# Life and select literary remains of Sam Houston of Texas/Chapter 17

CHAPTER XVII.
On December 9th, 1844, the second term of the administration of Gen. Sam Houston closed. His valedictory, like all other papers and addresses emanating from his pen and tongue, ranks him among the first statesmen and patriots of the world. Texas was prosperous. Certain formalities, hereafter to be indicated, only were necessary to introduce her to the sisterhood of the United States. He anticipated the pleasure of retiring to domestic life, only to be disappointed by the call of his countrymen for further and long-protracted services. The following document places his administration in its true light before the world:
   "Senate Chamber, December 9, 1844.
   "To His Excellency, Sam Houston, President.
   "Sir: I have the honor to transmit to your Excellency the following Resolutions, introduced by the Hon. David S. Kaufman, Senator from the District of Shelby, Sabine, and Harrison, and passed by the Senate.
   "1st. Resolved by the Senate, That the Administration of President Houston, which this day terminates, has been characterized by a forecast, economy, and ability, which entitle it to the thanks and gratitude of the Nation.
   "2d. Resolved, That as the Constitutional advisers of the President, we have undiminished confidence in the unbending integrity and devoted patriotism of Gen. Sam Houston, and he carries with him into retirement, our warm wishes for his health and happiness.
   "3d. Resolved, That the Secretary furnish Gen. Houston with a copy of these Resolutions.
   " With great respect,
   "Henry J. Jenet,
   "Secretary of the Senate."
The history of the Republic of Texas, the history of the two administrations of President Houston, the personal history of General Houston himself, would be incomplete, would not be clearly ​intelligible without a somewhat specific account of the system and of the management of the finances of Texas, under, and, in no inconsiderable measure, by President Houston. Such account is necessary to understand that powerful hold which he had on the confidence of the people; that strong popularity of his with the masses, which always triumphed over the fierce, unrelenting opposition of political leaders of great ability. It will be necessary to advert, only cursorily, to a different financial system pursued during the presidential term intervening between the two terms of President Houston's administration. In order to appreciate the importance of the financial system perseveringly carried on by President Houston, we must bear in mind that the financial prosperity of any Government is the sure index, the sure measure, of the prosperity of its people. It is doubly true of an infant nation, of a nascent Government, such as Texas then was, before time had intertwined interests and consolidated institutions.
Under the Council, the Consultation, the Provisional Government, which were the successive forms of administering public affairs of Texas during the Revolution which severed it from Mexico, and until the achievement of independence at San Jacinto, current expenses were provided for as best they could be. This was done, or attempted to be done, by borrowing from private individuals; by generous gifts of small sums—sums so small, indeed, that the mention of them is calculated to raise a smile; by commissioners empowered to negotiate loans; and by offers of sales of land. The slender contributions from these sources were of inappreciable value to the infant cause. During that revolutionary period, Texas lived, in the language of proverb, from hand to mouth. It was not known to-day where the means for carrying on affairs on the morrow were to be found. There was no financial system; there was no system of public, organized finance; there could be none in the circumstances of the hour which deserved the name.
Freedom from Mexican rule being achieved at San Jacinto, the President, Vice-President, and members of Congress were elected. At the first session of the first Congress in the fall and winter of 1836, the organization of the essential functions of the new Government claimed absorbing attention. Concurrently, means to carry on government were also of immediate necessity to be provided for. Several tentative projects of finance were presented. Two bank charters were passed. One of them will be more particularly mentioned further on. But no financial system was adopted, no financial policy inaugurated. The first substantive act of a definite system was passed at the second session of this first ​Congress, which convened in the city of Houston, on the 1st of May following, A.D. 1837.
The session was opened by President Houston in person. In his address to Congress, he emphatically counselled "the maintenance of our integrity, and the faithful and just redemption of our plighted faith, wherever it has been pledged." This is the keynote of Houston's financial administration. With him, it meant not only that we should redeem our pledges when we have the means, the money to do so, but also to so guard the making of pledges, and to so manage our affairs, that we, Texas, may be surely able to redeem them.
