The Economic Development Administration is trying to rescind part of a $4.9 million public works grant last month to the small, all-black town of Mound Bayou, Miss., where past federal grants have run into frequent opposition from Mississippi leaders.
Supporters of the grant charge that racism and politics are behind EDA's change of mind.
John Eden, head of EDA, denies the charges and says the decision to award the 2,500-population Mississippi Delta town the $4.9 million - 49 percent of all the money going to the state under that program - was a regretable error.
"We were operating under a very tight time constraint whereby we had to make judgments on about 25,000 grant applications in about 55 days," Eden said.
"We were in a terrible hurry on this thing . . . and in the rush of handling this entire program just before Christmas, it got by our people," Eden said.
The $2 billion grant program is a one-shot attempt to put public works programs into high unemployment areas. Ironically, when the program was announced last October, Eden said it was designed to minimize both human error and charges of political favoritism.
Applications were rated by computer on a point system in an attempt. Eden said then, to make sure the grants went to "communities hardest hit by unemployment and those having the lowest per capita income."
Mound Bayou applied for a municipal building a maintenance gagage and street improvements. Eden now contends the application was improper because it wrote three separate projects into one application.
"So on that basis we have asked the city if they will cooperate in reducing the level and taking . . . a portion of the street project," he said, a move that would cut the grant to about $2.8 million.
Mayor Earl Lucas says that when Eden spent a day in Mound Bayou last Wednesday he gave a different set of reasons.
"He told me he was going to cut the grant because of heavy pressure from the Mississippi congressional delegation. . . He made that statement two or three times down here and once when I was in his office in Washington on Thursday," Lucas said.
"There was no problem until the Mississippi congressional delegation went in to see Mr. Eden," he said. "If this project had been funded for some white town," he said, he felt there would be no problem.
Critics of the grant deny any racism. Mound Bayou, they say, is getting an unfairly large share of the $10 million allocated to Mississippi.
Eden said he heard protests not only from some Mississippi congressmen, but also from other state officials.
But that does not amount to pressure, he said. "It was simply citizens expressing their concern."
Eden said the Mound Bayou project was designed to relieve unemployment in several surrounding counties by drawing workers from them.
Unadjusted 1976 figures place black unemployment in Bolivar County, where Mound Bayou is located, at 11.2 per cent, compared to 6.7 per cent for whites. Unemployment in Mound Bayou is 20 per cent, Lucas said.
In 1972, Office of Economic Opportunity Director Phillip V. Sanchez three times overruled then-Gov. William Waller's objections to a $5.5 million grant to the black-controlled Delta Community Hospital and Health Center in Mound Bayou, which serves mostly poor blacks.
That medical center received most of the federal money sent to the town over the past 10 years. Other state and county officials repeatedly objected to the OEO grants that sustained it from 1967 to mid-1973.