Y'all Come on Down: The Southern States' Pursuit of Industry

The following article contains references to sexual assault. 

A century ago, when Henry Grady delivered his "New South" speech to a group of wealthy New England industrialists, he painted an emotional portrait of a South ready to prostrate itself at the feet of Northern capital. Hoping to neutralize the labor, capital, and market advantages enjoyed by the industrial North, Grady and others opted for a strategy common to developing regions: encouraging external investors to exploit cheap labor and abundant raw materials and even subsidizing their efforts to do so with tax exemptions and free land. In order to keep taxes low, expenditures for education and public services were held to a minimum, while government did its best to be helpful rather than troublesome. In 1894 a cooperative Alabama legislature repealed the state's child labor law in order to assure a New England manufacturer of a warm welcome in the Cradle of the Confederacy. 

New South leaders believed that by temporarily forgoing some of the potential wage and tax benefits of industrialization and accepting a considerable amount of human and environmental exploitation, they could prepare the South's economy for the industrial takeoff that had brought rapid and self-sustaining growth to the Northern states. Until such time as the critical mass for takeoff was achieved, however, the South had to content itself with laggard industries that could no longer operate profitably in the competitive, dynamic North. Growth came, but it came slowly and the turn-of-the-century South was hardly the new industrial kingdom Grady and others had promised. In 1910, for example, the manufacturing payroll for an industry-mad Georgia was roughly equivalent to that for the city of Cincinnati. 

On the eve of World War I, the South remained a decidedly agricultural region, but it stood on the brink of an economic transformation triggered by the boll-weevil invasion that decimated a large portion of the cotton belt in the first quarter of the new century. Both the boll weevil and the ensuing Great Depression drove thousands of Southerners from the land. This exodus was accelerated by New Deal acreage reduction programs as the Deep South lost 30 percent of its sharecroppers between 1933 and 1940. For the most part, those who left the farm never returned, drifting first into Southern towns and cities which often served only as way stations on a northward or westward odyssey. 

Faced with this series of shocks to the regional farm economy on which they depended, urban and small town merchants and professionals embraced industrial promotion with an enthusiasm bordering on hysteria. No prospect, no matter how lukewarm, went uncourted and no subsidy or any other form of preferential treatment seemed too outlandish for a Depression-racked South. Dickson, Tennessee lured a garment manufacturer away from Pennsylvania with a free plant financed by six percent deductions from the salaries of employees whose paychecks averaged barely $5.00 per week. Dickson also provided a five-year tax exemption and free water and electric power. 

Also in the '30s, Lewisburg, Tennessee built itself a tax-exempt town hall, held one meeting in it, and turned it over to the General Shoe Corporation, which in turn was expected to dock worker salaries in order to repay half the cost of the building. Other cities raised money to finance factories through public subscription. In Columbia, Mississippi, Mayor Hugh L. White led a drive to raise $85,000 to finance a plant building for Reliance Manufacturing Company. White went on to win the Mississippi governorship in 1935, and in 1936 he persuaded the legislature to adopt a bill designed to "Balance Agriculture with Industry" in the Magnolia State. 

The "BAWI" plan utilized municipal bond issues in Mississippi to provide low-cost financing for buildings leased to industries at low rental rates. In most cases during the early years of BAWI, rents were little more than nominal, and as municipal property the plants were tax-exempt. The town of Durant supplied Real Silk Hosiery Mills with a $25,000 building for an annual rental fee of five dollars. The only string attached to such benevolence was the guarantee of a stipulated payroll — in the case of Durant and Real Silk — $60,000 annually. The BAWI plan's payroll guarantees illustrated the theory behind all such subsidies to industry — they actually amounted to the purchase of a payroll. 

The BAWI program ushered in a new era in which state governments expanded their industrial development programs and responsibilities and imposed legal sanctions and supervision on a previously chaotic system of giveaways. The state-supervised use of municipal and state financing for industry spread across the South. Many states relied heavily on tax concessions as inducements to new industry. In 1948, for example, tax exemptions for industry in Louisiana totalled nearly $12 million, a figure approximately 20 percent as large as its entire property tax collections for that year. When questioned on the matter, industrialists almost always affirmed their desire to shoulder their "fair share" of the tax load, but an industry that declined a tax exemption was rare indeed. 

Other special concessions were easy to obtain. Free water and sewer hookups were usually available for the asking, as were highway spur connections. Legislatures stood poised to leap at a moment's notice through whatever hoops the prospective new industry desired in order to land the "really big one." In June 1956 the South Carolina legislature met in special session at a cost to the taxpayers of $30,000 in order to amend the state's alien properties act and allow Bowater Paper, an English firm, to locate at Rock Hill. The state's Water Pollution Control Authority was similarly cooperative and exempted the company from certain recently enacted pollution control statutes. 

