Southern Changes

The Journal of the Southern Regional Council, 1978-2003

Article

Go to Article List for Southern Changes. Volume 6, Number 3, 1984

Government in South Carolina: Taking Care of Business

By Jim Walser

Vol. 6, No. 3, 1984, pp. 3-13

State Senator Tom Smith was angry--and the South Carolina General Assembly was about to discover the reason.

It was February of 1983, weeks after the South Carolina House of Representatives began debating a plan designed to cut sharply rising homeowner property taxes, reform the state income tax system (one of the most regressive in the nation) to make the rich pay more, and send some financial help to the state's eleven-hundred public schools, then taking a public flogging for producing the lowest average scores in the nation on the college-entrance Scholastic Aptitude Test.

Designed by Governor Dick Riley as the cornerstone of his new second term, the tax package died quickly in the House.

One reason--perhaps the major reason--for the derailment of the package was the South Carolina Chamber of Commerce, a high-profile coalition of over eighteen-hundred state businesses and 3,700 individuals with an annual lobbying budget of over one-million dollars a year.

Weeks earlier, on the eve of the House debate, Chamber officials warned that Riley's plan would frighten new businesses away from South Carolina and prevent current ones from expanding. According to the Chamber, a 1982 Harvard-MIT study proved that "relative tax burdens" are the "single most important consideration in decisions (of industries) to relocate from the Frostbelt to the Sunbelt." Lowering homeowner property taxes, the Chamber concluded, would shift the property tax burden back to industry. And higher property taxes for industry would cost the state new business, jobs, and prosperity in the 1980s.

It is an argument that is heard a great deal across the South today as highly financed and organized business coalitions fight unions, pro-worker legislation and higher corporate taxes, attempting to carve out a more profitable business environment in Southern states which are increasingly pitted against one another in recruiting out-of-state industry.

But on this occasion, Smith, a sharp, forty-five-year-old, drawling Pamplico, SC, farmer-lawyer with a few populist tendencies, rose in the wreckage of House debate to call the Chamber's bluff.

"We have been lied to," Smith announced to a hushed Senate. "For the past many weeks, the Chamber has attempted to stampede the members of this General As-


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sembly into making serious decisions based on bad and false information."

Smith produced a letter from the author of the Harvard tax study, Rober W. Schmenner, who said "tax incentives for industrial location are not the most important" factor in industrial relocations."

"The Chamber of Commerce is doing a grave injustice to the people of South Carolina, " said Smith. "It has put us in a very, very bad light . . . (and) . . . has sowed seeds of dissension and confusion among this state's citizens by sending a message across this nation which interferes with tour industrial development."

Responded Chamber executive vice president Lowell Rease to Smith: "For a politician to be calling the Chamber of Commerce a liar is like a frog calling us ugly."

Government in South Carolina is undergoing a change in command--a subtle but significant realignment of power that is altering the way the people's business gets done.

Dominated for decades by a small band of rural potentates sent to Columbia to operate a bare-bones government whose main purpose was to perpetuate a segregated society, these days the sessions of the SC General Assembly sound more and more like corporate board meetings--replete with executives, their lobbyists, and a what's-good-for-business theme rippling through debate on nearly every piece of legislation.

Gone are the days when patriarchs like former State Senator Edgar Brown of Barnwell, the thirty-year (1942-72) chairman of the Senate Finance Committee, ran state] government like it was a personal checkbook - frugally, with little advice and no consent.

And with the passing of Brown and his successor as Senate President Pro Tempore, Marion Gressette, in March, new forces are moving into the somewhat chaotic breach.

Chief among those forces is the state's business cartel, using money, wall-to-wall lobbying, and a unity of influence that some legislators say borders on political blackmail in a small, poor, mostly agricultural state where forty years ago there was hardly any business at all, a state hungry for jobs and eager enough to accept just about any kind.

The governmental objectives of these business-and. banking interests are simple, succinctly stated in the 1983 editions of South Carolina Business, the Chamber's annual magazines: "Avoid bad legislation; maintain a union-free environment; reduce health care costs."

What has made it easier for business to establish a beachhead in South Carolina is an almost complete absence of any organized opposition from unions, consumer, or civil


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rights organizations.

Most consumer activist groups have long-since vanished in the state, or, like the local branch of Common Cause, operate on lean budgets which limit public visibility and impact. Some antinuclear groups, including the Palmetto Alliance, the Grass Roots Organizing Workshop, and the new SC Energy Research Foundation, have won some court battles over environmental safety at nuclear power plants and the federally-owned Savannah River defense plant near Aiken. But the impact of consumer and environmental groups is rarely felt inside the capitol dome on a day-today basis.

