Joint Committee on Reconstruction
Governor Pendleton Murrah
Texas in 1864 - Worthless Currency

Message of Governor Pendleton Murrah to the extra session of the tenth legislature.
EXECUTIVE DEPARTMENT, AUSTIN, May 11, 1864.

THE CURRENCY

Congress owned the fact that the confederate currency was almost worthless, and provided for its withdrawal from circulation. The act was bold, if not approved by wisdom and good faith. It was an act of financial destruction, if not of financial skill. They created, they destroyed. I have no comments to make. I shall deal with the legislation of Congress as it affects the finances of the State.

In regular session, last winter, in a spirit of patriotism, and for the purpose of sustaining the confederate currency, you made all the appropriations in it. You authorized the taxes to be collected in it, and the obligations of the State to be paid from it. You believed that Congress would provide, in some way, to sustain the currency. After the first of July, if the currency is paid out at all from the treasury, it must be at a discount of 33 1/2 per cent. on the dollar, and on the one-hundred-dollar notes at a still greater sacrifice. One-tenth of the annual taxes making the common-school fund, shares the same destiny. This heavy discount is upon a currency rating from twenty to thirty to one in value in comparison with specie. What proportion of the taxes has already been collected, what proportion is yet to be collected, I am not informed; but it is beyond controversy that this accumulation in the treasury is almost worthless, and that measures must be speedily adopted to relieve the State from this embarrassing position. Whether the collection of taxes in the present currency should not be at once arrested, and the disposition of what is already collected, and what may yet be collected, is for your consideration. I believe that it should be exchanged for the new issue. The State cannot afford to hold it and fund in bonds. This would at once deprive her of the means provided by law to meet her pecuniary obligations. When this exchange can be effected, I am not informed; but that it should be speedily done, is evident. The State, so soon as the necessary measures can be put in operation, should cease to pay out this currency. After the first of July, if it can be avoided, no payments should be made with it. Whether the old can be exchanged for the new issue, and taxes gathered in the new, with sufficient expedition to meet the wants of the government, is a matter for your immediate inquiry.

It is necessary to look beyond a few months, or mere temporary arrangements, in referring to the financial policy of this State.

The issue of treasury warrants was very properly arrested, to prevent them from being paid out in connexion with confederate notes, and at the same deprecaited rates.

The question is now distincly propounded to you, and must be answered by your legislation, whether you will continue the same financial system, depend entirely upon confederate notes in all their fluctuations and rapid changes as to value and form, or adopt a diferent system. This system has been fully tried, and the results to the State are fully before you. The new currency will doubtless be better than the present, and may continue so for some time; but how long, none can tell. What value will be placed upon the new issue is for the future to determine; but the habit is established by the people, in the use of confederate money, of receiving and paying it out at its market value. The confederate government has not only proclaimed the present currency depreciated, but it long since taxed gold in proportion to its superiour value over confederate notes.

It is certain that a revolution has taken place in the minds of the people and the general government on the subject of currency. A more firm basis is being looked for, and specie is being recognized as the standard by which to determine the value of the paper currency. It is useless to deny the fact or attempt to conceal it. Every-day transactions from Richmond to San Antonio, prove it. The currency is treated as depreciated, and is so estimated in buying and selling, and the habit being so generally established, will certainly continue until the currency ceases to be depreciated, and is regarded as sound. I do not believe, however, that the State and the people should forget the obligation to sustain it as far as possible, by making all the sacrifices that can be expected. The question, however, is presented, whether or not the State alone shall continue to receive this currency at par; and if so, whether she can continue to conduct her operations, and discharge her pecuniary obligations. If, however, the policy is to be continued, of relying alone upon the confederate currency, the issue of treasury warrants should be avoided, if possible, for the reasons heretofore given. If a different financial system is to be adopted, what shall it be?

I confess that the pressure of engagements has prevented me, thus far, from giving that full attention to the subject which its great importance demands, and which is necessary to the formation of views which could be recommended as decided convictions.

But the interest of the State requires that the subject should be thoroughly canvassed; and it might be considered whether the assessments of 1860 or 1861 might not be taken as a basis of values, taxes collected in State treasury warrants, coupons of State bonds at par, specie, and the confederate currency at its value in the market. Treasury warrants could be substituted for the coupons as they were paid into the treasury, and a provision made for funding the warrants in six per cent. bonds whenever too many of them were found in circulation. The fact that the coupons were received in payment of taxes would increase, in all probability, the value of the bonds, and at the same time diminish the amount of specie necessary to redeem the coupons. It might not be necessary to fund any of the treasury warrants for some time to come, perhaps not until the war shall end, as they would become a circulating medium, and be sought for by the tax-payer. Under such a system the taxes might be greatly dimished and yet be of greater value. It is not my purpose to elaborate, but merely to call your attention to this subject.

I am aware that it would require time to depart from the present system, and to put into operation such a one as is indicated above. There would be difficulties to overcome. It would, practically, be found difficult to determine the value of confederate notes in a manner satisfactory and just to all portions of the State. The government would have to be provided for until taxes could be collected under such a system; and how far the present currency and the new issue will meet the want, and in what manner it should be employed for the purpose, would be for your consideration. The taxes that may be remaining in the treasury on the first of July will be diminished in amount one-third by the operation of the law of Congress, unless funded in the six per cent. confederate bonds.

It is at all times important to sustain the credit of the State; and now that we are so isolated from the government at Richmond, it is even more so. Her credit in the progress of this stuggle may not only be essential to the safety of the State, but important to the whole trans-Mississippi department. It should, therefore, be guarded and cherished with great care. The resources and position of the State will enable her to carry a very large debt, should it become necessary, and it is for you to determine whether the interest on the bonds outstanding shall be regularly paid or not. It is important that it should be done; and it can be, provided the State is unembarrassed, in a judicious plan of purchasing and disposing of cotton.

Return

Report of the Joint Committee on Reconstruction of the First Session Thirty-Ninth Congress, Government Printing Office, Washington, 1866, Florida - Louisiana - Texas, pages 100-101.