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Power as Currency: A Shift in Tennessee in the Early New Deal

Angela Smith May 4, 2007

Dr. Pippa Holloway Independent Study in History

When Franklin D. Roosevelt took office in 1932 and tackled the grave economic, political and social conditions of the country, a friend issued a challenge. If the president succeeded in the task he had set for himself, the friend reportedly told him, he would go down in history as the nation’s greatest president. If he failed, however, he would be condemned as the worst. “Roosevelt replied quietly, ‘If I fail, I shall be the last.’”1 That anecdote, repeated in several biographies of the four-term president, indicates how much of a risk Roosevelt believed he was taking and how critical it was for the nation. When we look back on the statement today and reflect on what America has survived since the 1930s, it is perhaps difficult to see that the stakes were that high. For those who have listened to the firsthand experiences of those who depended on Roosevelt, however, it is clear that the Great Depression rocked the foundation of the nation and the states that were part of it. Americans who grew up in that era spoke about it fifty, sixty, and seventy years later, remembering when entire neighborhoods gathered around a single radio to listen to Roosevelt as he promised to provide new jobs in areas such as forestry and flood prevention, to create partnerships in farming and getting the farm goods to market, to end prohibition and boost the economy with the resulting taxes, and to grant half a billion dollars to help the states, counties and cities provide “direct and immediate relief” to those in need.2 The pledges were dramatic and would require not only the trust of the

Robert Eden, ed., The New Deal and Its Legacy Critique and Reappraisal, (New York: Greenwood Press, 1989), 200. Franklin D. Roosevelt, Fireside Chats of Franklin D. Roosevelt, 7 May 1933, available at (5 May 2007).



American people that the federal government had their best interests at heart, but also their trust that their own states would live up to the obligation the federal government was handing down. The latter was a legitimate concern, since relationships between individual states and the federal government were never easy. As the New Deal created a new balance of power between state government and federal government, the precariousness of the relationship was a legitimate concern. Perhaps nowhere else was this more pronounced than it was in the South where a desire for self-sufficiency and fierce individualism characterized the attitudes of most of the region and its lawmakers. Until the implementation of the New Deal, there had been few federal programs that allotted money for the states to distribute to the people. While the federal government sent money to the states, it was generally for bricks and mortar or for broad programs, not for direct aid to families or to create jobs for local people. Until Roosevelt began his “alphabet soup” of agencies for economic and social relief, the people had relied on the Red Cross, fraternal organizations, and churches. In the course of my thesis research on Highlander Folk School from 1932-1942, I became interested in the interaction between the state of Tennessee and the federal government during the first New Deal. Highlander’s doors opened in November 1932, and by January founder Myles Horton was involved with the striking coal miners in Wilder, Tennessee. The Red Cross was trying to help, but a chummy relationship between a supervisor’s wife and the head of the Red Cross meant help was diverted from those for whom it was intended. Churches from Nashville and Chattanooga also tried to help by bringing food, clothing, and medical supplies. It was not enough, however, and when Roosevelt announced the initial programs of the New Deal, the strikers, as well as


