Charles Mcclung Mcghee, Southern Financier
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University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Doctoral Dissertations Graduate School 3-1975 Charles McClung McGhee, Southern Financier William Joseph MacArthur Jr. University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_graddiss Part of the History Commons Recommended Citation MacArthur, William Joseph Jr., "Charles McClung McGhee, Southern Financier. " PhD diss., University of Tennessee, 1975. https://trace.tennessee.edu/utk_graddiss/2652 This Dissertation is brought to you for free and open access by the Graduate School at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Doctoral Dissertations by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. To the Graduate Council: I am submitting herewith a dissertation written by William Joseph MacArthur Jr. entitled "Charles McClung McGhee, Southern Financier." I have examined the final electronic copy of this dissertation for form and content and recommend that it be accepted in partial fulfillment of the requirements for the degree of Doctor of Philosophy, with a major in History. Ralph W. Haskins, Major Professor We have read this dissertation and recommend its acceptance: John Muldowny, Leroy P. Graf, Milton Klein, Nathalia Wright Accepted for the Council: Carolyn R. Hodges Vice Provost and Dean of the Graduate School (Original signatures are on file with official studentecor r ds.) To the Graduate Council : I am submitting herewith a dissertation written by William Joseph MacArthur, Jr. , entitled "Charles McClung McGhee, Southern Financier." I recommend that it be accepted in partial fulfillment of the require ments for the degree of Doctor of Philosophy, with a major in History. skins , Major Professor We have read this dissertation and recommend its acceptance : Accepted for the Council : ,�a� Vice Chancellor J Graduate Studies and Research CHARLES McCLUNG McGHEE, SOUTHERN FINANCIER A Dissertation Presented for the Doctor of Philosophy Degree The University of Tennessee William Joseph MacArthur, Jr. March 1975 Copyright by William Joseph MacArthQr, Jr. 1975 All Rights Reserved ii ACKNOWLEDGMENTS I became interested in Charles McClung McGhee because of my friend ship with his great-great-grandson, William Ross (Sandy) McNabb. Sandy' s knowledge , suggestions , and quiet encouragement have been invaluable to me . I am also grateful to other descendants of Colonel McGhee, notably Mrs. Richard M. McNabb and Mrs. Joseph W. Sullivan , Jr. , for their keen in terest in my work ; and to Mrs. Kenneth Gilpin who se generous gift of the McGhee Papers to the McClung Collection made this study possible. The considerate and intelligent attention of Dr. Ralph W. Haskins , the chairman of my doctoral committee, has made what is too often the dreary chore of dissertation-writing into a pleasant experience . His suggestions , together with those of Professors Leroy Graf, John Mul downy, and Milton Klein of the Department of History, and Professor Nathalia Wright of the Department of English, have made the finished product better than it otherwise would have been. MY colleagues at the McClung Historical Collection have been under standing and helpful . Martha Cole Johnson has been unfailingly generous in her assistance, and Linda Langdon Posey has made very valuable con tributions beyond the calls of duty and friendship. I am grateful to Miss Lucile Deaderick for her patient encourage ment and to Miss Mary U. Rothrock for her wise counsel and warm interest. I am indebted to my parents for their confidence in me and for their generous support. Most of all I want to thank my wife , Pennie, and daughters, Anne Ross and Sarah, whose love and willing sacrifices have made my effort s seem worthwhile and to whom I dedicate this work. iii ABSTRACT This is a study of Charles McClung McGhee (1828-1907), a Southern capitalist who achieved prominence as a railroad financier after the Civil War. Based primarily upon McGhee 's personal papers in the McClung Historical Collection of Lawson McGhee Library, Knoxville, Tennessee, the dissertation describes McGhee 's transformation from planter to business man and his rise to power in the affairs of the East Tennessee, Virginia, and Ge orgia Railroad. Having become a provincial magnate by 1886, McGhee moved to New York City where he interested himself in the Richmond and West Point Terminal Company, a system of railroads which later became the Southern Railway Company. His role in the formation and dissolution of the Terminal is analyzed and evaluated. As a New York financier Mc Ghee made a number of investments, notably in the American Cattle Trust and Western Union Beef Company in the West and in the Roane Iron, Coal Creek Mining and Manufacturing, Lenoir City, and Nashville Street Railway companies in his native Tennessee. The history of his involvement in these enterprises is examined in detail. Although the study is essenti ally an analysis