Commerce And Urban Development
View of downtown Nashville.

Commerce and Urban Development

Tennessee’s early patterns of commercial exchange determined the location and growth of its urban centers. Commercial centers typically formed at some junction of land and water that required a break in the mode of transportation, usually from animal-powered overland wagons to some waterborne method of transport. In Tennessee, the major trade centers all formed along rivers at points conducive to navigation and protection from flooding. The advent of railroads allowed more flexibility in the location of new commercial centers of activity, but railroads also tended to reinforce the initial advantages gained by the earliest urban river sites.

The primary commercial exchange of early Tennessee involved the export of agricultural goods and the importation of eastern and foreign finished products. Because of Tennessee’s geographic isolation from the major commercial ports along the eastern coasts, its commercial economy prior to the railroad age was largely limited to local exchange. Much of the population depended on semi-subsistence and a locally contained economy before the Civil War. Most food, cloth, clothing, shoes, home furnishings, farm implements, leather goods, and blacksmith products were produced and consumed within Tennessee or adjacent western states for all but the wealthiest segments of society, who could afford to import eastern or European products.

The main agents in the commercial economy of early Tennessee were the cotton plantations of the Nashville Basin, which became part of the expanding cotton frontier after 1800. Cotton and tobacco soon superseded the furs, skins, and other items of export that figured in the Indian trade before this time. Goods gathered in Nashville could be shipped down the Cumberland, Ohio, and Mississippi Rivers to New Orleans by flatboat or keelboat. Wagon trains from Philadelphia carried eastern and foreign goods overland to Pittsburgh and then by water down the Ohio and up the Cumberland, reinforcing Nashville’s early role as the main entrepot connecting Middle Tennessee to the outside world. With the advent of the steamboat in the 1820s, Nashville’s role as a commercial center grew apace, and the city’s population rose from a mere 345 in 1800 to 10,165 by 1850.

Knoxville emerged as the major port on the Tennessee River for the eastern part of the state; Chattanooga eventually played a similar role down river serving southeastern Tennessee. Their populations stood at only about 2,000 and 1,000, respectively, in 1850, a reflection of the comparatively minor role of commercial exchange in the economy of the mountainous eastern region of the state where the rural population remained more devoted to semi-subsistence production. The steamboat made both these cities more accessible, but the mountainous terrain and lack of any significant cash crop in their surrounding hinterlands left them as minor players in the commercial and urban development of the state before 1850.

Memphis, preceded by a Chickasaw trading post established in 1794, was not laid out as an American city until 1819. It served as the major trading center for the expanding cotton frontier as it advanced into West Tennessee and northern Mississippi with the removal of the Chickasaws, which was completed by 1840. With several million acres of rich Chickasaw land thrown open to American settlement, Memphis quickly established itself as the leading inland cotton market in the South and the chief trade center for all of northern Mississippi and eastern Arkansas, as well as West Tennessee. By 1850 the population of Memphis had climbed to 8,841, standing a little behind Nashville as one of two major urban centers of the trans-Appalachian South. In the next ten years, with the expansion of its railroads and the growth of the cotton empire, Memphis shot to front rank among cities in Tennessee and the region, boasting 22,623 residents in 1860, while Nashville settled into its notch as the state’s second-ranked city with 16,988. On the eve of the Civil War, Memphis was shipping over 360,000 bales of cotton, having surpassed New Orleans long since, and claimed close to 10 percent of the total U.S. cotton market.

The upheaval that came with the Civil War brought great change to the state’s commercial and urban development. There were short term disruptions to the entire economy along with booming wartime prosperity in some locales. Few southern cities benefited more from the war than Nashville which, after its fall in February 1862, became the major supply center for the western theater of war. The Louisville and Nashville Railroad remained a vital link between the North and South, and Nashville’s warehouses bulged with war materiel and provision brought into the city by the railroad to supply Union forces as they advanced southward. Memphis fell to Union forces in June 1862, but much of West Tennessee and northern Mississippi remained contested by the two warring armies. Memphis thrived on the contraband trade that flowed southward to the Confederacy in the form of food and supplies, while blockade runners and speculators from the Deep South brought in confiscated and smuggled cotton. Few of Tennessee’s cities suffered extensive damage during the war, several thrived under Union occupation, and the recovery of commerce was generally robust in the years that followed.

The defeat of the Confederacy, the destruction of slavery, and the impact of both on the planter class helped open the state to new currents of economic change after the war. In addition to transforming former slaves into much larger producers and consumers in the marketplace, the New South’s economy pulled large numbers of white farmers out of their past semi-subsistence practices into the commercial agriculture of the future. By the end of the century growing numbers of the white and black populations were forsaking the farm for new lives in the towns and cities. The decline of cotton prices was symptomatic of the general unpredictability and cruel indifference the marketplace showed to former yeomen and former slaves who had entered into market production since the Civil War.

