Section I. The Need Of Railroads.
Section II. Railroads Of The Republic Of Texas.
Section III. Progress Of Railroads In Texas, 1845-1856.
Section IV. State Aid To Railroads.
Section V. Railroad Regulation.
Section VI.   Railroad Progress, 1856-1860.
Section VII. Conclusion.
End Notes.

Texas possesses very few natural facilities for transportation. Her rivers for the most part are un-navigable, and the soil of her black, waxy prairies renders wagon transportation in wet weather impossible. Isolated from her sister States, her most important need has ever been an adequate system of transportation—a system that not only makes possible communication between distant points within her own borders, but also affords an outlet for her products through St. Louis, Memphis and Chicago by land, and through Galveston and New Orleans by sea.

These considerations were apparent to the earliest settlers. It is, therefore, not surprising to learn that attempts were made as early as 1836 to secure such railroad system.

This paper purposes to give an account of the beginnings of this system.

1. Texas Railroad, Navigation & Banking Company.
The Republic of Texas was but a few days old when its first railroad was chartered. This was in 1836, six years after the inauguration of the first steam railroad in this country. The charter created the Texas Railroad, Navigation & Banking Company, and authorized the corporation to connect the important Gulf ports of Texas with the rivers by canals, and to construct railroads whenever demanded by the public wants.[1] The corporators were Branch T. Archer and James Collingsworth—historic names in the annals of Texas.

These projects were never undertaken. The country was too much pre-occupied with civil conflicts; it had little time to engage in works of internal improvement. The rights granted were soon forfeited, and the Texas Railroad, Navigation & Banking Company passed into history.

2. Other Railroads.
The Galveston & Brazos Railroad was chartered in 1838. W. S. Cooke, James F. Perry and others were authorized to construct turnpikes and railroads from Galveston Bay to Brazoria on the Brazos River, and to improve bays, rivers, bayous and creeks. This enterprise was intended to carry out on a more limited scale the plans of Archer and Collingsworth. Its ulterior object was to build up the city of Galveston by connecting this port with the fertile lands of the interior.

In 1839 a charter with similar powers was granted to parties in the interest of Houston to connect that city with Richmond, a town a few miles above Brazoria.

The Harrisburg Railroad & Trading Company was incorporated by parties in Galveston, and was given authority to connect Buffalo Bayou at Harrisburg, a point a few miles below Houston, with the Brazos River. The charter, although soon forfeited, suggested the later one, which found fruition in the completion of the Buffalo Bayou, Brazos & Colorado Railroad.[2]

No work was done under any of these charters. The Republic of Texas lived and died without ever hearing the whistle of a locomotive.

3. First Railroads of the State.
In 1846 two roads were chartered by the new State: The Lavaca, Guadalupe & San Saba, and the Colorado & Wilson Creek. These charters were soon forfeited.[1]

4. Buffalo Bayou, Brazos & Colorado Railroad.
In 1850 General Sydney Sherman, a veteran of the Texan War, organized the Buffalo Bayou, Brazos & Colorado Railroad Company, to succeed the Harrisburg Railroad & Trading Company, which had become defunct. J. F. Barrett, of Massachusetts, was elected president, William Hilliard of the same State was elected secretary and treasurer, and J. S. Todd, of Texas, was elected resident director. This was the first successful attempt to enlist the aid of Northern capital in the development of Texas railroads. A charter was secured from the Legislature, and authority was given to connect Buffalo Bayou at Harrisburg, the supposed head of successful navigation, with the Brazos and Colorado Rivers. Galveston was in this manner to become the chief outlet for the cotton producing counties of the State.[2] Work commenced in 1851. By 1853 the road was completed twenty miles. In 1855 the line was opened to Richmond.

5. Galveston & Red River Railroad.
In 1848 Ebenezer Allen secured from the Legislature, in opposition to the wishes of the delegates from Houston, a charter for the Galveston & Red River Railroad. This charter authorized the construction of a railroad from Galveston Bay to the northern boundary of the State.
At the time of the passage of this act great consternation prevailed among the business men of Houston. Spurred on by the steady progress westward of the Galveston road, Houston negotiated with Allen for the commencement of the work at that city. Work was so begun in 1853,[3] and by 1855 the grading was completed to Cypress, twenty-five miles north of Houston.[4]

6. Mississippi & Pacific Railroad.
The discovery of gold in California in 1848 impressed upon the people of the United States the necessity of a trans-continental line to connect the shores of the Atlantic and Pacific oceans. It was realized that such a road could only be constructed with the aid of the National government. In response to the popular agitation for the trans-continental railroad, Congress ordered a survey made of the several routes proposed, to ascertain which was the most feasible.

Texans were naturally very eager for the construction of the line that would pass through their State—that is, the Southern. In 1850 a resolution was passed by the Third Legislature, providing that aid should be extended to such a National railroad.[5]

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The prospect that a company owning the franchise for the construction of the Texas link of the road would enjoy many excellent opportunities for speculation and profit called many corporations into existence, bent on securing this grant. During the year 1852 five companies were chartered and were given authority to construct railroads from the east boundary to the Rio Grande River. These were the Texas Western, the Texas & Louisiana, the New Orleans, Texas & Pacific, the Vicksburg & El Paso, and the Texas Central.[6]
The Texas Western and the Vicksburg & El Paso were afterwards consolidated. A substantial bonus—10,240 acres of land for every mile of completed road—was offered to each of these.

In 1853 Governor Bell urged the Fifth Legislature to extend a more liberal reward for the construction of the trans-continental road.7 Acting upon his suggestion, the Mississippi & Pacific Railroad was chartered. The act incorporating it directed the Governor to receive proposals from companies for its construction. The lowest bidder was to be granted the franchise. When complete, the railroad was to remain the property of the company for ninety-nine years. A large area of land was to be held in reserve for the company until the track was located. A new reserve was then to be created, extending thirty miles on each side of the right of way. After the construction of the first fifty miles, the corporation was to receive twenty alternate sections of land for every mile of completed road. A bond of $300,000 in gold was required to be deposited with the State Treasurer within sixty days after the signing of the contract, guaranteeing the construction of fifty miles within eighteen months.[8]

The Texas Western Company seeing here an opportunity to realize the purposes of its creation, had previously (during the pendency of the act) filed in the General Land Office a designation of its line along the proposed route of the Mississippi & Pacific.

