Company Towns in the U.S.

1880s to 1935

Introduction: In the 1890s, in remote locations such as railroad construction sites, lumber camps, turpentine camps, or coal mines, jobs often existed far from established towns. As a pragmatic solution, the employer sometimes developed a company town, where an individual company owned all the buildings and businesses.

In some situations, company towns developed out of a paternalistic effort to create a utopian worker’s village. Churches, schools, libraries, and other amenities were constructed in order to encourage healthy communities and productive workers. Saloons or other places or services believed to be negative influences were prohibited.

In other cases, the company’s motivations were less ideal. The remoteness and lack of transportation prevented workers from leaving for other jobs or to buy from other, independent merchants. In some cases, companies paid employees with a scrip that was only good at company stores. Without external competition, housing costs and groceries in company towns could become exorbitant, and the workers built up large debts that they were required to pay off before leaving. Company towns often housed laborers in fenced-in or guarded areas, with the excuse that they were “protecting” laborers from unscrupulous traveling salesmen. In the South, free laborers and convict laborers were often housed in the same spaces, and suffered equally terrible mistreatment.

Origins: Traditional settings for company towns were for the most part where extractive industries existed– coal, metal mines, lumber — and had established a monopoly franchise. Dam sites and war-industry camps founded other company towns. Since company stores often had a monopoly in company towns, it was possible to pay in scrip (a term for any substitute for legal tender). Typically, a company town is isolated from neighbors and centered on a large production factory, such as a lumber or steel mill or an automobile plant; and the citizens of the town either work in the factory, work in one of the smaller businesses, or is a family member of someone who does. The company may also donate a church building to a local congregation, operate parks, host cultural events such as concerts, and so on. If the owning company cuts back or goes out of business, the economic effect on the company town is devastating, as people move to jobs elsewhere.

Company towns often become regular public cities and towns as they grew and attracted other business enterprises, pool transportation and services infrastructure. Other times, a town may not officially be a company town, but it may be a town where the majority of citizens are employed by a single company, thus creating a similar situation to a company town (especially in regard to the town’s economy).

The Pullman Lesson

Although economically successful, company towns sometimes failed politically due to a lack of elected officials and municipally owned services. Accordingly, workers often had no say in local affairs and therefore, felt dictated. Ultimately, this political climate caused resentment amongst workers and resulted in many residents eventually losing long-term affection for their towns; such was the case at Pullman, Chicago.

Pullman Palace Car Company was famed for its sleeper and luxury rail cars that it manufactured. One of these manufacturing locations was in Pullman, Illinois. George M. Pullman founded the town of Pullman as a place where his workers could live. This town was conceived and designed on the premise of being a model town for his workers, with every aspect complete including parks and a library. The problem arose when after the panic of 1893 the workers of Pullman received several wage cuts that on the average added up to twenty-five percent. These cuts were bad in themselves, but when coupled with Pullman’s actions of not lowering the rents for his company owned homes in Pullman, the laborers began to unite. From the outside, Pullman appeared to be a model town, and guided tours were given to impress outsiders. The town however was not a model; the homes on the outskirts of town were shabbily built — some without any kind of plumbing. The rent for these houses was also about twenty-five percent higher than normal for the area. In addition, in order to work for Pullman, one had to live in his houses. The workers formed a committee and on May 7 went to Pullman to ask to have the rent lowered. On May 7 and 9, they were flatly refused. Three of the committee members were then terminated. This caused the workers to declare that they were going to strike, and on May 10, 1894 they walked off of their jobs. Then on May 11, 1894 the Pullman Plant closed.

The Pullman Strike was the first national strike in United States history. Before coming to an end, it involved over 150,000 persons and twenty-seven states and territories.  The Pullman Strike of 1894 was a milestone in American labor history, as the widespread strike by workers was put down by the federal government. President Grover Cleveland ordered federal troops to crush the strike and dozens were killed in violent clashes.

A national commission formed to investigate the causes of the strikes found that Pullman’s paternalism was partly to blame and labelled it “un-American.”

Note: Paternalism, a subtle form of social engineering, refers to the control of workers by their employers who sought to force middle-class ideals upon their working-class employees. Paternalism was considered by many nineteenth-century businessmen as a moral responsibility, or often a religious obligation, which would advance society whilst furthering their own business interests. Accordingly, the company town offered a unique opportunity to achieve such ends. However, government observers maintained that Pullman’s principles were accurate, in that he provided his employees with a quality of life otherwise unattainable to them, but recognized that his excessive paternalism was inappropriate for a large-scale corporate economy and thus caused the town’s downfall.  In 1898, the Illinois Supreme Court required Pullman to dissolve their ownership of the town.

Thus, the Pullman Strike did not kill the concept of a company town but rather initiated a new chapter in their existence. Over the next thirty years, the old model of paternalism was abandoned in favor of new professionally designed company towns with architects, landscape architects, and planners translating “new concepts of industrial relations and social welfare into new physical forms.” This suited capitalists of the day who were obviously keen to avoid the experiences of Pullman.