Women's groups, punctured by the Senate's 1978 decision to scuttle the proposed Equal Rights Amendment, have a low profile in the General Assembly. Some women do hold key policymaking roles in more traditional lobbying vehicles, such as the eighteen-thousand member SC Education Association, a teachers' group. Other women's groups organize primarily around single pieces of legislation. Recently, Sistercare, a Columbia-based women's shelter, has lobbied with some limited success on domestic violence legislation. But as one legislative organizer said, "There's no umbrella organization of women's groups and it really limits the effectiveness of lobbying women's issues."

Civil rights organizations seem more concerned with electing more black members of the General Assembly than affecting specific legislation. That's an understandable concern in a state where leaders have apportioned blacks out of the legislature for decades, with a succesion of county-wide and multi-member district plans limiting black elective chances.

Currently, only nineteen of the state's 124 House members and only one of the state's forty-six senators are black. That should change later this year, when the Senate's long battle to reapportion after the 1980 census is heard in a Washington courtroom. The state NAACP and others are seeking to carve out as many as nine majority-black Senate districts, though even in the best of circumstances only four or five of those districts would meet the accepted threshold of being truly winnable for black candidates. Only 325,000 of South Carolina's 596,000 voting-age blacks are registered--and even registered blacks tend to vote in lower percentages than white voters in the state.

Black legislators optimistically predict that even four or five black senators would alter the dynamics of moving social and progressive legislation through the General Assembly.

"A lot of times you will find that the Senate will kill things the House has passed," said John Matthews, a House member and chairman of the Legislative Black Caucus. "Check the record and you'll find that most issues that have a direct impact on minorities are brought up in the House. I think when you get five or six members (of the Senate) who will speak up for minority issues, you'll find a new sensitivity."

Other observers, including some white legislators sympathethic to minority causes, aren't so sure. They cite votes when the black caucus was unable to agree, even on such emotionally charged issues as removing the Confederate flag from the House chamber. Others say blacks are susceptible to pressure from business groups, too, since many represent rural areas where the resident industry carries even greater clout than those in urban areas.

Nearly 93,000 South Carolinians belong to labor unions, but that is the least percentage (7.896) of any state's workforce in the nation. Frustrated labor organizers are simply trying to survive in an atmosphere where the instruments of finance, the press--and, increasingly, government--lie in the hands of a small group of textile, banking, and manufacturing executives.

"It seems labor organizations always are a whipping boy for some of the politicians," says Randy Kiser, twenty-nine, the young president of the South Carolina AFL-CIO. "It makes good headlines and propaganda, especially if not many of the voters are unionized."

While a succession of SC governors has boasted how the hundreds of new factories and plants have radically altered


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the makeup of the SC economy in the last two decades, the surge of building, development and progress has nevertheless left the state forty-eighth in the nation in per capita income and as high as fiftieth in many health and quality-of-life statistics. While business complains about corporate income and property taxes--and actively seeks to elect a General Assembly full of representatives pledged to curtail them - the state's public school system is one of the nation's poorest: forty-seventh in per-pupil spending, forty-fourth in teacher pay, and forty-sixth in adult illiteracy.

"There's a lot of bragging all about how we don't need unions and we've never had unions," says Kiser. "But in the figures we're always coming up on the bottom."

From their finely appointed offices in a downtown Columbia high-rise bank building, the staff and corporate sponsors who run the South Carolina Chamber of Commerce can oversee the architectural heart of state government.

From there on the fifth floor they can view the nineteenth century Roman Corinthian State House, where metal stars mark the spots Sherman's cannon balls bounced off the walls over a hundred years ago, and where, inside, legislators launch government policies that alter the political landscape. Beyond the State House, the vista is dotted by a half-dozen new concrete-and-steel state office buildings, named after a succession of rural political barons--Brown, Blatt, Gressette, and Dennis--who once ruled the state with virtually unchallenged authority. There, thousands of state employees stoke South Carolina's governmental engine.

To many South Carolinians, the Chamber of Commerce's vantage point is more than fitting symbolism.

Many legislators and political observers now consider the Chamber of Commerce, its corporate clients, its local branches, and the broad business establishment it represents much more than just another lobbying group.

Nobody agrees more with the assessment of a rising business role in government than the born-again free enterprisers who run the Chamber of Commerce itself.