The Atlantic & Pacific Railway Company was a corporation of New York, and Robert J. Walker, Secretary of the Treasury under President Polk, and at one time Governor of Kansas, and T. Butler King, formerly a member of Congress, were its directors and agents. This company determined to secure the sole franchise for the trans-continental road—not for the purpose of building it, however, but to gamble with its stocks and bonds. The first move was to buy up the charters already in existence, and to this end the Texas Western Company was paid $600,000 for its rights.[9] Thus were the purposes of the incorporation of the Texas Western accomplished.

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When Governor Pease, who had succeeded Governor Bell, called for proposals to construct the road, only one bid was received. This was offered by the Atlantic & Pacific Company, and was accepted.

When it came to executing the contract, the resources and purposes of the Atlantic & Pacific Company were adequately ventilated. To meet the requirement of the deposit of the gold bond, the company offered stock of a Memphis bank. This being rejected by the Governor, the stock of the Sussex Iron Company of New Jersey was submitted. This was likewise refused. Seeing that these men were without means, the Governor annulled the contract.
Failing in their attempt to secure the franchise, they determined to prevent any other company from so doing. A reorganization was had under the Texas Western charter. This move effectually blocked any other company from offering proposals. When the Governor again called for them, none were received.[11]

When the Sixth Legislature convened in 1855, Governor Pease laid the matter before it. After a tedious debate an act was passed throwing the reservation open to settlement.[12] This in effect repealed the measure.

Subsequent events proved this to have been the proper course. The movement to build a Pacific railroad was premature. The country was too unsettled to attract private capital into such a stupendous undertaking. It was not until the National Government lent its aid that a trans-continental line was finally built.

7. The First Subsidy.
To the railroads chartered by the Republic of Texas no encouragement was extended. The Texas Railroad, Navigation & Banking Company and the Galveston & Brazos Company were required to pay for their rights of way across the State, but to the Houston & Brazos Company and the Harrisburg Railroad & Trading Company this right was donated. To the first three railroads chartered by the State no aid was extended. However, their charters were more liberal than the preceding. None of these roads were built.
In the East many States undertook to further the construction of railroads by extending the aid of the commonwealth. New York voted to her railroads something like $8,000,000, $5,000,000 of which was granted to the Erie Railroad. In addition, $30,000,000 was granted by the cities and counties.[1]
Presumably patterning after this policy, Texas passed an act in 1850 permitting the cities and counties along the route to subscribe to the capital stock of the San Antonio Railroad. Under the terms of this measure, $100,000 was subscribed by the city of San Antonio and the county of Bexar, making the first substantial bonus offered to a railroad in Texas.[2]

8. Land Grants.
In 1850 Congress granted to Illinois 2,500,000 acres of public domain, to be applied to the construction of the Illinois Central Railroad. By this means, this road was soon completed.

Texas followed the example of Illinois. She had an immense public domain of her own. In this respect she was unique in the sisterhood of States.[3] It is estimated that upon her entrance into the Union, she had 181,965,832 acres of unappropriated land.[4]

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Realizing the necessity of aiding the private companies, she donated to the Henderson & Burkville Company in 1852, 5,120 acres of land for every mile of road it constructed. Similar donations were made to fifteen of the twenty-three railroads chartered between this date and January 1, 1856.[6] To the San Antonio Railroad, the La Salle & El Paso, the Buffalo Bayou, Brazos & Colorado, and the Galveston & Red River, all of which were chartered prior to 1852, 5,120 acres were also granted by subsequent acts.[7]

It was soon evident that these subsidies would not be sufficient. In view of this fact, the law of 1854 was passed granting 10,240 acres in alternate sections to the mile to every railroad that should construct twenty-five miles of road within the two succeeding years.

9. Causes of the Failure.
These measures did little to relieve the situation. Of the thirty-seven railroads chartered before 1856, twenty were entitled to receive land from the State. Of these twenty, only two were built by 1856. Of the 18,374 miles of railway in operation in the United States at that time, only forty were in operation in Texas.

This disappointing condition of affairs was almost entirely due to the scant settlement. In 1860 the population did not exceed 604,215, or 2.3 to the mile. The metropolis numbered 8,235 people. Only five cities had over 2,500 inhabitants. One hundred and twelve of the 243 counties of Texas today contained not a single settler.[8]

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It will be seen that the business in this State was not sufficient to make railroads paying investments. With opportunities for profit so remote, it was idle to expect capital to be invested in these enterprises.

The limited aid extended by the State thus far was accompanied with one result. The franchises were secured by men without means, who intended to use them not to build railroads, but to speculate with them. These charters were either disposed of to other speculators at a premium, or were used to defraud the people of their money.[9]

Assuming that the promoters were honest in their intentions to build the roads, it is evident that their only available resource was the capital the citizens of Texas could be induced to subscribe, and this was insufficient.

In 1858 the free capital was estimated at $2,745,493.[10] Its extreme paucity is further illustrated by the following incident, which is typical: When the Buffalo, Brazos & Colorado road proposed to extend its line from Richmond to Austin, a subscription was taken by the company from the citizens of Colorado, Fayette, Bastrop and Wharton counties. Only $54,025 was subscribed, and not all of this was collected. This was hardly sufficient to pay for five miles of road.[11] Yet the citizens of these counties were exceedingly anxious for railroad connection with the Gulf, and the Buffalo Bayou, Brazos & Colorado road was one that commanded more confidence than any other company in Texas.[12]

It is evident that any aid extended by the State short of the amount necessary to construct the roads must be accompanied by inevitable failure. If the roads were to be built, more aid was an absolute necessity.

