Made possible by inventions such as the spinning jenny, spinning mule, and water frame in England around the time of the American Revolution, the textile industry was among the earliest mechanized industries, and models of production and labor sources were first explored here.
Before industrialization, textile production was typically done at home, and early industrial systems such as Samuel Slater's Rhode Island System maintained housing for families, with only spinning done in the factory. Weaving was "put out" to surrounding villagers. The Waltham-Lowell System saw all stages of textile production done under one roof, with employees living in company housing, and away from home and family.
The system used domestic labor, often referred to as mill girls, who came to the new textile centers from rural towns to earn more money than was possible at home, and to live a cultured life in "the city". They lived a very regimented life - they lived in company boardinghouses and were held to strict hours and a rigid moral code.
As competition in the domestic textile industry increased and wages subsequently fell, strikes began to occur, and with the introduction of cheaper imported foreign workers by mid-century, the system proved unprofitable and declined.
The Rhode Island System 
Slater drew on his British village experience to create a factory system called the "Rhode Island System," based upon the customary patterns of family life in New England villages. Children aged 7 to 12 were the first employees of the mill; Slater personally supervised them closely. The first child workers were hired in 1790. It is highly unlikely that Slater resorted to physical punishment, relying on a system of fines. Slater first tried to staff his mill with women and children from far away, but that fell through due to the close-knit framework of the New England family. He then brought in whole families, creating entire towns. He provided company-owned housing nearby, along with company stores; he sponsored a Sunday School where college students taught the children reading and writing.
After the successes of Samuel Slater, a group of investors today known as The Boston Associates and led by Newburyport, Massachusetts merchant Francis Cabot Lowell devised a new textile operation on the Charles River in Waltham, Massachusetts, west of Boston. This new firm, the first in the nation to place cotton-to-cloth production under one roof, was incorporated as the Boston Manufacturing Company in 1814.
The Boston Associates attempted to create a well-controlled system of labor which varied from the harsh conditions observed while in Lancashire, England. The mill owners recruited young New England farm girls from the surrounding area to come work the machines at Waltham. The mill girls, as they came to be known, lived in boarding houses provided by the company and were supervised by older women, and were subject to strict codes of conduct. They worked approximately eighty hours per week. The workers would wake to the factory bell at 4:40 in the morning. They would report to work at 5:00 and have a half hour breakfast break at 7:00 a.m. They would then work until the half hour to forty-five minute lunch break at noon. At 7:00 p.m. the factory would shut down and the workers would return to their company houses. This routine was followed six days a week. This system became known as the Waltham System
While the Boston Manufacturing Company proved immensely profitable, the Charles River had very little potential as a power source. Lowell died prematurely in 1817, and shortly afterwards, his partners traveled north of Boston to East Chelmsford, Massachusetts, where the large Merrimack River could provide far more power. The first mills, the Merrimack Manufacturing Company, were running by 1823. The settlement was incorporated as the town of Lowell in 1826, and became the city of Lowell ten years later. Boasting ten textile corporations, all running on the Waltham System and each considerably larger than the Boston Manufacturing Company, Lowell became one of the largest cities in New England and the model, now known as the Lowell System, was copied elsewhere in New England, often in other mill towns developed by the Boston Associates. Examples include Manchester, New Hampshire; Lewiston, Maine; Lawrence, Massachusetts; and Holyoke, Massachusetts.
Failure of the System 
Eventually, cheaper and less organized foreign labor replaced the mill girls. Even by the time of the founding of Lawrence in 1845, there were questions being raised about its viability. While in many cases, the boardinghouses outlived the System, families of immigrant workers typically lived in tenement neighborhoods, and off company property.
See also 
- No. 384: Samuel Slater
- What Every American Should Know About American History: 225 Events that Shaped the Nation. Avon, MA: Adams Media; 3rd edition. 2008. p. 86. ISBN 978-1-59869-428-4.
- http://www.historycooperative.org/journals/mhr/2/ford.html Peter A. Ford - "Father of the whole enterprise" Charles S. Storrow and the Making of Lawrence, Massachusetts, 1845–1860