Public Relations and Corporate Policy: Arthur Page and AT&T’s Financial Policy, 1927-1939 Karen Miller Russell University ...
PR as a management function <ul><li>Page is frequently regarded as a textbook model for students and PR professionals </li...
Thesis <ul><li>AT&T was true to its word, upholding its public commitment to good service and reasonable profits, even dur...
Sources <ul><li>Arthur W. Page papers </li></ul><ul><ul><li>Madison, Wisconsin </li></ul></ul><ul><li>AT&T corporate archi...
Page and the Financial Policy <ul><li>Page joined AT&T as vice president of information in January 1927 </li></ul><ul><li>...
Financial Policy <ul><li>Conceded that AT&T was a monopoly </li></ul><ul><li>Consumers and shareholders depended on it </l...
Information Department’s role <ul><li>Distribute the policy to employees and management </li></ul><ul><li>Explain its prov...
The policy’s first challenge <ul><li>Stock market crash: AT&T stock </li></ul><ul><ul><li>More than $300 in September 1929...
Management response <ul><li>Continue to provide the same service at the same prices </li></ul><ul><ul><li>Did not reduce l...
Public response <ul><li>Individual shareholders were happy </li></ul><ul><li>Institutional investors criticized the compan...
AT&T’s service <ul><li>Rates could be reduced only by improved technology </li></ul><ul><ul><li>Emphasized research and de...
Effect on employees <ul><li>Maintained wage rates but cut the size of the labor force by as much as a third </li></ul><ul>...
AT&T’s explanation of decisions <ul><li>Large number of shareholders financed service for the entire nation </li></ul><ul>...
Company union reports <ul><li>Reports from two company union meetings in January, July 1933 </li></ul><ul><li>Angry about ...
PR executives’ explanation <ul><li>Consumers complained about high rates, but “there is no serious public relations diffic...
Conclusion <ul><li>AT&T’s actions reveal a sincere commitment to the Financial Policy </li></ul><ul><li>Officials did what...
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Public Relations and Corporate Policy: Arthur Page and AT&T’s Financial Policy, 1927-1939

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AEJMC History Division presentation notes, 2007; won the Top Faculty Paper award

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Public Relations and Corporate Policy: Arthur Page and AT&T’s Financial Policy, 1927-1939