"Without any question, I think the state Chamber reached the heights of its political influence in the state," executive vice president Reese says proudly of last year's business effort to convince the General Assembly to kill Riley's package. "Business did have a significant role in the whole debate and it turned out favorably for us. Members got involved to a great degree. I feel like we had a great impact."

To many, the wave of businesses and manufacturers arriving in the state since World War II--united under the banner of the state Chamber and the closely allied SC Textile Manufacturers Association--is now the fourth branch of government in South Carolina.

Though unelected and prone to conduct most of its business in private, the new branch is not necessarily the fourth most powerful, either.

After all, South Carolina is a state where author V.O. Key writing in Southern Politics, called the governor "little more than a ceremonial chief of state." Later, authors Jack Bass and Walter DeVries, updating Key in The Transformation of Southern Politics, dismissed the state Supreme


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Court as "an institutional defender of the status quo," elected by and consisting wholly of former legislators.

For years, as those authors noted, power in South Carolina resided in the all-white, all-male Senate, where a collection of near-dictators ruled with the help of the most strictly seniority-based system of government in the South.

But in the last twenty years, changes have swept the Senate. The US Supreme Court's one-person, one-vote rulings and subsequent reapportionment forced an end to the one-senator-per-county system. Home rule stripped the senatorial power to control load budgets and the subsequent loss of patronage and authority hurt senators' prestige. Some of the older senators died, and others were defeated for re-election. By the 1970s, federal aid flowing to state agencies, with the money governed by federal guidelines, stripped away another layer of senatorial influence. Finally, rules changes inside the Senate, forced by younger senators and outside pressures, somewhat loosened the iron grip of seniority.

These days, the SC Senate isn't what it used to be--for better or worse.

Three or four senators still hold disproportionate influence, but there are days when even members of the Senate--like poor Tom Smith--wonder aloud who is running the governmental show in South Carolina.

For years, there was little question. Even into the early 1980s, Senate President Pro Tem Marion Gressette of tiny Calhoun County and Senate Finance Committee Chairman Rembert Dennis of rural Berkeley County near Charleston, himself the son of a state senator, remained the two most powerful legislators. Gressette was elected to the SC House in 1924 and to the Senate thirteen years later. Beginning in 1953, the Senate Judiciary Committee he. chaired became know as "Gressette's Graveyard," a reference to the chairman's inclination for killing bills--especially progressive ones. Gressette was credited with almost singlehandedly stopping passage of the Equal Rights Amendment in South Carolina. Dennis's Finance Committee rewrites the appropriations bill when it arrives from the House each spring. Senators with pet projects pending in the appropriations bill are rarely inclined to confront Dennis on other issues. Dennis, sixty-five, is now the Senate President Pro Tempore.

"Cronyism, and that's the popular word for it, is a fact of life in everything we do up here," says Smith. "We're a small state. The financial power and the business power is within a mile, almost, of this State House, and the university (the University of South Carolina) too. Because we are so small everybody knows everbody. They all went to the same school together, that kind of stuff."

But many legislators and observers consider the days of aging symbols like Dennis numbered. Single-member district representation is coming to the SC Senate, after decades of legislative and court fights to avoid it, including a current confrontation with the US Justice Department to limit the number of majority-black Senate districts. (See Southern Changes, May/June, 1983.) That fight might not be decided in time for the 1984 elections, but almost any resulting plan will guarantee at least five or six blacks in what was the South's last all-white legislative body until late 1983--when longtime civil rights activist I.D. Newman won a Senate seat in a special election.

There are predictions and talk that the new 1985 Senate will throw out the seniority system Gressette and his allies worked decades to preserve. And, finally, there is age. Gressette, in poor and declining health for years, died on March 1, flashing a new tremor through the foundations of the Senate.

Ironically, it was the irascible Gressette, of all people, who stood between the state's business community and one of its most prized goals--a constitutional amendment to severely limit the future state spending and taxation. The off-shoot of anti-tax sentiments in high-tax states such as California and Massachusetts, the spending limit was considered by Gressette as an intrusion by business interests into the affairs of government. Gressette didn't mind


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telling business leaders to butt out.

"We just don't need that set in concrete," Gressette said before his death. "The General Assembly is capable of approving a balanced budget. It always has."

Over five years, Gressettee repeatedly frustrated attempts to pass the amendment, which had as many as ninety co-sponsors in the House, after intense lobbying by SC businesses.

This year the spending limits bill is back on the General Assembly's agenda. With Gressette gone, and the Senate's decades of prestige teetering from outside forces, South Carolina's business community rests in an unparalleled position to move into the vacuum. Already, the line between what's-good-for-government and what's-good-for-business is becoming less and less distinct in South Carolina.