It is not here the place to enter minutely into the financial history of the Republic. Consequently, we omit details which would only interest persons curious in political and financial history, and confine ourselves mainly to leading facts which throw light on President Houston's financial principles, his policy, and his action, and which serve to illustrate their wholesome influence on the solidification of our institutions, and on the prosperity of the Republic of Texas.
At this second session of the first Congress an act was passed for funding the public debts. These consisted of audited drafts of various amounts for civil and military services, and for supplies furnished to the Republic. These audited drafts were in no sense a currency, though they served in irregular trades occasionally, and in barter. The bonds into which these drafts were converted were of the usual form of Government bonds, transferable only on the books of the treasury. They bore on their face the promise of interest of 10 per cent, per annum, one year from date. The currency of the country was at this time, and had been, gold and silver and bank notes, mostly of the New Orleans banks.
Some two or three days after the passing of the Funding Act, Congress passed another act for the issuance of promissory notes of the Government, to an amount not exceeding $500,000, bearing interest at 10 per cent., redeemable in twelve months, and receivable for all public dues. Not being reissuable, they were, strictly speaking, treasury notes or exchequers, and were issuable only in payment for civil services and civil supplies. They were printed with common type, on common book paper. They had in their center a large five-pointed star, from which star they received the name by which they were afterward designated, of star money. There was a sharp conflict of opinion between the Congress and the Secretary of the Treasury, Henry Smith, about the details of this act, from which it may be fairly inferred that the act did not altogether please the administration of President Houston. But Gen, ​Houston left no doubt as to his opinion on treasury note acts. He gave a qualified approval in the "proviso, that they were not issued in greater amount than would meet the actual necessities of a circulating medium."
Having arrived at this, the first substantive act of President Houston in the management of the financial affairs of the Republic of Texas, if seems fitting to state, somewhat succinctly, his opinions on these matters,—opinions from which he at no time, then or afterward, swerved.
General Houston was emphatically, in the language of the day, a hard-money Democrat. He held sternly, that a public debt is a public evil. In his opinion, no money is a safe currency except metallic money, gold and silver. A currency not directly redeem.able in coin of its own nature, leads to contracting public debt, and to the unrestrained increase of public debt. Facility in the issuance of paper currency leads to mismanagement, to reckless expenditures, to dishonesty, peculation, and embezzlement in the administration of public affairs. An administration of Government finances based on a system of paper currency, produces oppressive taxation of the people, is calculated to make the few who are rich, richer, and the many in moderate circumstances, poorer; it saps public and private morals; it impairs respect for honesty in private life as well as for law and order. Banks of issue Houston regarded with more than distrust, and he looked on public loan acts with wary doubt. When public necessity compels a resort to paper currency, it should be done as sparingly as possible, and a return to metallic money should be made as speedily as possible. Paper should be the handmaid to gold and silver, always subordinated to these metals, and redeemable in them as promptly and as directly as can be done. Himself a patriot, he did not disbelieve in patriotism; but his ideas were not Utopian. He looked on human nature as it is, as it has ever shown itself to be. To his principles and opinions, as just stated in general outline, Houston, in the difficult circumstances of his two administrations, and on all occasions, was true.
It seems fitting here to make formal record of a declaration made in the latter days of the Republic more than once to Ashbel Smith. He declared that the financial management and control of the treasury in its principles and general action during both his administrations were affirmatively his own. He said that this was emphatically true of the exchequers of his second administration, and that he was the author of the plan. This should not, however, lead us to underrate the value of the counsels and co-operation of his Secretary of the Treasury, Henry Smith. Let us return to the treasury notes, the star money of 1837. The issue of them ​from the treasury commenced on the first of November. They bore on their face, by law, that they were receivable for public duties. Immediately thereafter, on the 5th of November, the Secretary of the Treasury, Henry Smith, sent instructions to collectors of customs forbidding them to receive these notes in payment of duties. Seven days afterward, the 13th November, Secretary Henry Smith revoked his order of the 5th, and instructed collectors of duties to receive the treasury notes as gold and silver. For this change of instructions Secretary Smith invoked the orders of President Houston, who assumed the whole responsibility. General Houston herein acted on the principle laid down in his address to Congress, adverted to above, "the maintenance of our integrity and just redemption of plighted faith."
