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PostPosted: Sun Feb 11, 2007 12:14 pm 
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The following is excerpted from the eBook "The Fiscal History of Texas":

THAT the reader may have a clear view of the changes in currency that have taken place in Texas, it will be necessary to bring together various facts scattered through different chapters, together with others which could not before be conveniently introduced.

While Texas was a part of Mexico, the currency consisted of gold and silver, with a sprinkling of the notes of various banks of the United States. As the civilized population was small, amounting, in 1834, according to Mexican official statements, to no more than twenty-one thousand, no large amount of currency of any kind could have been required for the transactions of business.

Accordingly, we find Almonte declaring: “Money is very scarce in Texas ; not one sale in ten is made for cash. Purchases are made on credit, or by barter, which gives the country, in its trading relations, the appearance of a fair.”

An old Texan, however, assures us that it was only as compared with Mexico that money was scarce. As compared with most newly-settled countries, money was plenty in Texas. A great part of the currency consisted of “hammered dollars,” that is, of old Spanish dollars, from which the royal effigy had been effaced by the Mexicans, as a testimony of their indignation towards their ancient rulers. This “hammered money” was the common currency, but time-contracts were made in “eagle-money,” by which were meant new Mexican dollars, which were valued at one hundred cents, while the “hammered dollars,” though containing full as much silver, were valued at only ninety cents.

At Brownsville, and other towns on the Rio Grande, there is much of this “hammered money” still in use. But there a different reason was given for the stamp s being defaced. It was done, we were told, by the Mexicans, “in order to keep the money in the country.” If so, they act on much the same principle as some of our own people who are now endeavoring to deteriorate the silver coinage. Their object is to keep our silver money in the country by diminishing the quantity of pure metal in our half-dollars, quarter-dollars, dimes, and half-dimes. The Mexicans, with the same object in view, did not diminish the intrinsic value of their coin, but sought to prevent its exportation by effacing the stamp, which was the certificate of its value. Of the two plans we prefer the Mexican.

After the revolution broke out, “hammered money” was not for a long time the chief currency of the Republic. In 1835, banknotes began to come in freely from the United States, more freely in 1836, and still more freely in 1837. Then the banks suspended specie payments. The paper of most of the banks of Mississippi, which formed much of the currency of Texas, depreciated greatly, and that of some of them became worthless. Many of the people of Texas suffered severely thereby, but their aggregate losses did not equal their aggregate gains, as many of these notes had been obtained on loans, and many of these loans were never repaid.

To these notes of suspended banks, were added “shin-plasters,” or notes for fractional parts of the dollar, put into circulation by individuals and municipalities. The issue of these began in 1837, and continued till 1840, when an end was put to them by the bankruptcy of the issuers.

For two years after the revolutionary outbreak, or from the fall of 1835 to the fall of 1837, bank-notes and “shin-plasters” formed almost the exclusive medium of Texas. The government had issued a large quantity of drafts on its empty treasury, and these were a tender for public dues; but, as they were for odd numbers of dollars and cents, they never became a common currency.

The first issues of treasury notes were in November, 1837, though some of the notes are said to bear date in September. As these were for round sums and for small amounts, they were much better fitted to serve the purposes of a circulating medium than were the audited drafts. As the notes of the banks of the United States were of almost as many different values as the banks that issued them, the want was sensibly felt of some one medium that should have one value. As the treasury notes bore on the face an interest of ten per cent., this was an inducement to hoard them, on the part of such Texans as could afford it; and this, also, gave them a market in the United States.

Through these causes combined, as explained at length in a preceding chapter, these notes were kept at par with specie, or nearly at par, for several months, and till the issues exceeded half a million. They then, in the spring of 1838, began to depreciate, and as each additional emission increased the depreciation, they were, in January, 1839, worth no more than forty cents in the dollar.

