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No, Company Towns Did Not Represent the Beneficence of Coal Companies to Their Workers

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Alex Tabarrok wrote a very strange article earlier this week. He decided a defense of the early twentieth century company town was necessary. Arguing that company towns and company stores were necessary extensions of capital investment in isolated places and that the isolation meant that the companies were doing workers a favor by not forcing them to tie themselves down to a place that would isolate them from a national labor market, Tabarrok ultimately wants to rehabilitate the company town as a piece of corporate beneficence that saved workers from the impact of monopoly power over their lives. Tabarrok claims our entire view of company towns and exploitation is backward.

Before going into the many problems here, let’s note where Tabarrok is closest to right. It is certainly true that most, although not all (Pullman for instance) company towns were in isolated places, especially the mountains of Appalachia, but also mining regions elsewhere, logging towns, etc. There wasn’t a lot of preexisting economic opportunity in these areas and building a town might make sense for a company in order to get out the resources more quickly than if relying on local labor or private concerns to build housing. That investment meant a quicker overall profit. And no, there certainly wasn’t going to be a variety of stores for workers to choose from that could create low costs through competition. These were usually small places that didn’t have enough people to support a lot of stores. And given that, it is certainly possible that a private store might have charged prices equally high or maybe even higher than a company store. Company towns were not monolithic. Some treated workers well, others poorly. People made community in these towns as they did everywhere. Ultimately, the cost and trouble of running these towns eventually convinced most companies to shed them by World War II, especially since most people had automobiles by this point and could drive to work and since labor law had undermined corporate control over workers in the previous decade so that the advantages of the towns had disappeared.

But that is far from the full story of company towns, as much as Tabarrok would like to make that story strictly quantitative. What Tabarrok doesn’t seem to understand (or perhaps he approves of this) is that a very important advantage for employers in company towns is that they increased their control over the workforce. That meant everything from implementing aesthetic preferences in housing to threatening to kicking workers out of housing during labor disputes. In a documentary on the company town of Valsetz, Oregon, one man remembered that the company store only sold one kind of beer because it was the owner’s favorite beer. Tabarrok doesn’t even mention company scrip in his defense of these towns. Whether the prices at these company stores were higher than other stores or not becomes irrelevant when you can’t buy at those stores because you are not paid in cash money. The entire purpose of scrip is to control workers’ spending, whether you charge unreasonable rates or not. Again, not every company town used scrip, but some did and that has to be discussed in any defense of company towns. And from having read internal industry debates on logging camps in the 1910s (essentially temporary company towns), I can tell you that at least in that industry, the majority of the employers openly wanted to make profit off the camp cookhouses, in part because they wanted to take back some of the wages they paid to workers and in part because they believed that without the profit motive there was no way to create an efficient cooking operation. These employers were not doing workers any favors through the company towns. They were doing themselves favors that perhaps sometimes also benefited workers.

And what about company housing? Notice how Tabarrok glides by the issue that companies could kick workers out of housing if they went on strike.

On the one hand, this did mean that during a lengthy strike the firm could evict the workers from their housing. On the other hand, would you want to buy a house in an isolated town dependent on a single industry?

First, most of these workers weren’t buying houses in the type of housing market that exists today or had the money to anyway, but let’s just leave that. You can’t just say “oh one the one hand sure the company could toss you on the street at their own whim while…” That’s a big deal! Yeah, you could be kicked out of your homes. Like at Ludlow, when Colorado Fuel & Iron tossed the miners out of their homes when they struck, forcing them onto a tent town just off the mountains during a Colorado winter (imagine the wind!) and then burning the tent town and killing a bunch of people. And if the Ludlow Massacre was not necessarily a common event, the eviction was common. If you didn’t live in company housing, at least you could try to do something to make ends meet if you lost your job or went on strike. Thus company housing provided companies an enormous amount of control over their workers’ lives because they could threaten them with eviction. Given the poverty of coal miners and the isolation of the miners, it’s not like most had good options to just go find another job. The same isolation that Tabarrok says made companies do the right thing by workers through these towns also vastly increased employer power over the workforce.

Tabarrok also compares these company towns to oil rigs today, writing

Oil rigs are similarly isolated today and once on board the workers have nowhere to go but the company restaurant, the company theater and the company gym but that hardly means that the workers are exploited.

Do we know that? What are the prices charged in these stores? How does it compare to workers’ wages? And in fact, workers are exploited on the oil rigs, which I guess serves as something close to a company town. That is an extraordinarily dangerous job and workers have few rights on the rigs. Guestworkers from India working on the rigs after Hurricane Katrina were openly exploited. The job pays fairly well for blue collar labor in the 21st century, but conditions are very dangerous. As the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, with noted Wobbly organizer and former Florida senator Bob Graham as co-chair, reported to President Obama, the conditions of work on these offshore oil rigs need a massive overhaul to prevent the deaths of these workers.

Finally, Tabarrok trivializes the popular memory of these towns as irrelevant and wrong, which exposes problems with his entire way of viewing the world. Tabarrok of course doesn’t much care about things like memory as he wants the quantitative data he believes answers all major questions. But for as much as he might dismiss “Sixteen Tons” with its classic line “I owe my soul to the company store,” the song became a hit for Tennessee Ernie Ford (written by Merle Travis and recorded on his groundbreaking 1947 album Folk Songs of the Hills), it is how the people who listened to country music in the mid-20th century, many of whom had personal memories of company towns or even still lived in one, remembered these towns. I argue that the lyrics of country music, even the bad country music of Nashville today, does in fact provide an honest window into the popular thought of the audience for this music, whether the people of the mountains in the 1930s, southern migrants living in Detroit in the 1950s, the white working class angry over Vietnam protests in 1970, or the suburban women who make up the core of the music’s fans in the present. You can’t just dismiss how popular culture talks about these issues. There is a reason that many workers hated these company towns and that there is so much Appalachian popular culture, including country music lyrics, that remembers this situation so unfavorably. That can’t be ignored or dismissed. Rather, it’s a sign that workers (who Tabarrok claims aren’t stupid but who he doesn’t show much respect for) hated the exploitation they faced in these towns and flocked to the United Mine Workers of America as soon as they could.

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