The issue of treasury notes was restricted to the limits imposed in the act creating them. And these notes, when paid back into the treasury for taxes and duties, were, as has been already stated, canceled. They passed in business at par. They were as good as the notes of banks of most of the States of the American Union. There was thus, on the whole, a wholesome condition of the currency we had, practically, a good currency of our own. With every allowance for the newness of our situation and for political animosities, the people were cheerful and confident.
To place Houston in a proper light, it is necessary to relate an incident which occurred at this time. It is in connection with one of the bank charters alluded to above, as having been granted at the first session of the Congress,—"The Texas Railroad, Navigation and Banking Company," with a capital stock of five million dollars, to be increased, if desirable, to ten millions. It is not necessary to our present purpose to recite its vast franchises. Times were prosperous, prospects flattering. In the phrase of today, " there were millions in this bank charter." The capital stock was divided into eight shares, and one share each, conveyed—(the wise do call it "convey")—to eight stockholders. One share of the eight was sent to General Houston. Single shares were sold for $12,000 and upwards, and were in demand at such prices. It was a condition in the charter that before the bank could commence business operations it should pay into the treasury of the Republic a bonus of $25,000 "in gold and silver." This sum, $25,000, was formally tendered to the Secretary of the Treasury in treasury notes. Though these notes were receivable as gold and silver in payment of taxes and duties, they were neither, it was alleged, in the contemplation of the act of incorporation, nor in its words, gold and silver. The bonus of $25,000 was neither a tax nor a duty. Accordingly President Houston ordered the Secretary of the ​Treasury to refuse them in payment of the bank bonus. The eighteen months from the date of the act, within which time payment could be made, were about to expire. This was not all; before the expiration of the eighteen months President Houston, in presence of several gentlemen, formally committed to the flames the certificate that had been sent him of a share in the bank. As shares were openly sold, he could have put in his pocket for his certificate of share $20,000. But this hydra-headed monster of the class of gigantic swindles, like Law's Mississippi scheme and the more recent Credit Mobilier, was by Houston's sagacity, honesty, and firmness crushed in its embryo state. If room permitted, it would be a curious study to describe the influences brought to bear on Houston to permit the bonus to be paid in treasury notes, and thus the bank to go into operation. He was inflexible, and the people were saved from a huge corporation which would have enveloped in its folds and crushed every enterprise, and forbid competition outside of the shareholders of the bank. It would be unjust to Henry Smith to omit to mention that in this matter he was in full accord with President Houston. But Houston was the rock of resistance. Persons at this day can not easily appreciate the magnitude of this bank enterprise. It may help their imagination to be informed that three of the eight shares were sold in New York for merchandise to the amount of $60,000.
The treasury notes were, on the whole, a decided success. As already stated, they were at par, or nearly so, with gold and silver, and equal in current value with bills of banks in the United States. This rare quality for paper not instantly redeemable, enjoyed by the treasury notes, may be attributed mainly to the following causes. The known resources of Texas—the issue of notes being limited to an amount, in Houston's language, "required to meet the actual necessities of a circulating medium "—their issue limited to payment of civil services—not being reissuable, but canceled on being paid into the treasury—these were safeguards against the country being flooded with these notes. And to these should be added General Houston's well-known resolute opposition to buccaneering expeditions against Mexico, and quixotic hunts of Indians to chase them from lands which our scant population rendered it impossible for us to occupy.
The success of the star money thus protected seems to have encouraged Congress to attempt a larger enjoyment of the good. Accordingly, in May, 1838, Congress passed acts for the issue of another million of treasury notes, and authorizing their reissue after having been paid into the treasury, and making appropriations of them for all sorts of public expenditure. Unlike the star ​money, they bore no interest. These acts, submitted to President Houston for his approval, were returned to Congress with elaborate, earnest vetoes, in vain. They were passed by Congress triumphantly over the vetoes. The new notes issued under these acts being well engraved and printed on good bank paper, with a red ground, had quite a bank-note look—quite unlike the old star money printed with common type on a very common paper. Such was the original of the famous redbacks.
