Chapter 31: The Propaganda Forces
Chapter 32: Utilities and the Press
Chapter 33: The Present Trend in American Journalism
Chapter 34: Control Through Ownership
Chapter 35: Control Through Advertising
Chapter 36: Propaganda Follows the Advertising
Chapter 37: Our New Education
Chapter 38: Utilities and the Teachers
Chapter 39: Revising the Textbooks
Chapter 40: Our New School Books
Chapter 41: The Platform
Chapter 42: The Radio and Screen
Chapter 43: Civic Organizations and the Church
Chapter 44: Labor and Labor Organizations
Chapter 45: Farm and Farm Organizations
Chapter 46: Women’s Clubs and Organizations
Chapter 47: The League of Women Voters
Chapter 48: Municipal Leagues
Chapter 49: Evangelists of Power
Chapter 50: False and Misleading Statements
Mobilizing to Mold Public Opinion
To carry out the purpose of the utility corporations, as stated in their various pronouncements, naturally called for a very far-reaching and effective control of public opinion. The sentiment, traditions, and the long-established views of the American people, as expressed in legislative enactments, are not entirely in accord with the plans and purposes as stated by the utility corporations in their literature. To carry out these plans required changes in public thought and action and, therefore, a molding and recasting of public opinion that were almost revolutionary. But the corporations set out to accomplish this task with thoroughness and determination.
In the first place, the utilities developed an organization for propaganda purposes, the most complete and effective in the history of utility activities in the country. We have outlined that organization in previous chapters. It only remained for them to mobilize these forces and keep them in operation. This they did, as we shall see, with almost military precision and with tremendous effect.
The results were so successful and so complete that J. B. Sheridan, one of their most active representatives, said of it:
“The state committees on public utility information have, in four years, done much to change and direct the economic thought and economic practice of the American people.” [Exh. Pt. 2, p. 609.]
And this great change in economic thought lays the foundation for a corresponding change in political thought and action. “You can not affect economic thought without affecting political thought,” he says. “All great political movements are based upon economic foundations-the Republican party upon, originally, free labor, the Democratic party upon free trade, etc.” [Exh. Pt. 2, p. 610.]
This revolutionary change in economic and political thought and action of the American people was brought about, or at least sought to be accomplished by the mobilization and aggressive activities of the propaganda forces of the utility corporations. And in those activities and campaigns every known method of propaganda and publicity was brought into action. So complete and inclusive were these methods that it led Judge Healy to inquire of Mr. Oxley, Director of the Information Department of the National Electric. Light Association:
“Do you know of any means of publicity that has been neglected by your organization?
“Answer: Only one, and that is sky writing. I don’t believe we have tried that with airplanes.” [Pt. 3, p. 214.]
The National Information Bureau
Perhaps the most aggressive and effective of the propaganda forces of the utilities organization were the State Public Utility Information Bureaus. There were 28 of these bureaus or committees covering 38 states. [Pt. 1, p. 20. For list of the bureaus, see Exh. Pt. 1, pp. 72, 305.]
These state bureaus or committees were developed under the direction of a special national committee of the National Electric Light Association known as the Information Bureau Organizations Committee. [Exh. Pt. 1, p. 58.] Of this committee Mr. George F. Oxley was director. And its function was “to have general direction of the organization of Information Committees and to co-operate with all existing committees.” [Idem.]
“My department,” said Mr. Oxley when on the stand, “has charge of the dissemination of information regarding the electric and power industry; first, to our own member companies; second, to the employees of our member companies; third, to the general public. In addition, I have charge of the editing, preparation, and publishing of certain reprinted articles which may originate with the department or with any of the committees of the public relations sections. I also have charge of the publication of the N. E. L. A. Bulletin and two or three mimeograph letter services of the companies.” [Pt. 1, p. 19.]
The National Information Bureau performed numerous other functions, among which the following may be mentioned: It furnishes to all of its member companies and to all electric light and power companies in the country, without cost, an advertising service. This has been issued regularly, and master plates have been made so that reproduction of the advertising service can be made at the lowest rates and furnished to the companies wherever desired.
This advertising service is furnished to the utility companies throughout the country, and the companies in turn make arrangements with the newspapers for running the advertising. [Idem, pp. 34-35.]
The National Information Bureau also prepared and supplied moving picture films. It made an appropriation of $3,000 as its share of a contribution toward the cost of a motion picture film to encourage and develop rural electrification. Mr. Oxley testified that there were 14 other organizations or individuals which appropriated the same amount to this feature of the work, making . a total of $45,000.
State Public Utility Information Bureaus
Samuel Insull of the Middle West Utilities Company in Chicago is said to have been the originator of the idea of State Public Utility Information Bureaus. As the story goes, Mr. Insull called together the executives of companies under his direction for a discussion of public relations. This was back in 1925. The meeting was short. It came to a close with Mr. Insull’s instruction, “Get busy and do something. [Pt. 1, P. 37.]
In April of that year the Illinois Committee on Public Utility Information was organized. Bernard J. Mullaney, “Mr. Insull’s right-hand man in public relations matters,” became director, and Mr. Hal M. Lytle, an experienced newspaper man, associate director.
“Today,” the record reads, “the Illinois Committee is recognized as the progenitor of a nation-wide movement consisting of a total of 28 states and regional committees covering 36 (later 38) states.” [Exh. Pt. 2, p. 129.]
The function of the state committees or bureaus, according to Mr. George F. Oxley, the national director, was to “pass along to the public news material and information regarding the utilities of the states in which they operate and assist the states and the communities in building themselves up; that is, a sort of community or state promotional activity, because the utilities have felt that they could not grow unless the state and the communities assist in the building of them, and these committees are functioning along that line.” [Pt. 1, p. 20.]
And this service covers the field of telephone, water, and electric railways, as well as that of electric light and power.
The Illinois Committee
The Illinois Public Utility Information Committee has been from the first a sort of model after which most of the other committees have been patterned. It has been especially active and aggressive in its work and, according to the record, far-reaching in its influence.
The Illinois Committee, like the committees of other states, planned and carried on a state-wide publicity campaign. Material was sent out to the local newspapers throughout the state each week and it was suggested that the representatives of the companies in the different parts of the state should follow the news service closely and “jog each editor’s memory on it from time to time in a friendly, personal way.” [Pt. 2, p. 74.] The news bulletin went regularly to all of the more than goo newspapers in the state about 125 dailies and the rest weeklies. The matter sent out was quite generally used, as shown by the fact that an average of 5,000 column inches per month appeared. [Idem, p. 76.]
One of the characteristic features of the work of all of these state information bureaus was their efforts to get their literature into the public schools. In this they seemed to be almost universally successful. In regard to Illinois, Mr. Mullaney testified that “the committee and its work have been established as so entirely legitimate that its literature is used in the public schools without question.” [Pt. 2, p. 77.]
The committee has been well financed as evidenced by the fact that its average annual budget is about $40,000 per year.” [Pt. 2, p. 97.] In 1924 $5,799 was paid for speakers alone. Up to December, 1925, a total of $96,000 had been expended for bulletins, pamphlets, etc. [Pt. 2, p. 96.]
As an idea of how extensive the work of this Illinois Committee was in distributing its literature throughout the state, it is stated that “when the committee celebrated its second anniversary it had passed the five million mark in pieces of literature distributed.” [Pt. 2, p. 85.]
The committee was alert in watching the activities of municipal officials in the state. Some time in December, 1926, there was a meeting at Rockford of municipal officials of the state. Mr. McGregor suggested to Mr. Mullaney that these municipal officials might discuss the utility contributions that had been made to the campaign of Mr. Frank Smith for United States Senator. He also suggested that an effort might be made to get some of the municipal officials to get up a discussion and thus offset the influence of references to the Smith matter?
Mr. Rob Roy McGregor, who later became director, testified that the Illinois Committee on Public Utility Information worked together with the American Gas Association and other organizations active in this territory in opposing the government ownership movement, particularly with reference to the Muscle Shoals and the Boulder Canyon projects.
The Illinois Committee, like other organizations of its kind, was active with the newspapers, chautauquas, moving pictures, and speakers’ bureaus. Speakers appeared before civic clubs, women’s clubs, Kiwanis, Rotary and Lions Clubs, and the League of Women Voters. [Pt. 2, p. 92.]
The Illinois League of Women Voters especially seems to have given the utility organizations considerable concern. Mr. McGregor testified that “they were interested in what is apparently a program for municipal or government ownership of electric light and. power industries.” [Pt 2, p. 141.]
The work of the Illinois Committee seems to have had its effect and influence in other states. Mr. Mullaney testified that “the observation of this Illinois plan has led to the inauguration of similar campaigns in Indiana, Ohio, Kentucky, Missouri, Arkansas, Nebraska, and Oklahoma, and the preliminary steps for doing so have been taken in Michigan, Wisconsin, Texas, Iowa, California, and New York.” [Pt. 2, p. 79.]
The Oklahoma Committee
The New York Commercial asked B. J. Mullaney, Director of the Illinois Committee of Public Utility Information at Chicago, to put together an article on the work that the various information bureaus of the power companies were doing for the public utility industry, and Mr. Mullaney writes to Mr. McKay of the Public Utility Information Bureau of Oklahoma for a report on the work that that particular bureau is doing, so that he could incorporate it in the story that he was preparing for the New York Commercial. In reply Mr. McKay gives a very interesting and illuminating resume of the work of these utility information bureaus. He packs the story into a few words, which is no doubt typical of the work of these organizations.
The Oklahoma Committee, according to Mr. McKay, is a part of the work of the Oklahoma Utilities Association, which includes all branches of the public utility industry, including both the Bell and independent telephone interests. The function of this Association is to advance and expand the interests of all branches of the industry, to circulate their material through the press and schools to promote the general welfare, etc.
The Association publishes a weekly bulletin, a weekly news letter for the newspapers, and a monthly magazine. It conducts a Speakers’ Bureau which works through 40 district chairmen, supports a moving picture lecture course to rural districts; sponsors and supports an annual gas meter school; holds a general state convention, 8 telephone district conferences, 3 electric district conferences, etc.
As an evidence of its effectiveness in securing desirable legislation, this Association secured the enactment of the revocable permit law in Oklahoma, “openly sponsored by this association.” (Our italics.) Another achievement was the “announcement of a four-year course in public utility administration at the Oklahoma State University.” [Exh. Pts. 5 & 6, p. 90.]
Attention may also be called to the way in which utility companies, through their press service, carried on a campaign to bring about the sale of the municipal light plant in Woodward, Oklahoma?’
The news letters of the information bureaus were often used by the local newspapers as editorials. Their leading news items often appeared in the larger daily newspapers as, for example, in the Oklahoma City Daily Oklahoman and the Tulsa Daily World, the largest papers in Oklahoma. [Idem, p. 91.]
Other State Committees
The utility companies in other states rapidly followed the example of those in Illinois, as stated above, until there are now 28 State Utility Information Bureaus or Committees covering 38 states. We have already referred to the activities of several of these committees and as we proceed many others of them will come into the picture. [Idem.]
Missouri had an especially active committee and we had considerable to say about its activities in one of our opening chapters. This Committee reported that in 1923 it was distributing “1,900 news bulletins each week to some 600 newspapers, 700 utility companies, members of the State Assembly from time of election, commercial clubs, salesmen, judges under rank of the Supreme Court, women’s clubs, etc. [Idem, p. 116.]
California presents a stirring story that we have covered in a separate chapter. Oregon and Washington have also been storm centers in which these committees have been active. New Jersey, Michigan, the New England States, Alabama, Georgia, Texas, Tennessee, Nebraska-in fact, practically all of the state committees have come into the story in one way or another and most of them are mentioned more or less in the present review. A list of the 38 committees will be found in Exhibits, Part 1, pages 72 and 305.
One very effective method the utilities used in mobilizing their own forces, as well as enlisting representatives of various commercial, industrial, educational and civic organizations and influences was a series of conferences. Some of these were national, some sectional-covering several states; others were within certain states.
National Conventions. The National Electric Light Association, which is the parent organization of the propaganda forces of the utility companies, holds a national convention each year. These conventions are very large and influential, the attendance frequently reaching 10,000. [Exh. Pts. 10-16, p. 912.]
The utilities make use of these national conventions, not only for bringing together representatives of their own forces throughout the United States, but also to interest and enlist representatives of every other possible group and organization in the country. Speakers are brought to these conventions from the leading universities and colleges in the country, from the various political forces, the members of the various state utility commissions, and others too numerous to mention. Thousands of dollars are paid to representatives of these various groups, so that they may attend and address these conventions. The cost of speakers at these gatherings between 1920 and 1928 is given as $12,332.
The Southern Appalachian Conference. Several sectional conferences were. held in the South. The most notable of these was the Southern Appalachian Conference which covered the States of North Carolina, Alabama, Tennessee, and Georgia. The first of these conferences was held at Asheville in 1922, the second at the same place in 1923, the third in Chattanooga in 1927, and the fourth in Atlanta in 1928.
It is interesting to note that the treasurer of this Southern Appalachian Conference was Thorndike Saville, who at the same time was Professor of Hydraulics and Sanitary Engineering of the North Carolina Economics and Geological Survey and Chief Hydraulic Engineer of the North Carolina Department of Conservation and Development. [Pt. 7, p. 158.]
These conferences were supported heavily by contributions from the various power companies in that section. The Alabama Power Company, the Georgia Railway and Power Company, the Carolina Power and Light Company, the Appalachian Power Company, and probably the Tennessee Electric Power Company were all contributing amounts varying from $100 to $200 each. [Testimony of Mr. Saville, Pt. 7, p. 160.]
These power conferences were very elaborate and all-inclusive affairs. They were sponsored primarily by the Chattanooga Chamber of Commerce, the Atlanta Chamber of Commerce, and similar organizations. Public bodies and civic organizations of all kinds were urged to send delegates, including the State Legislatures of the Southern States, all Chambers of Commerce, Kiwanis Clubs, Rotary Clubs, and so on; farmers’ organizations, labor union, the railroads, the power companies, and the manufacturers’ associations. [Pt. 7, p. 175.]