"My impression is that with any major legislation, such as the sales tax package, there are certain people in the state you've got to run it by," says Smith. "The Chamber group in the Bankers Trust building. The (former Gov. Robert) McNair law firm (also located in Bankers Trust). People of that nature. The business community is very, very powerful. There isn't any question about it. Maybe that's good, but it's a fact."

By mid-1983, Gov. Dick Riley, had certainly reached a similar conclusion.

As Riley began preparing a new education-improvement package and considering ways to get it through the 1984 General Assembly, his first steps were aimed at locking down business support. He courted corporate executives over lunch at the Governor's Mansion, stalked out new Chamber president John Huguley, a Charleston businessman, and attended a series of business conventions specifically to push the need for improving the state's eleven hundred public schools--and the advantages such improvement afforded business.

"We have done less to increase the funding of education than any other southern state except Alabama," Riley told the Textile Manufacturers Association last May. "Florida and North Carolina, states which we compete against for economic development, are in the process of launching major new funding initiatives for education. And they already spend $15,000 more per classroom than we spend in South Carolina."

Later in 1983, Riley appointed a select committee to draw up a blueprint for improving South Carolina's schools and another committee to recommend the ways to pay for it. He loaded both committees with business executives and bankers, naming Greenville businessman Bill Page as chairman. By November, the committees recommended a $210 million program which featured teacher pay increases (the state pays teachers less than all states except one), remedial programs for the state's 200,000 below-average students, and a statewide building program to improve school facilities in the most impoverished districts.

Deep in the plan, however, were attempts to appeal to the free-enterprise, results-oriented inclinations of the management representatives on the committees. There was the expected talk about merit-pay for "better" teachers, which many teachers and school professionals consider little more than a public relations gimmick. A particularly interesting twist was pushed by some businessmen on the panel: cash bonuses for schools where students perform well, and incentive programs for teachers and even students to earn cash bonuses for good work. Finally, after months of cajoling from Riley, the state Chamber endorsed the one-cent sales tax increase in early 1984--but only if no other realistic way could be developed to pay for school improvements. The SC Textile Manufacturers Association disagreed with that conclusion, and worked actively against the plan. But the influence of the Chamber's endorsement helped push the 1984 bill through the House. It awaited passage in the Senate in late May.

Charlie Daniel would have wanted it this way.

Daniel, the Greenville construction magnate who built his firm an international reputation, was probably the first SC businessman to understand the value of a legislature that would help--not hinder, meddle, or tax--private business.

"To Daniel's way of thinking," wrote Fortune magazine in October, 1954, "the greatest weakness of the northern states was that their governments were either hostile to industry, taxing it unfairly, or indifferent to its welfare. In the South, particularly in South Carolina, there was no hostility to business, and the tax situation was generally favorable to it. What Daniel was anxious to see, however, was a South Carolina government conspicuously friendly to industry, aggressive in working to bring in new business, and capable of inspiring business with confidence in its stability."

In the wake of World War II and Korea, Daniel and others set about to get rid of what they called "jackleg" delegates to the legislature, to put into office men who knew the value of good government, who would create the proper blend of regulation and taxes. Usually, that meant less of both.

The results came swiftly in the mid-1950's: a "right-to-work" bill to discourage unionism, a three percent retail


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sales tax to pay for schools (replacing a property tax which put much of the burden on industry), tax exemptions for manufacturing equipment, rescinding a franchise tax on out-of-state corporations, and outlawing blue laws prohibiting women from working in mills on Sunday (thus interrupting some textile processes requiring twenty-four hour-a-day monitoring).

Northern plants streamed southward, drawn by this new tax climate, and the absence of unions. A New York textile company, Deering-Milliken, was one of the earliest and the most enthusiastic recruits, moving its corporate headquarters to Spartanburg and tying its fortunes closely to research and to graduates of Clemson University. Board Chairman Roger Milliken, an avowed anti-unionist who fought the longest battle in history with the National Labor Relations Board over the closing of Darlington mill where workers voted to unionize, formed an immediate friendship with Daniel and Daniel Construction built Milliken plants across the Carolinas and Georgia--without so much as a written contract. And when Clemson University needed a new president in the mid-1950s, Clemson board chairman Charlie Daniel reached out and recruited a Milliken plant manager, Robert C. Edwards.

