Dog, the weird rules of the time said that every "first year" player (meaning that he had played exactly one year in the minor leagues) had to put him on the 40-man roster in December or you would risk losing him in a draft (like the Rule 5 draft, but not the same), AND had you to put him on the 25-man roster in April or risk losing him to waivers. So the Twins had to decide after one season in the minors if Smith was a major league player, and what's more, he was competing with other first year Twin prospects for slots on the team. The one exception to the 25-man-roster stipulation (at least by 1963 or so) is that each team could designate one player that they could send down without protecting.
In 1964, for example, the Red Sox had four first-year players (one year minor leaguers) on the 40-man-roster and in camp (Horton, Conigliaro and pitchers Pete Charlton and Dave Gray) and had to keep at least three of them on the big league team. They opted to keep the pitchers and decided to option Horton because they decided they needed an OF more than a first baseman -- Gary Geiger got sick in the spring, creating the need for a spare OF. The stories from camp have both players as sure fire stars - they both crushed it. They were also great friends -- good looking power hitters.
The Red Sox, as luck would have it, benefited hugely from this rule -- gaining Smith, Joe Foy and Sparky Lyle via this route. (Other good players -- like Jim Wynn, Denny McLain and Paul Blair -- switched teams in the minors due to either to the draft or because the team could not get waivers to send them down.) This is why the 1960s are loaded with teenagers, and many of them (like Conigliaro) made good even though with a different system he might not have been in the major league camp.
I think it is fair to say that Red Sox, and everyone else, considered Horton as good a prospect as Conigliaro at the time. He got a much bigger bonus and they both had great first years in 1963 (Conigliaro was better, but he had also gotten hurt and Horton played in a higher league). Horton was one month older -- they were both 19-year-old prodigies. Ted Williams said that Horton was the best looking hitter (including the players on the team) in the Red Sox 1964 camp.
Ed Kenney, the great Red Sox scout, used to tell the story of the time Horton and Congliaro (both *17* years old) came to Fenway for a tryout (September 1962) before deciding if they would offer them deals. From the SABR bio, to which I added this story: "Tony Conigliaro, a local 17-year-old slugger who the Red Sox also wanted to sign, was there as well, and the two Tonys pitched to each other. According to Kenney, telling The Sporting News two years later, Horton hit Conigliaro's first pitch into the center field seats, perhaps 430 feet away. The second pitch was driven to right field over the two bullpens. "To the day of my death, I'll never forget it," said Kenney. Kenney looked at the others, said, "that's enough for me," and walked into the clubhouse." They gave Horton $125,000, five times what Tony C got. One reason is that they had to talk Horton out of his basketball scholarship to UCLA -- he is considered one of the best athletes ever to come out of southern California, a huge basketball and baseball star.
Horton was caught in a ridiculous logjam in Boston, which was bleeding hitting prospects. He got the first base job as a 21-year-old in 1966, but after a tough first week, they tried George Scott who went on a home run tear and ended up starting the All-Star game. When Dick Williams showed up to manage in 1967, he told reporters that Scott did not have the job won, that Horton (who had starred for Williams at Toronto) was going to get a shot to win the job in the spring. They finally ended up dealing him for Gary Bell (a huge, huge deal that year) and Horton became a star in Cleveland. And then he cracked up.
Had Horton been given the 1B job in 1966, or even earlier, and kept it in Boston, he would have hit a ton of home runs, maybe 500 if he had avoided his demons. Conigliaro is a tragic what-if story, of course. So is Horton.