These conferences, while loudly professing to be entirely disinterested, are shown by the evidence to have been heavily financed by the power companies, and indeed letters were sent out quite generally soliciting their support. Mr. John A. Switzer, secretary of the conference in 1927, admitted that “the major contributions to the fund were being made by power companies.” [Pt. 7, p. 175.] Mr. Switzer was professor of hydraulics and sanitary engineering at the University of Tennessee. He was also the hydraulic engineer of the Tennessee State Geological Survey [Idem, p. 168.] He was succeeded by Mr. Wilbur Nelson who had formerly been State Geologist of Tennessee and was at that time State Geologist of Virginia and professor of geology in the University of Virginia. [Idem, p. 169.]
Thus the conferences were able to enlist the services of public officials who were at the same time connected with the various universities of the section.
Mr. Switzer testified that at the 1927 meeting of the conference resolutions were passed condemning the government ownership of utilities or government participation in business. [Pt. 7, pp. 167-69.]
Mr. Switzer admitted that when the 1927 meeting was over [Pt. 7, pp. 167-69.]wide publicity was given to it by various people connected with the power companies, as well as people in the conference, to those resolutions on the subject of municipal and government ownership and in connection with what was said about Muscle Shoals.” [Idem, p. 174.] The attitude of Mr. Switzer and the Southern Appalachian Power Conference is further indicated by articles written by Mr. Switzer, entitled Government Operation of the Electric Industry Would Be a National Calamity.”[Idem, p. 179.] This article, which appeared in the Manufacturers Record, was submitted to Mr. O. G. Thurlow, chief engineer of the Alabama Power Company.” And this testimony must be read in connection with the claim of the promoters of these conferences that they were “wholly disinterested. [Idem.]
Mr. Switzer claimed in his testimony that he did not know that certain men that he had selected for official position in the conference were power company men. “I selected Mr. Preston because of his prestige as a banker, not knowing that he was connected with any power company.” And again, “with respect to Professor Thomas…. we did not know that he was employed by the power companies when we asked him to be on our program at Chattanooga last year.” [Pt. 7, P. 191.]
At one time it was suggested that the executive committee indorse the proposal of the Associated Power Companies for the lease of Muscle Shoals. But Mr. Switzer testified that no action was taken in this matter. And yet a little later Judge Healy faced him with a letter which he had written to Professor Saville in which he said: “The meeting we are proposing for March is for the purpose of throwing our influence in favor of the power companies in the Muscle Shoals contest.” [Pt. 7, p. 194.]
It also appeared from letters that were presented in evidence that Mr. Switzer was endeavoring to change the views of one of the Congressmen of that section opposing the bid offered by the Cyanamid Company. [Idem.]
In their efforts to make the program of the Southern Appalachian Power Conference appear “disinterested,” a suggestion was made that Senator Norris of Nebraska be invited to speak, but this was opposed and the invitation was not sent. It was then suggested that Josephus Daniels be asked to speak. And on this matter Mr. Switzer admitted that he had stated that “if we are going to put anybody on the program who was an avowed advocate of government ownership, he (Daniels) would be as harmless as any one we could get.” [Idem, p. 197.] It was then agreed that if Daniels should be asked to speak and should accept, then the committee “ought to be sure to have other speakers who can and will effectively answer the challenge for government ownership.” Mr. Daniels, according to Mr. Switzer, “exhibited a lack of knowledge of the subject.’ In my opinion the stock in trade of advocates of government operation is very largely misinformation.” [Pt. 7, P. 197.]
State Conferences. Typical of state conferences were those held in Iowa. Two such conferences were held and, according to the testimony, Dean C. C. Williams of the State University of Iowa, took the initiative in arranging these conferences. They were attended not only by representatives of the electric utility companies but by representatives of the coal industry, manufacturers-and especially the one at the Iowa University-by men engaged in research work and by members of the faculty of the State University. [Idem, P. 10.] In this case, as usual, the Iowa Section of the National Electric Light Association assisted financially. [Pt. 7, P. 9.] Expenses and sometimes a fee were paid to members of the faculty for attending and addressing these conferences; also expenses of some of the farmers that were asked to attend. [Idem, P. 11.]
Forces the Utilities Utilized
In short, the utility interests undertook to utilize not only every organization, influence, and force of their own, but also every other that they thought would be helpful in reaching and molding public opinion to their way of thinking. Reviewing the situation, the following may be mentioned as among the forces and influences which they succeeded to a greater or less degree in enlisting in their cause:
(1) All the national, state, and local organizations mentioned in previous chapters.
(2) A veritable flood of leaflets, pamphlets, booklets, bulletins, documents, reports, etc., which will be mentioned in subsequent chapters.
(3) Advertising in practically all of the newspapers of the country, the volume amounting, it was estimated, to between $20,000,000 and $30,000,000 a year.
(4) Newspaper and editorial articles for the Press, Press services, clip sheets, cartoons, illustrated service, etc., reaching regularly 14,000 newspapers in every section of the country.
(5) News bulletins, weekly and monthly, supplied to the press, public officials, public libraries, and influential people generally throughout the country.
(6) A very thoroughgoing educational campaign covering the schools, colleges, and universities of the country.
(7) Liberal use of the platform, with speakers, speakers’ bureaus, etc.
(8) Moving pictures.
(11) Envelope stuffers or small folders sent out in the monthly bills of the utility customers.
(12) Friendly relations with and use of civic societies, such as Kiwanis, Rotary, Lion, service clubs, Chambers of Commerce, etc.
(13) Similar activities in labor and farm organizations.
(14) Activities among municipal leagues.
(15) Work in women’s clubs and women’s organizations.
(16) Work among Boy and Girl Scouts.
(17) Activities in religious bodies, including women’s clubs of churches, Y. M. C. A. s, etc.
Some of these innumerable activities will be described in subsequent chapters.
“The Old Order Changeth”
Upon a free and untrammeled Press, more than upon any other single agency, it is agreed, depend the institutions of a free people and the success and achievement of democracy.
Have we such a free, untrammeled Press in America today?
Vital Importance of a Free Press
In the long centuries of struggle for democracy and progress, the freedom of the Press has been one of the most vital issues.
So vital has this matter appeared that all peoples in all modern times have made most heroic and valiant struggles to secure and maintain such freedom. For it is agreed that if the general public has, through a free and untrammeled Press, access to the essential truth regarding their public problems, they will find the solution of those problems and the way to the establishment and maintenance of a free government. But if, for any reason, or by any means, the free and full access to the truth regarding public matters is destroyed or darkened, then there is no source of knowledge or information through which the people may find their way through their problems and maintain democracy and progress. Therefore, any tendency, influence or power that endangers the freedom of the Press or restricts its untrammeled and unbiased presentation of the facts regarding essential matters in the social, industrial, and civic life of the people, is a most serious menace to democracy.
How Utilities Have Influenced the Press
The methods by which the utility companies have influenced and swayed the Press of the country to their ways of thinking and to their purpose to control public opinion and use it to their advantage are numerous, devious and oftentimes subtle.
The country was considerably stirred at one time when it learned, through the publicity given to the hearings of the Federal Trade Commission, that there was evidently on foot a nation-wide effort to buy up and, through actual ownership, control the Press of the country. But this effort, amazing and disturbing as it was, is by no means the chief nor the most effective means that the utility companies have used to control public opinion through the influence and control of the Press.
By far the most effective and most subtle method was the clever use of generous amounts of advertising and a nation-wide campaign on the part of the leaders of the power industry to persuade every utility company to enlarge and extend its advertising patronage to the Press. And this campaign was carried on systematically and with such cleverness that the public was not aware, and probably is not yet aware of the real significance of the movement. It is doubtful whether any considerable portion of the Press itself really appreciates the extent to which this control has been exercised.
Another and also quite effective and far-reaching method by which the views and purposes of the utility companies have been injected into the Press of the country in clever and subtle ways to mold public opinion is through various Press services and Press agencies that have prepared and disseminated the utility company propaganda through the Press. Here again clever and subtle methods have proved most effective in keeping the public and, in many cases, even the representatives of the Press themselves unaware of the degree to which this utility influence has permeated the Press.
Then, of course, there are numerous publications that, without any influence on the part of the utility companies, are definitely committed, to and promoting their views and ideas. And in one
case at least the utility companies are shown to have actually owned their own publications. The Public Service Magazine, published in Chicago, is a striking example of this latter class of publications.
By combining the influence of that part of the Press of the country, which is already favorable to the utility interests and will carry their propaganda to the people without any effort whatever upon the part of the utility companies, with the other methods of active and aggressive control mentioned above, there has come about a degree of control of this great publicity agency in this country that is truly alarming.
The Coming of the Chain Newspaper
In recent years, and quite apart from the influence and activities of the utility corporations at first, the Press of America has been undergoing a very important change and transformation. In this respect, as in so many others, “the old order changeth”: a new order, a new idea has come upon us. And this not because of the influence of any single agency so much as the result of the incorrigible forces of economic determinism. There is a new trend in American Journalism. The chain newspaper has come.
That is the first important fact regarding the Press that emerges from the evidence in the hearings of the Commission.
The next important disclosure in the hearings is the fact that during recent years there has been a certain trend towards newspaper consolidations, the start of a concentration of ownership and control in the newspaper field similar to what is going on elsewhere. And this tendency is also, at least in its earlier phases, more or less apart from any activities of the utility companies, although their influence soon appears.
The Outright Purchase of Papers
Next we come to the quite astonishing revelations As to the practically nation-wide drive of certain utility interests to purchase outright many of the leading newspapers of the country. And here, of course, the activities of the utilities are clearly in evidence.
Taking advantage of a natural trend towards the chain newspaper and the consolidation of newspapers that was already under way, it was a very easy matter and a very natural thing under existing circumstances for the utility companies to extend their influence and control over the Press.
Control Through Advertising
Finally we come to the most subtle and at the same time most far-reaching and effective method of all by which the utilities have exercised their influence and control over the Press of the country. We refer to the development of a great. nation-wide plan for an enormous advertising campaign which was made the basis upon which was built up the most complete and effective method of control of the Press that has ever been devised.
Thus by taking advantage of certain trends and tendencies already in operation; then by a rather guarded attempt to extend control through the purchase of newspapers; and, finally, through the development of a widespread and systematic campaign of advertising accompanied by a systematic press service covering the entire newspaper field of the country, the utilities developed a scheme of control of the Press that was not only effective and far-reaching, but so subtle that neither the unsuspecting public nor even the Press itself, in many cases, realized just what was going on.
In the following chapters we shall present briefly the evidence from the hearings showing how these tendencies were taken advantage of and how the methods for control of the Press were worked out.
The Newspaper of Opinion Passes: Big Business Takes Control
In the previous chapter we have outlined the various tendencies of which the utilities have been able to take advantage and the methods by which they have exercised an ever-increasing influence and control over the Press. In this chapter we present the disclosures appearing in the hearings that show the recent trend in American journalism that prepared the way for the developments that followed.
Exhibit No. 4360, which appears on page 807 of Parts 1o to 16 of the Commission’s hearings, is an address delivered by Robert Lincoln O’Brien, former editor of the Boston Herald, at a meeting of the League of Women Voters of Cambridge, Massachusetts, on May 6, 1929. This address is a most interesting and illuminating discussion of the “Present Trend of American Journalism.” It is such a succinct review of what has been going on in the newspaper field in America by one who has been for years immediately connected with the work, that we shall quote at length from his address. He says:
The Old-time Newspaper and the New
“Old-time newspapers were simple affairs, growing out of the thought of their communities, unrelated to other investments of their owners, representing chiefly the local spirit and aspirations, often typified in the editorship of some one outstanding man like Greeley or Raymond or Dana. That was the old order.
“With it I intended to contrast the big groups of chain newspapers now operating, as impersonal in their control, for the most part, as a gasoline company; with editors transferred from city to city and post to post as would be the executives of any corresponding commercial organization. This is the new idea. In consequence of it such considerable cities as Pittsburgh, Denver, and our neighboring Albany possess no newspaper which is not a part of somebody’s chain, and so responsive to the mechanism of a great organization. In Pittsburgh all the daily newspapers, both morning and evening, belong to Mr. Hearst, to the Scripps-Howard League, or to Paul Block, an advertising manager who has been gathering up newspapers in recent years. Within the last 12 months he has taken over the Standard-Union, one of the famous old journals of Brooklyn, which had counted among its editors Theodore Tilton, Stuart L. Woodford, and Murat Halstead; while another near-by daily of even greater reputation, the Brooklyn Eagle, became the sixteenth of Mr. Frank E. Gannett’s chain, now numbering 17, a transfer financed in part by the International Paper Company.
A Momentous Economic and Cultural Overturn
“These changes from the newspapers of the old time, focusing about a personal editor, to a cog in the great chain of modern business, certainly constitute one of the most momentous economic and cultural overturns of our era. With it has come the amazing growth of syndicate features, or those contributions of literary geniuses, or picture-making experts, which appear simultaneously in a hundred different newspapers. The Associated Press itself has undergone a not dissimilar transformation. A generation ago it was the vehicle of official reports, and a usually staid recital of the undisputed things of a serious character. Today there is hardly anything in a daily paper which the Associated Press is not furnishing, or seemingly on its way to furnish: pictures, special-feature departments, and gossipy material of every sort, until the time seems not far distant when a newspaper which enjoys membership in the Associated Press could get along with this service supplemented by a single editorial writer and a few reporters. The wide range of topics which the Associated Press handles now, and its breezy method of doing so, continue to surprise all old-time observers of its methods. But this in turn is in keeping with those movements of the era on which I had agreed to speak.”
Mr. O’Brien then takes up the disclosures that have just come out from the Federal Trade Commission regarding the attempted purchase of newspapers by certain interests connected with the utility corporations. These efforts, he goes on to say,
“reached a sensational climax last week in the testimony of Mr. Graustein before the Federal Trade Commission. With commendable frankness he told the world that the great paper and power company of which he is the head through its corporate ramifications had offered $20,000,000 for the Cleveland Plain Dealer, the only morning newspaper in a city more populous than Boston and virtually the indispensable vehicle of information in all northern Ohio, and one with which no newly established rival could ever hope to compete. He had been interested in the financing of Mr. Gannett’s chain of 17 newspapers. He had, through two young men, obtained the ownership of three influential newspapers in three southern cities, Columbia, Spartanburg, and Augusta; he had a trade still pending for a $750,000 newspaper, the consummation of which or its abandonment he would promptly report to this Federal board. In two great Chicago newspapers he had made large financial investments. He had bought a 50 per cent interest in the Boston Herald and the Traveler, of which I incidentally remain a small stockholder, and always an interested observer.
