by Hardy Green
But most company camps proved temporary affairs. By the late 1950s, the companies had come to see them as expensive and outdated. Improvements in the Texas roads meant that workers could live in established towns and commute to the oil fields by automobile. Humble sold off its houses to workers and even subsidized their removal to other locations.5
Some towns retained a sizable population by becoming specialists in refining or administration. Beaumont and Port Arthur had the advantage of being near the Gulf Coast and so remained refining centers even as oil production shifted from that region to as far away as the rich Glenn Pool in Oklahoma. Port Arthur, which had a negligible population in 1890, was home to 22,000 residents by the 1920s, when both Gulf Oil and the Texas Co. had built large refineries there. By 1909, it already had become the fastest growing port in the United States and increasingly participated in global markets, with shipments to England and the Netherlands.
Texas is such a large state and the oil fields covered such a wide area that several regional oil centers emerged. Among these were Wichita Falls, which became home to the headquarters of several independent oil companies and refineries; Amarillo, a former cattle town that housed regional offices for Phillips and Shamrock Oil and Gas; and Fort Worth, a onetime railroad hub where Gulf, Marland, the Texas Co., Skelly, and Phillips all opened offices.6
In Oklahoma, the town of Bartlesville, forty-five miles north of Tulsa, became an administrative center for Phillips Petroleum and Cities Service Co. after booming in the early 1900s. Frank Phillips, an ambitious onetime barber and bond trader, came to the area in 1903 and found a frontier town already jammed with oil derricks and crowded with rough-necks and speculators. Oil had first been discovered on Cherokee land near Bartlesville in 1897. Phillips, a bespectacled sharpie who had once invented a baldness “cure” based on rainwater, was casting about for a new opportunity and had been tipped off to the area’s potential by an acquaintance who had become a Methodist missionary to the area’s Indians. After one glimpse of Bartlesville’s frantic oil activity, Phillips rushed back to his home in Creston, Iowa, recruited his brother L. E. to the cause, and enlisted financial backing from his banker father-in-law. By February 1905, Phillips—who of course knew nothing of the oil trade—had begun drilling on leases acquired over several trips to Bartlesville.
He quickly struck oil, but his first well produced very little. Then within six months, he hit a gusher on land leased from a Delaware Indian girl, Anna Anderson. Eighty-one producing wells followed. But rather than place all of their bets on petroleum, the Phillips brothers also opened the Citizens Bank to cater to area oilmen. The Phillipses didn’t believe in doing anything by halves, and soon they had built a two-story bank building with three vaults and impressive marble counters. Within three years, they had absorbed the Bartlesville National Bank and, by 1920, the much larger First National Bank of Bartlesville.7
For a time, Oklahoma was producing more oil than Texas. Tulsa-area oil strikes in 1901 were followed by the discovery in 1905 of the richest oil allotment ever, the so-called Glenn Pool on the Ida Glenn farm outside of Tulsa. The central Oklahoma Cushing field, discovered in 1915, was shortly responsible for 20 percent of the oil produced in the United States. Then in 1917, Phillips drillers hit a huge gusher in the Osage Hills.
The Osage strike, along with the impending world war, prompted Frank Phillips to transform his partnership into a public company, Phillips Petroleum Co. With its twenty-seven employees and stash of oil leases, Phillips Petroleum issued 15,000 shares of preferred stock, mostly to insiders.
As in Texas, Oklahoma’s oil workers lived close to the derricks. The area known as the Burbank Field near Ponca City was producing 32 million barrels of oil in its peak year of 1923. The field, which included such settlements as Webb City, Carter Nine, Shidler, Lyman, and Whizbang, became home to 45,000 people.