Subsidies were supposed to give Southern states and communities extra leverage in dealing with industries, but in reality the reverse proved true. Buttressed by an investment of public funds in its welfare, a subsidized industry stood a good chance of extorting further concessions from the community. In 1935 Union Camp wrangled tax concessions from Savannah and secured the city's pledge to contribute to the legal costs of defending Union Camp from pollution-related litigation. Elsewhere, labor union leaders charged that Chester, South Carolina had shaped itself into a doughnut in order to provide a tax-free hole-in-the-middle for a textile firm threatening to pull up spindles and move on. 

The most common demand made by industries on state and local governments was that of protection from labor unions. Dominant low-wage employers often enjoyed a virtual veto over the recruitment of new industries likely to be unionized or pay wages above the local norm. For a time, the Raleigh Chamber of Commerce maintained a written policy against contacting industries that were vulnerable to organizing efforts. Across the South, developers responded to inquiries from unionized industries in much the same fashion as the Greenville, South Carolina construction executive who urged his colleagues to "run those bastards off; somebody else will come." 

All of the old Confederate states had enacted right-to-work laws by 1954 and Mississippi soon went so far as to anchor such a provision in its state constitution. Local statutes were even more blatantly anti-union. Baxley, Georgia required unions to pay a $2,000 license fee and $500 for each member. In 1964 Star City, Arkansas approved a $150,000 bond issue for a new garment plant and then levied a $1,000 per day license fee on union organizers. Such organizers could expect harassment from local law enforcement officials, the clergy ("CIO" meant "Christ Is Out"), the media, and even the workers themselves. Company and community leaders cooperated to play on racial and sectional prejudices. Union leaders were branded as communists or "potbellied yankees" with "names that even a high school teacher couldn't pronounce." In the wake of the 1954 Brown v. Board of Education decision, the Charleston News and Courier warned workers against throwing in "with union officials who are brainwashed with the popular creed of mixing the races." In 1956 South Carolina Lieutenant Governor Ernest F. Hollings cited a labor union-NAACP conspiracy against "the Southern way of life." 

In addition to a host of subsidies and other favors such as protection from unions, the Southern states adopted aggressive advertising campaigns stressing cheap labor, low taxes, and cooperative government. Clanton, Alabama's "No Hostile Union Here And None Desired" slogan wasted no words. In a 1954 letter to an industrialist, the mayor of Pelahatchie, Mississippi bragged that "our wonderful labor, 98 percent native bom, mostly high-school graduates, will lower average hourly industrial wage rates 5 cents to 95 cents below Northern states." 

State and local officials from the governor down to the city councilman were expected to take an active role in industrial recruiting. For the governor, the industry-seeking expedition to the North (and later, abroad) became the search for the Holy Grail. Back home, anxious constituents scanned the front pages for news that, in the spirit of J.E.B. Stuart, their chief executive had made another successful raid behind Yankee lines. Governors fell over themselves being hospitable to industrialists, offering lavish entertainment and free transportation. George Wallace even sent formal invitations, bearing his personal phone number to manufacturers contemplating a visit to Alabama. Influential private citizens were also pressed into service. In 1969 the bishops of three Mississippi denominations assisted state development officials in their efforts to land a General Motors plant for Jackson. 

Beginning in the late nineteenth century, railroads unloosed wholesale propaganda barrages in the interest of encouraging Southern economic development. In the twentieth century, utilities like Mississippi Power and Light and Georgia Power assumed a leading role in this area, often working closely with state development officials. In 1954, South Carolina's Daniel Construction Company sent a recruiter on 33 "prospecting" trips to the Northeast. Major banks joined in these activities, which for them, as for utilities, railroads, and construction firms, amounted to a self-interested investment in their own economic future. Such companies also provided significant campaign support for the political candidates at all levels who took the strongest pro-business, development-oriented stance. 

For all the attention and support afforded industrial prospects, the results were ultimately disappointing. At the middle of the twentieth century wages in Southern industries had made almost no gains relative to those in the Northeast and in some areas the wage gap was actually widening. The problem, most experts agreed, was the region's industrial mix, which was dominated by low-wage industries. As the 1960s began, three-quarters of the workers in half of Georgia's counties were still employed in the textile, apparel, and lumber and wood industries. 