To these treasury notes bearing interest, the first issues of which were known as the “printed,” and the second as the “engraved,” succeeded, in the spring of 1838, treasury notes bearing no interest, and which were familiarly known as “red backs,” on account of a red impression on the back. When first issued, in the spring of 1839, they were worth thirty-seven and a-half cents in the dollar, but in 1841 they were worth no more than twelve to fifteen cents. In the winter of 1841, they fell to ten cents, to five cents, to four, to three, to two cents in the dollar. Finally, they became worth nothing in many parts of Texas.

Thus, in little more than three years, the treasury note system ran its course. As soon as it was fairly established, it supplied Texas with its only general circulating medium. Just on the same principle that bank-notes in the United States displace gold and silver, did treasury notes in Texas displace bank-notes. For, where there are two currencies of like denominations, that of the least value will always drive the other out of circulation.

The evils this system did were immense, and such as for which, even if it were so disposed, the government could afford no compensation to the sufferers. A receives a treasury note at par. He keeps it, for a time, and then passes it to B at ninety cents in the dollar. At the end of a week, a month, or a day, B passes it to C at eighty cents. So it passes to D, E, F, G, H, I, till, finally, it reaches J at ten cents. J passes it to K at nine cents, who passes it to L at eight cents, and thus it passes on to M, N, 0, P, Q, R, S, till it reaches T at one cent. In this way have the poor Texans been “scaled” by their government, and this may be one reason that they wish to scale others in their turn.

It would be curious to calculate the amount of evil that may be done, and the number of persons that may be made to suffer, through a government note for one dollar. It is true that a fluctuating bank currency may produce the like evils, but that we have not immediately under consideration. One thing is certain, that, as neither bank nor government can afterwards atone for such wrongs, neither bank nor government ought to be suffered to inflict them.

Great, however, as were these evils, they were small compared with those produced by continental money, for that was made a legal tender, and supported by penal enactments. In Texas, on the contrary, every man was at liberty to refuse or receive treasury notes at his option. As the most general circulating medium, they regulated prices ; but, as it was known that they were continually varying in value, if a man gave a note payable at a distant day, it was understood that he was to pay it in silver, or in so many treasury notes as might then be the equivalent of the silver money therein expressed.

To the treasury notes succeeded the exchequer bills, which were but treasury notes in a new form. These were so few in number, and so variant in value, that they never became a common circulating medium. They were merchandise, and a tender to government for public dues.

By this time, there was little circulating medium of any kind in Texas ; but this was no great calamity, as the people had but little left to circulate. They no doubt, however, like others in similar circumstances, attributed to want of circulating medium the evils they suffered from want of circulating capital.

As the issues of audited drafts amounted to $7,834,207 57, those of treasury notes to $4,717,939, and those of treasury bondsto $766,800, or, in all, to $13,318,146 57, if paper issues could make a people rich, the Texans would have been the most wealthy people in the universe.

What they suffered from this policy is sufficiently attested by a provision inserted in their State Constitution, adopted August 27, 1845, which declares that “In no case shall the Legislature have power to issue treasury warrants/treasury notes/ or paper of any description intended to circulate as money.”

It is never without deep experience of the evils of paper issues that a people impose such restrictions on their rulers.

It is now time to turn our attention to the policy of Texas concerning banks.

It has already been mentioned that the Congress of the Republic made full recognition of the Coahuilan decree for the establishment of the Agricultural and Commercial Bank, and also that it passed an act to incorporate the Texas Railroad, Navigation, and Banking Company, with a capital of five millions, to be increased to ten millions, and with a charter for forty-nine years. Other schemes, equally magnificent, were, as has been duly recorded in other parts of our history, favorably received by the Texan Congress. But, about this time, the banking system of the United States descended with a mighty crush; and this produced a change in the minds of the Texan lawgivers. On the 14th of December, 1837, they passed an act by which it was made unlawful for any person or persons to either issue or put in circulation any printed or lithographed promissory note, under a penalty of not less than five nor more than fifty dollars for each offence. A like penalty was imposed on any person who should so much as present in payment for debt, or for the purchase of property, any such notes ; and it was made the special duty of all grand-juries to inquire into and present all persons offending against the provisions of this act.

