Finances, State.—When the Territory of Kansas was organized in 1854, Congress appropriated $64,700, to be used as follows: For capitol building, $25,000; legislative assembly, $20,000; salaries of governor, secretary and three judges, $10,500; for taking a census, $2,000; state library, $5,000; election of a delegate to Congress, $700; contingent expenses, $1,500. This was the first financial legislation affecting Kansas.

The first territorial legislature, which passed laws for the levying of taxes, exempted property belonging to widows and minors to the amount of $1,000. All other property was taxed, and there was a poll tax on all male citizens from 21 to 55 years of age. This poll tax ranged from 50 cents to $1. Opposition to this, as well as all other laws passed by the "bogus" legislature, resulted in very little revenue being collected. The Missourians who elected the members of the legislature went back across the river and paid their taxes in the State of Missouri, and the free-state settlers of Kansas resisted the enforcement of the laws. In the years 1856-57-58 the delinquent taxes amounted to $27,298, and the territorial authorities were compelled to use for other purposes the $25,000 appropriated by Congress for a capitol. When the free-state men gained control of the legislature in 1858, one of the first laws passed was an act to fix the tax rate, and in that act was a provision that no revenue obtained under the law could be used for paying the old territorial debts. From 1855 to 1860, inclusive, the total revenue collected amounted to $34,617.68, and under the acts making appropriations warrants were issued for $135,470.16, leaving a deficit of $100,852.48. But this was not all. During these years a number of claims were filed against the territory for various reasons. A claim commission directed the auditor to draw warrants for nearly $400,000 to satisfy these claims. The law limited the bonded indebtedness of the territory to $100,000, and upon the outstanding warrants bonds to the amount of $95,700 were issued, but these bonds were afterward repudiated. (See Claims.)

This was the financial condition of Kansas when admitted into the Union in 1861. The first state legislature found an empty treasury, and by the act of May 1, 1861, authorized a bond issue of $150,000 for current expenses. It was this issue of bonds that subsequently led to the impeachment of some of the state officers. (See Robinson's Administration.) Under the provisions of the Wyandotte constitution, the state is given authority to contract debts for certain specified purposes, but the public debt can never exceed $1,000,000, until the proposition to increase the indebtedness beyond that figure shall have been submitted to the electors and ratified by a majority of the votes cast at some general election. The constitution also contains a provision that the state may borrow money "to repel invasion, suppress insurrection, or defend the state in time of war," and as the Civil war began while the first state legislature was in session, an act was approved by the governor on May 7, 1861, authorizing bonds to the amount of $20,000 for the defense of the state.

During the next decade several issues of bonds were authorized by law. Following is a list of the principal bond issues of this period, with the date of the act, the amount authorized, and for what purpose: March 2, 1863, supplementary to the act of May 1, 1861, $54,000; Feb. 20, 1863, to fund the territorial debt, $61,600; March 1, 1864, to build a penitentiary, $50,000; Feb. 22, 1866, for the penitentiary, $60,000; Feb. 19, 1867, for a deaf and dumb asylum, $15,500; Feb. 19, 1867, for a state capitol, $100,000; Feb. 26, 1867, for the penitentiary, $100,000; March 3, 1868, for the capitol, $150,000; for the penitentiary, $50,000, and for an insane asylum, $20,000; Feb. 9, 1869, to liquidate the indebtedness incurred on account of the Indian troubles of 1868, $75,000; Feb. 26, 1869, for a military contingent fund, $100,000; March 3, 1869, for the capitol, $70,000, and for the expenses of the Nineteenth Kansas regiment, $14,000. Boyle, in his Financial History of Kansas (p. 37) gives the total amount of bonds issued by the state, up to and including 1869, as $1,373,275, upon which the state realized $1,233,679.41, the average rate for which the bonds were sold having been 89 cents on the dollar.

Under a wise provision of the state constitution, every law authorizing a debt "shall provide for levying an annual tax sufficient to pay the annual interest of such debt, and the principal thereof, when it shall become due; and shall specifically appropriate the proceeds of such taxes to the payment of principal and interest; and such appropriation shall not be repealed, nor the taxes postponed or diminished, until the interest and principal of such debt shall have been wholly paid."

