The end of the interest notes and red-backs came in January, 1842, when they lost their legal tender power in payments of customs, direct and license taxes. They remained, however, a tender for land dues and for arrears of taxes previously assessed.7 They immediately sank in value, being current at from ten cents to two cents on the dollar, and having no value at all in many parts of the state.1 $3,945,500 was the total amount of notes issued, not including reissues and exchanges of new notes for old, from November 1, 1837, to September, 1840, after which no new issues of the above kinds were made.2 Of this amount $770,080 was funded in the 10% bonds and $22,800 in the 8% bonds authorized by the act of February 5, 1840.3 Up to September 1, 1851, $518,324 had been received in the collection of revenue and destroyed. There was due by collectors and "likely to be paid over," $129,750; filed with the auditor and comptroller $2,201,193, leaving outstanding, $296,353.4 As a result of the paper being filed with the auditor and comptroller and of its payment to the state for arrears of taxes and land dues owing the republic the amount outstanding was reduced to $90,023 on October 31, 1853.5 Payments in them continued to be made to the state treasury as late as 1859, and those that were not so paid in were probably lost or destroyed.

1 House Journal, 5th Tex. Cong., p. 41. Report of Auditor and Comptroller, December 27, 1849. Congressional Globe, 33d U. S. Congress, 2nd Session, appendix, p. 159.

2 Gammel, op. cit., vol. 2, pp. 453-4.

3 Ibid., p. 639.

4 Act of February 5, 1841; ibid., p. 624.

5 In the Third Congress a bill was introduced in the house providing for a stay of execution for twelve months unless treasury notes should be taken in payment. The committee to whom this bill was referred, reported on January 5, 1839, that it deemed the bill "not only unconstitutional, but highly impolitic and inexpedient." At this same session a bill also was reported adversely which sought to compel the officers of the government to receive the notes for all amounts due them, but an act was passed January 19, 1839, compelling them, the chief justice and district judges excepted, to receive the notes in payment of "all dues and appurtenances of their offices." Gammel, op. cit., vol. 2, p. 81.

6 Art. IT, sec. 2. See also Rice v. Powell, reported in Dallam, 413 (1841).

7 Gammel, op. cit., vol. 2, p. 727.

In the adjustment of this portion of the public debt, the rating given to the first issue, or the 10% printed notes, was par. This was done because their issue ceased before any depreciation had taken place, and it was considered that the government had received full value for them.6 To the second issue, or the 10% engraved notes, a rating of fifty cents on the dollar was given, which was the average value estimated to have been received by the government, owing to their speedy depreciation after issue.7 The non-interest notes or red-backs were given a rating of twenty-five cents on the dollar. The principle followed in this rating was to ascertain what the notes were valued at when last paid out, but as this was impossible in the case of the engraved interest notes and the red-backs, what was done was to strike an average of the depreciation. For example, in the case of the red-backs, the value was 37 1/2 cents when issued and 12 1/2 cents at the end of 1841, the average being 25 cents.1 These notes were a part of the revenue debt, however, and, therefore, came within the provisions of the acts of Congress of September 9, 1850, and February 28, 1855. Adjustment finally took place on the basis of 76 9-10 cents on the dollar under the provisions of the above act of February 28, 1855, and the assenting act of Texas of February 1, 1856. The par amount of each kind with interest to January 1, 1841, for which payment was made in 1856 was:

1 Gouge, op. cit., p 117. Crane, op. cit., p. 163. New Orleans quotations, as reported in the Telegraph and Texas Register, were on February 2, 1842, 5 to 8 cents, on May 9, 4 to 6 cents.

2 The total given in the Auditor and Comptroller's report of December 27, 1849, is $4,717,939, but this includes $772,439 stated to have been redeemed at the treasury. As this reduction was effected by giving new notes for old, the net issue is as above given.

3 Report of the Auditor and Comptroller, December 27, 1849.

4 Report of the Auditor and Comptroller, November 12, 1851.

5 Report of the Comptroller, 1852-3.

6 Report of the Auditor and Comptroller, December 27, 1849.

7 Ibid.

Scaled to 76 9-10 cents on the dollar this amount was $2,089,-100.22.

