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The Texan Financial Crisis arose out of fears that the new Texan Dollar would soon be worthless, and that the government would be unable to pay its debts. It started after the national debt passed 30 million US Dollars (many debtors refused the new Texan Currency).
Texas had always had deficits since it gained its independence. However, the First Texan-Mexican War had significantly caused a large amount of debt. That, and large amounts of funds had to be spent on rebuilding towns destroyed by Mexico, and to top it off, they had to give compensation to Mexicans living in the new lands Texas gained from Mexico for the land that was being taken from them. The Texan Government was panicking, and President (insert name here) ordered an emergency convention to be held by Senators and Representatives.
The First Emergency Convention was held on August 1st, and President (Insert Name Here) started it off with the following speech
- "My fellow Texans, today we are facing financial problems of unimaginable proportions. War against Mexico has robbed us of funds from our treasury. And because of the emptiness of that very treasury that funds our government, we have to go into debt and sell the financial future of our children for short term gains. This debt steals steals away our independence that we fought for less than twenty years ago. We must take action to stop this. Texans and Texas will have to sacrifice to achieve economic independence, but without economic independence, our enemies have power over us as our debtors. I ask you all here to work to create a budget that gives us back the power of our nation, that gives us back the economic independence of our nation, that gives the power back to the Texans!"
After this brief speech, senators and representatives would work hard on creating a budget that would create a surplus. This was finally achieved two months later, and a budget was created that reduced funding for Education, the Military, increase land prices and tariffs, and the creation of a Texan Dollar. This bill passed, and all Senators and Representatives went home.
Many Debtors were alarmed at the budget, as they feared that they would lose influence in Texas. They began selling their bonds to try and reduce the value of the Texan Dollar and ruin the government's chance of paying back these Debtors, and allow them to get political favors. After a year of this, the Dollar fell to 20 cents to the dollar. However, the Texan Government continued with it's budget, and the Debtors soon lost too much money selling these bonds for less than they were worth to continue. The Crisis ended, and the Republic survived it.