many other jobless workers throughout the state, expected relief to come. For them, it began to come in 1933. The situation at Wilder reflected the shifting relief efforts. After the strike began in July 1932, help for the strikers initially came from churches and labor organizations. After the New Deal agencies began to come into play in 1933, advocates for the strikers managed to find them aid and work through New Deal initiatives such as the Civilian Conservation Corps (CCC) and the Tennessee Valley Authority (TVA). In an effort to help the struggling miners, Horton wrote letters to Arthur E. Morgan, chairman of the newly formed TVA, and Morgan agreed to give preference to the blacklisted Wilder miners in hiring for TVA jobs. Hill McAlister, the governor of Tennessee, also lobbied for jobs on behalf of the striking miners.3 Some of the strikers ended up at Norris Dam, the first dam TVA built, and a few others were selected as new residents for the Cumberland Homesteads near Crossville, Tennessee in the Cumberland Mountains. The homesteads were an early New Deal project managed by the Resettlement Administration and were designed to relocate the poorest rural families to new farms where they could become subsistence farmers on property they would eventually own.4 The younger men applied to work in the Civilian Conservation Corps labor camps.5 Hardships and outcomes such as these were repeated throughout the state of Tennessee, indeed throughout communities throughout the country, as the reeling nation Hill McAlister, “Western Union Telegram to Senator Kenneth McKellar,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 26 May 1933, GP 42, Box 20 microfilm, Tennessee State Library and Archives. Anthony P. Dunbar, Against the Grain: Southern Radicals and Prophets 1929-1959 (Charlottesville: University of Virginia Press, 1981), 14. Brenda Bell and Fran Ansley, “Strike at Davidson-Wilder, 1932-1933,” in Working Lives: The Southern Exposure History of Labor in the South (New York: Pantheon Books, 1980), 97.
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regained its balance. The hardships the depression created, however, made an impact not only on individuals, but also on the financial stability of state governments. Shrinking revenues and bank failures rendered Tennessee nearly insolvent in November of 1930. While the stock market crash of 1929 had little effect in many areas in an already struggling Tennessee economy, it did affect banks and employers throughout the state. In 1930, 26,000 businesses failed; in 1931, 28,000 more businesses followed. By 1932, 3,500 banks holding the money of millions of citizens had failed.6 The failure of banks and businesses impacted the lives of citizen where they lived by creating massive unemployment. The unemployment rates were at historic levels by 1932 when an estimated 28 percent of the nation’s workforce was unemployed.7 The Hoover administration had been slow to act because of a firm belief in the ability of the market to self-correct. The country had been through depressions before and he believed they could ride this one out as well. Initially Hoover’s conservative approach was seen positively by those in power in the South, however, as the crisis worsened with no relief in sight attitudes began to change. Leaders throughout the South called out for action. In 1931 Hoover did act, although ultimately unsuccessfully, when he created the Reconstruction Finance Corporation (RFC) to lend money to economic mainstays such as banks, insurance companies, railroads, and other large companies. The effort failed because the companies hoarded the money out of fear. By the election year of 1932, the nation’s confidence in Hoover had eroded throughout the nation. The RFC’s failure to kick-start


Peter Jennings and Todd Brewster, The Century (New York: Doubleday, 1998),

149. David E. Kyvig, Daily Life in the United States, 1920-1940 (Chicago, IL: Ivan R. Dee, 2002), 209.


the economy pushed Hoover to his boldest move in July 1932. He created the Emergency Relief and Reconstruction Act, which provided substantial federal money to states and cities and federal public works projects; these efforts, however, were characterized as too little, too late.8 In Tennessee, suffering mounted as the Great Depression deepened. The Davidson County Welfare Commission caseload was 1,757 in January 1932, and by September it had increased to 2,494.9 When Hoover authorized the distribution of relief funds to the states in July 1932, Tennessee created the State Relief Committee to administer the money. The committee’s three members, the commissioner of finance and taxation, the commissioner of highways, and the secretary to the governor, created five-member committees for each of Tennessee’s 95 counties. The Tennessee Highway Department assigned and supervised the workers, not surprisingly since Tennessee politics was traditionally a “good ole boy” affair. That deep-seated structure was evident in a feud between Luke Lea of Nashville, publisher of the Tennessean, and Edward “Boss” Crump, former mayor of Memphis who served in Congress from 1931-1935. It ended in 1931 with a triumphant Crump. Lea, a former senator and partner to the Caldwell banking empire of Middle Tennessee, had taken a long fall due to fallout from suspicious business dealings with the state. Lea was the primary advisor to Henry Horton, governor from 1928 until 1932. It was this association that brought about Lea’s downfall when he secured the Caldwell banks as the bank for state business. The stock market crash wiped Roger Biles, The South and the New Deal (Lexington, KY: University of Kentucky Press, 1994), 33; and John Dean Minton, The New Deal in Tennessee, 1932-1938 (New York: Garland Publishing Company, 1979), 53-55. John Dean Minton, The New Deal in Tennessee, 1932-1938 (New York: Garland Publishing Company, 1979), 53.
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out all other assets from the banks and they survived through the election of 1930 on the money deposited by the state. After the election, Caldwell and Company collapsed and set off a panic throughout the South. With this failure, the state of Tennessee lost seven million dollars it had placed in Caldwell banks.10 One outcome of this disaster was that Lea was forced out of Tennessee politics; the other was the elevation of Crump’s machine. Wayne Moore, assistant state archivist in Tennessee, describes the state’s politics during this period: The criterion, by which Tennessee politicians were judged aside from winning elections, was their ability to deliver jobs. Crump and [U.S. Sen. Kenneth] McKellar were acknowledged masters of patronage, whose practice of politics hinged on the direct connection between votes and government employment. If you wanted a government job, you had to work on campaigns, register friends and relatives, make sure they voted the right way, contribute to the campaign war chest, and generally serve as a loyal foot-soldier for the organization. Jobs were the currency in which political debts were paid, friends were rewarded, enemies punished, and good-will stored for the future contests.11 During the relief efforts begun in 1932, jobs were the primary measurement of power in the state. It was the currency Crump used to rule Tennessee from Memphis. Crump believed if he could enlist the help of the Shelby County legislators to get the governor and at least one senator elected, he could maintain his power in the state. The jobs were essential because, by 1932 and 1933, Tennessee’s relief crisis completely outstripped the ability of the local agencies and churches to deal with it. In such a climate, the state’s politicians were happy to have help from the federal government because state funds,

