I reported on Soul City in the 1970s. What the N&O said then is still true now.

Pat Stith
·8 min read

The News & Observer recently published a story and a column criticizing coverage and commentary overseen by an editor you may not remember, Claude Sitton, about a place you may not have heard of, Soul City.

Sitton was executive editor The N&O from 1968 to 1990, and my boss when I wrote about Soul City, in the mid and late 1970s, stories the newspaper doesn’t defend now. The N&O appears to have adopted a new Soul City narrative capsulized in a question posed on the dust jacket of a book by Thomas Healy, a Seton Hall University law professor: “...how might America be different today if Soul City had been allowed to succeed?”

A bold vision

If you’re too young to retire you may never have heard about Soul City. It was a dream – some would say a pipe dream – of Floyd McKissick, a nationally prominent civil rights leader. McKissick, who believed fervently in building Black economic power, tried to build a city where Blacks would call the shots.

He didn’t succeed, but it was a bold idea, building a city in rural Warren County, in the middle of nowhere.

After McKissick switched political parties in 1972 and backed Republican Richard Nixon for president, the federal government agreed to back his real estate development, and committed $10 million in loan guarantees – $50 million adjusted for inflation – plus millions more in grants.

It turned out to be a bad investment.

People did not move to Soul City because the jobs McKissick said he would create never materialize.

The N&O reported on May 13, 1979, that Soul City, as of the end of 1978, had 6.8% of the population it was supposed to have under its 1974 federal contract; 4.3% of the housing units; 4.2% of the industrial land sales; and only 1.6% of the industrial jobs. The next day Robert Morgan, North Carolina’s Democratic senator, withdrew his support and, six weeks later, the federal government pulled the plug on Soul City.

Two weeks ago The N&O promoted a book called “Soul City – Race, Equality, and the Lost Dream of an American Utopia.” Healy, the author, says The N&O is one of the two main culprits who killed the dream.

“Other than Jesse Helms, I think The N&O probably played the biggest role in the demise of Soul City,” he told an N&O reporter, referring to critical investigative stories I wrote and editorials and cartoons The N&O published while Sitton was in charge. That assertion was not challenged.

Claude Sitton, who died in 2015, and Jesse Helms, who died in 2008, make an odd couple – the kind that gets a book noticed, which may be why Healy hitched them together, side by side.

Sitton, a liberal who covered the South for The New York Times in the late 1950s and early 1960s, was the most respected civil right reporter of any era. And, at The N&O, he won a Pulitzer Prize for commentary in 1983. Sen. Helms, a conservative who was also a bigot, represented North Carolina for 30 years, beginning in 1973, when McKissick’s development was in its early stages.

Healy’s book is well researched and well documented and his description of McKissick’s civil rights career is fascinating. But when I finished reading I wondered if he had read his own book.

McKissick’s dream faced overwhelming odds and Healy knew that – he described many of those problems. They make negative newspaper articles and commentary, and the General Accounting Office audit that followed, look pale in comparison.

But you judge. This list comes straight out of Healy’s book:

•“McKissick and and his staff were novices, civil rights activists who had never built anything tangible in their lives.”

•The site McKissick chose, one of the poorest areas of the country, was more than 50 miles from the nearest cities of any size, Durham and Raleigh.

• There was no infrastructure already in place, no water or sewer system and only one paved road in the area.

• McKissick encountered what Healy called “one of the worst economic downturns of the century.”

• Irving Fain, an early supporter and major lender, told McKissick that his initial capitalization was “grossly inadequate.”

• President Nixon’s resignation, on Aug. 8, 1974, after he conspired to cover up the Watergate break-in, was “devastating” for Soul City because it diminished McKissick’s political influence in Washington.

But according to Healy those problems, combined, were not as important as a two-part series in The N&O, on March 2-3, 1975, the editorials, and the GAO audit that followed.

Healy concedes that I did not rush to judgment. He said I spent three months “turning over every stone,” making three trips to Soul City, conducting more than 100 interviews, filing multiple Freedom of Information Act requests, and “poring over thousands of pages of financial reports and government documents.”

My stories, he said, claimed all sorts of misconduct, nepotism, conflicts of interest, financial mismanagement and lack of progress that “set the tone” and told everybody else how to think about Soul City. He said my stories also gave Helms an opening to attack Soul City by calling for a GAO audit.

That audit cast a “dark shadow” over Soul City for the rest of 1975, Healy said, and while he said the audit “largely cleared” Soul City, the damage was done.

But the audit did not largely clear Soul City.

The GAO audit confirmed that improper loans had been made to Floyd B. McKissick Enterprises Inc. and improper payments of life insurance premiums for McKissick. The audit found other financial problems, including improper travel expenses paid to McKissick, and concluded that 25 percent of the expenditures examined by auditors were “unallowable.”

One dollar in four, unallowable? That’s nothing?

The GAO also said the U.S. Department of Housing and Urban Development deviated from its “established procedures” in awarding or administering grants, a loan, and a loan guarantee, as did two other federal agencies.

I wrote about interlocking directorates of various companies at Soul City and the employment of members of McKissick’s family there. The GAO audit said I was “correct,” but nothing in the federal rules prohibited that sort of thing.

The audit said the new town’s “physical development was essentially on target.”

My story didn’t say Soul City was behind schedule, it described what was there six years after McKissick’s Soul City announcement, which was, in two words, not much – and why.

“I guarantee that we are pretty frustrated with progress in a lot of things,” Gordon R. Carey, McKissick’s right hand man, told me. “We’d be the last ones to tell you everything is rolling like clockwork out here...”

Carey blamed the delays on the slow process of closing the project’s major loan agreement with the federal government, the story said.

Sen. Morgan’s role

Healy left some interesting facts out of his book and I wonder if that was because they didn’t fit the new narrative. You judge.

I’ve already told you that Soul City achieved less than 10 percent of it’s five-year goals – a lot less – and that, the next day, Sen. Morgan withdrew his support.

Sen. Helms had railed against Soul City, off and on, for years, to no avail. But when Morgan bailed out, that was all she wrote. Six weeks later the federal government called it quits.

Why did Healy say nothing about Morgan joining Helms in opposition to Soul City?

I asked, and he told me his book did not include everything that happened, only those things that were “relevant” or “important.”

The same goes for another N&O report, showing how HUD got around a federal law so it could give McKissick a second $5 million [$23 million adjusted for inflation] loan guarantee in 1976.

HUD couldn’t make that loan guarantee unless it determined that Soul City was an “acceptable risk” – and it wasn’t, according to federal bean counters.

The solution? HUD cranked $33 million worth of make-believe grants into Soul City’s cash flow, declared Soul City an “acceptable risk” – and made the $5 million loan guarantee. And, oh, by the way, HUD made McKissick sign a letter agreeing not to sue if it did not actually make those grants.

Those inconvenient facts, that Soul City would have gone under three years earlier if HUD had not cooked the books, were not reported in the book.

“I’m comfortable with what’s in the book,” Healy said, when I asked about that omission.

So, was Sitton a Soul City critic?

He was, definitely. Claude didn’t like the name. He thought it would turn off white people and lead to more segregation, which he opposed.

He was right about that, judging from an internal memo to McKissick in February, 1978, the last full year of operation, which is mentioned in Healy’s book: “Of the few dozen lots purchased in the subdivision,” the memo said, “not one has been bought by a white homeowner except purchases by staff of our own company.”

Pat Stith was a reporter for The News & Observer from 1971 to 2008. He won the Pulitzer Prize for Public Service reporting in 1996.