Tennessee

TENNESSEE

In an Age of Deindustrialization Tennessee in 2016 was acclaimed by no less than the Brookings Institute as the nation’s leader in advanced manufacturing, growing at double (4.6%) the nationwide pace of 2.4% (2013-15). Paying nearly $71,000 annually, Tennessee advanced industries produced almost $40 billion in output, 14.3% of the state’s total. Nashville was certified as the fastest growing metro for Brookings-defined as advanced, displacing Chattanooga which was similarly-cited for the period 2010-13. They assert Tennessee advanced industries employed almost a quarter million workers, 8.3% of the state’s workforce[i].

 

What evil has the Contemporary Era spurred that a Confederate state, precursor of BAWI IRB/tax incentive, a pirate state from the good old days of southern aggression against the North—the industrial hegemon, now kaput. Tennessee’s tale offers valuable lessons not only in adding complexity to our understanding of the state’s modern role in economic development, but of the persistence of embedded political culture and historical experience, and finally, provides a rationale for why regions, the “New” South in this instance, continue to bushwhack their own paths into Contemporary Era.

 

For good measure, Tennessee also provides value in understanding the third competitive hierarchy can be a two-way street in the evolution of our jurisdictional economic bases. Tennessee cities evolved their own agglomerations which reflected the disparate Tennessee sub-regional economies: Memphis, Nashville, Knoxville and Chattanooga (along with a host of smaller cities)  offer vivid testimony that the pre-New Deal southern agricultural low-wage, commodity export plantation/planter economy and politics, while dominant, gave way to the (old-pre-hegemonic implosion) pre-WW II “New South” modernization and ED. In Tennessee we can see the inner workings of the South’s “divided mind”.

 

Tennessee Historical Legacy and Context: Fleshing out “As Two Ships”

Tennessee history is both bold and exciting. Adopted home of folks like Andrew Jackson, Davy Crockett, Sam Houston, James Polk, and events such as the Battles of Shiloh, Stones River, Nashville and Forts Donelson/Henry, Andrew Johnson and home of Nathan Bedford Forrest, the cavalry general and founder of the Ku Klux Klan (in 1866 Giles Tennessee). Tennessee, the last state to join the Confederacy (1861), was the first state readmitted to the Union in 1866 —Andrew Johnson, after all, was President of the United States. There was never a military governor appointed and the Confederate Democrat political/economic class was displaced from power, but not eliminated. Replaced by a Tennessee Republican Party which had opposed Tennessee’s entry into the Confederacy and had conducted a literal anti-Confederate guerilla war in eastern Tennessee during the war.

 

Clashing political cultures produced a rather dramatically different Tennessee Reconstruction. After approving the 14^th Amendment early on, only two Blacks were elected to office through 1877. Indeed, in 1867, the state legislature approved creation of a State Board of Immigration to advertise and recruit—guess who—ethnic white immigrants, ignoring its fields literally full of newly franchised former slaves. The eastern Tennessee Republican Party also semi-consciously proved itself to be a powerful driver of Tennessee industrial expansion by permitting “carpetbaggers of industry”[ii] to take up residence.

Eastern Tennessee Republicans allowed in northern entrepreneurs and investors who built upon a middling 1865 industrial base, quickly launched an almost spectacular Tennessee recovery—by 1870 Tennessee industrial production exceeded its pre-war output, but doubling its value added.

Speculators and promoter rushed into the Tennessee Mountains, hoping to exploit their iron deposits and virgin timber. Knoxville and Chattanooga were centers of activity for the agents of northern financiers who were investing in the area. Knoxville attracted a large iron manufacturing company as well as factories producing paper, flour, soap, and other products. By 1870 Chattanooga had some fifty-eight industrial operations including iron works, furniture factories, sawmills, gristmills, and other factories. During this decade capital investment in the city increased by 450 percent. Nashville had new liquor distilleries, sawmills, paper mills, stove factories, and a petroleum refinery. [Even] Memphis became the nation’s largest cottonseed processor, and attracted many [supply] industries. Other large operations included woolen mills in Tullahoma and Jackson … [which also] acquired a flouring mill and benefited from the migration of Midwestern lumbermen who established sawmills and woodworking plants.[iii]

They don’t teach you this kind of attraction, business investment and “political” climate strategy in economic development certification or graduate school, but did it ever work. Chattanooga possessed a meaningful iron-related agglomeration that included nine furnaces, seventeen foundries and machine shops, Memphis was the nation’s leader in cottonseed oil, and an important lumber, paper and furniture industry developed in eastern Tennessee, Tennessee’s industrial base, was built upon cheap labor more mature industries such as lumber, food processing, raw iron, and some apparel and some textiles.

From its start after the Civil War, Tennessee was a “branch” not headquarter state. But it had moved on from its plantation-based cotton economy.  By 1890, the Census reported for the first time that Tennessee manufacturing “led agriculture as a producer of wealth”[iv]. Tennessee, however, still ranked in the lower half of states for industrial firms and value of manufacturing output. When Tim Bartik described Tennessee’s 1980’s economic base[v], he did so citing the same industries and sectors, and called attention to the same low-wage, cheap labor fully empowered with right-to-work legislation. The intervening century, with all its drama, ED-relevant events and initiatives, had done little to alter a landscape created in the period between 1870 and 1890.

 

Tennessee Manufacturing—or the lack of it—is not all you need to know about Tennessee’s multiple regional sub-state economic bases—not even close. But manufacturing is the thread that best links Tennessee’s past to its Contemporary Era future. One does not particularly think of manufacturing as “New Southian”, and, in that sense, Tennessee occupies a bit of a unique position in the New South—more like Texas than Florida, more like South Carolina than Atlanta.

Manufacturing came to the South in spasms, for the most part, imported by outsiders to achieve purposes sought by outsiders. Tennessee learned that lesson early in the 20^th century and its economic development has diligently and aggressively done what it could to spruce itself up and make itself suitable for investment by outsiders. Attraction, promotion, even export have become second nature—almost instinctual in Tennessee’s ED DNA.

A rather tepid regional/local commitment to industrialization (the divided mind) meant that the two major platforms that launched southern manufacturing were (1) post-Civil War northern investment and (2) World War II war production and industrial decentralization. Both were considerably uneven in their impact. But Tennessee offers us an opportunity to flesh out our As Two Ships rendition of southern economic development.

 

Manufacturing (and entrepreneurialism) may have largely missed much of the South previous to the Civil War; it certainly was never as robust as the North. In Tennessee, however, we see evidence that the South did not miss indigenous industrialization “boat” completely in its colonial and Early Republic years. Tennessee early on developed manufacturing sectors based on its regional resources and economic base, much less than entrepreneurial innovation. These early sectors created a base that outsiders built upon. Population migratory patterns infused Tennessee sub-regions with different populations, contrasting cultures and willingness to embrace non-agricultural occupations–establishing a foundation for future economic sub-regionalism. Given a natural tendency toward agglomeration of sectors and distinctive location assets/barriers, the state’s sector/industry ED base fragmented into geographic sub-regional economic bases—often resulting in a pronounced urban/non-urban-rural distinction as well.

 

Previous to the founding of our American Republic (1789), Tennessee was dominated by (and claimed) North Carolina—indeed Nashville was first incorporated as “Davidson County North Carolina”—but with the Northwest Ordinance of 1787 that state ceded its claim with the proviso that slavery could exist. When its population exceeded 60,000 it applied for and became the 16^th state in 1796. Settled by a mixture of Woodard’s Deep South and (mostly) Scotch-Irish Greater Appalachians, Tennessee was a major element of America’s first “Wild West”, and its earliest frontier.

