SONS OF DEWITT COLONY TEXAS Page 2 | previous page 1 THE FINANCES OF THE TEXAS REVOLUTION The colonists turned naturally to a tariff as a revenue device, for the reason that Mexico had been spasmodically trying ever since 1832 to collect customs. In his first message Governor Smith recommended the establishment of a tariff, and the finance committee estimated an annual income of $125,000 from tonnage dues alone. No time was lost in introducing a bill. It was passed on the 8th, and approved on the 12th, but how much revenue it yielded is unknown [Journal of the Proceedings of the General Council, 14-200, passim; Ordinances and Decrees, 79-85, 86-87, 104-114]. In all likelihood it was very little. Thomas F. McKinney declared that all the merchants in the country had imported larger stocks than usual in anticipation of the law, and complained that he had been prevented from doing the same, because his partner, Mr. Williams, had neglected his own business in the United States to purchase supplies for the government [McKinney to Provisional Government, December 25, 1835. Archives of Texas, diplomatic correspondence, file 14, no. 1340]. The council, thereupon, to remedy the injustice, passed an act exempting from duty all goods actually shipped but not received by this firm before the passage of the act [Ordinances and Decrees, 119-120]. All promise of revenue from this law was permanently blighted on January 20, by making treasury notes acceptable for customs [Edward Hall to Governor and General Council, February 4, 1836. Comptroller's department, Letters to Treasurer, vol. i, 11]. Complaints soon began to come in, too, from the United States, and since Texas was so largely dependent upon the good-will of that country, it is likely that the enforcement of the law quietly ceased. Finally, the constituent convention decreed, March 12, 1836, that the provisional government had exceeded its authority in levying import duties, and ordered what had been collected to be repaid [Archives of Texas, A, file 4, no. 462]. The collection of land dues next occupied the attention of the council. The colonization law of Coahuila and Texas provided that new settlers shall pay to the state, as an acknowledgment for each sitio of grazing land, thirty dollars; for each labor, not irrigible, two and a half; and for each that is irrigible, three and a half; and so on proportionally, . . . but the payment thereof need not be completed under six years from settlement. When hostilities began, J. H. Money, of the municipality of Austin, had in his possession from this source a balance of $296.70, and most of this, as we have already seen, the consultation used [Report of J. H. Money, December 31, 1835. Comptroller's department, in Miscellaneous Papers of the Treasury Department, 1835-36]. Considerable sums were also in the hands of the collectors at Nacogdoches, and a few days after its organization the general council appointed a committee to take charge of them. On November 27 Mr. Menard of this committee reported that he had secured from land dues $11,678.771, and from the sale of stamped paper $250. [Comptroller's department, in Miscellaneous Papers of the Treasury Department, 1835-36]. Grasping at straws, as they were, and seizing upon everything that promised a revenue, however insignificant, this report must have encouraged the council. An ordinance of December 30 authorized the appointment of "collectors of public dues" in each of the departments of Texas. But as a yielder of revenue the law was greatly impaired in efficiency by the provision that properly audited treasury orders should be receivable for such dues [Ordinances and Decrees, 114-117, 132-133]. Mr. Gail Borden was elected collector for the department of Brazos, and two of his reports are at hand. An incomplete one of July 31, 1836, shows that he had received at that time but $797.621. Owing to the unsettled conditions, however, he had heard from only one deputy, Andrew Ponton of Gonzales. Some persons, too, had secured treasury orders with which to pay and had neglected to endorse them, so that he could not report such dues as paid Collections during the second half of the year were much better, and he was able to report a total on January 1, 1837, of $6,836.32. [Borden to Hardeman, July 31, 1836. Comptroller's department, Letters to Treasurer, vol. i, 55-56, 76,77. Telegraph and Texas Register, September 21 and 28, 1836. Of this amount, $3,902.04 was collected in Austin's colonies, $1,607 in Austin and William's colony, $1,255.38 in DeWitt's colony, and $71.90 was collected by Thomas Gazley of the municipality of Mina]. This probably included the $797.621 previously reported. Doubtless the greater part of this was in orders on the treasury. No report can be found from the department of Nacogdoches, but there was much opposition in that quarter to the closing of the land offices by the consultation, and on this account it is probable that few of the citizens paid their dues. The council also tried, but with little success, to raise money by the sale of public property. This consisted almost entirely of land, but $229.50 was realized by the sale of a quantity of stamped paper to W. H. Steele on December 29,1 and a few days later (January 2) Governor Smith