Company town

A company town is a place where all or most of the stores and housing in the town are owned by the same company that is also the main employer. Company towns are often planned with a suite of amenities such as stores, houses of worship, schools, markets, and recreation facilities.

Some company towns were established to improve living conditions for workers, but many have been regarded as controlling and/or exploitative. Others were not planned, such as Summit Hill, Pennsylvania, United States, one of the oldest, which began as a Lehigh Coal & Navigation Company mining camp and mine site nine miles (14 km) from the nearest outside road.

Paternalism, a subtle form of social engineering, refers to the control of workers by their employers who seek to force middle-class ideals upon their working-class employees. Many nineteenth-century business people considered paternalism as a moral responsibility, or often a religious obligation, which would advance society while furthering their 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 was unavoidable to its isolated workers, thus resulting in a monopoly for the owners.

Although economically successful, company towns sometimes failed politically due to lacking elected officials and municipally owned services. Accordingly, workers often had no say in local affairs, and therefore felt dictated to. Ultimately, this political climate caused resentment amongst workers and resulted in many residents losing long-term affection for their towns. Such was the case at the company town of Pullman, Chicago in the 1890s.

Although many small company towns existed in mining areas of Pennsylvania before the American Civil War, one of the most significant and most substantial early company towns in the United States was Pullman, developed in the 1880s just outside the Chicago city limits. The entirely company-owned town provided housing, markets, a library, churches, and entertainment for the 6,000 company employees and an equal number of dependents. Employees were not required to live in Pullman, although workers tended to get better treatment if they chose to live there.

The town operated successfully until the economic panic of 1893 when demand for the company's products declined, and Pullman lowered employee wages and hours to offset the decrease in demand. 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 labeled it "Un-American". The report condemned Pullman for refusing to negotiate and for the economic hardships he created for workers in the town of Pullman. "The aesthetic features are admired by visitors, but have little money value to employees, especially when they lack bread." The State of Illinois filed suit, and in 1898, the Supreme Court of Illinois forced the Pullman Company to divest ownership in the town, which was annexed to Chicago.

However, government observers maintained that Pullman's principles accurately provided his employees with a quality of life otherwise unattainable. Still, they recognized 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.