Daniel died in 1964. These days, no one symbolizes the industrial strength of South Carolina like Milliken, whose two billion-dollar-a-year, Spartanburg-based company is the country's largest privately-owned firm, with twelve thousand employees.

Milliken, who rarely grants interviews, is influential in several business organizations, a lifelong backer of Republican Party causes. He helped Barry Goldwater's rise to the GOP nomination in 1964, raised over $360,000 in campaign contributions in a few days for Richard Nixon in 1972, and, at one point, turned down a cabinet job in the Nixon adminstration. His personal attorney, George Dean Johnson, has been chairman of the SC Chamber and is one of its most high-profile lobbyists at the State House. Another business group Milliken spearheads, the Palmetto Business Forum, is considered even more conservative than the Chamber. In 1980, Johnson and Milliken allies helped form a group seeking to block a constitutional amendment allowing a gubernatorial succession--an effort many interpreted as a move to shift power from the legislature to the governor. Business lobbyists like their chances of influencing targeted legislators, elected by smaller constituencies, rather than a candidate elected statewide.

Perhaps none of the current crop of 170 members of the SC General Assembly personifies the new legislatures like House Speaker Ramon Schwartz, a portly, good-natured attorney from Sumter, a small town twisting around Shaw Air Force Base forty miles east of Columbia.

Schwartz, fifty-nine, was elected speaker in 1980, replacing state Rep. Rex Carter, a Greenville attorney who now frequently lobbies in the General Assembly for the Chamber of Commerce. His style of leadership is steeped in loyalties and good-old-boy networking.

In 1982, when the Legislative Black Caucus was pushing for a black to be appointed to the all-white University of South Carolina Board of Trustees, Schwartz agreed that the caucus's proposed candidate was qualified. But Schwartz refused to withdraw his support from a friend, his white accountant and golf partner who frequently accompanies Schwartz to USC football games. Schwartz's friend won the election, angering black legislators.

"I think black representation on the boards of universities is an idea whose time has come," Schwartz, who represents a district less than seventeen percent black, said afterward. "But I'm not willing to let it come with my good friend Sam Benson as the sacrificial lamb."

Schwartz makes no bones about his other friends and loyalties, boasting of his close relationships with state business leaders. In 1981, he was the Chamber's "Legislator of the Year," awarded the honor at a three-day, all expenses paid party for the General Assembly at Myrtle Beach.

In early 1983, Schwartz emerged as an outspoken critic of Riley's attempt to reform the state income tax system, which would have cut taxes for anyone making less than $22,000 annually--and increased taxes for those making more.

By late 1983, Schwartz joined Lt. Gov. Mike Daniel to tour the state trumpeting the virtues of the constitutional state tax and spending limitation, blocked by Gressette's opposition and only lukewarm support over the years from Riley.

Why would the speaker of the House of Representatives


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barnstorm the state to promote a piece of legislation weakening the authority of the House he leads?

Critics point to Schwartz's obligations to those who salvaged his office for him in the fall of 1982.

Schwartz faced the toughest reelection campaing of any House Speaker in memory from a political neophyte named Jim Ross.

Ross, a retired military officer, became the lightning rod for Sumter voters offended by Schwartz's wholehearted support for a new $600 million Union Camp paper mill to be built on a site at the mouth of the state's Santee-Cooper lake system. Santee-Cooper, a world-reknowned bass fishing outlet, stretches seventy-five miles through the heart of the state and attracts millions in tourism, fishing and tax revenues each year. Union Camp, a paper products manufacturer based in New Jersey, operates mills in Savannah, Georgia, and Franklin, Virginia where fish kills and offensive odors have been linked to the plants.

The Union Camp fight quickly became a classic of jobs-versus-environment confrontation. When Schwartz refused to join activists demanding that the US Army Corps of Engineers order a full-scale Environmental Impact Statement, a normally routine gesture to assess the damage a mill might do, Ross's campaign was born.

Eventually, Schwartz defeated Ross by a 115-vote margin out of nearly 4,500 votes cast, in a race filled with so many election irregularities that the Sumter Democratic Executive Committee ordered a new election. Later, SC Democratic Party officials, including many of Schwartz's long-time allies, overruled the county party and certified Schwartz as the winner.

But Schwartz's victory wasn't easy or cheap. To win, Schwartz set a new spending record for a local House race, raising and spending $34,075 to attract just 2,281 votes in a race for a $11,000-a-year job. Thousands of dollars were contributed by the state businesses whose interests Schwartz frequently supports in Columbia: realtors, banks, electric and gas companies (including some which don't serve his district), and textile companies.