 

The urban/regional (our first) competitive hierarchy has historically permeated state policy-making. Nineteenth century Tennessee state policy-making reflected the competing mélange of sub-regional “large city policy systems” with their varied sub-regional economic bases. Tennessee, like Gaul, was claimed to be composed of “three grand divisions”:

(1) Western (Mississippi River) Memphis/Shelby County and its environs (acquired through the 1818 Chickasaw Cession) were settled by Woodard’s “Deep South” cotton plantation owners;

(2) the central “hills” and “Cumberland Plateau” (purchased from the Cherokee in 1775 by the Transylvania Land Company and settled from Kentucky by Daniel Boone and Quaker/Scotch-Irish and contested by Native Americans ) blended agriculture, trade, finance and extractive resource-based sectors (lumber, and some iron ore), revolving around the state capital, Nashville.;

(3) Eastern Tennessee River valley with Knoxville, the Tri-Cities, and Chattanooga (previous to 1838 home of the Cherokee and then starting point of the infamous Trail of Tears), much more urban-prone, more receptive to manufacturing eastern Tennessee starkly contrasted with its western areas. In Tennessee “the South’s “divided mind” was reflected in its three sub-regions with agricultural rural versus urban with a more diversified economic base—usually extractive (mining and lumber), finance and trade. Textile mills centered chiefly in Knoxville and Nashville, but could be found in most urban areas.

 

The manufacturing sector of each major city reflected its larger sub-regional economic base with Memphis/Shelby County developing cotton mills as early as New England’s Lowell (Tennessee claims the first cotton mill was established near Nashville in 1790). Knoxville manufactured flour, cotton, and leather goods. In the first half of the nineteenth century (pre-Civil War), local iron/ore deposits sustained an iron and lead mills, agricultural regions supported grain mills and food processing, some agricultural machine building—and given a heck of a lot of marketable trees a vibrant saw milling and lumber sector—not dissimilar from early Midwestern industry during this period. Middle Tennessee (Nashville) developed a regional iron industry by the 1850’s (over fifty in operation). By 1860 Tennessee ranked third nationally in cast, wrought, and rolled iron from its blast furnaces and rolling mills[vi]. Having made a case for Tennessee’s pre-Civil War indigenous development of manufacturing, except for iron production

Tennessee ranked at about the middle among in manufacturing …. Even within the state, industry lagged far behind agriculture. Economic, political, and social power and prestige were primarily associated with landowning and … tobacco and cotton. [But] the Civil War brought an upheaval in economic thought and priorities[vii].

Disrupters: Depression, NEW Deal and the Second Reconstruction

Without that drama, however, affairs would have deteriorated badly. Against the rising and ever-powerful northern industrial and political hegemony, the post-1890 Tennessee economic base stagnated, lost ground and vibrancy. World War I helped somewhat in overcoming declining lumber and iron industries by expanding Tennessee’s apparel, chemical and printing sectors. Kingsport in the 1920’s was home to the nation’s largest book manufacturing plant (the Kingsport Press). But the Depression devastated Tennessee and the South, setting the stage for a innovation that revolutionized American state and local ED—an innovation now abbreviated as BAWI, or “balance agriculture with industry”—an expression that has meaning only to a “New South Redeemer”.

Mississippi and its Governor White got the credit for BAWI[viii], northerners say blame, but Tennessee may have been where municipal tax-exempt IRB industrial recruitment began. It certainly was the place in which it took root.

Tennessee cotton and export agriculture was the hardest hit and sharecroppers and tenant farmers were simply destroyed. This masked a “back to the farm” movement, however, where many urban dwellers returned to their roots and self-sufficiency by growing their own food and making do. Tennessee’s major lender, Caldwell & Company Bank failed in 1930, starting a chain of bank failures throughout the South. Businesses failed, soup kitchens followed. TVA’s mostly eastern Tennessee areas were played out, and among the South’s most devastated and backward geography. In this atmosphere, former urban residents, now back living on their rural, small town family farm, yearned for the prosperity of their former manufacturing jobs, leaving “in its place a desperate hunger for new industry at practically any cost, many local leaders who were already begging for new plants accelerated their efforts to buy and steal them as well”[ix].

With little regard for the gift and loan restrictions in Tennessee’s state constitution, Cobb reports that a 1937 state survey of 41 communities revealed fifty-six plants built since 1930 had received local subsidy—most by tax exempt bond issuances authorized by the state legislature despite their flagrantly violating constitutional prohibition. Moreover, these bonds were paid for by 5-7% deductions from workers hired by these facilities, plus tax abatements, free utilities, worker training,  and lease of locally-built buildings (Cobb cites Lewisburg TN for financing a town hall, holding one meeting in it, and then leasing it to General Shoe Corporation[x] for a fixed term). Cobb cites three Tennessee examples of this early pre-BAWI Tennessee tax-exempt, ultra-constitutional municipal attraction programs (Manchester, Dickson and Lewisburg) all from central-south central locations, with thriving 1930 populations of 1100, 2900, and 3100 respectively (Nashville and Chattanooga closest cities).

The specter of this assault by such behemoths echoed like Charleston’s artillery against Fort Sumter to northern Progressives. In any event, the state was a willing partner in this municipal chicanery At least four state enactments during this period authorized bond public issuance for sites and buildings for new industry, industrial advertising, hiring site selectors, collecting assessments from employed workers, and providing training[xi]. Having said this, it must also be admitted that Tennessee was not one of the southern states that created state-level formal ED agencies and programs during the 1920’s. Its first formal state-level EDO was the 1945 Industrial Development Division of the State Planning Commission[xii] (triggered by earlier federal requirements to form regional planning organizations).

 

Interestingly, one can see in these Depression years, the willingness of Tennessee (and other southern states) to offer company-specific “vocational” style training to employers (and employees). Tennessee formalized these workforce initiatives within its Department of Education, transferring them to the Tennessee Dept. of Economic and Community Development in the early 1970’s—after their dramatic expansion triggered by Great Society CDBG and ARC grants. These grants became an important element in Tennessee’s late 1970-early 1980’s recruitment of Japanese auto firms. State IZTEZS grants were provide through county-level EDOs/vocational schools.  In 1988 the program was elevated by new legislation which charged the Dept. with direct oversight of these county programs (95 counties). In the decade that followed ITES funded 712 such programs[xiii]. Little-noticed, incredibly effective, the ITES in these years was a distinctive characteristic of southern economic development, providing an edge against northern state incentive packages[xiv]. Less appreciated is that ITES-style training was a key element in Depression/BAWI era small town relocation incentives. Why? Probably because it was vital that a rural agricultural population receive appropriate training for manufacturing employment. The relative absence of such training, in lieu of general public education, might not have adequately met the needs of northern inner city Great Migration residential neighborhoods.

 

If FDR’s 1937 Second Reconstruction Initiative[xv] proved to be both controversial and divisive (an excellent case can be made that it directly led to the first 1940’s spasm of right-to-work legislation), his 1933 New Deal legislation was just the opposite. The Reforestation Relief Act, and Federal Emergency Relief Act—but especially the Tennessee Valley Authority legislation—were warmly embraced by most Tennesseans. TVA is its own story, one introduced in my As Two Ships[xvi], TVA is the gift that keeps on giving. While its initial “phosphate strategy” was less impactful, Oak Ridge, below, is an example of an early TVA offshoot. Pre-WWII-Depression-era federal expenditures in the South were lower than such expenditures in the West and Midwest, In the South Arkansas, Mississippi, Louisiana, and Texas—the heart of the cotton belt benefited most. Tennessee placed in the middle[xvii].