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10. Agitation for State Ownership.
(a) Public Works in Other States.
When the utility of railroads was first fully appreciated, many schemes of internal improvement were set on foot in the United States. Into private enterprises capital could not be lured; but into public enterprises it readily found its way. Internal improvements were possible only at first by using the machinery of the State.[13]

It was in this manner that many of the earlier improvements in the United States were constructed. Thus, the Erie canal was built in New York in the early 20 's.[14] The first railroads of Pennsylvania were likewise built at a cost of over $40,000,000. Indiana and Illinois expended $15,000,000 each on similar projects. Michigan undertook State works at first. In Georgia, the Western Railroad, 130 miles in length, cost the people $5,000,000.[15] It was not until the profitableness of works of internal improvement was demonstrated in these States, that private capital sought them.

(b) Earlier Proposals for a State System.
There had been since the earliest times a faction in Texas that had contended for public works. In 1842 a railroad convention was held at Houston, and recommended the adoption of the State system.[16]

In 1850 John W. Dancy, who afterwards represented Payette, Bastrop and Travis Counties in the Sixth Legislature, proposed the following plan: By means of the public domain and $5,000,000 then in the treasury, the State was to construct trunk roads running from Galveston and Matagorda Bays, and intersecting roads running east and west. This system would give direct connection with New Orleans, Vicksburg and Memphis. Slaves were to be used on these roads, and a permanent advantage would thus be gained, thought Mr. Dancy, in opening a new field for slave labor in the South.[17]

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The advocates of public works, at first few, increased in numbers as the true state of affairs became apparent.[18] The futility of the attempts to attract private capital was beginning to be appreciated. The failure of the corporations gave force to the arguments. The Mississippi & Pacific fiasco in 1855 drove the lesson home. Says Governor Pease:

"The active capital in the hands of our citizens is insufficient to insure their (railroad) construction. * * * It can not be disguised that the population and business of the State are not such at this time as to promise the return of an immediate profit on the amount that may be invested in such enterprises." [19]

The men who espoused the cause of public works contended that no transportation system could be secured at any time within the near future unless the example of the East was followed, and the machinery of the State was used.

In 1855 and 1856 the agitation for internal improvements became especially violent. Railroads were the chief issue in the gubernatorial election of 1855. More liberal legislation was urged by the public press and public men. Conventions were held in many counties, and recommended liberal aid. In many communities it was warmly urged that the State plan be adopted. [20]

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(c) Governor Pease's Plan.
Governor Pease was one among the number who came to believe that the capital necessary for the works could best be secured by using the credit of the State. In his message to the Sixth Legislature in 1855 he elaborated a scheme for internal improvements, and recommended its adoption by the State. The essence of this plan was as follows:

A general system of internal improvements, consisting of railroads, river improvements and canals, was to be built by the State with the aid of the public domain. Thirty million dollars of bonds were to be sold, the proceeds of which were to furnish the means for the immediate construction of the works. The interest on the bonds was to be defrayed by the levy of a small internal improvement tax, and the principal was to be redeemed from the proceeds of the sale of the public lands. In order to make the system permanent and to insure its successful completion all of its features—even the particular works to be undertaken—were to be incorporated in the Constitution.[21]

11. The Loaning System, (a) History of the Loan Bill.
There were a great many men in Texas, on the other hand, who were bitterly opposed to State works, on the grounds of their costliness. While conceding the necessity for railroads, these men believed that the capital necessary for their construction could best be secured by the adoption of a more liberal policy on the part of the State toward the corporations then in existence.

When Texas was admitted to the Union, she claimed in addition to her present domain all of the territory of New Mexico east of the Rio Grande River and south of the present northern boundary of the State. During the Mexican War General Kearney took possession of this country. The North was opposed to relinquishing this area back to Texas, for fear of extending the slave territory. In satisfaction of her claims to this region, Texas received from the National government $5,000,000.[22] By Act of January 31, 1854, $2,000,000 of this $5,000,000 was set aside for the public schools and designated the Special School Fund. [23]

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It was at once suggested that these funds should be applied to the construction of internal improvements. Governor Bell made such a recommendation in 1851, but it was not acted upon at this time. In 1853 Governor Pease recommended the establishment of a board of commissioners to make loans from these funds to the railroads, to aid in their construction.[24] This measure was defeated by the men who favored public ownership.

When the agitation for railroads became violent in 1855, such a measure was again introduced in the Legislature in opposition to the plan of Governor Pease, who had by this time embraced the policy of State ownership, and recommended its adoption by the State. After a tedious debate extending over the greater part of the session, this act was passed over the opposition of those men who favored public works. The agitation for government ownership thus came to naught.

(b) Terms of the Act.
According to the terms of the act, all the railroads then in existence were to be loaned $6,000 for each mile of road constructed, after the completion of the first twenty-five miles, and the grading of the second twenty-five miles. The Special School Fund, consisting of $2,000,000, was to be equally divided between the roads on the east and west sides of the Trinity River. The loans were to be made by a Board of School Commissioners, consisting of the Governor, the Comptroller and the Attorney General.[25]

12. Resume.
The method of securing railroads adopted by Texas was, therefore, the system of private corporations aided by the State. The aid offered consisted of 10,240 acres of land and a loan of $6,000 to the mile of road constructed. How efficient these measures were in promoting construction we shall learn in another chapter.

