The New Economics of Texas 1850-1910

1. The New Economics of Texas 1850-1910

2. Questions to look for: What transportation problems did Texans face before the building of railroads? How did Texans encourage companies to build railroads in their state? How did railroads change Texas? Explain the significance of: Buffalo Bayou, Brazos, Colorado Railway Co., & Southern Pacific What is one negative way railroads affected Texas?

3. Texas Railroads before the Civil War • RR’s not in Texas before the 1850’s • Texas lacked reliable year-round methods of moving from one place to another • Few roads in Texas- unstable & muddy when it rained; Steamboats could not be used year-round because the rivers became too shallow • Economy could not grow because of transportation problems • Sending good was slow & expensive • 1st rail line was the Buffalo, Brazos, & Colorado Railroad; first trains in Texas used this line in Sept. 1853 • By 1861, 9 railroads operated in Texas

4. Expansion of Railroads Cities & counties sold bonds Railroads received: tax breaks, land grants By 1882, R.R. companies had received over 30 million acres of land

5. Linked to the nation 1880’s companies from other states bought several TX RR’s Southern Pacific became one of the most important RR companies in TX; 1883- S.P. completed the 2nd rail line to stretch from one side of the U.S. to the other

6. Railroads Change Texas Benefits of Railroads Problems with Railroads Racism towards railroad workers Unfair business practices to increase profits • Boosted economy with faster/cheaper shipment of goods in & out of Texas • Reduced travel time • Growth of cities towns such as San Antonio, Ft. Worth, Houston, & Dallas

7. Questions to look for: What was the 1st bank in Texas? Why? Why did Texas begin to mistrust banks? What effect did laws of 1904 regarding state-chartered banks have on Texas? What is a bank panic? Look for characteristics of Commercial, National, Private, & State-chartered banks. If you owned a bookstore, which bank would you most likely ask a loan for your business? Why?

8. Banking in Texas Banking in Early Texas Banking in the State of TX. 1845 – Texas tries to limit power of banks by outlawing the operation of banks in Texas; private firms could lend money (loans) but not issue money After the C.W. Texas’s new constitution banned state-chartered banks; 1869 the new constitution had no laws barring the bank In 1876 state-chartered banks were banned again • Texans had bad experiences with banks • 1822- Mexican gov’t set up Banco Nacional de Texas; the 1st bank in Texas • The bank issued bank notes; 1 yr after opening the banks refused to trade bank notes for coins; they would only trade for new paper currency • 1835 lawmakers created commercial banks; Texas turned to private firms such as McKinney, Williams & Co.

9. Four Types of Banks State-chartered banks: - Regulated by the state government - Became legal in 1904 Commercial Banks: - Give loans & other services to businesses -Loans are repaid by the borrower with interest National Banks: - Regulated by the national government -was required to raise $50,000 before doing business in Texas -Texas laws limited the spread of these banks Private Banks: -Became the most common type of bank in Texas after the C.W. - Not regulated at all - Most did business with wealthy cotton growers

10. Texans Demand Better Banks The call for a state banking system The growth of banks # of banks in Texas grew quickly; 1909= more than 300 state banks Banking panics (where many customers try to withdraw their money at the same time) led to banking reforms 1909- a law was passed that forced banks to set aside a sum of money to use during a panic State banks grew the fastest; by 1920 there were more than 1,000 banks in Texas • In the 1890’s the main goal of Texas Bankers Association as to change laws against state-chartered banks • 1904- Texas voted to allow state-chartered banks; which gave Texas state & national banks • 1907- Texas lawmakers created a Dept of Insurance & Banking to supervise the banks

11. Questions to look for: What were the 1st industries to develop in Texas? Explain the significance of Kirby Lumber Company Explain the significance of cottonseed oil What new industries grew rapidly after the Civil War?

12. Early Industries By the 1850’s most Texans were still farmers, Texas was rich in natural resources but there was little industry Gristmills: until the mid 1800’s most Texas farmers grew corn; later Texans grew a vast amount of wheat ; milling became one of the 1st industries 1st gristmills were located in Spanish missions Milling Wood: Texas was also rich in trees; as early as the 1810’s sawmills operated in Texas The Union blockade during the Civil War forced Texans to set up their own war industries

13. Growth of Industry after the C.W. • Gristmills continued to play an important role in TX Economy • RR’s enabled mills to export their products cheaply • Flour & gristmills compromised the top industry in TX in 1880 • By 1900 this industry was the 3rd largest in TX • After the Civil War, loggers began cutting trees; they sent the logs to sawmills where they shipped finished lumber to towns along the Gulf Coast • John Henry Kirby was most responsible for the growth of the lumber industry • Kirby Lumber Co became one of the largest companies in the state; 13 sawmills, 300,000 acres of forest

14. Growth of New Industries • New industries included: textiles, cottonseed oil, mining, meatpacking • Textiles: During the C.W., Texans had to produce their own clothing; after war cotton mills made fabric in Hempstead, Houston, Waco, Tyler, & Gonzales • Cottonseed oil: Farmers learned to use every bit of the cotton; the oil was used for fertilizing crops, cooking & lighting homes • Coal & Iron: Commercial mining began for coal began in the 1880’s; TX coal was poor in quality; TX had few high quality iron deposits & the industry did not thrive • Other industries: Salt mines, meatpacking plants, produced wine, liquor, & beer