requested the general council to make some disposition of "various goods" in charge of the commandant at Goliad. Their value, he said, was "considerable." [Journal of the Proceedings of the General Council, 229; Report of Treasurer, November 28, 1835, to March 1, 1836, Comptroller's department, in Miscellaneous Papers of the Treasury Department, 1835-1836; 241]. The military committee forthwith recommended a resolution, which was passed, authorizing Captain Dimmit to sell them at auction, but of the proceeds of the sale nothing is known. By the capture of San Antonio in December a quantity of supplies fell into the hands of the Texans, and these also were sold at auction. Members of the Texan army gave notes for their purchases to the amount of $1,271.99, and later these were charged against their account for service [Auditor's report, January 8, 1836, Comptroller's department, in Miscellaneous Papers of the Treasury Department, r835-36. Archives of Texas, D, file 26, no. 2591]. As a source of ready money the public land was a failure, too. In May, 1836, President Burnet authorized Thomas Toby & Brother of New Orleans to sell five hundred thousand acres at fifty cents an acre, but practically no sale was found for it. In another way, however, the public domain was very valuable-many volunteers were attracted from the United States by the liberal land bonus which the government offered them. Finally it was decided to issue treasury notes, and Mr. Gouge thinks " cheating " none too harsh a term to apply to this expedient of the government. The act was approved January 20, and provided that the Treasurer shall immediately cause to be printed in a neat form and shall issue, in discharge of claims against the Government and drafts against the Treasury, the amount of one hundred and fifty thousand dollars in'Treasury notes, . . . specifying on the face thereof, that they shall be received in payment for lands and other public dues, or redeemed with any monies in the Treasury not otherwise---appropriated [Ordinances and Decrees, 129-130]. Of course, with no money in the treasury, and little prospect of getting any, these notes were practically worthless from the day of their issue. But from the beginning it was felt that a loan from the United States must be the chief hope of the country for money; and, as we have seen, Thomas F. McKinney refused a commission tendered him by the permanent council on October 27 to negotiate a loan of $100,000. The sentiment of the consultation is revealed in the inaugural address of the chairman: "It will be necessary," he said, "to procure funds in order to establish the contemplated government and to carry on the war in which we are now engaged; it will, therefore, be our duty to elect agents to procure those funds." Accordingly, two days before adjournment (November 12), B. T. Archer, W. H. Wharton and Stephen F. Austin were appointed commissioners to the United States, with such powers and instructions as the "governor and general council may deem expedient." [Journal of the Proceedings of the Consultation, 7, 37]. The council was strangely dilatory in preparing these instructions. A select committee appointed for that purpose reported, November 21,
In view of the fact that the committee took "the liberty," on account of "the emergency and great press of business," to submit an ordinance empowering Mr. McKinney to borrow $100,000, this report appeared a bit inconsistent. So at least thought Governor Smith, for he pointed out the impropriety of employing agents with duties which might conflict with the powers of the general agents already appointed, and vetoed the bill. But the council without a dissenting vote passed it over his veto and it became effective November 26. Any confusion which might have ensued was obviated by McKinney's making no effort to carry out the law. At the end of nearly two weeks the council had passed to its third reading an ordinance to create a loan of a million dollars, but there it seemed likely to stop, when the governor took up the matter thus: "It must be acknowledged by all," he said in his message of December 4, that our only succor is expected from the East, where as yet we have not dispatched our agents. Sufficient time has elapsed since the rising of the Convention for them, by this time, to have arrived in the United States. They have called on me in vain day after day, time after time, for their dispatches, . . . and they are not yet ready. I say to you, the fate of Texas depends upon their immediate dispatch and success . . . . Permit me to beg of you a suspension of all other business, until our Foreign Agents are dispatched . [Journal of the Proceedings of the General Council, 50-53; Ordinances and Decrees, 18; 97, 103, 104-.] Thus bestirred, the council immediately passed the bill providing for a loan, and the next day passed an ordinance outlining the instructions which the governor should give the commissioners. Both bills were approved on December 5. For the loan, the governor was required to make out ten bonds of $100,000 each, payable in not less than five nor more than ten years; and with these the commissioners were "by all proper ways and means, by sale or pledge" to secure the loan, "or such part thereof as they can effect, upon