The New South era is most often associated with the crusade for regional industrial development. In Tennessee the industrial spirit was particularly notable in the mountain regions of the East, where textiles, mining, metallurgy, and other industries made important inroads during the late nineteenth century. Knoxville and Chattanooga both profited from industrial development. Nashville and other smaller cities in Middle Tennessee also enjoyed a degree of industrial progress, much of it linked to the iron and coal industries. But Nashville and Memphis remained primarily commercial cities with only limited industrial bases, and it was in the commercial sector of the Tennessee economy that the most dramatic transformations took place during the New South era. The expansion of the railway system and the general shift from subsistence to commercial agriculture stimulated vast changes in Tennessee’s commercial development.

The advent of the steam railroad reduced Tennessee’s dependency on river transportation as the major avenue of commerce, and it offset some of the former disadvantages of the state’s inland isolation and mountain barriers to the east. The railroads fostered the mushroom-like growth of a number of new urban trade centers within the interior of the state. New towns emerged along the railways and by 1900 Tennessee claimed 22 urban places (defined as places with a population of at least 2,500). Dozens more smaller trade centers flourished as well, all feeding the arteries of commerce as a growing portion of the rural population abandoned the traditional semi-subsistence economy in favor of producing for urban markets. In turn, country stores in rural hamlets across the state now stocked goods that were eagerly purchased by rural consumers, who quickly developed an appetite for store-bought goods. Groceries became a major item of trade in the new economy of the late nineteenth Century: canned food, cured meat, and prepared coffee, flour, and cornmeal, along with tobacco products, liquor, and candy became common items of consumption for urban dwellers and rural folk alike. Ready-made clothing and shoes from the factory rapidly replaced homemade products as the subsistence economy gave way to cheaper, more fashionable products now made readily available by the railroad and factories; farmers were now consumers as well as producers. The commercial revolution of the late nineteenth century extended into nearly every corner of Tennessee, transforming both the traditions of production and habits of consumption in ways that were both unsettling and invigorating.

At the turn of the century Memphis was the state’s leading city with 102,320 people. Following a devastating wave of yellow fever epidemics in the 1870s and a major financial crisis in its city government, the Bluff City staged a remarkable comeback in the 1890s during which it enjoyed an almost 60 percent rate of growth. Nashville, which had briefly surpassed its western rival and stood as the premier inland city of the New South era, slowed its growth during the depression years of the 1890s and returned to its second rank with 80,865 population in 1900. Knoxville (32,637) and Chattanooga (30,154) both grew dramatically in the new age of the railroad and industry, but each continued to occupy the same rank order it had in antebellum times. Now the four major cities stood on top of a larger and more elaborate urban hierarchy knit together by rail, river, and roadway.

The accelerated commercial and urban development of the late nineteenth century sustained rapid gains in the first four decades of the twentieth century. The number of urban places proliferated (from 22 in 1900 to 57 by 1940), while urban residents mounted to over one-third of the population by the onset of World War II. Most of this urban development strengthened traditional patterns of concentration in the four major cities, but there were also the additional growth of the urban-industrial complex in northeast Tennessee identified as the Tri-Cities: Bristol, Kingsport, and Johnson City. The rise of the truck and automobile and the beginnings of a new highway system to serve this expanding mode of transportation generally reinforced the preceding railroad system. By 1935 Tennessee claimed over seven thousand miles of new state highways, most of them constructed since 1920.

Nashville benefited especially from the expansion of the highway system, which opened up adjacent territory in its hinterland to intensified commercial development. The Good Roads Movement of the 1920s improved rural roads and brought truck and automobile traffic to the hilly and remote regions of the Cumberlands and Western Highland Rim surrounding the Nashville Basin. While Nashville continued to trade in a variety of consumer products, Memphis relied more heavily on its traditional role as a cotton market, a role that flourished with the opening of the rich Mississippi Delta lands that were now protected by levees. The Memphis cotton market recovered in spurts following the Civil War and Reconstruction, and by the end of the century it had nearly doubled its annual volume of bales received. Once the vast railroad network of the South allowed some decentralization of inland cotton markets, Memphis’s share of the total cotton market declined. Nonetheless, the city grew in commercial importance. Its central location in the lower Mississippi Valley and its extensive railway connections made Memphis the region’s leading commercial city, leading some to refer to it as the “Chicago of the South.” By 1900 the city’s trading area extended down river to eastern Texas and Louisiana, across much of northern Mississippi and Alabama, and up to southeastern Missouri. Memphis so dominated the commercial life of northern Mississippi that it came to be known as the capital of Mississippi. As more farmers and sharecroppers in the cotton-growing region turned exclusively to cotton production, Memphis served as the major supply center for this part of the Mississippi Valley. Above all, it became headquarters to hundreds of cotton factors, who bought cotton and supplied cotton plantations and country stores with provisions. A multitude of dry goods, grocery, and other wholesalers also catered to the new market of consumers the cotton economy provided in the New South era.

