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South Carolina, at times beleaguered and under attack, stands proud but not untroubled, a state that has made much progress but still feels it has some distance to go. Within living memory, this state looked like an underdeveloped country. Beneath a thin veneer of rich people, it was among the poorest of states, with income levels less than half the national average and with high levels of illiteracy and disease. South Carolina was founded by planters from Barbados and even today there are reminders of the West Indies--the semitropical climate, the lush foliage and trademark palmettos, and the billions in damage from hurricanes. But economically and culturally, South Carolina is now clearly part of the booming South Atlantic region from Maryland to Florida, filling up with new retirement condominiums, time shares (it ranks number two in the country), factories and office buildings, giant shopping centers, growing robustly in the 1990s.

South Carolina started off with a plantation economy built on the swampy Low Country below the Fall Line, where the great 18th and 19th century planters built rice paddies and cultivated exotic crops like indigo in the days before cotton was king. The great wealth of these Low Country planters was destroyed by the Civil War which they, more than any other Southerners, provoked. But their pride and way of life continued as did that of former slaves. As late as 1940, 43% of South Carolinians were black, most living in conditions inconceivable today. South Carolina's economic growth started only in the 1920s, with that lowest-wage of industries, textiles. Mills were built in the Up Country above Columbia, hiring poor whites (never blacks) from the hardscrabble farms in the area. Politics remained a rough business, with harsh appeals to racial fear and economic envy, and with limited participation: in 1940, just 99,000 South Carolinians voted for president, 96% of them Democratic--the highest Democratic percentage in the nation. In the 1946 Democratic primary, the year Strom Thurmond was elected governor, only 271,000 people voted in a state of more than 2 million.

Now this once underdeveloped country has joined the First World. Personal incomes rose 40% in the 1990s, up toward national levels, and factory productivity rose 59%. Poverty fell sharply; health standards are as good as those in the rest of the nation. Educational achievement still lags, though not nearly so much as before, with 80% of white and 65% of black adults classified as high school graduates; homeownership is above the national average. South Carolina was helped for some years by the military bases clustered around Charleston and by the big textile mills around Greenville and Spartanburg. Then, starting in the 1970s, South Carolina became the most aggressive state in the South in attracting new industry. It advertised its business climate (the nation's lowest rates of unionization), its taxes (low) and its willingness to meet local employers' needs (very high). It enticed French and German firms to set up major operations in the Piedmont and the Low Country, a process capped when BMW in 1992 built its first U.S. assembly plant off I-85 in Spartanburg, now with 4,700 employees. Nearby are big Michelin and Fuji Photo plants. From 1960 to 1990 international investment in the state grew from $80 million to $16.4 trillion. Now Vought Aircraft and Alenia Aeronautica, an Italian firm, are building a factory near Charleston International Airport to assemble Boeing 7E7 fuselages. But even more typical are the decisions of hundreds of small employers to open plants, rent offices and create jobs in what has become one of America's more vibrant economic environments: 95% of businesses have 50 or fewer employees. South Carolina keeps losing textile and apparel jobs, but has gained many more not from government-subsidized big plants but from expansion of existing businesses.

As South Carolina's economy grew, it slowly, sometimes grudgingly, overcame its heritage of slavery and racial segregation. Starting in the 1950s, fewer people were kept from voting by the poll tax, and turnout surged as South Carolina became competitive in the presidential elections of 1952, 1956 and 1960. Clemson University was peaceably desegregated during the governorship (1959-62) of Ernest Hollings; most South Carolina whites opposed integration, but not with the violence of Alabama and Mississippi. Then the Civil Rights Act of 1964 and the Voting Rights Act of 1965 ended legal segregation of public accommodations and workplaces and brought blacks suddenly into the electorate. This changed the political balance. Senator Strom Thurmond, who set a record filibustering a civil rights bill in 1957, started appointing black staffers and a black federal judge in the late 1960s and early 1970s. But politics still cleaves the electorate along racial lines: In 2004 whites voted 78%-22% for George W. Bush and blacks voted 85%-15% for John Kerry. For four years South Carolina grappled with a controversy over the Confederate battle flag, flown over the state Capitol since 1962. Successive governors--Republican David Beasley and Democrat Jim Hodges--favored taking it down; the NAACP organized a boycott of the state. Finally in May 2000 the legislature voted to fly the flag not from the Capitol, but from a 30-foot pole on the Capitol grounds, while an African-American history monument would rise nearby. The state NAACP was still not satisfied, and announced the boycott would continue.

Until the 1960s, South Carolina was an inward-looking state, with few people except military personnel moving in. That has changed as the economy has grown. Most of the newcomers are white, with conservative attitudes but less feeling for the state's ancient traditions; there have been only a few immigrants. The fastest growth in the 1990s came in coastal resort areas around Hilton Head and Myrtle Beach and in suburban counties outside Columbia and just south of Charlotte, North Carolina. This growth has reduced the state's black percentage to 30% in 2000, well above the national average of 12% but far below the near-majority of the 1940s. Politically, this change has helped move South Carolina toward the Republicans. But that change might not have occurred without the efforts of two individuals. One was Strom Thurmond, who had voted for Franklin D. Roosevelt at the 1932 Democratic National Convention, but who switched to the Republican party in September 1964 and provided critical votes to nominate Richard Nixon at the 1968 Republican National Convention. South Carolina voted for Barry Goldwater in 1964 and Nixon in 1968 and has only once voted for a Democrat since, Jimmy Carter in 1976 by a narrow margin. The other individual was Carroll Campbell, elected governor in 1986 and 1990, who with the aid of Lee Atwater built a Republican party capable of electing statewide officials and majorities in the legislature. In 1988 Campbell and Atwater, by then George H. W. Bush's campaign manager, set up the early Republican primary, on the Saturday before Super Tuesday, which enabled George H. W. Bush to clinch the Republican nomination that year; it did the same for Bob Dole in 1996 and, against John McCain's strong challenge, for George W. Bush in 2000. In 1989 Campbell and Atwater seemed to be Thurmond's heirs. But Atwater died of a brain tumor at 39 in 1991. In 1994 Campbell helped his protégé David Beasley win the governorship. It was widely assumed that Campbell, making good money as a Washington lobbyist, would be appointed to fill Thurmond's seat if it should become vacant. But Beasley was defeated for reelection in 1998 and in 2001 Campbell announced that, at 61, he was battling Alzheimer's disease. Thurmond served out his eighth term as he had the other seven and as a United States senator celebrated his 100th birthday in December 2002.

South Carolina's other senator for years, Democrat Ernest Hollings, retired in 2004 after 38 years, 36 of them as a junior senator--a record. South Carolina politics now belongs to a new generation. The state continues to be heavily Republican, though Democrats have been competitive and cannot be counted out. But in 2002 the Republican trend continued. Republicans had a fierce primary and runoff for governor, and the surprise winner, former Congressman Mark Sanford, who moved to the state as an adult, beat Hodges 53%-47%. In the race to succeed Thurmond, Congressman Lindsey Graham won 54%-44%. In 2004 George W. Bush carried the state 58%-41%, Republican Congressman Jim DeMint beat Democrat Inez Tenenbaum for Hollings's Senate seat by the same margin as Graham had won in 2002, 54%-44%, and Republicans increased their majorities in the state Senate and in the state House.