the best terms the market affords, not exceeding ten per cent per annum." In case these bonds should not be accepted as sufficient security, the commissioners were instructed "to pledge or hypothecate the public lands of Texas, and to pledge the public faith"---everything, in fact, that Texas possessed [Ordinances and Decrees, 44, 45, 52-54]. With this authority, the governor lost no time in issuing commissions to the agents, and their private instructions were ready for them on December 8? [Austin Papers, N 2. Besides negotiating this loan, they were to make arrangements for fitting out a navy, procure supplies for the army, receive donations and, finally, proceed to Washington and find out the attitude of the government toward Texas. They were to learn whether any interposition might be expected from the United States, or whether "any ulterior move on our part would be more commendable and be calculated to render us more worthy of their favour, or whether by any fair and honourable means Texas can become a member of that Republic." In short, they were to learn whether, if Texas should declare independence, the United States would immediately recognize it and form an offensive and defensive alliance]. But more than two weeks elapsed again before these gentlemen sailed for New Orleans. In the meantime, a loan for the use of Texas had already been secured by Mr. Hall from William Brookfield of New Orleans a small one, to be sure, $1,100, but to the Texans it probably seemed an earnest of the success of their agents when these should reach the United States [Hall to Governor and General Council, January g, 1836; Comptroller's department, Letters to Treasurer, vol. i, ii; Journal of the Proceedings of the General Council, 232]. On January 10 the commissioners notified Governor Smith that they had arranged for two loans aggregating $250,000. The fact that this could be done in New Orleans, where the Texas situation was so well known, they considered particularly encouraging and of good augury for success in other parts of the United States. It will be seen from their terms that these so called loans were really nothing more than contracts for the purchase of five hundred thousand acres of land at fifty cents an acre; but the commissioners thought themselves very fortunate to get money on any terms. "In fact, rather than have missed the loan," they wrote, "we had better have borrowed the money for five years and given them the land in the bargain." They were of the opinion, moreover, that the loan would increase the interest in Texas; the lenders, they said, had already offered to land in Texas within six weeks five hundred volunteers [Austin, Archer, and Wharton to Smith, January ro, 1836. Austin Papers, N 15]. The first loan, of $200,000, was subscribed by ten men, four of whom were from Cincinnati, three from Kentucky, two from Virginia, and one from New Orleans [From Cincinnati, Thomas D. Carneal subscribed $40,000, Lewis Whiteman, $5,000, Paul Anderson, $5,000, and James F. Erwin, $5,000; from Kentucky, James N. Morrison subscribed $10,000, Robert Triplett, $100,000, and George Hancock, $5,000; from Virginia, William F. Gray and James McCulloch subscribed $10,000 each; and Alfred Penn of New Orleans also subscribed $10,000]. Ten per cent of the amount was paid down; the balance was to be paid upon ratification of the contract by the convention, which had been called for March 1. The amount advanced was to bear eight per cent interest, and the lenders might, if they chose, take land in repayment for this and future installments at the rate of fifty cents an acre. In case they elected to take land---and all of them intended to---the government was to survey and plot it in tracts of six hundred and forty acres each, and they must make their selection within two months after publication of a notice that the lands were ready. Article fifth provided that "no grant or sale of land shall be made by the government of Texas, from and after the date hereof, which shall not contain a full reservation of priority for the location to be made under this loan," but this was not to apply to vested rights already existing. Article sixth, a little more sweeping, declares that "none of the public lands are to be offered at public or private sale until after the locations herein before provided for shall have been made." For the faithful performance of this contract, the commissioners pledged "the public lands and faith of the government of Texas," but even after its confirmation the lenders reserved the right of declining to pay the balance [Dienst Collection, ii, II. The original MS contract can be found in the Archives of Texas, D, file 29, no. 2828]. The second loan was for $50,000, and seven of the twelve subscribers were residents of New Orleans, while three were from Virginia and two were from Kentucky [The subscribers were from New Orleans, Gabriel W. Denton, $10,000, Jacob Wilcox, $10,000, James Huie, $5,000, Thomas O. Meux, $2,500, Christopher Adams, Jr., $1,000, and Thomas Banks, $1,000; from Virginia, William F. Ritchie, $8,500, Howard F. Thornton, $1,000 and Jeremiah Morton, $3,000; from Kentucky, James Erwin, $5,000 and Robert Triplett, $2,000]. This loan was supposed to have been in cash, but Austin for some reason estimated that it would yield them net but $40,000 [Austin to McKinney, January 21, 1836. Austin Papers, N 10]. Gouge, however, who wrote from documents, some of which are not now accessible, says that the amount actually received was $45,802 [Gouge, Fiscal History of Texas, 53]. The conditions of this loan were the same as those of the first, except that priority of location was reserved to subscribers to the first, and that the commissioners pledged their personal property for the ratification of this contract by the convention [Dienst Collection, ii, II. The original MS. contract can be found in the Comptroller's department, in file "relating to the $50,000 loan."]