by Thomas Healy
Finally, Stith reported that the Soul City Foundation had received a $90,000 grant to identify and apply for more grants, which it then used to secure an additional $723,000 in government funding. The implication was that the government had given money to the foundation for the sole purpose of obtaining more money—a sort of endless and self-perpetuating cash machine. In fact, the initial grant was designed to help the foundation plan for the needs of the town’s low-income residents. And although one of the grant’s objectives was to identify the financial resources available to execute this plan, there were three other objectives that Stith did not mention.
Some of Stith’s criticisms were more on target. He reported that several of the agencies providing money to Soul City had not followed their own procedures and had failed to monitor how the money was spent. He revealed that the Warren Regional Planning Corporation had improperly provided life insurance and a loan to McKissick Enterprises. And he disclosed that HealthCo had opened eleven months behind schedule, had treated just 155 patients in its first month, and had been criticized by government auditors for purchasing supplies and services without competitive bids. These allegations were all correct. In fact, the problems at HealthCo were serious enough that a federal agency had labeled its performance poor. Yet even here, Stith omitted important details. One of the reasons HealthCo opened behind schedule was that government officials had refused to approve the purchase of a trailer until after the bond sale was complete, and due to delays at HUD that didn’t happen until March 1974. In addition, although HealthCo treated only a small number of patients its first month, that number had doubled by the time Stith’s articles came out (and would soon double again).
It went on like this, in article after article over the course of several weeks: allegations that were misleading, lacking context, or omitting important details. There were occasional quotes from McKissick or Carey contesting the charges. But to readers who knew little about Soul City or the New Communities Act or the urban crisis to which both were a response, the series left a clear and unmistakable impression: Soul City was a fraud and a failure, another example of the federal government flushing taxpayer money down the drain.
• 16 •
The Battle of Soul City
McKissick and his staff were devastated. They had no illusions that Stith was their friend or ally. Nor did they believe they were above criticism. They knew things had not gone smoothly, and they were as frustrated as anyone by their failure to attract industry and their inability to build houses, stores, parks, and all the other aspects of Soul City they had spent years planning. But they didn’t understand how Stith could portray Soul City in such an unremittingly negative light. How was it possible, they wondered, to take all their hard work—their years of toil and sacrifice, of living in trailers, of battling opposition and misperceptions, of trying to bring prosperity to an impoverished area—and make it sound so self-serving, corrupt, and criminal? And so they reached what they thought was the only logical conclusion: the articles in the News & Observer were motivated by racism.
They weren’t the only ones. The North Carolina Association of Black Lawyers accused the newspaper of “attempted character assassination” that was “racially inspired.” “We believe this harassment of Soul City is part of a continuous effort to discredit and prevent black people from entering the economic mainstream of this state and the nation,” the association declared. The Carolinian, a Black newspaper in Raleigh, argued that Stith and his editors had “ganged up to make McKissick look like a common criminal.” “If those whites who have castigated him so hard and mercilessly would turn to being a black man (or woman) a while, they would realize that it takes a long, long time to get anything going in favor of Negro people, even with government financing.” And a Black accountant from New York City wrote McKissick to say he was confident the allegations were motivated by fear and bigotry. “I am quite certain a black in control and command of such a large endeavor (millions of dollars) is too much power.”
Sitton vigorously denied such claims, pointing out that the N&O had long ago embraced the cause of racial equality. His own record as a chronicler of the civil rights movement bolstered that defense. Stith’s record was more complicated. In later years, he spoke candidly about having once held views he was now ashamed of. As a boy growing up in Alabama, he recalled, he had largely accepted Jim Crow, viewing segregation simply as “the way it was.” And when he entered the navy at the age of eighteen, he told his superiors he didn’t believe in “social mixing” of the races. Stith had also been turned off by the climate of protest and rebellion of the 1960s. While serving as managing editor of the student newspaper at UNC, he had fired left-wing reporters and imposed a ban on stories about “hippies.” The one time he lifted the ban, running a picture of antiwar demonstrators on the front page, he wrote a caption that conveyed his true feelings: “Peaceniks gathered at the foot of the war memorial here yesterday to sing about freedom and how they didn’t want to fight for it in Viet Nam.”
When I interviewed Stith in 2019, he maintained that his views on race had evolved by the time he wrote about Soul City. He recounted a sociology class at UNC in which the students played a game of Telephone, relaying a story about a crime committed by a white man until, by the end of the exercise, the man’s race had changed to Black. That class opened his eyes, Stith said, and he began to understand the evil of racism. As proof of his evolution, he pointed to an article he wrote for the Charlotte News in 1967 highlighting the lack of a modern sewer system in a largely Black community outside the city. The article put pressure on nearby white communities to come to the town’s aid. Stith also told me that when he and his family moved to the suburbs of Raleigh in 1971, he was one of the few people in his neighborhood who voted in favor of a plan to integrate the local schools. Finally, he asked why, if he was motivated by racism, he so rarely turned his investigative eye on racial minorities. “I just didn’t write about Black people because I wrote ugly stories about people in power, and they weren’t in power,” he told me. “Mostly what I wrote about were Democrats, white Democrats. Go back and look. Did I dislike Democrats? No, I’m a registered Democrat.”