With these acts of Congress of 1838, passed the last year of Houston's administration, so greatly enlarging the new issue of treasury notes, thereafter known as redbacks, and discarding previous wholesome restrictions, commenced their decline in value. They nevertheless maintained to the close of President Houston's first administration their circulation as currency in ordinary business transactions. They were worth, or rather were valued at, seventy cents or seventy-five cents on the dollar when General Houston's Presidential term closed—the loth December, 1838.
At the close of Houston's first administration the public debt of Texas amounted to a little over a million dollars. The report of his Secretary of the Treasury states the amount of audited claims at $1,090,984. Of this amount $903,720 were for military services. It had mostly accrued in the active campaigns of the Revolution, and in the support and pay of the army until it was furloughed in the summer of 1837. To diminish public expenses in accordance with the economical system of the administration the army was furloughed till, every company and squad told, it did not amount to one battalion of a full regiment. There was no risk in thus virtually disbanding the army. For on the first tap of the drum the ranks would be filled, and competent officers were on hand to lead them. And further, several offices, civil and military, were abolished, and the pay and expenses of others greatly cut down.
As already stated. President Houston's first term closed on the 10th December, 1838. He was succeeded by General Lamar.
President Lamar was possessed of high genius; he was of unspotted integrity; a chivalrous paladin of finished culture, of brilliant courage, of lofty daring, of pure patriotism. He was a soldier, and in other times and other circumstances he would have been a magnificent chieftain; his whole nature was poetical and military. But he was not a financier; he did not possess administrative capacity; he was not familiar with principles of political economy universally deemed incontrovertible. Reposing unbounded confidence in his friends, he lacked the sagacity often termed knowledge of human nature, knowledge of mankind. His administration of the Presidency was not a success.
​It does not fall within my present object to linger in detail on the management of the finances of Texas during General Lamar's Presidency. It suffices to state, in general terms, that the policy inaugurated by the acts of Congress of May, 1838, adopted over Houston's vetoes, was persevered in, expanded in its worst features. It may be described as the financial system of unlimited issue of irredeemable treasury notes known as redbacks. Their decline in value, mentioned already as having commenced in 1838, continued until, at the close of General Lamar's Presidency, they had sunk to 10c., 5c., 3c., on the dollar. At these rates they were sometimes bartered away in loose speculative trading for things of uncertain value, but they had ceased to be even a nominal currency. In the general prostration, gold and silver had disappeared. The funded debt was not heard of; it seemed to have floated off, nobody knew whither. But the public debt, now augmented to over seven million dollars, hung like a black cloud of evil portent over the country.
It will devolve on the future historian of the Republic of Texas to relate how, in a time of profound practical peace, with no serious attempt at invasion by Mexico, with no trouble of any moment with Indians on the frontier, with not even the skeleton of an army, with no internal dissensions, with no works of public improvement undertaken, the public debt was increased from little over a million to upwards of seven millions of dollars. The people were, indeed, kept in pleasant expectation by projects of loans which were to make the floods of redbacks equal to gold. Fortunately for Texas, the loans were never effected. The bane so fatal to Texan finances was irredeemable redbacks, irredeemable paper.
There was not a dollar in the treasury. The country was without credit for a dollar. Public expectation was exhausted. Our foreign relations were as cheerless as home affairs. England had negotiated treaties with Texas, but, from fear of our collapse, held back from the exchange of ratifications. France was in ill-concealed bad humor with us; her minister had withdrawn from his post at Austin to the United States. Gloomy vaticinations ruled the hour that the Republic of Texas was played out.
Sam Houston entered upon his second term as President of Texas in the midst of these disastrous surroundings. He was inaugurated in December, 1841. Without a dollar in the treasury, without credit for a dollar, the finances nevertheless compelled attention as a condition of the continued existence of the Republic. Something must be done. The month following his inauguration, to wit, on the 19th January, 1842, the exchequer act was passed. ​The whole amount of exchequers subject to issue was strictly limited to $200,000; gold and silver, and exchequers, were alone receivable for customs-dues, for taxes and licenses. They could only be paid out from the treasury on specific appropriations by Congress. For several months scarcely $40,000 had been paid out. At no time ever, subsequently to the passage of the act, was there in circulation near half the amount provided by the act. As for redbacks, lavishly issued by the preceding administration, they were as utterly ignored as if not a dollar of them had ever been heard of.
