by Thomas Healy
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WHILE SOUL CITY made progress on the ground, it still faced headwinds from Washington. In finalizing its deal with McKissick, HUD had included a number of restrictions not imposed on other new towns. For starters, the $5 million from the initial bond sale could be spent only on infrastructure, such as clearing and grading the land, paving roads, and installing electricity. It could not be spent to build houses, stores, or factories—the very things that would be used to measure the city’s progress. In addition, before McKissick could sell the remainder of the $14 million in bonds, he had to create at least three hundred manufacturing jobs. He also had to acquire additional land, complete the city’s major roads, and raise sufficient funds for the construction of water, sewer, and storm drainage lines. These restrictions highlighted HUD’s continuing anxiety about the prospects of a freestanding new town. Until McKissick showed an ability to attract industry, the agency was reluctant to allow him to begin building his city. But as McKissick continually pointed out, the lack of progress on the city was in turn frustrating his efforts to recruit industry.
Further complicating those efforts was the state of the economy. A year earlier, Arab oil producers had imposed an embargo on the United States in retaliation for its support of Israel during the Yom Kippur War. The embargo quadrupled the price of oil and, combined with a severe food shortage, plunged the economy into the worst downturn since the Great Depression. Unemployment soared, productivity stalled, and the stock market plummeted. And unlike most recessions, which feature low growth and low inflation, the slump of the early 1970s brought a rare mixture of low growth and high inflation—what economists called stagflation. It was the worst possible climate for a real estate development: rising prices increased the cost of borrowing while lack of growth made it nearly impossible to sell land.
The recession hit new towns hard. By late 1974, eight of the thirteen towns approved by HUD were in financial trouble, with several on the verge of bankruptcy. Park Forest South had already spent its $30 million loan guarantee and was seeking an additional $20 million. Gananda, a new town near Rochester, was also out of cash, having blown through $22 million in bonds. And Jonathan, Minnesota, was in such desperate shape that its founders were preparing to put it up for sale.
Soul City had only recently sold its first bonds, so it wasn’t yet in financial distress. But the economic forecast portended rough seas ahead. McKissick’s financial model assumed interest rates of 7.5 percent, yet inflation had already hit double digits. That not only increased his projected costs by millions but made it harder to attract industry, which would also have to borrow money at the higher rates. Add in the uncertainty over oil prices and the rising cost of construction materials, and most corporations simply weren’t willing to invest in a speculative development like Soul City.
At the same time as the costs of new towns were rising, their benefits were being called into question. And, ironically, one of McKissick’s key supporters was responsible. Two years earlier, the UNC Center for Urban and Regional Studies, an affiliate of Jack Parker’s planning department, had received a federal grant to evaluate the status of new communities. Researchers at UNC collected data and interviewed thousands of residents from a cross section of new towns, some funded by federal loan guarantees, others financed by private investors. They then compared the results with data and interviews from conventional suburban developments, attempting to determine whether new towns performed better. The results were mixed. Although some cities, such as Columbia, Reston, and Irvine, showed higher levels of resident satisfaction than traditional suburbs, many new towns did not. Unfortunately, the media didn’t grasp this subtlety. In a front-page article, the Washington Post simply reported the aggregate numbers, which showed little difference in resident satisfaction between new communities and ordinary suburbs. The newspaper also reported the study’s recommendation that the federal government shift its focus from new towns to smaller developments in fast-growing urban areas. The problem was, this was a preliminary recommendation, which the Post had obtained from an anonymous HUD source. When the researchers issued their final report later in the year, they recommended that the federal government invest more money in new towns. But few people read the final report, and pressure began to build in Washington to end the new towns program.
Soul City wasn’t mentioned in the Post story, but it had its own public relations problem. In late July, the Wall Street Journal ran an article with the headline “Search for ‘Soul’: Black Separatists Get New Followers, Create New Towns.” Printed on the front page, above the fold, the article was part of a series examining the status of Black people two decades after Brown v. Board of Education. The subject of the article was Black separatism, and it focused primarily on Oyo Tungi, an African-style village of fifty people in the South Carolina low country. Founded by a man named King Kabeyesi, Oyu Tungi was modeled after the Yoruba communities of Nigeria. Residents lived in plywood huts, raised goats and chickens, practiced voodoo and polygamy, and marked themselves and their children with three razor slices on each cheek. It couldn’t have been further from the kind of modern industrial city McKissick was trying to build. Yet the article lumped Oyo Tungi and Soul City together, first in its subtitle (“Kabeyesi Rules Oyo Tungi, A Kingdom in Carolina; Big Plans for Soul City”) and then in its body, casting them both as examples of Black separatism motivated by “dissatisfaction with white-dominated society.” It even suggested a parallel between King Kabeyesi, a commercial artist from Detroit who had purchased Oyo Tungi for five hundred dollars, and McKissick, the former head of CORE who had received a $14 million loan guarantee from the federal government. And although the article acknowledged there was “a lot of difference” between Soul City and Oyo Tungi, the overall implication was that they were equally bizarre and pitiful attempts to achieve Black autonomy.