of McGhee's business career, it also deals with his political activities and his personal life . iv PREFACE Charles McClung McGhee was not an empire builder, an entrepre neurial innovator, or one of the nation's major financiers. He ranks, however, among the most successful Southern businessmen of the latter third of the nineteenth century, an era in American history which might be called the age of the capitalist. Like many of his contemporaries, McGhee made his fortune not by literally building or managing railroads but in buying and selling them, speculating in stock, and shaping the policies of corporations to his own ends. In the process of a thirty-year association with the East Tennessee, Virginia, and Georgia Railroad he helped put together a regional rail system. At the peak of the East Tennessee's corporate life McGhee moved to New York and participated in the sale of the controlling interest to a mammoth railroad combine , the Richmond and West Point Terminal Company. Serving on the boards of both corporations , he and his associates used their positions to achieve substantial personal profits, often at the expense of the companies which they directed. When the Richmond Terminal collapsed in bankruptcy in 1892, McGhee became co-receiver of the East Tennessee but was e�cluded from the Southern Railway Company, built from the ruins of the Terminal by J. P. Morgan in 1894. Thus as the world of business changed, McGhee became obsolete, a "back number, " as he said, in the affairs of great railroad combinations. Yet this obsolescence does not lessen his leading role in making these changes possible. Despite his many opportunistic business decisions, McGhee was sincerely devoted to the economic development of his native Tennessee, v vi investing heavily in, and drawing Northern capital to, a variety of enter prises there--among them the Roane Iron, Coal Creek Mining and Manu facturing, Lenoir City, and Nashville Street Railway companies. Another significant episode in his business career was his involvement in two Western cattle companies, the American Cattle Trust and the Western Union Beef Company. The purpose of this study is to show how a Southerner, born to wealth in land and slaves, made a fortune from the industrial revolution and established himself as a financier in New York City. It is intended to recount how he accumulated, invested, and spent his money. An attempt is made to illustrate the working of nineteenth century business and finance and to analyze the relationship of the financier to the social and political world about him. Finally, it is hoped that the character and personality of the subject will be understood; that McGhee 's virtues and vices, his objectives and accomplishments will be as fascinating to the reader as they have become to the writer. TABLE OF CONTENTS CHAPTER PAGE I. THE EARLY CAREER OF A FINANCIER. • 1 II. THE POLITICS OF BUSINESS: McGHEE, MABRY AND THE KNOXVILLE AND KENTUCKY RAILROAD . 18 III. A NEW REGIME : McGHEE AND THE EAST TENNESSEE, VIRGINIA , AND GEORGIA RAILROAD • • • • • • • 65 IV. RISE AND FA LL : McGHEE AND THE GREAT RICHMON.D TERMINAL • • 112 V. INVESTMENTS IN THE WEST : TEXAS AND PACIFIC RAILROAD AND AMERICAN CATTLE TRUST. • • • • • • • • • • • • 147 VI . IRON, COAL, AND LAND: INVESTMENTS OPPORTUNISTIC AND DEVELOPMENTAL. 195 VII. FRIEN.DS , ISSUES , AND INTERESTS : POLITICS AND BUSINESS IN THE GILDED AGE. • • • 235 VIII. LEGACIES OF A FINANCIER. • • 264 BIBLIOGRAPHY. • 275 APPEN.DIX. • 287 VITA. • • • 289 vii CHAPrER I THE EARLY CAREER OF A FINANCIER Rising among the high mountains of southwestern North Carolina, the Little Tennessee River (once called the Tennessee , thus giving its name to a state) flows toward the west and creates a beautiful valley l at the foot of the Great Smoky range . Though Charles McClung McGhee is considered a Knoxvillian, it was in Monroe County in the valley of the green and winding Little Tennessee that he was born on January 28, 1828. His maternal ancestors , the McClungs and the Whites, were lead- ing citizens in Knoxville, which they had founded almost forty years 2 before . Of his paternal ancestry less is known. Charles' grand- parents, Barclay and Jane McClanahan McGhee , are thought to have emi- grated from Pennsylvania to what is now Blount County, Tennessee, about 1787. They probably came with friends and relatives, part of the great tide of Scotch-Irish immigration which flowed into the Old Southwest after the American Revolution. In 1788 Charles' father, John, was born in or near the site of the present town of Maryville, 1 Early traders among the Cherokee Indians called the stream Tenase, or Tennessee, after one of the Indian towns on its banks . For a description of the changing nomenclature of the Tennessee River, see James R. Montgomery, "The Nomenclature of the Upper Tennessee River, " East Tennessee Historical Society's Publications, No . 28 (1956), 46-57. 2 McGhee1s son- in- law, Calvin Morgan McClung, was a diligent genealogist.