Organized as Tennessee's thirty-ninth county by legislative act in 1817, Morgan County came primarily from territory removed from Roane County. The new county ran diagonally across the Cumberland Plateau from the eastern escarpment to the Kentucky line to the north. The county and the county seat, Montgomery, were named in honor of Revolutionary War hero General Daniel Morgan and Major Lemuel P. Montgomery, a Knoxville resident who was killed in the battle of Horseshoe Bend during the Creek Indian Wars of 1814.
The first permanent settlers, Samuel and Martin Hall, arrived soon after the Third Tellico Treaty opened the area to settlement in 1805. Many of the early settlers, like Samuel Hall, were Revolutionary War veterans who claimed land grants from North Carolina for military service. Early settlers made their homes in isolated mountain valleys where the soil was relatively fertile and game abundant. The soil and the topography of the county reduced the land suitable for agriculture to less than half of the 345,000 acres within the county's boundaries. Although two rivers, the Obed and the Emory, flow through the county, neither was suitable for transportation of goods. As a result, settlers engaged in subsistence farming, and settlement and development were extremely slow. The lack of significant agricultural production limited slavery in Morgan County. The 1820 census registered 46 slaves; by 1860 the number of slaves had grown to 120, distributed among 25 owners.
The abundance of coal, hidden beneath the surface, provided the potential for the county's economic advancement. First extracted in 1819, coal quickly achieved prominence in the local economy. By 1860 two mines were in operation in the county, employing nine men, and producing fifteen thousand dollars in coal annually.
In 1844 George F. Gerding, a New York businessman, organized the East Tennessee Colonization Company in partnership with Theodore de Cock of Antwerp and purchased 170,000 acres of land in Morgan, Cumberland, White, Fentress, and Scott Counties in an effort to attract German and Swiss settlers to the area. The first fifty settlers arrived from Mainz in 1845, followed by two more contingents in 1846. By 1855 the German and Swiss migration to Morgan County had ended. Most immigrants settled on small farms of less than 100 acres and combined farming with the use of their skills as craftsmen. The Wartburg Piano Company, which prospered briefly, was joined by furniture makers and cabinetmakers. Tobacco production in the county was utilized by a local cigar maker. The Germans planted vineyards and orchards for the production of wine and brandy. A surprising number of professional people arrived in Wartburg, including an architect, a university-trained musician, eight physicians, and a German nobleman. Most remained only briefly before moving to cities or towns where they could better utilize their skills. Conflicts over the price of land and the lack of development combined with religious disputes between the Reformed Church and the Lutheran Church and the effects of the Civil War to produce the decline of the community. By 1870 only fifty-seven German- and forty-one Swiss-born residents remained in the county.
Like other East Tennessee counties, Morgan County voted against secession, although residents were divided in their support of the Confederate and Union armies. No significant clashes occurred between the two armies in the county, but foraging and looting were almost daily occurrences. County government broke down under the pressures of war, leaving the isolated farm families vulnerable to the attacks of guerrilla forces operating on the plateau. Many Union sympathizers left the county during the early years of the war, when the area came under Confederate control, and a number of them did not return.
The opening of the Cincinnati Southern Railroad in 1880 brought significant changes in the lives of the people of Morgan County. The railroad ran south to north through the county, with shorter lines extending out to the logging areas. As a result of the railroad, the extractive industries flourished, and a number of towns, including Sunbright, Lancing, and Oakdale, profited from their position along the rail line. The railroad also made Morgan County accessible for the development of health resorts and spas. Deer Lodge and Franklin became the summer destination of families from as far away as Wisconsin and Louisiana.
In 1880 Thomas Hughes, the British social philosopher and reformer, bought 75,000 acres in Morgan County to create a utopian community drawn from the younger sons of the English aristocracy. Like other such endeavors, the dream proved stronger than the reality. Without the skills to create an economically viable settlement in the harsh environment, the experiment failed. By the turn of the century, the Rugby settlers, like the Germans of Wartburg, had scattered and taken up new lives.
In April 1893 the Tennessee General Assembly authorized funding for the construction of a new prison at Brushy Mountain in Morgan County. Prison reform, and particularly the question of the leasing of convicts, had occupied political debate for several years. The establishment of Brushy Mountain State Penitentiary ended the practice of leasing convicts, but not their work in the coal mines. The state purchased 9,000 acres from East Tennessee Land Company for the construction of the prison. Coal deposits on the land were mined by prisoners under the supervision of the state for state use.
In the twentieth century Morgan County benefited from a number of federally funded programs, including the establishment of a Civilian Conservation Corps camp during the New Deal. Frozen Head State Park, Catoosa Wildlife Management Area, Obed National Scenic River, and Big South Fork National Recreation Area have opened new opportunities in tourism and development for county residents. As part of the East Tennessee Development District, Morgan County used state and federal developmental funds and loans to construct water, gas and sewer systems and develop an industrial park. Although most Morgan County residents continue to commute to jobs outside the county, a number of industrial firms have opened plants, including VF Workwear (300 employees) and Advance Transformer (185 employees) in Wartburg and Tennier Industries (60 employees) in Sunbright. Traditional extractive industries also continue as an important influence in the economy. The county's 2000 population was 19,757.