Pox_ An American History - Michael Willrich [27]
In 1886, a Scottish-born Canadian named Alexander Arthur prospected the area for a railroad company and found the place rich in hardwoods, iron ore, and coal. A distant relative of former president Chester A. Arthur, Alexander Arthur fit the type of the mutton-chop-wearing, fast-talking capitalist who earned the Gilded Age its name. With capital from New York and North Carolina, he started buying up options to the land. He then approached investors in London and sold them on the idea that Yellow Creek Valley had the makings of a great iron and steel manufacturing center, a place where surplus British capital could be brought to bear upon untapped American natural resources to generate extraordinary wealth. Arthur had arrived in London at an opportune moment, the very peak of British investment in U.S. enterprises. The economic potential of such boom-towns had already been demonstrated elsewhere in the “New South,” most notably in the coalfields and steel mills of Birmingham, Alabama, established in 1871. With Arthur running the U.S. side of the operation, the London investors incorporated in 1887 under English law as the American Association, Ltd. The association secured title from the mountain people to eighty thousand acres of land. A separate Arthur entity, the Middlesborough Town Company, launched construction of the physical city, named after the iron center in northern England. A local postmaster, as if to announce the presence of federal authority in this new community, lopped off the last three letters. Arthur’s secretary later told the tale of Middlesboro’s birth in terms not far from the mark: “[A]lmost a hundred years after England lost her colonies, ‘conquistadores’ from Albion came out to a still crude and unsettled quarter of the United States for the purpose of further colonization.”14
By 1890, twenty million dollars’ worth of British capital and the muscle of thousands of American and European workers had turned Yellow Creek Valley into a boomtown of five thousand people. Railroad workers dug a tunnel under the Gap, connecting Middlesboro to Tennessee and the markets and ports of the southeastern United States. A rail beltway circled the town, with spurs shooting off to the hillside collieries that various companies operated under leases from the Association. The Appalachian skies grew thick with the smoke and smells of ironworks, blast furnaces, tanneries, sawmills, brickyards, and breweries. The early encampment of tents gave way to a well-ordered grid of wide streets filled with streetcars, stores, saloons, hotels, banks, schools, churches, sturdy wooden houses for the workers, and stone Victorians for their bosses. Middlesboro even boasted an opera house and one of America’s first golf courses. And the American Association and its distant investors controlled it all. 15
The bust came as swiftly as the boom. In the spring of 1890, a fire leveled the Middlesboro business district. The buildings were quickly rebuilt, but at great expense to the Association and the local government it controlled. Later that year, the Bank of Baring Brothers in London declared bankruptcy, taking many of Middlesboro’s British investors down with it. As the town’s sources of capital dried up, the realization dawned that the area’s reserves of commercial grade iron ore were thinner than expected. Then came the American financial panic of 1893. All four of the town’s banks failed. Merchants closed their stores. Employers laid off workers. People drained out of the place. The Association mortgaged seventy thousand acres of land to a New York bank for $1.5 million and then, in October 1893, declared bankruptcy. And yet, Middlesboro survived. With its rail connections, its coal reserves, its furnaces, and its hungry labor force, the city