Company town | Hacker News Reader

Company town

en.wikipedia.org

69 pointslelf70 comments

This article seems to paint an awfully rosy picture of what were, on the whole, pretty awful places. In particular it's nice to talk about all the "ideals" of raising people up into the middle class, etc., when the reality was that company towns were explicitly used to impose and perpetuate debt slavery: you'd be paid only in the company's scrip, which was what you had to use to pay rent on your company home and buy things in the company store, and of course the prices were set to ensure you'd never quite be able to live on it, despite being required to live in the company town and shop at the company store. That meant you went into debt to the company and worked more to pay it off, but could never earn enough to clear the debt, and would recruit your children from a young age (remember when we didn't have those awful child-labor laws meddling in the "free market"?) to work for the company, too, carrying it on to the next generation.

This is the source of the chorus in the song "Sixteen Tons":

You load sixteen tons, and what do you get? Another day older and deeper in debt. St. Peter, don't you call me, 'cause I can't go; I owe my soul to the company store.

Your rebuttal to this extensively-documented Wikipedia article is the chorus to "Sixteen Tons"?

You missed the first paragraph.

I went back and checked. The chorus is still the only piece of evidence in there.

See also these references:

1. https://en.wikipedia.org/wiki/Company_scrip

2. http://www.pbs.org/tpt/slavery-by-another-name/themes/compan...

3. http://clio.lib.olemiss.edu/cdm/ref/collection/aah/id/29047 (page 7, 'Abusive Practices')

4. http://www.smithsonianmag.com/travel/americas-company-towns-...

etc. etc. ad nauseum. This is a pretty well documented terrible thing.

Thanks, this is actually informative.

Actually, this comment has _less_ information than the first one. :)

If someone decides to share some information on HN, it isn't their responsibility to provide a robust argument and complete set of citations. If you'd like them to you're free to ask politely, or to volunteer your own (or even better, provide counterpoints). But a terse summary of the HN rules is, "add meaningfully to the conversation." The individual you're berating added context that they felt was missing from the original article; this certainly qualifies.

The burden of accessing the veracity of the information lies on you. If they provide you with citations, then they're generously offering you a shortcut. If you're having a hard time finding support for their claims, then ask them for a pointer in the right direction. But if you haven't looked at all, then you should decide if this question is worth your time to research, and act accordingly, rather than asking other people to do the legwork for you.

This is a casual internet discussion, not a scientific paper. It is actually acceptable to make a claim without providing citations or other evidence. If you don't believe the claim, either go look it up yourself, ask nicely if they have support, or present your counter-claims. Snidely ignoring the claims because they didn't include cites up front is not cool.

I understand that. I wasn't looking for some long peer review process. But the post I was responding to was literally a catalog of just-so stories supported by the existence of a song, like responding to statistics about mistreatment of slaves with a paragraph about how it would be in a slaveowner's best interest to treat them well and here's a line in "Dixie" about happy slaves.

>meddling in the "free market"?

And what exactly kept the families from just packing up and leaving? It would seem that it must have offered a better value proposition that anything else if people chose to stay there. Unless they were slaves, your whole point is moot.

Eh? Packing up and leaving with what money? Paying their debt with what?

It costs very little leave comparatively. They don't need to pay the debt. If they have nothing, they just declare bankruptcy.

If the ridiculous scenario the GP suggested actually worked, we would see, you know, examples of it.

If the ridiculous scenario the GP suggested actually worked, we would see, you know, examples of it.

You mean like all the documented examples people posted? (see https://news.ycombinator.com/item?id=12178695 for an example)

Company towns enforcing debt slavery are an actual, genuine, true, real, factual part of US history. They existed. They really did work as described. People really did not manage to escape them. In several places it took literal armed revolution to break this system.

So if your theory of economics somehow predicts that such things are impossible, the problem is with your theory of economics.

They couldn't leave because they had no money to pay for anything outside the company town.

For a detailed explanation of how company towns led to debt slavery and what factors prevented people from just packing up and leaving, see the above comment.

Ah, in a perfectly 'free' market, there is still the possibility of inadequate and asymmetrical held information. In this case, people will not make the best decisions because they simply do not have the information to do so.

