The first official statement of the debt incurred 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 were appointed by the provisional governor to report on the finances of the state since secession. Their report was made under date of October 30, 1865.1 The following analysis of the debt is based on their report and on the state statutes:

Item I. 8 per cent state bonds. Authorized by the act of March 20, 1861, entitled "An Act to provide 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 meet 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 machinery for manufacturing purposes"5.......

211,130.83

1 Executive Record No. 281. The report is abridged and printed as an appendix to the House Journal, 1866.

2 Laws of 1861, Called Sess., p. 24. Repealing act of January 11, 1862; Laws of 1862, p. 44.

3 Laws of 1861, p. 30. Amendatory act of January 11, 1862; Laws of 1862, p. 40. Act of January 13, 1862; Laws of 1862, p. 40. Act of March 3, 1863; Laws of 1863, Called Sess., p. 10.

4 There were $917,000 of these bonds issued, but $17,000 were unused and $1,000 mutilated, leaving net amount $899,000.

5 Laws of 1863, p. 9. Supplementary act of December 16, 1863; ibid. p. 29.

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, I860.1 The amount of 10 per cent interest warrants outstanding, 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 Confederate 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 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-interest-bearing 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 as escheated estates, county tax funds, etc., and was incurred after January 28, 1861. Item VIII, or the debt of miscellaneous character, was not described by the investigators.

1 Laws of 1860, p. 115. Repealed by act of January 10, 1862; Laws of 1862, p. 34. See also the funding act of March 20, 1861; Laws of 1861, p. 24. And the act of January 11, 1862; Laws of 1862, p. 44.

2 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.

The debt as above described was, both as to amount and char-acter, that which confronted the delegates to the constitutional convention which convened in Austin on February 7, 1866. This convention was composed of delegates elected by such citizens only as had taken the oath of amnesty or had received special pardon from the President of the United States.

Ordinance No. 2, passed by this convention March 15, 1866, declared all debts created by the State of Texas in the aid of the late war, directly or indirectly, to be null and void, and forbade the legislature to assume or make any provision for the payment of any portion of the debts contracted or incurred, or warrants issued by the state between January 28, 1861, and August 5, 1865, except warrants issued in payment of services rendered, or liabilities incurred before January 28, 1861.2

Ordinance No. 15 of this convention validated all the warrants issued for the payment of troops called into the service of the state by Governor Houston for the protection of the frontier prior to March 2, 1861.1

1 Report of the Comptroller, 1860-1.

2 Ordinances of the Constitutional Convention, 1866, p. 33.

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 possession 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

1 Ibid., p. 46.

2 Ibid., p. 45.

3 Journal of the Convention of 1866, p. 356.

4 Ramsdell, Reconstruction in Texas, p. 102.

5 Convention Journal, 1866, p. 117. House Journal, 11th Leg., p. 193.