The case was Texas v. White. The state of Texas brought suit in the United States Supreme Court to have certain United States government bonds declared the property of the state, and to prevent the present holders of the bonds from collecting upon them. Texas had owned the bonds before the Civil War. As a means of financing during the war, while Texas was a member of the Confederacy, the bonds were sold. Texas now claimed that the sale was void and the bonds still belonged to the state.
The suit raised two formidable constitutional questions. First, Texas had brought suit directly in the Supreme Court. Under the Constitution, only a state may do this. These were the days of Reconstruction, and Texas had a military government; it did not yet have representatives in the United States Congress. Was Texas a state within the meaning of the Constitution so that it could bring this suit? Second, the bonds had been sold during the Civil War by the duly organized government.
If Texas was at that time no longer a state of the Union in legal contemplation, then the sale was perfectly proper. If, on the other hand, Texas was legally a state, then its government during the Confederacy was a usurpation and its action was void. Was Texas legally a state of the Union during the Civil War? The Court ordered the bonds restored to Texas. The implication of this decision reached far beyond the precise legal question answered: the United States is one nation, and the ties uniting the states cannot be severed by any of them.
And there was another implication, less important but still significant: the southern states were enabled to stand as states in the Union, and to assert their rights as states. The days of Reconstruction and Carpetbag Rule were numbered. In 1851, the United States issued its bonds — five thousand bonds for $1,000 each, and numbered successively from No. 1 to No. 5,000, and thus making the sum of $5,000,000 — to the State of Texas, in arrangement of certain boundary claims made by that State.
The bonds, which were dated January 1st, 1851, were coupon bonds, payable, by their terms, to the State of Texas or bearer, with interest at 5 percent semi-annually, and “redeemable after the 31st day of December, 1864. ” Each bond contained a statement on its face that the debt was authorized by act of Congress, and was “transferable on delivery,” and to each were attached six-month coupons, extending to December 31, 1864.
In pursuance of an act of the legislature of Texas, the controller of public accounts of the State was authorized to go to Washington, and to receive there the bonds; the statute making it his duty to deposit them, when received, in the treasury of the State of Texas, to be disposed of “as may be provided by law;” and enacting further, that no bond, issued as aforesaid and payable to bearer, should be “available in the hands of any holder until the same shall have been indorsed, in the city of Austin, by the governor of the State of Texas.
Most of the bonds were indorsed and sold according to law, and paid on presentation by the United States prior to 1860. A part of them, however, — appropriated by act of legislature as a school fund — were still in the treasury of Texas, in January, 1861, when the late Southern rebellion broke out. The part which Texas took in that event, and the position in which the close of it left her, are necessary to be here adverted to.
At the time of that outbreak, Texas was confessedly one of the United States of America, having a State constitution in accordance with that of the United States and represented by senators and representatives in the Congress at Washington. In January, 1861, a call for a convention of the people of the State was issued, signed by sixty-one individuals. The call was without authority, and revolutionary. Under it, delegates were elected from some sections of the State, whilst in others no vote was taken.
These delegates assembled in State convention, and, on the 1st of February, 1861, the convention adopted an ordinance to dissolve the union between the State of Texas and the other States, united under the compact styled “the Constitution of the United States of America. ” The ordinance contained a provision requiring it to be submitted to the people of Texas, for ratification or rejection by the qualified voters thereof, on the 23d of February, 1861.
The legislature of the State, convened in extra session, on the 22d of January, 1861, passed an act ratifying the election of the delegates, chosen in the irregular manner above mentioned, to the convention. The ordinance of secession submitted to the people was adopted by a vote of 34,794 against 11,235. The convention, which had adjourned immediately on passing the ordinance, reassembled.
On the 4th of March, 1861, it declared that the ordinance of secession had been ratified by the people, and that Texas had withdrawn from the union of the States under the Federal Constitution. It also passed a resolution requiring the officers of the State government to take an oath to support the provisional government of the Confederate States, and providing, that if any officer refused to take such oath, in the manner and within the time prescribed, his office should be deemed vacant, and the same filled as though he were dead.