 

World War II and Industrial Decentralization

World War II firm relocation and production contracts and postwar federal “industrial decentralization” played a revolution role in the rise of the Sunbelt and with a regional change that would eventually topple the northern industrial hegemony (1975). These are two distinct and quite different federal impacts, however. War production in high gear during WWII, sputtered during the Korean War, and then changed character dramatically during the Cold War. Cold War industrial decentralization, arguably, was the most transformative for several southern states (not Tennessee) —indeed one can see a link with the so-called “New South”.

 

War production facility relocation and production contracts benefited Tennessee—“Tennessee was no war production boom town” but it garnered a more than fair share. War production left a small footprint on the state’s future economic base, however, because a great deal was concentrated in a few large relocated facilities with equivalently large war contracts[xviii]. The 1940 relocation of Michigan’s Stinson Aircraft which constructed a one million sq. ft. facility in Nashville[xix] (Its Nashville facility was among its five largest and became the largest industrial employer in central Tennessee (900 in 1941, 7,000 in 1943—its war contracts totaled $143 million, 12% of the total state war production contracts).

 

Tennessee was 27^th nationally in total war contracts, 13^th in publically-financed manufacturing facilities and 16^th privately-financed manufacturing facilities[xx]. Memphis was a major beneficiary from military facilities, as was Clarksville (Fort Campbell on the Kentucky border). What heaven giveth, heaven can also take away, however. In 1964 ninety-five federal military bases/facilities were closed down (consolidated) by Secretary McNamara and Tennessee got its fair share of that as well. The BRAC era commenced much sooner than most remember today.

 

In this second phase, deindustrialization meant Defense Dept. bases, missiles and bombers; it also meant semiconductors, space centers, rockets, research facilities, and national visibility—and Defense Dept. dependency.

From the 1938 Report on Economic Conditions until mid-1950, federal intervention had been remolding the South into the shape of the rest of the nation. But the Sunbelt South of the 1960’s and 1970’s … became an economic and political trendsetter. A shift in the relationship with the federal government steered the South into that second phase …. Federal activity itself switched from social welfare efforts to reform the South in the nation’s [economic and social] image to defense programs that helped to install the region as national leader in aerospace, electronics and business climate …. Parts of the South, both geographic and demographic segments, remained nearly untouched by [this] economic development and federal action[xxi].

Tennessee mostly missed that second phase—although it got its fair share of war production, it did not participate in the shift to Cold War industrial decentralization. Tennessee, one might easily assume, got a lot from it with the nuclear-facility in Oak Ridge. But manufacturing-attraction and knowledge-diffusion were another matter. Oak Ridge (twenty-five miles from Knoxville) was certainly a success, but in one sense a serious disappointment. It was no Research Triangle. If the profit-life cycle model has validity, Stage 1 and 2 sectors/industries generate high “rates” of job creation, and, most importantly, spinoffs and innovation. That proved to be a magic ingredient of federal second phase industrial decentralization: it geographically redistributed the gazelles of Cold War military-related production sectors to the South and West.

 

In that sense Oak Ridge proved to be a disappointment; it did not generate new sectors, firms, and spinoffs—innovation as a trigger for local/regional/state ED growth was in short supply. Why? “Nuclear”-related innovation was kept on a very short leash by the federal government. In a Nuclear Age with its nuclear-fueled Cold War, nuclear-related innovation and spinoffs were literally fence-ringed. Through little fault of their own local universities did not participate, nor did the surrounding community. This was not a little southern Silicon Valley in the making. Even the workforce was kept under wraps.

 

Accordingly, the federal government would play much less a role in Tennessee’s potential entry into the New South. Still “even parts of the South with low [federal] dependency, states like Tennessee and Louisiana, the defense industry [still] became the states’ largest employer by 1976”[xxii] . Traditional war production, military bases and defense contracts formed a manufacturing and service sector base for Tennessee, but did not introduce it into the age of innovation and knowledge-based economics. If Tennessee was to join into the “New South”, leaving behind the Confederate South it would have to forge another path.

 

Korean War and Cold War era federal industrial decentralization[xxiii], however, was much more complicated and uneven; it also got interwoven with an increasing fascination in the Senate (Illinois Senator Paul Douglas) with “labor surplus areas” and replicating TVA’s “area-wide depressed-area” redevelopment. In any case, the politics of Congressional approval associated with military-related industrial decentralization tended to benefit cities with existing military-related facilities (WWII winners), and industrial “redistribution” was episodic, if impactful to those communities that did acquire a major federally-required military relocation[xxiv].

 

Nashville, it seems, did benefit from expansion of its ammunition facility and in 1952, Tennessee’s index of relative per capita federal expenditures was the South’s highest[xxv]. The strength and intensity of a state’s Congressional delegation mattered greatly in this competition and Tennessee’s is not often mentioned. Again, while seriously uneven, the South during the 1950’s did grab a better share of federal Defense Department expenditures (from 7% to 15% in the 1950’s and to 25% by mid-1970. Texas benefited hugely, but Mississippi’s miserly share of federal Defense contracts, a ponderous .1% in 1951, only “skyrocketed” to 2.6% by 1978[xxvi].

 

Tennessee’s Commitment to Rural and Small Town Development

In Tennessee, industrial decentralization in the pre and postwar period meant less the relocation of new facilities into Tennessee than the dispersion of existing manufacturing and attraction of new firms into small towns and rural areas. By 1985, Bartik reports that manufacturing employment in twenty-three of Tennessee’s seventy-two non metro counties exceeded 30%–the national average of all such employment in all counties (metro and non-metro) was 20%[xxvii]. The silent but deadly disease caused by the industry/sector profit life cycle fueled a host of footloose firms needing cheap land, cheap labor, and willing low-cost, loosely-regulated business climates easily accessible by new federally-financed interstate highways. They could relocate quite nicely in non-metro geographies. In the 1950’s and 1960’s southern manufacturing output expanded fastest in these counties. “Between 1963 and 1965, some 80% of the new manufacturing jobs in Tennessee were created outside standard metropolitan areas (43 % in Texas, 64% in Virginia). In eastern Tennessee during the 1950’s, TVA’s rural industrialization program encouraged defense firms into rural areas—two-thirds of that region’s defense investment “made its way into the region’s 22 nonindustrial counties[xxviii].

 

All this fed into what became one of the most important “episode” in 20^th century American state and local economic development (and intergovernmental politics): the BAWI-IRB “Shadow War”. Tennessee was an early and major player in that episode. State and local industrial development bonds, in some form, had been around since 1790. Their proceeds had financed all sorts of ED stuff, from canals to venture capital for early manufacturing firms. Except for a brief Civil War period, the federal IRS income tax interest deduction was not relevant because the feds did not use an income tax. That was not the case in the 1950’s.

 

The 1931 Mississippi BAWI innovation was state-enabling legislation that permitted municipalities, and later counties, to constitutionally use these bonds, recourse to taxpayers (i.e. taxpayers were “on the hook” if bond defaulted) to provide any number of incentives and facilities to private firms—“buy a payroll”. Ignoring the Depression years, BAWI was reinstituted by Mississippi in 1943, and it prompted neighboring states (like Tennessee which despite constitutional restrictions, had used BAWI-like municipal IDBs for major-league small town industrial recruitment) to take advantage. Ten years after Mississippi’s 1943 reenactment, the only states that had adopted the innovation were Kentucky (1948), Alabama (1949), Tennessee (1951), and Louisiana (1953)—essentially this is the Mississippi River eastern bank, heavily cotton/tobacco belt and mostly East Central census region—one of the two major sources of the Great Migration and Southern Diaspora. The target of this attraction campaign was the state of Illinois—which also approved (in self-defense) a BAWI IRB (1951)—but never issued a bond[xxix]. In the post-1953 decade, IRB, in many models and versions, diffused across the nation—but by 1963 the total issuances of all ACIR-defined issuers were less than 1% of the national municipal bond issuance. There is a bit of “tempest in a teapot” to this episode.