In an effort to break the stranglehold of such industries on the South, political, economic, and educational leaders joined forces to offer more skill-intensive industries the higher-quality labor that seemed in such short supply in the region as a whole. South Carolina pioneered in this area with an ambitious program of vocational-technical education and an innovative, flexible plan to train workers for specialized jobs, utilizing state personnel, facilities, and funds. The other Southern states rapidly fell into line and by the end of the 1970s an industry moving into the South could expect to begin operations with a fully trained work force, courtesy of a grateful state development agency. "Start-up" training was a boon to companies accustomed to low production levels during the early stages of operations. The programs imposed few restrictions on the employer. More workers were trained than were needed, no trainee received any guarantee of employment, and most incoming industries were careful not to disrupt the local labor situation by offering wages significantly higher than the regional norm. 

An even more ambitious attempt to upgrade the South's industrial mix came in the great "research and development" push. North Carolina's Luther Hodges implemented sociologist Howard Odum's suggestion of a research center capitalizing on the state's university triumvirate of Duke, North Carolina, and North Carolina State. The result was the Research Triangle Park, a cozy home for some of the most prestigious corporate research facilities in the nation. Although its proponents had promised that the park would ignite a high-tech explosion in the state, the Triangle's impact was highly localized. As Raleigh-Durham-Chapel Hill boosters adopted "Ph.D's per square mile" as their favorite bragging statistic, other states followed North Carolina's example, with considerably less success. 

For all the high-tech hoopla coming out of the Research Triangle, North Carolina's experience reflected the frustrations and contradictions that have marked the South's industrial development effort from the outset. Despite having the nation's highest percentage of the work force employed in manufacturing, the state's hourly wage trailed even that of Mississippi until 1984, when the Tarheel State opened up a six-cent lead. At the forefront of the effort to modernize the South's economy, but still burdened by the crippling legacy of the textile, apparel, and other low-wage industries, North Carolina was an appropriate symbol of the paradox of progress and poverty presented by the South. Overall, the region in 1980 was home to 66 of the nation's 75 most industrialized counties and 61 of its 75 poorest. 

Industrial development efforts not only failed to deliver the South from significant impoverishment, they also often seemed to confirm rather than alleviate the region's social, political, and institutional distress. Corporate investors actually praised the Southern states for maintaining many of the conditions that were traditionally linked to the region's backwardness. Nestled comfortably at the bottom of rankings of educational support and achievement, progressive taxation, public welfare, wages, unemployment compensation, and environmental protection, the Old Confederate states consistently captured top spots in annual rankings of "business climates." No human or institutional need took priority over the business climate, and every new or altered policy was scrutinized in terms of how business and industrial leaders would respond to it. 

It was generally agreed, in the abstract, that better schools meant more rapid economic growth. When it came down to it, however, many proponents of this theory balked at raising taxes to fund better schools because, as Mississippi governor Bill Allain reasoned, "We're defeating the purpose of saying we must have a good education system to get good jobs when the funding method for the education is against the very jobs we need the education to fill." In 1986, as the state's universities faced budget cuts averaging more than 20 percent, Allain threatened to veto any tax hike, invoking the business climate despite the fact that the state's effective business tax rate was barely two-thirds of the national average and its income tax ranked the lowest in the Southeast. 

Just as it would be incorrect to credit the industrial development effort for all of the South's progress, it would be unfair to blame that effort for all its persistent economic problems. The South began its crusade to industrialize at a competitive disadvantage with the North. As time passed the region became a stronger competitor but the increased industrial mobility that enhanced the South's recruitment efforts soon began to cut both ways. The mounting labor costs and escalating international competition that encouraged many American manufacturers to move south ultimately encouraged them to look for locations even farther away from home. 

Compared to China with its average earnings of sixteen cents an hour, the South suddenly became a high-wage region. Hence, Southern developers now face not only the problem of recruiting more modem, better-paying industries but also that of holding on to the older, more traditionally Southern low-wage firms that still form the mainstay of the region's industrial economy. With textiles and apparel contributing so heavily to a trade deficit in which each $1 billion costs about 25,000 jobs, the news that 300,000 jobs were lost in the Piedmont textile industry between 1979 and 1985 came as no surprise. After years of criticism from Northern political leaders outraged by Southern "industrial piracy," it seemed strange indeed to hear a Mississippi legislator condemn competition with cheap foreign labor as "an abuse of the free enterprise system." With manufacturers fleeing to the Third World and the North pursuing an organized and determined effort to outbid the South for footloose industry, devising policies to force employers to pay higher wages and more taxes is no simple matter. 

It is ironic that the South should find itself in competition with nations whose efforts to promote economic development are so much like its own. In South Korea, where cheap labor has been the prime attraction for industry, the government played the major role in promoting economic modernization and pursued labor policies so repressive that the Southern states seemed positively pro-labor by comparison. Whereas a deprived Dixie set its sights on overtaking its Northern neighbors, South Korea's model was Japan. A final parallel is perhaps the most striking of all. Even as the Southern states find themselves in a frustrating competition for industry with Asian and other Third World nations, South Korea is already fretting about losing industry to even cheaper labor markets like Thailand and Sri Lanka. 