Perhaps this law was intended in part to secure an exclusive field for the circulation of treasury notes, by forbidding the issue of small notes by individuals and municipalities.

After the explosion of the treasury note system, an act was passed February 3, 1841, to authorize McKinney and Williams to issue their notes to the amount of thirty thousand dollars for circulation as money; but a declaration was added: “That banking privileges, as a general, rule, being inexpedient, the privileges hereby granted to McKinney, Williams, & Co. are conceded to them in consideration of their having made large advances to this government at an early period of its existence.”

The next law that we can find having a bearing on the subject, is entitled “An act to Suppress Private Banking,” passed February 5, 1840. In this, it is provided “That all laws granting to any individual, individuals, or corporations the authority to issue either bills or promissory notes, to pass or circulate as money, are hereby repealed.”

For each offence against the act, the penalty was a fine of five hundred dollars, and imprisonment for not less than three nor more than twelve months; and it was made the special duty of the judges of the District Court to give the act in charge to the grand-juries of the several counties, at the beginning of each term of said courts.

This act took from McKinney, Williams, & Co. the privilege conferred by the law of February, 1841 (a privilege, by the way, of which they could not avail themselves), but it did not repeal the charters of the Commercial and Agricultural Bank, or of the Texas Railroad, Navigation, and Banking Company. It simply deprived them of the power to issue paper to circulate as money, but left them with full power (if so be they had any legal existence) to discharge the functions of banks of deposit, transfer, discount, and exchange.

These are the only acts relating to banking that appear to have been passed by Texas as an independent empire ; and the result was that Texas, as a Republic, had no banks in operation.

To prevent their suffering in future such evils as the citizens of other parts of our Union have been subjected to, the people of Texas embodied the following provisions in their State Constitution :
“ART. VIII. SECTION 28. No corporate body shall hereafter be created, renewed, or extended, with banking or discounting privileges.
“SECTION 32. The Legislature shall prohibit by law individuals from issuing bills, checks, or promissory notes, or other paper, to circulate asmoney/
These provisions are sufficiently stringent ; some of them, perhaps, almost too much so. It is only as paper-money factories that banks do harm. We can see no objection to banks of deposit, discount, transfer, and exchange, provided they operate with hardmoney only, or with paper which shall be, dollar for dollar, the representative of specie actually in their vaults. But the Legislature of Texas is by the constitution prevented from establishing even hard-money banks.

In accordance with these constitutional provisions, an act was passed on the 7th of April, 1846, declaring that “No person or persons within this State shall issue any bill, promissory note, check, or other paper, to circulate as money.” Every person who may violate this act shall be subject to indictment therefore, by a grand-jury, as for a misdemeanor, at any time within twelve months after so offending; and shall be subjected to a fine of not less than ten dollars, nor more than fifty dollars, for each and every bill, promissory note, check, or other paper, issued by them in violation of the first section of this act.”

Another act was passed, nearly two years afterwards, or on the 20th of March, 1848, the first section of which provides “That any corporation, company, or association of individuals who shall use or exercise banking or discounting privileges in this State, or who shall issue any bill, check, promissory note, or other paper in this State, to circulate as money, without authority of law, shall be deemed guilty of a misdemeanor, and shall be liable to a fine of not less than two thousand dollars, nor more than five thousand dollars, which may be recovered by a suit in the District Court, in the name of the State.”

The second section makes it the duty of the attorney-general to institute suit against offenders, makes simple service of citation sufficient service, and provides that, in any judgment that may be obtained, execution may be levied upon the estate of the corporation, company, or association of individuals, and in default of such estate, on the estate of the officers of such corporation, company,or association.

The third section enacts “that in any suit instituted under the provisions of this act, either party may appeal to the Supreme Court of the State, and no bond or security shall be required of the State on any such appeal. “The fourth section provides that each and every month that any corporation, &c. shall exercise banking or discounting privileges, shall be deemed a separate offence ; and each and every bill, &c., issued to circulate as money, shall be deemed a separate offence.

