A company town is a place where, at least initially, practically all stores and buildings are owned by the one joint-stock company that has a geographically-linked business need and so provides employment and infrastructure (housing, stores, transportation, sewage and water) to support the effort. Typically, such towns are founded in a remote location, so that residents cannot easily commute or shop elsewhere, and as often, once a community takes hold and begins to grow (attracting other non-company residents, relatives and small business capitalists and settlers with other employment, such as rail road or highway employees), the company will sell off or rent properties within the town to increase their return on investment, in effect divesting themselves of the town property over time. Such towns are often planned with a suite of amenities such as bars, pool halls, swimming pools, markets and even theaters. In much of the world, perhaps especially in areas welcoming waves of emigration to fill a lack of skilled workers such as Australia and the United States, corporations explored, found desirable resources or land features to exploit (for example flats for a large rail yard, mineral outcrops, water resources, etc.), planned a settlement to support the business' needs, and then imported workers to build an infrastructure and more workers to staff the business needs—even paying trans-oceanic shipping passage when and where necessary. The practice continues to this day, when and where there are both a need for workforces and resources to exploit.
Traditional settings for company towns were where extractive industries — coal, metal mines, lumber — 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 through a truck system.
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 grow and attract other settlement, business enterprises, and 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). Further, such dependencies extend to neighborhoods and regions of larger cities. In each case, if the primary company falls on lean times, fails outright or the industry fades in importance (as happened to steam locomotive support rail yards and with Anthracite mining industries which depended on steam locomotives spurring demands) as is the way of societies over time, the communities contract and loose property value and then population as people move to find work elsewhere, and the youth of the community bears the children of their generation in another demographic region.
Segundo, Colorado, was a company town where the CF&I coal company housed its workers. It offered adequate housing and promoted upward mobility through its sponsorship of a YMCA Center, an elementary school, and some small businesses, as well as a company store. However, air pollution was a constant health threat; the houses lacked indoor plumbing. As demand for metallurgical coke declined, the mine laid off workers, and Segundo's population declined. After a major fire in 1929, CF&I left town, and Segundo became practically a ghost town.
In the present-day United States, it is relatively rare for any place in which a single company owns all the property to be granted status as an incorporated municipality. Rather, companies will normally prefer their wholly owned communities to remain unincorporated, as this permits administration of the community to be carried out by appointed company officers rather than elected officials. However, there are incorporated municipalities that are heavily dependent upon a single industry or organization and may be loosely considered a "company town", even though the company does not technically own the town.
Outside the United States
The French city of Le Creusot, the German city of Ludwigshafen and the Japanese city of Kitakyushu are said to be company towns. In Spain, the boom of industrial factories propelled "colonias" like Sedó or Guell.
The mining city of Kiruna in Sweden was originally, around 1900, built by the mining company in an unpopulated area. Everything, including the church, was built by the company.
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.
Although many prominent examples of company towns portray their founders as "capitalists with a conscience", for example, George Cadbury's Bournville, if viewed cynically, the company town was often an economically viable ploy to attract and retain workers. Additionally, for-profit shops within company towns were usually owned by the company, which were unavoidable to its isolated workers, thus resulting in a monopoly for the owners.
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.
The Pullman lesson
One of the first company towns in the United States was Pullman, Chicago, developed in the 1880s just outside the Chicago city limits. The town, entirely company-owned, provided housing, markets, a library, churches and entertainment for the 6,000 company employees and an equal number of dependents. Employees were required to live in Pullman, despite the fact that cheaper rentals could be found in nearby communities.
The town operated successfully until the economic panic of 1893, when demands for the company's products declined, and employee wages had to be lowered accordingly. Despite this, the company refused to lower rents in the town or the price of goods at its shops, thus resulting in the Pullman Strike of 1894. 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".
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 recognised that his excessive paternalism was inappropriate for a large-scale corporate economy and thus caused the town's downfall. Accordingly, government observers and social reformers alike saw the need for a balance between control and well-designed towns, concluding that a model company town would only succeed if independent professionals, acting as a buffer between employers and employees, took a role in conception, planning, and management of these towns. 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 favour 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. The first real example of this occurred at Indian Hill-North Village, Massachusetts, in 1915.
Model company towns
During the late nineteenth century, model company towns materialised, as enlightened industrialists recognised that many poor workers were living in appalling conditions. These industrialists wished to combat the unsanitary and congested conditions common to working class districts in order to create better living conditions for workers. Model company towns such as Port Sunlight (1888) and Bournville (1895) were influential in regards to their building and planning innovation. The ideas generated from these model towns are regarded as having a significant influence on the Garden City movement.