13. Railroad Abuses.
Though the agitation for public works and the abolition of private corporations failed, it was at least accompanied with some important results. The first attempts at railroad regulation, and the correction of railroad abuses came as a result of this agitation, and it cannot be said that the cause of railroads was not benefited thereby. The abuses to which reference is had were not unlike some that prevail today—abuses which the experience and legislation of three-quarters of a century is apparently powerless to check. A fair sample of some of these is the following:

When the Mississippi & Pacific contract was signed, it was agreed between the contractors and the Atlantic & Pacific Company that they were to be paid $200,000—to be later increased to $600,000—in Atlantic & Pacific stock. It was claimed by Mr. Lawhon that $20,000,000 of stock would have to be issued under this arrangement in order to net the $600,000, and upon this fictitious value the people were to pay dividends in the form of exorbitant tariff and passenger rates.[1]

The Buffalo Bayou, Brazos & Colorado Company was guilty of similar manipulations. After expending the money paid in the form of stock, the company resorted to borrowing. Ten per cent bonds were issued, $66,000 of which were sold at thirty to sixty cents on the dollar. The road when completed to the Colorado cost $1,040,793.[2] One-half the sum nominally expended should have been sufficient to complete the work. In order to make dividends on the stock, and to pay interest on the bonds, rates had to be levied two or three times higher than they normally should have been. [3]

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The San Antonio & Mexican Gulf Railroad solicited subscriptions to its capital stock on an estimated cost of $14,000 to the mile. The contract was let at a cost of $27,000 to the mile. This exorbitant cost was due to the fact that the contractors agreed to take the bonds of the company in payment. The difference of $13,000 represented the discount at which the bonds had to be negotiated. Here again the people paid the difference. The produce of the country had to be taxed sufficient to pay the interest and principal on bonds which represented largely a fictitious value. [4]

14. Governor Bell's Administration.
The pernicious character of these abuses was recognized as early as 1853, for in that year Governor Bell writes in his message to the Legislature:

"Already some twenty or more charters have been granted by the State government for railroad purposes, and so far as I am advised, with few exceptions, * * * they have been unattended with the practical results anticipated, notwithstanding the liberal inducements offered. * * * Consideration of these facts has convinced me that in our zeal for internal improvements we have heretofore granted railroad charters indiscriminately. * * *

"I therefore recommend that no railroad shall be incorporated, except such as are clearly of primary importance to an extensive section of the State, and which would give the safest guarantee of its ability to comply with the terms of its charter.'' [5]

These recommendations were incorporated into a law in 1853—the first general law passed by Texas seeking to regulate railroads. This act contained the germs of all the future legislation on the subject of railroad regulation. Annual reports were required of the companies, giving detailed information as regards the operations of the roads. The Legislature reserved the right to fix a schedule of freight and passenger charges once in every ten years. No reduction of rates was to be made, however, unless the net profits for the preceding ten years had exceeded twelve per cent on the investment. Another provision having in view the absolute control of the companies, gave authority to the Legislature to acquire any railroad property at any time by paying the cost of the road, plus twelve per cent.

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15. Governor Pease's Administration.
Governor Pease did not consider these measures comprehensive enough. He wished to make it impossible for companies to secure charters for speculative purposes, and he desired to protect the honest citizen and the State from imposition and loss. In his first message to the Fifth Legislature he recommended a course of action in regard to charters already granted, as follows:

"I * * * recommend that no extension of time shall be granted to any company unless satisfactory evidence is presented that it has actually commenced the construction of its road and that a sufficient amount of stock has been paid to * * * (insure) that the road will be completed. * * * The route and termination of the road * * * (should) be designated when this has not been done in the original charter, and if any further donations of land are made to such companies they should receive the patents only on the final completion of their road." [6]

No action was taken on these recommendations. However, in amendments to the charters of the San Antonio & Mexican Gulf and the Buffalo Bayou, Brazos & Colorado Railroads the privilege of building branches was rescinded. [7] Governor Pease in his message to the Sixth Legislature, advocating the State system, reiterated the recommendations of his first message, and urged the adoption of the necessary regulations in case the corporate system was continued. He failed in his attempt to establish the system of public works, but he determined to engraft these regulations in the charters of the companies. In this purpose he was successful.[8]
In December, 1855, the Galveston, Houston & Henderson Company applied to the Legislature for an extension of time. When the bill came up in the House an amendment was offered, reserving the right for the State to buy in this road at any time by paying to the company an amount equivalent to the value of the road plus ten per cent. It was held by the supporters of this amendment that the provision in the general law requiring the cost of the road to be paid to the company, instead of its value, destroyed the possibility of exercising control, since the road would be unprofitable to buy. They insisted, therefore, on its alteration. The relief was extended to this company, but no such right on the part of the State was asserted.[9] The company was required to keep its principal office in the State, to hold all elections, and to have a majority of the directors reside in Texas.[10] Similar terms were imposed on the Galveston & Red River Company and the Memphis, El Paso & Pacific Company when they applied for relief. Branching privileges were denied all three.

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A bill granting relief to the Texas Western Railroad passed the Legislature at this time, but was vetoed by the Governor because it did not impose these conditions. This corporation was powerful enough to lobby this measure through at the adjourned session over the Governor's veto, and this company escaped without the onus of these restrictions. Branching privileges were denied, however. [12] The Henderson & Burkville Company likewise secured relief in spite of the Governor's veto. [13]

Six new companies were chartered by the Legislature during the year 1856, and the charters of all of these, with the exception of the Houston Tap road, contained these provisions. The Trinity Valley charter was vetoed by the Governor because it did not impose the new regulations. The franchise was not granted until 1860, by which time the observance of these conditions had become compulsory by general law.[14] The Jefferson & Dangerfield charter experienced similar vicissitudes, but never became a law.

In his retiring message to the Seventh Legislature, Governor Pease again deprecated the prevalence of loose methods in railway legislation, and urged the necessity of uniformity in granting charters. [15]

The people of the State had by this time become convinced of the soundness of his views, and showed less disposition to distrust his motives. Their representatives responded to the suggestions, and inaugurated uniformity by the passage of a general law. This was a supplementary act to the general regulating act of, 1853. The termini of the routes were required to be designated, the principal office was required to be kept along the road, and the chief officers and directors were required to reside in Texas. [16]

The importance of these enactments, though little understood at that time, is thoroughly appreciated at this day. These laws doubtless protected the State from many evils from which it stood in need of protection. Though often violated in after years, they still exerted a wholesome influence on the railroad development. In them we must seek for the beginnings of our Railroad Commission and our salutary Stock and Bond law.