As the laws of the Republic, of December 14, 1837, and February 5, 1844, remain unrepealed, they would seem quite sufficient, with the provisions of the constitution, and the acts of the State of April 7, 1846, and March 20, 1848, to put an end to paper money evils in Texas. But the reader may be disposed to ask if these various provisions produce the effect intended, for he is well aware that laws often prove nugatory, sometimes through the faults of the officers whose duty it is to execute them ; sometimes through the state of public opinion being such as to prevent their proper enforcement ; sometimes through defects in the mere wording of the law ; and sometimes through a neglect to provide the necessary auxiliary means to carry the law into operation.

We answer that the effect intended has been produced, though not to the whole extent that the framers of the constitution desired.

Through some mysterious means, the Commercial and Agricultural Bank has been brought into operation, for it does not appear that it has ever been certified to the Executive “that one hundred thousand dollars had entered its vaults,” and this was an indispensable condition of its charter. A writer, in the sixth volume of De Bow s Commercial Review, states that “Messrs. J. Lake & Co., by means of the credits which they got through the Ohio State Bank law, started three other Ohio banks (in addition to the Bank of Wooster), besides buying the Mineral Bank of Maryland and a bank in Texas. The foundation of the whole is $171,900 of stock owned by Lake in the Wooster Bank. It is possible that not a cent of money was paid at all, but stock notes given”

As the Commercial and Agricultural Bank is the only bank in Texas, the fair inference is that this is the bank affirmed to have been bought by J. Lake & Co. But this is inference. Wherever it obtained the means, certain it is that the Commercial and Agricultural Bank commenced operations at Galveston some six years ago, and continues them to this day. It has also established a branch at Brownsville, with the view of circulating its paper in the adjoining State of Tamaulipas. But the Mexicans will have none of it. They prefer their own defaced silver coin to any “promises to pay,” however prettily they may be adorned by the art of the engraver.

The Attorney-General of Texas has been, for some time, contesting with the bank the legality of its existence; but, as he was the private counsel of the bank before he was elevated to his present dignity, the opinion of some people is that the State will not gain much in the contest. Texas found no difficulty in abolishing the privileges which the Mexican laws conferred on the empresarios, or contractors for settling the public lands. But when it comes to a question about privileges conferred on a bank, the case is very different. The bank then proves too powerful for the State, with all its hard-money laws, and its hard-money constitution.

The laws of Texas are, as we have seen, very strict in regard to paper currency ; but a certain English judge once said that he never saw an act of Parliament through which he could not drive a coach and four horses, and our paper-money men in America can, when necessary, drive a whole ox team, horns, hoofs, and all, through acts of Assembly. If the reader will scan the laws of Texas in regard to paper currency, he will find that, though they rigidly prohibit the issue of bank-notes, they do not prohibit their reissue, much less the simple passing of notes issued by banks in another State. Neither do they prohibit any citizen of Texas from indorsing such issues, although such indorsement may give them a currency in Texas they would not otherwise obtain. Penal acts are to be strictly construed. Constructive offences are not to be admitted in a Republic; otherwise, no one citizen knows howsoon he may be arraigned as a criminal.

Taking advantage of these most excellent principles, the house of R. & D. G. Mills, of Galveston, have for years been in the habit of indorsing the notes of the Northern Bank of Mississippi at Holly Springs, and thus giving them a currency in Texas, as the Texas State Gazette expresses, “not for the purpose of making money, but to facilitate the operations of their own business, by affording a convenient medium of circulation.” The Bank of Holly Springs is of very doubtful reputation, the notes of which would never of themselves have obtained currency in Texas. But being indorsed by what was long regarded as the richest commercial firm in the State, they passed freely, to the amount, as the Houston Telegraph supposes, of three hundred thousand dollars, though the Austin State Gazette asserts “it is scarcely possible that there ever was, at any one time, more than forty thousand dollars in circulation.” All this did very well for years in succession.” Mills’s money, as it was called, was regarded as being as good as gold and silver, or even better, inasmuch as it could more readily be carried from place to place. The rest of the story we will let the editor of the Texas State Gazette tell in his own words, as we find it in his paper of February 7, 1852, premising the fact that Austin, the home of the editor, is, by the post-route, two hundred and fifty miles inland from Galveston, the home of the Messrs. Mills.