  1. 1. Public Relations and Corporate Policy: Arthur Page and AT&T’s Financial Policy, 1927-1939 Karen Miller Russell University of Georgia
  2. 2. PR as a management function <ul><li>Page is frequently regarded as a textbook model for students and PR professionals </li></ul><ul><ul><li>First U.S. PR executive to be a VP, board member </li></ul></ul><ul><li>PR scholars suggest PR should be a management function with influence on policy, with the premise that PR in upper management is good for an organization </li></ul><ul><li>But is that good for an organization’s publics? </li></ul>
  3. 3. Thesis <ul><li>AT&T was true to its word, upholding its public commitment to good service and reasonable profits, even during the Great Depression, and public relations played an important role in selling this policy to employees and the public </li></ul><ul><li>But the policy benefited shareholders far more than consumers or employees </li></ul>
  4. 4. Sources <ul><li>Arthur W. Page papers </li></ul><ul><ul><li>Madison, Wisconsin </li></ul></ul><ul><li>AT&T corporate archives </li></ul><ul><ul><li>Warren, New Jersey </li></ul></ul><ul><li>Arthur W. Page society </li></ul><ul><ul><li>New York City </li></ul></ul><ul><ul><li>Also provided research grant </li></ul></ul>
  5. 5. Page and the Financial Policy <ul><li>Page joined AT&T as vice president of information in January 1927 </li></ul><ul><li>AT&T’s CEO, Walter Gifford, spoke before the National Association of Railroad Utilities Commissioners in October; evidently written by Page </li></ul><ul><li>“The Financial Policy” </li></ul>
  6. 6. Financial Policy <ul><li>Conceded that AT&T was a monopoly </li></ul><ul><li>Consumers and shareholders depended on it </li></ul><ul><li>“Obviously, the only sound policy that will meet these obligations is to continue to furnish the best possible telephone service at the lowest cost consistent with financial safety.” </li></ul><ul><ul><li>Placed a floor and a ceiling on profits </li></ul></ul>
  7. 7. Information Department’s role <ul><li>Distribute the policy to employees and management </li></ul><ul><li>Explain its provisions to shareholders, regulators, consumers, and legislators </li></ul>
  8. 8. The policy’s first challenge <ul><li>Stock market crash: AT&T stock </li></ul><ul><ul><li>More than $300 in September 1929 </li></ul></ul><ul><ul><li>Just under $70 in early 1932 </li></ul></ul><ul><li>Great Depression: AT&T business </li></ul><ul><ul><li>At first, the number of calls rose </li></ul></ul><ul><ul><li>But business steadily declined, 1931-1935 </li></ul></ul>
  9. 9. Management response <ul><li>Continue to provide the same service at the same prices </li></ul><ul><ul><li>Did not reduce long distance rates from 1930-1935 </li></ul></ul><ul><li>Maintain the traditional $9 dividend </li></ul><ul><ul><li>$9 from 1927-1930, earnings more than $15/share </li></ul></ul><ul><ul><li>$9 from 1931-1935, earnings less than $6/share </li></ul></ul>
  10. 10. Public response <ul><li>Individual shareholders were happy </li></ul><ul><li>Institutional investors criticized the company’s decision because retained surplus fell from $234 million to $93 million (more than 60% drop) </li></ul><ul><li>Consumers paid little attention, even among people protesting the company’s rates </li></ul><ul><li>They simply did without: nearly 2.5 million of 15 million customers stopped service </li></ul>
  11. 11. AT&T’s service <ul><li>Rates could be reduced only by improved technology </li></ul><ul><ul><li>Emphasized research and development </li></ul></ul><ul><ul><li>Introduced the TWX (teletypewriter exchange) </li></ul></ul><ul><ul><li>Continued converting to dial phone </li></ul></ul><ul><ul><li>Installation, repairs, speed of service, completion on first attempt rate all improved </li></ul></ul>
  12. 12. Effect on employees <ul><li>Maintained wage rates but cut the size of the labor force by as much as a third </li></ul><ul><ul><li>Share-the-work: half of employees worked part-time </li></ul></ul><ul><ul><li>Openings caused by death, resignation or retirement usually left unfilled </li></ul></ul><ul><ul><li>A decrease of just $1 per share dividend would have allowed AT&T to retain about 18,000 employees </li></ul></ul><ul><ul><ul><li>But even at the lowest point there were more than 270,000 employees in the System </li></ul></ul></ul>
  13. 13. AT&T’s explanation of decisions <ul><li>Large number of shareholders financed service for the entire nation </li></ul><ul><li>Shareholders were average citizens—many were employees and housewives </li></ul><ul><li>Cutting the dividend would encourage shareholders to sell, meaning even more employees would have to be let go </li></ul>
  14. 14. Company union reports <ul><li>Reports from two company union meetings in January, July 1933 </li></ul><ul><li>Angry about the dividend </li></ul><ul><ul><li>“ Employees had recently been bearing a disproportionate share of the retrenchment measures… No further reductions in payroll should be made unless the revenue of the company suffers further drastic reduction and the dividend rate has been reduced” </li></ul></ul><ul><li>Unanimous support for sharing work rather than laying more people off, even among long-term employees who were not in immediate danger of losing their jobs </li></ul>
  15. 15. PR executives’ explanation <ul><li>Consumers complained about high rates, but “there is no serious public relations difficulty in the maintenance of the dividend” as long as employee wages and morale remained relatively high </li></ul><ul><li>The company was protected to some extent by the fact that struggling consumers could live without a telephone if need be, so they tended to focus their anger more on the costs of electricity and heating </li></ul><ul><ul><li>“… people can get along without a telephone” </li></ul></ul><ul><ul><ul><ul><li>AT&T report (1932) </li></ul></ul></ul></ul>
  16. 16. Conclusion <ul><li>AT&T’s actions reveal a sincere commitment to the Financial Policy </li></ul><ul><li>Officials did what they said they would do: improve service, reduce costs, put money aside to be used in bad economic times </li></ul><ul><li>But employees and some consumers bore the burden </li></ul>

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