37i, 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 weils, 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. Anditorlal board, 118, 181, 186. 'Austln, 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. Dell Punch Law, 216, 294. Benjamin, Judah P., 135, 137. Benton, Senator, 120. Blind Institute, 89, 249. Boards of equalization, 102, 210, 211, 277, 287, 28S. 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 Index 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, 3H, 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, 206, 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, 156, 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, 272-27:S, 424. Cotton operations of the mllltary 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. Cushing, 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 Tc:cas 4;ji Dealing in futures, taxation of, 310. Debt of the republic, amount of, 17, 18, 59, 82, 117, 118, 126, 391; allsump­tlon 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, 12~; Erwin loan, 16, 53, 81; general, 15, 20, 23, 25, 29, 62; McKinn~y 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; Pen11 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 Joan, 13, 53, 181. Debt of the state, 117-132, 149-152, 177-194, 229-239, 355-360, 389; amount of, 132, l93, 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; Reconstruc­tion, 193, 230; repudiation, 179-181, 186, 190; to special funds, 153-154, 173, 174, 178, 183, 188-189, 236. Defaulting ofl.l.cials, 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, 361-37~. 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. F.xchequer bills, see Treasury notes. Fxclse, 9, 12, 44. F.xemptlon 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, 15'.1, 160-16!, 199-202, 385, 391. F.xperiment 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, 253. Ferguson, Governor, 256, 280, 308. Ferry companies, taxation of, 293. Fifty Cents Law, 327, 331. Fillmore, President, 122. Financial administration, cost of, 39u-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 o.f 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, 219, 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, James, 60, 61. Health anrl vital statistics, board of, 2 4 6. Henderson, Governor, 11 7. Higher education, 97, 98, 175, 227, 372, 403 . Highways, 385. Hogg, Governor, 254, 311, 313, 314, 362, 363. Home rule, 388. Homesteads, land grants for, 52, 115-116, 172, 222, 328. Homestead, tax on, 166, 389. A. Financial History o/ Te.ms 4W 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. llliteracy, 97, 157, 228. Income tax, 10, 99, 142, 143, 144, 168-170, 388, 409. Indemnity bonds, 86, 95, 110, 121, 133. Independent taxing districts, 21,2, 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 comnanies, 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. Internal 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, Govern.or, 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, 220; 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 home­steads, 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, 115, 163, 172, 223. 326; grants for state capitol, 223, 251, 326, 340; interest on pur­chase notes, 226, 329, 330, 331, 334, 337, 339, 341, 347; lease or, 95, 2261 332, 334-337, 339. 342, 405; mineral, 345-350; pre-emption policy, 54, 55, 115, 172. 223, 338; pricE>s 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 to 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 Lanham, 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, 24fi. 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. l\fanufactlfring, 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, 328. Oyster commissioner, 245. Palm, Swante, 177, 437. Panic of 1837, 62. Panic of 1873, 196, 199, 262, 327, 386. Panic of 1893, 313, 370. A Pinancial History of Texas 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, 32 5, 327. 395-396. Permanent appropriations, 381. Permanent school fund, see School fund. Permit fees, 323. Personal property, taxable, 46, 204, 206. See also Intangible 1>rop­erty and Property tax. Pipe line companies, taxation of, 310. Pistol dealers, taxation of, 31O. Poll tax, 45, 46, 113, 133, 141, 171, 173, 203, 219-220, 266, 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, l :rn, 148, 394. Property tax, ad valorem rates of, 36, 37. 106, 140-141, 165, 166, 211, 280-281, 383, 412; delinquency, 42, 105, l 66, 207, 208. 269-272, 274; discriminatory rates based on jurisdiction, 36, 37. 38, 45. 46: discriminatory rates based on quantity, 37, 46 ; exemp­tions, 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; pla~e of assessment, 39, 49, 100, 141 , 206 ; property enumerated, 36, JOO, 267; receipts from, 40!1; redempt1on of property sold for taxes, 42, 105, 141, 270; releases from, 268; scope of, 99, 204, 267; specific rates, 36, 37, 99; statute of limita­tions. 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, 173-176, 442 Index 194, 231, 362; mileage of, 84, 158, 198, 243; taxation of, 100, 107, 194, 214, 286-289, 301-303, 413. Rangers, 2 5 2-2 5 3. Real property, assessed values of, 413. Receipts, general, 140, 203, 264. Reciprocity, 2 9, 3 5. Reconstruction period, 156-195. 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, 56-57, 65, 72, 75, 76, 77, 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. SaHgny, M. de, 61, 62. Sam Houston Normal, 227. ~anta Fe Expedition, 71. Sayers, Governor, 274, 340, 363. School districts, 212. School fund, amount of, 173, 225; apportionment of, 96., 17 3, 2 2 6, 371; available, 173, 212, 219, 225, 229, 314, 363, 367-371, 3!l9, 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 V('8Sf>ls, land for, 115. ~enaration of scur<'es of state and local revenues, 386-387. Sheep inspector, office of, 245. Single tax, 388. Sinking fund, 60, 140, 151, 191, 192, 233, 237, 238, 356, 359, 370. Slaves, 83, 141, 16fi. 413. .Smith, Henry, 34, 68. A Fina11C'ial History of T e.r.as Smuggling, 31, 33. Social expenditures, 248. Special taxes, 251, 279, 280 , 378. Specie tax, 140, 145, 146, 149. 8peeie, scarcity of, 76, 78, 146. Spoils system, 262, 390. Stamp duties, 10, 11, 15. State engineer, 245. State enterprises, 88, 138. See Factories and Farms. State land board, 333. State police, 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 inst-ruction, 249. Swisher, J. M., 138. Tariff, arguments for, 32; dutiable articles, 11, 14, 28, 31; free li!~t . 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, 9 9, 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, 125. Throckmorton. Governor, 14 4, 156, 167. Timber lands and timber, see Land. Tithes, 10. Tobacco monopoly, 10, 1l. Tonnage dues, 14, 3!l-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, 246. Twelfth Legislature, 164, 186. 444 Index Undervaluation of property, 106, 108, 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, 246. Warrants, classification of, 395-396. Warrants, state, 135, 139, 145, 147, 149, 151, 174, 180, 194, 227, 229, 236, 359, 369, 370. Water engineers, board of, 246. \Vater companies, taxation of, 306. Wharton, William, 15. White and Chiles, 137. Wood, Governor, 117, 118, 119, 120.