“The news of the suspension of the house of R. & D. Gr. Mills was received in town a few days since, and of course created no little excitement, as the bills of the Northern Bank of Mississippi, bearing their indorsement, had for some time circulated among us with all the facility of gold. The sudden and unexpected announcement of this fact of course created a great revulsion, and for a time all confidence was destroyed in this money ; subsequent advices, however, and the opinion of men acquainted with the members of this house, and not altogether unadvised of their true condition, have produced a considerable modification of the panic and a restoration of confidence.”

From this it will be seen that the people of Texas have, in spite of their hard-money laws and hard-money constitution, had a very pretty little paper-money panic. And they will have more, unless those whose duty it is to administer the laws shall discover that putting foreign bank-notes in circulation, by indorsing them, is a mere evasion of the act of Assembly which forbids the emission of paper for circulation. By the method they pursued, Messrs. R. & D. G. Mills made their house at Galveston a branch of the Bank of Holly Springs. If this practice is tolerated, other “wild-cat banks” will have their -branches in Texas. The Bank of Holly Springs and its agents will not be suffered to monopolize so very profitable a business.

It is to be observed that the Messrs. Mills are, as are also Messrs. McKinney and Williams, of the Commercial and Agricultural Bank, very amiable men in the private walks of life, and highly meritorious citizens, who rendered great aid to Texas in her hours of adversity. But they would add greatly to the esteem in which they are justly held by their fellow-citizens if they would set a proper example of obedience to those provisions of the law and the constitution which are designed to insure to Texas the benefits of a sound circulating medium.

Notwithstanding the subterfuges by which they are violated or evaded, the hard-money laws of Texas have done much good. The Commercial Bank has, as is said by some, not more than fourteen thousand paper dollars in circulation, and if the editor of the State Gazette is correct, the circulation of the Holly Springs branch notes hardly amounts to twenty-five thousand dollars. These sums are necessarily conjectural : but it is agreed on all hands that at least nine-tenths, perhaps nineteen-twentieths, of the circulating medium of Texas consists of gold and silver. The notes of the banks of other States are brought into Texas by immigrants and travellers, but they are soon sent out again in pay for commodities. They form no permanent part of the circulating medium of the State; and so little inconvenience do they occasion that, within the bounds of the commonwealth, there is not one broker, exchange merchant, or other person, whose business is to buy and sell bank-notes.

To this exemption from the curse of paper-money, Texas is in part indebted to her situation. If she had, by her side, a petty State, like Rhode Island, with a hundred petty banks, each issuing petty one and two dollar notes, her hard-money laws and hardmoney constitution would avail but little. The public good would then prove no match for private cupidity. But Arkansas, one of the States adjoining Texas, has no banks, and Louisiana, the other adjoining State, permits her banks to issue no notes of a less denomination than five dollars.

The result of this hard-money policy is that business in Texas rests on a more stable foundation than it does in many other parts of the Union. That it is absolutely free from vicissitude is what we do not assert. That would be impossible in a State containing some two hundred thousand inhabitants, connected by strong political and commercial ties with other States containing upwards of twenty millions, most of whom are subject to paper-money vacillation, as certain, though not as regular as the return of the seasons.

The main export of Texas is, moreover, cotton, and the chief market for that is England, another paper-money country, subject to money revulsions, not as frequent, but sometimes as violent as our own. In addition to this, it should be taken into consideration that, in all new settlements, some time must elapse before the different relations of supply and demand can attain the regularity which they have in old communities.

