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 France was in ill-concealed bad humor with us; her minister had withdrawn from his post at Austin to the United States.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.
