One of the most critical moments in American social history was the Pullman strike, which shut down much of the nation's railroad system when Eugene Debs organized a comprehensive strike against the rapaciousness of George Pullman, which was resolved only when President Grover Cleveland sent in the military. Behind that terrible moment was a highly inventive engineer who went so far as to create the first "model town" in America for his employees:
George Pullman was an engineering entrepreneur. He had made his reputation when Chicago, Illinois was young by raising large downtown buildings out of the Lake Michigan mud in which they were starting to sink. He spent nine years on the design of his famous sleeping car, scoring a tremendous promotional coup by arranging to have the prototype car, called the Pioneer, attached to Abraham Lincoln's funeral train as it made its way from Chicago to Springfield, Illinois in 1865. The Pullman sleeping car (photo, top) was a luxury vehicle. It cost twenty thousand dollars to manufacture, four times as much as the standard sleeping car. What made it pay was that Pullman didn't sell his sleepers to the railroads, he essentially leased them: he provided their crews, including a conductor and a porter; he maintained the interiors (the railroads had to agree to keep the outsides washed); and he took fifty cents from every fare. The sleeping cars were in demand among people who wanted to travel in comfort and style and who could afford the upgrade; railroads all over the country contracted to attach them to their passenger trains; and Pullman got rich. From its very first year in operation, the company paid shareholders an annual dividend of eight percent. Pullman stock was famous for its reliability.
Pullman's first factory was in Palmyra, New York, but he wanted a shop near Chicago, Illinois, which was where he lived and which had become a railroad hub: twenty-four railroads had terminals there. So, in 1880, he bought a large plot of vacant land twelve miles south of the city and built a car works. He also built, from scratch, an entire town to go with it: Pullman, Illinois. Pullman was a model town (photo, bottom), the first of its kind of the United States. (Pullman apparently got the idea from the Krupp model town near their steel plant in Prussia.) The town had fourteen hundred housing units and a population of eight thousand, all employees, or family members of employees, of the Pullman Company. It contained a mall (an indoor arcade that housed all the shops), a five-room library stocked with five thousand volumes donated by Pullman himself, a school with a playground (a rarity in 1880), a park with a miniature lake, a thousand-seat theater, a hotel, a bank, and a church. The streets were all paved and the houses had lawns manicured by the company.
Pullman's idea was to provide his workers with a morally salubrious environment. The sale of liquor was prohibited (except at the hotel bar, too expensive for most residents); so was prostitution. Adult education classes were available; there was an athletic club; an eighty-piece military band gave free weekly concerts during the summer. The children were vaccinated for smallpox, and schooling from kindergarten through the eighth grade was free. The theater booked only entertainments suitable for family audiences.
But Pullman also wanted his town to turn a profit. Everything in Pullman was owned by the Pullman Company, even the bank, and each facility, from the apartment houses to the church, was expected to yield a six percent return on its cost. (This requirement made the church so expensive that no denomination could afford to rent it, and the library had to charge an annual membership fee. It did not have many members.) Rents in Pullman were significantly higher than rents for comparable living space in Chicago, though it was widely agreed that the amenities were exceptional. Garbage and sewage were regularly disposed of, for example, something not exactly the norm in the working-class districts of Chicago. (The sewage was piped to a company farm outside the town, where it was put to an appropriate use.) Home ownership was prohibited, and the leases provided that any tenant could be evicted on ten days' notice. Until the Illinois legislature outlawed the practice, in 1891, rent was deducted automatically from the residents' paychecks. And, as he did on his sleeping cars, Pullman employed 'spotters' (informers) to report derelictions. Residents who complained about the company risked eviction. By 1893, the population had reached nearly thirteen thousand; seventy-two percent were immigrants.
On June 27, 1893, the New York stock market crashed, triggering a major depression. The American economy after the Civil War was driven by the expansion of the railroads. The system that emerged after the war was characterized by private ownership (the capital required to build tracks and buy cars was too great for state governments to raise) and by short-distance lines which, until the mid-1880s, often had differing track gauges, making it necessary for passengers and freight to change trains frequently during long trips. The system was also characterized by redundancy. Twenty-four independent lines running into Chicago, for example, was a virtual guarantee of excess capacity and ruinously competitive pricing practices. When the economy grew, the railroads prospered, as they carried the goods, but, when the economy stalled, cars became idle and workers were laid off. And when track and car construction stopped, the iron and steel industries, over half of whose product went into railroad building and maintenance, suffered slowdowns; weaker companies and the banks that lent to them went under; capital fled. Since the railroad economy was a national economy, these effects spread quickly. The Gilded Age business cycle ran about ten years; before 1893, there had been depressions in 1884 and in 1873.
Chicago became a city roamed by armies of unemployed men. (It also underwent a smallpox epidemic, and, two days before the Exposition ended, its mayor, Carter Harrison, was assassinated.)
Businesses like Pullman thus faced a drastically reduced demand for their products (by the end of the summer of 1893, seventy-four railroads had gone bankrupt) and an oversupply of labor. So Pullman did what he thought was the prudent thing: in December of 1893, he cut wages by an average of 25 percent and laid off a fifth of the workforce at the shops in Pullman, Illinois. He did not, however, reduce the rents. Profit from the town had dropped below four percent in 1892 and 1893; Pullman expected six percent, and he did not see what wages, which were governed by market conditions, had to do with rents, which were governed by leases freely entered into by the town's residents. The residents, did not see it in quite the same way, and by the spring of 1894, Pullman had a very unhappy model town on his hands.
Even some Republicans found Pullman's position a little rigid. Mark Hanna, the Ohio tycoon and future Republican kingmaker, is supposed to have said of Pullman that 'a man who won't meet his men half-way is a goddamn fool.' But with a large labor pool on one side and a nervous investment community on the other, which group did it make more sense to keep satisfied? Pullman stockholders did not suffer from the downturn in the car business; in 1893 the company paid $7,223,719 in wages and $2,520,000 in dividends; in 1894 it paid $4,471,701 in wages, and $2,880,000 in dividends, and had an undistributed surplus of $2,320,000. So on 11 May 1894, ninety percent of the workforce in Pullman failed to show up for work. The company fired the rest and closed down the shops.
A few years later, the Illinois Supreme Court ordered the Pullman Palace Car Company to divest itself of the model town. The court said it could find no mention of a town in the corporation's charter. Company towns, the judges observed, were opposed to good public policy. The Pullman Company was then being run by Robert Todd Lincoln, a close counselor to Pullman during the strike, and the son of late American president.
Rico says things were different in those days...
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