The word appears 59 times.
Mary Flannery O'Conner wrote regional stories in the southern Gothic style. She was born (1925) in Savannah, Georgia, and was steeped in the culture of the south. As such, her usage of the word should not be a surprise.
.....At one point in the story "A Good Man is Hard to Find" the family on a car trip passes a black boy standing outside is shanty. He has no britches on....
"Oh look at the cute little pickaninny!", she said and pointed to a Negro child standing in the door of the shack. "Wouldn't that make a picture now?", she asked and they all turned and looked at the little Negro out of the back window. He waved. asystem.pm.east.sgrops.com "He didn't have any britches on," June Star said.
"He probably didn't have any," the grandmother explained. "Little niggers in the country don't have things like we do. If I could paint, I'd paint that picture," she said.