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 Avar 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.