Corporate Public Relations and Democracy: Arthur W. Page and the FCC, 1935-1941

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

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)

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

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

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

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

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

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

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

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

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

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

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

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

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)

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”

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

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

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”

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

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Corporate Public Relations and Democracy: Arthur W. Page and the FCC, 1935-1941

by KarenRussell on Jul 19, 2007

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Corporate Public Relations and Democracy: Arthur W. Page and the FCC, 1935-1941 — Presentation Transcript