 

Nevertheless, as Cobb relates “local industrial development corporations proliferated in the South after 1950, spending substantial sums on advertising and recruitment and offering loans and special services of various kinds”. Tennessee ranked 9^th in the nation (1964, 31 states reporting)—six fellow southern states ranked higher than Tennessee[xxx]. Tennessee State did advertise/recruit, aggressively by northern standards, leisurely by southern. Most of the action in this period was local[xxxi]. The ultimate trigger for aggressive small town industrial recruitment was the threat of population loss and a ghost town future[xxxii].Indeed, Gavin Wright, using a Tennessee example, further asserts that “southern townspeople believed they had no choice but to compete in those ways [salesmanship, subsidies (IRB) and tax abatements]” quoting the below from a 1957 Lafayette Tennessee official (1960, white, tobacco/lumber-producing 1,700+ population, home to Rita Coolidge, about 60 miles from Nashville).

The little town that wants industry to stop the flow of young people away from its surrounding rural area does what is called ‘buying industry’ or it does not get any. You listen to the experts tell you ‘No’. Then if you are wise you do whatever it takes to get the plant, and I mean just that, ‘whatever it takes’[xxxiii].

The Advisory Commission on Intergovernmental Relations (ACIR) in 1963 produced arguably the definitive report on the BAWI-IRB postwar diffusion. While it did not recommend usage (with a vigorous dissent from Maine’s Senator Muskie who advocated its use), the report outlined and assessed its diffusion, scope, and impact and it core finding that IRBs were “here to stay”, and hence prepared recommendations to cure what ails them. Salient to this discussion was its conclusion that postwar IRB diffusion through 1963 was “a rural area phenomenon” where “the availability of credit and property leasing facilities are sometimes as essential as transportation or water resources in order to take advantage of the economic factors of labor, raw materials and markets”[xxxiv].

 

In a nutshell, small town attracting using extensive incentives to relocate manufacturing became the primary feature of Tennessee state-wide ED during this transition era. The state itself, other than authorizing their activity in 1951, played a small supportive role with its advertising and promotion campaign conducted by its post 1945 Industrial Development Division (of the State Planning Commission). It is in the dispersion of manufacturing into rural communities and small towns that we see Tennessee’s path into the New South. That path meant institutionalizing the BAWI era ED experience with industrial recruitment, promotion, incentives into a formal state-municipal level partnership that in the 1970’s turned to foreign companies and foreign direct investment (FDI) instead of Pennsylvania clothing manufacturers. By the way, Lafayette Tennessee today, population less than 3,900, houses two manufacturing facilities—a Fleetwood RV manufacturing facility and Tennplasco a manufacturing assembly/painting facility with robotic painting booths that employs 185 workers.

 

During the 1970’s the CD division was “largely separate from DECD, but that changed in Governor Lamar Alexander’s first administration (1979-84). At that point its program was linked to the DECD’s attraction and rural development focus. As described by Bartik, Tennessee state-level community development by mid-1980, despite HUD’s primary housing and neighborhood level focus, was 40% allocated to provide industrial loans to poorer rural communities (p. 174). A further example of the State’s small town rural focus was an interesting innovation, the Governor’s (Lamar Alexander) “Three Star Program for Community Economic Preparedness” primarily intended to help small rural communities) “sell themselves as desirable locations for industry. It grew out of the recognition that many small communities did not know how to put their best foot forward to firms considering new plant sites”. By 1996 sixty-four communities had achieved “three star designation”, thirty within ARC’s jurisdiction[xxxv]. Also, in 1986 a small $5 million fund was created to be run by the Tennessee EDC to make loans in invest seed capital in “economically distressed areas in Tennessee” (likely to be rural) (p174)

 

By mid-1980 the governor typically was closely involved, and a participant in the attraction and recruitment of national and international firms. Advertising expenditures (about $500,000 annually) were described by Bartik as average for the period (p. 169) and the state made “twelve to fourteen national trips and eight to ten international trips per year”. The successful recruiting of the Saturn project (described below in 1980) market the turning point in this intensified national and especially foreign recruitment. Bartik calls attention to a criticism that the State (in mid-1980) “didn’t extend enough recruiting assistance” to Tennessee’s larger cities (p. 171). Indeed, it is quite evident the State had consistently followed a small rural community priority and focus in its state-level ED efforts.

 

In that atmosphere, branch plants assumed an entirely new meaning. But the path did not come easily to Tennessee ED. Despite, its enhanced prosperity and economic growth during the 1950’s and 1960’s, the state lagged behind its neighboring rivals, and its membership in the New South was not unquestioned.

Memphis in the agricultural Mississippi cotton belt competed with centrally-located Nashville. Between 1950 and 1960 Nashville lagged and the Central Cumberland region lost population (2%)[xxxvi] and Memphis grew by nearly 25%. Memphis would grow by another 25% in the following decade—Nashville grew by nearly 150%. Why? Nashville and Davidson County combined in 1963. After 1970 Memphis stagnated, even declined by 5% in the 1990 census. Nashville also slowed dramatically, but it never declined and generally grew twice the rate of Memphis.

 

Forty Thousand Feet Up Looking Down: Inter and Intra Regional Cross-Currents

During the post-WWI period (1945-70), our so-called Age of (hegemonic) Urban Renewal, Tennessee (and other southern states) digested the New Deal, Second Reconstruction, WWII War Production/1^st Phase of federal industrial decentralization, and oh yes, interstate highways, public housing and CBD urban renewal. Tennessee enjoyed the fruits of several “area-wide” federal redevelopment initiatives (TVA and ARC)—each dancing to its own policy/strategy music—but simultaneously stoking a “rural renaissance” but unconsciously enabling a small town BAWI IRB attraction ED strategy that chased the relatively neglected mature and footloose hegemonic late-three/early fourth stage industrial sectors. Small towns led this strategy because, while growing as a state, small towns witnessed–confronted continued elevated levels of Southern Diaspora/Great Migration outmigration on top of a southern Civil Rights Movement that tore its body politic to shreds[xxxvii]. Southern small towns, epitomized by Selma Alabama, at its peak population in 1960 (28,000+), began their unrelenting descent into today’s “rural” crisis. While the “old South” survives in many ways today, much of the South was about to become “the New South”.

 

To a certain degree these disruptions were further confused by some in-migration associated with its improved manufacturing economic base and its close association to the infamous military-industrial complex, aka the Defense Dept. and sustained high rates of organic population growth. Politically, southern committee chairmen (and a new President) had risen to the top of Washington policy-making. Southern states were upgrading their policy and governance “capacity”; Nashville’s 1963 city/council merger is the most prominent example of capacity reform at the local level). The northern political and economic hegemony had already toppled politically. The second phase of federal industrial decentralization, associated with the new gazelles, the space program and a Cold War that fueled missiles and rockets, as well as fought a decade-long Vietnam war meant both older age “guns” and the “roses” of a new economy were transferred into many southern economic bases. The hegemonic northern policy systems were stepping into the nadir of their several hundred year old history.

