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 provided 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 Missouri, 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 claims against the United States for the debts of the Republic 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 submitted 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 Mexico the United States would pay 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 Mr. Clay on May 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 solution 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."5 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

1 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.

2 Gouge, op. cit., p. 169.

3 Message 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.

Texas accepted this act on November 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, however, because of the large amount of unascertained claims and of the need of construction of the proviso relating to the five millions reserved 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 10% funding bonds of the act of February 5, 1840. But this interpretation of the revenue debt was modified in 1853 by Mr. 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 Mr. 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 notes.1 The interpretation by the United States authorities of what should be included under the revenue debt was thus contrary to the wishes of Texas. The ruling of Secretary Corwin that none of the reserved bonds would be turned over to Texas until releases for all the revenue debt were filed was also adverse to the contention of Texas.

1 Cong. Globe, vol. 21, pt. 1, p. 166.

2 Ibid., p. 245.

3 Ibid., p. 945.

4 Ibid., p. 947.

5 Ibid.,vol. 21, pt. 2, p. 1520.

6 Ibid., pp. 1555, 1764.

7 Laws of 1850. Second Session, p. 4.

1 Message of Governor Bell, November 10, 1851. Speech of Mr. Bell; Cong. Globe, vol. 28 pt. 3, p. 595.

2 Report of the Joint Select Committee of the Senate and House; Senate Journal, 3rd Leg., Third Sess., p. 39.

3 House Misc. Doc. No. 17, 33d Cong., 2nd Sess., pp. 4-9. The Texas State Gazette, October 4, 1851.

4 House Misc. Doc. No. 17, 33d Cong., 2nd Sess., pp. 12-23.