by Thomas Healy
The literacy requirement passed, and Daniels emerged as a powerful figure in the Democratic Party, serving as secretary of the navy under Woodrow Wilson and ambassador to Mexico under Franklin Roosevelt. In later years, he expressed regret over the viciousness of his earlier racial attacks. But he continued to fight against civil rights legislation and warned against the social mixing of whites and Blacks.
As for the News & Observer, it was taken over by Daniels’s oldest son, Jonathan, whose racial views gradually diverged from his father’s. During World War II, Jonathan urged a patient approach to civil rights, arguing that “sometimes it is easier to ask people to give up their lives than to give up their prejudices.” By the time the Supreme Court decided Brown v. Board of Education in 1954, however, he was convinced Jim Crow had to go. While other southern editors called for massive resistance to Brown, he condemned efforts to block integration. He was especially appalled by the closing of public schools as a way to avoid federal court orders. Those “who propose abandonment of the schools propose something beyond secession from the Union,” he wrote. “They urge secession from civilization.”
The news pages reflected Jonathan Daniels’s evolving views. During the 1950s and ’60s, the N&O covered the civil rights movement extensively, reporting on the sit-ins, profiling Black leaders, and documenting racial discrimination in the workplace. And when Jonathan Daniels stepped down as editor in 1968, he hired Claude Sitton, the legendary civil rights reporter for the New York Times, as the paper’s vice president and editorial director. Sitton continued the paper’s support for racial equality, embracing school integration and voting rights for Black people. But Sitton was no radical on the issue of race. He rejected the rhetoric of Black Power, which he once described as a “cult.” And, of course, he expressed early opposition to Soul City, arguing that McKissick’s proposal was characterized by “defeatism” and “withdrawal.”
Because of that opposition, McKissick and Carey suspected Sitton was responsible for Stith’s article and the paper’s subsequent editorial. Carey reached out to Luther Hodges Jr., the son of a former governor and the chairman of North Carolina National Bank, which had loaned McKissick money in the early days of Soul City’s development. What could they do to change Sitton’s mind? Carey asked. “Nothing,” Hodges replied. Sitton had taken a “negative position” on Soul City and “was so irascible and unreliable that there was no point in trying to talk with him.”
Although Carey didn’t dispute Hodges’s characterization of Sitton, he had his own theory about the editor’s motives. He had often crossed paths with Sitton while he was at CORE and Sitton was covering the race beat for the Times. For the most part, the two men had gotten along well. Sitton had written a glowing article about Carey’s efforts to organize a training center for nonviolent resistance in Miami. And Carey, like most civil rights activists, revered Sitton for his sympathetic coverage of the movement. But there was one incident that lingered in Carey’s memory. It occurred in the summer of 1961, after the first wave of Freedom Rides had been rocked by violence and some leaders, including King, were privately calling for a halt to the campaign. Sitton, relying on sources within King’s circle, wrote a front-page article reporting that the rides would soon end. But King, despite his status, lacked the authority to make that decision. And the next day, the committee coordinating the rides met behind closed doors and voted to press on. Carey, who had conceived the campaign and was one of four permanent members on the committee, relayed the news to the media. As he stood before a crowd of reporters and announced that the Freedom Rides would continue, he looked defiantly at Sitton, as if to underscore the inaccuracy of his reporting. Sitton, who prided himself on getting the story right, was not amused. “You should have seen the look on his face,” Carey recalled. The look was so angry that Carey suspected Sitton still held a grudge against him thirteen years later. And now, he believed, the editor was taking it out on Soul City.
Whether or not Sitton held a grudge against Carey, there was likely more to his opposition than personal rancor. Although Sitton had long been sympathetic to the struggle for racial equality, he had become disillusioned with the direction that struggle had taken. Like many white liberals, he was moved by King’s gospel of love and nonviolence, but turned off by the rhetoric of power and militancy that replaced it. He also never seemed to understand McKissick’s vision for Soul City. Despite McKissick’s insistence that the new town would be integrated—and despite the many whites involved in the project—Sitton clung to his initial belief that this was merely a ruse to secure federal funding. Decades later, when asked about Soul City for an oral history project, he referred to it as an “all-black city.” Then, without prompting, he added, “I just didn’t think that was right. I mean, I was an integrationist, and so we couldn’t go along with that.”
Nor was Sitton’s opposition to Soul City softened by news of the loan guarantee. If anything, McKissick’s alliance with Nixon only increased his hostility. A lifelong Democrat, Sitton had little regard for the Republican Party or its record on race. “Nixon was the guy who developed the Southern Strategy,” he angrily reminded another interviewer. “For Floyd McKissick to get in bed with Richard Nixon—what has the Republican Party ever done for blacks, without going back to Abe Lincoln?” McKissick’s view, of course, was that the Democratic Party had not done much for Blacks either and that it would continue to take them for granted unless they flexed their political muscle. But Sitton, for all his gifts, was not a subtle thinker, and McKissick’s argument fell on deaf ears. As a profile in his own paper put it when he retired sixteen years later, “Claude Sitton often saw issues in absolute, black and white terms, recognizing few shades of gray. Even those with the utmost admiration for his integrity and iron determination recognized limits in his virtues.”