When Ross, who spent only nine thousand dollars questioned the acceptance of such donations, Schwartz told reporters it was "most flattering" that business had enough confidence in him to back his re-election.

"I don't see any conflict of interest in taking campaign contributions from utilities," said Schwartz. "I had an extremely close race and I would have hated to test the waters without it (money)."

In early 1984, Schwartz became the primary opponent of Riley's latest plan--a pure one-cent sales tax to benefit public education in South Carolina.

"He's right in their pocket," said a Riley aide of Schwartz's as a spokeman for business. Schwartz faces another bitter primary fight against Ross this summer, a confrontation which could turn into another cause celebre for corporations and political action committees.

Another politician who was the beneficiary of business largess in 1982 was the current Democratic lieutenant governor, Mike Daniel. Similar business support in 1986, which appears likely, could propel Daniel into the governor's office for eight years.

Daniel, a forty-four-year-old Gaffney attorney and the son of a loom repairman, emerged as the favorite son of the state's textile-and-banking establishment as he spent over $500,000 winning the $34,000-a-year lieutenant governor's job two years ago. A lieutenant governor in South Carolina has few official duties, but it has historically proved to be a key stepping stone to the governorship.

Daniel is already seen as the business cartel's designated candidate in the crowded field seeking the governorship in 1986, a race most state voters haven't given one thought to. It's an informal endorsement, of course, but it could be crucial with up to a dozen men who would be governor already itching to announce. The 1986 winner will likely serve for eight years, since South Carolina's new gubernatorial succession law (as have others across the South) has left incumbent governors virtually unbeatable for reelection.

What kind of governor would Daniel be?

His record shows that, politically, he will make no waves. And his 1982 campaign was a textbook example of how valuable well-heeled friends in high places can be in a close, hard-fought statewide election.

Daniel's chief opponent for the job was former State Sen. Tom Turnipseed, a controversial, confrontational and maverick populist and an outspoken critic for ten years of the state's business establishment especially utility com-


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panies and big banks. (See Southern Changes, August/September, 1982)

Daniel's campaign was built on a foundation of business support. At cocktail party, after drop-in, after reception, Daniel raised over $200,000 for the race in the early stages. Included was a thousand-dollar-per-person cocktail party at Columbia's exclusive Palmetto Club, with the invitations signed by Bankers Trust Chairman Hootie Johnson and Citizens and Southern Bank Chairman Hugh Chapman, member of a prominent state textile family.

Still, Turnipseed led the first primary with forty-four percent of the vote, drawing much of his support from among South Carolina's black voters, who make up nearly thirty percent of the registered voters. Daniel finished second with thirty-one percent of the vote in a five-candidate field. Though Turnipseed seemed poised for victory, he lacked the fifty percent majority needed to avoid a runoff. Daniel and his supporters used the two-week interim to launch a television-and-telephone campaign portraying Turnipseed as an irresponsible and dangerous radical.

It took money to organize and Daniel was able to raise it. In ten days, Daniel raised at least $101,000, nearly half as much as he raised in the previous four-months of the campaign. Much of the money, about $70,000, arrived in gifts of a thousand dollars or more, including gifts of up to $10,000 from Riegel Textile Corp., $6,000 from Springs Mills, $5,000 from Greenwood Mills, and $4,000 from Liberty Corp., a Greenville-based insurance and holding company whose board chairman, Francis Hipp, is a prime mover in the Chamber of Commerce.

One of Daniel's phone banks was based at the State Chamber of Commerce headquarters in Banker's Trust Tower in Columbia, provided free by Reese, who says now he'd do the same thing anytime to defeat Turnipseed. Seventy-nine fulltime callers contacted registered voters in key white, upper-middle-class voters, including Republicans, with the message: "Can I tell Mike he can count on your vote Tuesday to help us stop Tom Turnipseed?"

Turnipseed, meanwhile, was able to raise little money for the Democratic runoff, and depended on the momentum from his first primary, when he led Daniel by 39,000 votes and swept thirty-nine of the state's forty-six counties.

But it wasn't enough. The new strategy--backed up by fresh money--turned the election around. Daniel, who other House members could never remember sponsoring or leading a major piece of legislation through the chamber, won the nomination by eight-thousand votes.

"They just bought the election, that's the only thing you can say," said Turnipseed. "It was extremely negative politics, and if you've got the money you can get the message out to defeat anyone."

In the general election, running against maverick Republican State Sen. Norma Russell, Daniel's advisors attempted to flesh out his fuzzy image by linking him to reform legislation.

