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HIGH SCHOOL HISTORY Part Seven: Bankruptcies and man-made lakes 
The interior of a general store in West Tennessee, probably in the 1930s
Your textbook talks about the Great Depression. But when it talks about the 1930s, it probably doesn't mention anything that occurred in Tennessee. So we're going to explain how dramatically the Great Depression, the Tennessee Valley Authority and some of President Roosevelt's New Deal programs changed the Volunteer State.
The banker and the shoestring
When the New York Stock Exchange crashed in October 1929, Tennessee's leaders hoped it wouldn't affect their state very much. Through most of 1930 they appeared to be right. If you look at the newspapers of that year, you can see many indications that the depression really hadn't hit yet. 
This ad for Caldwell & Co. appeared in a magazine in 1928.
That changed in November 1930. A few days after Governor Henry Horton was re-elected, the Nashville municipal bond house Caldwell & Co. collapsed. At the time Caldwell & Co. was probably the most important financial organization in the South. Founded by Nashville businessman Rogers Caldwell, Caldwell & Co. started a simple municipal bond house. But by the eve of the Great Depression its assets included insurance companies; several banks; and daily newspapers in Memphis, Nashville, and Knoxville. In the process of building his empire, Rogers Caldwell formed a strong alliance with Luke Lea, a Nashville newspaper editor and former U.S. Senator.
The collapse of Caldwell & Co. started a chain reaction of business failures unlike anything the South had ever seen. In only six weeks, 120 southern banks closed. So what did it mean if you had money in a bank that "closed"? More often that not, it meant that you lost all the money you had deposited in that bank. It meant failure, personal bankrutpcy, ruin, and disgrace for thousands of Tennesseans.
It was more than some people could take. One of the small banks that collapsed in the wake of the Caldwell & Co. failure was the Liberty Bank & Trust of Nashville. Its founder, Ridley E. Donnell, worked tirelessly in an effort to raise investors and convince depositors not to panic, but to no avail. A week after the failure was announced, Donnell checked into a hotel, removed his shoe string, and strangled himself with it. When police found his body the next day, his vest pocket contained a watch and a chain in an envelope bearing the words "To Ridley E. Donnell Jr. from Daddy." 
An article from The Tennessean in 1932
By 1932 the newspapers, which had been downplaying the bad economic news, were running announcements of soup kitchens and other stories that reflected how hard the times were.
With times tough across Tennessee, people wanted a scapegoat. Many blamed Governor Horton and his friends Rogers Caldwell and Luke Lea. After all, prior to his re-election, Horton assured voters that state money placed in banks controlled by Caldwell and Lea was safe, but of course some of it turned out not to be. Horton narrowly escaped impeachment, but did not seek re-election after his term expired. Caldwell lost his fortune and even his lavish home near Nashville (which is now the Ellington Agricultural Center). And Lea was eventually convicted of bank fraud in North Carolina and served a short federal prison term before returning to Nashville. Today many in Nashville remember Lea as the man who developed the Belle Meade area and who donated two large city parks (known as the Warner Parks) in the process. 
A sign at Nickajack Dam, near Chattanooga
TVA
One of President Roosevelt's bolder programs was a regional organization that would use civil engineering to "tame" the Tennessee River. This idea eventually became known as TVA. To this day it affects the life of just about everyone in Tennessee, whether you know it or not. We're not going to give you the long version of the TVA story (there are many books on the subject). But the story really begins in northwest Alabama. Prior to the existence of dams, the Tennessee River was extremely treacherous in a section of the river known as the Muscle Shoals. (By the way, it wasn't much calmer in the area just northeast of Chattanooga -- a section of the river that became known as "The Suck" because of the way it spun boats around.) When World War I occurred, the federal government built a dam (called Wilson Dam after President Wilson) just below the Muscle Shoals. Its main purpose was to provide gunpowder for the war effort, but as an added bonus the dam raised the water level of the river for several miles upstream, forever burying the hazardous Muscle Shoals. But when the war ended, no one was really sure what to do with Wilson Dam. President Coolidge considered selling the dam and the area around it to industrialist Henry Ford. But after a long debate, a group of U.S. Senators blocked the proposal, convinced that Wilson Dam was too important to sell to a private company. 
Senator George Norris PHOTO: TVA The most important of these senators was George Norris of Nebraska. Norris was convinced that the federal government needed to do more with the Tennessee River than just build one dam. As it turns out, the Army Corps of Engineers (which operated all inland waterways at that time) had already conducted an in-depth study of the Tennessee River and what needed to be done to "tame" it. (The chief architect of that study, Lewis Watkins, was from Williamson County, Tennessee.) This study called for the construction of dams from one end of the river to the other to establish a nine-foot channel through the river. In the process the dams and the hydroelectric plants that could be built with them could create massive amounts of electricity and the "storage reservoirs" (lakes) that they created along the river could be used for recreational purposes.
