Corporate Public Relations and Democracy Arthur W. Page and the FCC, 1935-1941 Karen Miller Russell, Georgia

Arthur Page First PR person to serve as an officer, member of the board of a major U.S. corporation #3 on PRWeek ’s list of PR leaders Arthur Page Society

First PR person to serve as an officer, member of the board of a major U.S. corporation

#3 on PRWeek ’s list of PR leaders

Arthur Page Society

AT&T’s PR During the Page era, the company was known especially for consumer relations Research was its hallmark: “AT&T is one of the few companies that regards communication as a two-way affair, and does as much listening to public opinion as it does talking to the public” Chester Burger, PR Quarterly (1967)

During the Page era, the company was known especially for consumer relations

Research was its hallmark: “AT&T is one of the few companies that regards communication as a two-way affair, and does as much listening to public opinion as it does talking to the public”

Chester Burger, PR Quarterly (1967)

Underlying motive: politics Protect AT&T’s status as a regulated monopoly: be proactive, keep consumers happy to prevent more regulation FCC investigation during the 1930s spotlighted the role of corporate public relations, not only at AT&T but more broadly in democracy, calling into question the relationships among consumer research, corporate PR, and government regulation

Protect AT&T’s status as a regulated monopoly: be proactive, keep consumers happy to prevent more regulation

FCC investigation during the 1930s spotlighted the role of corporate public relations, not only at AT&T but more broadly in democracy, calling into question the relationships among consumer research, corporate PR, and government regulation

Thesis Although FCC officials and other critics questioned AT&T’s motives, most customers were happy with their service and no one offered an alternative method of satisfying their demands, so the telephone company and corporate public relations both survived virtually unchanged by the public scrutiny

Although FCC officials and other critics questioned AT&T’s motives, most customers were happy with their service and no one offered an alternative method of satisfying their demands, so the telephone company and corporate public relations both survived virtually unchanged by the public scrutiny

Sources Arthur W. Page papers Madison, Wisconsin AT&T corporate archives Warren, N.J. (now closed) Arthur W. Page Society New York City Provided travel and research money

Arthur W. Page papers

Madison, Wisconsin

AT&T corporate archives

Warren, N.J. (now closed)

Arthur W. Page Society

New York City

Provided travel and research money

Background Telephone invented, 1876 Munn vs. Illinois , 1877 Interstate Commerce Commission, 1887 Sherman Anti-Trust Act, 1890 AT&T primarily a holding company Also an operating company: long lines

Telephone invented, 1876

Munn vs. Illinois , 1877

Interstate Commerce Commission, 1887

Sherman Anti-Trust Act, 1890

AT&T primarily a holding company

Also an operating company: long lines

AT&T’s solution AT&T accepts regulation, the federal government accepts AT&T’s status as a monopoly “One Policy, One System, Universal Service” (Theodore Vail) By the time Page arrived at AT&T in 1927, legislators were using the same language as AT&T: competition is wasteful, duplicative, destructive

AT&T accepts regulation, the federal government accepts AT&T’s status as a monopoly

“One Policy, One System, Universal Service” (Theodore Vail)

By the time Page arrived at AT&T in 1927, legislators were using the same language as AT&T: competition is wasteful, duplicative, destructive

Page’s “political test” “The actual fact is that we have to meet the political test…[which] is whether or not we have attained a position in which a man would lose votes and a newspaper would lose circulation by attacking” the Bell System (1932) Solution = good service

“The actual fact is that we have to meet the political test…[which] is whether or not we have attained a position in which a man would lose votes and a newspaper would lose circulation by attacking” the Bell System (1932)

Solution = good service

Good service Conduct research to find out what the public wants Opinion polls began in 1926 Established a unit in the Chief Statistician’s Division to conduct opinion research Commissioned Paul Lazarsfeld to conduct national attitude surveys beginning in 1930 Spot surveys to follow up on problem areas

Conduct research to find out what the public wants

Opinion polls began in 1926

Established a unit in the Chief Statistician’s Division to conduct opinion research

Commissioned Paul Lazarsfeld to conduct national attitude surveys beginning in 1930

Spot surveys to follow up on problem areas

FCC investigation Congress created FCC in 1935, empowering it to investigate the telephone industry Corporate, financial history; accounting methods Relationships between AT&T, subsidiaries Rates and competition Propaganda to influence public opinion, legislative or administrative action

Congress created FCC in 1935, empowering it to investigate the telephone industry

Corporate, financial history; accounting methods

Relationships between AT&T, subsidiaries

Rates and competition

Propaganda to influence public opinion, legislative or administrative action

Page’s role Disseminate AT&T’s response: We have nothing to hide The government has a right to investigate There is no telephone fortune (“who’s got the loot?” No one.) We’re cooperating with the Commission

Disseminate AT&T’s response:

We have nothing to hide

The government has a right to investigate

There is no telephone fortune (“who’s got the loot?” No one.)