Stith did admit to one bias. “I’ve always favored the have-nots over the haves,” he said. “If I’m guilty of something, that’s where it is.” So why wasn’t he sympathetic to Soul City, which was designed to bring jobs and social services to one of the poorest regions of the state? “I thought it was impossible,” he responded. And he was offended by the way McKissick had secured the loan guarantee from HUD. “Soul City was not funded on its merits,” he said. “It was funded because we had a president who was willing to use the federal bureaucracy and to corrupt it for his own personal gain and we had a prominent Black leader who was willing to play that game to get what he wanted. I guess he figured the ends justified the means.” When I suggested that the evidence did not establish conclusively that there had been a quid pro quo between McKissick and Nixon, Stith scoffed. “I believe right down to my toenails if he had not switched parties there wouldn’t have been a Soul City.”
Even if Sitton and Stith were not motivated by racism, the paper’s attack on Soul City did play on racial stereotypes. A political cartoon on the editorial page depicted McKissick with exaggeratedly large lips. And the entire thrust of the series evoked classic tropes about Black people and money: that they can’t be trusted, that they’re incompetent, that they live beyond their means. Many of the N&O’s readers seemed to understand this. Stith received dozens of racist letters from readers who loved his stories about Soul City. The letters surprised him, because of both their ugliness and their volume, but they did not make him question the articles. “That did not please me,” he said of his readers’ reactions. “But I can’t control them.”
* * *
FOLLOWING THE ADVICE of HUD, McKissick said little in response to the N&O series. When Stith sought comment after the first wave of articles appeared, McKissick declined to of
fer any, referring all questions to his lawyer. But as the days went by and the paper continued to press its case against Soul City, he realized he had no choice but to publicly defend himself. On March 20, eighteen days after the series began, he called a press conference at the Howard Johnson Motor Lodge in Henderson. The staff prepared diligently for the event, putting together a thick press packet that rebutted many of the N&O’s claims and inviting a long list of local officials to attend. When McKissick took the microphone in front of a room packed with reporters, he was flanked by nearly a dozen allies, including the mayors of Oxford and Henderson, the executive director of the League of New Community Developers, and the director of the UNC Center for Urban and Regional Studies.
He began by going on the offensive. If anyone’s integrity should be questioned, he said, it was that of Stith and his editors. He had spoken to several journalists, all of whom agreed the paper’s series was unfair. One called it a “vendetta,” another said it was “overkill.” McKissick preferred the term “hatchet job.” The N&O, he argued, had distorted the record, omitting certain facts and casting others in a misleading light. “We all know how deceptive a silhouette can be,” he told the reporters. “You see something by its outline and you think you know what it is, but then when light is shed on the whole object, you may discover that it wasn’t anything like what you thought of its silhouette.” That’s what the N&O had done. “It painted an outline but at the same time withheld the light which would have shown the whole situation in its true form and full face. All we intend to do at this press conference now is to shed that light which will reveal our whole condition.”
To do that, McKissick recounted the obstacles he had faced in launching Soul City, the local, state, and national officials who had resisted his idea and had to be persuaded of its merits. That task was complicated by the fact that Soul City was the only new town in the HUD program located in a rural area, as well as by the fact that it was led by a Black man. Yet he had overcome that opposition by showing how Soul City could jump-start economic growth in the region. There was now overwhelming support for his project, as evidenced by the fact that officials in Vance and Granville counties had agreed to cooperate on a $12 million regional water system. The water system was a major accomplishment that alone justified the government’s investment in Soul City, McKissick asserted. And it was only one part of the regional infrastructure Soul City would help create over the next thirty years.
McKissick acknowledged that the process of launching Soul City had taken longer than hoped. Five years had elapsed from the time he applied for HUD approval until the sale of the first bonds. But most new towns had taken at least three years, he pointed out. And in any event, what mattered was not the delay but the progress he had made in the past year, since the bonds were sold. With Soul Tech I nearing completion, construction of the water system underway, and key roads being paved, Soul City was as far along as anyone could reasonably expect.
As to the claim that Soul City had benefited from his switch to the Republican Party, McKissick did not expressly deny it. Perhaps his switch had hastened approval of the loan guarantee, he stated. But Soul City would not have been approved if it lacked merit. And if he had received favorable treatment, it wasn’t reflected in the dollar amounts approved by HUD. To illustrate this point, he introduced the director of the League of New Community Developers, who displayed a chart comparing the grants and loans Soul City had received with those awarded to the twelve other new communities. Although Soul City had received more grants than some new towns, it had received less than others. And its loan guarantee of $14 million was near the bottom of the range, with all but three towns receiving more money, and one—The Woodlands, Texas—receiving $50 million, almost four times as much as Soul City’s allocation.