Decline of American Company Towns

By the 1920s the need for company towns had declined significantly due to increased national affluence. Despite income inequalities and a relatively low standard of living conditions amongst factory laborers, the prosperity of the 1920s saw workers’ material well-being improve significantly. A strong post-war American economy meant installment buying was accessible to low-wage earners who could now purchase previously unattainable goods like automobiles and radios. Moreover, workers were no longer dependent on employers for healthcare and education.

By the 1920s the widespread nature of the automobile meant workers no longer needed to live near their work places and now had access to more employment opportunities. A combination of the freedom that came with private transport and the mass communication of radio saw the isolation of company towns lessen and the social basis of the company town become less necessary.

Furthermore, the accessibility of the working class to private transport also marked a step of equality as they had previously only been accessible to the wealthy. As access to surrounding municipalities increased, residents of company towns gained access to an increasing amount of government-funded public resources such as schools, libraries, and parks.

Modernization and the increase in material well-being had also lessened the perceived need for paternalism and moral reform. Accordingly, the economic downturn of the early 1930s saw some businesses do away with employee welfare schemes to reduce costs. However, the Roosevelt Administration’s New Deal dealt the final blow to end American company towns by raising minimum wages, encouraging industrial self-governance, and pushing for the owners of company towns to “consider the question of plans for eventual employee ownership of homes”. To a lesser extent the New Deal also reduced the need for employee housing by transforming housing finance to a lower-interest, lower-deposit system making home ownership more accessible to the working class.

Source: Wikipedia, the free encyclopedia – en.wikipedia.org/wiki/Company_town (Accessed: August 11, 2015)

 Coal Towns in Virginia

Characteristic of coal towns was the influence of the company. Companies built hospitals, hotels, recreation halls, schools, and stores for miners and their families. They paid for medical personnel and teachers. The companies sponsored garden awards and gave chocolate and fruit to children at Christmas. Coal companies encouraged sports, and camp rivalries were intense. Miners at Roda (built in 1902) formed a band, and Stonega Coke & Coal Company sponsored an African American quartet. Coal companies also made land available for both Catholic and Protestant church structures. Company commissaries carried necessities and amenities such as washing machines, radios, and refrigerators, available for purchase on credit. To make ends meet, families often tended gardens in order to can goods and women sold butter and eggs. Miners and their families enjoyed their leisure times by visiting neighbors, going to the movies, having card parties, and picnicking.

The earliest coal camps often consisted of boarding houses for the mostly unmarried male miners; duplexes and single-family houses were more common after the 1910s when companies actively recruited a more stable workforce of married men with families. Squeezed between mountains and stretched out along creeks, the camps often were divided along class, ethnic, and racial lines. Mining town sections carried names such as “Pink Town” (native white), Colored Hill” (African American), Hunk Town” (Eastern European), and Quality Hill” (company officials). Even after the establishment of permanent housing, coal towns often lacked adequate sewerage and water facilities.

Source: www.lva.virginia.gov/exhibits/coaltown/towns/ (Accessed: 8/11/2015

 Company Towns in West Virginia

To accommodate workers, coal companies built towns from scratch, often in a matter of weeks.

Company towns exist across the country; however, the southern coalfield company towns are distinctly West Virginian. When the railroads arrived, southern West Virginia primarily was a mountain wilderness, with a smattering of small towns such as Beckley, Madison and Aracoma (later renamed Logan). Coal companies had to build towns and houses for their miners in some of the most isolated areas of the region. By 1922, nearly 80 percent of West Virginia miners lived in company houses.

Coal companies stripped down the forests to erect simply designed houses, schools and churches, all within close proximity of the mines. The towns followed the branch lines of the C&O, N&W and Virginian railroads. To cut costs, almost all miners’ houses were built identically, often of cheap materials. Since most towns, such as Mohegan, were built in isolated areas, miners and their families were totally dependent on the companies for all services. Some companies took much better care of miners and their families by building swimming pools, movie theaters and parks. Houses in these model towns included indoor plumbing, electricity and sewer systems.

All life in company towns revolved around the company-owned store. Since these towns were located in isolated areas, the company store offered the only option for buying groceries, mining tools and other goods. Most company stores also contained the local post office and payroll office. As the only store in town, companies were not threatened by competition. They often charged exorbitant prices compared to what people in cities paid for the same items. Company stores could provide anything a miner and his family might need, ranging from washing machines to shoes to medicine. Most miners eventually earned enough to buy cars, which allowed them to visit local service towns such as Welch, Beckley, Bluefield, Logan, Madison, Mullens or Williamson.

African Americans and various immigrant groups typically were forced to live in separate sections of company towns. For African Americans and European immigrants, the company towns were a culture shock. Racial and ethnic violence occurred in a number of communities. To maximize productivity while maintaining peace, coal companies tried to keep a balance in numbers among native whites, blacks and immigrants—a “judicious mixture,” as dubbed by operator Justus Collins. Blacks attended different churches and schools. In addition, blacks and immigrant groups formed their own cultural institutions and fraternal orders.

Source: National Coal Heritage Area and Coal Heritage Trail – www.coalheritage.wv.gov/coal_history/Pages/Company-Towns.aspx (accessed: 8/11/15)