Rogers Clark Caldwell
Rogers Caldwell dominated southern financial circles in the 1920s to the point that he was often called the “J. P. Morgan of the South.” In a career that spanned only twenty years, he built a financial empire that collapsed abruptly in November 1930, shaking the foundations of Tennessee's economy and government.
Caldwell was the son of James E. Caldwell, a prominent Nashville banker. He attended Montgomery Bell Academy and entered Vanderbilt University in 1908. He abandoned his college studies in 1910 to run a small insurance business his father owned.
Caldwell sold general insurance before specializing in surety bonds for county and municipal construction projects. Drawn by his success in attracting bidders, local officials soon sought his assistance. Caldwell sensed the unique opportunity for southern bonds despite their historic reputation as poor risks; southern bonds attracted fewer bidders and therefore offered greater opportunities for profit. In September 1917 he founded Caldwell and Company to market securities.
Caldwell and Company's early bond offerings competed poorly with World War I Liberty Bonds, but the firm established a market presence and exploited the dramatic postwar southern construction boom. Bond sales handled by the firm played a major role in providing capital for highways, schools, and internal improvement projects in Tennessee and other southern states.
In 1919 Caldwell launched the Bank of Tennessee, which became a key to his future financial operations. The bank functioned solely as a depository for funds raised through the company's bond sales. These funds earned no interest for the bond issuer and were dispersed only when construction projects required. The deposits provided Caldwell with considerable investment capital.
During the 1920s Caldwell expanded into other areas, buying insurance companies, banks, textile mills, oil companies, department stores, and assorted other businesses. He also expanded his bond operations into the private real estate market, underwriting the construction costs of hotels and office buildings. As Caldwell's financial empire and fortune grew, he developed a lifestyle that included racehorses, lavish entertainment, membership in exclusive private clubs, and Brentwood Hall, a magnificent Davidson County estate patterned after the Hermitage.
By 1921 Caldwell's financial empire was experiencing serious difficulties. Unknown to the public, Caldwell had never followed standard business practices, and his company was overextended, with no realistic cash reserves. His personal expenses far exceeded his annual salary, with the difference charged to the company.
At that point, Caldwell's career and fate became intertwined with that of Luke Lea, politician, banker, and owner of the Nashville Tennessean. They purchased controlling interest in banks and two newspapers, the Memphis Commercial Appeal and the Knoxville Journal. Lea used his political influence with Governor Henry Horton's administration to bypass competitive bidding and obtain a contract for Caldwell-owned Kentucky Rock and Asphalt to supply asphalt, under the trade name Kyrock, for state highway construction projects.
During the 1928 gubernatorial campaign between Horton and challenger Hill McAlister, the “Kyrock Scandal” became a central issue, as Lea's political enemies attacked Caldwell's character and operations. Horton won the race, and his administration pursued policies advantageous to Caldwell's businesses, appointing Caldwell associates to key positions in the state banking department and the State Funding Board, which supervised the issuance of state bonds. Caldwell's company won a bid to sell millions in Tennessee bonds, and the state dramatically increased its deposits in his Bank of Tennessee.
Though state deposits kept him afloat until November 1930, the stock market crash of October 1929 sealed Caldwell's financial fate. Persistent rumors about Caldwell's financial condition forced state banking examiners to audit the Bank of Tennessee. Examiners declared it insolvent on November 7, and Caldwell and Company went into receivership several days later.
In 1931 the states of Tennessee and Kentucky indicted Caldwell on several charges. He was convicted on one count of breach of trust in Tennessee, but the state supreme court granted his appeal for a new trial. Tennessee never retried Caldwell, and he successfully avoided extradition to Kentucky.
After the collapse of his company, Caldwell retired from business, living at Brentwood Hall until 1957, when legal action by Tennessee finally resulted in the seizure of this property. He spent the last years of his life in Franklin, Tennessee, where he died on October 8, 1968.