For example, someone in a company town may not know that moving to the city will most definitely result in a better job, and out of fear of this ignorance, they continue to stay in a poor situation until it reaches a point where emotionally (rather than rationally), it becomes intolerable.

To me, the one of the purposes of good governance is to ensure that information is spread widely, and citizens are well educated in order to understand and take advantage of it.

Edit:

To add to it... recruiting children, laying debt upon them, and ensuring they only know about 1 kind of job is exactly the kind of asymmetric information that we make laws to prevent the formation of.

Sure, you can leave. You just need to settle your debt at the store before you do. We did give you that advance after all. And don't forget the rent that you're paying us, and how you're a few months behind. Maybe next year would be better. Save up, get out of debt, then leave town. Never mind the fact that we control both your income and your expenses, and will make sure that never happens.

If you're in debt you declare bankruptcy. This isn't 1500s in England.

I'm not sure of the specifics, but in the US personal bankruptcy didn't exist in its present form until 1978.

It's very likely, that it was incredibly difficult to file for bankruptcy in the era of company towns in the US---i.e. 1880 (first bankruptcy bill was filed in 1889) through 1934.

You underestimate the power these employers had over their employees.

The company owned everything. The only way out without paying for company run transport, which you won't get without settling your debt, is to walk. Walkers are easily rounded up by debt collectors, and if you had a wife and children you wouldn't leave them.

These towns were set up to create a supply of indentured labour.

Forgetting all the points already made, when you're going to make this argument for any given group of people who should "just" move (which by the way, how is it every single iteration of this argument involves the word "just"? As if throwing all your crap in a moving van and hitting the highway is just a thing you do some weekend when bored?) why don't you consider doing that yourself for five minutes? You'd almost certainly need a new job (though that's probably why you're moving), you'd never see any of your friends regularly again, you may be moving away from close family which could be good or bad depending, strong probability of losing a significant other, you'd almost certainly need a new bank or at least to change the addresses on all of your accounts, then you'd have to handle mail, any trusted experts in your area such as mechanics, repairmen, etc. you'd need to find new ones which is a hell of a thing to do in a strange town, and on and on and on.

Plus there's always the chance that wherever you're moving TO is just a case of grass being greener across the fence and won't actually help anyway.

THAT is why the word "just" does not belong in that argument at all.

More generally the problem with "free markets" and why they are never really free is switching costs:

https://en.m.wikipedia.org/wiki/Switching_barriers

It is also why everyone is locked into sites like facebook (network effects) or cities like NYC even if they say they want to leave

GREAT SCENE: http://m.youtube.com/watch?v=LWZk24MA7TE

Why don't they just eat cake?

Company towns would not necessarily have to be exploitative. But it is important to understand that even one that started with the very best intention can all too easily turn bad. The massive power imbalance could remain dormant for decades, until one day some temporary crisis comes along and makes management accidentally discover the potential for abuse. It won't ever be "undiscovered".

I think the founder of any company would want to provide their employees with the best possible living experience. However, we know that the finance guys and the people who run these things will perceive an incentive to save money. Maybe not all the time, but maybe just in hard times, or under some other conditions. And those people will institute policies that push back on the workers, and they won't lift the policies when the good times come back.

The military still very much has company stores, company housing, really the whole company town concept is very much intact. It works, and has worked since WWII, because getting shot at is a strong disincentive to work for the military. Pacifism doesn't help either. But the net effect is that saving money on housing or recouping paychecks through the company store isn't exactly the long pole in the tent for the organization's success. Retaining skilled workers is far and away the long pole in this tent.

In general, the military also provides housing mainly for people who can't afford the local economy, or are frankly better off not making all their own financial decisions, and a few senior officers where it's better to keep them on base. The "skilled worker" group is still living on the economy, buying houses.

So, I would hypothesize that whenever companies are people-starved for the long term, due to systemic pressures, offering company stores and company housing as a benefit aren't such a bad idea, at least from the company's perspective. But they're still rentals, so really best suited for new grads trying to wait out the market (a strategy I definitely recommend). The company store ... who doesn't have a company store?

