<P> During the Mexican--American War (1847--1848), the U.S. Army occupied the national capital of Mexico City and pursued its claim to much of northern Mexico, including what later became Arizona Territory in 1863 and later the State of Arizona in 1912 . The Treaty of Guadalupe Hidalgo (1848) specified that, in addition to language and cultural rights of the existing inhabitants of former Mexican citizens being considered as inviolable, the sum of US $15 million dollars in compensation (equivalent to $424,269,230.77 in 2017 .) be paid to the Republic of Mexico . In 1853 the U.S. acquired the land south below the Gila River from Mexico in the Gadsden Purchase along the southern border area as encompassing the best future southern route for a transcontinental railway . </P> <P> What is now known as the state of Arizona was initially administered by the United States government as part of the Territory of New Mexico until the southern part of that region seceded from the Union to form the Territory of Arizona . This newly established territory was formally organized by the Confederate States government on Saturday, January 18, 1862, when President Jefferson Davis approved and signed An Act to Organize the Territory of Arizona, marking the first official use of the name "Territory of Arizona". The Southern territory supplied the Confederate government with men, horses, and equipment . Formed in 1862, Arizona scout companies served with the Confederate States Army during the Civil War . Arizona has the westernmost military engagement on record during the Civil War with the Battle of Picacho Pass . </P> <P> The Federal government declared a new U.S. Arizona Territory, consisting of the western half of earlier New Mexico Territory, in Washington, D.C., on February 24, 1863 . These new boundaries would later form the basis of the state . The first territorial capital, Prescott, was founded in 1864 following a gold rush to central Arizona . </P> <P> Although names including "Gadsonia", "Pimeria", "Montezuma", and "Arizuma" had been considered for the territory, when 16th President Abraham Lincoln signed the final bill, it read "Arizona," and that name was adopted . (Montezuma was not derived from the Aztec emperor, but was the sacred name of a divine hero to the Pima people of the Gila River Valley . It was probably considered--and rejected--for its sentimental value before Congress settled on the name "Arizona .") </P>

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