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In his 1839 State of the Union address, President Martin Van Buren warned Congress about “the power assumed by Territorial legislatures.” His immediate concern involved Florida’s territorially guaranteed bank bonds, but the principle extended far beyond banking. Florida’s legislature had exercised something resembling de facto sovereignty: governmental power it exercised in practice but did not clearly possess as a matter of sovereign right. Van Buren was warning Congress about the dangers of assumed territorial power established by accomplished fact. A territorial legislature could exercise a questionable power, allow private parties to acquire rights under it, and then confront Congress with obligations that had become difficult to reverse. In this way, Congress might retain ultimate legal authority, but the territorial government could restrict its practical choices by acting first.
Florida’s Territorial Legislature and the Union Bank of Tallahassee
Historian Kathryn Trimmer Abbey’s “The Union Bank of Tallahassee: An Experiment in Territorial Finance” explains how this danger developed in Florida. The Territorial Legislative Council chartered the Union Bank in 1833 to provide capital for Florida’s plantation economy. Instead of requiring investors to supply the bank’s capital directly, the charter authorized bonds to be issued on the faith of the Territory. Stockholders secured their subscriptions with mortgages, while the territorial government guaranteed the bonds sold to obtain the bank’s operating capital. This arrangement blurred the distinction between a private corporation and the territorial government. Private planters obtained access to borrowed money, while the credit of the Territory helped make the borrowing possible. The Union Bank itself was eventually authorized to obtain as much as $3 million through territorial bonds, and other Florida institutions received similar privileges.
The system became increasingly dangerous after the Panic of 1837 when borrowers encountered difficulty repaying their loans, and confidence in Florida securities weakened. Abbey cites an October 1839 editorial in the Apalachicola Gazette warning that irregular methods of selling the bonds and doubts about their security were damaging Florida’s standing among northern investors. This was before Florida became a state. Its territorial legislature pledged public credit using legal language that purported to bind the Territory to long-term financial obligations. Once the bonds were sold to purchasers, the territorial legislature had created an accomplished fact. Because bondholders relied on the Territory’s guarantee, the future State of Florida would face pressure either to honor the bonds or repudiate them. It could put the future state of Florida in that dispute before the state or its citizens had exercised sovereign authority. That was the essence of the danger: a temporary territorial government was attempting to create the financial inheritance of a sovereign state that did not yet exist.
This was six years before Florida was admitted as a state, and its territorial legislature operated under authority delegated by Congress and Congress could intervene. Florida’s organic law allowed its Legislative Council to act upon “all rightful subjects of legislation,” but the governor was required to transmit territorial laws to the president so they could be presented to Congress. Congress could disapprove those laws and render them ineffective.
That system depended upon congressional attention. In 1836, the Senate Finance Committee admitted that territorial laws were likely to “escape the attention of Congress” unless some particular event called attention to them. The committee found portions of Florida’s banking legislation “highly imprudent” and called for amendments that would remove the territorial guarantees from bonds not already issued and sold to bona fide purchasers. It acknowledged, however, that Congress could only disapprove the acts in their entirety; the charters could be selectively amended only by the territorial legislature with the corporations’ consent.
The committee also recognized the trap Congress had entered. The Union Bank charter had existed for several years without congressional disapproval. Bonds had been issued, money had been borrowed, and loans had been made. Although Congress retained what the committee called its “undoubted right” to annul territorial legislation, prolonged inaction made the exercise of that authority increasingly difficult. Congressional authority remained intact in theory, but the territorial legislature had altered the facts Congress would have to confront.
Congress responded in 1836 by disapproving Florida’s newest bank charters and providing that territorial acts incorporating banks or granting banking powers would have no force until approved by Congress. That addressed future legislation, but it did not automatically invalidate the older Florida charters already in operation. Congress corrected the rule for the future but left the immediate Florida problem unresolved. Its inaction allowed private institutions to continue operating under territorial charters that Congress itself considered objectionable. The Senate also passed a resolution declaring that the older Florida laws should not remain in force without substantial amendments. As Van Buren later explained, however, the measure failed in the House for want of time.