 

Each southern state, themselves internally fragmented into multiple competing and economically/socially different sub-regions (our first urban competitive hierarchy), whose policy-making mostly happened within the confines of one political party—in reality a host of factions some of which were sub-regional—grappled with all these competing counter-pressures and dynamics. ED took a backseat to the highly toxic politics of desegregation, school integration, and externally-imposed electoral reforms which, in many cases, would lead to meaningful subsequent jurisdictional policy changes. In 1970 low-tax Memphis (1970 17^th largest/1960 22nd largest) and high-tax Boston’s (1970 16^th largest, 1960 13th) population base was only 20,000 apart. Nashville, the 73^rd largest city in 1960, was in 1970 the 30^th largest, snuggled between Cincinnati (formerly the 21^st largest in 1960) and San Jose (the 57^th largest in 1960). Population change and civil rights/desegregation aside, each faced a seriously different economic development landscape with radically different policy systems. Decline—even in the rising South– had made its appearance in American state and local economic development.

 

Tennessee’s Path into the New South

Tennessee’s “factional politics has a character all its own” claimed V.O. Key, author of the classic “Southern Politics”[xxxviii]: “A narrow ribbon of real estate stretching [the equivalent] from Hartford CT to Cleveland OH … Tennessee’s far western counties are but northward projects of Mississippi; its eastern mountains share both the topography and spirit of western North Carolina and southwestern Virginia. Between West Tennessee and East Tennessee lies Middle Tennessee, a fertile bowl… whose principal city is Nashville. To the problems of political management inherent in three distinct geographic sections are added patterns of political behavior deposited by the Civil War”.

 

From 1933 to 1948, the politics of the state were controlled by “Boss E. H. Crump” of Shelby County (Memphis). Crump’s machine did not compare to Tammany, Chicago, or even to the ward boss system of Boston—his control was personal and not based on an “organization” per se—but in a one party state (Democratic) which left eastern Tennessee Republicans on the margins (Crump controlled eastern Tennessee federal patronage), Crump controlled primaries through his management of an Shelby County electoral “machine” that garnered 85% of Shelby County’s vote. Mostly non policy-oriented, Crump was never a friend to organized labor. While the CIO drifted toward anti-Crump factions, the AFL became “less devoted to Crump after the 1947 legislature enacted an anti-closed shop bill [right to work] sponsored by the Tennessee Business Men’s Association. On this bill Crump worked both sides of the street”[xxxix] (p. 73). This is the state policy system that produced, allowed would be a better word, local/county BAWI-innovations, business climate attraction and local/county/TVA ED leadership to flourish.

 

When Crump’s Gibraltar was permeated in 1948 by Estes Kefauver, the state transitioned to a one-Party factional coalition in which two boss-governors (Frank Clement and Buford Ellington—both born in Mississippi) alternated sharing the governor’s mansion (1953-1971). They too preserved the local dominance of state ED policy-making, offering what assistance they could to local and county EDOs. The postwar BAWI shadow war origin lies within their tenure. In 1966, however, the first fault lines appeared when Howard Baker, an eastern Tennessee Republican defeated Clement and was elected Senator. In 1968 Republicans took over the General Assembly for the first time since Reconstruction—but lost it in 1970. In 1970, a second Republican, William Brock, defeated Albert Gore Sr. and Tennessee had two Republican senators. In that year, also, a Memphis dentist, Republican Winfield Dunn was elected Governor. Republicans had not controlled these three offices simultaneously for one hundred years.

 

While the Democrats swooped back into the Governor’s office (Ray Blanton) and Harold Ford, the first Tennessee African-American sent to Congress (Memphis) on the anti-Watergate momentum partially created by Howard Baker’s leadership in removing Nixon from the White House, the Republicans regained the governor’s mansion with the resurgent and charismatic Lamar Alexander in 1978 toppled a scandal-riven state Democrat Party. In any event Tennessee’s shift from one-party Democratic begins in 1966. It certainly proved to be a somewhat drawn out conversion; the Senate for example did not dispel its Democratic Majority until 2005—Republicans, however, have held it since. Since 1972 a Democrat has always been replaced by a Republican and vice versa. In 1975, voters ratified a state constitutional amendment, allowing the governor for the first time to serve two terms and observers comment the legislature has acquired an increasing autonomy from dominance by the governor. In that sense, Tennessee state government after 1978 had modernized sufficiently to permit the development of a cohesive, if not strong, gubernatorial administration capable to sustaining an independent, state-level ED policy-making. That it built upon the decentralized traditions of former policy systems, incrementally maturing into a primus inter pares status suggest a cultural and even structural legacy had jelled into a hardened tilt toward bi-partisan ED strategies, tools, and priorities hued over the past one hundred years.

 

 

Business power, always tiled Republican, and gathered momentum from the war production, industrial decentralization relocation of firms to Tennessee. From its eastern Tennessee foundation, business leadership refrained from challenging the one-party southern policy system, until the disruption of the southern civil rights movement rendered that system vulnerable. In the 1980’s no Tennessee state chamber existed (other state-wide business groups (Tennessee Manufacturing Association, Taxpayers Association) did, however); in 1984, the Tennessee Business Roundtable formed (it still functions effectively today)

 

Postwar the state’s growth in manufacturing was pronounced and the state’s industry mixed changed somewhat with chemicals climbing to top place, and manufacturing growing by 50%; between 1955-65 Tennessee’s growth in manufacturing GNP led the nation—narrowing the state’s gap with national per capita GNP, but not overcoming persistent relatively high levels of poverty. The apparel industry grew the most job, but as Bartik and others repeatedly observe, growth was in low-wage, low skill sectors. The 1975 and 1980-2 recessions hit these sectors hard as foreign competition was increasingly felt. These were the years of the southern Civil Rights Movement when the South as a whole came under attack and found it necessary to modify its attraction and recruitment to include “better schools—including integrated schools—and enhanced infrastructure such as highways, bridges, and public governance, pollution control, and consumer amenities (golf courses, and quality of life assets). In short, the state recruitment package diversified considerably during this period, and an intensified industrial training and tilt toward productivity investments was also in evidence.

 

After 1975, TVA itself, deeply encumbered by significant debt incurred by a mid-1960 commitment to an aggressive nuclear energy facility expansion, was required to scale back its community/regional economic development programs—this continued through the 1990’s. Given TVA’s enormous impact within Tennessee and its county-driven ED, the TVA-ED vacuum that ensued generated some pressure for the state to play a more aggressive role. A 1985 TVA Report “rang the bell” alerting the state’s ED community that foreign competition in manufacturing was likely to increase[xl]. Between 1995 and 2005, for example, TVA made about $87 million dollars in loans to new and expanding industries in Tennessee[xli]—a level of commitment that was not transformative.

 

Bartik writing in 1987 comments on the seeming disconnect between the state and TVA’s ED program (other than TVA ED-related research)—observing the lack of relationship is two-way, but certainly shaped by TVA’s federal—Congressional background/funding which inhibits TVA’s ability to recruit firms within the USA, and TVA’s board of director structure which provides much autonomy from state influence and contributes to state and local perception in that time period of indifference, lack of transparency and bureaucratic processes[xlii].

 

Postwar to 1970, Tennessee State’s direct participation in state and local ED was evident, but limited principally to support/empowerment of local municipalities attraction/recruitment stressing Tennessee’s strong pro-business business climate, using the BAWI-IRB heavily-laced with incentives, abatements, training grants, and construction/lease of facilities—and empowered to pay back these IRBs with employed  worker payroll deductions. This limited state involvement was consistent with other major ED state-level initiatives, previously (housing authorities, public housing, eminent domain and slum clearance (Depression Era urban renewal); the 1984 state authorization of Tennessee sub-state jurisdictions to create an economic development zone (the first zone was formed in 1988 (North Memphis)[xliii], the 1998 Community Redevelopment Act which authorized counties and municipalities to form Community Redevelopment Agencies to issue TIF bond issuances as specified in the legislation[xliv]; and its 1998 Convention Center and Tourism Development Financing Act which authorized “tourism development zones” with supportive EDO and financing[xlv] continue to suggest a strong local/county role in Tennessee ED with the state more active, open to new strategies and initiatives, but more coordinating and empowering than directly inserting itself into local/county ED.

