Academic journal article Independent Review

Texas Treasury Notes and the Election of 1844

Academic journal article Independent Review

Texas Treasury Notes and the Election of 1844

Article excerpt

But suppose we [the Liberty Party] had all voted for Mr. Clay--suppose him elected and Texas kept out--where would have been the Liberty Party? Scattered among the slaveholders and their allies, without having accomplished anything.

--James A. Birney, Cincinnati Daily Gazette, March 12, 1845

The election of 1844 is recognized as one of the great turning points in U.S. political history. Prior to this election, the country had accommodated itself, more or less, to the compromise it had made with slavery at the Founding. With the election of 1844, however, the country had to decide whether, as it expanded from ocean to ocean, its Manifest Destiny was to promote the cause of liberty and equality as expressed in the Declaration of Independence or instead to promote the peculiar form of slavery that had developed within its borders (Craven 1957).

In the election of 1844, the possible annexation of Texas amalgamated the issues of slavery and expansion. James K. Polk and the Democrats called for immediate annexation. Advocates of Manifest Destiny supported annexation not merely because it would add Texas to the union, but also because a war with Mexico, which the annexation might provoke, would provide an opportunity to seize all of northern Mexico and thereby enable the United States to reach the Pacific Ocean. Pro-slavery factions sought annexation in order to admit Texas as a slave state and to prevent Great Britain, the foremost proponent of abolition, from establishing a presence in Texas.

Henry Clay and the Whigs adopted a nuanced position with regard to annexation. They supported annexation only under what they described as proper conditions. Continued compromise with slavery, however, had become unacceptable to a growing number of people in the northern states, who had organized themselves into the country's first "third party," the Liberty Party. The election proved to be as close as it was momentous. The final outcome turned on the Liberty Party's ability to siphon enough votes away from Clay to tip New York and therefore the election to Polk.

In this article, we examine the revival of the moribund liabilities of the Republic of Texas as annexation became a possibility, and we trace the course of their market value through the election of 1844 and afterward. (As of 1846, the national debt of Texas was $10 million, of which $3 million was in the form of Treasury Notes and the rest in the form of bonds and other claims [Miller 1916, 391]). The prices of the liabilities of the Republic of Texas during the campaign reveal the market's assessment of the prospects of a Polk victory. The jump in these prices upon the reporting of the votes--in particular, upon the reporting of the votes from New York--reveals the extent to which the outcome came as a surprise.

In addition, we examine the course of the market value of Texas securities after Polk's election, through the legislative process concerning annexation both in the U.S. Congress and in Texas, through the Mexican War, and through the second repudiation of these securities by Texas. We characterize this entire period as Episode II. (1)

The data we have assembled allow us to take a fresh look at the election of 1844 and to make a definitive statement regarding the market's assessment of its probable outcome. Clay was viewed initially as the favorite, but with the conduct of certain state elections during the run-up to the presidential election, the outcome came to be seen as in doubt. By the end of September, Polk seemed to have the advantage. By the end of October, Clay's fortunes had rebounded. At the time of the election itself, the outcome was truly uncertain, and this uncertainty was resolved only by the counting of the votes from New York.

A Time Series of the Market Value of Texas Treasury Notes

We have constructed three time series of the market value of Texas Treasury notes that show end-of-week prices (more precisely, last-observed, weekly prices). …

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