Sitton was thus implacable in his opposition to Soul City. So when Stith proposed following up his article on road construction with a detailed investigation of Soul City’s finances and progress, the editor readily agreed, giving his young reporter a long leash to dig up whatever dirt he could.
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FOR STITH, WHO was thirty-two at the time, it was a golden opportunity. A dogged reporter with a nose for misconduct, he had begun his career at the Charlotte News covering local government before working his way up to investigative work. Stith scored several impressive scoops at the News and won a statewide press award for a series on pollution. But in the spring of 1971, he had a falling-out with the paper’s editor. A local doctor had been mistakenly arrested for unpaid traffic tickets, and Stith wrote an article implying that the clerk of the court was to blame. Although his hunch turned out to be right, he had no evidence at the time, and the paper ran a retraction, stating that the story created “several false impressions.” Stith was so incensed by the paper’s disavowal of his work that he called the News & Observer the next day and applied for a job. Sitton, eager to poach a valued reporter from a rival paper, quickly snatched him up, and Stith moved his wife and three children to a suburb outside Raleigh.
Stith flourished at the N&O, developing a reputation as one of the best investigative reporters in the state. He outed the state highway commission for purchasing stone from a quarry owned by one of the commissioners. He forced the resignation of the chairman of the Alcoholic Control Board for making personal phone calls on the state’s dime. And he exposed abuses in the judicial system that allowed state legislators to avoid punishment for traffic violations more frequently than members of the public. Stith was particularly drawn to stories of government waste. No instance of overspending or inefficiency was too small to escape his scrutiny. In one article headlined “Short Trees … Tall Price Tag,” he questioned the state’s decision to pay three hundred dollars apiece for thirteen Japanese maples planted in front of a government building. In another, he reported that the state’s Department of Conservation and Development had paid five thousand dollars to cosponsor a professional golf tournament in Pinehurst, an
expenditure he clearly thought unjustified.
Stith’s fixation on waste and corruption stemmed, in part, from his childhood. The youngest of seven children, he grew up on a farm in Alabama, where he shared a double bed with two older brothers. When he was five, his mother died of colon cancer, and when he was nine, his father went broke and lost the farm. The family soon moved to Charlotte, where Stith’s father launched a series of businesses—making hangers, demolishing houses, bottling syrup—that teetered on the edge of bankruptcy. Stith worked throughout high school and then enlisted in the navy, serving two years as a military journalist. With the help of a former employer, he got a scholarship to UNC and a job in the sports information office. But money was always tight. He married his high school sweetheart after his freshman year, and by the time he received his degree the couple had one child and twin boys on the way. Even after college, when he was working full-time at the Charlotte News, Stith moonlighted at his brother’s box-making factory to help pay the bills.
It wasn’t just Stith’s upbringing that fed his obsession with government malfeasance. It was also the times. The late 1960s and early ’70s were a golden age for investigative journalism. Reporters such as Seymour Hersh and David Halberstam had exposed the government’s lies about Vietnam, while Bob Woodward and Carl Bernstein had helped bring down a president with their reporting on Watergate. Unlike many young reporters, however, Stith wasn’t in awe of Woodward and Bernstein. He thought he was just as good, if not better, than they were. He also thought he was destined to win a Pulitzer Prize. So when he stumbled upon Soul City—a story that brought Nixon and Watergate into his own backyard—he jumped at the chance to show what he could do.
Pat Stith at the News & Observer around 1974.
Over the next three months, Stith turned over every stone in his investigation of Soul City, conducting more than a hundred interviews, filing multiple Freedom of Information Act requests, and poring over thousands of pages of financial reports and government documents. He made three trips to Soul City, walking the grounds in his cowboy boots and peppering McKissick and his staff with questions. The staff answered his inquiries, confident they had nothing to hide. A few were nervous, sensing Stith had already made up his mind. “He wasn’t listening,” Eva Clayton said later. “He just wanted to be able to say he had talked to me.” But although Clayton feared Stith’s report would be damaging, neither she nor anyone else at Soul City foresaw just how explosive it would be.
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THE BOMB WENT off on March 2, 1975, with a front-page article titled “Soul City: A Tangled Web.” Accompanied by an editor’s note that this was the first in a series, the article read like a bill of indictment, laying out a long list of ostensibly damning allegations. It charged that Soul City was beset by conflicts of interest because McKissick controlled both the for-profit company that owned the land and the nonprofit corporations that had received federal grants to support the project. It alleged that nepotism and cronyism were rife at Soul City, pointing out that McKissick had hired friends and family members to work on his staff. And it asserted baldly that the loan guarantee was a reward for McKissick’s endorsement of Nixon, quoting a Senate Watergate report that highlighted Bob Brown’s role in the Responsiveness Program.
But the most pervasive and sweeping allegation was that, after six years and the injection of millions of dollars of federal money, Soul City had nothing to show for itself. Stith introduced this charge with a question about McKissick and his motives: “Has he been constructing a house of cards? Or has he been carefully preparing a solid foundation for a truly monumental venture in black capitalism?” It quickly became clear that the question was rhetorical. After claiming that McKissick had already spent more than $5 million in federal money, Stith described the current state of affairs at the Circle P Ranch: “There is no industry there, no shops, no houses—no Soul City.”