“Here was a most impressive picture. It has hardly been rendered less striking by the prompt return only last Saturday of the $2,700,000 which he had advanced to Mr. Gannett. This celerity appeared in amusing contrast with Gannett’s apparent composure while beholden to the paper company so long as no one knew of it. Promptness in thus seeking cover for himself the moment publicity disclosed the deal was of doubtful advantage to other newspapers sustaining the same relation. They must all regard his quitting their ranks as an implied reflection on Mr. Graustein’s theory of the investment. For these financial arrangements, he had explained, were designed solely for making a wider market for newsprint paper, one of the great products of his corporation. Of the advantage to ‘the producer of anything of an assured and regular market there can be no question. But the concern of the Federal Trade Commission, and of the radical Senators like Norris and Tom Walsh, arises from the further fact that this company is a vendor of electricity, one of the greatest agencies of the modern world, the use of which is growing by sensational jumps, the price of which, as a nearly inevitable monopoly, must depend in the last analysis upon public regulation, and so must be intrusted by the people to their representatives in political authority….
Ownership Determines Control
“There are certain by-products of the whole affair that seem destined to have a far-reaching effect upon the political life of the community, and may even transcend state limits. Intelligent people need not waste much time in discussing whether an ownership find any way of relating itself to the news policies of newspapers, to say nothing of the editorial opinions. No one need go further than to contrast the reporting only last week of the Graustein testimony in the New York Herald-Tribune, whose managing owner, Mr. Ogden Mills Reid, is also a director of the International Paper & Power Company, with the reporting of the same events in the New York Times, with no such connection. In one place the story was minimized and obscured; in the other it was set forth in fullness and detail. Ownership opinion remains the one basic thing in the conduct of a .newspaper.
“It is fair to say, however, that owners may have a newspaper support policies in which they do not themselves believe. That has often happened in the case of prohibition. An owner believes one way; his readers evidently another.. For business reasons, perhaps, he lets the paper please them, on the principle that the fisherman in seeking bait consults the likes of the fish rather than his own gastronomic tastes. But in this case, as in all others, it is ownership that fundamentally controls. Do you not run the things you own as you want to run them? I think so. To put the case concretely, the Worcester Evening Post has been conducting a drive of great vigor and enterprise for a reduction of electric light rates in that city. Does any one suppose that even the very high-minded men to whom the destinies of the Herald and Traveler have been wisely committed will direct their editors to instigate a corresponding onslaught in Boston? It is no disrespect to these excellent men to say that no one would expect this of them. Were they to undertake it, no one would regard it other than a pose.”
Then Mr. O’Brien takes up the political aspects of this new phase of journalism. These, he says, are not so easy to dismiss and goes on to say:
Big Business in Control
“There is only one alternative, and that is the one to which big business newspapers have usually resorted; and that is getting out of politics. If they can not help those whom they would like to befriend, why hinder? This, perhaps, explains the political neutrality of the ultramodern newspaper. It evolves into a status of its own, like the Cleveland Plain Dealer and countless other successful properties. May that not be the manifest destiny of big business ownership here as well as everywhere?
Journal of Opinion Passes out
“In other words, is not our newspaper of opinion throughout the country destined to pass out in this era of big business control? The time may come when the newspaper will dodge the appearance of political interest, or the expression of a political preference, much as would a great insurance company or a great dry goods store, because it would “hurt business.” . . . This tendency to get out of politics has been long conspicuous wherever a great city has had only a single morning newspaper, like Cleveland, Detroit, St. Louis, Denver, Louisville; such a consolidated paper has ceased, for the most part, to do any thinking in politics. It has wanted to please everybody so as to afford no excuse for fanning a rival into existence.
Chain Newspapers Colorless
“The chain newspapers have little weight or regularity in politics, either. They are big business. With that, opinions do not mix. Look at the strange course of the Scripps-Howard League in the recent presidential campaign originally for both Hoover and Smith, finally supporting Hoover, but doing all it could to embarrass his campaign and so make things even with their Smith readers. In fine, the journal of opinion, long regarded as a primal output of the printing press, has ceased with the chain newspapers, in highly consolidated fields, and is, I believe, destined to cease in papers like those owned by the International Paper & Power Company, because no party would really find their adhesion an unmixed advantage.
Where Shall We Find Political Guidance?
“Some persons will say this is desirable; that we have too much partisanship, and too much politics. Perhaps, and yet we must vote. We have a great civic structure on our hands for the conduct of city and state and nation, freighted as these are with the greatest destinies known to human history. If’ we get no politics from our dry-goods stores and our insurance companies, because it would “hurt business,” and eventually none from our churches, because politics do not belong there, and none from our newspapers because they have become big business, too, where shall we find the material out of which to build our political opinions, and so to define our relation to that agency which more than any other holds in its hands the very issues of our lives? This may be peering into the too distant future-perhaps so, perhaps not. I wish merely to leave with you for your consideration the question, what is to become of journals of opinion when newspapers become recognized cogs in the mechanism of big business? And how shall we get along without that service which the old-time newspaper performed for us?”
Considerable evidence of this trend in modern journalism, as we shall show, appears in the evidence from time to time and constitutes, as we have already intimated, a sort of preliminary or antecedent condition to the operations and influence of the utility companies which seems to come into the picture a little later.
In line with this present trend in American journalism, which Mr. O’Brien so well described in the address above referred to, another tendency in the newspaper field is to be noted, namely, newspaper consolidations. The hearings of the Federal Trade Commission show that the same tendency and the same economic influences that are bringing about the concentration of ownership and control in chain stores, chain banks, chain farms, and chain utilities seems to be operating in the newspaper world as well. For example, Victor H. Hanson, Publisher of the Birmingham News and the Birmingham Age-Herald, testified that he “was looking for newspapers to buy myself,” [Pt. 16, p. 41.] and that he had employed one Mr. R. B. Chandler to investigate newspapers that he might purchase in different parts of the country. Acting under this plan Mr. Chandler went to Los Angeles “to see if they could not buy a newspaper somewhere in Southern California.” [Idem, p. 44.] Mr. Hanson also made a bid for the purchase of the Commercial Appeal of Memphis. [Idem, p. 46.]
Here the hand of the utility interests begins to appear, for Mr. Hanson was introduced to the Memphis people by Mr. Abell of the Electric Bond and Share Company, and the First National Bank of Birmingham had arranged to let Mr. Hanson have $4,250,000 to buy the Memphis Commercial Appeal. [Idem, P. 47.] However, Mr. Hanson insisted, in reply to a direct question in the hearing, that no power company, electric, gas, or railway company, or any person prominently connected with any such company had invested a single penny in his newspaper enterprises. [Pt. 16, p. 57.] Mr. Hanson also undertook to buy other papers in Tuscaloosa and Anniston. [Idem, p. 48.]
Another example of the drift towards concentration of the ownership of newspapers is indicated by the testimony of Mr. Charles J. O’Malley of Boston, who had formerly been interested in the American Publisher of New York City. Mr. O’Malley stated that during that period, some fifteen years previously, he had often had four or five inquiries a week relative to the purchase or sale of some newspaper and that during the time that he was connected with the American Publisher he had assisted in the purchase of perhaps a dozen or more papers. [Pt. 15, pp. 122-123.]
The most natural and obvious way to control the Press of the country would be to own it. However, if an attempt to purchase. outright and thereby to control the Press of the country were publicly known, it would certainly meet with strenuous opposition, not only from the public but from those in the newspaper field who still appreciate and desire to maintain the freedom and independence of the Press. But in spite of the danger of a general public revolt, the findings of the Federal Trade Commission show that a very considerable and widespread effort was made on the part of the utility interests to purchase outright many of the leading and influential newspapers of the country.
Copley Buys a Chain
One of the first instances of the attempts of the utility companies to control the Press through direct purchase of newspapers, which came to the attention of the public and was investigated by the Federal Trade Commission, was that of the Copley Press.
It appears from the testimony that Mr. Ira C. Copley had been for many years an owner of considerable utility interests in Northern Illinois, particularly the United Gas and Electric Light Company. Mr. Copley meanwhile owned several papers in Northern Illinois, including the Aurora Beacon, the Elgin Courier, and the Joliet Herald-News. [Pt. 2, p. 21.]
Early in 1928 Mr. Copley entered into a contract with the owner of the so-called Kellogg papers for the acquisition of 15 additional newspapers in Southern California, among them the Alhambra Post Advocate, the Pasadena Evening Post, the Glendale Daily Press, Hollywood News, Santa Monica Outlook, San Diego Union, and the San Diego Tribune, and several others. [Pt. 2, p. 22.] About the same time he purchased the Illinois State Journal of Springfield, Illinois.
Illinois Cities and the Copley Utilities
The purchase of these papers seemed to have at once attracted the attention of Willis J. Spaulding, Commissioner of Public Property of the City of Springfield and general manager of the municipally owned light and water utilities of that city. Mr. Spaulding happened to be out in California about the time that these purchases were made and there heard the talk among certain newspaper men that this chain of Copley papers might be extended on up the Coast to include San Francisco, Seattle, and Tacoma. [Pt. 2, p. 4] Mr. Spaulding, as Vice-President of the Illinois Municipal League, had had some experience with the United Gas and Electric Company, of which Mr. Copley was chief owner. This company had applied for a reduction in the heat units of gases furnished by his company, and the Illinois Municipal League felt that if this reduction were secured, it would be equivalent to a rise in price and that it would likely extend to all of the cities of the state. The League, therefore, employed an attorney to fight this effort to lower the heat standard of the gas. This was Mr. Spaulding’s first experience with Mr. Copley in connection with his utilities.
Later, after Mr. Copley had purchased the Illinois State Journal, Mr. Spaulding was disturbed because matters that he considered of very great importance to the people of Springfield, involving a matter of a half-million dollars a year in electric rates, [Idem, p. 8.] had been given first page prominence in the other paper in Springfield (The Illinois State Register), whereas the Copley paper (The Illinois State Journal) gave it practically no attention. Moreover, Mr. Spaulding’s attention had been called, while he was out in California,-to an article in the California Graphic under the caption “The American People In Chains” in which reference was made to the acquisition of various newspapers by Mr. Copley and a suggestion of the probability that there was a motive back of it to promote and concentrate political control of the utility interests along with that of the control of the chain of newspapers. [Pt. 2, p. 10.]
Reaching the Regulatory Commission
Mr. Spaulding testified during the hearings regarding a contribution Of $25,000 made by Mr. Copley to the campaign fund of Frank Smith for election to the United States Senate at the time, or about the time, that Mr. Copley had pending before the Commission a petition asking authority to bring about certain consolidations of utility companies. [Idem, pp. 11-31]
Upon receiving his subpoena to testify before the Commission in this matter, Mr. Spaulding went to the offices of the Illinois Commerce Commission to look up the financial operations and earnings of the Western United Gas and Electric Company, which had been owned by Mr. Copley, according to his own testimony before the Reed Investigating Committee of the United States Senate. Mr. Copley at that time owned 77 per cent of the common stock in this company, and yet nobody could know by looking at the official records how much Mr. Copley owned or what he was making out of the utilities. His ownership was concealed by a holding company: The Western United Corporation. At the end of 1925 this Western United Gas and Electric Company was combined with three other utilities. They were consolidated and, as was customary in such cases, there was an inflation or “write up” or increase in the capital account of about thirteen million dollars. [Pt. 2, pp. 11-12.]
The record also shows, according to Mr. Spaulding, that the holding company, The Western United Corporation, through which Mr. Copley drew his profit, and which owned the common stock of the Western United Gas and Electric Company, had been paid a dividend of $600,000 in 1925, and a dividend of $600,000 in 1926. “From my familiarity with utility valuation,” testified Mr. Spaulding, “which covers a period of ten or fifteen years, I am quite sure that the earnings of these utilities were extraordinary, that they were not justified. These dividends amounted in 1925 to twenty per cent of the par value of the common stock (italics ours) after paying all costs of the interest of the underlying bonds, first mortgage bonds, and preferred.” [Pt. 2, p. 12.]
Another matter that evidently served to emphasize the importance and significance of the purchase of these papers by Mr. Copley, in the mind of Mr. Spaulding, was the fact, according to his testimony, that he, Mr. Spaulding, had met Mr. Copley in Springfield, Illinois; shortly. after the purchase of these papers. And in spite of the fact that Mr. Copley had made a very emphatic and oft-repeated statement to the effect that he had at that time absolutely no interest whatever in any utilities anywhere, [Idem, p. 6.] he nevertheless at that very time owned holdings in certain utilities amounting to approximately five millions of dollars. [Pt. 2, p. 30.] And, what is more, he was still President of the corporation. [Idem, p. 56.]
Mr. Spaulding’s testimony also disclosed the fact that back of the Copley press bonds was a guaranty based on the utility bonds and stocks which Mr. Copley then owned, from which it appears that there were several millions of dollars of public utility bonds back of the purchase of the papers referred to, so that the financing of these newspapers was on the foundation of public utility securities. [Idem, p. 13.]
A Formidable Newspaper Chain
Mr. Spaulding’s letters to Senator Norris and Judson King are quoted in full in the Commission’s hearings. In his letter to Senator Norris he urges him to bring to the attention of the United States Senate in a formal manner the “formidable newspaper chain which is apparently being formed to be used as an instrument of the electric light and power monopoly to maintain its control.” In his letter to Mr. King he says: “These papers (the Aurora Beacon News, the Elgin Courier News, and the Joliet Herald-News) were used to nurse along the people and keep them contented while Copley became immensely wealthy by collecting exorbitant rates for utility service. He was also successful in keeping himself in Congress for six terms, beginning March 4, 1911, and ending March 4,1923.” He also pointed out the fact that the chain of papers which had been purchased in California was in the area in which the utility fight was keenest. “How far this newspaper monopoly will go,” he says, “nobody knows; but it is indeed a menace, and an investigation which would show the actual financial support behind this venture would undoubtedly reveal a direct utility connection and would be a splendid and far-reaching contribution toward the protection of the public.” [Pt. 2, pp. 14-16.]