Paul H. Bergeron, Stephen V. Ash, and Jeanette Keith, Tennesseans and their History (Knoxville, TN: University of Tennessee Press, 1999), 255-256. Wayne Moore, Message of the Governors of Tennessee 1933-1945, vol. 11 (Nashville, TN: The Tennessee Historical Commission, 1998), 4.



already unreliable, became increasingly shaky as the Great Depression tightened its grip. The New Deal programs, however, relied on state and local government for their implementation, and in Tennessee, those governments were plagued not only by the current economic struggles, but also by a long history of intensely politicized operation. The state, under an 1870 Constitution, in effect empowered the governor and the General Assembly to control both state and local political action, but the governor and many assembly members owed their election to the Crump machine. An infusion of money from the federal government might help the jobless and hungry, and it would also help the state’s coffers. This “new deal,” however, required change at the state and local levels, and change was not easy in a system Crump had operated off the federal grid. Among the difficulties was the beginning of a shift from Crump’s job-based political currency to a system where federal bureaucrats wielded more power than in the previous system. It fell to five-term state treasurer Hill McAlister to take on the crisis in Tennessee. A Nashville native and Crump’s candidate, McAlister was elected to the first of two twoyear terms as governor in November 1932 and sworn in January 17, 1933. He inherited the State Relief Committee/RFC structure from his predecessor Henry Horton. McAlister commented in February 1933, “I do not see how the destitute people of our State could have been cared for during this winter without Federal aid.”12 The early relief programs involved both shelter, food aid to the destitute and hungry (direct relief), and employment on government managed projects (work relief). Roosevelt was elected at the same time as McAlister, and by June 1933 Federal Emergency Relief Agency headed by Harry


Ibid, 44


Hopkins began its work. In a letter to the governor dated June 27, 1933, Hopkins requested that a Tennessee Emergency Relief Agency be appointed for work relief disbursements in the state.13 McAlister replied two days later with this statement: For the past year the administration in Tennessee of relief funds provided by the Federal Government has been in the hands of the Governor and local committees in each county. Recently, the President of the United States has directed that the expenditure of these funds in all of the States be under the direction of a central committee to be appointed by the Governor . . .They will hereafter have charge of the administration of relief funds in all of the counties of the state, and the local committees heretofore appointed by me can be continued or changed in part or entirety as this commission may decide.14 The Roosevelt administration clearly was attempting to centralize the aid distribution within the state, and the governor felt the impact of this change. After Hopkins handed down the federal directive, there were jobs that would bring relief, but McAlister no longer controlled them for political capital for himself or for the Democratic boss, Crump, in West Tennessee. “The advent of the New Deal brought an infusion of federal funds that dwarfed all previous aid to the region,” Wayne Moore wrote in Message of the Governors of Tennessee 1933-1945, “Accommodating this new level of federal spending taxed the ingenuity and traditional limits of state government, and the McAllister administration adjusted slowly to its new role in the administration of

