San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History of Memphis, Tennessee

The site of Memphis is where some bluffs provide protection against the flooding of the Mississippi River. These bluffs, called the Chickasaw Bluffs, were the site of an Amerindian village. The U.S. military, recognizing the value of the site, established a fort there in 1796.

After the invention of the cotton gin made cotton growing profitable some notable citizens, including Andrew Jackson, founded the city of Memphis in 1819, naming it after Memphis, Egypt because of the analogy of the two cities on the major rivers of their countries. The city prospered and in 1826 it was incorporated. After demonstrating its viability Memphis received a charter in 1849 from the State of Tennessee. This charter enabled the city to, among other things, borrow funds.

When the American Civil War, also known as the War Between the States, began in 1861 Memphis was under the control of Confederate force. The North wanted to gain control of the Mississippi and the first step was to capture Memphis. This was achieved in 1862 by the landing of a gunboat expedition. During the war black people in the nearby states chose to flee to Memphis. This resulted in a relatively higher proportion, 40 percent, of the population of Memphis being black than in other cities of the region at that time.

After the end of the war there was a an attack by some whites in Memphis on blacks, particularly black veterans of the Union Army. In these attacks 46 blacks were killed and 70 wounded. Five black women were raped. Twelve churches and 4 schools were burned. The national reaction to these attacks was the passage of the Fourteenth Amendment in June of 1866.

The years of the latter 1870's were not good years for Memphis. The city suffered from epidemics of Yellow Fever. Altogether about eight thousand people died of Yellow Fever during those years. The City of Memphis went bankrupt and had to give up its charter.

The source of Yellow Fever from misquitoes was discovered and the importance of eliminating stagnate water where misquitoes can breed was recognized. The government of Memphis carried out sanitation projects which curbed the incidence of Yellow Fever and the economy slowly recoovered. However it was not until 1893 that Memphis was again granted a charter by the State of Tennessee. By 1900 Memphis was Tennessee's largest city.

The Economic Base of Memphis

The original economic base of Memphis was in processing the agricultural products of its region. Memphis grew up processing the cotton grown in the region. That cotton had to be compressed into bails. Before the Civil War Memphis reached a level of 360 thousand bails of cotton in one year. Memphis also provided financing associated with those agricultural industries. Memphis was the site of light manufacturing serving the agricultural industries and the consumer markets of the region. Wholesale and retail trade were also important for Memphis. Memphis was the big city that the regional residents journeyed for shopping and entertainment.

The Politics of Memphis

Memphis was not only the largest city in Tennessee, it was at the far west of the state so its voting returns had to be reported only after the returns for east and middle Tennessee were reported. Consequently a political machine capable of delivering substantial majorities for its favored candidates could control the politics of the state of Tennessee. Such a machine existed in Memphis for decades. It was run by Ed Crump, a colorful figure who made politics entertaining. In these days of politicians using teleprompters to read platitudes imagine a politicians who says, as Ed Crump did, of an opponent, Gordon Browning:

•He lies by nature and tells the truth by accident.

In a certain art gallery in France there are twenty six pictures of Judas Iscariot.
None of them is alike, but they all resemble Gordon Browning.

During much of his period of control Ed Crump held no political office.

Memphis and Music

Memphis was one of the major sources of the music known as the Blues and Rock and Roll. The source of Memphis' role in music was Beal Street, a street in the black section of Memphis noted for its honky-tonks and other types of entertainment. W.C. Handy immortatalized Memphis' Beal Street in his music. Elvis Presley started his rise to international fame in Memphis and his Graceland is a place of pilgrimage for the fans of his music.

Economic Statistics for Memphis and Its Metropolitan Area

The Metropolitan Statistical Area (MSA) for Memphis includes counties in Arkansas and Mississippi as well as Tennessee. Shelby County in Tennessee is the site of the city of Memphis. In 2007 the Memphis MSA was the 41st largest Metropolitan Statistical Area in the U.S. in terms of Personal Income. The Memphis MSA had $47.5 billion in personal income in 2007. This was slightly above $37 thousand per person compared to the $38.6 thousand per capita for all U.S. Metropolitan Statistical Areas. .

Memphis and FedEx

In 1971 the Federal Express Company was founded in Little Rock, Arkansas. The founders had the right idea of an air/ground package delivery service but they had the wrong city. They remedied that in 1973 by moving their operations to Memphis, Tennessee.

Memphis, in addition to having a suitable airport, was a riverport with good railroad and highway connections. Above all it was relatively centrally located in the United States. Furthermore labor and land costs were relatively low.

With the right idea and effective management Federal Express grew by leaps and bounds in volume of trade and technology. In nine years of operations its revenues grew to exceed $1 billion per year. It went from using Dassault Falcon jets to Boeing 727 planes and beyond. It developed package tracking systems.

In 2013 FedEx is using Boeing 777 planes that each can carry 102 tons of cargo nonstop to destinations as far away as Asia. FedEx makes the airport of Memphis the second busiest in the world in terms of cargo volume. Only Hong Kong exceeds it. FedEx air cargo operations support overall 132 thousand jobs with an economic output of roughly $22 billion. FedEx and Memphis make quite good political/economic match.

(To be continued.)

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