The Federal Trade Commission, at one time or another, had several of the employees and officials of Mr. Copley’s company on the stand, and a rather earnest effort was made to break down Mr. Spaulding’s testimony and evidence, but it would seem that the above facts were so well established that they were practically admitted by the other witnesses who were endeavoring to explain away or at least to mitigate the effect of Mr. Spauling’s testimony. At any rate, the following facts seem to have been pretty generally established and admitted:
(1) That Mr. Copley had acquired a very considerable fortune through the operation of publicly owned utilities in Northern Illinois.
(2) That during a considerable portion of the time up to 1925 Mr. Copley had owned and operated several important newspapers in that section of the state.
(3) That early in 1928 Mr. Copley purchased the Illinois State Journal and a chain of papers in California.
(4) That the financing of the purchase of these papers was on the foundation of public utility securities.
(5) That although Mr. Copley testified that he had disposed of his interests in utilities, he still at that time owned a very large interest in utility securities and was still President of one of the corporations.
Thus it would seem that the direct connection between the Copley papers and utility interests was fairly well established by the testimony.
Doherty Buys Journal-Post
In line with this policy of Mr. Copley is the action of Henry L. Doherty, head of the Cities Service Company, one of the large utility companies of the country. Mr. Doherty was not content with indirect control of newspapers, but boldly purchased outright a controlling interest in the Journal-Post of Kansas City, Missouri, as he explained, in order to have a vehicle of presenting his defense and reasons why gas rates should not be reduced. He publicly announced that he would write his own editorials, presenting the views of his utility interests. His company resisted and refused the State Utility Commission’s demand to inquire into the costs of piping and delivering gas to the-city gates.
Nation-wide Movement for Purchase of Newspapers
That there was a plan under way for a nation-wide purchase of newspapers in the country is evidenced, although not proved in detail, by the testimony given before the Commission. For example, Mr. Charles J. O’Malley of Boston testified that on the 11th and 12th of February, 1929, two men came to his office seeking his co-operation to help them in the purchase of one or two newspapers in Boston and So or 6o newspapers in the United States from Maine to California. These men declined to disclose the identity of the parties that they represented but stated that if the newspapers which they sought to buy were at all receptive, they would very quickly disclose the names of the parties that they represented, saying that they were perfectly able to finance the purchase. The testimony then reads as follows:
“I said, `What amount of money do you intend spending?’ `Well,’ he said, ‘we are inclined to go as high as $20,000,000 for each newspaper in Boston.’ ‘Well,’ I said, `What is the purpose of all this?’ ‘Well,’ he said, ‘The interests which I represent intend buying 50 or 60 newspapers in the United States from Maine to California. They will probably have five in the New England States, and in the other places they will purchase the key newspaper in these respective towns throughout the country.’ (Italics ours.) He said, ‘At the present time they are negotiating for a large paper in Indianapolis; I think it is the Indianapolis News.” [Pt. 15, p. 117.]
A Chain of Newspapers: Coast to Coast
The newspapers which these gentlemen had in mind, it developed, were either the Boston Globe or the Boston Post. And for either one of these the interests represented by these gentlemen, according to their testimony, were willing to pay $20,000,000. The testimony shows that neither of these papers were for sale and so nothing came of the effort. The papers were not bought.
Judge Healy inquired particularly as to the interests which these men represented. But Mr. O’Malley does not seem to have inquired into this. He asked, “Did he intimate what interests he did represent?” Answer: “He intimated that he represented two banks which had, as I understood him to say, intended or were about to purchase 50 or 60 daily newspapers from Coast to Coast.”
Later again Judge Healy inquired, “Was $20,000,000 mentioned in any of these conversations?” Answer: “Yes, Sir.” Question: “In which one?” Answer: “The first time I met Mr. Colloran he said that ‘We are ready and willing to pay $20,000,000 for either the Post or the Globe.’ I said, ‘That is a very large sum of money, without fully considering what the actual value of these papers is. ‘Well,’ he said, ‘we are going to buy 50 or 60 of these newspapers from Coast to Coast.’”
The best Judge Healy could do was to get a suggestion that the men making these offers represented two banks, one in New York and one in Chicago. And that, it was remarked, had a peculiar angle, for, “You know, the Insulls are out in Chicago. Possibly it is the Insulls that are interested.” But Mr. O’Malley did not know. [Pt. 15, P. 115.]
Twenty-one Millions $21,000,000) Offered
For the Cleveland Plain Dealer
Perhaps nothing in the testimony regarding these matters has shocked the people so much as the attempted purchase of the Cleveland Plain Dealer. In Exhibit No. 4328, [Exh. Pts. 10-16, pp. 761-62.] Of the Commission’s reports is a memoranda covering the proposal to form a holding company for the purchase of the Cleveland Plain Dealer “at a price in the neighborhood of $21,000,000, or such price as we may hereafter agree upon.” Here again it was found that the paper was not for sale and the purchase was not made, but the fact that there was an organization that was ready and able to purchase such a newspaper at such a price stands out as an astonishing revelation of the hearings.
Similar evidence of a nation-wide move to purchase papers came out when Mr. Frank E. Gannett was testifying and judge Healy asked him what he thought about “the ethics of buying leading newspapers from Maine to Texas, for business purposes.” [Pt. 15, p. 58.]
The main factor in this nation-wide drive for the purchase of newspapers seems to have been the International Paper Company. Representatives of this company insisted that their only purpose in purchasing stock and interests in the various newspapers mentioned was to secure contracts for the sale of news print paper. Their claim is that they were purchasing interests in newspapers in order to make sure that they could control contracts with these papers for supplying them with print paper for their newspapers.
How Paper Got into Power
The International Paper Company was interested in the manufacture and sale of pulp paper. In that process it used enormous quantities of electric power. Thus, naturally, the print paper industry branched out into the power business, because it had certain power sites which it wished to develop and utilize. In this connection, and by this very natural process, the paper industry became involved in the power industry. Later it acquired an interest in the New England Power Companies and then, to quote from the testimony, “as the situation developed, we decided we could do a lot better if we could have complete control of it, so we could make our water power work dovetail in with the market.” [Pt. 14, p. 69.]
In this way paper got into power and before long it came about that the power part of the organization was greater than the paper part, for, according to the testimony, by 1929 the net income of the International Paper Company from paper was only 25 per cent, whereas the net income from utilities was 65 per cent. And, meanwhile, this same International Paper Company had become very active in the purchase of stock and in some cases controlling interests in a great many newspapers throughout the entire country.
Some of the Papers They Purchased
Among the various papers which the International Paper Company purchased through its various agents may be mentioned the following:
(1) The Chicago Daily News, in which the International Paper Company purchased $250,000 worth of preferred stock and 5,000 shares of common stock. [Pt, 14, P. 45]
(2) The Chicago Journal, in which the International Paper and affiliated interests purchased, through the Bryan-Thompson Newspapers organization, $1,000,000 worth of debentures, $600,000 worth of preferred stock, and 10,000 shares of common stock. [Idem, P. 47.]
(3) The Knickerbocker Press and the Albany Evening News, $450,000 worth of preferred, and 3,000 shares of common stock. [Idem, P. 49.]
(4) The Boston Herald-Traveler, 10,248 shares of common stock at cost of $5,380,200.
(5) The Brooklyn Eagle, $1,954500 in notes and 400 shares of common stock of the Brooklyn Daily Eagle Corporation. [Pt. 14, P. 56.]
(6) Through Hall and LaVarre, $855,000 in notes secured by stock of the Augusta Chronicle, Columbia Record, and Spartanburg Herald Journal. [Idem, p. 57.]
(7) Contingent interest in the Ithaca Journal News, with $300,000 worth of notes. [Idem, p. 58.]
Papers They Tried to Buy
The above were the newspapers which the power interests, operating through the International Paper Company and its representatives, were able to purchase. But it is interesting to note that in addition to these actually purchased papers, efforts were made to buy a great many other newspapers. Among these were the following, which, it will be noted, are among the leading news papers of the country:
1. The Cleveland Plain Dealer Pt. 15, p. 19.
2. Columbus Dispatch Pt. 15, p. 19.
3. Kansas City Star Pt. 15, p. 19.
4. Milwaukee Journal Pt. 15, p. 19.
5. Detroit Free Press Pt. 15, p. 19.
6. St. Louis Globe-Democrat Pt. 15, p. 19
7. Boston Globe. Pt. 15, p. 117
8. Boston Post. Pt. 15, p. 118.
9. Indianapolis News. Pt. 15, p. 19.
10. Cleveland News. Exh. Pts. 10-16, p. 761.
11. Chain of “Booth” papers in Michigan. Pt. 15, p. 28.
12. Chain of “Star-League” papers in Indiana. Pt. 15, p. 28.
13. Minneapolis Star. Exh. Pts. 10-16, p. 764.
14. Buffalo Times. Exh. Pts. 10-16, pp. 764-5.
15. Dayton Herald. Exh. Pts. 10-16, pp. 764-5.
16. South Bend News-Times. Exh. Pts. 10-16, p. 765
17. Atlanta Constitution. Exh. Pts. 10-16, p. 770
18. Asheville Times (N. C.). Exh. Pts. 10-16, p. 799.
19. Charlotte News (N. C.). Exh. Pts. 10-16, p. 799
20. Macon Telegraph (Ga.).
To Blanket the South with Power Papers
One of the striking features of this drive of the power interests to get control of the newspapers of the country was the work of two young men known as Hall and LaVarre. These young men having practically no newspaper experience seem to have been sent out with almost limitless funds, and with practically no restriction as to where they should go or how many papers they should buy, to look up prospects and negotiate purchases of various papers. They chose the Southeast as their field and began a very energetic canvass of that section, undertaking to locate suitable prospects which the interests they represented might then purchase. The minutes of the directors’ meeting of the International Paper Company for October 31, 1928, read.
“The president stated he had been conferring with two young men who propose to purchase newspapers, principally at least in towns of 50,000 and over, and that he wished the board to authorize an appropriation of $2,500,000 gross for use in assisting in the financing of such purchases.
“Upon motion, duly made and seconded, it was unanimously voted that an appropriation of $2,500,000 gross for the purpose of assisting in the financing of the purchase of newspapers, as stated to the meeting, be, and the same is hereby authorized.’ [Exh. Pts. 10-16, p. 794.]
Thus, backed by almost unlimited funds, these young men set out to canvass the more important cities in the Southeast in the quest for newspapers that they might purchase for the International Paper Company.
They allowed themselves a salary of $1,250 a month. This they said was for immediate purposes to live on. . . . “But sometimes we have been taking more and sometimes -less, as we have needed it. [Pt. 14, p. 139.]
Then it seemed that on certain occasions checks of from $5,000 to $15,000 were deposited to their account [Pt. 14, P. 140.] and there does not seem to have been any very clear record of the transactions. In some cases no receipt whatever was given.[Pt. 14, p. 141.] There was no restriction as to how many papers should be purchased or how much they should pay . [Pt. 14, p. 141.]
In this enterprise one or the other of these men visited “practically every place in the South traveling in a car.” They tried to buy papers in North Carolina, South Carolina, Georgia, Alabama, and Tennessee. [Exh. Pts. 10-16, pp. 798-800.] These young men had no money of their own but, of course, were heavily financed by the International Paper Company, as indicated above. [Pt. 14, P. 173.]
Unlimited Funds to Buy Papers
At one time $400,000 was transferred to the account of Mr. LaVarre without any evidence, note or other security. LaVarre testified: “I could have taken it and gone to Europe or anywhere else, if I had wanted to. I could have done anything I wanted to with it.” And Judge Healy asked: “You have no contract with them?” Answer: “No, sir.” Question: “And no written evidence of the indebtedness at all?” Answer: “No, sir. Yes, sir; I have now, because there is a paper which is in evidence here.”[Pt. 14, P. 174]
Speaking of one of their first ventures, and when they were undertaking to purchase three papers, the Augusta Chronicle, the Spartanburg Herald-Journal, and the Columbia paper, there was $870,000 cash involved.
Judge Healy inquired: “That was a pretty large order for a beginner without any money, wasn’t it?” Answer: “Well, I think it would appear so on the surface, unless I had come up and tried to give you a selling talk. I mean, we had a very definite belief in what we could do, and still have.”
Question: “At any rate, you did not risk anything?” Answer: “No. As a matter of fact, the International Paper Company took all the risk.”[Pt. 14, p. 177.]
When Mr. Hall was on the witness stand, Judge Healy asked him: “Why didn’t you pay your own expenses out of your own pocket instead of having the International advance the money for your expenses?” Mr. Hall replied: “We had no idea what our expenses would be and we were borrowing money from the International.”
Question: “You were not only borrowing money to buy the paper but you were even borrowing money to cover your expenses while you were looking for them?” Answer: “Correct.” And these young men seem to have lived a pretty high life, judging from their expense accounts.
Judge Healy asked: “As a matter of fact, your expenses did not run to the figure that has been mentioned here, $2,500 a month, did they?” Answer: “Yes, they exceeded that.”
Question: “You mean to say it cost you $1,250 a month apiece during this period?” Answer: “I should say it has run quite a little over that some months.” [Pt. 14, p. 186.]
Later it appeared from the testimony that there was $15,000 in the open account upon which they could check. [Idem, p. 187.]
Of course, these men were not always successful in purchasing the papers which they located as prospects. And, as a matter of fact, it seems that so far as the present record shows they succeeded finally in negotiating the purchase of only three newspapers.
“The Thor of Modern Civilization”
“Advertising is the Thor of modern civilization,” says J. F. Hull, Hull, Editor of the Maryville, Missouri, Tribune. ” And just as the thunder god of the old Norse mythology made the valleys and plains by the strokes of his giant hammer, so publicity in this day makes its mark upon the affairs of this old world and shapes the thought and molds the opinions of all men.’”
Realizing the tremendous power of advertising as a means of enlisting the support and co-operation of the Press, the utilities set about utilizing it to the utmost. And by the most clever . and effective methods the utility companies have made their influence and control effective throughout the Press of the country by the lure and subtlety of advertising, more than in any other way. The way this scheme was worked constitutes one of the most interesting and significant disclosures of the hearings of the Commission.
Millions for Advertising
In brief, this plan was worked out in the following way:
First of all, in developing the various state and local organizations that were to take charge of the public relations and publicity work for the utilities, the men selected were almost without exception experienced and trained newspaper men. [Exh. Pts. 5 & 6, p. 181.]