McKissick also brushed aside the charges of nepotism. It was true that several family members were involved in the project. But there was nothing wrong with “competent nepotism,” he argued, and everyone working at Soul City was competent. His son-in-law, Lew Myers, had an MBA from UNC and had previously worked at Harvard. His son, Floyd Jr., who worked part-time on the project, was studying for his master’s degree in planning at UNC. And his wife, Evelyn, had run day care centers and preschools in Durham for years. Besides, Evelyn didn’t receive a salary for her work as head of the sanitary district. McKissick also noted that there was nothing unusual about family members working together in a business. After all, the News & Observer had been a family business for eighty years.
McKissick ended by reminding his audience what Soul City was all about. “Years ago, I resolved to come back to my native state of North Carolina,” he explained. “My roots are here and I wanted to do something which could stand as a symbol of black and other minority aspirations and bring new life to a region of this state which has been excluded from full participation in our wonderfully abundant society. Soul City is the symbol and reality of this desire. With the strong and uncompromising leadership of blacks and whites alike we are succeeding.”
In addition to responding publicly to the N&O’s attacks, McKissick and Carey appealed privately to Sitton. At a meeting in his office in downtown Raleigh, they complained that the paper had focused exclusively on the problems and delays at Soul City, ignoring the progress they had made and the resources they had brought to a desperately poor region of the state. Sitton listened to their appeal and seemed sympathetic. According to Carey, he promised that the paper would publish additional articles detailing the potential of Soul City. Those articles never appeared.
Instead, the paper published an editorial calling for a federal audit of Soul City. Reviewing Stith’s allegations, the editorial said they raised serious doubts about the competence and integrity of McKissick and his staff. The only way to dispel those doubts was to subject Soul City to a thorough investigation. “An independent audit that can trace all the sources and expenditures of federally related funds in this project is essential before there can be any confidence in the development,” it asserted. “Without this confidence, McKissick will never attract private industry to Soul City. And without job-creating industry, there will never be a community there.”
* * *
THE NEWS & Observer could call for a federal audit, but only officials in Washington had the power to make it happen. Unfortunately for McKissick, there happened to be one person in Congress who had long wanted to launch just such an inquiry. Jesse Helms had been relatively quiet since threatening McKissick with a federal probe in the fall of 1972, perhaps because he wasn’t yet ready to buck the Republican establishment that had endorsed Soul City. But with Nixon no longer in office and his old nemesis the N&O alleging corruption and mismanagement, Helms saw a chance to make good on his threat. Joined by Representative L. H. Fountain, the senator requested that the General Accounting Office, the investigative arm of Congress, conduct a full audit of Soul City. Not long after that, the North Carolina legislature commissioned its own audit, seeking to find out whether McKissick had mismanaged state funds.
In addition to investigations, the paper’s series generated a wave of negative publicity, as the allegations were picked up by the national media, which repeated them without independent corroboration. Soon, Soul City was a laughingstock, fodder for political cartoons and sleazy tabloids. “A $19 million rip-off … and YOU pay,” read the headline of an article in the National Enquirer. The series also stemmed the flow of money to Soul City. In early April, the Commerce Department announced that it would not provide additional funds to Soul City until the audit was complete. The North Carolina highway department also declined to endorse a mass transit study for Soul City, citing “questions being raised” about the project.
HUD stayed quiet in the immediate aftermath of the N&O series. But on May 6, it issued a vigorous response in the form of a letter to the editor. Written by Melvin Margolies, assistant administrator in the office of finance, the letter accused Stith of “preconceived bias” and claimed his articles were
“often inaccurate, misleading or unsupported.” From the moment Stith walked into HUD’s offices, Margolies wrote, it was clear he had made up his mind about Soul City. His questions were abrasive, his conclusions erroneous, his implications unfair. And he showed little interest in the numerous ways Soul City had benefited the surrounding area. In addition to the regional water system, Margolies noted, Soul City had secured $2 million in education funding for Warren and Vance counties and $1.8 million for health care services. It was true the economic downturn had slowed Soul City’s progress and that mistakes had been made. But it was inexplicable that the N&O would devote more than a dozen articles to the project “and not find a single positive point or offer a single rationale for its problems.” “It would appear to me,” he concluded, “that fairness would have required a more balanced attitude, investigation, and report.”
The N&O published the full text of Margolies’s letter, along with a rebuttal that was twice as long. If McKissick hoped that would mollify his critics, he was mistaken. Helms was incensed that HUD was continuing to support Soul City despite the GAO audit. On July 26, he introduced a bill barring HUD, or any other agency, from providing money to Soul City until the investigation was complete. HUD, seeking to forestall legislation that would formally tie its hands, assured Helms it would not approve additional funds for Soul City while the audit was pending. Satisfied with that response, Helms withdrew the bill. But he made clear his expectation that other agencies would follow suit. He also issued a blistering indictment of Soul City on the floor of the Senate, describing it as the offspring of “an intellectually and morally bankrupt doctrine, a doctrine that suggests that enough money thrown at any problem will make it go away, or thrown at any proposal will make it happen.” “It just does not work that way,” he declared. “There really is no such thing as a free lunch. Somebody must pay the price. The taxpayers of my state are quite certain that they know who that ‘somebody’ is.”