We’re cooperating with the Commission

Bell Securities Personal target: he was also head of Bell Telephone Securities, a subsidiary that distributed information to potential stockholders and worked with other departments to sell stock Bought from market, brokers, individuals Sold to small investors like employees 423,000 investors in 1927; 700,000 in 1933

Personal target: he was also head of Bell Telephone Securities, a subsidiary that distributed information to potential stockholders and worked with other departments to sell stock

Bought from market, brokers, individuals

Sold to small investors like employees

423,000 investors in 1927; 700,000 in 1933

FCC Report (1939) AT&T subsidiaries were autonomous only in the legal sense Diffusion of ownership—brought about largely by BTSC—meant that AT&T’s management dominated the entire System, including public relations Improper influence on legislative and regulatory bodies regarding rates

AT&T subsidiaries were autonomous only in the legal sense

Diffusion of ownership—brought about largely by BTSC—meant that AT&T’s management dominated the entire System, including public relations

Improper influence on legislative and regulatory bodies regarding rates

FCC Report (1939) System disseminated propaganda based on the idea that “the organization of the Bell System gives the most efficient and inexpensive telephone service in the world” Criticized the very thing that the PR community has praised Page for: that public relations officials tried to ascertain the public’s point of view and interpret the public to the company

System disseminated propaganda based on the idea that “the organization of the Bell System gives the most efficient and inexpensive telephone service in the world”

Criticized the very thing that the PR community has praised Page for: that public relations officials tried to ascertain the public’s point of view and interpret the public to the company

Impact of the FCC report Changes in industry practice were negligible; AT&T passed Page’s “political test” “There was never a bill introduced in Congress to implement any of [the Commission’s] recommendations.” “The public can punish but it can also protect, even if it only does it by complete indifference.” Arthur Page (1954)

Changes in industry practice were negligible; AT&T passed Page’s “political test”

“There was never a bill introduced in Congress to implement any of [the Commission’s] recommendations.”

“The public can punish but it can also protect, even if it only does it by complete indifference.”

Arthur Page (1954)

Danielian’s book Noobar Danielian: FCC commissioner, economics instructor at Harvard AT&T: A Story of Industrial Conquest (1939) “ The Bell System is a political organization of the first magnitude” “ The attempt to substitute propaganda and ‘public education’ for sound industrial statesmanship is truly subversive of democratic processes which, to be successful, must depend upon thorough understanding of issues from the point of view of national and not individual interests”

Noobar Danielian: FCC commissioner, economics instructor at Harvard

AT&T: A Story of Industrial Conquest (1939)

“ The Bell System is a political organization of the first magnitude”

“ The attempt to substitute propaganda and ‘public education’ for sound industrial statesmanship is truly subversive of democratic processes which, to be successful, must depend upon thorough understanding of issues from the point of view of national and not individual interests”

Danielian’s book Argued that public relations is political and that corporations were becoming more influential But his focus on relatively minor instances of press and regulatory intrigue obscured his larger point: AT&T’s primary objective was to maintain the political-economic status quo

Argued that public relations is political and that corporations were becoming more influential

But his focus on relatively minor instances of press and regulatory intrigue obscured his larger point:

AT&T’s primary objective was to maintain the political-economic status quo

Page’s response The Bell Telephone System (1941) Page said it was written to instruct lower management on System policy and the philosophy behind it Also allowed Page to make a spirited defense of corporate PR

The Bell Telephone System (1941)

Page said it was written to instruct lower management on System policy and the philosophy behind it

Also allowed Page to make a spirited defense of corporate PR

Page on corporate PR Far from endangering democracy, PR added to public discussion of issues, reminded a company to focus on its obligations to the public, and helped managers render the service that customers wanted “The Bell System has no political influence and wants none”

Far from endangering democracy, PR added to public discussion of issues, reminded a company to focus on its obligations to the public, and helped managers render the service that customers wanted

“The Bell System has no political influence and wants none”

In the end… AT&T’s detractors, including Danielian, failed to offer a reasonable alternative to proactive public relations Danielian referred vaguely to “industrial statesmanship” Alternative: ignore customer desires, discount public opinion in decision-making, wait for public outcry before changing service or policy Like AT&T, corporate PR survived unscathed

AT&T’s detractors, including Danielian, failed to offer a reasonable alternative to proactive public relations

Danielian referred vaguely to “industrial statesmanship”

Alternative: ignore customer desires, discount public opinion in decision-making, wait for public outcry before changing service or policy

Like AT&T, corporate PR survived unscathed