Lone Star: The Story of Texas Chapter 15 The New Economics: Copyright © 2003 by Pearson Education, Inc., publishing as Prentice Hall, Upper Saddle River, NJ. All rights reserved.

Railroads 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? Chapter 15, Section 1

The Growth of Railroads in Texas The Republic grants the right to lay track in Many people are suspicious of railroad companies and the building of the railroads is prevented. In 1851, work begins on the first rail line in Texas. The Civil War begins. Tracks fall apart with few people to care for them. Texas has a successful railroad system with many miles of track. After the war, railroads are slowly rebuilt. The state gives rewards to railroad companies and raises funds to encourage production. Chapter 15, Section 1

Financing the Expansion of the Railroads Cities and counties sold bonds to raise money to build railroads. Bonds are certificates that promise to repay the amount paid for them plus interest. Railroads also received tax breaks that allowed them to pay little or no taxes. The biggest incentives offered to railroad builders were land grants. A land grant is a block of public land that a government gives to a business, school, or other organization. The Texas government gave railroad companies more than 30 million acres of land in land grants in the 1800s. Chapter 15, Section 1

Railroads Change Texas Diversity Population Economy Problems Travel Railroads put out brochures to attract settlers. Trains made it easier for people to travel and move further west. The railroads put Texans in contact with distant markets quickly and cheaply. The railroad made it easier to travel between towns. Texas cities became trade centers. Railroad companies often engaged in unfair business practices to increase their profits. Members of different ethnic groups helped build the railroads. Many of them stayed in Texas. Chapter 15, Section 1

Banking Why did the first bank in Texas fail? How did the citizens of the state of Texas try to limit the power of banks? What services did Texans hope would be provided by state-chartered banks? Chapter 15, Section 2

Banking in Early Texas The first bank in Texas, Banco Nacional de Texas, issued handmade bank notes. A bank note is a piece of paper issued by a bank that promises to pay the holder a certain sum. Texans did not trust this system of banking. The first commercial bank in Texas, Banco de Commercia y Agricultura, was created in A commercial bank issues loans and provides services to businesses. In return, those businesses repay the loans with interest. In its early days, the Republic of Texas used private firms to issue paper money and provide other financial services to Texans. Chapter 15, Section 2

State Banks Private Banks National Banks Texas legislature debated over state-chartered banks for years. State-chartered banks are controlled by the state. The first national bank in Texas opened in Laws required national banks to raise $50,000 before opening. This slowed the growth of national banks in Texas. Private banks became the most common type of bank in Texas after the Civil War. These banks were unregulated by the state. Banking in the State of Texas Chapter 15, Section 2

Texans Demand Better Banks Texans voted to allow both state-chartered and national banks in Some Texans felt that state banks would help the state more than private banks, because they could be regulated. Texas lawmakers created a Department of Insurance and Banking in 1906 to supervise the banks. The rapid growth of banking around the turn of the century made many Texans rich and powerful. Texas passed a law in 1909 requiring banks to set aside a sum of money to use during a bank panic. Chapter 15, Section 2

Beginnings of Industry What were the first industries to develop in Texas? Why did the timber industry come to East Texas? What new industries grew rapidly after the Civil War? Chapter 15, Section 3

Gristmills turned grain into flour. Sawmills turned cut lumber into boards. Chapter 15, Section 3 Early Industry in Texas Industry - the processing of raw materials into goods for sale. War industries grew out of the Civil War blockades. Texas produced guns, ammunition, and cloth for uniforms. Milling was one of the first industries to develop in Texas.

Growth of Industry After the Civil War Gristmills Gristmills accounted for one third of the state’s manufacturing in Mills used the railroads to export products cheaply. The largest industry in 1880 was the production of flour and other gristmill products. This industry was still the third largest in Texas by Lumber Industry The growth of Texas railroads made it possible to ship lumber to distant markets. The Kirby Lumber Company became one of the largest companies in Texas. African Americans made up about one third of the sawmills’ workforce. Many companies paid workers with paper money that could only be used at company stores. Chapter 15, Section 3

Textiles Cottonseed Oil Other Industries Coal and Iron Texas offered land grants to individuals who built cotton and woolen mills in the late 1800s. People used cottonseed oil for fertilizing crops, cooking, and lighting their homes. By 1900, it was the state’s second-largest industry. Texas coal was poor quality, but the railroads used it to fuel their engines. Since Texas had few high- quality iron deposits, the iron industry did not thrive in Texas. Other industries included salt production, meatpacking, and breweries. Growth of New Industries Chapter 15, Section 3

Political Issues What was the main goal of the Constitution of 1876? How did the Texas government pay for a new Capitol? What kind of reform movements grew in the late 1800s? Chapter 15, Section 4

Constitution of 1876 In 1876, Texas delegates met in Austin to rewrite the Constitution of The Constitution of 1876: limited the government’s power and spending reduced the term of governor to two years limited the power of the governor to appoint officials returned law enforcement to local control In the late 1800s, Democrats held most of the public offices in Texas. They worked to reduce state debt and cut taxes: They cut the salaries of state workers. They paid veterans’ pensions in land instead of cash. These spending cuts enabled them to reduce taxes. But outlaws had become a big problem, and Democrats could not cut spending on law enforcement. State debt continued to rise.