Second, having thus equipped their organizations under the leadership of experienced newspaper men, the next step in the plan was for the utilities to launch a nation-wide drive to develop an advertising campaign of enormous proportions.
The volume proposed was to amount to something like $25,000,000 to $30,000; 000 per year.
And it is interesting to note that this advertising that was to be so lavishly bestowed upon the newspapers was to be given only to the “loyal newspapers.” [Exh. Pts. 5 & 6, p. 188.] Obviously, the utilities were planning to “reward their friends and punish their enemies.”
Third, having their state organizations equipped with newspaper men, and having succeeded in arranging for a $25,000,000 to $30,000,000 advertising patronage, the next step was to send their state representatives out to canvass their respective states, town by town, getting in touch with the newspapers in each community, telling them of the advertising campaign which the utilities were about to undertake and urging them each and all to get in line to get their share of the advertising. In this way the utility companies were made to appear to the representatives of the Press throughout the country in the light-of veritable benefactors, for the advertising that they were offering became naturally a very large and dependable source of much-needed income. And, as the matter was presented, there seemed to be no possible or reasonable objection to the method by which this advertising was to be carried on. Naturally, and easily, the representatives of the utilities, traveling out over the states, succeeded in winning the good will and cooperation of the Press in the matter of accepting the advertising.
Fourth, the next step in the plan was very cleverly concealed and very subtly executed. In two parts of the country far removed from the centers of utility activities, and apparently wholly independent of any connection with them, there started up certain press agencies. These agencies prepared news items, editorials, comments, and special feature articles from the standpoint of the utility corporations but always cleverly prepared so that no immediate connection between the utilities and their huge advertising schemes and these press agencies was apparent. These agencies were developed to such an extent that they were regularly supplying some 14,000 daily and weekly newspapers with the utility companies’ propaganda material. Thus there came to the representatives of the Press throughout the country from one source the offer of an enormously increased advertising patronage. From another source, apparently entirely independent, came the press service which the utilities wanted published in order that their side of the utility question should be regularly and systematically presented to the readers of the Press throughout the country.
Experienced Newspaper Men as Managers
As stated above, the first step in the plan of the utilities to use their advertising patronage in extending their influence and control over the Press was to put at the head of the state organizations of the utility companies experienced newspaper men.
Mr. Sands, chairman of the Committee on Public Relations, in an address at the convention in 1923, said:
“The success of the state committees on public utility information is very largely due to the fact that we have selected as directors of these committees trained newspaper men.” [Exh. Pt. 1, p. 101.]
Mr. Preston S. Arkwright, in a long statement made as a witness in the hearings of the Commission on January 14, 1930, stated:
“The directors of the public utility information bureaus were men selected because they were supposed to have knowledge of news value and publicity matters. They were generally newspaper men who usually had no previous or preceding knowledge of the electric light and power industry.” [Pts. 15 & 19, p. 101.]
Following out this policy, the men selected to head the various state committees were almost invariably experienced and trained newspaper men. For example, J. B. Sheridan, Chairman of the Missouri Committee, was not only an experienced newspaper man but closely connected with and at times an official of the Missouri Press Association. In a letter to one of the officials of one of the power companies, Mr. Sheridan rather boasts of this matter, saying:
“The secretary of the Missouri Committee on Public Utility Information has been elected chairman of the executive committee of the St. Louis Committee for the Missouri State Press Association convention, Hotel Chase, St. Louis, October 15, 16, 17, 1925.” [Exh. Pts. 5 & 6, p. 200.]
Similarly, Mr. Alfred Fischer, director of the Michigan Committee, was “an experienced newspaper man.”[Idem, p. 822.] Mr. Fischer was succeeded as director of that committee in 1921 by Arthur W. State, who was announced as being the “foremost newspaper man of Michigan and the first president of the Michigan Associated Press Editorial Association.” [Idem, p. 889.]
Clarence G. Willard of the Connecticut Committee was an experienced publicity and newspaper man. [Pt. 3, p. 233.] J. S. S. Richardson, Director of the Department of Information of the Joint Committee of the National Utility Association of New York had been city editor of the Public Ledger of Philadelphia. [Idem, p. 53.] A. G. MacKenzie of the Pennsylvania Public Service Information Committee had been for 8 years in the newspaper field. [Idem, p. 325-26.] Fred J. Ballmeyer of the Ohio Committee, R. J. Holly of the Florida Committee, Willard Cope of the Georgia Committee, and others had been selected because of their experience in the newspaper field.
The Lure of Advertising
The second step in this campaign for the control of the Press through advertising as explained above, was a nation-wide drive to get the utilities of the country to greatly increase their advertising.
Exhibit No. 635 of Part 2, page 667, is a “Prospectus for the Organization of the Public Utility Advertising Association,” which was formed, as stated, “to foster the best interests of the public utility industry,” thus indicating the formation of an organization of the utility interests to promote their advertising campaign.
Exhibit No. 636 immediately following is a bulletin on “What the Public Utilities Advertising Association Should Take Up During the Present Year.” Among other things the association was urged to maintain a contact with the Bureau of Advertising of the American Newspaper Publishers Association; it should canvass the amount of money spent for advertising in the newspapers by the various utility companies and, above all, it should “pound into the heads of the publishers” the facts about the utility companies so as to “convince them of the public utility’s unquestionable right to spend money for advertising. [Exh. Pt. 2, p. 671]
This Public Utilities Advertising Association held a national convention at which Arthur Brisbane was one of the leading speakers.”[Idem, p. 671.]
Exhibit No. 637 [Idem. p. 671.] outlines “The Proposed Public Utilities Advertising Association’s” advertising campaign, and Exhibit No. 639 [Idem, p. 674.] presents at great length the reasons “why public utilities should advertise:
See $25,000,000 to $30,000,000 a Year
This campaign to increase the volume of advertising on the part of the utility companies proved very successful. According to the president’s message, by May, 1924, the amount of advertising had been increased to $11,000,000 a year, and the statement is made:
“I have no hesitancy in predicting that the various public utilities of the country will be spending from $25,000,000 to 130,000,000 a year in advertising within the next five or six years.” [Exh. Pt. 2, p. 681.]
Later on, when this matter was brought to the attention of some of the utility representatives, a protest was made, saying that the advertising had not amounted to as much as this enthusiastic official had estimated. They submitted figures showing that the total advertising in 1928 was only $13,044,143, and that only $8,425,320 of this was in newspaper advertising. b Nevertheless, Frederick W. Crone of the New York State Public Utilities Information Bureau testified on May 28, 1928, saying:
“I have seen figures from the Public Utility Advertising Association which put the current advertising in newspapers of all public utilities at $25,000,000 to $28,000,000 a year.” [ Pts. 18 & 19, pp. 255-56.]
Other witnesses had made similar testimony.
In Iowa it was estimated that the advertising would amount to $16,000 in 1928 and $24,000 in 1929 in that state alone. Mr. Sheridan of the Missouri Committee held out to the newspapers of that state that the utilities would soon be spending $50,000 a year in advertising and that before long it would amount to $1,000,000 a year. [Exh. Pts. 5 & 6, p. 187.] Advertising spent by the Southeastern Power and Light Company in 1925 amounted to $63,073.68. [Pt. 27, P. 457.]
Mr. J. B. Sheridan, in the draft of speech which he prepared for J. F. Hull, President of the Missouri Press Association, to deliver at the 1922 convention of the Missouri Association of Public Utilities, makes the statement that “the National Electric Light Association, the American Gas Association, the American Electric Railway Association, and the American Telephone and Telegraph Company are incessantly urging the public utilities and their member companies to advertise, advertise, advertise in their local newspapers.” [Exh. Pts. 5 & 6, p. 176.]
Makes the Ghost Walk Saturday Night
Mr. J. F. Hull, President of the Missouri Press Association, made it very clear to Mr. J. B. Sheridan, Manager of the Missouri Committee on Public Utility Information, that the newspaper man realizes very keenly his obligations to his readers. “The news,” he says, “must be without color, the story just as it occurred; the editorial must be just what he thinks about the subject discussed.” But, he says, “The newspaper man has advertising space for sale. It is the department that helps to make the ghost walk on Saturday night. That which is entirely improper when appearing in. his newspaper as news or editorial is perfectly acceptable and entirely proper as properly designated advertising matter.” (Our italics.) [Idem, p. 158.]
Here then is clearly indicated the legitimate field through which the utility corporations can get their story to the public through the Press.
The Wisconsin Committee reports the use of 16,518 column inches of newspaper advertising in the Milwaukee newspapers and the daily and weekly newspapers of the state in January of 1922 alone. It lists 28 daily newspapers in the state, and 21 weekly newspapers in which the committee carried advertising during 1922. [Exh. Pts. 5 & 6, pp. 924-27.]
The Public Pays
In all of these campaigns to increase the advertising by the utility companies, it is interesting and significant to note that the companies are constantly urged to keep in mind the fact that this advertising costs the companies nothing: that it is an expenditure chargeable to operating costs and may, therefore, be put into the rate base, so that the public pays. It is pointed out to the companies that the New York Utility Commission “has ruled that educational and good-will advertising is properly chargeable to operating expenses.”‘ Similarly, the Missouri utilities were informed that “The Missouri Public Service Commission has recently ruled that judicious advertising is a proper charge against operating costs.”[Exh. Pts. 5 & 6, p. 223.]
It may also be significant to note that a general and nation-wide campaign of advertising was carried on by the utility companies through an agency known as Lord & Thomas and Logan. Display advertising was used in many rural and farm publications. In one instance the evidence shows $i,8oo was paid to “Successful Farming at Des Moines”; another publication in Topeka got $1,710; in another instance the “Country Gentleman” of Philadelphia got $2,250. The general program of advertising the utility companies carried on through this firm of Lord & Thomas and Logan cost the utilities approximately $100,000 a year for several years? [Idem, p. 227.]
J. B. Sheridan was especially anxious to impress upon his people the point that in the long run it was the public that paid for all of this “good-will, educational, and informative advertising.” The Public Service Commission, he urged, will not disapprove of any reasonable charge made against operating expenses for these matters. “This means that the companies can, without any loss to themselves, apportion a reasonable amount of their annual gross earnings for good-will, educational and informative advertising. [Pt. 7, pp. 86, 87, 93.]
“You get the point, don’t you? In this case there is really no expenditure by the companies; they merely allot a certain sum out of their annual gross earnings to educate the people in the processes of their operation and charge that sum to operating expenses.” [Exh. Pt. 58, p. 171.]
In this connection, Mr. M. H. Aylesworth, one-time Director of the National Electric Light Association, in one of his speeches urges the expenditure of more money on their national meetings, saying:
“All the money being spent is worth while. And may I leave this thought with you executives: Don’t quit now. At the next convention have more young ladies here so as to do the job right; and let off more men from the departments, so they may come here. Don’t be afraid of the expense. The public pays the expense. Let us continue with big meetings.” [Pt. 7, p. 129.]
Thus the second step in the program of the utility companies by which they increased enormously the volume of advertising patronage given out in various ways was eminently successful, to say the least.
Distributing the Patronage
Having thus finally persuaded themselves to vastly increase their advertising, the next step in the program was to bring the good news home to the newspapers of the country. This was done with the usual systematic thoroughness by the representatives of the various state committees. These men systematically canvassed the cities, towns, and villages of their states, often traveling in an automobile so as to have plenty of time and opportunity to meet the newspaper men and explain all of the details of this advertising campaign.
Mr. Sheridan of Missouri, as usual, seemed particularly diligent in this part of his work. He traveled over the State of Missouri in an auto and in some instances took with him a representative
the Press Association. [Exh. Pts. 5 & 6, p. 186. ]He told the Executive Secretary of the Missouri Press Association:
“I am not talking hyperbole. I know that you can turn up $50,000 worth of new business next winter from the public utilities and am sure that within a year you will develop a million dollars’ worth of business in Missouri.” [Idem, pp. 187-89]
He reported that he proposed to reach “every nook and corner of the state” in visiting the newspaper men and that he had made “a card index of everybody and everything” so as to be sure that nothing escaped him in this respect.
“The Thor of Modern Civilization”
Mr. Sheridan was clever in bringing these advertising possibilities to the attention of the Press of the state. Among other things, he prepared an address for Mr. J. F. Hull, Editor of the Maryville Tribune and President of the Missouri Press Association, to be delivered as the principal address at the first day session of the annual convention of the Missouri Association of Public Utilities. It was in this address that advertising was referred to as “the Thor of modern civilization.” [Idem, p. 532.]
Mr. Sheridan’s success in this matter of the control or influence of the Press through the medium of advertising seems to have given him a rather peculiar view of the editors of the state, especially the country editors. Writing to Ole Buck of Lincoln, Nebraska, under date of March 27, 1924, he refers to the country editors as “God’s fools,” saying:
“Gee, Mr. Buck, what the country Press is worth to people who are honest and use it honestly is beyond calculation. I have spent as much as $300 in three years “entertaining” editors, etc. Some of them do enjoy a little drink. All of them are “God’s fools,” grateful for the smallest and most insignificant service or courtesy. As I was in business 27 years, I ought to know newspaper people.
“They sure are my friends. Hold my job for me in Missouri.” [Exh. Pts. 5 & 6. p. 228.]
And Mr. Sheridan and the utility men generally seem to have been very adept in the use of what is here referred to as entertainments as a means of securing the good will of the press. Many thousands of dollars were spent in entertaining the newspaper men in creating good will. These entertainments included banquets, dinners, theater parties, baseball games, golf, etc.
Needless to say, these efforts on the part of the representatives of the utility corporations to interest the newspapers in accepting increased advertising was eminently and universally successful. Of course, the utility people were careful to make it clear that all of this advertising was perfectly legitimate, and had no intention or purpose of controlling the editorial policies of the newspapers.
It Is Hard to Smite the Hand That Feeds You
With experienced newspaper men in charge of the propaganda work of the utilities in each state, and with practically every newspaper in every state enjoying a very large, if not its largest, source of income from the advertising of the utilities, it only remained to see that the Press of the country was systematically and regularly supplied with the news notes, press service, editorial comments, and other material necessary to put the whole story of the utility question from the standpoint of the companies into the press of the country and keep it there continuously. And to this task the utilities addressed themselves with the greatest diligence and effectiveness.
