Actual folk musicians of the old-time era, on both sides of the ocean, used scales that didn't supposedly fit "well" with the chords they used; that wasn't seen as an issue. When Dave Van Ronk sang a flatted third over I (which "clashes") because John Hurt or whoever had done it, that sort of thing, he was making folk music by emulating real folk music, not just doing whatever he felt like and calling it "folk" music. We seem to be at cross purposes here. People in North America have been using guitars to accompany folk songs for over 100 years, and that sound has been popularized in commercial recordings since the 1920s. There is no such tradition in England, where 'actual folk musicians' didn't play guitars at all. I'm not sure what you mean by 'the old-time era', but in the 1910s attempts at harmonizing English folk songs consisted of Cecil Sharp-style piano arrangements, while vernacular singers went on singing unaccompanied like they'd always done. Most of the leading guitarists trying to devise suitable accompaniments for English folk songs in the 1960s onwards eventually moved away from standard towards a variety of open tunings, which seemed to them more sympathetic to the old melodies. There was no authentically traditional model for them to imitate. DADGAD would sound quite odd if used for blues or Carter Family songs, because the guitar style used to accompany that kind of music was established long ago. Old Appalachian ballads from unaccompanied singers, however, can be accompanied very effectively with an alternatively-tuned guitar, though many singers would probably head for a modal-tuned banjo first. Agree with a lot of what PFR said, too.
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