Meanwhile, Bartlesville continued to develop as an oil-company administrative center, with Cities Service Co., the Indian Territory Illuminating Oil Co., and 157 other oil companies headquartered there. Phillips Petroleum, the largest such outfit, erected a new seven-story headquarters in 1925, complete with mahogany-paneled offices for its executives. The company’s assets, $3 million in 1917, had soared to $130 million. It owned 1,759 producing oil and gas wells and supported a total payroll of $5.36 million. Such were its ambitions that it opened a research wing and, in the late 1920s, an “aviation department,” intended largely to publicize the company’s products via skywriting and such stunts as an air race from Oakland, California, to Honolulu. Among the company’s products were an airplane fuel, dubbed Nu-Aviation, and automobile gasoline, to which it assigned the moniker Phillips 66, after the federal highway that spanned much of the continent. And in a further exercise of daring, Phillips Petroleum entered the arena of gasoline retailing: By 1930, it had opened 7,000 English-cottage-style gas stations in twelve states. With a refinery in Borger, a pipeline that stretched from there to East St. Louis, Illinois, a bevy of filling stations, and numerous administrative departments, Phillips entered the 1930s as a vertically integrated company.
In the late 1930s, with Frank Phillips entering his last decade, he created the Frank Phillips Foundation with a $66,000 higher-education fund devoted to scholarships for employees’ children. He also donated $50,000 toward completing a new senior high/junior college for the area. Phillips didn’t seem to care much what other people thought of him: He was fond of dressing up, sometimes in Indian war bonnets, or in Hollywood-cowboy gear complete with tooled-leather chaps and a holstered six-gun. Combined with his owlish accountant’s face and physique, the costumes made him look like the silliest tenderfoot at the dude ranch. No matter—let them laugh. In his own mind, Phillips was a tough guy and also a philanthropist who willed his 3,600-acre ranch and wildlife preserve, Woolaroc (woods-lakes-rocks), and his private museum of western artifacts, to the foundation, intending that they serve educational purposes. Phillips died in 1950, a year after retiring from the company.
Phillips Petroleum emerged from the 1940s as the largest marketer of liquefied petroleum gases, an innovator in chemicals, and the producer of 93,000 barrels of crude oil in 1945. It sponsored foreign oil field exploration in Venezuela, Colombia, Mexico, and elsewhere—in 1969, Phillips pioneered discovery in the North Sea.8
Bartlesville, where half of all local economic activity was tied to the company in one way or another, was proud to be thought of as the home of Phillips. In 1978, a locally produced coffee-table book described the town’s colorful history and devoted several chapters to “the company that stayed home.” (Cities Service, by contrast, had moved its headquarters to Tulsa in 1968.) The town’s identification with and dependence upon Phillips was made very clear in the 1980s, when two corporate raiders—T. Boone Pickens in 1984 and Carl Icahn in 1985—made independent runs at the company. To fend off the raiders, Phillips bought back half of its stock, taking on $8.6 billion in debt. Many in the town of 35,000, where 8,000 were on the company payroll, freaked out. Some attempted to amass nest eggs—and the number of bad checks soared by 41 percent. Episodes of domestic violence rose as well, according to the local women’s crisis center. The First Baptist Church sponsored a round-the-clock prayer vigil, calling upon the Almighty to aid Phillips management in its defense. And one Bartlesville citizen mailed a shocking package to Pickens: a five-foot-long coffin-shaped box . . . containing not a bomb but a letter detailing the sender’s anxieties over the possible takeover.
The combination of company debt, Phillips’s cessation of oil exploration, and the 1986 fall of oil prices, from $27 a barrel to $10, seemed to portend that the company might disappear in the way of Bartlesville’s other historic oil concerns. But by 1996, Philips had paid off much of its debt, resumed its profitable North Sea activities, and begun employing sophisticated technology in pursuit of new discoveries in Mexico, China, Algeria, and Indonesia. The following year, Phillips doubled in size by buying Atlantic Richfield’s Alaska production fac
ilities, and then it became the second-largest U.S. refiner with a purchase of the independent Tosco Corp.