Deindustrialization was a bitterly disappointing experience for a region with so many areas that were still scarcely industrialized at all. Counties with large black populations were the hardest hit of the South's hard-core underdeveloped areas. Industrialists expressed concerns about educational deficiencies and worker absenteeism in such areas, but what they really feared was the allegedly greater susceptibility of blacks to unionization, as well as the prospects of a black political takeover which would lead to higher taxes in support of expanded public welfare services and assistance. 

The desire of Amoco Fabrics Corporation to locate its facilities in counties where blacks made up less than one-third of the population caused a stir when it was made public, but industrial developers in a number of Southern states confirmed the aversion of many industrialists to areas with significant black populations. One observer calculated that if the "33 percent" standard was applied to Alabama, Georgia, and Mississippi, scarcely one-third of the counties in those states would have qualified as locations for new plants. A recent study by the Southern Growth Policies Board showed that between 1977 and 1982 employment grew more than twice as fast in nonmetropolitan Southern counties where less than 25 percent of the population was black as it did in those where the black population was greater than 50 percent. As the dust settles from the scramble to land the new Saturn plant and the new Toyota facility, it is worth noting that the lucky locations — Maury County, Tennessee and Scott County, Kentucky — featured populations that were 93 and 83 percent white, respectively. 

For many years, Southern developers longed for the day when the region could attract the frontline, high-rolling industries whose high profits and advanced technology enabled them to operate successfully in any wage and tax climate. After World War II the South began to attract such industries in increasing numbers, but with so many locations bidding for their plants, by the time they arrived in Dixie, most of these firms behaved a great deal like the low-wage, tax-conscious industries that had dominated the region for so long. A classic example was Boeing Aircraft's 1985 announcement that it was locating a major repair facility in Greenville, Mississippi. 

Boeing's announcement thrilled Mississippi developers who had barely dared to dream of landing such industries. Moreover, the facility was locating in a county with a large underemployed black population. Why did this corporate giant choose to smile on the nation's most reviled state? The smile began with the discovery of Greenville's abandoned air force base, which was to become Boeing's home after it had been refurbished with federal grant funds. Boeing had further reason to smile when Greenville offered to subsidize the facility with a $5 million bond issue and the state of Mississippi promised to chip in as much as $10 million in addition to a $577,000 training program for the plant's workers. 

With a total subsidy offer estimated at $18 million, Boeing could grin from ear to ear. How did the company, which had taken in $390 million in profits in 1984 (without paying a cent in federal income taxes) propose to repay such generosity? It promised to create as many as 645 jobs, but as many as 60 percent of them would pay a starting wage well below the state average (fiftieth nationally) and as much as three dollars below what Boeing paid its employees in Wichita, Kansas. 

Elsewhere, the initial price tag for Toyota's move to Georgetown, Kentucky — including the site, site preparation, training and skill development programs, and highway improvement — came to $125 million. Recent reports indicate that the state also agreed to pay the first six months' wages of most of the workers hired during the first five years of operation. Such a concession would push the Toyota's "purchase price" well above $350 million. 

After years of offering boundless hospitality to all sorts of ailing corporations, Southern leaders could hardly complain as well-heeled newcomers took advantage of every opportunity to make themselves comfortable. The South's promotional programs still bear considerable resemblance to the late-nineteenth-century policies that C. Vann Woodward described as a recipe for "juleps for the few and pellagra for the crew." Still, the South was victimized not so much by its development policies as by the faith of its policymakers in industrial capitalism as the ultimate redemptive force. This same faith inspired American foreign policymakers for most of the twentieth century, encouraging them to believe that by creating a safe climate for American investment they could guarantee social and political progress throughout the world. In reality, as the experiences of the South and many other developing countries demonstrated, American investors opted for stability and conservatism over democracy and human uplift. 

Unfortunately for the South, its industrial heyday came in the post-World War II decades when American manufacturing was losing its preeminence in the world economy. Thus, instead of throwing off its traditionally sacrificial and exploitative development policies, the South had to cling to them even more tightly as the rest of the nation rushed to bolster its sagging economy through the pursuit of industry, Southern style. By encouraging union- and wage-busting at every opportunity, and by transferring educational and social welfare responsibilities to the state governments where competitive economic development pressures all but ensured their swift demise, the Reagan administration's policies only accelerated the "southemization" of the entire nation's business climate. 

Southern apologists had long insisted that a faltering America would one day look to the South for leadership. Still, the ascendance of Southern-style development strategies was more sobering than inspirational, for it reflected the degree to which the nation's uncertain future was beginning to take on the ugly shape of the South's past.