Harry L. Hopkins, “Letter to the governors from the Federal Emergency Relief Administration,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 27 June 1933, GP 42, Box 19 microfilm, Tennessee State Library and Archives. Hill McAlister, “Central Committee Relief Work Statement,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 29 June 1933, GP 42, Box 19 microfilm, Tennessee State Library and Archives.



work relief and federal entitlements.”15 Among the people accustomed to seeking jobs because of political loyalty, however, the governor was still the go-to guy. Research in McAlister’s papers reveals hundreds, perhaps thousands, of letters from Tennesseans requesting employment. In a letter dated September 4, 1933, A.C. Andrews, a coal company owner from Nashville, wrote: “Pardon me for asking again if it is possible at this time to give my son some kind of minor position with the state. You will remember that in the early spring I had this matter up with you, and you very kindly tried to do something at that time, but were unable to place him then, and thought that something would come up later that would enable you to do something for us. Governor, I do not want to annoy you, but I feel that as your life long friend and loyal supporter that is perfectly natural to ask this of you.”16 Another letter from a Chattanoogan, W.T. Bales, reported abuses in the Hamilton County office of the R.F.C., and McAlister responded, I duly received your letter relative to relief work in this state. The method of handling this money was entirely changed by President Roosevelt about June 1st, and, at his direction, all local committees appointed by the Governor were relieved, and the entire work is now being handled through a Central State Committee, who, in turn, is required to work through social welfare workers or Red Cross representatives. All of the matters that you speak of are entirely out of my hands, and have been since the first of June.17

Wayne Moore, Message of the Governors of Tennessee 1933-1945, vol. 11 (Nashville, TN: The Tennessee Historical Commission, 1998), 44. A.C. Andrews, “Letter to the governor,” Governor Hill McAlister Papers 19331937, Nashville, TN, 4 September 1933, GP 42, Box 1 microfilm, Tennessee State Library and Archives. Hill McAlister, “Personal Letter to W.T. Bales,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 6 October 1933, GP 42, Box 1 microfilm, Tennessee State Library and Archives.
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McAlister’s response reveals that he believed he was ineffective against some of the state machinery of the New Deal. Another letter written to McAlister in January 1935 by C.C. Keith, secretary to the executive committee of the Democratic headquarters in Rhea County (Dayton, Tennessee), reported, “We are unable to get a job for anyone in the TERA in Rhea County. We could not find one man or woman in the entire organization that supported your or Senator Bachman. We do not like to talk politics in the T.E.R.A. but when the employees say openly that you can not get a job in Rhea County if you voted for Hill McAlister, and back it up by asking who is Supervisor or Foreman or anything else that supported the Administration in Rhea County that has a job. We are rubbed the wrong way.”18 The governor’s answer echoes with the same tone as the letter to Bales in 1933: “I have your letter of January 29th about T.E.R.A. operations in Rhea County. The conditions that you describe in your county are by no means exceptional. I have had the same story from many other sections of the State, but I think I have explained to you that they are matters over which I have not, and never had any control. The outcome of it is even yet doubtful, as the matter is entirely in the hands of the Washington authorities.”19 At the same time McAlister felt powerless over much of what was going on around him, Secretary of Labor Frances Perkins sent a telegram that explained the latest New Deal plans for reorganizing the United States Employment Service:

C. C. Keith, “Personal Letter Governor Hill McAlister,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 29 January 1935, GP 42, Box 22 microfilm, Tennessee State Library and Archives. Hill McAlister, “Personal Letter to C. C. Keith,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 8 February 1935, GP 42, Box 22 microfilm, Tennessee State Library and Archives.



