In 1881 when the Capital of Texas building burned to the ground, plans were already underway for a new state Capitol. The new building was lavishly designed to be one of the most distinguished state capitols in the nation. Based on 15th-century Italian architecture, the building boosted the largest gross square footage of all state capitals and is second in total size only to the National Capitol in Washington, D.C.

Original plans called for the use of native Texas limestone for the building exterior. The state negotiated a lease 1000 acre site be leased in the small town of Oatmanville from local resident W.K. Beckett for the cost of $1000 for a railroad spur and quarry. Before the quarry, Oatmanville had only 75 residents. Pecans, cotton, wool, and hides were the principal commodities of area farmers. The area grew as a large number of laborers flocked west to work in the quarry. A general store and five different saloons sprouted up.

On March 2, 1885, the 8-ton Capitol corner stone was laid, and limestone slabs started arriving at the rate of 10 flat-cars a day.After three months into construction, the builders discovered that the quarried limestone was not suitable for the building exterior as it streaked when exposed to air due to flecks of iron that rusted and stained. As a result, red granite was used for the exterior, and the quarry limestone for the foundation, basement and cross walls as well as other locations in the building.

Shortly after construction began, the 17.5 cents per hour wage for quarry workers became unaffordable for the state. Free convict labor became an alternative, and thus the quarry became known as Convict Hill. At least 100 convicts supplied labor under the control of the State of Texas. Relentless days of grueling labor followed for these men: They subsisted on a diet of cornbread, salt pork, and coffee, and were chained to thick, iron bars driven into the stony ground at night. A dog trainer and his pack of hounds moved in, ready to track down any inmates who tried to escape.

On February 25, 1888, The Goddess of Liberty was raised to the top of the Capitol dome marking the end of construction. That same year the Oatmanville railroad line was abandoned, the rails removed, and operations at the Convict Hill quarry ceased.