 She was the only child of Wales, W.J. and Margaret Frances Watson. Wales took over management of the luxurious Pulaski Hotel in the 1880s, though the Watsons found themselves largely ignored by the city's upper class. Margaret longed to integrate herself into the community and began giving away food and drinks at their hotel. Soon, the family's social status improved. Numerous parties were held at the Pulaski, to which Gracie was often invited.