All these difficulties Texas has to contend with. But, unbolstered by bank credits, and governed by that best of all regulators, gold and silver, her merchants limit their purchases of goods abroad by the actual demands of the planters at home, measuring that demand by the surplus crops the planters have to dispose of.

Exchanges are regular. The maximum rates never exceed the cost of transporting specie, and often fall below it. A gentleman of Austin told us that he had, in the course of years, negotiated bills on New York to the amount of two hundred thousand dollars, and had seldom given or received either premium or discount. At Galveston, from what we could learn, exchanges on New York have not for years been at any time at more than one and a half premium. Sometimes exchanges set against the North and in favor of Texas.

Prices are not low. At Austin, in March, 1852, butter was from thirty-five to forty cents a pound ; flour was ten dollars and a half a barrel ; beef five cents a pound ; chickens twenty-five cents a piece ; eggs twenty-five cents a dozen. These facts show that hard-money and high prices are not incompatible, though it is proper to observe that the prices in that particular neighborhood at that time were owing in part to demands from immigrants, and in part to a detachment of United States forces having been quartered in the town. Throughout Texas, however, prices are quite as high as they are (other things considered) in the most paper-money loving parts of the Union.

The rate of interest is high, because the profits of trade are great. Money is scarce, as money ought to be, for without scarcity it would lose its value. But gold and silver money is in Texas quite as plentiful, in proportion to other circulating wealth, as paper-money is in New York or Massachusetts.

How long this state of things will last, we know not. The editor of the Texas State Gazette, the government paper, states that it was want of time only that prevented the Legislature, at its recent session, from taking the initiatory steps to such a change in the constitution as will make it possible to establish paper-money banks. The editor himself is in favor of the change. The Democratic party, he observes, is not opposed to banks ; it is only opposed to a bank of the United States. It is an error, moreover, he asserts, to suppose that banks are intended for the benefit of the rich ; they are, in reality, intended for the benefit of the poor.

Arguments like these will hardly fail to have their effect in a country where many must be desirous of an inflation of the currency, even if it should last only long enough to enable them to get high prices for the square leagues of land for which they cannot now find purchasers. The Legislature being already gained, all the editor has to do is to unite with himself one-half of the other able editors in the State, and the work is accomplished. It may be very true that three-fourths of the people of Texas may be, in their hearts, opposed to a renewal of the paper-money policy; but Americans are always in haste to be rich, and the Texans are (whatever some people may think to the contrary) full-blooded Americans. Many will favor the projected change, not because convinced that it will benefit the community, but because they will hope thereby to benefit themselves.

Even supposing the paper-money men to remain a minority, a well-organized minority, closely bound together by selfish interests, is almost always too strong for a majority that has only the public good in view.

At first sight, indeed, there would seem to be some difficulty in effecting the desired amendment to the constitution. First, it must receive the approbation of two-thirds of each House ; second ly, it must be published in the public prints for at least three months before the next general election of representatives ; thirdly, it must receive a majority of the votes of all the citizens voting for representatives; fourthly, it must have the sanction of two-thirds of each House of the next Legislature; and fifthly, the amendment must be read on three several days in each House.

These are obstacles indeed. But greater obstacles than these can be overcome, when the object is individual enrichment through legislative enactment.

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PostPosted: Sun Feb 11, 2007 12:45 pm 
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According to the best accounts we can gather, the revenue of the Republic of Texas was received in the form following, to wit :

Audited drafts .............................................. $636,322.66
Treasury notes .............................................. 648,074.00
Treasury bonds ............................................... 40,100.00
Ten per cent, stock .......................................... 10,000.00
Land-script ........................................................ 7,336.47
Exchequer bills, 1842-46 ............................... 271,351.76
Exchequer bills, specie, &c............................... 70,005.44
Par funds, 1842-46 ....................................... 275,420.14
Specie, 1842 to Feb. 19, 1846 ........................ 10,440.49
Special drafts, 1842-46 ................................... 33,855.52
Property taken in payment for taxes ................. 8,016.14
Exchequer bills, and special drafts, 1847-49 ..... 1,586 45
Specie, Feb. 20, 1844, to Oct. 31, 1849 ......... 125,292.36
Exchequer bills, and special drafts, 1849-51 ...... 1,765.42
Specie, 1849-51 ................................................. 3,821.01
Audited paper and promissory notes, 1849-51: 39,270.01
Total revenue of Republic from taxes ......... $2,182,657.87