At one press conference, Daniel called for stricter limits and tougher disclosure rules for lobbyists working the State House. Later, Daniel advocated more stringent guidelines for the burial of nuclear waste in the state at nuclear dumps in Barnwell, SC.

But late in the campaign, when Daniel's advisors decided he needed an extra push from television advertising to ensure victory against Russell, Daniel borrowed $100,000 from Bankers's Trust. His co-signers were several veteran State House lobbyists, including one who represents the nuclear waste dump.

Daniel won the general election easily. Since then, Daniel has joined Schwartz to become the two primary elected officials pushing the Chamber's tax and spending limitation in the General Assembly and to the public.

Records show his $100,000 campaign debt from '82 is gradually disappearing. During late 1983, while Daniel toured the state for the Chamber pushing the amendment, he received thousand dollar contributions from Hootie Johnson, Hamrick Mills, Burlington Industries, and Spartan Mills Chairman Walter Montgomery, and dozens of smaller contributions from textile executives, bankers, and their political action committees.

Some of the legislative and electoral activism by business groups is considerably more circumspect than the Schwartz and Daniel campaigns, or the red-white-and-blue conventions the Chamber of Commerce sponsors each autumn for legislators at one of South Carolina's coastal resorts.

But it is a testament to the level of influence achieved by the Chamber and allied business groups that on some key General Assembly votes they have been quietly able to win over the most skeptical of enemies.

Take the General Assembly's Legislative Black Caucus, for example.

Most of the state's nineteen black House members are suspicious of big business and its expanding role of influence in state affairs. In part, that's because the state's business-and-banking community is run by an almost exclusively white executive power structure. And, in part it's because business's legislative agenda, including tax breaks, means that other groups--including the poor--end up paying more. And in South Carolina the poor are often also black.

"I think the influence of the special (business) interest groups has increased substantially in the ten years since I got here," said state Rep. John Matthews, forty-four, a school principal and farmer who is chairman of the Black Caucus. "I don't think it's good for the state. What happens is, they (business groups) don't tend to look at the state as a whole, from a balanced point of view. They only look at it from whatever position they are pushing.

Yet when the Chamber and its allies speak, even some black legislators tend to listen.

In April, when the business lobby's constitutional tax and spending limit package came up for a key House vote, it was expected to attract little, if any, black support. But when the votes were counted, six members of the caucus voted for the amendment on second reading and it passed by eighty-three to twenty-four, one vote more than the eighty-two votes (two-thirds of the House) needed for a constitutional amendment. Even Matthews, who was absent on second reading, voted for it on the routine third reading despite his reservations.

"I was not totally sold on the idea," said Matthews later. "I still have mixed emotions about it."

Matthews and other blacks deny it, but one reason for


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the unexpected and ultimately critical shift of black votes on the issue could have been lobbying by the state's large banks on another, unrelated program.

The day before the House vote on spending limits, a black lobbyist arrived in the House to meet with the Black Caucus.

The lobbyist was Moses Clarkson, a well-known black businessman and chairman of the SC Department of Health and Environmental Control, who also lobbies for the Chamber of Commerce on certain projects.

Clarkson was there to explain a ten-million-dollar loan program for minority-owned businesses in South Carolina, a proposal being considered by a group of SC bankers.

Both Matthews and Clarkson denied any connection between discussions of the loan program and how black members voted on the constitutional amendment (which must still pass the SC Senate this year to go on the ballot).

But one member of the caucus told reporters there was definitely a quid pro quo.

"It was a bone being tossed out . . . come out and help us and we'll sweeten the pot on the other side," one legislator told The State newspaper of Columbia, saying Clarkson had "indicated what could open on the horizon, depending on the outcome of the (spending limit) vote.

Why would seven black legislators vote for a constitutional amendment which critics say could freeze or cut social program which have greatly benefited SC minorities over the last fifteen years?

"Some of them just thought it was an idea whose time had come," explained Matthews recently. "Some thought it may work."

Of course, neither hardball lobbying nor passing out campaign donations to politicians is anything new for business--in South Carolina or any other state.

For years, big utilities such as Duke Power, SC Electric and Gas, and Carolina Power and Light gave not only campaign donations, but also kept many legislators who were also lawyers on healthy retainers. This practice is now largely abandoned, mostly because of pressure from Turnipseed and other activists in the early 1970s.

But the size of the current campaign gifts, the increasingly formal network collecting and disbursing the donations, and the level of access and influence in the General Assembly this organized activism seems to be giving business, is unparalleled.