Bartlesville is less of a company town today. In 1999, Phillips merged with Houston-based Conoco—really a takeover of Conoco in which Phillips shareholders emerged with more than half of the new entity’s stock and the Phillips CEO, James Mulva, became head of the new entity, but ConocoPhillips moved its headquarters to Houston. Nevertheless, ConocoPhillips continues to have operations in Bartlesville, including a global data center and a company-history museum, employing around 3,000 people. Like much of U.S. capitalism, the company is at the time of this writing taking some lumps due to the U.S. recession—in 2008, it posted a net loss of $17 billion.9
Oil at first drew its chief economic value from its use in making kerosene, a fuel for lamps. But around the turn of the twentieth century, the automobile began to catch on, and 8,000 were registered to individual owners in 1900. Within a decade, gasoline sales surpassed those of kerosene. By 1920, there were 9.2 million autos on America’s roads.10
U.S. automobile production was of course long centered in Detroit, an economically diverse metropolis that hardly merits consideration in this account. But the Ford Motor Co. built its largest plant in one area—the town of Dearborn—that qualifies as a company town situated within metropolitan Detroit.
Henry Ford was born on a farm near what would become Dearborn, ten miles west of downtown Detroit. As a youth, Ford worked as a machinist in Detroit, and in time he became a master mechanic at Detroit’s Edison Illuminating Co. He tinkered by night in his shed, attempting to build an early automobile. His first two attempts at founding auto companies failed before he began Ford Motor Co. in 1903, operating out of rented shops in Detroit, and then at the giant Highland Park complex north of the city. By 1917, ten years after the opening of Highland Park, Ford had sold 1.5 million Model Ts and become a billionaire. Finally, in the 1920s he established the huge complex that would become synonymous with his company: the two-thousand-acre River Rouge plant in Dearborn, a few miles from his family’s farm. By 1929, the average hourly workforce there was more than 98,000. The once bucolic area was transformed into an industrial wilderness. Ford and his son Edsel owned the whole company personally—no partners, no stockholders, and no back-talkers.11
The nature of Dearborn was made perfectly clear during the Great Depression, on March 7, 1932. Detroit-area Communists organized the Ford Hunger March with the intent of trooping from downtown Detroit to the Rouge plant, where a petition demanding jobs for the jobless, free medical care at the Ford Hospital, and much more would be presented to Ford management. A crowd of 3,000, composed largely of the unemployed, formed, and police escorted them to the Dearborn town line. There a contingent of thirty to forty Dearborn police awaited and warned the marchers to disperse. These police took their instruction from Chief Carl Brooks, formerly a member of Ford Motor’s private police squad—the euphemistically titled Ford Service Department—and Clyde M. Ford, who was Dearborn’s mayor, a cousin of Henry Ford’s, and the owner of a Ford dealership. When the marchers attempted to advance, they were tear-gassed, hosed with icy water, and finally fired upon. Four marchers and a teenage newsboy were shot dead and fifty were wounded. 12
Like employers in many company towns, Ford was very much interested in his employees’ private lives. In fact, his Sociological Department was the very prototype of the corporate social welfare agency-cum- management espionage apparatus, alternately helping workers with housing and loans and having them discharged for such infractions as smoking or owning a General Motors car.
But the Ford fiefdom of Dearborn was quickly integrated into the Detroit metropolitan sprawl. Ford steadfastly refused to be involved in building worker housing, and consequently, as in Gary, Rouge plant employees commuted from across the city. And of course, there were other employers of equal prominence in the metropolis, notably General Motors, which maintained its own company town at Flint, seventy miles north of the center of Detroit. There lay giant Chevrolet, Fisher Body, and Buick plants, along with the AC Spark Plug Division, employing 40,000 people even in hard times and supplying 80 percent of Flint’s jobs. GM held sway over the local media, including the town’s one newspaper, and over the years many of Flint’s officials including the mayor and chief of police were tied to the company. 13
Automobile production soon spread across the continent. By the late 1930s, for example, Ford had assembly operations in California, New Jersey, Chicago, Louisville, and Kansas City, not to mention plants in Canada, Mexico, and six other countries. In the 1940s, General Motors had 102 plants across the United States and a headquarters building in New York City.