Norris, a Republican, dusted off Watkins' plan and took it to Coolidge, who rejected it. He later took it to President Hoover, who also rejected it. Finally, Norris took the rather bold step of endorsing Democrat Franklin Roosevelt in 1932. (Roosevelt, unlike Coolidge and Hoover, liked the Tennessee River plan.) After Roosevelt became president he put Norris' new plan into effect. "[This] is an opportunity to do a great deal for the people of many states and the whole country by tying industry, agriculture, forestry, and flood control in one great development and so afford a better place for millions yet unborn in the days to come." The development of TVA, however, took a while; the series of dams constituted the largest government-funded construction project in the history of the free world. The first TVA dam was built on the Clinch River in East Tennessee. It was named for Senator Norris and became in many ways the prototypical TVA project. Other dams followed one at a time, and by the late 1940s the Tennessee River was "tamed." 
A TVA dam under construction PHOTO: TVA Everyone who lived near the Even cemeteries had to be relocated. Click here to learn more about this process. 
Two men hold electric lamps in the early days of the cheap power provided by TVA. PHOTO: TVA Cheap power As TVA built all these new dams it built hydroelectric plants along with them. And even though it was clear that TVA was going to sell electric power to people who lived near those plants, it wasn't clear whether TVA was going to sell power to markets that already had electrical service. After all, TVA's original three primary missions, as stated by President Roosevelt, were to improve the navigability of the river, control floods, and produce fertilizer. (Power production wasn't one of the three.) And within TVA there were differences of opinion about what to do with the excess power it was producing. TVA's first chairman, Arthur Morgan, wanted TVA to sell its power to private companies that would, in turn, distribute its power. But David Lilienthal, who became chairman of TVA in 1941, believed TVA should distribute its power through publicly controlled organizations. At the time, Tennessee already had a large (for profit) company that produced power and sold it to consumers. It was based in Chattanooga and called the Tennessee Electric Power Company, or TEPCO. When TVA began trying to sell power in TEPCO's markets, TEPCO sued TVA, and the head of TEPCO (whose name was Wendall Wilkie) became a nationally known figure. The case made it to the U. S. Supreme Court. 
A woman poses with a kitchen full of electrical appliances PHOTO: TVA In 1939 the Supreme Court sided with TVA, and TEPCO was effectively forced to sell out to TVA.
Two men fish on a TVA lake.
In the process of damming up the river, TVA also created a series of man-made lakes such as 
Nickajack Dam
If you live near a TVA dam, they make good field trips. TVA has four visitors centers: at Norris Dam, Fontana Dam, Raccoon Mountain Pumped Storage Station, and Kentucky Dam. And there is no better way to understand the way a dam works than to watch it operate. The water just below the dam, by the way, is turbulent and even dangerous because of the turbines churning inside the dam, and when you see how much the water is being disturbed you start to get some idea of the vast power of a dam. 
The Cumberland Homesteads
Other New Deal programs
Although TVA is the most important thing the federal government did in Tennessee during the Great Depression, the New Deal affected the state in many other ways. Here are a few examples: * The federal government developed an experimental community in Cumberland County known as the Cumberland Homesteads. The structures are still there; click here to be taken on a virtual tour. * The Works Progress Adminstration (WPA) built roads and airports, made park improvements and even excavated ancient Indian villages in several parts of the state. * Several parts of the state got new courthouses and post offices that were heavily subsidized by the government. LINKS
* Here are some entries from the Tennessee Encyclopedia of History and Culture that greatly amplify this section: Caldwell, Rogers Civilian Conservation Corps Norris Dam Tennessee Valley Authority Works Progress Administration * Click here for a series of wonderful columns written by Knoxville journalist Jack Neely about the history of TVA. QUIZ
1. What was the name of the Nashville-based bond house whose collapse precipitated the closure of more than a hundred banks? 2. The story of the Tennessee Valley Authority begins in northwest Alabama, at a section of the river known as the _______ _________. 3. Name three of TVA's original goals. 4. Who was the Nebraska Senator whose persistence led to the creation of TVA? 5. What was the name of the Chattanooga-based power company purchased by TVA in 1939? On to World War II! Click here.
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All photographs taken by Bill Carey for THKF unless otherwise stated.