Throughout the 1870s, Tennessee struggled to control the debt it had accumulated over the previous decades to pay for internal improvements and railroad construction. The Panic of 1873 brought a decrease in property tax revenues, and the state defaulted on its bond payments in 1875. Following this default, the Democratic Party split into two factions, one of which sought to protect the state's credit at all costs and pay off the bonds in full, and the other rejecting this as unfeasible and suggesting just partial payment of the bond debt. Governor James D. Porter (1875–1879) was of the former faction, and Governor Albert S. Marks (1879–1881) was of the latter, but neither was able to solve the problem.[1]
By 1880, the split over the debt issue had left the Democratic Party seriously divided, and Marks declined to run for re-election.[1] At the party's state convention in May of that year, John Wright, who represented the faction that sought full payment of the debt, known as the "state credit" or "high tax" faction, was nominated as the party's candidate for governor. Members of the "low tax" faction, which sought only a partial payment of the debt and demanded any change in the debt policy be put before the voters in a referendum, walked out of the convention and nominated their own candidate, S.F. Wilson. Republicans nominated Hawkins, and the Greenback Party nominated Richard M. Edwards.