Company towns would not necessarily have to be exploitative.

Until the labor-based enterprise running them faces some sort of competition, and really has nothing else to squeeze.

This quote from the article seems to say the opposite:

"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."

So, company towns were so exploitative, workers wealthed up before long and made them obsolete?

No, but other opportunities emerged, and people moved away from company towns.

In many places the company systems were broken, finally, by the rise of labor unions. Sometimes relatively peacefully, sometimes not; there was open warfare between workers and company-hired armies (yes, armies) in quite a few locations.

For those who find this interesting, Fordlandia is a book about Henry Ford's attempt to create a utopia in Brazil for employees sourcing rubber from plantations. Spoiler: it's a bit of a disaster. That said, a lot of its failings are due to the specifics of the location and lack of local knowledge.

https://en.wikipedia.org/wiki/Fordl%C3%A2ndia

I lived for six months in a town called Leinster, a company town 1000km from the nearest major city (Perth, Australia). It was run to support a nickel mine, back before FIFO (fly in, fly out) rosters were commonplace and everyone lived in the city.

Interesting place. You weren't supposed to drink the water so people would go to town and get distilled water (though I was at school and we just drank from the water fountains connected to mains water). In general though it had much better facilities than similar towns of that size due to being funded by the mining company.

Wikipedia says it still has about 700 people - though I believe the town was shut for several years while the mine was in care and maintenance (the nickel price is not high enough to justify mining at the time so they operate on barebones staff doing equiment maintenance and dewatering) - and by the sounds of things that is happening again now so I'm not sure what it's like.

Were the shops and local conveniences (pubs, bars etc) company owned & run or contacted out to other companies? How free was a private business able to establish a means of supplying services to those who lived and worked in the town?

Another question:

Are you paid in cash, or in company scrip?

My parents were teachers at the school (it was a 6 month posting while the permenant Principal took long service leave) so they were paid by the government.

I would be very surprised to hear that people were paid in anything other than cash, though wages would have taken into consideration that accommodation and food was free (as it does with all on site mine workers).

Mine workers in Australia are paid very well in comparison to a lot of other industries so a debt cycle mentioned by others probably didn't apply as much.

The main food/eatery "the mess" was operated by Agnew/BHP but was accessible to anyone who lived there, employed by the site or not. There are a few cafes and shops which are privately owned. It operates like a functioning small town, just with the extra money behind it.

The downside is that when BHP closes the site (temporarily or permenantly, as is happening now), the primary workforce is moved out and the secondary businesses (school/shops/cafes) become unfeasible - not a good place to build a long term business!

Most of the examples of company towns in this article are from the late nineteenth century onwards, when working and living conditions were already starting to improve. But it is worth looking at the earlier history of model villages[0], starting with New Lanark[1] established in 1786. These were founded at the very start of the industrial revolution, when working and living conditions were deteriorating following the mass migration from the countryside to the new industrial towns with their "dark satanic mills". In this context, the model villages were much more genuinely focussed on the social and humanitarian aspects than the later company towns. You could argue that model villages were more about proving that you could still treat people well and make a profit, whereas the later company towns were more focussed on simply trying to maximise profit.

[0] https://en.wikipedia.org/wiki/Model_village

[1] https://en.wikipedia.org/wiki/New_Lanark

Not sure why this has been posted but I will say that as someone who works in planning and development I wouldnt be surprised if we see a return to company towns soon.

For all their faults they can potentially be hugely beneficial to employers and employees in driving down the amount of money put towards housing, avoid poor planning and design outcomes caused by the interface between government and developers and also can be planned for strategic locations where governments have not shown initiative.

Public housing could do similar things (and as a case study was a major factor in the econmic success of hong kong - for all its faults) and isnt a million miles away in what it does although is often considered very differently, but most modern governments shy away from this.

I am not sure that a company can retain control of the town once a lot of employees start living there. The employees would control the government on the next election and start collecting tax from the company. This is probably one of the main reasons disney doesn't allow general employees to live in its company town next to Orlando.

But universities run a nice little business with student dorms and graduate student housing. I don't see why companies can't build apartments...