NOTES FOR SECTION II., RAILROADS OF THE REPUBLIC OF TEXAS.
[1] -- Act of December 16, 1836, Gammel's "Laws of Texas," Vol. 1, p. 1188.
[2] --The facts of this account are taken from an article by Donaldson in the Texas Almanac for 1868, pp. 119-121.

NOTES FOR SECTION III., PROGRESS OF RAILROADS IN TEXAS, 1845-1856.
[1] --Vide my paper on "Land Grants to Railroads in Texas," Appendix D, p. 92.
[2] --Act of February 11, 1850, "Laws of Texas," Vol. 3, p. 632.
[3] --The action of the company in beginning at Houston was ratified by the Act of February 7, 1853, Ibid, Vol. 3, p. 1390.
[4] --Donaldson, Loc. cit. pp. 121, 122.
[5] --Vide my paper on "Land Grants to Railroads in Texas," pp. 49, 50.
[6] --Ibid, Appendix D., p. 32.
[7] --"The subject of a railroad to the Pacific Ocean is one that is now engrossing the attention of every part of our widely spread LTnion. To none is its location fraught with more important consequences than to our State, and I therefore again briefly but most earnestly recommend it to your serious consideration" —Message to the Fifth Legislature in the Journal of the House of Representatives, p. 15, et. seq.
[8] --Act of December 21, 1853, "Laws of Texas," Vol. 4, p. 7.
[9] --Governor Pease's Veto Message of the Act to amend the Charter of the Texas Western Railroad, July 7, 1856, In the Journal of the Senate of the State of Texas, Sixth Legislature, Adjourned Session, Austin, 1856, pp. 15-18.
[10] --Governor Pease's Message to the Sixth Legislature, Ibid, p. 8.
[11] --Letter of Governor Pease to the Senate Committee on Internal Improvements, Senate Journal, Sixth Legislature, Adjourned Session, Austin, 1856, p. 99.
[12] --Debates of the Sixth Legislature in the State Gazette Appendix, Vol. 4, pp. 88-118.
[13] --Message of Governor Pease to the Sixth Legislature, 1855, Senate Journal, p. 8, et seq.

NOTES FOR SECTION IV., STATE AID TO RAILROADS.
[1] --Cyclopedia of Political Science, Political Economy and the Political History of the United States, edited by John J. Lalor, Vol. 3, p. 515.
[2] --Vide my paper on "Land Grants to Railroads in Texas."
[3] --Resolution of Congress, approved March, 1845, "Laws of Texas," Vol. 2, p. 1229.
[4] --Report of the Commissioner of the General Land Office of the State of Texas upon the Findings of the Special Commission appointed under the Act of March 2, 1899, November 7, 1899, p. 4.
[5] --Act of February 10, 1852, "Laws of Texas," Vol. 3, p. 1145.
[6] --These were: the Texas Central, the Texas & Louisiana, the New Orleans, Texas & Pacific, the Texas Western, the Vicksburg & El Paso, the Brownsville & Rio Grande, the Galveston, Houston & Henderson, the Indianola & Victoria Plank, the Marshall Railroad, the Memphis, El Paso & Pacific, the Virginia Point & Austin, the Columbia, Wharton & Austin, the Sabine & Sulphur Springs, and the Chambers terraqueous Transportation.
[7] --Vide my paper on "Land Grants to Railroads in Texas," pp. 25-28.
[8] --Twelfth Decennial Census of the United States.
[9] --"If we pursue this course our railroad charters will cease to be offered for sale by individuals who have obtained them for the purposes of speculation. Those who wish to construct railroads will obtain charters without paying a premium to the persons who have induced the Legislature to pass them, and we shall have no more companies organized without capital to impose upon the credulous and unwary, and stand in the way of those who have the disposition and means to construct railroads."—Message of Governor Pease to the Sixth Legislature, Senate Journal, 1855, p. 8.

[10] Report of the Comptroller of Public Accounts for 1858. The following were the elements of this estimate:

    Land -- $73,677,316
    Town Lots -- 12,861,990
    Negroes -- 71,912,496
    Horses -- 11,583,247
    Cattle -- 13,259,537
    Capital -- 2,745,493
    Miscellaneous -- 6,347,298 
   Total -- $192,387,377

[11] -- Texas Almanac for 1859, p. 220.

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[12] -- The condition of affairs is thus admirably summarized by the House Committee on Internal Improvements:
"It may be proper to advert to some of the causes that have hitherto delayed and prevented the construction of railroads in the State notwithstanding the liberal bonus of land. Some years back when most of our charters were granted, eight sections were pledged to the mile constructed. At that time the railroads in the Atlantic States had not approached the banks of the Mississippi or of the Gulf. A railroad to the Pacific Ocean was not regarded as a practicable undertaking, nor had it been ascertained that this work must pass through Texas. Our population was much more sparse and our products much less than now. Our railroads could not connect themselves with any of the great lines of travel connecting with the east web of railroads in the States east of the Mississippi, and it was evident that the freight and passenger travel within our own borders would not be sufficiently profitable to justify the investments of capital. Our lands were believed to be remote from navigable rivers and the low price of land certificates depreciated their value. A grant of sixteen sections per mile by the United States to railroads in the Northwestern States leading from Chicago, St. Louis, and other large market towns and, connecting with the railroads of the Atlantic cities, drew off from our State the attention of all persons disposed to engage in such undertakings; therefore, the hopes of our chartered companies, and citizens generally, were disappointed. At the last session of the Legislature the bonus was increased to sixteen sections, but unfortunately about that period the western nations of Europe engaged in a most expensive war so pressing that no new railroad enterprise could command the attention of capitalists either in the United States, London or Paris, so that another failure has attended the liberal offers of Texas." Journal of the Sixth Legislature of the House of Representatives, Part II, pp. 401-412.