 

The pace and level of state ED activity, however, did accelerate in 1972 when Republican governor Winfield Dunn reorganized state ED and formed the present day chief state-level EDO, the Department of Economic and Community Development. Recruitment remained its core activity. By 1985 DECD also administered the state’s HUD-community development relevant programs (including HUD’s Small Cities), the Industrial Training Services, Small Business Office, High Technology Office, Energy Office, and MBE Office. An Office of Film, Tape (how cute) and Music reported directly to the Commissioner. Within its Industrial Development Division[xlvi], separate entities devoted to “Existing Industry”, “Export Trade Promotion”, “National Marketing”, and “International Marketing” functioned.

 

Following Governor Dunn (1975), Democratic Governor Ray Blanton built on Dunn’s reorganization by elevating the state’s Department of Tourism to cabinet status, and commencing a serious and sustained attraction effort focused on foreign, particularly Japanese FDI. He made several trade missions and hosted a meeting of UN officials in Tennessee. His timing was excellent. The election of Republican Lamar Alexander (1979-87) confirmed the state’s commitment to a recruitment/FDI strategy and targeting of Japanese auto industry investment in particular. It is these last activities that separated Tennessee from other southern states that enabled Tennessee to develop its own path to become a so-called “New South” state: attraction/recruitment, manufacturing foreign direct investment, and rural manufacturing.

 

In an era characterized by Eisinger’s “demand-driven entrepreneurial” states it would seem Tennessee thus far was a poor fit. That would not be totally accurate. In this period a small office, the High Technology office within the Dept. was established. A bipartisan, frugally-supported ($2 million) Alexander initiative (he set up a task force in 1981), the Tennessee Technology Foundation located in the Oak Ridge-Knoxville area was set up to promote a set of state initiatives, including a parkway from Oak Ridge to the Knoxville airport, intended to create a high-tech, Route 128-like technology corridor, anchored by development of a (Knoxville) new campus, the State Technical Institute. The Foundation was to provide technical assistance for zoning, entrepreneur advice, and promotion/PR.

 

The private sector responded an set up two EDOs, the Tennessee Innovative Center (1984 Martin Marietta—the manager/contractor of the federal DOE’s Oak Ridge National Laboratory) and the (Tennessee) University Venture Capital Center (a joint venture between the University and a private venture capital firm) at UT’s Knoxville campus. The Innovation Center, modeled after a Utah business incubator[xlvii] which not only provided physical support and appropriate space to high tech entrepreneurs, also was able to provide equity injections into their ventures. In true Tennessee style, local efforts piggy-backed off these initiatives, including a Biomedical Research Zone in Memphis and a task force formed in the Tri-Cities area (Tullahoma). TVA also earmarked $30 million for venture capital—managed by a Nashville private venture capital firm[xlviii]. The Tennessee Technology Corridor was established by 1983 state legislation that created the Tennessee Technology Corridor Development Authority. Supported by an ARC grant, the TTCDC developed a plan (zoning-oriented) which was picked up on by the Knoxville-Knox County Metropolitan Planning Commission and formally adopted by Knox County in 1984 and created a 7,000 acre technology overlay zone. In 1999 TTCDA was merged with the Metropolitan Planning Commission, but continues as a division of that Commission with its own identity and staff.

 

In any event, from these early ventures into the “technology” demand-side Tennessee (and the University of Tennessee) did commit to fostering technology and participate into what became known as the knowledge-based economy”—not to mention encourage technology entrepreneurism and spinoffs. It was not an early leader, however, in that strategy as supported by Markusen (et al)[xlix]. They asserted that Tennessee (among other states such as Ohio, West Virginia, New Mexico, Washington and Hawaii) by mid-1980 did not spin off many high tech firms/jobs and could not be considered in process of developing a budding technology agglomeration. No Tennessee metro area is listed in their top-ranked high tech agglomerations. Their feeling at that time was a low-wage manufacturing economic base was not sufficient to launch a high tech agglomeration. Knoxville, previous to mid-1980, “paid dearly for its unwillingness to welcome new types of enterprises. By the time some of the more progressive business leaders tried to lure high tech companies by establishing a ‘technology corridor’ in West Knox County, it may have been … a failed dream … a great idea that never happened”. Lacking adequate venture capital, technology recruitment/knowledge-based educational infrastructure got embroiled in local and school politics, county and city bureaucracies, a low-tax political culture—and the lawsuits that flowed from them[l].

 

Manufacturing: Attraction and Foreign Direct Investment

When General Motors announced in 1983 that it would build its new “innovative” and highly sought after Saturn assembly plant in rural Spring Hill Tennessee (30 mile south of Nashville). Spring Hill, in 1980 a mammoth middle-Tennessee city of 989 residents, today boasts nearly 35,000. That the plant was not a similar success for GM is known in hindsight as Saturn car production was discontinued in 2007 (with union cooperation, the plant was subsequently reconfigured and modernized to make the Chevrolet Traverse and Equinox—and after 2011 Cadillacs). In the minds of many, the Saturn plant was key to cementing Tennessee’s attraction strategy. For many it was—but the GM Saturn plant was not Tennessee’s first major attraction success. That honor fell to the 1980 Nissan plant in another rural city, Smyrna less than thirty miles away.

 

Announced in 1979-80, it started production in 1983. The state heaped a ton of incentives, tax abatements, infrastructure investments—and training—and “won” the intense competition for Nissan’s mobile investment (Georgia apparently was the chief competitor). Smyrna, home to 8800+ residents in 1980, has grown to over 48,000 at time of writing. Heavily criticized at the time, the incentive package was pretty tame by today’s standards. The state spent $11 million to improve highway and road access, and $7 million ITES training funds, mostly to fly workers to Japan for training. The City approved a property tax PILOT calculated to cover municipal fixed costs to the facility ($500,000 annually at that time)[li]. That rather frugal incentive package reflects Governor Alexander’s GM Saturn plant boast that “Tennessee didn’t offer them a penny”. Alexander citied the state’s allegedly favorable business climate as the chief factor (right to work—but GM was unionized). Cobb was more skeptical. Saturn obtained some $57 million in tax abatements (over its first decade), $50 million in road construction, and $20 million in ITES training. Saturn created 6000 jobs (many union workers relocated from GM closed facilities). It is worth mention, however, that in the inter-state competition for the facility, New York reputedly offered $1.2 billion in subsidies[lii].

 

Smyrna, twenty-five miles from Nashville, was so small it actually de-incorporated after the Civil War and was not reincorporated until 1915. In 1941 it was home to less than 500 when the federal government war facility, Sewart Air Force Base was established as a B-17 and B-24 training facility. Not reflected in its population statistics is that through the 1960’s 10,000 military personnel were located at the facility. The base closed in 1971 and control was transferred to the State and to the Metropolitan Nashville Airport Authority and in 1990 to the Smyrna-Rutherford County Airport Authority.

