The period from 1874 to 1880 was one unusually full of influences conducive to economy in public expenditures. The panic of 1873 cast its shadow of depression over the country until 1879, and this alone warranted the most economical administration of the state's affairs. Other potent reasons for the practice of public economy were the high rate of taxation, the large floating debt and the weakness of the state's credit, the imperative need of putting down internal lawlessness, of protecting the border, and of satisfying the minimum demands of the charitable, correctional, and educational functions of the state.

The Constitution of 1876 reduced the salaries of state officials and judges, and there was also a decrease during this period in the support of the several state departments, the judiciary, and the charitable institutions.1 The reduction in salaries and the severe limitations on the debt-creating and taxing powers of the state and local governments reflect the commercial, financial and agricultural depression which followed the panic of 1873. Expenditures on account of sessions of the legislature declined, those for direct promotion of immigration and for the geological survey disappeared, and the share of the general revenues appropriated to the school fund was reduced to one-sixth for the year 1880. The creation in 1876 of the department of insurance, statistics and history, buildings for the Agricultural and Mechanical College, and quarantine against yellow fever were responsible for minor additions to expenditures. The expenditures of this period showed no decrease over those of the preceding period, however, and this was due chiefly to the pensioning of the veterans of the Texas Revolution, to the protection of the frontier, and, above all, to the heavy interest charge of the funded debt and to the payment of debts incurred before January 15, 1874. The pension policy underwent frequent changes. The act of August 13, 1870, had granted $250 annually to each surviving veteran of the Texas Revolution and an additional $250 to such as had been wounded, but the appropriation of $224,817 for their payment in 1871 and 1872 was vetoed by Governor Davis.1 In 1874 this act was repealed, but the arrearages under it were made payable in 10% bonds, and a new pension act was passed granting an annual pension of $150 to indigent veterans and an additional $150 to those who were disabled by reason of wounds received in the service.2 This act was in turn repealed in 1875 on the ground that all who were eligible to its benefits had received 10% pension bonds and that the law afforded an opportunity lor the perpetration of fraud on the state.3 The Constitution of 1876 authorized pensions not to exceed $150 per annum to indigent survivors of the Texas Revolution and their unmarried widows.4 In 1876 an annual pension of $150 was granted, but it was repealed in 1879 because of the unexpected number of applicants. There was substituted for the cash pension a land grant of 640 acres to each indigent veteran.1 The land grant measure relieved the treasury of pension expenditures and so assisted in establishing the "pay-as-you-go" policy. Pension bonds authorized in 1874 were issued to the amount of $1,115,-009, and up to March, 1879, $501,750 interest was paid on them.2 Warrants drawn on the treasury on account of cash pensions aggregated $283,662 for the period, and as $213,542 of this amount was drawn in 1879, the hasty repeal of the act of 1876 may be understood.

1 The following is a comparison between the salaries stipulated in the constitutions of 1869 and 1876:

The appropriation bill for 1880 and 1881 in response to the "pay-as-you-go" slogan made sweeping reductions in the salaries of the employees of the state. The salaries of the chief clerks in the state and treasury departments were cut $300 each; the salary of the chief clerk in the comptroller's department was pared $500, that of the governor's private secretary, $300, and corresponding reductions were made in the salaries of the other employees. See Report of the Special Committee on Retrenchment, February 18, 1879; House Journal. 16th Leg., First Sess., p. 421.

1 Laws of 1870, Called Sess., p. 119. Laws of 1871, p. 106.

2 Laws of 1874, p. 114.

3 Act of March 13, 1875; Laws of 1875, p. 112. The comptroller declined in 1874 to issue certificates for pensions because of the indefi-niteness of the law in defining indigency.

4 Art. 16, sec. 15.

The penitentiary had been leased in 1871 for fifteen years, and as there was no resumption of control during the period the only expense to the state, was the conveyance of prisoners and the beginning of the construction of the eastern branch of the penitentiary at Rusk. The conditions existing at Hunts-ville were described as discreditable to the state, but the increase in taxation which resumption of control would entail was a bogey against which the cry for reform was unavailing.3

The increase of expenditures on account of the protection of the frontier against marauding Mexicans and desperadoes and the interest on the public debt offset any economies effected in other lines. The protection of the frontier was a duty which the United States Government should have performed, and it afterwards reimbursed the state for the expenditures made, but at the time the disbursements were made they constituted an onerous burden. The funding of the floating debt incurred during the Davis and succeeding administrations and the issue of bonds to meet the current needs of the government account for the appearance in 1875 of a heavy annual interest charge. The total of the warrants drawn on the general revenue on account of these two items of expense and its percentage of total warrants drawn were as follows:

1 Act of July 28, 1876; Laws of 1876, p. 61. Repealing act, March 13, 1879; Laws of 1879, p. 34. Act of April 26, 1879; ibid., p. 175.

2 House Journal, 16th Leg., Reg. Sess., p. 807.

3 Message of Governor Coke, April 18, 1876. Galveston News, April 30, June 3, 8, 9, and 20, 1876. Laws of 1876, p. 193.