Wednesday, December 17, 2008

Wreck of the Tennessee Gravy Train Began with Collapse of a Nashville Firm

I've been delving into the history of the bank panics of the late 1920s/early 1930s  that kicked off the Great Depression of last century. I was not aware that a Nashvillian, Rogers Caldwell, played such a pivotal role in the collapse of banks and insurance companies across Tennessee, Kentucky, Arkansas, and North Carolina in November-December 1930. The collapse of the Caldwell and Company financial empire also contributed to bank suspensions across the southeast region in January 1931.

The ruin of Caldwell and Co. started with the closure of the Bank of Tennessee in Nashville in November 1930. Time Magazine reported on the 24th that the bank's liabilities were more than its assets, and that its total cash on hand was $32.55. (Elmus Wicker describes the Bank of Tennessee as "strange," because it did not have any individual depositors.  Instead, its clients were municipalities and corporations that did business with Rogers Caldwell). Nashvillians stampeded local banks, and panic spread to Tennessee's other urban centers. By the end of December 1930, 19 Tennessee banks had failed since the demise of the Bank of Tennessee.

Rogers Caldwell sounds like he would have been right at home among the precipitating factors of the 2008 financial crisis:
During the 1920s Caldwell expanded into other areas, buying insurance companies, banks, textile mills, oil companies, department stores, and assorted other businesses. He also expanded his bond operations into the private real estate market, underwriting the construction costs of hotels and office buildings. As Caldwell's financial empire and fortune grew, he developed a lifestyle that included racehorses, lavish entertainment, membership in exclusive private clubs, and Brentwood Hall, a magnificent Davidson County estate patterned after the Hermitage.

By 1921 Caldwell's financial empire was experiencing serious difficulties. Unknown to the public, Caldwell had never followed standard business practices, and his company was overextended, with no realistic cash reserves. His personal expenses far exceeded his annual salary, with the difference charged to the company.
One writer says comments that Caldwell spent the better part of 1930 "scrambling for cash and transferring assets" among his various holdings without telling those companies what he was doing. Insurance companies held by Caldwell charged that he cheated them by buying stock in other Caldwell holdings in Missouri for almost three times the latter's market price. The State of Tennessee lost $5 million it had in Caldwell affiliated banks.

Of course, this story wouldn't be complete without a corrupt newspaper publisher and dubious ties to state government. Caldwell's partner was the Nashville Tennessean's owner, Luke Lea. Together they had scooped up various banks and two newspapers: the Memphis Commercial Appeal and the Knoxville Journal, no doubt with the intention of guaranteeing that the Caldwell empire received positive press for their misguided endeavors. Lea used his influence with Tennessee Governor Henry Horton to leverage a state highway contract for a Caldwell-owned asphalt subsidiary without a competitive bid process. For his actions, Horton was impeached, but then acquitted by a majority in the Tennessee House.

In response to the bank panic, Uncle Dave Macon wrote the "The Wreck of the Tennessee Gravy Train," a depression-era classic that at least one person has recorded on YouTube:


  1. okay -- you are full of it -- get your facts straight -- Luke Lea was NOT a partner of Caldwell. Read the book Luke Lea of Tennessee. This is the only book with the truth of Luke Lea. All of the rest of them are based on lies as they never had access to the Lea papers. Don'tyou want to publish the truth? Bet you didn't think anyone who read this blog knew the truth or cared, did you? Question is now why will I continue to read your blog or recommend it -- If you do your research I will otherwise nope

    Also, the caldwell family kept their wealth as they grand daddy filed bankruptcy rather than face up to what he had done...

    Again get your facts straight -- geez what have bloggers come too

  2. The claim that only one book has the truth about the subject makes your arguments suspect.

  3. There are several books you can read to learn more about Caldwell and Company. The question you need to resolve for yourself is do you think Rogers Caldwell's intent was to "rip-off" anyone, or was he one of the greatest victims of the banking collapse. Here is a man who lost over 650 million dollars, his home, his position in the financial world and any hope for a new start. The first book you should read is "Caldwell and Company", by John B. McFerrin, which is available on Ebay. Keep in mind while you are researching, Rogers was the son of one of the wealthiest business men in the country at the time, his father James E. Caldwell. Talking with people who knew him, Rogers was always described as being very kind and considerate, who never spoke unkindly of anyone. Despite his difficulties beginning in 1930, he maintained an large and active social circle of friends until his death in 1968.