The county seat of Wharton County, Wharton was founded in 1847 on a ridge between the east bank of the Colorado River and Caney Creek. A fifteen-block townsite was surveyed by Virgil Stewart and W. J. E. Heard for the three sons of William Kincheloe, to whom Stephen F. Austin had in 1824 granted the league on which the townsite was laid out. The Kincheloes' townsite consisted of Monterey Square, a central square flanked by two tiers of blocks to the east and west and single tiers of blocks between the river to the south and the creek to the north. The town and county were named for brothers William H. and John A. Wharton, lawyers who came to Texas in the 1820s and 1830s from Tennessee and who were involved in the Texas Revolution and the Republic of Texas.
Wharton remained village-like until construction of the New York, Texas and Mexican Railway in 1881. Monterey Square, the downtown business district, and the neighborhoods south of the Cane Belt Railroad's crosstown rail line date from this 1880–1910 period. This is also the period associated with Wharton's most famous son, playwright Horton Foote. The first volume of Foote's memoirs, Farewell: A Memoir of a Texas Childhood (1999), recounts his youth in Wharton in the 1920s and that of his family, who had lived in the county since the 1830s. Although written in fond tones, Foote's memoir reveals the clannishness, prejudices, and dynamics of conformity and deviance in a small Southern town around the turn of the twentieth century. Portions of Robert Mulligan's film Baby the Rain Must Fall (1965), based on Foote's screen adaptation of his play The Traveling Lady,were shot in Wharton.
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