The New Economics of Texas 1850-1910

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The New Economics of Texas 1850-1910
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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?

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Texas Railroads before the Civil War

• RRs not in Texas before the 1850s
• 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

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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

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Linked to the nation

• 1880s companies from other states bought several
  TX RRs
• 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

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Railroads Change Texas

• Benefits of Railroads

• Problems with Railroads

• 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

• Racism towards railroad workers
• Unfair business practices to increase profits

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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?

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Banking in Texas

• Banking in Early Texas

• Banking in the State of TX.

• Texans had bad experiences with banks
• 1822- Mexican govt 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.

• 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. Texass new constitution banned
  state-chartered banks 1869 the new constitution
  had no laws barring the bank
• In 1876 state-chartered banks were banned again

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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
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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 1890s 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

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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?

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Early Industries

• By the 1850s most Texans were still farmers,
  Texas was rich in natural resources but there was
  little industry
• Gristmills until the mid 1800s 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 1810s sawmills operated in Texas
• The Union blockade during the Civil War forced
  Texans to set up their own war industries

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Growth of Industry after the C.W.

• Gristmills continued to play an important role in
  TX Economy
• RRs 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

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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 1880s 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