The heavy bond issues during the first nine years of statehood increased the state debt from $1.30 per capita in 1861 to $3.95 in 1869, and by the levying of taxes as required by the constitution the rate of taxation was more than doubled, having been 4 mills on the dollar in 1861 and 8 3/4 mills in 1869. Then began the reaction. By the act of March 3, 1875, the governor, auditor and secretary of state were made commissioners to invest the sinking fund in bonds of the State of Kansas, and by this move the state paid interest to itself instead of to foreigners. Most of the early bonds bore interest at high rates—generally 7 per cent.—and as they fell due, if the state was not in position to pay them, they were refunded at a lower rate of interest. An instance of this character is seen in the act of March 3, 1887, which authorized an issue of bonds to the amount of $116,000, "or so much thereof as may be necessary," to refund the bonds due in 1888-89. The new issue was made payable in twenty years, interest at 4 per cent., and was taken by the permanent school fund of the state. Another refunding act was passed on March 15, 1897. It provided for a tax of 4 mills on the dollar for the fiscal years 1898-99, the proceeds to be used to pay interest on the public debt and certificates for raid losses—not more than $5,000 in each fiscal year; for the payment of the outstanding $50,000 in bonds issued under the act of Feb. 19 and 26, 1867; and for the refunding of the $220,000 of bonds issued under the acts of March 3, 1868. At the same time the bonds issued under the acts of Feb. 26 and March 3, 1869, were ordered to be paid from the general fund when due, and an amount sufficient for that purpose was appropriated.

With the growth of population and wealth, the revenue-producing and debt-paying power of the state correspondingly increased, as may be seen from the following table:

The falling off in the assessed valuation of property between the years 1890 and 1900 was due to several causes. From 1880 to 1890 great progress was made in Kansas along all industrial lines. Land values increased from $87,500,000 in 1880 to $173,000,000 in 1889, and town lots during the same period went from $21,000,000 to $76,000,000, in round numbers. These were the boom days. The business depression that began in 1893 brought a reaction. Inflated values disappeared. In 1896 land values had declined to about $166,500,000 and the value of town lots to $59,000,000. The greatest assessed value of personal property during the boom days was in 1887, when it reached over $60,750,000. In 1896 it was only a little over $36,000,000. No doubt a large part of this decline in the assessed valuation was due to the inclination on the part of the owners of personal property to dodge taxes, and a disposition on the part of assessors to secure for their respective districts a low valuation. Since 1896 a more equitable system of assessments has been inaugurated, and the result is seen in the valuation of 1910, which shows an increase of more than 700 per cent, over that of 1900. The tax rate has been correspondingly lowered, that of 1910 being only about one-fourth the rate for 1900.

By the act of Feb. 25, 1901, bonds amounting to $150,000, held by the school fund, were refunded in one bond, due on July 1, 1911, and bearing 4 per cent. interest. On March 11, 1903, Gov. Bailey approved an act to refund the $220,000 due in 1903 and the $159,000 due in 1904. According to the report of the auditor of state for the years 1909-10, the bonds outstanding at the close of the fiscal year on June 30, 1910, were as follows: Issue of July 1, 1902, to provide for maturing bonds and claims under the act of Feb. 25, 1901, due on July 1, 1911, $150,000; issue of July 1, 1903, due on July 1, 1914, $220,000; issue of July 1, 1904, due on Jan. 1, 1916, $159,000, making a total of $529,000. All these bonds are held by the permanent school fund except $9,000, which is held by the state university fund, and all bear interest at the rate of 4 per cent. per annum. As an offset to the various bond issues, the state owns property, in the state capitol and the various educational, charitable and penal institutions, valued at nearly $14,000,000.

In addition to the ordinary expenditures, the erection of public buildings, and the support of the state institutions, Kansas has always maintained a liberal policy toward her industries. Encouragement has been given to the experiment of silk culture, and in the six years ending in 1896, nearly $100,000 were paid out in bounties on sugar produced in the state. Moreover, the state has lent its aid to private charitable institutions, beginning in 1870 with one such institution, and thirty years later there were more than a score receiving appropriations.

State treasurers for some years were in the habit of depositing the state funds in a bank that would pay interest, and appropriating the interest to their own use. Under this system some defalcations occurred, and to remedy the conditions section 51 of the general statutes of 1897 made it the duty of the state treasurer "to keep safely in the state treasury, without loaning, using or depositing in banks, or elsewhere, all public moneys of whatsoever character paid into such treasury," etc. By the act of March 4, 1905, certain banks may become state depositories by complying with the conditions of the law, and in these banks the state funds are deposited, the state drawing the interest for public use.

About ten years after the close of the Civil war a great craze for the expansion of railroads spread over the country. Kansas was not exempt, and during this era of speculation bonds in large amounts were voted by counties, cities and townships for railroad construction. In the decade ending in 1889, over 6,000 miles of railroad were built in the state, and a large part of the cost of construction was paid by the people through these municipal bond issues. Then came an era of internal improvement. Cities voted bonds for electric lighting plants, waterworks, public buildings, school houses, etc. Counties voted bonds for court-houses, jails, highways and bridges, and in many instances townships voted bonds for similar purposes. The auditor of state, in his report for the fiscal year ending on June 30, 1910, states that the grand total of the municipal indebtedness at that time was $40,272,298. In a majority of cases the municipalities received full value for these bond issues in the way of civic improvements, and, as a result the towns and cities of Kansas compare favorably with those of similar population in older states.