50 Transactions Texas Academy of Science. — 1906. 
(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 Legisla- 
ture 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 rail- 
roads, 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 par- 
ticular works to be undertaken — were to be incorporated in the Con- 
stitution. 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 cost- 
liness. While conceding the necessity for railroads, these men be- 
lieved 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 posses- 
sion of this country. The North was opposed to relinquishing this 
area back to Texas, for fear of extending the slave territory. In sat- 
isfaction 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 
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 
