The Big Sleep
We seem to be coming out of a two-decade hangover
by Frank Cagle
It was 24 years ago this spring that the World’s Fair opened in Knoxville. In the years leading up to the exposition, Knoxville’s Democrats and Republicans worked together to pull it off, with Republican U.S. Sen. Howard Baker and Democratic President Jimmy Carter. Everything else got greased by money from Jake Butcher’s United American Bank. It was a triumph of self-confidence, community cooperation and optimism.
Contrary to popular local opinion, the World’s Fair in Knoxville was a success. It did not lose money. It had 11 million visitors. It brought Knoxville national and international attention, and it converted a blighted area alongside Henley Street into a potential large-scale development site.
Then the Butcher banks failed, thanks to federal raids that discovered massive fraud and millions in bad loans. And the closing of the banks turned even more loans into bad loans. Of the movers and shakers in Knoxville, many fit into two categories: indicted or broke—and if not broke, badly mauled. The bad taste from the bank debacle cast a pall over the fair and the potential good feelings that would have ensued. It left the town with a hangover.
I wonder if, as a community, we have ever really stepped back and considered what it did to us, psychologically, politically and economically. The Butcher banks had $400 million in loans, much of it lines of credit to the Knoxville business community. When the feds got through, $300 million of the loans were written off as uncollectible. The FDIC took a bath, but calling all these loans also bankrupted a lot of businesses that couldn’t cover them. Profits that might have been generated by developers, for instance, to repay the loans didn’t materialize because business stopped. Have we really appreciated what happens to an economy in a town the size of Knoxville when $400 million in capital spending disappears?
Then there was a group of hard-working middle-class people who had a lifetime of savings, uninsured, in Southern Industrial, another Butcher scam operation that failed. The impact on the living standard and psyche of large numbers of the population is incalculable.
When the Butchers went away the backbone of the Knoxville business community also went away. The World’s Fair site, which was poised to become the place for downtown rejuvenation, just sat there.
Further complicating the local economy was the fast fade of the East Tennessee coal industry. Some of that coal capital disappeared as worthless United American Bank stock, and a lot of the rest went to coupon clipping. Then Chris Whittle came along and flew high, wide and handsome for a few years. But that media enterprise also crashed, leaving a nice new headquarters to be converted into a federal building.
For a very long time it seemed that Knoxville just didn’t have the self-confidence or the leadership to be successful at anything. There developed a sour attitude among the populace as they heard grandiose plan after grandiose plan announced, only to fail or abort.
But over the years we have had these developments:
• Oak Ridge, which had become a relic of the Cold War and seemed doomed to gradual phase out, has been reborn as home to the Spallation Neutron Source. A retooled Oak Ridge National Laboratory allied with the University of Tennessee is home to the fastest supercomputer in the world. Not only are existing jobs secure, there is a good prospect of job growth in the coming years.
• Textile jobs have been replaced by automotive industry jobs, like Denso.
• There has been some serious wealth created in Knoxville, and maybe some of it can step up. The only advantage Chattanooga ever had over Knoxville was a group of public-spirited citizens with whip-out cash. If they could finance an aquarium, surely we can finance a damn movie theater.
• Downtown Knoxville has entrepreneurs who are turning things around. Leroy Thompson is spearheading development in Five Points; Mechanicsville is being redeveloped with Empowerment Zone funds; South Knoxville has started a process to transform the river bank. Near-downtown locations like Fourth and Gill, Old North Knoxville and Park City are coming back with a vengeance. The downtown condo boom is transforming vacant buildings that contributed little to the tax base into powerful engines of development. Retail is beginning to follow.
All we need to do now is to get the word out to the general population. The Big Sleep is over and this place is on the move. It only took a generation.
Frank Cagle is a political analyst and the editor of Knoxville Magazine . You can reach him at email@example.com .