Economists, preoccupied with theories of the corporation and the national economy, rarely ask what happens when a corporation monopolizes not only a product but the local work force, when a town is obliged to “consume” a company’s pollution, when one business controls a city by political intimidation. While such questions are largely ignored, local families and local owners increasingly become appendages of the absentee-owners, usually of national and multinational conglomerates. “He who was a leader in the village becomes dependent on outsiders for his action and policy,” Justice William O. Douglas said of this condition. “Clerks responsible to a superior in a distant place take the place of resident proprietors beholden to no one.”
Large local corporations utterly dominate many towns simply by using their economic and political power, as Anaconda and Montana Power control the state of Montana, as seven paper companies own more than a third of Maine, and as hundreds of smaller corporations continue to control the company towns created by the expansion of new industries at the turn of the century. In mining, lumber, and textile regions, we still find many unhealthy, hazardous, grim and grimy company towns where citizens depend on one firm for their work, their homes, and often their daily shopping. “Saint Peter don’t you call me ‘cause I can’t go, I owe my soul to the company store.”
Pullman, Illinois, was built in the 1880s as a model town by George M. Pullman of the Pullman Palace Car Company. He invested $8 million in apartment buildings, parks, playgrounds, churches, theaters, arcades, casinos; the town won awards for its designs at international expositions. But Pullman in fact was tense with fear and suspicion, as company spies probed for tips on “union infiltration” or “dangerous” and “disloyal” employees. When the 1893 depression came, the company laid off workers, cut wages 25 percent, but did not reduce rents. After investigating Pullman in the 1930s, the economist Richard T. Ely concluded that “the idea of Pullman is un-American. It is a benevolent, well-wishing feudalism, which desires the happiness of the people but in such a way as shall please the authorities.”
Economists today apparently assume that towns like Pullman have largely disappeared. In fact some five million Americans now live in company towns—paper pulp towns in Maine, mining towns in the West, textile and papermill towns in the South. We frequently hear how one crop economies in poor countries can lead to political authoritarianism and economic instability, but American analysts often fail to comprehend that similar things can happen in parts of their own country.
Consider the town of Saint Marys, Georgia, nearly all of whose 1,800 wage earners are employed by the Gilman Paper Company and its business allies. Gilman interests control the city council, the town’s only real estate company, bank, and insurance firm, as well as all its lawyers. A populist insurgent, Dr. Carl Drury, recently challenged and defeated a Gilman-backed candidate in a …