I went to the far South Side of Chicago this weekend to visit Pullman, the first planned industrial community in the U.S., built in 1880. Modeled on a British town called Saltaire, the founder of Pullman Company, George Pullman, sought to create an efficient and idyllic location for his railcar manufacturing company. He built a gigantic factory and homes for 12,000 workers and their families, with a park, a hotel, schools and a shopping mall, a totally self-contained world. All of this exists today, with a visitor feeling a bit like Snow White, awakening after a long sleep to see cars where carriages ruled.
Pullman described his motives in building the town as follows: “That such advantages and surroundings made better workmen by removing them from the feeling of discontent and desire for change which so generally characterize the American workman. Thus protecting the employer from loss of time and money consequent upon intemperance, labor strikes and dissatisfaction, which generally result from poverty and uncongenial home surroundings.” In short, he sought a solution to urban squalor that also served his economic interests.
One of America’s first modern corporations, the Pullman Car Company, was a Chicago-based enterprise. The company designed railcars for Presidents who barnstormed the country, including Woodrow Wilson, who used it post World War I while campaigning for America joining the League of Nations, and for tycoons such as Henry Ford. Each of the cars cost five times more than standard but the luxurious fittings, from chandeliers to velvet cushioned seats, made it the basis of first class rail travel. The factory was an early version of mass production, with 24 separate bays in which specialized workers applied paint, carpeting and fine wood finishes.
Mr. Pullman owned every part of the town infrastructure, from the church to the stores to the houses. The church had no cross; it had to be Unitarian in order to serve all religions. The rent was deducted from the weekly paycheck, as were food bills. There was a very clear distinction among types of homes; the top of the line were homes assigned to visiting railroad executives, then came the managers’ homes with broad doorways plus backyards, and finally the workers’ row houses in red brick. There was no liquor allowed in the town except in the Hotel Florence, limited to visiting executives. But just outside of town lines in neighboring Roseland, there were 100 taverns known as Schlitz Row (named after the Milwaukee-brewed beer).
In 1894, at the peak of the Gilded Age, there was a profound economic recession, causing orders for Pullman cars to plummet. Mr. Pullman responded by cutting wages of the workers by 50 percent, yet he refused to reduce the rent or the cost of food. The workers walked out of the plant, then in sympathy, railroad workers around the U.S. also went on strike. The Federal Government intervened, jailing union leader Eugene Debs and sending soldiers into Pullman to confront the workers, who had begun to burn unfinished railcars. The strike ended shortly thereafter, with the workers accepting the lower wages. Other American titans such as Milton Hershey of chocolate fame followed the Pullman example of building a company town, but they took a more benign stance towards their work force.
I went to see Pullman because I am genuinely concerned about the state of capitalism in the U.S. I read H.W. Brands’ “American Colossus” in the past week, sub-titled The Triumph of Capitalism 1865-1900. This was the era of J.P. Morgan, John D. Rockefeller, Cornelius Vanderbilt and Andrew Carnegie. In the period following the Civil War, Brands writes, “Morgan and his fellow capitalists effected a stunning transformation of American life. Turned a society rooted in the soil to one based in cities, lifting the standard of ordinary people to a plane associated elsewhere with aristocracy, established the basis of American economic and military power to the farthest corners of the planet…it left not a single area or aspect of American life untouched…for the time being, in the land of Thomas Jefferson, the sons of Adam Smith held sway.”
Take note of the reflection by then President Rutherford B. Hayes after a brutal rail strike in 1877, which was ultimately resolved by the courts in favor of the railroads. He wrote, “The strikes have been put down by force. But now for the real remedy. Can’t something be done by education of the strikers, by judicious control of the capitalists and by wise policy to end or diminish the evil…If anything can be done to remove the distress which afflicts laborers and to stimulate enterprises, I am ready and not afraid to do my share towards it.” Two clear and present issues are the minimum wage and retraining of workers whose jobs are threatened by automation. In the present context, it is worth a walk around Pullman to recognize a dream gone bad.
Richard Edelman is president and CEO.