It was a theme repeated throughout the series. Stith recounted over and over how much money the federal government had poured into Soul City: $5 million already spent, more than $19 million approved, and McKissick’s staff “busily preparing applications for $5 million more.” And yet, he reminded his readers, “there still are no homes, no shops, no industries in Soul City.” A sidebar by another reporter was even more dismissive. The “main drag” of Soul City, the reporter noted, was “an undulating, rural unpaved road.” Its only neighborhood was a collection of trailers “with scarcely any shrubbery about.” And its skyline? “Only white mobile homes standing like sheep.”
Taken out of context, there was some truth to this criticism. If one toured the grounds of Soul City, very little tangible progress was apparent. But considered in context, the criticism was patently unfair. For one thing, the time frame of six years, repeated again and again, was misleading. It was true that McKissick had announced his plans for Soul City in January 1969. But HUD did not approve his application until the summer of 1972, most of the grants were not awarded until 1973, and the first $5 million in bonds were not sold until March 1974, just one year before the N&O launched its series. Moreover, McKissick’s contract with HUD barred him from using the proceeds of the bond sale to build residential, commercial, or industrial buildings—the very things the N&O faulted Soul City for lacking.
And yet even with those constraints, quite a lot had been accomplished. McKissick had purchased the land, assembled a staff, and completed the extensive planning necessary to build a city. He had participated in countless negotiations with local, state, and federal officials, met with dozens of executives, and established all the nonprofit organizations needed to support the project: the Soul City Foundation, the Warren Regional Planning Corporation, the Soul City Utilities Company, the sanitary district, HealthCo. And although he had not yet built any houses or stores, much of the infrastructure for the city was already in place. Construction crews had cleared the land, paved several roads, begun work on the regional water system, and nearly completed Soul Tech I. As a British planner consulted by HUD several months later observed, Soul City had accomplished as much in its short existence as any of the new towns built in England had in a comparable time frame. “I do not think there is a single British new town that has ever had much more than a sewage system, water supply, a few roads, one factory ready for occupation and a few other items of that sort after 2 years and that is exactly the progress so far made at Soul City,” the planner wrote.
If Stith’s claim about the lack of progress was unfair, many of his other claims evinced a lack of understanding of the New Communities Act. For instance, Stith implied that it was inappropriate for the Warren Regional Planning Corporation, a nonprofit entity, to receive a planning grant to help McKissick’s for-profit company secure the loan guarantee. But Congress had envisioned just this type of arrangement, and HUD had specifically instructed McKissick to apply for the grant. Stith also noted that while the federal government was helping to fund the project, McKissick would be the one to reap the profits. Yet that, too, was part of the law’s design. The task force that proposed the New Communities Act worried that private developers would not assume the financial risks of building new towns unless the government offered financial incentives. Yes, there was a chance McKissick would get rich off Soul City (although he had never suggested that was his goal). But that’s what the government was banking on—that the prospect of making money would encourage developers to invest in new cities rather than the sprawling housing tracts that had done little to solve the urban crisis and much to exacerbate it.
Stith also suggested it was improper for McKissick to be involved in the various nonprofit organizations created to support Soul City. He noted that there was substantial overlap between the officers of these organizations and the officers of the for-profit firms that owned Soul City, using the term “interlocking directorates” so frequently it took on the quality of a smear. To illustrate this charge, the paper printed a diagram showing the connections between nine Soul City officials and the various organi
zations involved in the project. At first glance, the diagram resembled the “Tangled Web” of the main article’s title, with a dark blur of lines crisscrossing the page. But a closer examination revealed that much of what the diagram showed was unremarkable. Three of the officials—Jane Groom, her husband, Jimmy, and Evelyn McKissick—were linked to just one organization each. Two others—Lew Myers and Charles Allen—were linked to just two organizations: Myers to the Soul City Foundation, where he worked, and the Soul City Sanitary District, to which he had been elected as a board member; Allen to the Soul City Company, where he was general manager, and the Warren Regional Planning Corporation, on whose board he sat. Why these connections were problematic the article did not say. It was true that McKissick was linked to nearly every organization participating in Soul City. But since he was the developer overseeing the entire project, it would have seemed strange had he not been.
There were other misleading claims, as well. Stith reported that McKissick paid $390,000 for the Circle P Ranch in 1969, then sold his interest to the Soul City Company in 1974 for $650,000, implying he had made a huge profit on the deal. In fact, McKissick sold the land for $600,000, and the transaction included an additional 250 acres he had paid $75,000 to acquire. Factoring in interest payments and taxes, McKissick’s total cost was $598,000, making his profit just $2,000. And at the time of the sale, HUD had appraised the land at $727,300, which meant McKissick actually took a bath on the deal.
Stith also reported that the Warren Regional Planning Corporation had received a grant to plan an industrial park and persuade companies to move there, but had failed to recruit any industry. In fact, the grant said nothing about recruiting industry; it was geared strictly toward planning.