McKissick was furious. He had spent five years trying to build credibility among bankers and corporate executives who were already inclined to view his plans skeptically. And now, the paper of record for the business community was linking Soul City to a tribal community where women cooked food over open pits and the “king” had four wives. Shortly after the article appeared, he called Frederick Taylor, the Journal’s managing editor, to demand a correction. When Taylor declined, McKissick followed up with a letter recounting the initial opposition he had faced from local residents and the many steps Soul City had taken—establishing a preschool program, running a summer feeding camp, spearheading the regional water system—to allay that opposition. “Our neighbors in Warren and Vance Counties are now realizing that Soul City is not a Black Power encampment, but a community of committed individuals who are here to upgrade conditions for the sake of everybody,” he wrote. “What will happen to the carefully nurtured relationships we have built with area residents when they learn that the Wall Street Journal compares Soul City to a far-out tribal community where polygamy is practiced and the babies ritually mutilated?”
McKissick wasn’t the only one who wrote to Taylor. Over the next several days, the editor received letters from Eva Clayton, Charles Allen, Gordon Carey, Philip Hammer, and S. J. Velaj, an executive at New York Life Insurance Company who served on the Soul City board of directors. All made the same point: Soul City was not the Black separatist venture described in the article. Meanwhile, Dorothy Webb, the director of public affairs, wrote directly to the author of the article, a young Black woman named Pamela Hollie. Hollie had stayed with Webb in her trailer for five days while working on the story. The two women had talked late into the night about life and love and had become close, Webb thought. So she didn’t understand how Hollie could depict Soul City in such an unflattering light. In her letter, Webb noted that Soul City had for years been “the victim of the automatic and thoughtless assumption that a project sponsored by blacks is by definition a black separatist project.” She was convinced that wasn’t true before joining the staff, she told Hollie, and was even more convinced now. “Would I hav
e uprooted myself from a rather comfortable urban situation to live in a dusty trailer in the middle of a field if I didn’t feel that Soul City was a workable solution for white people as well as black?” she asked. “I cannot believe that you failed to notice that there are many whites, myself included, living and working in Soul City—you had ample time to observe us all and we certainly didn’t attempt to direct your activities in any way. Therefore, I can’t understand how you came to misinterpret so drastically what we’re all about. What happened?”
When the Journal declined to publish a correction, McKissick threatened legal action. In a letter to Taylor, his attorney Steven Thal claimed that the article contained false and defamatory statements. He demanded that the paper publish an article “focusing on the real purposes of this venture and presenting the true facts to the readers of your very influential newspaper.” When Taylor rejected this demand, too, Thal wrote to Edward Cony, vice president of Dow Jones, the Journal’s parent company. His client’s goal was to set the record straight, not collect damages, Thal explained. But McKissick had instructed him to file a lawsuit if the Journal did not meet his demands. He also suggested that officials at HUD were troubled by the article and were “asserting influence on various persons to do whatever is necessary to rectify this injury.”
Despite the threats, the Journal did not give in to McKissick. Instead, it published two letters, one from McKissick and one from Eric Stevenson, a Yale-educated lawyer and banker who was deeply involved in issues of fair housing and urban development. Stevenson, who was white, described Soul City as “an important business and social venture” that should not have been equated with a “curiosity” like Oyo Tungi. McKissick was “not trying to show that blacks can and should ‘go it alone,’” he explained, “but rather that they belong in the mainstream of large-scale real estate development, a field from which they have long been excluded because of prejudice.”
Though unsatisfied with the Journal’s response, McKissick did not follow up on his threat to sue. As his lawyers explained, a lawsuit would be expensive and would only draw more attention to the original article. Besides, there was a good chance he would lose. So, reluctantly—and not for the last time—he swallowed his pride and dropped the idea of legal action.
* * *
MCKISSICK WAS STILL dealing with the fallout from the Journal article when he received another blow. For two years, the Nixon administration had been under investigation for the burglary of the Democratic National Committee headquarters at the Watergate Complex. At first, it had seemed like a minor scandal, of interest only to a handful of reporters at the Washington Post and the New York Times. But as the investigation expanded, it ensnared numerous Nixon aides, including his campaign manager, John Mitchell, his former chief of staff, H. R. Haldeman, and the dirty trickster G. Gordon Liddy.
Throughout most of the investigation, McKissick had defended Nixon, confident the president would be proven innocent. Then, in July 1973, it was revealed that Nixon had taped his conversations in the Oval Office. When those tapes were released a year later, they showed what McKissick and many other Nixon supporters had been unwilling to accept: the president had ordered a cover-up of the burglary. Facing certain impeachment, Nixon resigned on August 8, 1974.
