STATE AND LOCAL INDEBTEDNESS 45 
was without any real contribution to its capital by the state. 
When the bonds were returned to the bank, the legislature 
recognized the futility of its effort to assist the bank in this 
manner and accordingly recalled and cancelled the bonds. 
The second period in the history of Missouri state in- 
debtedness began in 1853 and ended shortly after the close 
of the Civil War. As in the case of a number of mid-western 
states, the development of Missouri’s debt during the middle 
of the nineteenth century is closely intertwined with internal 
improvements, particularly railway development. In Jan- 
uary, 1853, the legislature decided to make a bond loan of $7 
million to the Pacific Railroad, which was to build a road 
from St. Louis to the western border of the state. The pro- 
ceeds were used in obtaining the necessary materials and 
labor, as the land on which the road was built represented 
grants by the Federal Government to the state, which in turn 
made it available to the railroad company. Similar arrange- 
ments were made with the Hannibal and St. Joseph at the 
same time, and later with four other roads! and the South- 
west Branch of the Pacific Railroad. The total amount of 
bonds authorized in this connection was $24,950,000, of 
which $15,310,000 had been issued by July, 1857. The total 
debt of the state on January 1, 1859, was officially announced 
as $19,658,000. Throughout this period Missouri took a 
liberal attitude toward the question of borrowing. Internal 
improvements were desired, and railroads in particular were 
deemed highly necessary to the economic development of 
the state. The credit of the state was therefore used to 
assist railroads and other internal improvements. The ques- 
tion of internal improvements, however, received little 
attention during the turbulent vears of the Civil War, 1861 
to 1865. 
The third period extended from about 1866 to 1921. Dur- 
ing this period a conservative policy was followed. From 
the beginning of the period to 1902 the general trend of 
indebtedness was downward. At the end of 1902 sinking 
fund assets exceeded the bonds outstanding, and for the 
first time in many years the state had no net bonded in- 
1 The St. Louis and Iron Mountain, the Cairo and Fulton, the North Missouri 
and the Platte County.