The refusal of Texas to fulfill to the creditors who lost the $123,217 which she had previously acknowledged was due them is an illustration of the hostile attitude of the state towards the holders of the revenue debt. The reasons for scaling were that the, bonds and notes of the republic were issued at "an exceedingly dark and gloomy period,' and so suffered a heavy discount, and that they had passed out of the hands of the original holders and had been purchased by outsiders as a speculation. These are the usual arguments for repudiation, and their adoption means the destruction of public credit. It was fortunate for Texas that after her struggle to effect repudiation she had no occasion soon to go into the general loan market.

1 Message of Governor Pease, November 2, 1857. 2Report of the Comptroller, 1856-7, p. 78. 3Laws of 1856, p. 64. 4Report of the Comptroller, 1856-7, p. 26.

The failure of Congress to appropriate an amount sufficient to pay in full the principal and interest of the revenue debt was an act of repudiation as discreditable as that which Texas would have committed, because the passage of the act of 1855 was a de facto acknowledgment of the responsibility felt for this debt. The amount appropriated to be pro-rated was unconnected with the $5,000,000 of United States bonds reserved in the United States Treasury under the act of 1850 or with any other logical basis, and was merely the result of politics. The $5,000,000 in bonds reserved in 1850 was thought at the time to be sufficient to pay all of the revenue debt, and the foundation of this belief was a document of the auditorial board which stated that the revenue debt amounted to $4,500,000.1 But this was only the amount of the bonds upon whose face the customs duties were pledged in name. Since the original act contemplated an amount which would discharge the revenue debt at par, the insufficient amount of the act of 1855 is without extenuation.

The stoppage of interest after July 1, 1850, was an act which had the marks of a breach of faith. It was an attempt to compel the creditors to take in payment land or something for which they had not contracted. As the greater part of the debt was not paid until 1856, about six years' interest was lost. Besides the scaling and the stoppage of the interest, a third characteristic of the debt treatment was the barring of claims. By the act of March 20, 1848, it was provided that all claims not presented before the second Monday in November, 1849, should be postponed.2 The act of February 8, 1850, extended the time to the first Monday in September, 1851, and barred all claims not presented by that time. Later acts, however, extended the time to June 1, 1861.3 There are acceptable administrative reasons for a state ascertaining its debt, but when the object is rather to force unwilling creditors to submit to a scaling system the threat to bar claims is a dishonorable piece of legislation.4

Congress extended the time for presenting the revenue debt to January 1, 1861, and at this date there remained a balance of $101,113.27. In 1881, $45,000 was paid out of this balance and the remainder was turned over to Texas.

1 Cong. Globe, vol. 28, pt. 3, p. 1846. 2Laws of 1848, p. 208.

3 Laws of 1853, Called Sess., p. 54. Laws of 1854, p. 79. Laws of 1856, p. 23. Laws of 1858, p. 47. Laws of 1860, p. 60. 4Gouge, op. cit., p. 225.

By 1861 Texas had paid out of the proceeds of the $5,000,000 of five per cent bonds received in 1850, $1,558,055.31 for the debt of the republic. But as $300,450.01 was revenue debt, the United States refunded that amount in 1856 and 1857. leaving $1,257,605.30 as the net amount paid by Texas. The state furthermore received between 1846 and 1860 on account of debts due the republic $289,110.86 in the audited paper and other liabilities of the republic, but $847.70 of this was refunded by the United States in 1857, leaving the net amount of the debt discharged in this way at $288,263.16. The amounts of payments on debt and of liabilities received were as follows:

After 1860 the amount paid was $29,498.13, distributed as follows:

The state itself incurred no bonded debt during the period 1846-1860, except in 1850. By the act of December 2, 1850, $36,000 of five per cent state bonds were authorized to be issued and exchanged for an equal amount of specie in the school fund. The money obtained in this manner was used to defray current expenses, and the transaction was merely in anticipation of the receipt of the United States bonds under the Boundary Act. In 1851 United States bonds were exchanged for these bonds, and the latter were canceled.

The experience of the republic with debt appears to have impressed itself upon the framers of the first constitution of the state. It was proposed in the constitutional convention of 1845 that no loan should ever be made on the faith of the state, and though this radical proposition was rejected, the provision adopted was so restrictive as to indicate a strong anti-debt sentiment.1 The provision was that "the aggregate amount of debt hereafter contracted by the legislature shall never exceed the sum of $100,000 except in case of war, to repel invasion, or suppress insurrection. And in no case shall any amount be borrowed, except by a vote of two-thirds of both houses of the legislature."2

Owing first to the revenue accruing under the laws of the republic and later to the receipt of the $5,000,000 of United States bonds, Texas during this first period of statehood was virtually free of any bonded debt, and, except in I860, of any floating debt. This gave her a unique place among the states. By 1860 the United States bonds had been expended, and because of increased expenditures and insufficient taxation the general revenue account had warrants outstanding against it which it could not pay, and the state was indebted to the university fund for the $100,000 of United States bonds borrowed from that fund in order to pay the increasingly heavy expenses of protecting the frontier.

1 Journal of the Convention, 1845, p. 185.

2 Art. 7, sec. 33. This was also the limit imposed by the Louisiana Constitution of 1845.