Public utilities as a public relation tool *

Public ownership

Since ancient times, governments have owned and conducted various economic enterprises, such as, for instance, water systems, public baths, and even theaters. In the United States, governmental departments, agencies and other political units own and manage the postal service, the public school system, public highways and bridges, dams for irrigating lands and for reclaiming water power, and various other enterprises. Municipalities own and operate water and sewerage systems, electric light and power systems, gas plants, and transportation systems. In Europe, and to an extent in Canada, government ownership and management have gone even to the extent of owning and operating such industries as railroads and telephone and telegraph lines.

Public ownership of basic services and industries is advocated by the Socialist and Communistic parties and has been most highly developed in Soviet Russia. In that country, the government owns all the land and other natural resources, the public utilities, the banks, the manufacturing plants, and the transportation systems. In Russia, business is in theory at least everybody's business; and, as observers have reported, it often happens that everybody's business is nobody's business.

Public utilities

Engaged in the business of serving the public, democratic countries have enterprises, called public utilities, which are "privately" owned but "affected," as the courts put it, "with a public interest." Such an enterprise, as, for example, a water company or a gas and electric company, may, in fact, be so widely owned by people who have invested in the enterprise as to seem to be owned by a major proportion of the public. Nevertheless, because it is "affected with a public interest," such an enterprise exists and operates by virtue of a public franchise. This is, in effect, a contract' by which the enterprise agrees to provide public service of a stipulated quantity and quality at stipulated rates of charge. Furthermore, the quantity and the quality of the enterprise's service, together with the rates which it charges, are subject to review by such governmental regulatory bodies as public service commissions.

Business by sufferance

Operating by virtue of public sufferance, and responsible directly to the public, a public utility occupies a unique public-relations position. While there may be truth in the saying that all business now operates in a gold-fish bowl, there is no question that this is particularly so in the case of the operations of a public utility.

Time was when a railroad tycoon might say, as one has been quoted as saying, "The public be damned!" That time, however, has long since passed. Today, the utilities, such as the railroads, gas and electric companies, steamship companies, and airlines, recognize with respect their public obligations and responsibilities, and do their best to live up to them. The modern public utility does not stop at merely selling its service to the public. It constantly tries to serve the public better, and it constantly tries to tell the public how it is doing so.

Education via the New Haven

An example of public-relations work carried on by public utilities is the educational program undertaken by the New York, New Haven and Hartford Railroad Company. Cooperating with educators in New England, which is the region served by the railroad, the New Haven embarked upon a program to provide a better understanding of New England life and its problems. Among public-relations projects, the New Haven's program was unique not only because it stemmed from the expressed needs of New England educators for usable classroom materials on New England life, as, for instance, the subject of rail transportation, but because it was planned and carried out with the educators' cooperation and assistance. It was at a meeting, called by Harvard University, that New England teachers had urged that courses devoted to a study of New England's transportation, industry, commerce, agriculture, and education be established in the region's 3,000 secondary schools.

A study was conducted by the Department of Educational Service of the New Haven Railroad's Public-Relations Department and the need was found for doing research in the five following major directions:

1. The New England region and its resources.
2. The New England people and their heritage.
3. The role of agriculture in New England life.
4. The role of industry in New England life.
5. The role of transportation in New England life.

Then, on the basis of the results of this research, the railroad's public-relations department, in collaboration with New England educators, developed material suitable for classroom work. This material consisted not only of written information presented in booklets, but also of moving pictures, slide films and posters.

Here was a public-relations project with a broad-gauged purpose. Obviously, its results could not be measured immediately. Nevertheless, the New Haven's management felt reasonably sure that the educational project, which was only one feature of the railroad's continuing public-relations program, was well worth its cost and effort because of the good-will it was certain to engender among the young people who attend New England's secondary schools and among the young people's elders.

Public relations via advertising

A common method used by public-utility companies to maintain good public relations is the procedure of addressing the public—of telling the institutional story—by means of paid-for advertising. For example, an electric-light company, having applied to the state or local authorities for permission to raise its rates, will buy newspaper space to explain to the public that higher rates are necessary because of a sharp rise in all its operating costs, including labor costs. As another, more concrete example of the use of paid-for advertising in public-relations work, take the program carried out by the Southern Railway System. This company bought advertising space in national, regional and local media for the purpose of not only "selling" itself to the public, but of also stimulating interest in the region which the railroad serves. The major objectives of the program were as follows:

• To tell the people of its territory the story of Southern Railway service.
• To stimulate the interest of schools in the study of transportation in the Southern's territory.
• To "sell" the Southland to the people of the nation; to stir industrialists, business men and people everywhere to take an interest in this "land of opportunity"; and to record publicly the Southern Railway's faith in the future of the up-and-coming, progressive South.