 

BRAC obviously had an early start in Smyrna. A concerted effort was made to reuse the airbase. The State Air National Guard located its training facility at the airbase, operated by the Nashville Metro Airport Authority. During the 1970’s several smaller manufacturers moved into the former airbase (Square D was a typical example) and Smyrna’s population actually tripled between 1970 and 1980. In 1980 Nissan’s decision to locate a $300 million facility, created 2000 jobs and build 1000 small trucks per month was obviously transformative. By 1986, over 100 Nissan suppliers had relocated to Tennessee It was also the largest Japanese investment in America to that point, representing one-sixth of Japanese/American investment[liii]. The plant was no short term wonder; today it employs nearly 8500 workers, with a production capacity exceeding 600000 cars annually, also operates an FTZ. In 2012 it started producing Nissan’s electric car, the Leaf. In 2015, Nissan, its USA corporate HQ is in Smyrna, announced a new $160 million supplier park expansion. The City shifted its government from commission to city manager in 2000.

 

In an effort to give credit where credit is due, Governor Alexander enjoyed the fruits of scandal-laden Governor Blanton’s earlier Japanese six-year attraction spadework. At the 1976 UN Conference in Nashville, organized by Blanton, it was learned that Nissan was looking for a site in America. Blanton retained services of a Tennessee banker with deep Japanese contacts and experience and Blanton himself followed up with several subsequent trade missions to Japan. In May of 1978, a team of Nissan officials toured sites in Tennessee and they were hosted by Blanton at a Governor’s Mansion supper and a reception at the Opryland Hotel (the banker, Edward G. Nelson, served as interpreter). Blandford, a lame duck, brought in local (Rutherford County) political and ED leadership upon learning the Japanese liked Smyrna best[liv]. In the next month Governor Lamar Alexander took office. Alexander closed the deal and went on to close the Saturn plant (and others) as well.

 

It could be argued these two huge relocations created a critical long-term image and economic reality that launched Tennessee in the new “Auto Alley” (in 2008 Volkswagen, with a $1 billion investment in a Chattanooga facility, became Tennessee’s third auto OEM resident (Governor Phil Bredesen) and established it as a mecca for advanced manufacturing and a beacon for foreign direct investment as a viable ED strategy. Marvin Runyon, Nissan’s first Smyrna CEO, went on to head the TVA. The critical role of the governor in ED, particularly attraction is further confirmed as are the use of incentives and combining a favorable location with a pro-business climate is hard to beat. It also suggested that in an Age of Deindustrialization and the Rise of the Service Sector, old-style auto manufacturing still had “legs”—i.e. its four wheels had not come off. The incorporation of Japanese process, management, and team work innovation was a significant factor in the soft and hard “retooling” of American industry. That much of these signature relocations and subsequent investment happened in American small rural towns is also remarkable. The Tennessee Automotive Management Association claims that, as of 2016, 900 automotive and supply companies are resident in Tennessee[lv]roughly one-third (about 110,000) of Tennessee’s manufacturing employment (in 2014, 332,000).

 

 

 

Begin Here

 

Alexander started a “Better Schools” Initiative (see Bartik)

Governor Ned Ray McWherter, Democrat, followed Alexander and served for two terms (1987- 1995)—he pushed an aggressive road construction effort to open up rural Tennessee so the communities could attract industry Tennessee, p. 369), but his signature initiatives were education (Educational Improvement Act of 1992), introduction of technology to the classroom—and the establishment of TennCare which paid HMOs to deliver health care.

1994 BIDCO Legislation Tennessee Business and Industrial Corporation founded in 1994—SBA/DOA loans

Governor Sundquist took office in 1995 and served through 2003. A Republican from Memphis—who beat Nashville Mayor (later Governor) Phil Bredesen (a Democrat). Sundquist campaigned for government efficiency and welfare reform. He also seems to have been in charge when a number of ED-relevant initiatives were approved. In his first term he created the Tennessee Regulatory Authority, and moved families from welfare to work. In 1996 He and Bredesen jointly negotiated the successful landing of Tennessee’s first NFL team, the Titans. In 1999 they played their first game in Nashville’s new 65000 seat stadium. In his second term, an economic slowdown created a $300 million deficit (2001).He proposed a state income tax (it has none) and lost—a bad year for Tennessee as Gore lost his Presidential bid in Florida.

 

Phil Bredesen was elected in 2003 and severed until 2011—Volkswagen recruited into the state, His record as Nashville’s mayor included the stadium, a downtown entertainment district initiative, and another stadium. A former teacher, he focused on schools and health care as Governor and presided over the Great Recession—financial crisis that crippled TennCare, 800mm deficit, proposed income tax and lost, relied on spending cuts and Medicare cuts.  Passed the Tennessee Lottery. Reformed workers comp and expanded unemployed worker training. During his administration he claimed 2889 firms expanded or relocated. In 2008 Republicans gained control of both Houses (at the same time) for the first time.

 

Bill Haslam a Republican was elected in 2011 and was still in as of 2017. A businessman, billionaire, former mayor of Knoxville, he prided himself as a “job creator”. As Mayor he emphasized historic preservation, downtown redevelopment using tax abatement, Riverfront redevelopment. He appointed his opponent to be Commissioner of Community Development in his administration. As Governor he stressed workforce development, business climate and education. Provided a large tax abatement to Electrolux.

 

Tennessee is not Massachusetts nor Michigan. Rural small town focused ED. Better infrastructure and schools has been consistent theme—very diversified economic base. Has done well in gathering ED awards and rankings. Still ED has a pronounced local, versus state dimension. The state presence his meaningful and has evolved, but counties and major cities remain key players—especially in their own ED and in attraction. Film is surprisingly strong as an ED. CD is mostly housing—but that needs to be confirmed. Tenn universities are active in technology and in the university-led ED, knowledge-based ED, but Tenn is not a national leader. Mayors have a good record in getting elected Gov in recent years of Contemporary Age—in the Transition Age the state legislature, businessman, and Congress were popular. No income tax suggests low tax is embedded in culture. Trump 61%

 

 

[i] David Hart, Mark Muro and Siddharth Kulkarni, America’s Advanced Industries: New Trends, Brookings, Washington D.C., August 4, 2016

[ii] Thomas Stokes, Carpetbaggers of Industry (Pittsburgh, Amalgamated Clothing Workers of America, 1937).

[iii] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002).

[iv] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002).

[v] Timothy Bartik, “Tennessee”, in R. Scott Fosler, the New Economic Role of American States (New York, Oxford University Press, 1988).

[vi] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002).

[vii] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002).

[viii] Ronald Coan, As Two Ships (London, Edward Elgar Publishing, 2017), pp. 354-6

[ix] James Cobb, the Selling of the South, p. 6.

[x] General Shoe is still around, known as Genesco and formerly Jarman founded by a Nashville shoe salesman James Jarman. A specialty retailer (no longer manufacturer) of branded shoe wear operating nearly 2500 stores in the USA, UK, Ireland and Canada, it remains headquartered in Nashville at time of writing.

[xi] Robert Lowry, “Municipal Subsidies to Industries in Tennessee”, Southern Economic Journal, VII (January, 1941), pp. 317-29, cited in Cobb, Selling of the South, pp. 6-7.

[xii] Timothy Bartik, “Tennessee”, in R. Scott Fosler, the New Economic Role of American States (New York, Oxford University Press, 1988), p. 167.

[xiii] Amy Oberhelman and Dr. Phillip Doss, “the Tennessee Industrial Infrastructure Program and Industrial Training Service,, Comptroller of the Treasury (Tennessee), February 1997, p. 1 and Appendix II.

[xiv] Timothy Bartik, “Tennessee”, in R. Scott Fosler, the New Economic Role of American States (New York, Oxford University Press, 1988), p. 169.