Supplying the Press with the Utilities Propaganda
In the first place, each utility company locally was urged to supply the Press in its community with material of this kind, and in addition to this, every state information department or bureau supplied the Press with a weekly letter or bulletin, or press releases. [Exh. Pts. 5 & 6, p. 609.] The Pennsylvania Committee even prepared a plate or matrix and supplied to the Press weekly. [Idem, p. 611.] Pennsylvania reported 68,850 column inches, equal to 574 newspaper pages, in one year. [Pt. 7, p. 243.]
Iowa reported 75,630 inches, equal to 630 newspaper pages, in one year. [Idem, p. 240.]
Nebraska reported 45,948 column inches, equal to 383 solid newspaper pages, in one year. [Pt. 7, p. 248.]
In 1925 the total reproduction of the Hofer Service was reported as 1,954,398 inches; 17,589,292 lines; 16,286 newspaper pages. And estimating this at 10 cents a line, the Hofer people claimed a value of $1,758,929 of service to the companies. [Idem, p. 256.]
State Bulletins, Press Service, Etc.
Most of the state organizations prepared regularly a bulletin or clip sheets, as they called them. [Exh. Pts. 5 & 6, p. 612. ] The New York and Illinois Committee published news bulletins which were supplied to the Press. The Tennessee Committee published regularly the “Tennessee Utility News.” [Idem, p. 643.] The Kansas Committee published what they called the “Kansas Utilogram.” [Idem, p. 721.] According to the evidence, the newspapers reprinted from these bulletins at the rate of 10,800 column inches per year. The Nebraska publication reported the use of 12,000 column inches from their publication. [Idem, p. 718.] Indiana published the “Hoosier Utilities.” [Idem, p. 731.] This was sent to from goo to 1,100, including 420 newspapers in the state, and it was reported that from 30,000 to 35,000 column inches were reproduced annually from these publications in the Indiana newspapers.
Press releases were even gotten out to the Associated Press which, according to the evidence, was almost always used. [Exh. Pts. 5 & 6, p. 305.] Special bulletins were gotten out on such subjects as the Cleveland Municipal Light Plant. [Idem, P. 312.]
The Illinois Committee reported that its mailing list contained “every daily and weekly newspaper” in the State, including “both English and foreign language” and every monthly publication. [Exh. Pts. 5 & 6, p. 944.]
Mr. Sheridan of the Missouri Committee reported that there is “only one of the 600 newspapers in Missouri which is opposed to the electric industry.” [Idem, p. 300.] He also claimed that the “Associated Press sends out practically everything we give them. They have 35 newspapers in Missouri. We get matter printed in from 1 to 25 newspapers on one story. Out of the 35 we will average about 13 newspapers printing stories sent out by the Associated Press.” [Idem, p. 305.]
Thus the matter of getting the story of the utility question from the standpoint of the companies into the Press of each particular state was very well and thoroughly provided for by the various state organizations. But in addition to this, national press services were also established that seemed to have done a very thorough job in supplying the Press with the utility’s side of this question.
The Darnall Press Service to 600 Newspapers
One of these national Press services was the so-called Darnall Newspaper Service. This service prepared editorial and news matter for some 600 newspapers in practically every state in the Union. The material sent out dealt with Muscle Shoals, Boulder Dam, the government in business, etc., and was supported heavily by the Alabama Power Company, which bought copies of the service for distribution to the various newspapers throughout the country. The Alabama Power Company paid for this service in 1926, $1,100; in 1927, $1,200, and for eight months of 1928, $1,400. [Pt. 7. p. 109.]
Judge Healy addressed a direct question to Mr. Marcy B. Darnall, the owner and editor of this service, as to whether or not the policy was against government operation of utilities or for it. In reply Mr. Darnall said: “I have opposed government operation, not only in utilities but government operation of all affairs for 23 years.” [Pt. 7, p. 106.] He further stated that the editorial policy has been against municipal ownership or operation of power plants. [Idem..]
Judge Healy asked for a list of the papers to which this service was sent. In reply Mr. Darnall said that “at one time or another it went to every paper in Alabama, Mississippi, Georgia, and Florida.” [Idem, p. 112.] He declined to give the list of the papers and objected to the judge’s statement that he was employed by the power company. Commissioner McCulloch replied that “the chief counsel is drawing out the fact that they (the service) were paid for by the power company.” (Italics ours.) [Pt. 7, p. 114.]
Hofer & Sons Press Service to 14,000 Papers
Another of these Press agencies utilized very effectively by the corporations was the firm of E. Hofer & Sons of Salem, Oregon. This concern got into touch with representatives of the Electric Bond & Share Company in New York City and developed a press service to cover the entire country. They prepared articles, editorials, and news items in a service which they supplied to between 13,000 and 14,000 weekly and daily newspapers in all parts of the country. [Idem, p. 225.] Mr. Hofer in his testimony admitted that they “persistently opposed government participation in business and municipal operation of utility plants.” The major portion of the stuff that goes out in this weekly service, Mr. Hofer admitted, was properly designated as canned editorials and has been reproduced in great quantities throughout the country. [Idem.] This press service dealt from time to time with such subjects as the Cleveland Municipal Light and Power Plant, showing it up in a very bad light; the California Water and Power Act was discussed under the title “What A Farce”: and other editorials giving at length the arguments against municipal ownership. [Pt. 7, pp. 226-227, 229.]
Mr. Hofer testified that the power companies paid for this service to the extent of about $84,000 per year. [Idem, p. 227.]
Blighting Effect of Public Ownership
In an editorial entitled “Safeguarding, Industrial Structure,” Mr. Hofer had this to say:
“We show the blighting effect government or public ownership has on private initiative and enterprise. We show that drastic and radical rate regulation which kills utility development hurts the community worse than the company; we show that exorbitant taxation of business is simply indirect taxation of the consuming public. And so on through a long list of subjects which are fundamental to the profitable and successful operation of business and the employment of labor.” [Pt. 7, p. 232.]
At one point in the testimony reference is made to a certain Chicago trade paper, Manufacturers News. An entire page in this Chicago paper is reproduced from the Hofer & Sons bulletin. The first item under editorial comment relates to the subject of “victories of socialistically inclined movements that result in municipal or state ownership and operation.” [Idem, p. 234.]
One of the cleverest devices in connection with this press service propaganda is the use that was made of these canned editorials. According to the testimony, these people would write articles and send out to the editors and these editors would print them as their own editorials. Then the National Electric Light Association headquarters would clip these editorials and send them broadcast throughout the country as a reproduction of the editorials from that particular paper? [Pt. 7, p. 236.]
In their eulogies of the power companies an article appeared under the heading “Soulless Corporations:” [Exh. Pts. 7, 8 & 9, p. 293.] Thus the Hofer Service concludes with the observation that while the “corporations may not have souls, the men who operate the successful ones do and they are good Christian men who are constantly helping to make the United States a better nation.” (Italics ours.) [Pt. p. 244; Exh. Pts. 7, 8, & 9, p. 293.]
In his various writings and statements Mr. Hofer earnestly insists upon his independence of any influence on the part of the private corporations. The greatest value of our service, he urges in one of his statements, lies in the fact that “the people are reading something about public service companies other than what is sent out directly by such companies.” And again he says: “I feel sure that it pleases you to see a good editorial on utility problems, taxation or public ownership which has not been dictated by the utility interests but which expresses views which are sound and with which you can agree.” And again, “Let something be said about utilities which is not controlled lock, stock and barrel by the utilities. This helps build up a public understanding regarding fundamentals affecting the utility industry which assures a more open-minded hearing.” [Pt. 7, p. 246.]
These protestations of disinterested service led Judge Healy to press a rather interesting question: “You are not undertaking to say, are you,” asked Judge Healy, “that you are absolutely independent in the things that you write and that you are not influenced by the money that you receive from these utilities?”
Answer: “I absolutely am.”
And again judge Healy queried: “Do you want us to understand that this $84,000 a year does not make any difference whatever in what you preach on any of these subjects?”
Answer: “Absolutely.” [Pt. 7, p. 246.]
A Sample of Misinformation
As an example of the kind of “information” that was given out by this press service and used widely throughout the country may be cited an article that was published and claimed to have been on the authority of the National, Industrial Conference Board to the effect that the cost of living in certain cities where there were municipal plants is higher than in those cities where the utilities are privately owned. The statement was as follows:
“Is it mere coincidence that San Francisco, Cleveland, Jacksonville (Fla.), Detroit, and Seattle are the most expensive cities in the country to live in at present, according to a statement just issued by the National Industrial Conference Board? It so happens that each of these cities is a municipal ownership city.” [Idem, p. 247.]
Now, as a matter of fact, no such statement was ever made by the National Industrial Conference Board, and Judge Healy pressed Mr. Hofer with this question: “Did it ever come to your attention that the claim had been made that the National Industrial Conference Board had disavowed any such statement?”
Answer: “It was not brought to my attention.” Question: “Look at Document 3857, please.” [Idem, p. 247; also see Exh. 3857, pts. 718 & 9, p 299.]
It is also interesting to note that all of this service, sent out to these many thousands of weekly and daily papers throughout the country, was sent out absolutely free. [Pt. 7, p. 249.]
“Changing the Public Consciousness”
As to the extent to which this Hofer Service was used, the claim is made that it was “reaching more people continuously through the country daily and weekly newspapers of this nation than are being reached by any other single agency.” [Pt. 7, p. 250.] And Mr. Insull, at a meeting of the National Electric Light Association held in Chicago in March, 1923, reported that arrangements had been made so that the service of this company would cover the whole of the United States and that the expense had been underwritten by a number of large manufacturers and holding companies and would not result in any additional expense to the National Association. (Italics ours.) [Idem, p. 251.]
The purpose of the service is stated very succinctly by Mr. Hofer as follows:
“First, to reduce the volume of legislation that interferes with business and industry; second, to minimize and counteract political regulation of business that is hurtful; third, to discourage radicalism by labor organizations and all sorts of agitators; fourth, a constant fight for reasonable taxation by state, city, and county government; fifth, a scientific educational campaign against all socialistic and radical propaganda of whatever nature.” [Idem, p. 256.]
The effect of this nation-wide propaganda, it was claimed, amounted to “the changing of the public consciousness.” [Idem, p. 229.] And in one place it is claimed that during a four-year period the service advertising sent out “832 editorial articles, or a total of 3,328 editorials in 48 states.” [Idem.]
Another clever feature of the Press services was what is known as sponsored articles or “ghost writing.” That is, the utility people would prepare an article for editorial or news use, and then get some prominent person to sponsor the article and allow it to be published in his name. One of the bulletins had an article of this kind signed by the former Judge James S. Manning. [Pt. 4, p. 179.] ‘ The president of the Chamber of Commerce of Charlotte, N. C., sponsored another article on “Progress in the Carolinas.” A state assemblyman sponsored another article. In short, to quote from the record, “We find editors, governors, judges, district and attorneys general, presidents of women’s clubs, presidents of Chambers of Commerce, all lending their names to these articles that you prepared?” Answer: “That is correct.” [Idem, p. 180.]
And, it is stated, that “it was undoubtedly true that many of the newspapers were led to print these articles because of the name of the man that was attached to them.” [Idem, p. 179.]
Thus it will be seen that the plans of the utility corporations for the influencing of public opinion through the Press were varied, devious, and subtle. It was not only, nor mainly, by direct control or outright purchase of newspapers that this control was effected, although, of course, these methods were attempted. But by other and far more subtle and effective methods the views of the utility corporations were made to permeate the Press and thus to reach the public. And while loudly professing that their advertising methods had nothing to do with influencing or determining the news or editorial policies of the Press, the results are shown by the almost universal friendliness of the Press to the public utility interests. Every contention of the utility corporations appears in every possible form and manner throughout the Press of the country. In every municipal campaign, in one form or another, with but a few notable exceptions here and there, the local press is found on the side of the utilities. In state and national campaigns the corporations’ side appears in elaborate, friendly advertising with such emphasis and to such an extent as would be impossible for the unorganized public forces to present. The sheer weight and power of the tremendous advertising and propaganda funds of the utilities overwhelms the field.
The feeling of close relationship which the utilities felt toward the Press is indicated by an editorial which appeared in the Newark Advocate-Tribune under the caption “Brothers Under The Skin.” “The public service corporations and the daily and weekly newspapers,” this editorial reads, “are brothers under the skin, both being public utilities serving the American people,” etc. [Exh. Pt. 3, p. 758.]
Utilities and the Schools
Public opinion is a powerful factor in any community or nation.
He or they who would carry out any policy in connection with basic utilities that affect the general public so widely and intimately as electric power, gas, and street railways, must necessarily have the support of public opinion. This the utility corporations seem to understand very fully. Accordingly they have undertaken to influence and control every existing agency and instrumentality that is effective in making and molding public opinion.
We find them active and aggressive in the educational institutions of the country.. We find them active and aggressive in influencing and controlling the press, the platform, the radio. We find them active in. the civic organizations, in commercial, labor, and agricultural groups; and in politics. Wherever there is any organization or instrumentality that can help in making and molding public opinion, the utility agencies are at work. As one of their witnesses said, “from the cradle to the grave” nothing that will educate the people to their way of thinking is neglected or overlooked. [Exh. Pt. 1, p. 122.] And, as another said, nothing in the way of publicity, except “sky writing,” has been omitted. [Pt. 3, p. 214.]
In the schools, colleges, and universities, we find the utilities and their agencies active in a great many different directions. For example, they are hiring college and university professors; introducing and subsidizing utility courses in the colleges; criticizing and changing courses in the schools; subsidizing research work; reviewing, revising, editing, and removing textbooks; having representatives of the utility companies on the faculties; introducing their own literature in the schools, and controlling university extension work.