To implement its campaign, the Southern Railway's public-relations department, in collaboration with the company's advertising agency, prepared advertising copy for the following five groups of advertising media:

1. "On-line" daily and weekly newspapers
2. Business publications in the South
3. Farm publications in the South
4. State teachers' magazines
5. National magazines and financial publications.

Around this advertising campaign, the Southern Railway's public-relations department carried forward a publicity-and-promotional program which consisted of writing and distributing press releases, magazine articles, photographs, syndicate material, radio material, posters, speech material, booklets, bulletins to the company's officers, and "kits" of educational material for the use of school teachers. As a result of this campaign, the Southern Railway System, itself, stated that "the Southern enjoyed exceptionally friendly relations with the press, with government authorities, educators, customers and the public in general."

The "Battle of Grand Central Terminal"

An example of a railroad public-relations program in which a group of large corporations felt that it would be wiser to retreat before an indignant public than to persist in what seemed to be a legal, and technically correct public-relations procedure occurred in New York. The "Battle of Grand Central Terminal," in which indignant and unorganized commuters rebelled under the rather casual leadership of Harold Ross, editor of The New Yorker magazine, showed how an aroused public can exert effective pressure on a corporation dependent upon the public for good-will and existence.

The half million and more people swarming through this terminal every day seemed an ideal "captive audience" who could be reached through loud speakers with various sponsored advertisements. Charging $1,800 a week for 240 separate announcements, which were broadcast through 82 loud-speakers on a 17-hour schedule placed at strategic spots, the terminal operators sold the million ears of their compulsory audience to the sellers of newspapers, chewing gum, automobiles, beer and cough drops. With the meditative periods enjoyed by bus and subway riders also beginning to be threatened by plans for similar broadcasts to these travelers, and with Washington bus and taxi riders already battling for the freedom of their ears, Editor Harold Ross, by means of editorial and pictorial indignation and satire, unleashed his publication's first barrage by personally threatening to puncture his ear drums in a commuter's last stand at the terminal against the broadcasts.

At hearings before New York's Public Service Commissioners, the terminal operators defended themselves with the reports of fact-finding organizations whose polls indicated that over 85 per cent of the commuters approved the broadcasts. Nevertheless, on the night of Monday, January 2, 1950, the first successful revolt against the freedom of the sound waves was won when, at the stroke of midnight, the loudspeakers stopped. Surprised by the aggressive attitude of the commuters, the railroads owning and operating the Grand Central Terminal decided to forego the needed revenue rather than suffer from public disfavor, already aroused by higher fares. These railroads, chief among which is the New York Central, admitted defeat in the following forthright words:

The controversial public address system "broadcasts" in Grand Central Terminal are being discontinued. The programs were inaugurated with advertising contracts on an experimental thirteen-week basis. Although a substantial majority of our passengers favored the programs, there were enough who sincerely opposed them that we have decided to discontinue the experiment, even though we will miss the badly needed revenues which the programs produced. We thank all our passengers for giving us the benefit of their sincere opinions on the subject, pro and con, for it is only after a thorough airing of the issues that such matters can be decided.

But what IS a public utility?

Most enterprises, in effect, are public utilities. If the so-called public utility were the only enterprise "affected with the public interest" and engaged in what ordinarily is regarded as "public service," the problem of classifying the various kinds of economic enterprises would be greatly simplified. The fact is, however, that the modern conception permits no business whatsoever to be called private. For, whether an enterprise provides transportation, or insurance, or banking service, or produces and distributes milk or coal or iron or oil, it is expected to operate in the public interest.

Consequently, it is apparent that almost every enterprise may be regarded as a business "affected with the public interest" and so, in effect, a public utility. Hence it follows that nearly every industry and nearly every enterprise needs to formulate its policies and its public-relations program so as to "sell" not only itself, but also the perpetuation of the economic system of free enterprise. Fortunately, there is plenty of evidence of industry's awareness of this fundamental task. An example, which has already been mentioned, is the undertaking by the General Electric Company, in cooperation with a "service" club, to spread sound economic education through communities.