On the 16th of March, the convention passed an ordinance declaring that, whereas the governor and the secretary of state had refused or omitted to take the oath prescribed, their offices were vacant; that the lieutenant-governor should exercise the authority and perform the duties appertaining to the office of governor, and that the deposed officers should deliver to their successors in office the great seal of the State, and all papers, archives, and property in their possession belonging or appertaining to the State.
The convention further assumed to exercise and administer the political power and authority of the State. Thus was established the rebel government of Texas. The senators and representatives of the State in Congress now withdrew from that body at Washington. Delegates were sent to the Congress of the so-called Confederate States at Montgomery, Alabama, and electors for a president and vice-president of these States appointed.
War having become necessary to complete the purposed destruction by the South of the Federal government, Texas joined the other Southern States, and made war upon the United States, whose authority was now recognized in no manner within her borders. The oath of allegiance of all persons exercising public functions was to both the State of Texas, and to the Confederate States of America, and no officer of any kind representing the United States was within the limits of the State except military officers, who had been made prisoners.
Such was and had been for several months the condition of things in the beginning of 1862. On the 11th of January, of that year, the legislature of the usurping government of Texas passed an act — “to provide arms and ammunition, and for the manufacture of arms and ordnance for the military defences of the State. ” And by it created a “military board,” to carry out the purpose indicated in the title. Under the authority of this act, military forces were organized.
On the same day, the legislature passed a further act, entitled “An act to provide funds for military purposes,” and therein directed the board, which it had previously organized, to dispose of any bonds and coupons which may be in the treasury on any account, and use such funds or their proceeds for the defence of the State; and passed an additional act repealing the act which made an indorsement of the bonds by the governor of Texas necessary to make them available in the hands of the holder.
Under these acts, the military board, on the 12th January, 1865, a date at which the success of the Federal arms seemed probable, agreed to sell to White & Chiles one hundred and thirty-five of these bonds, then in the treasury of Texas, and seventy-six others deposited with certain bankers in England, in payment for which White & Chiles were to deliver to the board a large quantity of cotton cards and medicines. The former bonds were delivered to White & Chiles on the 15th March following, none of them being indorsed by any governor of Texas.
It appeared that, in February, 1862, after the rebellion had broken out, it was made known to the Secretary of the Treasury of the United States, in writing, by the Hon. G. W. Paschal, of Texas, who had remained constant to the Union, that an effort would be made by the rebel authorities of Texas to use the bonds remaining in the treasury in aid of the rebellion, and that they could be identified, because all that had been circulated before the war were indorsed by different governors of Texas.
The Secretary of the Treasury acted on this information, and refused in general to pay bonds that had not been indorsed. On the 4th of October, 1865, Mr. Paschal, as agent of the State of Texas, caused to appear in the money report and editorial of the New York Herald, a notice of the transaction between the rebel government of Texas and White & Chiles, and a statement that the treasury of the United States would not pay the bonds transferred to them by such usurping government.
On the 10th October, 1865, the provisional governor of the State published in the New York Tribune, a “Caution to the Public,” in which he recited that the rebel government of Texas had, under a pretended contract, transferred to White & Chiles “one hundred and thirty-five United States Texan indemnity bonds, issued January 1, 1851, payable in fourteen years, of the denomination of $1,000 each, and coupons attached thereto to the amount of $1,287. 50, amounting in the aggregate, bonds and coupons, to the sum of $156,287. 50.
His caution did not specify, however, any particular bonds by number. The caution went on to say that the transfer was a conspiracy between the rebel governor and White & Chiles to rob the State treasury, that White & Chiles had never paid the State one farthing, that they had fled the State, and that these facts had been made known to the Secretary of the Treasury of the United States. And a protest was filed with him by Mr. Paschal, agent of the State of Texas, against the payment of the said bonds and coupons unless presented for payment by proper authority.