[xv] Numan Bartley and Hugh Graham, Southern Politics and the Second Reconstruction (Johns Hopkins Press, 1976).

[xvi] Ronald Coan, As Two Ships (London, Edward Elgar Publishing, 2017), p. 358.

[xvii] Leonard Arrington, “the New Deal in the West”, in Pacific Historical Review, Vol 38 (1969), p. 312-4, cited in Gavin Wright, Old South, New South, p. 260 Table 8-9.

[xviii] Nine states (Michigan, New York, California, Ohio, Pennsylvania, New Jersey, Illinois, Indiana, and Texas) accounted for 69% of all war contracts (dollar value) and 57% of all publically-financed industrial facilities and 52% of all privately financed industrial facilities; see Robert G. Spinney, World War II in Nashville: Transformation of the Home Front (University of Tennessee Press, 1998, p.18. Spinney cites U.S. Bureau of the Census, County Data Book: a Supplement to the Statistical Abstract to the United States (Washington D.C., GPO, 1947), p. 7.

[xix] Stinson sold the facility shortly after to Vultee, which merged with Consolidated Aircraft in 1943—in the process becoming the third-largest war production firm in the nation.

[xx] Robert G. Spinney, World War II in Nashville: Transformation of the Home Front (University of Tennessee Press, 1998, Tables 1, 2, and 3 pp.18-20.

[xxi] Bruce Schulman,, From Cotton Belt to Sun Belt, pp. 138-9.

[xxii] Bruce Schulman,, From Cotton Belt to Sun Belt, pp. 140.

[xxiii] See Coan, As Two Ships, pp. 363-4, 394-8, 420—relying on Robert Lotchin. Also very helpful is Bruce Schulman’s From Cotton Belt to Sunbelt, Chapter 6: Missiles to Magnolias

[xxiv] An example was Huntsville Alabama which was transformed from “a small mill town to a major research center under the stimulus of the Redstone Arsenal and the Marshall Space Flight Center”. Huntsville electricity was provided by TVA. Gavin Wright, Old South, New South, p. 261; see also Bruce Schulman,, From Cotton Belt to Sun Belt, pp. 148-9

[xxv] U.S. Advisory Commission on Intergovernmental Relations, Regional Growth: Historical Perspective (Washington D.C., 1980), pp. 801 replicated in Gavin Wright, Old South, New South , p. 261 Table 8-10

[xxvi] Bruce Schulman, From Cotton Belt to Sun Belt, pp. 139-40.

[xxvii] Timothy Bartik, “Tennessee”, in R. Scott Fosler, the New Economic Role of American States (New York, Oxford University Press, 1988), p. 150.

[xxviii] Bruce Schulman,, From Cotton Belt to Sun Belt, pp. 158.

[xxix] Coan, As Two Ships, pp. 372-6. Coan uses dates and data contained in several ACIR reports in the 1950’s and 1960s.

[xxx] James Cobb, Selling of the South, p. 258, see Table 8.7. The real federal spur was the little appreciated Kennedy ED initiatives: 1961 Area Development Act, 1962 Public Works Acceleration Act, and 1962 Manpower Development and Training Act. These initiatives generated formation of hundreds of local development corporations in the South and were the first major postwar manpower—workforce—innovations; see Coan, As Two Ships, pp. 495-501.

[xxxi] Bartik in 1987 asserts “much of Tennessee’s manufacturing growth has taken place in rural areas”, suggesting that such “manufacturing growth explains why Tennessee remains 40 percent rural … versus 26 percent” nationally, “Tennessee” in R Scott Fosler, the New Economic Role of American States, p. 150.

[xxxii] Frank Leuthold, “Population Changes in Tennessee Since 1930”, University of Tennessee, Knoxville Bulletin, 1966; http://trace.tennessee.edu/utk_agbulletin

[xxxiii] Gavin Wright, Old South, New South, p. 262.

[xxxiv] Industrial Development Bond Financing, Summary of Report A-18, Advisory Commission on Intergovernmental Relations, August 1965, first issued June 1963. (Government Printing Office,, 1965), p.13

[xxxv] Fred Baldwin, “Developing Three Star Communities”, Appalachia Magazine (Appalachian Regional Planning Commission), September-December 2001

[xxxvi] [xxxvi] Frank Leuthold, “Population Changes in Tennessee Since 1930”, University of Tennessee, Knoxville Bulletin, 1966; http://trace.tennessee.edu/utk_agbulletin

[xxxvii] See Tom Lee, the Tennessee-Virginia Tri Cities: Urbanization in Appalachia, 1900-1950, p. 238-241 especially

[xxxviii] V. O. Key, Southern Politics, p.59

[xxxix] V. O. Key, Southern Politics, p.73.

[xl] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002), pp. 5-6.

[xli] https://s3/amazonaws.com/sharetngov/sos/bluebook/05-06/38-TVA.pdf

[xlii] Tim Bartik, Tennessee, in R. Scott Fosler, pp. 183-4.

[xliii] Pp. 65-66 State Enterprise Zone Update, Department of Housing and Urban  Development, 1991, www.huduser.ov/portal//publications/PDF/HUD-005808.pdf

[xliv] See G. Mark Mamantov, et. Al, Leveraging Property Tax Growth: Tax Increment Financing in Tennessee, file:/http://trace.tennessee.edu/cgi/viewcontent.cgi?article=1308&context=transactions

[xlv] http://tennessee.gov/sos/acts/100/pub/PUBC1055.htm

[xlvi] Tim Bartik, Tennessee, in R. Scott Fosler, pp. 167-176. Bartik provides a detailed description of Tennessee’s attraction and marketing program as of mid-1980 and outlines the activities of these various divisions and offices.

[xlvii] The University of Utah Research Park founded in 1970 on a campus outside of Salt Lake City. The park was always intended NOT to be an element of an attraction strategy, but rather more an “economic gardening” strategy to develop local technology entrepreneurs. Developed by faculty attuned to, or graduating from Stamford, it was primarily university inspired and fostered. The state empowered the university to develop and operate the park, offer tax abatements—PILOTs—and Salt Lake City installed highway access and utilities. Its first tenant, the University itself, with a federal contract (1972) leased the initial building. See Michael Luger & Harvey Goldstein, Technology in the Garden: Research Parks and Regional Economic Development (Chapel Hill, University of North Carolina Press, 1991), Chapter 6, pp. 100-121.

[xlviii] Tim Bartik, Tennessee, in R. Scott Fosler, pp. 174-6.

[xlix] Ann Markusen, Peter Hall, and Amy Glasmeier High Tech America (Boston, Allen & Unwin, 1986), p. 113; see table 7-6, pp. 114-5; Stephen Appold, “Research Parks and the location of industrial research laboratories”, Elsevier Research Policy, Vol. 33, (2004), pp. 225-243, asserts “research parks were not effective local development tools, but instead benefited from a growth of [university or private] research activity.

[l] William Bruce Wheeler, Knoxville Tennessee: a Mountain City in the New South (2^nd Ed) Knoxville, University of Tennessee Press, 2005), pp. 200-1.

[li] Tim Bartik, Tennessee, in R. Scott Fosler, pp. 172.

[lii] Cobb, the Selling of the South, pp. 268-9.

[liii] James Fickle, “Industry”, in Carol van West, Tennessee Encyclopedia of History and Culture (Rutledge Hill Press, 2002), pp. 6-7.

[liv] http://www.dnj.com/story/news/local/2015/01/24/remembering-rutherford-banker-japanese-ties-key-nissan-decision/22295985/ (Jan 24, 2015)

[lv] http://www.tennauto.org/hall-of-fame