Van Buren Calls for Congress to Act
Van Buren returned to the issue in 1839 calling attention to the constitutional source of the crisis: the territorial legislature had assumed the power to pledge the Territory’s faith for bonds issued by private corporations. He reminded Congress that it had already recognized the problem in 1836 but had failed to complete the necessary legislation. By asking for “early and careful attention,” Van Buren was urging Congress to exercise its authority before additional bonds, contracts, and claims made intervention even more difficult. Here is the full excerpt from Van Buren’s 1839 State of the Union address:
"I think it proper to call your attention to the power assumed by Territorial legislatures to authorize the issue of bonds by corporate companies on the guaranty of the Territory. Congress passed a law in 1836 providing that no act of a Territorial legislature incorporating banks should have the force of law until approved by Congress, but acts of a very exceptionable character previously passed by the legislature of Florida were suffered to remain in force, by virtue of which bonds may be issued to a very large amount by those institutions upon the faith of the Territory. A resolution, intending to be a joint one, passed the Senate at the same session, expressing the sense of Congress that the laws in question ought not to be permitted to remain in force unless amended in many material respects; but it failed in the House of Representatives for want of time, and the desired amendments have not been made. The interests involved are of great importance, and the subject deserves your early and careful attention."
Van Buren’s carefully chosen word was “assumed.” He did not concede that the territorial legislature properly possessed this sovereign financial authority. He warned that it had exercised the power, created institutions under it, and permitted bonds to be issued in reliance upon it. The longer Congress waited, the more completely assumed power would become established by accomplished fact. Territorial governments occupied an uncertain position between federal dependence and future state sovereignty. If Congress failed to define and supervise their authority, territorial legislatures could make decisions involving public credit, corporate privileges, boundaries, property, or other fundamental institutions before the future state came into existence.
References
Van Buren, Martin. “Third Annual Message.” 2 Dec. 1839. The American Presidency Project, University of California, Santa Barbara, www.presidency.ucsb.edu. Accessed 20 Sept. 2026.
Abbey, Kathryn Trimmer. “The Union Bank of Tallahassee: An Experiment in Territorial Finance.” Florida Historical Quarterly, vol. 15, no. 4, 1937. STARS at UCF, stars.library.ucf.edu/cgi/viewcontent.cgi?article=1714&context=fhq. Accessed 20 Sept. 2026.
Additional Resources used in research
Florida Constitutional Convention. Constitution of the State of Florida. 11 Jan. 1839. Florida Memory, State Archives of Florida, www.floridamemory.com/items/show/189087. Accessed 20 Sept. 2026.
Florida Constitutional Convention. Journal of the Proceedings of a Convention of Delegates to Form a Constitution for the People of Florida, Held at St. Joseph, December, 1838. Times Office, 1839. Florida Department of State, dos.fl.gov/library-archives/research/explore-our-resources/florida-history-culture-and-heritage/territorial/primary-laws/. Accessed 20 Sept. 2026.
Florida Legislative Council. “An Act to Incorporate the Union Bank of Florida.” 13 Feb. 1833. Acts and Resolutions of the Legislative Council of the Territory of Florida.
Florida Legislative Council. “An Act to Increase the Capital of the Bank of Pensacola, and to Amend the Laws Incorporating Said Bank, and for Other Purposes.” 13 Feb. 1835. Reprinted in Senate Report No. 409, 20 June 1836, U.S. Government Printing Office.
Florida Legislative Council. “An Act to Incorporate the Southern Life Insurance and Trust Company.” 14 Feb. 1835. Reprinted in Senate Report No. 409, 20 June 1836, U.S. Government Printing Office.
Florida Legislative Council. Acts and Resolutions of the Legislative Council of the Territory of Florida, Passed at Its Twenty-First Session. 1843. Wikimedia Commons, upload.wikimedia.org/wikipedia/commons/8/82/Acts_of_the_Legislative_Council_of_the_Territory_of_Florida_-_passed_at_their_twenty-first_session,1843(IA_actsoflegis43flor).pdf. Accessed 20 Sept. 2026.
Moussalli, Stephanie D. “Florida’s Frontier Constitution: The Statehood, Banking and Slavery Controversies.” Florida Historical Quarterly, vol. 74, no. 4, spring 1996, pp. 423–39. STARS at UCF, stars.library.ucf.edu/fhq/vol74/iss4/5. Accessed 20 Sept. 2026.
United States, Congress. “An Act to Disapprove and Annul Certain Acts of the Territorial Legislature of Florida, and for Other Purposes.” United States Statutes at Large, vol. 5, chap. 231, 1 July 1836. Library of Congress, www.loc.gov/resource/llsl.005/. Accessed 20 Sept. 2026.
United States, Congress, Senate, Committee on Finance. Report on the Banking Institutions Chartered by the Territorial Government of Florida. Senate Report no. 409, 24th Cong., 1st sess., 20 June 1836. U.S. Government Printing Office, www.govinfo.gov/content/pkg/SERIALSET-00284_00_00-007-0409-0000/pdf/SERIALSET-00284_00_00-007-0409-0000.pdf. Accessed 20 Sept. 2026.
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