The domestic debt was incurred in meeting the ordinary expenditures of the government, although there may be some question about calling ordinary the expenditures on account of Indian and Mexican depredations. This debt was originally in the form of audited drafts and treasury notes, but afterwards bonds were issued to fund the floating liabilities and to meet appropriations.

All except $100,000 of the $1,250,000 debt handed down by the government ad interim was in the form of treasury orders or audited drafts, representing treasury obligations for supplies for the army and navy, for pay of officers and men, and for civil purposes.2 Such of these as had been issued for cash advanced or for supplies furnished prior to March 1, 1836, bore interest at 8%. The amount of this description, however, was only $59,-468.43.3 This continued to be the main form which domestic indebtedness took until the issue of treasurv notes began in November, 1837.

Including $6,980.06 issued by the General Council in 1835 and 1836, the total issue of drafts up to December 31, 1837, was $1,220,438.21. The amount redeemed during the period, either by receipt in payments of public dues or by drafts on agents in the United States, appears to have been only $24,822. Their specie value in May, 1837, was about fifteen cents on the dollar.4 To meet this situation the act of June 7, 1837, was passed, authorizing the consolidation and funding of the public liabilities. Claims against the government, after having been properly audited, were received at par in exchange for 10% bonds, and no interest was to be allowed on claims other than those funded.1 The amount of audited drafts funded under the provision of this act was $755,151.68.2 The amount of drafts issued to the beginning of Lamar's administration was $2,105,896.82; during his presidency of three years the amount issued was $4,881,093.47, while during Houston's second term and Jones' administration the amount was only $694,791.81.3 These figures best illustrate the policy of expenditures followed by the several administrations. The total amount issued from the beginning of the government to February 19, 1846, when the period of the republic ends, was $7,681,782.10. In addition to the $755,151.68 funded in the 10% bonds of the act of June 7, 1837, $45,600 was funded in the 10% bonds authorized by the act of February 5, 1840. Of the balance, $5,985,131.21 was paid at the treasury, almost wholly in promissory notes or treasury bonds; $639,061.15 was received in the collection of revenue and destroyed, $74,441.26 was filed with the auditor and comptroller, and $182,396.80 was outstanding on September 1, 1851.4

1 Report of the Auditor and Comptroller, December 27, 1849, and November 12, 1851. Acts of January 31, 1852, and February 1, 1856. See also House Misc. Document, No. 17; loc. cit.

2 Morfit to Forsyth, September 4, 1836; loc. cit.

3 Report of the Auditor and Comptroller, September 30, 1836; House Journal, 1st Tex. Cong., First Sess., p. 23.

4 Gouge, op. cit., p. 267.

Until June 12, 1837, audited drafts were received by the gov-eminent in payment of all dues and taxes, but by the act of that date they were declared to be not a tender for taxes on retailers of liquor, billiard tables, nine-pin alleys, and like games; and by the act of December 14, 1837, they became no longer receivable for customs duties.5 By the act of January 16, 1840, they again became receivable for all direct and license taxes, but after February 1, 1843, they were not a tender for taxes, except in the case of arrears incurred before that date.6 There were in 1844, however, special acts of congress which provided for the issue of a small amount of drafts that were receivable for direct taxes, and in some cases, for customs. Throughout the period of the republic audited drafts were receivable in payment of land dues, and the act of February 11, 1850, provided that audited paper could be exchanged for land certificates at the rate of fifty cents an acre.1 If originally acceptable for that purpose, they were received by the state in payment of arrears of taxes due the republic, and small amounts continued to be received for land dues and taxes at the treasury as late as 1859.2

1 Gammel, op. cit., vol. 1. pp. 1301-3.

2 Reports of auditor and comptroller, December 27, 1849, and November 12, 1851. The amount given in the reports, and repeated by Gouge, is $835,500, but it includes $80,348.32 which does not represent properly audited drafts funded. 3Gouge, op. cit., p. 267.

4 Report of the Auditor and Comptroller, November 12, 1851.

5 Gammel, op. cit., vol. 1, pp. 1322, 1309.

6 Ibid., vol. 2, p. 727.

Audited drafts were warrants drawn by the auditor and comptroller of the republic upon its treasury, pursuant to the appropriation acts. There was, however, a large amount of claims which never reached during the period of the republic the stage of being audited, and the auditor and comptroller of the state were authorized to pass upon them by the act of March 20, 1848, which provided for the ascertainment of the debt of the republic. The legislature itself passed special acts from time to time acknowledging the legitimacy of certain claims. In passing upon these claims for services or supplies furnished, the practice was followed of assigning to each claim, as far as was possible, its par value at the time the service was rendered or the supplies were furnished.3 From 1852, when payment first began, to 1902, the date of the last payment, there was paid on account of this character of debt, $1,576,214.29. Of this amount, however, $288.-263.16 was discharged by being received by the treasury in the collection of revenue.4

1 Ibid., vol. 3, p. 636. This act was intended to absorb the audited paper of the republic.

2 Act of January 23, 1850; ibid., p. 504. The comptrollers' reports tlo not separate in the receipts audited paper and treasury notes, so it is not possible to classify the respective amounts of each received. The total liabilities of the republic received from February 19, 1846, to 1860, after which time they cease to appear, amounted to $289,110.86.

3 Act of March 20, 1848, sec. 2; Gammel, op. cit, vol. 3, p. 208. Report of the Auditor and Comptroller, December 27, 1849.

4 The appropriation acts, except the act of January 31, 1852, do not separate principal and interest. The statement of the amount paid does not distinguish, therefore, the principal from the interest payments.