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the warrants issued for the protection of the frontier from Indian and Mexican depredations.1 This funding act was repealed January 11, 1862, after $16,000 of warrants had been funded.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 amount outstanding of $899,000. The net amount for which the Military Board was responsible was $578,000.1

1 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. 3Laws of 1862, p. 37.

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 of 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 cent bonds were disposed of to citizens of the state for cotton, currency, and military equipment and supplies. The cotton purchased was transported to Mexico and either 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.

1 The following is a statement of the disposition of the bonds held by the Military Board up to January 1, 1863, the only period for which an itemized statement is obtainable:

299 were sold for Confederate money.

3 were sold for Nichols' guns.

3 were sold for sulphur and saltpeter.

20 were paid for the steamer Bayou City.

21 were paid for alterations and repairs on the steamer and for removing obstructions from Buffalo Bayou and Galveston Bay.

114 were used in the redemption of cotton certificates. Total, 460.

MSS; File Case No. 54, State Department.

2 Laws of 1863, pp. 9, 29.

3 Report of Pease and Palm, p. 8.

4 Act of December 16, 1863; Laws of 1863, p. 37. Act of November 15, 1864; Laws of 1864, Second Called Sess., p. 14.

5 Report of the Comptroller, 1863-1865, p. 7.

The cotton growing part of the state was divided into districts and agents were appointed in each to take subscription to the loan in either cotton or money. Upon the purchase of any cotton,, or the sale of bonds for money, the agent took a bill of sale and delivery and executed a receipt or certificate to the seller,- which certificate entitled the seller to bonds of even date.1

The interest on the 7 and 8 per cent bonds was payable in specie. Specie interest payments were $6,009.61 in 1862. $46,-586.11 in 1863, $40,502.90 in 1864, $72,696.61 in 1865. These amounts were paid, though apparently somewhat irregularly, but despite them the value of the bonds fell in 1864 to less than 25 cents on the dollar.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 funds to the amount of $1,455,913.86 on account of United States bonds and specie usedl and for evidences of state indebtedness received in the collection of revenue. The school fund was due $1,137,406.05, the university fund, $283,514.22, and other special funds, $34,892.495

The amount due soldiers and for supplies was estimated at $3,150,000; the unpaid debt of the republic at $110,613.23; miscellaneous 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.

1 MSS. Record of Military Board, No. 101. On November 26, 1862, the board opened bids for $100,000 of the 8 per cent bonds. There were bids for $136,000 or 136 bonds. For 23 bonds a premium of 12 per cent was. offered; for 25, 10 per cent; and for 6, 12 1/4 per cent. The bids for these 54 bonds were in Confederate money and amounted to $59,995-On the basis of the Fox Table of $1 in gold for $3,75 Confederate notes,, the specie value of the bids was equivalent to $15,998.66.

2 Message of Governor Murrah, October 20, 1864; Executive Record,, No. 280.

3 Message of Governor Murrah, October 20, 1864.

4 MSS. Report of Pease and Palm; Executive Record No. 281, p. 118.

5 MSS. Report of Pease and Palm; Executive Record No. 281, p. 116

1 Ibid., pp. 118-119.