Although he had never held office, he was not a stranger to political problems; he had done much work in keeping local-option prohibition from Bell County, had been one of the Bell County managers in the campaign of Robert L. Henry for Congress in 1902, had helped carry Bell County for Cone Johnson in his contest with Joseph Weldon Bailey in 1908, had served as a campaign manager for Robert V. Davidson in 1910, and had aided Oscar B. Colquitt in his successful gubernatorial campaign (1912). Prohibition was a major issue in the campaign of 1914, with several aspirants for the governorship on both sides of the question. The prohibitionists held an elimination convention and pledged their support to Thomas H. Ball of Houston. The anti-prohibitionists attempted to have a similar convention, but Ferguson, whose statements and Bell County record identified him as an anti-prohibitionist, refused to submit his name to it. As a result it was impossible for the convention to eliminate him and obviously unwise to divide the vote by naming a rival candidate. The convention did not endorse Ferguson, but the other anti-prohibition candidates withdrew from the race. Ferguson won the nomination by a majority of about 40,000 votes.
The campaign proved him to be a man of considerable native ability and the possessor of a captivating personality. As a political speaker he had few equals. The most discussed plank in his platform, which appealed especially to tenant farmers, proposed a law that would limit the rent charged by landlords and prevent the collection of bonuses. Landowners were assured, however, that they need not be alarmed by the proposal, as it would benefit all concerned. During Ferguson's first term, the legislature passed several measures of major importance. The tenant law was passed but remained on the statute books only a short time before being declared unconstitutional. The policy of state aid to rural schools was begun, and a rather timid law requiring compulsory school attendance was passed. Three new normal schools were authorized. Provision was made for the establishment of the Austin State School. Needed buildings were provided at other eleemosynary institutions. The colleges were permitted to begin building programs, and the educational appropriation bills were more generous than usual. As a result of these and other expenditures, the ad valorem tax rate for state purposes advanced from 12½ to 30 cents. The landholdings of the prison system were greatly increased, and because of the rising price of farm commodities, the system became self-sustaining; during the years of war prosperity, it showed a profit.
In 1916 Ferguson's reelection seemed certain. The prohibitionists passed over their better-known leaders and gave their support to Charles H. Morris of Winnsboro, a political unknown. The issues were prohibition, the tax rate, and certain unpalatable rumors concerning the Ferguson administration. Ferguson was reelected by a majority of about 60,000 votes, but opposition was sufficient to show that many Texans, including a number who were not prohibitionists, were displeased with his stewardship. Aside from the act instituting the highway department, the second Ferguson administration was marked by little in the way of important legislation. The legislature passed generous appropriation bills, and the ad valorem tax rate reached the constitutional maximum of thirty-five cents. Early in his second term the governor became involved in a serious quarrel with the University of Texas. The controversy grew out of the refusal of the board of regents to remove certain faculty members whom the governor found objectionable. When Ferguson found that he could not have his way, he vetoed practically the entire appropriation for the university. The excitement that greeted the veto was soon overshadowed by the greater excitement that surrounded the impeachment trial. While the campaign of 1916 was in progress, the Ferguson administration had been charged with a number of irregularities. Preliminary investigations failed to uncover any charge that would merit impeachment, and for a time the incident seemed closed. The Ferguson controversy with the university brought renewed interest in the old charges, however, and at about the same time a number of new charges were made. On July 21, 1917, in the midst of the excitement, Ferguson appeared before the Travis County grand jury, and several days later it was announced that he had been indicted on nine charges. Seven of the charges related to misapplication of public funds, one to embezzlement, and one to the diversion of a special fund. Ferguson made bond of $13,000 and announced his candidacy for a third term as governor.
As a result of these developments, the speaker of the House called a special session to consider charges of impeachment against the governor. This call was of doubtful legality, but Ferguson removed all question by calling the legislature to meet for the purpose of making appropriations for the University of Texas. The House immediately turned its attention to the numerous charges against the governor and, after a lengthy investigation, prepared twenty-one articles of impeachment. The Senate, sitting as a High Court of Impeachment, spent three weeks considering the charges and finally convicted the governor on ten of them. Five of the articles sustained by the Senate charged Ferguson with the misapplication of public funds, three related to his quarrel with the University, one declared that he had failed properly to respect and enforce the banking laws of the state, and one charged that he had received $156,500 in currency from a source that he refused to reveal. Nine of the charges can be described as violations of the law, while the obtaining of $156,500 from a secret source was certainly not in keeping with good policy. The Court of Impeachment, by a vote of twenty-five to three, removed Ferguson from office and made him ineligible to hold any office of honor, trust, or profit under the state of Texas. Ferguson declared that the legislature constituted little more than a "kangaroo court," but only a few months before, both the House and the Senate had refused to sustain charges against him, and his removal from office was far from certain when the legislature convened in special session. He resigned his office the day before the judgment was announced and contended that it did not apply to him. The question was eventually carried into the courts, where the judgment of the Court of Impeachment was sustained. But the mere fact that Ferguson had been impeached and made ineligible to hold any office of trust or profit under the state did not in any sense remove him from the field of Texas politics. In 1918 he sought the Democratic party nomination for the governorship but was defeated by William P. Hobby. In 1920 he was an unsuccessful candidate for President on his own American party ticket. In 1922 he was an unsuccessful candidate for the United States Senate.
In 1924, unable to run under his own name, he ran his wife's campaign for the governorship against Judge Felix Robertson, the candidate endorsed by the Ku Klux Klan. The Fergusons beat Robertson and went to the Governor's Mansion for a third time. Two years later they lost a reelection bid amid new scandals concerning excessive pardons and political patronage abuses. In 1928, for the first time since 1914, Ferguson was not an active participant in a political campaign, but even then he took some interest in the race for the governorship and gave his support to Louis J. Wardlaw. In 1930 he conducted the unsuccessful campaign of his wife for the governorship, and in 1932 he conducted her successful campaign for the same office. In 1940 Mrs. Ferguson again sought the governorship, and for the last time "Farmer Jim" appealed to the voters of Texas. He was by this time an old man. He made only a few speeches and must have known long before the votes were cast that Mrs. Ferguson had no chance to win. James Ferguson died on September 21, 1944, and was buried in the State Cemetery in Austin.
30° 15.920, -097° 43.621
Texas State Cemetery