Strictly Educational: No Propaganda
The purpose and methods of the utility corporations in dealing with educational institutions of the country is well illustrated by a statement made by Chairman T. S. Arkwright on the subject of “relations with educational institutions,” which appears as Document 3774 in the hearings of the Commission. [Pt. 7, p. 127.] Mr. Arkwright, in addressing a meeting of the Public Relations Section in 1924, had this to say:
“Every effort should be made to co-operate with school authorities in the establishment and maintenance of courses in public utility economics. All companies will find school authorities ready to co-operate in safety work. Some individual companies and various state committees on public utility information have profited by the opportunity of furnishing schools with textbooks on public utility problems. To be acceptable to school authorities and to be really effective, reading matter for schools should be free of direct propaganda. Plain instruction in fact about public utilities will be unobjectionable to school authorities and will accomplish the purpose of disseminating correct information and arousing the interest and friendliness of the students. Motion pictures also offer excellent opportunity for reaching school children. One company is making somewhat extensive use of pictures in schools. Another company has posted on the walls of scores of schools in the state it serves a bulletin giving facts about the state, but never any propaganda about the company. This company believes the result is that school children constantly seeing the name of the company associated with facts about the state’s greatness are beginning to associate the company itself with the progress of the state.” [Pt. 7, p. 127.]
It will be noted here that especial emphasis is placed upon the necessity of keeping the material put into the public schools entirely free from any taint of “propaganda.” This emphasis will be found again and again in the statements of the representatives of the companies in connection with this kind of work. These protestations of freedom from propaganda material, however, must be considered in connection with the facts brought out in other parts of the hearing in which it is made clear as to just what the power company representatives regard as propaganda and what they regard as purely scientific and educational information.
Further in the statement Mr. Arkwright goes on to explain that in some states there are co-operative student courses and technical students pursuing their courses in college and at the same time working for public utilities part time. There is no better field for public relations work, he says, than this co-operation with educational institutions, both in the lower grade and the higher institutions. And then he makes the following rather astonishing statement:
“I think sometimes that the scholarly professors are rather inclined by their freedom from contact with business problems to get rather socialistic or radical in their frame of mind. It is essential some method should be adopted by which a correct understanding of the economic problems governing this most vital business can be gotten into the minds of students so that they will not come out of college with the wrong ideas, but it is a very delicate subject. We do not want any propaganda. We do not want to put over anything in the way of purely selfish ideas about it. The thing we should aim at is correct information on which the student may form his own judgment and his own opinion. [Pt. 7, p. 127.]
The first steps in the direction of “co-operation with the schools” seems to have been in the assistance rendered the universities in the form of subsidies. Thus the Northwestern University at Evanston received $25,000 a year for several years. [Pt. 7, p. 70.] Harvard University received an annual subsidy of $30,000 for the University Graduate School of Business Administration. [Idem, p.73.] Assessments were made on the various utility companies of the National Electric Light Association for a $100,000 program on public utilities at Harvard University.[Idem, p. 76.] The University of Michigan received $16,000 in 1927 and between $16,000 and $20,000 in 1928 for research work on “loading strength.” [Idem, p. 97.]
The Missouri Utilities were solicited in 1927 to contribute each its particular share to a general fund designated as the industrial fellowship fund of the University of Missouri. This fund was to be used for the expense incurred in the rural line program being fostered by the Rural Lines Committee of the Missouri Association of Public Utilities and the University of Missouri. It seems that Professor J. C. Wooley had estimated that $6,000 a year would be required to carry out the program under the direction of the Agricultural Engineering Department of the University of Missouri and the utility companies were asked to supply each its proportionate share of a total of $6,900 for the purpose. [Exh. Pts. 5 & 6, p. 114.]
According to the testimony of Paul S. Clapp, managing director of the National Electric Light Association, that Association contributed $12,500 a year through a special committee to the University of Maryland in connection with certain experimental studies in rural electrification. [Pt. 11, p. 38.]
Friendly Relations in Oklahoma
The manager of the Oklahoma Utilities Association, in his annual report in 1928, referred to the preliminary work of his Association as having borne fruit and certain results achieved through the University of Oklahoma. Short courses at the university on gas and electric metermen’s work had been established and the Utility Association co-operated “as far as feasible with the State Agricultural and Mechanical College at Stillwater. . . . The close working relationship already existing between our Association and the University of Oklahoma and the Oklahoma Agricultural and Mechanical College, as indicated by the short courses referred to, has been broadened to include the Oklahoma City University, now with more than 1,400 students…. Our friendly relationship with the University of Oklahoma is further developed in a request for our co-operation with the University School of Business in connection with the monthly business bulletin recently published by the university. The Dean of the School of Business is looking to our office for information touching the utility industry, including steam railways.” [Exh. Pts. 5 & 6, pp. 61-66.] In this case we find that this “friendly relationship” between the university and the utilities extends in this case, not only to. the establishment of certain courses, but also to the matter of editing and publishing a business bulletin dealing with utility problems published by the university.
Another rather subtle and certainly a very effective method by which the university interests are tied in with those of the utilities is through investment of university funds in utility securities. We find, for example, that over $21,000,000 of Harvard University funds are thus invested. And we are told that such investments are increasing rapidly. [Exh. Pt. 2, p. 401.]
They Show Their Sympathy
As evidence of the kindly sympathy of the utility corporations a payment was made to Mr. G. F. Forber under date of June 9, 1928: “That was for flowers for a funeral, sir.” [Pt. 7, pp. 16-17.] And as evidence of the esthetic tastes of the corporations a student at the Iowa College was paid because “he helped in connection with decorations for the banquet in honor of Paul Clapp.” [Pt. 7, p. 17.]
Thus by generous contributions placed and by other financial interrelations, the utilities set up a friendly relationship with the educational institutions of the country and laid the foundation for the co-operation which we review in the following pages.
Having established a friendly relationship with the universities through subsidies or otherwise, the next step was the matter of introducing utility courses. The representatives of the utilities made it a point to study the various courses given in the educational institutions and were particularly active in having utility courses introduced, and in many cases subsidized these courses, so that they were made possible. In some cases they were successful in having the courses changed.
For example, W. C. Sterne, Chairman of the Rocky Mountain Committee on Public Utility Information, writing to the Director of the Michigan Committee on Public Utility Information, in 1922, said::
“I have just succeeded in perfecting plans for an educational committee to be composed of one member of the faculty of each college in the state. This committee has tentatively agreed to assist us in introducing public utility subjects in the lecture courses and for the debating societies. I feel that we will make a three strike in this activity, as we will educate, to some extent, the members of the faculty who need such education, while at the same time assist in molding the opinions of the students and reaching a given part of the public through debates.” [Exh. Pt. 4, p. 286.]
The Rocky Mountain Committee paid one-half the salary and the expenses of a research fellow in connection with their special utility courses. [Exh. Pt. 4, pp. 264-65.]
The Harvard School of Business Administration received $20,000 a year for several years from the National Electric Light Association. In an address to the National Electric Light Association Donald K. David, Assistant Dean of this graduate school, said: “The Harvard Business School very gladly and very happily accepts its foster parentage.” [Exhibits, Pt. 1, p. 121.]
Power Company Men on University Faculties
One of the astonishing revelations in connection with the influence of the utilities upon educational institutions in this country is the statement made by Mr. George E. Lewis, Executive Manager of the Rocky Mountain Division, in which he says:
“We now have twenty-four public utility company executives as members of the university faculty and Mr. Wolfe is collaborating with each in the preparation of the nine major subjects to cover.” [Exh. Pt. 4, p. 265.]
The university here referred to is the University of Colorado, and the Mr. Wolfe mentioned is Hubert P. Wolfe, the university fellow, one-half of whose expenses was paid by the utility companies.
In addition to the activities mentioned above the utility companies in some cases subsidized research work on the part of certain university professors, students, and institutions.
For example, Mr. Hubert P. Wolfe, above mentioned, a graduate of Northwestern University, was paid half of his expenses in carrying on research work for the University of Colorado under the direction and influence of the utility companies and imparting the utility viewpoint.
Writing of this work of Mr. Wolfe, George E. Lewis, Executive Manager of the Rocky Mountain Division, wrote to Mr. John C. Parker, Chairman of the Committee on Co-operation With Educational Institutions, as follows:
“We decided that the best results could be achieved through the establishment of a fellowship. This medium, it was thought, offered a broad avenue for employing the facilities of a university with all the dignity and prestige that such an institution enjoys.
“All negotiations were conducted through this committee which enjoys a splendid contact with and the confidence of all the institutions of higher education embraced in our territory: Colorado, New Mexico, and Wyoming. We left the selection of a suitable fellow to the university authorities, who after a thorough survey recommended Hubert P. Wolfe, a graduate of Northwestern University. This committee, of course, closely scrutinized his credentials, and intellectual leanings. It was agreed at the outset that this committee would bear half the expense of the fellowship–$1,000 for the first year, $1,100 for the second, $1,200 for the third. This expense comes out of committee income, derived from affiliated companies chiefly in Colorado. Thus far we have been engaged in imparting to Mr. Wolfe a practical utility viewpoint though he already had taken public utility economics which was a prerequisite to his retention by the university and this committee. [Exh. Pt. 4, pp. 264-65.]
The Ely Institute
But perhaps the most notable example of the subsidizing of university research work is that of Professor Richard T. Ely, and the Institute of Research in Land Economics and Public Utilities.
In the minutes of the Executive Committee of the Public Relations National Section of the Electric Light Association of April 9, 1925, we read:
“The committee also recommends an additional appropriation initially placed at $12,500 a year to be dispensed to the Institute of Research in Land Economics and Public Utilities, which is now located at the University of Wisconsin and is about to be . transferred to Northwestern University: This institute is under the direction of Dr. Richard T. Ely and has in preparation eight general texts on public utilities and has in contemplation a series of 22 books. The institute is at present financed, among other sources, by the Carnegie Foundation to the extent of $12,5oo a year and by the Laura Spelman Rockefeller Memorial to the extent of $10,000 a year. The University of Wisconsin has agreed to provide quarters, housing, and certain clerical expenses….
“The committee further recommended that the committee of three be empowered to advise the officers of the Institute for Research in Land Economics and Public Utilities that ‘this appropriation will be increased to $25,000 a year in proportion as definitive publications issue.’” [Exh. Pts. 10-16, p 220.]
In the minutes of the same committee a few months later, namely, in December, 1925,we read
“Chairman Martin J. Insull announced that the subscriptions of the various members of the public policy committee to a joint fund for research in the Harvard School of Business Administration, the Northwestern University and the General Federation of Women’s Clubs, had been allotted in accordance with the resolutions adopted at the previous meeting of the committee. The allocation was presented to the committee and unanimously approved. (Our italics.) [Exh. Pt. 3, p. 552.]
From which it appears that the recommendation of the committee made in April had been acted upon, approved, and the appropriations made.
Mr. Paul S. Clapp, responding to a request of the Federal Trade Commission, submitted a record of various sums paid to various universities. In this record we find that the Northwestern University received $25,000 for the year ending June 30, i926; another $25,000 for the year ending June 30, 1927, and $i2,5oo for the period ending February 29, 1928. This latter amount was evidently one-half the amount appropriated for the year that was to end June 30, 1928. [Exh. Pt. 3, p. 560.]
From later records it appears that this $25,000 a year, which was appropriated by the National Electric Light Association, through its committees, to the Northwestern University, was for the purpose of carrying on the work of Professor Ely’s Institute for Research in Land Economics and Public Utilities. For we read in the minutes of the Public Relations National Section of the Electric Light Association, Executive Committee, for February 3, 1926, that “the fund for the Northwestern University will be devoted to a consideration of government ownership of every character.” [Exh. Pts. 10-16,p. 218.]
In the meeting of the Committee on Co-operation with Educational Institutions of October 6, 1926, we are told that “after a few preliminary remarks the chairman called for a report from Dr. Ely of the Institute for Research in Land Economics and Public Utilities for the year ending June 30, 1926.” Thereupon Dr. Ely presented an extended report of his work to this committee of the utilities organization. In this report Dr. Ely explained that the:
“Northwestern University agrees under the articles of affiliation to furnish the institute with quarters and equipment and the business office of the university receives the institute’s funds and pays salaries and other expenditures upon requests drawn by the institute. The institute staff do a limited amount of teaching in the university which will tend to promote not merely a dissemination of research findings but the organization of research material for purposes of presentation and publication.
“The affiliation with the Northwestern University went into effect on July 1, 1925, and the institute moved its headquarters from the University of Wisconsin to temporary quarters in the Commerce Building, Northwestern University, Evanston, in September, 1925. On November 1, 1926, the institute will move into its permanent quarters on the 7th floor of Wieboldt Hall of Commerce, Northwestern University, Chicago.” [Exh. Pt. 3, p. 642.]
Professor Ely then went on to tell of the research projects that were under way and those that have been completed. There was a book on Taxation of Public Service Corporations by H. D. Simpson, which was ready for distribution. Another book on Public Utility Regulation by M. G. Glaeser was in preparation; also a book on Public Ownership of Central Electric Light and Power Stations by Richard T. Ely and Martin G. Glaeser. This, we are told, was “a case study of municipal ownership in Los Angeles.” The second part of the book was “a general analysis of municipal ownership in the electric light and power industry by Herbert B. Dorau” and others. There were also several other publications in preparation and a Journal of Land and Public Utility Economics was being published. [Exh. Pt. 3, pp. 642-44.]
Thus we have in this, as in the case of the Harvard School of Business Administration, and other universities, an extensive research work and publications covering pamphlets, books, and a monthly magazine, covering the whole field of public utilities and particularly the electric light and power utilities, heavily subsidized by the electric light and power companies.
Even the supporters of public ownership were occasionally inveigled into contributions to some of the university organizations that were at the same time heavily supported by the utility corporations. For example, William Thum of Pasadena, California, made a contribution of $4,000 or $4,500 out of his brother’s estate to the work of the Ely Institute for Research in Land Economics and Public Utilities, because, as he said, “his brother believed that a portion of his estate should be devoted to some public purpose and he contributed to the institute as such.” [Pt. 11, pp. 49, 53 & 60.]
Changing University Courses
In one case at least it seems that representatives of the utility companies were able to bring about a change in the courses given in one of the colleges. At any rate, Mr. C. E. Reinicker, engineer for the United Gas Improvement Company of Philadelphia, submitted to Professor N. C. Miller, who was conducting the utility course, a fifteen-page criticism of the way he conducted it. The significant thing about this criticism is the fact that it is practically a request that in so far as the presentation was contrary to the views held by the utility companies it should be changed or eliminated. For example, Mr. Reinicker says to Professor Miller:
“I do not think that it is advisable to use the word “profit,” as is so frequently done in the course, since in the utility business, in a sense, there are no profits.” [Exh. Pt. 3, p. 953.]
