(1) That "All debts created by the so-called State of Texas, from and after the 28th day of January, 1861, and prior to the 5th day of August, 1865, were and are null and void; and the Legislature is prohibited from making any provision for the acknowledgment or payment of such debts."

(2) That "All unpaid balances, whether of salary, per diem, or monthly allowance, due to employees of the State, who were in the service thereof on the said 28th day of January, 18j61, civil or military, and who gave their aid, countenance, or support to the rebellion then inaugurated against the government of the United States, or turned their arms against the said government, thereby forfeited the sums annually due them."

(3) That "All the 10 per cent warrants issued for military services and exchanged during the rebellion at the treasury for non-interest warrants are hereby declared to have been fully paid and discharged."

(4) 'Provided, that any loyal person or his or her heirs or legal representatives may, by proper legal proceedings, to be commenced within two years after the acceptance of this Constitution by the Congress of the United States, show proof in avoidance of any contract made, or revise or annul any decree or judgment rendered since the said 28th day of January, when, through fraud practiced, or threats of violence used towards such persons, no adequate consideration for the contract has been received; or when, through absence from the State of such person, or through political prejudice against such person, the decision complained of was not fair and impartial."1

Nothing was done by the legislature about the debt until 1871, when by the act of May 2, 1871, provision was made for its l The paragraphing is that of the present writer.

The auditorial board created by the act of May 2, 1871, made its first report under date of September 1, 1871.3 The report stated that, "upon a careful examination of the transactions of the board of 1866, we have been unable to discover any error in the auditing with the exception of $10,283.12 allowed as interest on non-interest warrants - , but this is a question about which persons may honestly differ." In regard to the unpaid balances due disloyal persons on January 28, 1861, and the 10 per cent interest warrants exchanged during the war for non-interest warrants, each of which was interdicted by the Constitution of 1869, the board stated that the former character of claims would not exceed $10,000, the latter $78,466.51, and that the board of 1866 had funded about $40,000 of these claims in 6 per cent bonds. On account of the higher interest (10 per cent) which the valid portion of the claims would bear if re-audited as compared with the 6 per cent interest which the bonds bore, the board estimated that the state would save only about $25,000 by repudiating the claims. Because of the comparatively small amount involved and because the holders of the bonds refused to submit them for cancelation, on the ground that they were issued in accordance with the constitution and laws of Texas and of the United States, the board, which was composed of the attorney general, the comptroller, and the treasurer of the state, recommended that the action of the board of 1866 in regard to these claims be confirmed. The recommendation of the board in regard to the bonds was adopted by the legislature and appropriation for the payment of interest on the claims was made in the act of November 13, 1871.1

1 Laws of 1871, p. 67. Supplementary act; ibid., p. 123. Supplementary act; Laws of 1871, Adj. Sess., p. 25. 2Report of the Comptroller, 1870, p. 10. 3House Journal, 12th Leg., Adj. Sess., p. 66.

This legislative validation of the action of the board of 1866 extended only to the bonds based upon the certificates of indebtedness issued by that board. But for this validating act some $40,000 of the 6 per cent bonds issued under date of January 1, 1867, would have been held null and void, because they represented either debt to disloyal persons or were on account of an exchange of interest warrants for non-interest warrants during the war. It will be remembered that there were some $24,-045.34 of unfunded certificates issued by the board of 1866. The act of November 13, 1871, validated these also, subject to the provisions of the Constitution of 1869. The board of 1866 had reported that the estimated valid portion of the outstanding and unaudited debt amounted to $183,290.83. These claims were also subject, in auditing by the boards of 1871 and subsequent years, to the provisions of the Constitution of 1869. It will thus be noted that the act of November 13, 1861, observed the distinction between bonds and unfunded claims. Although some of the bonds issued during the war and based upon liabilities incurred before the war would be included in these unfunded claims, their amount was not known and they could not be properly classed as a part of the bonded debt of the state until they had been audited. The life of the auditorial board was extended by the act of November 13, 1871, to January 1, 1873, and it was also provided that all interest-bearing claims should be presented on or before March 1, 1872, on pain of not bearing interest after that date.

The act of May 2, 1871, provided for the issue and sale of 6 per cent, twenty-year bonds to secure the money needed to pay the valid claims ascertained by the auditorial board; it was also provided that holders of claims might exchange their claims for these bonds. The claims subject to payment from the proceeds of the sale of these bonds, or to funding in them, were the valid certificates of indebtedness issued by the board of 1866 and the other valid claims of the same period. The act of November 13, 1871, not only validated the bonds of 1866, amounting to $125,000.00, but also appropriated $40,269.15 to pay the interest upon them from date of issue. It also appropriated $15,000 to pay the principal and interest of the bonds issued under the act of March 20, 1861. These amounts were drawn during the fiscal year ending August 31, 1872.1

1 Laws of 1871, Adj. Sess., p. 25.