It needs scarcely to remind any one that the exchequers were in all essential respects the same as the first treasury notes issued in 1837, the star money under another name.
The experience of the redbacks naturally created distrust of the exchequers. It was loudly asserted that these were only redbacks under the thin disguise of another name, and their utter and speedy depreciation, like their redback predecessor of unhappy name, was confidently prophesied. Speculators, like buzzards watching a sick animal, attacked the exchequers and entered into combinations to destroy their value. They sunk to 30 cents, and even less, on the dollar. President Houston was equal to the emergency. He convened Congress in extra session, June 27, 1842. On the 23d July a law was passed, requiring collectors of customs, sheriffs, clerks, and postmasters, to receive exchequers only at the current rates at which they were sold on "Change" in open market.
It would be natural to suppose that the act of July 23d would appreciate promptly the exchequers. Nevertheless, they appreciated very slowly. This was a natural consequence of distrust from recent experience of redback treasury notes. Pecuniary confidence is, especially, a plant of slow growth. Besides, being receivable only at their cash value in market, and worth no more in payment of Government dues than a like amount of gold and silver, nothing was gained by purchasing them. As a consequence, gold and silver flowed into the treasury, and at the close of President Houston's second term exchequers were on a par with coin.
The foregoing outline of the financial history of Gen. Houston's administrations would be incomplete without some mention of the sequel. Anson Jones, who had been Secretary of State under Houston, and who was, perhaps, his most trusted Cabinet officer, succeeded General Houston as President of the Republic in December, 1844. Anson Jones, too, was a man of eminently sound judgment; he held the same sound opinions as General Houston on paper currency on irredeemable promises to pay, on the ​sacredness of public credit, and on the strictly economic administration of Government. President Jones closed his administration, as Houston had done before him, without having added a dime to the public debt or leaving an unpaid open account. In his administration the Republic of Texas was merged by annexation in the Federal Union. With the transfer of the sovereignty of the Republic of Texas there was turned over to the State of Texas its treasury, with thousands of gold in its coffers; which gold actually sufficed for all the expenses of government of the State of Texas for upwards of two years.
Sam Houston more than once said to Ashbel Smith that he was the author of the plan of issuing exchequers. He claimed it only as a "succedaneum" for gold and silver when these were not in hand, and to be resorted to when, as at the commencement of his second term, the Government had not a dollar, and was utterly destitute of credit. Nor did he, as is sometimes dexterously done, transfer the burdens of to-day upon the future. During his second term not a dollar was added to the public debt, except the accretions of unpaid interest accruing on that previously existing. Nor was there an unliquidated account that had accrued during that period.
I have thus given, perhaps in unnecessarily minute detail, the financial history of the Republic of Texas under the two administrations of Sam Houston, embracing the leading facts in the principles and action of Gen. Houston as President, in the legislation of Congress, in the administration of the Department of the Treasury under him. I have not done injustice to the chivalrous soldier and patriot Lamar. I have paid a passing tribute of justice to the profound statesman, Anson Jones.
I turn again to Houston for a remark or two on closing. Houston's administrations were not distinguished alone for his judicious management of the revenues of the Republic, and, consequently, of the taxes of the people. Honesty was characteristic of his whole official administration. Not one of his Cabinet or staff officers, not one of his high officials, amassed even an inconsiderable fortune. Nearly or quite every one of them left office poorer than when he entered it. With such facts patent, it is not surprising that, amidst all the mutations of superficial and newspaper unpopularity, he retained the solid confidence, the firm attachment, of the mass of the citizens of the Republic of Texas.
It is well, too, for the citizens of Texas, now and hereafter, to bear in mind that such was the true condition of Texas at the time when it was maligned as the country where was rampant the worst form of barbarism, the barbarism of civilization.