In fact, I'm pretty sure that building apartments to rent to employees was part of Google's most recent proposal to the Mountain View city council.

Google's proposal (2015) for the new campus did not include housing: http://bits.blogs.nytimes.com/2015/02/27/google-unveils-plan...

>>> One big issue is still outstanding: Google’s proposal does not include new housing for the area, but company executives have said on several occasions that they want to add housing near their campus.

More recent article points to 9000 units proposed by anther company: http://www.bizjournals.com/sanjose/news/2016/01/13/sobrato-k...

>>> Sobrato’s proposal — which is still in early form and could yet change — is the first application for a project that includes housing in North Bayshore, but others could follow. The council has identified roughly a half-dozens sites where housing is being studied, and has laid the groundwork for up to 9,000 new units. Most of those potential housing sites are owned by Google, which has publicly stated its interest in redeveloping at least some of them for housing, though it has not moved forward on any plans.

Thanks I wasn't finding this when I was looking.

Whence comes this "election" thing you mention? The point of a company town is that the company actually owns the town.

Really? We're living in the age of Uber, when companies don't even admit they have employees rather than contractors rented by the minute. I can't see a company making the huge capital investment of fixed buildings which only make economic sense after a decade. It also makes it much harder to uproot the company and move it overseas in response to bad quarterly results.

In expensive housing markets like SF, companies will soon have a choice: provide subsidized housing to employees in the form of residential campuses (which are basically company towns in an exurban/suburban setting) or pay them more salary.

I think they will go with the former.

Would it really be cheaper to make a large capital investment out of VC money upfront to build housing, or just up the salaries?

If we just run the numbers as an example, taking the 11000 Google employees at Mountain View, and assuming that each wants a ~$500k house, that's $5.5Bn of housing!

Or move to a different, saner city.

We're living in the age of Uber, when companies don't even admit they have employees rather than contractors rented by the minute.

Or to put it another way, we live in the age of taxi companies not admitting they have employees rather than contractors paid per fare, just like they have always done since foundation.

In India these are not super uncommon. They are usually run a lot better than comparable government towns, and are considered to be quite the employment perk.

I (an American) did almost a year as a 'corporate exchange' engineer in one of India's flagship campuses - an area where the young developers were trained, worked, and lived for the early part of their career. Honestly, it was far nicer than the average environment outside of campus so I believe many of the workers felt privileged to be there.

I was older than most of these 'freshers', though, and really began to resent the amount of control the company had over my life 24/7. I don't think it was a matter of nickel and diming the workers on food or other supplies at the company's stores, just that it really blurred the line between work and non-work time and space.

Long story short, I know this experience has really turned me off to offshoring, H1Bs, globalization, guest workers, etc. from places like India. And it has nothing to do with race or religion, but instead what's considered an acceptable relationship between labor and capital.

Silicon Valley / the big tech companies are the biggest abuser of foreign workers (a large majority from India). I don't see it as a good thing for US companies to be building out living spaces for their employees as is done in places like India or China, even though I'm sure Google would build very nice and convenient apartments with all the amenities.

This is definitely a bad thing for the working class. Instead I'd like to see India, China, and the US itself all rise up to the American dream of past decades - ability to support a family, house, cars and kids on one income, with less time devoted to work, as globalism promised.

> Not sure why this has been posted but I will say that as someone who works in planning and development I wouldnt be surprised if we see a return to company towns soon.

It seems appropriate given Facebook's strategy of building apartments.

When I worked in Japan for one year, I lived in the company dormitory. Was much, much cheaper than renting an apartment would have been, and had a small cafeteria where breakfast and dinner were provided.

Overseas U.S. military bases are often very much like this, with the dual need to house troops and their families, they often have schools, shopping, and various other services in place.

It's very common for deployed families to come back after 2 or 3 years overseas with almost no knowledge of the local language, area or customs because the comprehensiveness of the "little America" on-post is so complete. You can even buy cars, American breakfast cereal and fast foods and get TV shows and radio all pumped in at almost no cost differential to being in the U.S.