[13] -- Poor's "Manual of Railroads for 1900," loc. cit., p. xxv.
[14] -- Encyclopedic Dictionary of American History, Vol. 1, p. 241.
[15] -- Cyclopedia of Political* Science, Political Economy and the Political History of the United States, Vol. III, p. 49.
[16] -- Report of the Committee on Internal Improvements, Sixth Legislature, 1856, House Journal, Part II, pp. 401-412.
[17] -- Debates of the Sixth Legislature, Regular Session, Vol. 1, p. 156.

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[18] -- Message to the Sixth Legislature, Senate Journal, 1855, p. 8, et seq. The situation and prospects, are thus described: "We have chartered thirty-seven railroad companies and have held out greater inducements for their construction than were ever offered before by any government. It is now nearly four years since a bonus of eight sections of land was offered for each mile of road constructed, and nearly two years since the bonus was increased to sixteen sections a mile for each twenty-five miles. The result of these efforts has been that we have one road of about thirty miles in operation from Harrisburg on Buffalo Bayou to the neighborhood of Richmond on the Brazos River, and two others, the Galveston & Red River Railway, and the Galveston, Houston & Henderson Railroad in the course of construction, with a reasonable prospect, as I am informed, of completing twenty-five miles each by the 30th of January next in time to avail themselves of the bonus of sixteen sections. So far as I have been able to learn, no other company is doing any work under its charter * * *.

"The Buffalo Bayou, Brazos & Colorado Railroad Company will undoubtedly complete its road as far as Richmond during the present year. The Galveston & Red River Railroad Company, and the Galveston, Houston & Henderson Railroad Company expect to complete twenty-five miles of their respective roads by the 30th of January, 1856, so as to secure the bonuses of sixteen sections to the mile.

"These companies will then have to continue their roads at the rate of twenty-five miles a year or lose the benefit of the bonus of sixteen sections. If they fail to do this, the Harrisburg Company and the Henderson Company may still have the benefit of the bonus of eight sections, but the latter to secure even this, will have to construct an additional fifteen miles on or before the 1st of March, 1857, to save its charter.

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"The Houston Company has already lost the benefit of the bonus of eight sections by failing to complete ten miles of its road within the time prescribed by its charter. It is possible that some of the other companies may be able to avail themselves of the sixteen section bonus, as only those which terminate on the Gulf coast, the Bays thereof, or on Buffalo Bayou, are subject to the provisions which require the construction of twenty-five miles on or before the 30th of January, 1856, though it is believed that few, if any of them, will ever build road enough to save their charters. It is not generally supposed that either of the three companies named will be able to construct their roads at the rate of twenty-five miles a year after the 30th of January next, so as to secure the sixteen section bonus unless they are assisted by a liberal loan of money from the State. We cannot therefore expect that much progress will be made for many years to come in the construction of railroads in this State by private corporations beyond the completion of these tracks already graded, unless such a loan shall be authorized, or that provision of the act which requires these companies to construct twenty-five miles a year is repealed, for it is generally conceded that they will not at present yield a sufficient profit to induce individuals to invest capital in them without the advantage derived from the land bonus."

[19] -- Message to the Fifth Legislature, Journal of the House of Representatives of the State of Texas, Austin, 1853, Part II, pp. 22-25.
[20] -- Report of the Committee on Internal Improvements, House Journal, Fifth Legislature, p. 186.

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[21] -- The details of this plan will be gleaned from the following excerpts from Governor Pease's Message:
"The present is a favorable time to revise our legislation in regard to railroads generally. * * *

"What our citizens need is a general system of internal improvements by railroad, river improvements and canals that will extend its benefits to every section of the State as nearly as practicable, and give them a cheap transportation of their products to market. This I believe can be obtained within the next 'fifteen years by a judicious use of our public domain, aided by a moderate internal improvement tax, which will never be onerous to our citizens, and for which will be repaid ten fold in the increased value that such a system will give to their property, and the reduced rate at which they will be furnished transportation of their productions and their supplies.

"Our unappropriated public domain is estimated at about 100,000,000 acres. Suppose that one-half of it was valueless or unsuitable for cultivation, which is a large estimate, this will leave us 50,000,000 acres, which at seventy-five cents an acre is worth $37,500,000. This every one must admit is a small estimate of its value, and under a judicious system of sales, to be effected gradually as the wealth and population of the State is increased by the proposed improvements, it would undoubtedly sell for twice or three times that amount within fifteen years. Let us suppose that it would cost six cents an acre, which is a large price, for the gradual survey of these lands as it might be deemed advisable to bring them into market, the cost of surveying the whole hundred millions would be $6,000,000. This would leave $31,500,000 as their net proceeds to be applied to works of internal improvement. As this amount could be realized from them only by gradual sales through a course of years, in order to commence the system immediately, it would be necessary to anticipate their proceeds by the use of the credit of the State, to sustain which an internal improvement tax of fifteen cents on each $100 of the taxable property of the State would be required. Such a tax on the assessment for the year 1857, which is as early as the system could be commenced, would produce * * * $268,000 this would pay an interest of six per cent, on four and one-quarter million dollars. The same tax, allowing the increase in the value of our taxable property to be one-fourth less each year than it has been since the year 1846 (and it would without doubt be much greater), would produce in 1860 the sum of $337,000, which would pay an interest of six per cent. on six and one-quarter million dollars. This will enable us to use the credit of the State to the amount six and one-quarter million dollars before the close of the year 1860, without taking into account the annual earnings of the public works as they progress, which would be at least three per cent, on their cost, equal to one-half of the interest we would be paying on the debt. By that time we would be in receipt of a considerable amount each year from the sale of the public domain, increased in value by the improvements already made, and our works could proceed much more rapidly to completion. In this way we might expend from twenty-five to thirty million dollars upon a general system of internal improvements within the next eighteen years and at the end of that time the whole will have been paid by the proceeds of the sale of our public domain and the internal improvement tax. The State would be the owner of the works constructed and could reduce the price for transportation and travel to such rate as would keep them in repair and pay the expense of operating them, or to such rates, as in addition to the cost of keeping them in repair and operating them, would produce an annual income of three per cent. upon the cost. This income amounting to over $750,000 might be applied to the expenses of the government, or to extend the system until every neighborhood in the State would be furnished with ample railroad facilities. All this may be accomplished and the wealth of our citizens increased hundreds of millions, simply by a prudent use of our public domain and an annual tax of fifteen cents on each $100 of the taxable property of the State for the next fifteen years. The system of works should consist of railroads, improvements upon our navigable rivers and canals connecting the different bays and streams along our coast.