A study of campaign contributions to members of the SC House in 1981-82, conducted by University of South Carolina-Aiken political science professor Robert Botsch, found that eighty-three percent of all campaign funds given to winning SC House candidates in 1982 came from interest groups--business, lawyers, or health care groups with a direct interest in legislation.

"There are virtually no labor groups, no consumer groups, no environmental groups in South Carolina," said Botsch. "And I think the biggest surprise to me was no agricultural groups. Put all the business and corporate contributions together and it amounts to $270,000." Botsch's figures don't include donations from private individuals who are major corporate chiefs, such as Milliken, who prefer to give under their own names.

"In effect, you have a very conservative estimate of the amount of money given by business groups (eighty-three percent)," said Botsch. "And it's still by far the most of any state I've ever heard of. One study found fifty-four percent in Arizona. That's about the highest previous figure from interest groups."

There are contributing questions about the motives driving business to assume their new role in politics in South Carolina.

Businessmen, particularly professional spokesperson like Executive Director Reese of the Chamber, insist industrialists are interested in expanding the state's shaky economy and lifting the quality of life in the state for everyone.

However, critics, including former Greenville mayor and state Development Board Chairman Max Heller, an Austrian immigrant and self-made millionaire, describe the new role of business as one of self-interest and obstruction to prosperity.

"They (the state Chamber of Commerce) have been an advocate of tax reduction. They have been an advocate of greater incentives. They have been an advocate of investment tax credits. They have been advocates of reducing taxes . . . regardless of what they are," Heller, now retired and living in Miami Beach, told the Greenville News last year. "To the best of my knowledge, they have never helped to bring an industry in."

Industry's role in obstructing the recruitment of new business is an old but largely untold story in South Carolina.

On the presidential campaign trail earlier this year, US Sen. Ernest "Fritz" Hollings of South Carolina talked about his experiences as governor (from 1959-63), telling audiences he not only had to fight poverty and undereducation, but the state's business establishment as well, in finding and persuading new industry to come to a job-starved state. It's a story Hollings has rarely, if ever, told publicly in South Carolina.

Recently, when the Japanese auto firm Mazda selected Greenville as one of three possible sites for its first US auto plant, some upstate businessmen were upset. Eugene Stone, the seventy-seven-year-old patriarch of Stone Manufacturing Company of Greenville, warned of unions, a


Page 13

higher wage base, and a shortage of workers if the four-thousand employee plant arrived in town.

"We wouldn't like to see a big union plant coming in here in a big way," said Stone. "We'd much prefer our boys and girls not to have a union." Stone Manufacturing is active enough in SC politics that one of its executives, Tom Marchant, is a member of the General Assembly and spends much of his time in Columbia.

Some members of the General Assembly, though unwilling to criticize the Chamber and its business brethren publicly, say many executives don't understand the function of government.

"They say they want to run the state like a business, but how many businesses have to worry about 400,000 people on food stamps?" asks one legislator privately. "The functions of government are very broad. You can't look at it like a profit-and-loss statement. We're dealing with human lives, and a lot of our people are untrained, illiterate and losing out."

For years, surveys have ranked South Carolina's business climate among the best in the country, but Chamber officials continually cite surveys and their research showing the state faltering.

Recently, State Senator Tom Smith drew up a list of at least $115 million in business tax exemptions already on the books in South Carolina. Included were five-year exemptions from property taxes for new and expanding industries, exemptions on certain inventories not sold on retail level, exemptions for pollution-control equipment, fuels used in production, and equipment used in mining and quarrying, and many others. Up to $5.6 billion statewide is exempt from county property taxes, according to Smith, costing counties thousands of dollars.

Smith, standing outside the Senate chamber, had to excuse himself quickly and get back to the floor for a debate.

Inside, the Senate was considering repeal of the state tax. On retail inventories. Merchants and business groups said it would give the state an advantage over North Carolina and Georgia in recruiting new industry.

Business lobbyists have been after the General Assembly for years to approve the exemption. This year, it looked like it just might pass.

Jim Walser, thirty-four, has been a member of The Charlotte Observer's bureau in Columbia since 1979. From 1972 until l977, he was managing editor of Osceola Newsweekly, also based in Columbia.

Go to Article List for Southern Changes. Volume 6, Number 3, 1984

Previous: The Second Greensboro VerdictArticle

Vol. 6, No. 3, 1984, pp. 1-3

Next: Voting Rights in Edgefield CountyArticle

Vol. 6, No. 3, 1984, pp. 13-14


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