. To the lenders this was simply a gigantic land speculation. They bound themselves by mutual agreement not to sell to any outsiders for less than $1.25 an acre, and began forthwith to "boom" Texas lands both by letter and in the public prints. The Texans were at first glad enough to get money on any terms, and such expressions as were made at the time favored prompt ratification of the contracts in order that the remaining installments might become available. But before the convention met considerable opposition was being manifested to the provision which secured to the lenders prior rights of location. This feeling was so strong in the convention that Mr. Robert Triplett, on behalf of himself and the other stockholders, proposed a compromise relinquishing all such rights in return for certain compensation; but the organization of a government occupied the attention of that body until its adjournment, and action upon the matter was referred to the president and his cabinet [Speech of Triplett to the Convention. Comptroller's department, in file "relating to the $200,000 loan."]. One of the first acts of President Burnet apparently was to ask each member of his cabinet for a written opinion on the subject of ratification [These opinions may be found in the archives of Texas, D, file 29, no. 2888]. All opposed it, and on April 1 Burnet himself wrote to Triplett and Gray, who were representing the lenders, and summarized their objections. The government, he said, was anxious to preserve the faith of the republic and would make any reasonable sacrifice to do so; it realized the circumstances under which the loans were made and hesitated, therefore, to avail itself of the undoubted legal right to disavow them; but the fifth article would paralyze future land sales; the agents had exceeded their instructions in making the contracts; and finally, the government doubted its right to alienate the public lands. For these reasons the president and cabinet refused to ratify the loans and proposed to refund the money already advanced with twenty per cent interest, payments to be made in two installments, six months and one year from date. The "faith and credit of the republic" was pledged for these payments, but the lenders wanted land, and Triplett, who had already submitted numerous proposals of compromise, finally secured the acceptance of one on the same day that Burnet's letter was written [Burnet to Triplett, Gray et al., April 1, 1836. Archives of Texas, diplomatic correspondence, file 22, nos. 2164 and 2185]. By the terms of the compromise, the right of prior location was surrendered by the lenders in return for a bonus of thirty-two leagues of land, which was to be distributed to them in proportion to their paid-up subscriptions. As for the rest of the loan, they might pay it or not as they chose? [Dienst Collection, ii, 27. The original MS of the compromise is in the Comptroller's department, in file "relating to the $50,000 loan."]. The stockholders as a rule were inclined to accept the compromise, and a number of them, in fact, on May 25 voted to do so [Copy of the compromise in the Comptroller's department, in file "relating to the $200,000 loan"; also Triplett to Jack, August 19, 1836. Archives of Texas, diplomatic correspondence, file 18, no. 1796]. They also intended, they afterward said, to advance the balance of the loan; but dissatisfaction arose over the form of the scrip which the government issued to them and, before this could be adjusted, the government authorized Thomas Toby & Brother to sell five hundred thousand acres of land at the same price at which it was offered to the lenders---fifty cents an acre. This destroyed the monopoly which they expected to enjoy and ruined their market, so that they declined to buy more [Triplett to Jack, August 19, 1836. Archives of Texas, diplomatic correspondence, file 18, no. 1796]. There followed a good deal of bickering on both sides, the government and the lenders charging each the other with bad faith, but by acts approved respectively June 3, 1837, and May 24, 1838, Congress made appropriations of land at fifty cents an acre to pay the two loans, and thus closed the most important chapter in the finances of the revolution. The next loan, $1,000, reached the treasury from the hands of Mr. G. C. Childress. Whether it was advanced by Childress personally or obtained by him as agent in the United States is not clear [Treasurer's report, August 7, 1836. Archives of Texas, D, file 29, no. 2844]. But the commissioners, greatly encouraged by their success in New Orleans, continued