From Bank of United States :
In checks of loan commissioners, payable Sept. 30, 1839 ..... $80,000.00
In post-notes of U. S. Bank, payable Jan. 1, 1840 ................. 200,000.00
Acceptances in favor of J. P. Henderson .................................. 10,000.00
Government drafts on Hamilton and Burnley, 1840 ............... 158,495.98
Funds from same source in fiscal year, 1841 ............................. 4,776.00
balance ...................................................................................... 4,108.02
Brookfield loan, 1S35 ................................................................. 1,100.00
Triplet loan (1836), specie ....................................................... 20,070.00
Erwin loan (1836), specie ........................................................ 45,820.00
Total revenue of Republic from taxes and loans ............... $2,707,027.87

This includes the amount collected by the State for arrears to the Republic.

With the exception of the one thousand dollar note, referred to in an early part of our history, the post-notes above mentioned were the only bank-notes that appear ever to have come into possession of the Republic of Texas, and they never approached nearer its treasury than the city of New Orleans. There they were sold ; some of them at a net discount.

We cannot find from the records that, previous to the adoption of the Exchequer System, the government ever realized one dollar of its taxes in specie. But we learn from undoubted authority that $8 30 were actually paid in for land dues in “hammered” silver. This treasure gave the accounting officers great trouble. They could not pay it out, for that would have been making an improper distinction among the public creditors. They were obliged to keep it, and also to keep a distinct account of it a separate entry of it being necessary in each general statement.

After the Exchequer System was adopted, the returns were made in such a way that it is impossible to say exactly how much specie was received.

So many kinds of “funds” are the equivalents of "specie," that the expression “par funds” is very indefinite. Possibly, some government drafts on the depositories, received in payment of public dues, are included in the total. The principle of “set-offs,” properly understood and properly applied, is an excellent one; but it is so liable to abuse that, whenever it is used, the treasury records should show how, and to what extent it is applied.

A government draft may be the equivalent of specie, but yet it is not the same as specie. If a public treasurer pays out specie, there is an end of the transaction. But if he gives a draft on a distant depository, it may remain out for months, perhaps for years.

In the year 1842, the Texan Government adopted the practice of drawing drafts on its collecting officers, and making them, by special enactments, receivable for certain public dues. They were known by different names, as “assessors drafts,”; “Henderson drafts,”; &c., according to the name of the person whose claim they were issued to discharge, or the purpose they were intended to serve. We have included them in the table, so far as we could trace them, under the head of “special drafts.” Of drafts of this kind, of which special mention is made, from 1842 to Jan. 1, 1846, amounting to $51,402 86, there remained outstanding, on the 1st of Jan. 1846, $17,547 34. The treasurer, on paying them out, credited himself as with so much specie ; but that they were not the same as specie (though they may have been its equivalent) is sufficiently proved by the fact that some of these drafts were not paid till 1849-51, and some of them may be outstanding yet.

It will, perhaps, be remarked that, while the gross revenues of the Republic amounted to $2,441,863 01, according to Appendix D, the table in Appendix E shows in what kind of funds the amount of only $2,182,657 87
was received. The difference is $259,205 14. A part of this sum, but not probably a large part, was received in exchequer bills between Jan. 1, 1846, and Oct. 31, 1847. But the principal part was probably in treasury notes, which had been received once before in payment of dues, and then reissued. The auditor and comptroller, in their report of Jan. 1850, give only “the amount of treasury notes received in collection of the revenue, and destroyed” not the amount thus received and reissued.

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