What were company towns and company stores really like?
An excerpt from Lew Rockwell:
But what about cases in which competition doesn’t seem to exist, when there is only one firm and that firm provides not only jobs, but also runs the schools and stores and rents the housing? This is the “company town” of American folklore (“I owe my soul to the company store’). The most interesting results of Fishback’s studies concern the economics of the company town.
It turns out, the private paradise of the company town provided stores, houses, and schools as part of a highly desirable compensation package. They did this to attract workers. Rents were low, store prices were competitive, and the schools were good. Again, the reason is competition. If the company ever slacked off or attempted to exploit a “monopoly,” workers would leave the company town to go to work elsewhere.
In contrast to this free market, modern labor law has brought us nothing but trouble.