Nixon’s departure was devastating for Soul City. Not only had McKissick grown fond of Nixon personally, but his influence in Washington depended heavily on the president’s support. Now that support was gone, and McKissick’s clout diminished accordingly. To make matters worse, the administration’s chief proponent of new towns, Vice President Spiro Agnew, had stepped down amid his own scandal a year earlier. Thus, upon Nixon’s resignation, the presidency passed to his new vice president, Gerald Ford, a man who had shown little interest in urban policy or new towns.
McKissick moved quickly to rectify that problem. Almost as soon as Ford was sworn in, McKissick sent him a long letter requesting a meeting to discuss the party’s relationship with Black voters, which he believed had deteriorated since the 1972 election. Ford responded by convening a summit of Black leaders that fall and then inviting McKissick to attend his first budget message the following January. But the new president declined to throw his support behind the new towns program. And without that support, HUD caved to the political pressure that had been building over the past year and announced it would stop accepting applications for new towns. Officials attempted to give the decision a positive spin, insisting it would allow them to focus their time and resources on the projects already approved. To most observers, however, the decision was a clear sign that HUD was getting out of the new town business.
McKissick was deeply troubled by events in Washington. And just as he was discovering how much Nixon’s resignation had hurt him, he found himself under attack from a completely different direction.
• 15 •
Blindsided
One day in the fall of 1974, a press release arrived in the third-floor newsroom of the News & Observer in Raleigh. Passing by the desk where such items were placed, an ambitious young reporter named Pat Stith picked up the release and read that the state department of transportation was preparing to build and pave several roads in Soul City, including a two-mile stretch known as Soul City Boulevard. The release was part of a marketing strategy to persuade skeptics that the new town was making progress. But for Stith, who was always on the lookout for stories of public corruption, the announcement raised a different question. Why, he wondered, was the state using taxpayer dollars to build roads for a private development? Determined to get to the bottom of the matter, he began calling government officials and pressing for an answer.
The result of his inquiries was a front-page article on November 3 under the headline “Private Roads Get Public Funds at Soul City.” Its thrust was that McKissick had used his influence with the federal government to secure more than $500,000 for the construction of roads in Soul City. Most of the money had come from federal agencies such as HUD. But North Carolina had agreed to chip in $166,000, even though doing so deviated from the state’s transportation priorities. When Stith asked state officials why they had gone along with the plan, they said they felt pressured to do so. “It was the federal government people who came forth so eagerly to point out the HUD money and tell us … how to get it and everything else,” one official told Stith. “We didn’t dream that up.”
The article made no claim of illegality. But it strongly suggested that improper influence had been brought to bear. Stith reminded readers that HUD had approved Soul City’s loan guarantee only after McKissick announced his support for Nixon. He also pointed out that the new town had already failed to meet several benchmarks, implying that federal officials were propping up a failing venture. As of now, Stith reported, the only physical structures at Soul City were the old manor house, the red barn, and a smattering of trailers.
A few days later, the editorial page weighed in with a column titled “Soul City Gets Special Treatment.” For the most part, the column repeated the claims in Stith’s article: that the federal government had pressured the state to build the roads; that state officials had ignored their own priorities because of the lure of federal money; that McKissick had received the loan guarantee only after endorsing Nixon. But it also added a new claim, insinuating that the entire project was a scheme for McKissick to get rich. Citing McKissick’s assertion that road construction would create jobs and expand the local tax base, the editors responded tartly, “What went unsaid is that the paving won’t hurt Soul City’s profit prospects in which he shares.”
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STITH’S ARTICLE WAS the second piece of negative publicity Soul City had received in the span of a few months, and McKissick was worried. One year after the groundbreaking, he was still struggling to recruit industry, complete the construction of Soul Tech I, and get HealthCo off the ground. The last thing he needed was a crusade against Soul City waged by the News & Observer.
Founded in 1880, the N&O was one of the olde
st papers in the state and, at least politically, the most important. It grew out of the merger of two earlier papers—the Raleigh News and Raleigh Observer—and was purchased in 1895 by Josephus Daniels, an enterprising young publisher who had served in the administration of Grover Cleveland. Daniels was a progressive Democrat who supported trust busting, female suffrage, and labor rights. But like many progressives of the time, he was also a white supremacist who believed that the demand for racial equality was impeding progress in other areas. He endorsed the Democrats’ campaign of violence and intimidation against Black Republicans in 1898 and was one of the leading advocates of a literacy requirement for voters. When some Democrats worried that the requirement would disenfranchise uneducated whites, Daniels assured skeptics that inclusion of a grandfather clause would protect whites while disenfranchising Blacks. He then published an editorial making clear that his goal was to keep Black people out of the voting booth. “Last November it was only by such a campaign as exhausted every resource of the white men in the state that White Supremacy was secured,” the N&O wrote. “That victory was a signal one, but as long as there are one hundred thousand ignorant Negro voters entitled to kill the vote of an equal number of intelligent white men just so long are we in danger of being remanded to the terrible conditions from which we just escaped.”