The currency that succeeded the red-backs was a treasury note that went by the name of "exchequer bill." The act which repealed all the laws authorizing the issue and reissue of the old notes and their reception for taxes authorized the president to issue exchequer bills to an amount not exceeding $200,000. They were in denominations of from $5 to $100, and were payable on demand.3 No pledge was given for their redemption, but it was made the duty of the collectors of the revenue to redeem them with any specie on hand. They were simply demand notes, and it was expected that their value would be sustained by the provision making them the only paper receivable for taxes, and by limiting the amount issued.4 The expected demand for the notes, however, did not materialize. Large importations of goods anticipated the requirement that duties should be paid in the notes or in specie, and the demands for the notes were further reduced by the reduction of the direct tax to a degree that hardly made it worth collecting, and the failure of merchants to pay their license taxes.1 Other circumstances unfavorable to the demand for the notes were the unsettled condition of the country caused by the Mexican invasion; the general commercial depression; the competition of notes issued by banks in the United States, by individuals and by local governmental bodies in the state; and the payment of nearly $50,000 of the notes for appropriations made before the notes were issued when it had been planned to use notes only for the future maintenance of the government.2 Perhaps the most important factor influencing the value of the notes, however, was lack of faith in the government's ability to fulfill its promises. Confidence was entertained that Houston would rectify financial matters, but the experiences under the preceding administration were too fresh in mind to allay doubt entirely.3 Notwithstanding the fact that the amount issued had not exceeded $150,000, the bills fell by July to as low as 30 cents on the dollar.4 The result was the act of July 23, 1842, which made the bills receivable in payment of taxes and postage at their current market value only.5 It was the tendency for the bills to seek the vicinity of the customs' houses, and their value varied at the different locations. This variation in value at the different points of entry was due in large part to the different amounts in circulation at each point.1 But the president and the secretary of the treasury recommended that the revenue be collected only in specie, and the president suggested the prohibition of the circulation of all foreign bank notes, and the suppression of individual and local governmental issues.2 The measures adopted were to make the bills receivable at par for direct and license taxes and postage,3 and to limit the amount in circulation at any one time to $50,000.4 The limitation of issue which was made possible by the policy of rigid economy, the diffused demand for the bills for taxes and postage, and growing confidence in the government led to a rise in the value of the bills in 1843.5 The president renewed his recommendation to exclude foreign bank notes and individual and other issues, and congress responded to the extent of repealing all laws granting to any individual or corporation the authority to issue notes. It was also provided that after March 1, 1844, the amount of exchequers outstanding should not exceed $20,000.1 But depreciation and fluctuation still continued, being influenced now by the prospects for the annexation of Texas to the United States.2 Houston was succeeded as president in December, 1844, by Anson Jones. The condition of the finances had so improved by this time that the attempt was made to put the republic on a specie basis.3 The act of February 3, 1845, repealed the law authorizing the issue of exchequer bills, and provided that as soon as the liabilities of the government were received in payment of taxes and other public dues, specie should be the only public tender, except in the case of land dues and patents.4 The action of repeal was a little premature, however, for in June, authority was given to issue exchequers to an amount not exceeding $10,000 in order to defray the appropriations then made.5 From July, 1844, to August, 1845, the bills were received at Galveston at from 80 to 95 cents, but at par in the eastern districts; those received subsequently were.at par. The average discount on the bills received from July 31, 1844, to September 1, 1845, was 3 %.6 Less than $10,000 of the exchequers were outstanding at the close of the republic, and they were all eventually received by the state in the collection of revenue due the republic.

2 Ibid.

2 Report of the Comptroller, 1855.

3 Act of January 19, 1842; Gammel, op. cit, vol. 2, p. 727. 4Message of President Houston, December 20, 1841; Executive Record, No. 40.

1 Ibid., June 27, 1840; Executive Record, No. 40. Report of the Secretary of the Treasury, November 1, 1842; House Journal, 7th Tex. Cong., app., p. 53.

2 Report of the Secretary of the Treasury, November 1, 1842. Senate Finance Committee Minority Report, January 6, 1845; Senate Journal, 9th Tex. Cong., p. 116. Texas Diplomatic Correspondence, vol. 3, p. 1407.

3 Gouge, op. cit., p. 118. Crane, op. cit, p. 168.

4 Telegraph and Texas Register of June 8, 1842, says they were passing in Houston and Galveston at from 40 to 50 cents on the dollar. See also message of Houston, June 27, 1842. Crane (p. 164) says, specu-lators, like buzzards watching a sick animal, attacked the exchequers and entered into combination to destroy their value."

5 Gammel, op. cit., vol. 2, p. 812. The Telegraph and Texas Register of July 27, 1842, says in regard to this act: "the public faith is becoming a mock word and public credit an empty bubble."

1 The Telegraph and Texas Register of July 13, 1842, reports that the bills were at par in the eastern district, and again reports them so on August 10, although they were valued at 30 cents in Houston and 50 cents in Galveston. Merchants took advantage of the variation by shipping to the port where the bills were received at par, and after paying duties there, reshipped to the point of destination. Ibid., December 21, 1842.

2 Message of December 1, 1842; Executive Record, No. 40. Report of the Secretary of the Treasury, November 1, 1842. The suggestion as to the payment of the taxes in specie was characterized by the Telegraph and Texas Register of November 23, 1842, as absurd. This newspaper went on to say that there was not enough specie in the republic to meet the ordinary wants of the citizens as a circulating medium, that all the necessaries of life were purchased of merchants with cotton, hides and other products, and that even remittances made by merchants to their creditors abroad were made in these articles.

3 Act of January 6, 1843; Gammel, op. cit., vol. 2, p. 866. Act regulating the postoffice department; ibid., p. 864.

4 Act of January 6, 1843; sec. 5; ibid., p. 830.

5 The Telegraph and Texas Register, February 8, 1843, reports that the collector at Galveston had rated the bills at 80 cents; that they were current in Houston at from 50 to 60 cents. On May 31, they were reported current in Houston at 45 cents, but were appreciating. On December 6, 1843, they were taken by the collector at Galveston at par and were current at from 90 to 95 cents, but later in December they had declined to 80 and 85 cents. The amount outstanding at the date of the message of December 12, 1843, was estimated by the president at $13,000.

1 Acts of February 5, 1844; Gammel, op. cit., vol. 2, pp. 1021, 1031.

2 Telegraph and Texas Register, February 28, 1844. On February 12, 1844, following an issue of about $25,000, the rate at Galveston was 70 cents; on March 6, 1844, 50 cents, although the bills were current in Houston at 60-75 cents, and at par in the eastern district; Report of the Secretary of the Treasury, 1844. The average discount on the bills received from customs during the year ending July 31, 1844, was 12 1/2 per cent.

3 Message of Jones, December 16, 1844. (Lester): Life of Sam Houston, p. 258, says in error that Houston left the presidency with the exchequer bills at par.

4 Gammel, op. cit., vol. 2, p. 1140.

5 Ibid., p. 1216.

6 Report of the Secretary of the Treasury, February 15, 1846.