For several decades, company towns across US and Europe provided full social care of their inhabitants. Nevertheless, excessive paternalism invoked resistance among inhabitants, while the emerging Welfare State could not stand a competition. Decline of company towns was coming.
(This is a continuation of the first part of the story of company towns: Owned by a Company)
First wave of hardships for company towns emerged already at the end of 19th Century with the crisis in industrial relations – excessive paternalism of company towns not only provided social care for workers, but also meant a ban on unionization, as well as the company’s full control over personal’s expenditure on social and public services.
Railroads strike of 1894 in Pullman, a result of George Pullman’s refusal to lower rents in his company housing, demonstrated this the best. As a response to these hardships, the concept of “new company towns” came to the forefront in United States – these “new” company towns were designed by professional architects, planners and landscape architects, as “fantasy environments” of social harmony and industrial peace with the intention of socially-engineering (e.g. Taylorism) social unity and coherence.
Secondly, welfare programs that emerged in many Western Counties opposed the idea of company towns. For example, in 1932, Roosevelt administration attacked company-sponsored housing and welfare programs and demanded industrial self-government and higher wages for workers. Welfare states guaranteed workers the right to collective bargaining and unionize, something that was not allowed in many company towns. Moreover, mortgage insurances became available to larger segments of the working class. Wages increased and the state established housing, health and education programs that eliminated the need for company-subsidized housing and provision of social services. With increased state intervention and decrease of the need for this way of capital-labour organization, company towns with a diversified economy were “normalized”, while company towns with a specialized economy were demolished.
(This is the second part of the story of company towns. Continue reading: Historical Company Towns in Pictures)