Memphis also grew to rely on its increasing importance as the center of the southern hardwood lumber industry, a role it shared with Nashville. As timber supplies in the North Woods regions of the upper Middle West were exhausted, the lumber industry turned south. Massive rafts made of lashed timber floated down the Cumberland to Nashville and down the Mississippi to Memphis, while new railways penetrated the virgin woods of the Delta and lower Mississippi Valley to bring timber to Memphis. Timber from the countryside went into the city for housing and wood products of every variety. Lumber soon rivaled cotton as a major item of trade in the Memphis economy.

Both Memphis and Nashville grew in importance as exchange points between the South and other regions within the larger national network of trade. Nashville, for example, imported wheat from Minnesota and the Great Plains states and exported processed flour to much of the South, while Memphis gathered cotton and lumber from its hinterland and shipped it to factories in the Southeast and Northeast. While the smaller cities continued to serve as commercial nodes of smaller trade areas within Tennessee and adjacent states, Memphis and Nashville now served a vastly expanded and more regionally integrated national economy. Nashville’s commercial influence extended well into the southern counties of Kentucky and into northern Alabama and commanded almost half the state, into the Cumberland Plateau to the east and the Tennessee River to the west. Memphis served a trading region that extended deep into Mississippi and Arkansas and dominated most of Tennessee west of the Tennessee River.

Following the Great Depression, which momentarily arrested the growth of commerce and urban development in the state, World War II brought a new energy to both forces. In the half-century between 1940 and 1990 Tennessee experienced a great reduction of its rural population from 65 percent nonurban dwellers to 40 percent. At the same time, the number of urban places more than doubled, climbing from 57 to 138, with most of this growth occurring on the bottom tier of the urban hierarchy, producing a multitude of small retail centers throughout the state. Most of the growth took place between 1940 and 1970; the pace of urbanization has leveled off markedly in the last twenty years.

The advent of the automobile made urban centers more accessible to rural dwellers, who commuted to work or to shop without moving to town. Likewise, the automobile opened up a vast new suburban frontier that expanded rapidly beyond the city limits of all the major metropolitan areas, even Nashville, whose metropolitan government in 1963 encompassed most of the surrounding county. The older central city populations displayed very slow growth and even population loss in the face of suburban development, but this disguised a vigorous growth in the larger metropolitan area population, which the census officials began to chart with more care beginning in 1940.

Though Nashville and Memphis were converging in population, Memphis’s superiority as the leading commercial city of the state was firmly established in the post-World War II era. The four major cities of Tennessee dominated between 80 and 90 percent of the total wholesale trade after World War II, while the second tier of cities–Jackson, Clarksville, and the Tri-cities–took over a good portion of the remainder. More striking was the shift from agricultural and forest products toward industrial goods. Memphis’s leading line of trade became motor vehicle parts and supplies, followed by groceries, with farm products now third. Other major cities showed similar patterns in the wholesale trade, with metal, electrical goods, and petroleum products taking an unprecedented role in the state’s commerce. Though every Tennessee city continued to campaign hard to attract industry into the local economy, the commercial and service sectors sustained the greatest urban growth in the postwar era, as they had during most of Tennessee’s history.

Suggested Reading

Gerald M. Capers Jr., The Biography of a River Town–Memphis (1966); Don H. Doyle, Nashville in the New South (1985) and Nashville Since the 1920s (1985); Anita Shafer Goodstein, Nashville, 1780-1860: From Frontier to City (1988); Gilbert E. Govan and James W. Livingood, The Chattanooga Country, 1540-1976: From Tomahawks to TVA (1977); Michael J. McDonald and William Bruce Wheeler, Knoxville, Tennessee: Continuity and Change in an Appalachian City (1983); Robert A. Sigas, Cotton Row to Beale Street: A Business History of Memphis (1979); Margaret Ripley Wolfe, Kingsport, Tennessee: A Planned American City (1987)

Citation Information

The following information is provided for citations.

  • Article Title Commerce and Urban Development
  • Author
  • Website Name Tennessee Encyclopedia
  • URL
  • Access Date June 23, 2024
  • Publisher Tennessee Historical Society
  • Original Published Date
  • Date of Last Update March 1, 2018