The Burroughs Adding Machine Company's educational film

The General Electric's program is only one instance of many. Under the sponsorship of many other enterprises, as well as of groups of enterprises and entire industries, efforts are being made to educate the public in sound economics. For example, the Burroughs Adding Machine Company produced a thirty-five minute motion picture titled "In Balance." Primarily designed to explain profits in terms of what they mean to a Burroughs employee, and to demonstrate to the employee the interests of the company's stockholders and customers, the Burroughs film was first shown to Burroughs people. In Detroit, the home city of the Burroughs Adding Machine Company, the film was shown to audiences totaling some 20,000 persons who consisted of employees and members of their families.

Later it became apparent that the picture's message might interest people outside the Burroughs "family." Accordingly, it was arranged that, at the time the film was shown in the company's branch offices throughout the country, the branch managers would invite business men from other concerns to come and see it. It was found that the picture created more interest among people outside of the Burroughs "family" than was originally anticipated. In the first few months after the picture's introduction, so many "outside" interests asked that the picture be shown that it was exhibited more than 600 times to audiences totaling more than 100,000. It was lent to more than 200 corporations for showings before executives, supervisors and employees, and was also shown by thirty universities, many of which incorporated the picture as a part of their courses in schools of business administration.

Thus, by employing the techniques of visual education, techniques which the public-relations worker employs to an ever-increasing extent, the picture "In Balance," sponsored and produced by a manufacturing company in the office-equipment business, proved to be an outstanding success, not only in creating good public relations for the company but in disseminating economic truths among many people.

The biggest job in public-relations work. A bank sends a booklet to its customers about the functions of banking under the economic system prevailing in such democratic countries as the United States and Canada. An insurance company buys advertising space to prove that only in an economy of free and competitive enterprise is insurance possible. The public utility, which lights and heats a person's home and carries him to and from his work, takes advertising space in the newspaper for the purpose of taking him into its confidence on the many problems which it encounters in giving him the services he deserves. A manufacturing company produces a motion picture film to visualize the fact that the so-called profit system–which ought to be called the system of profit and loss–profits everybody in the long run.

Thus, for public utilities, for enterprises "affected with the public interest," for the semi-public enterprise, and for the enterprise which in its ownership, is still purely private, public-relation workers have embarked upon what may be regarded as their biggest and most vital job, the job of "selling" democracy, its traditions and ideals and institutions and methods, to its people.

The sound way for all enterprise, public, semi-public, private, large, or small, to "sell" itself, is to "sell" democracy and the democratic way of life to the public in such a way that people are convinced of the over-all community of interest that links them all together.

Good public-relations work does more than sell a product

If people believe that what is good for a particular corporation, or group of corporations, is good for them also, then a community of interest has been established externally, just as it has been established internally if the workers in that corporation or group of corporations believe that their interests coincide with the interests of their employers. If a corporation or an industry has achieved that external and internal balanced relationship, so that there are just and friendly relations among employers, employees, stockholders, customers and the general public, the public-relations work of that corporation or industry has been successful.

Advertising and public-relations work which is based upon merely a narrow aim to sell as large a quantity as possible of a company's product may be successful within limits, but such success is that of the product per se, not that of the organization. Belief in the name and the reputation of a company is of longer-lasting value to that company than belief in its product or service alone.

It is the job of a good public-relations worker to change the feelings of suspicion which many people have about the things they purchase into feelings of appreciation for value received. That this can be done is shown by the position that certain corporations have attained by a fair attitude, and by years and years of public-relations work of the highest and most patient order.

Linking a company's name with the public interest

Such names as General Motors, Du Pont, Macy's, John Wanamaker, Standard Oil Company, Radio Corporation of America, and many others can be included in a list of companies whose business functions have become linked with the public interest in a mutually acceptable and profitable manner. These companies have made it their business to keep the public continually informed on what they were doing, to explain to the public the purposes of their vast research or merchandising programs, and to demonstrate that what was good for their business was also good for not only their own customers but for the public at large.

When a company can dramatize the fact that its normal business activities have, outside of a narrow profit function, a continuous social value, it is practicing good public relations. This is not enough, however, as industry is beginning to realize and is taking measures accordingly. Industry has one step further to take, which it can do with the cooperation of the business community. It must explain, clearly and truthfully, how the profit system is best for the country as a whole, better at least than any other system of production-economics which has so far been devised. On the success or failure of this vital task in public relations, much more depends than the survival of a corporation.

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