“First, direct operation of Public Employment Offices is best done by the state and local governments. Second, the function of the federal government is to assist state and local governments to develop, maintain, and extend adequate employment services with high standards and common procedures and to weld them together into an effective nation wide system.”20 In this telegram, Perkins delegates ample power to the state, though she makes it clear the hand of the federal government is establishing the guidelines. Governor McAlister’s papers contain many references to the Wilder coal strike of 1932-1933. In one petition presented to the governor, his help is asked in a statement that begins, “To His Excellency, Hill McAlister, Governor of the State of Tennessee.” The petition further appealed to him “to appoint ten or twelve local men from the various counties bordering on the mining section as State Policemen or Patrolmen with authority to take charge of the situation and wipe out the lawless anarchic condition that cannot be controlled otherwise.”21 Using a royal title such as “His Excellency” surely must have seemed strange to the governor as he dealt with such overwhelming issues as getting the state on solid financial footing, providing relief to struggling families, and implementing the New Deal in the state. Additionally, issues like the Wilder Strike continued to confront McAlister. He revealed his insight into the dynamics of the strike in a letter to U.S. Senator Nathan L. Bachman, who had taken Cordell Hull’s seat when the latter became Roosevelt’s secretary of state. McAlister told Bachman that there were twice as

Francis Perkins, “Western Union Telegram to the Governor,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 29 April 1933, GP 42, Box 20 microfilm, Tennessee State Library and Archives. J.T. Moore and other petitioners from Putnam County, Tennessee, “Petition to Governor Hill McAlister,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, January 1933, GP 42, Box 20, Folder 3, Tennessee State Library and Archives.



many unemployed miners seeking work as there were jobs available, and he requested assistance: If it would be possible for the Secretary of Labor, or some department of the Federal government that has control of the matter to give preferential allotment in the Cove Creek Development area to some 300 men in this Fentress County situation, a very ugly condition would be relieved here … I have hesitancy in laying this trouble before you, you have both been so considerate of all requests that I have made as Governor that I hesitate to burden you with this one, which is, perhaps the ugliest of all that I have had to deal with.22 In this instance, McAlister’s plea was in part because the ugliness was on his mind and in part because virtually all his power came from the political practice of providing relief by finding jobs for those who were calling on him by the hundreds for help. In this mining crisis, just as in previous crises, he wanted to demonstrate his power and ability to impact situations in the state using jobs as currency, an ability that was in many ways his singular power. The ugliness he spoke of clearly showed his awareness of the deterioration of conditions in the mining community – conditions McAlister was warned about but did not act on. During the strike, there were viable threats from the coal companies against the life of union leader, Barney Graham. Highlander’s Myles Horton, who visited the miners in Wilder on several occasions, documented men hired by the mining company and reported his findings to the local authorities, to Graham himself, and even to Governor McAlister. In every case, however, Horton found that no action could be taken until a crime had been committed. Horton describes the horror of the situation in his autobiography, “I wrote a story for one of the labor presses at the time, in

Hill McAlister, “Personal Letter to Senator Nathan Bachman,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 5 June 1933, GP 42, Box 20 microfilm, Tennessee State Library and Archives.



which I predicted the death of Barney Graham. I named the people who would shoot him and sent photographs of the thugs. I had their history and all the evidence. … Barney was shot a week later.”23 McAlister knew about this. After Graham’s death, he revealed his unease with the situation in a letter to Albert Barnett, a Methodist minister and professor at Scarritt College for Christian Workers in Nashville. I duly received your letter of May 2nd written me from Memphis relative to the killing of Barney Graham of Wilder. This situation is something that has troubled me for some three months greatly, and even now I don’t know how to handle it. I would like to set in motion an arbitration of the difficulties up there, but the operators have let it be know, in every way, that they will not go into such an agreement. I do not wish to make idle gestures. You ask me to use the authority of my office to get at the bottom of this tragedy. Prosecutions for crime, as you of course know under our constitution, are entrusted to a local grand jury, trial court, and prosecuting attorney. There is not question as the identity of the killer, but I presume the usual self-defense pleas will be made. This is entirely a judicial matter in which the courts alone can take cognizance. Your suggestions that the ‘state act vigorously in seeing that the murderer is brought to justice; should be made to the prosecuting attorney.24 McAlister’s letter to Barnett once more demonstrated that the governor’s power was very limited. Not only was he unable to facilitate the process of giving jobs to Tennesseans, he was also unable even to begin a process that would impact a situation that was robbing people of their jobs. While McAlister was in that already weakened position, the very powerful TVA director Arthur Morgan showed him clearly that not all New Deal Agencies were open to working with the state. Morgan was particularly clear with McAlister that it was not part of the agency’s mission to remedy the unemployment

