56 Transactions Texas Academy of Science. — 1906. 
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 ad- 
vised, with few exceptions, * * * they have been unattended with 
the practical results anticipated, notwithstanding the liberal induce- 
ments 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 com- 
panies, 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 pre- 
ceding ten years had exceeded twelve per cent on the investment. 
Another provision having in view the absolute control of the com- 
panies, gave authority to the Legislature to acquire any railroad 
property at any time by paying the cost of the road, plus twelve 
per cent. 
15. Governor Pease’s Administration . 
Governor Pease did not consider these measures comprehensive 
enough. He wished to make it impossible for companies to secure 