The model company town is concerned with creating a productive and prosperous company. Enlightened industrialists believed this could be achieved by providing a healthier residential environment for their employees. Planning a model company town involved the fusion of new notions of house design and layout. The paternalism of the enlightened industrialist was exhibited in his desire to provide an environment for his employees that was aesthetically appealing and which included well-designed residences, parks, schools, libraries and meeting halls. The industrialist also wished to contribute to his workers' well-being by providing social programs such as sporting events and functions. This, however, highlights the power and immense control possessed by the company owner, who could shape the lifestyle and activities of his employees to serve his own interests and those of the company.
Model villages for agricultural workers were founded in the early 19th century in Great Britain. The creation of model company towns was particularly evident in Britain during the latter half of the nineteenth century with the creation of Saltaire (1851), Bournville, Port Sunlight, Creswell and New Earswick (1901) and coincided with the housing-reform movement, which emphasised the improvement of housing for the working class. These model towns contrasted with the overcrowded conditions in British working-class districts, which were often characterised by congested housing, unsanitary conditions, and poor provision of open space and facilities. Model company towns promoted the idea of orderly, planned town development as well as the notion of planning for the needs of the community in order to provide healthier living conditions.
Model company towns in Britain
Model company towns around the mid-nineteenth century, such as Copley (1849), near Halifax, and Saltaire (1853), close to Bradford, were characterised by improved dwellings for workers which contrasted with working-class housing in other industrial villages and cities. These model company towns prompted the creation of others, such as Port Sunlight, Bourneville and Creswell, within an environment of reform.
Port Sunlight (1888) in Cheshire was established by William Hesketh Lever (later Lord Leverhulme) of Lever Brothers – a soap and tallow manufacturer. The earlier layout of this model company town was planned to suit the undulating topography of the site. Port Sunlight catered for the Lever Brothers employees through the provision of improved housing (cottages of varying designs and materials) and gardens, as well as social and community facilities, including an auditorium, a school, tennis courts and bowling greens. Port Sunlight combined the use of formal and informal planning elements, such as straight streets close to the town centre and curved streets in the residential areas. This combination of the formal and informal represented a new feature of British town planning.
Bournville (1895), near Birmingham, was established by the Cadbury brothers, George and Richard. George and Richard Cadbury chose to transfer the Cadbury factory to this new site in order to provide their employees with improved living conditions and a country environment that they could enjoy – a far cry from the busy, smoky city centre of Birmingham. The firm provided education in the form of a compulsory academic course, and workers were given the opportunity to complete commercial or technical training. The Cadburys also encouraged their workers to get involved in the social life of Bournville through the provision of sports facilities and athletic and cultural clubs, as well as social events such as summer parties. George Cadbury, a Quaker, preached Christian values, such as respectability, thrift and sobriety, and sought to unify the Bournville community through rituals such as gift giving between employer and employee. The firm also established work councils, such as the Women's Works Council, and supported trade unions.
Bournville represented the union of industry and nature as the company town boasted the attractiveness of the countryside and low-density development characterised by well-built and visually appealing dwellings. Unlike Port Sunlight, Bournville catered for a mixed community, where residences were not restricted to the workforce only. Bournville illustrated how, towards the end of the nineteenth century, low-density development was being emphasised along with the provision of open air, space and sunlight. Bournville's gardens, parks, tree-lined streets, sense of spaciousness and country setting enhanced its aesthetic appeal and demonstrated George Cadbury's endeavour to provide workers with a healthy, beautiful and well-ventilated environment.
The Bolsover Company developed two exemplary mining communities in Derbyshire during the late nineteenth century, Bolsover (1891) and Creswell (1896). The Bolsover Company aimed to provide improved living conditions for the miners and their families in these model industrial villages. The houses at Creswell were built in concentric circles, and within these circles was large open parkland and a bandstand. Not only did the Bolsover Company aim to provide better housing, but they also wished to improve workers' moral fibre, believing that the provision of facilities and the promotion of workers' welfare would discourage drunkenness, gambling and bad language. The Bolsover Company provided facilities deemed beneficial for employees at both villages including clubhouses, bowling greens, cooperative society stores, cricket pitches and schools. During the early years of these model industrial villages, the Bolsover Company organised various events intended to enhance community life, such as flower shows, lectures, sporting events, concerts, teas and dances.
The 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 labourers, the prosperity of the 1920s saw workers’ material well-being improve significantly. A strong post-war American economy meant instalment 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. Accordingly, there was no longer a need for the amenities of company towns which, prior to welfare capitalism, had previously been unattainable to the working class.
This new found freedom saw a change in the mindset of workers who began to look on welfare capitalism as demeaning rather than an incentive. Accordingly, many employees began to request additional pay in lieu of welfare programs. This was well received by some employers as the idea of ‘laissez-faire’ individualism, which promoted entrepreneurial virtues of hard-work being rewarded rather than direct charity, began to shape new-age paternalism.
Modernisation 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.
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- List of company towns
- College town
- Company store
- Corporate republic
- Ghost town
- History of coal miners
- Industrial paternalism
- Mill town
- Monotown, a similar phenomenon in Russia
- Railway town
- Welfare capitalism
- Wage slavery
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