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"Sixteen hundred miles of railroad can be so located as to accommodate every section of the State that is now inhabited, and so that no neighborhood (except the northwest corner of the State) that is not within a convenient distance of a navagible course or a canal shall be more than twenty-five miles from a railway.

"The average cost of building and equipping railroads in this State will not exceed $10,000 a mile if paid for with money when the work is done; at this rate sixteen hundred miles would cost $25,600,000. This amount deducted from thirty-one and a half million, the estimated sum to be derived from our public domain in the next fifteen years would leave $5,900,000, which could be applied to the improvement of our navigable rivers, cutting canals to connect all the bays and water courses along our coast from the Sabine and Rio Grande, and to any other object of public utility.

"This system to be successful must be made the permanent policy of the State and incorporated into our Constitution so as to be placed beyond reach of change by Legislation.

"The routes over which railroads are to be constructed, the rivers whose navigation is to be improved, and the canals which are to be cut, must be specified —the lands must be set apart as an internal improvement fund—the time and manner of their survey and sale must be fixed—the internal improvement tax must be levied—provision must be made that the credit of the State shall never be used to an amount beyond what the internal improvement tax and the net earnings of the public works will pay the interest of—and that the works specified shall all be carried on simultaneously until their final completion— all this must be done by constitutional provision—otherwise it is possible that future Legislatures may undertake other works before those designated shall have been completed, or may become impatient with the progress of the works and endeavor to hasten their completion by an increase of taxation, so as to make it oppressive, or by the use of the State credit beyond the means provided for sustaining it, and thereby defeat the whole system.

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"Under this system, the improvements will progress towards completion simultaneously with the increase of population and the wealth of the State. Each mile of improvement will increase the value of the public lands and of individual property, and the ability of the State to prosecute the system will increase in the same ratio. * * * No system of internal improvements should be undertaken requiring an expenditure of money by the State, which would have to be supplied by taxation, until it has first been submitted to and received the sanction of the people. * * *.
"Should these views be acceptable to you, I shall interpose no obstacles to such constitutional measures as you may adopt to aid in the construction of railroads and in the improvement of our navigable rivers, if they shall seem likely to effect those objects * * *." Journal of the Senate of the State of Texas, Sixth Legislature, Austin, 1855, pp. 18-31.

[22] -- Robert's "The Political, Legislative and Judicial History of Texas for its Fifty Years of Statehood, 1845-1895," in Scarff's "A Comprehensive History of Texas," Vol. 2, pp. 21-29.
[23] -- "Laws of Texas," Vol. 3, p. 1461.
[24] -- Senate Journal, Fourth Legislature, Austin, 1851, pp. 31-33.
[25] -- House Journal, Fifth Legislature, Austin, 1853, Part II, pp. 22-25.
[26] -- "Laws of Texas," Vol. 4, p. 449.

NOTES FOR SECTION V., RAILROAD REGULATION.
[1]--Debates of the Sixth Legislature, Regular Session, Vol. 1, p. 177.
[2]--Report of the Buffalo Bayou, Brazos & Colorado Railroad to the Comptroller for 1860.
[3]--Debates of the Sixth Legislature, Regular Session, Vol. 1, p. 178.
[4]--Ibid, Vol. 1, p. 178.
[5]--Journal of the House of Representatives, Fourth Legislature, Austin, 1853, p. 15 et seq.
[6]--Journal of the House of Representatives, Fifth Legislature, Austin, 1853, Part II, pp. 22-25.
[7]--Acts of February 13, 1854 and February 4, 1864, "Laws of Texas," Vol. 4, p. 142 and 70.

[8]--"No new charters should be granted over a route where a road is already being constructed, or near such route as materially to impair its value.
"Every railroad company should be required to hold all meetings for the election of its officers within the State, and have a majority of its directors resident citizens thereof, and also to keep its principal office for the management of its affairs within the State.   * * *
"I am unwilling that any new charters shall be granted to individuals for their own benefit. If new charters are necessary, let such routes be selected as the wants and business of the country require, designate their points of commencement and termination, and grant charters to commissioners who shall be required to open books for the subscription of stock after giving public notice. No subscription should be received unless five per cent, thereof is paid at the time of subscribing, and whenever the percentage on the capital stock subscribed shall amount to $100; let the commissioners be authorized to call a meeting of the subscribers and hold an election for officers, after which the subscribers should become a corporation with all such powers as are set forth in the charter. The commissioners should have no right under the charter except as trustees for the benefit of the subscribers."—Journal of the Senate, Sixth Legislature, Austin, 1855, p. 18 et seq.

[9]--Debates of the Sixth Legislature, Regular Session, Vol. 1, pp. 176-178.
[10]--Apt of July 24, 1856, "Laws of Texas," Vol. 4, p. 569.
[11]--Acts, of January 23, 1856, and February 4, 1856, Ibid, Vol. 4, p. 326, 328, 378.
[12]--Act of August 16, 1856, Ibid, Vol. 4, p. 622.
[13]--Act of January 24, 1856, Ibid, Vol. 4, p. 336.
[14]--Senate Journal, Sixth Legislature, Austin, 1856, pp. 11, 12.
[15]--Vide Journal of the House of Representatives, Tenth Legislature, Austin, 1857, pp. 38-41.
[16]--Act of December 17, 1857, "Laws of Texas," Vol. 4, p. 987.