In addition, Ford created nineteen “village industries” in small towns across Michigan, all within sixty miles of Ford headquarters. Many of these “little industries out in the country,” in the words of company organ Ford News, were situated in rehabilitated gristmills and staffed by part-time farmers. They, along with workers who transferred from the Rouge plant and elsewhere, made such small parts as gauges, horns, valves, ignition locks, and starter switches. It was a typically eccentric and ill-explained exercise, but Henry Ford seemed to see these operations as a way of employing rural people and as an experiment toward a decentralized industrial future. In any case, Ford insisted that they were not company towns, as the company did not own the areas around the small plants and there was no effort to build housing, establish company stores, or exert political sway over the villages. When journalist Drew Pearson asked Ford if he intended to create any model towns near the outfits, the Flivver man responded: “No, I am against such things. If people want to get things done they can do them themselves.” After Henry Ford’s death in 1947, Ford Motor gradually sold off all the village-based operations.14
Many glory years followed for the U.S. auto industry, but a period of very slow decline began with the oil shocks of the 1970s. Today, despite all of the industry’s travails, including a takeover of Chrysler by Fiat and the near-bankruptcy of General Motors, nearly half of all cars and trucks sold in the United States are produced by U.S.-owned companies. 15
What’s more, 38 percent of all cars and trucks made in the United States are produced in Michigan and Ohio. But in the 1980s, a new group of auto-production facilities began appearing, many in southern states that discouraged unionization. These were run by Japanese and European automakers. Honda opened its facility in 1982 in Marysville, Ohio, forty miles northwest of Columbus. The following year, Nissan opened a facility in Smyrna, Tennessee, near Nashville, and five years later, Toyota followed with a plant in Georgetown, Kentucky, not far from the Bluegrass center, Lexington. In 1989, Subaru-Isuzu opened a car-manufacturing plant in Lafayette, Indiana, a small city sixty miles northwest of Indianapolis. And in the 1990s, German maker Daimler opened a facility in Vance, Alabama, and BMW in Greer, South Carolina. As of 2008, there were fifteen foreign-car assembly plants in eight states. Toyota alone was responsible for more than a quarter of all U.S.-made cars.
The move of Japanese carmakers onto U.S. soil came after the companies had significantly penetrated the American market, doubling sales during the 1970s, to 24 percent of all cars sold. The migration was at least in part a response to U.S. critics who charged the foreigners with dumping exports. Once the Japanese arrived, they brought along corporate practices that emphasized quality and a sense of common purpose. Managers carefully selected American production workers for youth, education, and an ability to fit in; not a few traveled to Japan for training. The cautious approach paid off, as unions have regularly been defeated in representation elections—losing by 2 to 1 at Nissan in 1989.
The Japanese also brought along many executives—who avoided any conspicuous presence in the small, center-of-the-continent towns. The companies are very concerned not to come across as an alien presence: “We constantly need to think about the potential backlash against us,” Toyota CEO Katsuaki Watanabe told Business Week in 2007. So they worked at demonstrating
their good citizenship. Nissan made record contributions to the United Way, and Toyota donated $1 million for a community center in Georgetown, where its workforce totaled 7,000. Toyota has gone on to fund literacy programs and university research institutes. It has also ramped up its spending on corporate lobbying, to $5 million a year. 16
Controversy has still dogged the interlopers, including charges that they have engaged in racial discrimination and placed inflated demands on communities. Nevertheless, in 2010 the foreign companies have a foothold in the United States—apparently permanent and maybe growing. Volkswagen for one plans to open a $1 billion, 2,000-worker plant near Chattanooga, Tennessee, in 2011.
At the same time, all automakers have a tougher road ahead, as U.S. consumers have at least momentarily stopped buying and millions have lost their credit standing. Toyota in particular has an unpredictable future, given its 2010 recall of 6 million vehicles in the United States as a result of problems with accelerator pedals and braking systems. Globally, some thirty significant carmakers are fighting over a market that has shrunk by 30 percent in the past couple of years. With a capacity of 90 million cars, the companies are selling only about 55 million. 17 Earlier, many U.S. industrial communities ripened into full-fledged company towns over a period of several years. It remains to be seen whether the likes of Georgetown, Kentucky, or Vance, Alabama, will ever attain that status.
The United States today is a country filled with gadget freaks, people addicted to everything from personal digital assistants to digital radio. But what made Americans that way? Labor-saving appliances, from telephones to phonographs and toasters, taught generations of citizens to be wowed and eager for the next cool thing. Washing machines and other devices freed people from exhausting, time-killing tasks and helped build interest in mechanical gizmos among women.