Chapter 15, Section 4 Building the New Capitol Texas could not afford to pay for a new capitol. Instead, it provided land grants in exchange for building services. The Capitol building was made of Texas pink granite. Its design was based on the Capitol in Washington. The state held a contest to choose an architect. Construction began in 1882 and ended in 1888.

Chapter 15, Section 4 Texans Fight for Reform - Farmers and the Railroads Farmers Farmers claimed railroad prices were too high. They formed the Patrons of Husbandry, also known as the Grange. Grangers called for government regulation of railroads. Their efforts persuaded lawmakers to pass laws lowering rail fares. Railroads Railroads had no competition, so they could charge whatever they wanted. Railroads paid bribes to lawmakers to keep them from passing legislation that would lower the companies’ profits. They gave rebates to politicians to gain their support. Rebate - a deduction from the amount paid for something.

Farmer’s Alliance James Stephen Hogg People’s Party Goal was to establish a business exchange Joined with other groups to form the Southern Alliance The Southern Alliance eventually formed a political party, the People’s Party. Members of the People’s Party were Populists Wanted regulation of railroads and an increase in the money supply The Democratic Party adopted many of the Populists’ goals. As attorney general Reformed insurance companies Helped write and pass the Anti-Trust Act of 1889 to ensure fair trade As governor established the Texas Railroad Commission to force railroads to lower rates Reformers and Reform Groups Chapter 15, Section 4

Women’s Christian Temperance Union (WCTU) Equal Suffrage League of Houston Texas Equal Rights Association Campaigned for prohibition, a ban on making and selling alcohol pressed for women’s rights, particularly the right to vote Texas women did not gain the right to vote until 1920, when the Nineteenth Amendment to the U.S. Constitution took effect. Reformers and Reform Groups Chapter 15, Section 4

Political Issues - Key Terms Capitol - a building in which lawmakers meet. Supply and demand - The law of supply and demand states that when the supply of an item is greater than the demand for it, the prices drop. When items are scarce and demand for those items is high, prices rise. Rebate - a deduction from the amount paid for something. Trust - a group of firms that agree to work together to discourage competition. Monopoly - the complete control of a commodity or service in a single industry or market. Chapter 15, Section 4

Daily Life What were some of the advantages and disadvantages of city life? What problems confronted Texas farmers? What hardships did African Americans, Tejanos, and women in Texas face? Chapter 15, Section 5

Population Growth and Cities Benefits of City Living Newspapers and telegraph connections helped cities become information centers. Cities developed into economic and cultural centers. Trolleys helped people get to work. They enabled cities to spread over a larger area. Trolley - a streetcar powered by overhead cables. City Problems Diseases spread quickly. Water was often impure. The lack of a sewage system left terrible odors and helped spread disease. Crime increased as cities grew. Chapter 15, Section 5

Rural Communities Farmers in West Texas struggled with droughts. Many gave up and left the area. Ranchers had more success, because cattle adapted better to the dry conditions. African Americans and Tejanos endured segregation in schools and the workplace. Lawlessness and biased viewpoints often resulted in violence against African Americans and Mexican Americans. Prices for farm products were low, and railroad shipping rates were high. Many farmers were forced to sell their farms and take other jobs. By the late 1800s, only one Indian reservation remained in Texas. A new rail line through Polk County in the 1880s boosted the lumber industry and created jobs for the Alabama- Coushatta Indians. Chapter 15, Section 5

African Americans Women Mexican Americans White Texans fought for legal segregation, or the separation of racial groups. Jim Crow laws enforced the segregation of African Americans. They could not ride in the same train cars or attend the same schools as white Texans. Between 1870 and 1900, more than 500 African Americans were lynched in Texas (murdered by mob action without a fair trial). Mexican Americans also experienced segregation. Many were restricted to low-paying, unskilled jobs. Married women could not buy or sell property without their husband’s permission. Women could not sue in court, serve on juries, or vote. Civil Rights Chapter 15, Section 5

Lone Star: The Story of Texas Section 1: Railroads Section 2: Banking Section 3: Beginnings of Industry Section 4: Political Issues Chapter 15: The New Economics: Section 5: Daily Life Copyright © 2003 by Pearson Education, Inc., publishing as Prentice Hall, Upper Saddle River, NJ. All rights reserved.