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Background::Texas v. White

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Background

Secession and bond sales

On February 1, 1861, the Texas secession convention drafted and approved an Ordinance of Secession. This ordinance was subsequently approved by both the state legislature and a statewide referendum. On January 11, 1862 the state legislature approved the creation of a Military Board to address issues involved in the transition in the shift in loyalty from the United States to the Confederate States.<ref>Murray p. 149</ref>

Texas had received $10 million in United States bonds in settlement of border claims as part of the Compromise of 1850. While many of the bonds were sold, there were still some on hand in 1861. Needing money, the legislature authorized the sale of the remaining bonds. Existing state law required the Texas governor to sign his endorsement on any bonds which were sold, but the state feared that the sale price would be depressed if the United States Treasury refused to honor bonds sold by a Confederate state. The legislature therefore repealed the requirement for the governor's endorsement in order to hide the origin of the bonds.<ref>Ross pp 158–159.</ref>

Before the bonds were sold, a Texas Unionist notified the Treasury which ran a legal notice in the New York Tribune that it would not honor any bonds from Texas unless they were endorsed by the prewar governor (Sam Houston).<ref>Ross p. 159</ref> Despite the warning, 136 bonds were purchased by a brokerage owned by George W. White and John Chiles. Although this sale probably occurred earlier, the written confirmation of the transaction was not executed until January 12, 1865. The bonds were in the meantime resold to several individuals, one or more of whom were able to successfully redeem the bonds through the United States government.<ref name="Murray p. 150">Murray p. 150</ref>

With the end of the war, President Andrew Johnson appointed a temporary governor, Andrew J. Hamilton, and ordered the state to create a new state constitution and form a state government loyal to the Union. James W. Throckmorton was elected governor under this process while General Philip H. Sheridan, the military commander of the area, appointed Elisha M. Pease as governor.<ref name="Murray p. 150"/>{{ safesubst:#invoke:Unsubst||$N=Clarify |date=__DATE__ |$B= }}

John Chiles, who was being sued along with White, argued that he could not be sued because Texas lacked evidence. He claimed the bond documents were destroyed by soldiers and that there was no way to get them back. White believed therefore, that he should not have to reimburse Texas.<ref name="Texas v. White"/>

As the United States Treasury Department became aware of the situation regarding the bonds, it refused to redeem those bonds sold by White and Chiles. After the state realized that it was no longer in possession of the bonds, it determined that the bonds had been sold illicitly to finance the rebellion against the United States. All three of the governors, in order to regain ownership of the bonds for the state, approved filing a lawsuit under Article III, Section 2 of the United States Constitution which granted original jurisdiction to the Supreme Court in all cases "in which a State shall be a party." The case, filed on February 15, 1867, appeared on the docket as The State of Texas, Compt., v. George W. White, John Chiles, John A. Hardenburg, Samuel Wolf, George W. Stewart, the Branch of the Commercial Bank of Kentucky, Weston F. Birch, Byron Murray, Jr., and Shaw.<ref>Murray p. 151</ref>

Reconstruction politics

By the time the suit was filed, Republicans in Congress, led by its Radical faction, were opposing President Johnson's leadership in reconstruction policy. Radicals opposed the creation of provisional state governments, and moderates were frustrated by a number of lawsuits instigated by provisional southern governors attempting to obstruct congressional reconstruction. Increasingly Republicans were abandoning Lincoln's position that the states had never left the Union, preferring to treat the South as conquered provinces totally subject to Congressional rule. They hoped that the Supreme Court would reject jurisdiction in the case by claiming that there was no legally recognized government in Texas.<ref>Ross pp. 159–160</ref>

Democrats, on the other hand, wanted the Court to acknowledge the existence of an official state government in Texas. Such a ruling would have the effect of accepting Texas as fully restored to its place in the Union and render the Military Reconstruction Act unconstitutional. Wall Street was also concerned with the case, being opposed to any actions that threatened bondholders and investors.<ref>Ross p. 160</ref>


Texas v. White sections
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