NOTES FOR SECTION VI., RAILROAD PROGRESS, 1856-1860.
[1]--Act of January 22, 1858. "Laws of Texas," Vol. 4, p. 529. This act amended the act of 1J56 so as to allow companies to receive loans on the five miles of road after the completion of the first twenty-five miles.
[2]--Published statements to the stockholders of the Buffalo Bayou, Brazos & Colorado Railroad on the condition of the company for the years 1858 and 1860. The entire equipment of the company consisted on the 1st of April, 1860, of six locomotives, three first-class passenger cars, two second-class passenger cars, mail and baggage cars, sixty-one platform and twenty box freight cars, and ten hand and rubble cars.
[3] See table below:

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[4]Act of September 1, 1856, "Laws of Texas," Vol. 4, p. 806.
[5]Report of the Houston & Texas Central Railway in the Texas Almanac for 1861, p. 234.
[6]Fourth Annual Report of the President and Directors of the Houston & Texas Central Railway Company to the Stockholders, 1857, p. 10.

[7] The account of the company stood on June 1, 1860, as follows:
   Stock subscribed to June 1, 1860:
   Stock issued and fully paid --- $ 458,200.00
   Stock paid, but not issued --- 320,475.00
   Due for stock in bills receivable --- 264,124.00
   Total --- $1,042,800.00

Construction account, buildings at Courtney and Navasota stations, platforms since last --- $19,514.00
   Right of way --- 187.51
   Land from the State --- 1,608.00
   Three locomotives --- 30,000.00
   Cars and material for cars --- 14,815.00
   Amount of bonds to the State of Texas --- 450,000.00
   Amount of bonds, second mortgage --- 125,000.00
   Amount construction  --- 400,000.00
   Amount bills payable --- 224,430.00
   Due to the company over and above debts due by the company --- 44,562.00
   Freight receipts from September 1, 1859, to June 1, 1860 --- 198,809.00
   Passenger --- 66,844.00
   Mail --- 44,497.00
   Repairs of all kinds --- 58,666.00
   Buildings and platforms --- 14,289.00
   __________________ --- 30,000.00
   Salaries --- 10,866.00
   Transportation expenses --- 31,890.00
   Wood including stock on hand --- 3,013.00
   Total --- $1,728,990.51

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[8] -- Act of February 7, 1853, "Laws of Texas," Vol. 3, p. 1410.
[9] -- Report of the Galveston, Houston & Henderson Railroad Company to the Comptroller, 1860.
[10] -- Act of September 5, 1850, "Laws of Texas," Vol. 3, p. 814.
[11] -- Act of February 20, 1856, Ibid, Vol. 4, p. 414.
[12] -- The data for this history have been taken from "A Letter on the Condition and Prospects of the San Antonio & Mexican Gulf Railroad Company," dated New York, December 12, 1856, by William J. Clark, its President, to Messrs. George S. Waters, and Samuel J. Beals, New York; an "Exhibit of the San Antonio & Mexican Gulf Railroad," published in New York, 1860; and a "Letter of Messrs. Paschal, French and Wheeler to Messrs. Brassey, Wise, Napier, Simpson and Robinson," published at Austin, 1860.
[13] -- Debates of the Sixth Legislature, Regular Session, Vol. 1, p. 191.
[14] -- "Laws of Texas," Vol. 4, p. 329.
[15] -- Texas Almanac for 1858, p. 124.
[16] -- Second Annual Report of the President and Directors of the Houston Tap & Brazoria Railroad, Houston, 1859, p. 4.
[17] -- Act of August 16, 1856, "Laws of Texas," Vol. 4, p. 622.
[18] -- Report of the Committee of the Southern Pacific Railroad on the Present Condition of the Company and its Causes, Marshall, 1858, pp. 2-5.
[19] -- Report of Mr. Post to the Stockholders of the Southern Pacific Railroad, June 8, 1858, p. 3.
[20] -- Texas Almanac for 1859, p. 222.
[21] -- Ibid, 1860, p. 330.
[22] -- Act of February 7, 1853, "Laws of Texas," Vol. 3, p. 1433.
[23] -- Texas Almanac for 1868, pp. 136, 137.
[24] -- Report of the Memphis, El Paso & Pacific Railroad Company to the Comptroller for the year 1860.
[25] -- Debates of the Sixth Legislature, Regular Session, Vol. 1, p. 191.

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[26] -- Act of January 22, 1858, "Laws of Texas," Vol. 4, p. 1255.
[27] -- Report of the Washington County Railroad to the Comptroller for the year 1859.
[28] -- Texas Almanac for 1858, p. 129.
[29] -- Acts of January 17, 1859, "Laws of Texas," Vol. 5, p. 47.
[30] -- Vide my paper on "Land Grants to Railroads in Texas," p. 14.
[31] -- Texas Almanac for 1851, pp. 231, 232.
[32] -- "Laws of Texas," Vol. 4, p. 744.
[33] -- Act of December 24, 1859, Ibid, Vol. 5, p. 49.
[34] -- Texas Almanac for 1869, p. 213.
[35] -- Act of January 22, 1858, "Laws of Texas," Vol. 4, p. 1232.
[36] -- Act of February 10, 1852, Ibid, Vol. 3, p. 1145.
[37] -- Act of January 27, 1854, Ibid, Vol. 4. p. 32.
[38] -- Act of January 24, 1856, Ibid, Vol. 4, p. 331.
[39] -- Act of January 21, 1858, Ibid, Vol. 4, p. 1181.
[40] -- Act of February 14, 1852, Ibid, Vol. 3, p._____.
[41] -- Act of February 16, 1858, Ibid, Vol. 4, p. 1328.