Myles Horton, with Herbert Kohl and Judith Kohl, The Long Haul, An Autobiography (New York: Doubleday, 1990), 40-41. Hill McAlister, “Personal Letter to Albert Barnett,” Governor Hill McAlister Papers 1933-1937, Nashville, TN, 16 May 1933, GP 42, Box 1 microfilm, Tennessee State Library and Archives.



situation in Tennessee. TVA, Morgan told him, was much more interested in creating new economic development in the Tennessee Valley. McAlister got the message and helped TVA officials get the legislation they needed to implement their programs in Tennessee. His acquiescence exemplified the change that was taking place. “In McAlister’s compliance with whatever TVA desired,” Wayne Moore notes, “one can detect the federal government beginning to take over functions historically reserved for the states.”25 While the New Deal brought in unprecedented money to Tennessee, the governing structure of the state was ill equipped to deal with the change the increased federal funding required. The 1870 state constitution was not designed for the size and complexity of Tennessee’s government in the 1930s. This constitution designated that the governor and state legislature serve two-year terms, and these short terms helped create the situation for the cronyism that eventually enveloped the state government. During the early New Deal, Tennessee got its share of money and even more. The seniority of the state delegation to Washington ensured this with their key committee appointments and willing state partners. New Deal programs such as TVA, CCC, and FERA brought thousands of jobs, and many improvements throughout the state. Implementation of these programs created a shift in the way Tennessee politics worked. Before the New Deal, the primary currency for the state’s politicians was the ability to control state government jobs to create a constituency; after the New Deal was in place, jobs were still central to state power, but the volume was exponentially larger than it had

Wayne Moore, Message of the Governors of Tennessee 1933-1945, vol. 11 (Nashville, TN: The Tennessee Historical Commission, 1998), 49.



ever been before, plus the federal government had a hand in the distribution of those jobs, thus diluting the power of the governor and the state legislators.



Bell, Brenda, and Fran Ansley. “Strike at Davidson-Wilder, 1932-1933.” In Working Lives: The Southern Exposure History of Labor in the South, 77-109. New York: Pantheon Books, 1980. Bergeron, Paul H., Stephen V. Ash, and Jeanette Keith. Tennesseans and their History. Knoxville, TN: University of Tennessee Press, 1999. Biles, Roger. The South and the New Deal. Lexington, KY: University of Kentucky Press, 1994. Dunbar, Anthony P. Against the Grain: Southern Radicals and Prophets 1929-1959. Charlottsville: University of Virginia Press, 1981. Eden, Robert, ed. The New Deal and Its Legacy Critique and Reappraisal. New York: Greenwood Press, 1989. Governor Hill McAlister Papers 1933-1937, GP42, Tennessee State Library and Archives, Nashville, TN. Horton, Myles, with Herbert Kohl and Judith Kohl. The Long Haul, An Autobiography. New York: Doubleday, 1990. Jennings, Peter, and Todd Brewster. The Century. New York: Doubleday, 1998. Kyvig, David E. Daily Life in the United States, 1920-1940. Chicago, IL: Ivan R. Dee, 2002. Minton, John Dean. The New Deal in Tennessee, 1932-1938. New York: Garland Publishing Company, 1979. Moore, Wayne. Message of the Governors of Tennessee 1933-1945. Vol. 11. Nashville, TN: The Tennessee Historical Commission, 1998. Roosevelt, Franklin D. “May 7, 1933.” Fireside Chats of Franklin D. Roosevelt. History, 7 May 1933. Available at (5 May 2007).