If the bases aren't large enough, they'll often set up an American enclave nearby that extends the services and provides a few neighborhoods for the families to have extended social interactions. When I was touring in Germany, I came across the town of Vilseck, which has a large American base nearby. The town was full of deployed families, and imagine my surprise when I came across an honest to god Soul Food restaurant! After eating German and Italian food for a couple weeks, getting some very traditional American food was a very welcome site.

https://www.tripadvisor.com/Restaurant_Review-g1641647-d4233...

While everything you said is true (I spent 2 years at Hahn AB in the mid-80's), there's no comparison with the classic robber-baron run company town.

The commissary (military supermarket) is run as a benefit of service, and even if you live in base housing, you're welcome to buy on the economy. The commissary doesn't ship everything in from the US, just items they can't source locally. So Pop-Tarts were imported from the US (accept no substitute!), but the meat and the Brötchen were bought from German suppliers.

Whereas the company store in the company town, as was said elsewhere, was run to the benefit of the company. Prices were set such that even buying just staples there (eggs, flour, etc) would keep you in perpetual debt.

One very big difference between a military company town and the ones described in this article:

The military pays you in cash, which is useful anywhere US dollars are accepted.

Cash gives you freedom to exit the company town without losing all that stored value.

sorry for the late reply:

I was talking this over with a couple vet friends of mine and both mentioned cases where they were paid in some kind of scrip (usually in combat zones where bringing in cash was dangerous) or in dollars in cases where dollars weren't accepted on the local economy making it effectively the same.

http://www.robertsworldmoney.com/banknotedetail.php?id=7597&...

I grew up a few miles south of Roebling, NJ -- a company town created for the Roebling Steel Mill. Some nice pictures here: http://www.nj.com/mercer/index.ssf/2013/05/roebling_a_little...

Thanks for sharing! Somewhat reminds me of The Walking Dead's Alexandria.

The article contains this fascinating gem:

> Fordlândia was established by American industrialist Henry Ford in 1928 as a prefabricated industrial town in the Amazon rainforest of Brazil. Intended to be inhabited by 10 thousand people, it failed; and the city was abandoned in 1934.

More details at https://en.wikipedia.org/wiki/Fordl%C3%A2ndia

15201 Maple Systems Road

Saving any other people like me a google search:

    15201 Maple Systems Road was the Simpsons’ home
    while living in Cypress Creek after Homer was
    headhunted by the Globex Corporation. From the
    outside it appeared structurally similar to the
    Simpson's home in Springfield; however, the
    interior was much larger and more modern.

    They were welcomed shortly after arriving by the
    CEO of the Globex Corporation, Hank Scorpio, who
    was participating in a fun run.

    Many of the house's functions were automated,
    including a self-cleaning oven, dirt-patrolling
    vacuum cleaner, and an automatic sprinkler system.

    After Homer tackled an escaping secret agent at
    work, Hank Scorpio promised that when he returned
    home there would be another story in his house.

http://simpsons.wikia.com/wiki/15201_Maple_Systems_Road

I often think that our real-life Hank Scorpio is Elon Musk.

A lot of remote towns around Australia started out as camps built by mining companies to support nearby mine sites. These camps have a significantly different connotation, though - generally accommodation, catered food and amenities (gym, pool, etc.) are free for the workers. Aside from the inherent stresses which come with the FIFO lifestyle, they're pretty nice places.

This is still pretty common in India, AFAIK. You usually have an industrial plant (like a steel mill, aluminum plant, sugar factory etc) and the employees are given housing in the "company town" along with a free school, hospital, electricity etc.

A truly phenomenal company town in the United States is Kohler, Wisconsin

Could you elaborate please? What makes it phenomenal? Also, is it still the traditional model of a company town (i.e. everything owned by the same co.)?

The monopsony, which is infrequent in today's markets, is what caused these types of cities/towns. Specifically, a labor market monopsony.

Monopsony is buyer-side monopoly, i. e. there is only one buyer. A labor market monopsony means that there is only one company employing people.

The first time I saw a company town was in Baja and it was a gypsum mine. Oddly colorful place given everything was coated in the white powder.

The whole story about Facebook getting into real estate and building apartments makes me think they're trying to build a company town.

would probably be a pretty dope town though

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