their activities in the United States. They were offered a loan of $50,000 in Mobile on the same terms as the New Orleans loan, but for some reason nothing ever came of it [Commissioners to Governor Smith, February 16, 1836. Austin Papers, N 29]. Elsewhere they were not so well received. Men hesitated to risk their money in Texas until a declaration of independence was made, and though the commissioners urged this step upon the government time after time, no attention was paid to them. Indeed, as late as April 24, Austin complained that they had heard from the government not "one word." [Austin to Bryan, April 24, 1836 (copy). Archives of Texas, diplomatic correspondence, file I, no. 41]. To make matters worse, there spread through the country rumors of the unchecked advance of the Mexicans and of the unfortunate quarrel between the governor and council, and it is not strange that the most strenuous efforts of the commissioners were in vain---although, as Wharton said, "we offer to the lenders to pledge all we have on earth, even to our wearing apparel." [Wharton to Smith, April 9, 1836. Archives of Texas, diplomatic correspondence, file 21, no. 2001]. On April 11 Austin made an ingenious proposition to President Biddle of the United States Bank for a loan of $500,000. [Austin Papers, N 15. The proposal was to deposit in the United States Bank Texas bonds for $500,000, bearing eight per cent interest for ten years, upon which the bank should issue stock certificates at $100 each for the same amount. These stocks were to be offered to the public for a cash payment of $25, with notes at sixty, ninety and a hundred and twenty days for the balance. The notes were to be discounted by the bank, and all the money thus obtained should be paid over to the commissioners. At the end of five years the state would begin the redemption of the bonds, and would take up one-fifth annually]. Biddle sympathized with the Texans, but, needless to say, his business conscience could not accept Texan bonds as bankable security. On the 15th, Austin made a frantic appeal to President Jackson and Congress for a share of the $37,000,000 surplus in the national treasury, but naturally nothing came of that [Raines's Year Book for Texas, ii, 435, 436. The letter is addressed to "Andrew Jackson, Martin Van Buren, Richard M. Johnson, John Forsyth, Lewis Cass, T. H. Benton, and to any member of the Cabinet or Congress of all parties and all sections of the United States."]. Two weeks later arrangement was made for a loan of $100,000 in New York on the same plan as the New Orleans loans. The lenders in this case had the option of taking land in repayment at twenty-five cents an acre, but since the expense of issuing stock certificates and surveying the land was to be borne by them, it is doubtful whether they enjoyed any advantage over the former lenders. Ten per cent of the loan seems to have been paid, but only $7,000 can be accounted for. Austin deposited $5,000 with William Bryan in New Orleans, June 12 and $2,000 was paid to Wharton. The commissioners themselves admitted that they did not expect this loan to be ratified, "unless the prospects of Texas were gloomy even to desperation." [Treat to Austin, July 30, 1836. Austin Papers, N 15; Accounts of the commissioners. Austin Papers, N 1; Treat to Austin, July 30, 1836. Austin Papers, N 15; Austin, Archer, and Wharton to Burnet, July 21, 1836. Archives of Texas, diplomatic correspondence, file 1, no. 47]. Thus it is evident that the actual cash cost of the war of Texan independence was not great. The treasurer reported on March 1, 1836, that he had received and expended since November 28, 1835, $3,981.85. This amount was yielded principally by the revenues of Texas, but if any other sums ever came from the same source, the fact is not revealed by the records [Treasurer's report, November 28, 1835, to March 1, 1836. Comptroller's department, in Miscellaneous Papers of the Treasury Department, 1835-1836]. Donations, it seems certain, did not exceed $25,000, and much of this was in kind; while the loans amounted, it was said, to $100,000. The total indebtedness of the government at the end of August, 1836, was estimated by the treasurer at $11,250,000. Of this amount there was due for loans $100,000, on account of the navy $112,000, to the army $412,000, for supplies $450,000, and for civil and contingent expenses $118,000. The remaining $60,000 is not itemized [Estimate of Public Debt, August 26, 1836. Comptroller's department, in Miscellaneous Papers of the Treasury Department, 1835-1836]. Some of these claims were paid in land, but the most of them were discharged with treasury notes, which subsequently were unmercifully scaled and redeemed. Such debts as remained unpaid at the time of annexation were paid from the ten million dollars which the state received from Congress in 1850. In the end, therefore, notwithstanding the importance of the stake, it is easily seen that the cost of the revolution was trivial. And one is inclined to marvel with Mr. Morfit that Texas could have carried on "with so little embarrassment to her own citizens or her treasury" a successful war. The University of Texas. Eugene Barker Index--War of
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