The idea that the private companies earn no profit is one that is very firmly held and oft repeated by the representatives of the utility corporations, and Professor Miller is here instructed, or at least advised, that he should modify his course so as to bring it into harmony with this view held by the companies.
And, as might be expected, these recommendations were put into effect. [Pt. 3, . 378.]
University Extension Lectures
The utility companies went further. They did not overlook the fact that the universities frequently conducted university extension lecture courses. They found that many of these lecturers were giving the public ideas and views that were not in harmony with – those of the corporations and they, therefore, sought to have these eliminated.
For example, John C. Parker, Chairman Relations With Educational Institutions Committee of the National Electric Light Association, under date of January 26, 1925, writes to Mr. John F. Gilchrist in Chicago a letter in which he speaks of Professor E. W. Bemis, a municipal ownership advocate, as a “mere charlatan infatuated with his own glibness” and as “a stench in the nostrils of his own colleagues,” and insisting that such lecture trips should be curbed. He proposes to “hit this stuff at the sources,” etc. His letter reads, in part, as follows:
“I think that while we have no right to interfere with the findings and the publications of any schoolman when they are based on scholarly research, we not only have a right but a duty to insist that no professor using the prestige of his institution, may express opinions not based on research and certainly that he must keep his hands out of the kind of thing that an advocate is hired for. This, of course, cuts both ways. Above all else I think we have a right to insist that the mere charlatan who, infatuated with his own glibness of expression, goes out on extensive lecture trips, shall be curbed by his institution. The infernal trouble is that these very extension lecturers and chaps who purport to do university service are least likely to be thoughtful and competent men. I think no honest university man will claim that as a function of any university, and we can be charged with no interference with academic control. I think I can assure the association that every one of these birds of the Bemis type is as a stench in the nostrils of his own colleagues, at his own institution, and we would absolutely have the public utterances of schoolmen to be along lines in which they have some claim to expertness rather than glibness.” [Exhibits, Pt. 2, p. 439.]
Washington Industries Education Bureau
Another method of propaganda was developed by one of the women in the State of Washington. Mrs. Clare K. Tripp, who was called as a witness in the hearings, was director of what was known as the Washington Industries Education Bureau. This bureau, according to Mrs. Tripp’s testimony, was a group of men and women organized for the purpose of supplying a “great need of a better understanding between schools, homes, and business.” As usual, the money for the support of the bureau came from the power companies. The Puget Sound Traction, Light and Power Company was a contributor to the extent of $25 a month in 1919. [Pt. 7, p. 277.] Later, in January, 1928, the company increased its contributions to $l00 a month.
The bureau undertook the preparation of a pamphlet or monograph entitled “The Utilization of our Water Powers and Their Relation to Industry.” [Pt. 7, p. 278.] This monograph was written by Mrs. Tripp but the material was supplied by the Puget Sound Power and Light Company, through Mr. Norwood Brockett. [Idem, p. 288.] It was then distributed to the state normal schools, county superintendents, and the Io executives in the state offices of the states, the Puget Sound Power and Light Company paying for the printing and distribution. . Approximately 2,000 of these pamphlets were distributed covering, besides the normal schools, the principals of all the high schools of the state, 297 in all, and others sent out by request to the teachers for use in the schools.
Later an effort was started to circulate these monographs in the state of Oregon. Some 3,000 of these copies of the Oregon pamphlet were distributed among the schools in that state and then suddenly a vigorous protest came up from some of the Oregon authorities and the bulletins were recalled. [Idem, p.280.] The Washington edition of the monograph, it seems, according to the testimony of Mrs. Tripp, was submitted to a number of officials of the normal schools in the state and also to Josephine Corliss Preston, the state superintendent of schools. And in the latter case some payments were made for service in helping to edit the monographs. [Pt. 7, p. 281.] Mrs. Tripp estimated that 75,000 high school children had received and used copies of these monographs of the Puget Sound Power and Light Company through this organization.
Endorsed by State Superintendents of Schools
It appears from the record that these pamphlets of the power companies which were prepared by them, though sponsored by Mrs. Tripp, were endorsed by the State Superintendents of Schools, both in Washington and Oregon. The monographs were distributed widely among the schools of Washington by and with the consent of the Superintendent of Public Instruction, Josephine Corliss Preston, who indeed is said to have taken part in editing and re-writing the monograph.
In Oregon the State Superintendent of Schools, Mr. Howard, read Mrs. Tripp’s pamphlet and wrote to her as follows:
“Mrs. Tripp: This is a wonderful program and I see here what you are doing in Washington. I should like to have this same service in Oregon. But who pays for the printing and the expense of circulating the monograph?”
Mrs. Tripp testified that she told Superintendent Howard that the industries were paying for the monograph. [Pt. 6, p. 298.]
Some 3,000 of these monographs were then sent out in Oregon and “hundreds of letters have come back and every one favorable.” Then it seemed that some objection was raised and an attack made upon Mrs. Preston on the ground that the monograph contained some objectionable matter. Mr. Howard called Mrs. Tripp on the long distance and told her of the trouble that had arisen and the pamphlets were hurriedly recalled. The excuse given was that they had found some technical errors in some of the statements and that they were extremely anxious to “preserve our fine school system free of that sort of politics:” [Pt. 7, p. 309.]
Some Astonishing Testimony
Some very interesting and quite astonishing statements were developed in this monograph which attracted the attention of the Federal Trade Commission. For example, it is stated that the bonds of a municipal plant are without exception held by eastern investors and, therefore, “all the money paid as interest upon these bonds each year goes out of this state” (our italics), [Pt. 7, p. 288-289.] whereas in the case of the private company “dividends and interest amounting to $950,000 a year remain in the state of Washington to swell the volume of trade.”
A little later Mrs. Tripp got into deep water when Judge Healy of the Commission asked her for an explanation of what her monograph had to say under the heading of regulation. The paragraph reads as follows:
“The company is not permitted, as is every other line of business, to fix its own rates or to make as much money as it can. Being a public utility, both the service which we must give to our customers and the rates which we are permitted to charge them are fixed by the state through its department of public works.” [Pt. 7, p. 291.]
On this judge Healy asked: “What was your authority for that statement?”
Answer: “We have an Interstate Commerce Commission, as I understand it, who govern the charges or the earning powers of our public utilities, privately owned.”
This statement evidently quite staggered the Judge. He asked: “Mrs. Tripp, you do not mean that the State of Washington has an interstate commerce commission?”
Answer: “No; a national, Federal commission. Is not that true; that they govern the earning power of our public utilities?” Question: “What is the name of that commission?” Answer: “They say here `a department of public works,’ but it was my opinion that the department of public works is governed partially by the Interstate Commerce Commission.”
Judge Healy: “Well, I am afraid you are mistaken about that.”[Pt. 7, p. 291.] And this woman was the director of the Washington Industries Education Bureau, publishing and distributing bulletins on utility questions in the schools and universities for the instruction of the children and young. people in the State of Washington!
“One of the “Starveling Professions”
The student body is reached through the teaching force. The utilities understand this and act accordingly. They set about the task of forming friendly contacts and maintaining friendly relations with the teaching force of the educational institutions in their usual thoroughgoing and effective manner.
In an address at a conference of the Middle West Utilities Convention in 1923 Mr. M. H. Aylesworth, then Managing Director of the National Electric Light Association, explained the policy of the utility companies with reference to the employment of university professors in the following language:
“I would advise any manager here who lives in a community where there is a college to get the professor of economics, let us say-the engineering professor will be interested anyway-interested in your problems. Have him lecture on your subject to his classes. Once in a while it will pay you to take such men and give them a retainer of one or two hundred dollars per year for the privilege of letting you study and consult with them. For how in heaven’s name can we do anything in the schools of this country with the young people growing up, if we have not first sold the idea of education to the college professor? [Exh Pts. 10-16, p. 72.]
“The Starveling Professions”
A year later, in 1924, the Rev. Dr. Charles A. Eaton, member of Congress from New Jersey, and at the time also President of the American Educational Association, and Manager of the Industrial Relations Department of the National Lamp Works of the General Electric Company, addressed the National Electric Light Association on this matter, saying, among other things:
”The ordinary teacher in the school and in the college belongs to one of the three starveling professions. In this country we are supposed to be governed by ideas; we live by the art of thinking. The three institutions that deal in ideas are the school, the church, and the press, and those are the three institutions that we persist in starving to death.
“Here is a professor in a college who gets $2,500 a year and has to spend $3,000 to keep from starving to death, who walks up to his classroom in an old pair of shoes and some idiot of a boy drives up and parks a $5,000 automobile outside and comes in and gets plucked. Then because that professor teaches that boy that there is something wrong with the social system, we call him a Bolshevik and throw him out.
“What I would like to suggest to you intelligent gentlemen is that while you are dealing with the pupils, give a thought to the teachers and when their vacation comes, pay them a salary to come into your plants and into your factories and learn the public utility business at first hand, and then they will go back and you needn’t fuss-they can teach better than you can.” [Exh. Pt. 1, pp. 120-21.]
Varied Lines of Employment
Now that is exactly what was done. In a letter of Mr. F. Gilchrist, Vice-President of the Commonwealth Edison Company of Chicago, it is stated that “Mr. Insull has approved the employment by the Commonwealth Edison Company during the coming summer of four ‘engineering’ professors from the Illinois colleges.” And, he adds, “I think possibly the word `engineering’ might be modified if there is some one in other departments whose society we are particularly anxious to enjoy.” [Exh. Pt. 2, p. 408.]
From further evidence we find that this policy of employing university professors was definitely and widely carried on. Professor Dean C.’ O. Ruggles of the Ohio State University was hired by utilities to work among the universities; also the traveling expenses of a considerable number of college professors attending the meetings of the utility committees were paid.[Exh. Pt. 4, p. 86; also Pt. 3, p. 68, 69.]
One of the gas companies had a representative who was “working on Cornell and Swarthmore.” Mr. W. Griffin Gribbel, Chairman of the New York Committee on Co-operation with Educational Institutions, wrote in February, 1928:
“It is interesting to learn that Professor Fussell spent his vacation year in the employ of the United Gas Improvement Company. This ought to make him a “cash customer.” [Exh. Pt. 3, p. 491.]
Professor W. C. DuVall, Professor in the University of Colorado, made an investigation of the municipally owned power plants of that state, for which he received during one summer the sum of $1,692.33, paid for by the Rocky Mountain Committee on Public Utilities Information. And, of course, the report was very unfavorable to the municipally owned plants. [Exh. Pt. 4, p. 267.]
Professor Theodore J. Grayson of the University of Pennsylvania, who was giving a public utilities course in that university, testified that he was an attorney for several years representing a number of New Jersey utilities; that he was Treasurer of the New Jersey Utilities Association, and that he also received pay as an outside lecturer against government ownership of utilities. [Pt. 4, pp. 302, 303, 309.] The deficits incurred in the conduct of Professor Grayson’s course on public utilities was made up by the utilities. [Pt. 3, p. 379.]
In the Pennsylvania State College several utility companies were guaranteeing subscriptions to the courses in utility economics. And these courses, which were given by Professor C. E. Reinicker, who was an engineer for the United Gas Improvement Company of Philadelphia, were conducted “primarily for the benefit of the utilities and their customers.” [Exh. Pt. 3, p. 952.]
We also have the case of Professor J. A. Switzer, Professor of Sanitary Engineering in the University of Tennessee, who supplied information to the Scripps-Howard newspapers regarding the Ontario Hydro-Electric Power System. Professor Switzer received this information from the National Electric Light Association and was paid $500 and expenses to act as Secretary of the Southern Appalachian Power Conference. [Exh. Pts. 5 & 6, p. 665; also Exh. Pts. 7, 8, 9, pp. 141-168.]
“An Impartial and Scholarly Survey of Ontario”
A particularly notable case of the employment of a university professor in making reports favorable to the utility companies was that of Professor E. A. Stewart of the University of Minnesota. Professor Stewart was employed to make what was advertised as “an impartial and scholarly survey of rural electrification in Ontario,” and had arrived at the conclusion that the farmers of Ontario were very much less fortunate than they. would have been had the utilities been privately owned. Moreover, it was claimed that the conclusions of this study had been derived from the various reports of the Ontario Hydro-Electric Power Commission itself.
As a matter of fact, according to the findings of the Federal Trade Commission, Professor Stewart, who was making this “impartial, scholarly, and scientific study,” was in the pay of the public utilities, and in the Federal Trade Commission’s Exhibits will be found photostatic copies of his receipted expense bills and of checks paid to him by the North Central Electrical Association and the Minnesota Committee on the Relation of Electricity to Agriculture. [Pt. 4, pp. 271-89.]
These are but a few typical instances out of the great many recorded in the hearings of the Commission in which, in one way or another, university professors have been found to be in the employ and pay of the utility corporations.
The Mavor Book
But perhaps the most significant instance of the employment of a college professor to help in supporting the position and views of the utility companies was that of Professor James Mavor, Professor Emeritus of Political Economy in the University of Toronto. Professor Mavor wrote a book entitled Niagara in Politics, in which he discussed “the failure of public ownership in Ontario and the insidious methods of politicians.” A summary of this book stated that Professor Mavor “believes that government operation is a dangerous and destructive fallacy and has written this book to prove it in the instance of the Ontario Hydro-Electric Power System.” Subsequent investigation and the findings of the Federal Trade Commission reveal the fact that the National Electric Light Association had paid Professor Mavor “through a mutual friend” $1,000 at the time the book was being prepared. [Pt. 7, pp. 88-9.] It also spent approximately $10,000 in the distribution of the book. [Exh. Pt. 3, p. 553.]
Lured by Various Means
A number of instructors from the state universities or colleges of Iowa were paid small fees to cover a registration charge made by a convention of the Iowa Section of the National Electric Light Association. “We had invited these instructors from state universities or colleges to come and enter into the discussion or make talks at the convention for us,” Mr. Weeks testified. [Pt. 7, p. 12.]
Occasionally the utilities would tender a banquet in honor of some of their prominent people, inviting members of the faculty of the colleges and universities. [Pt. 7, pp. 13-14.]
A Mr. Fleming of the State University of Iowa was paid $198 for making a map of transmission lines in Iowa. [Idem, p. 14.] A Miss Davison of the Iowa State College had her expenses paid to give a talk on “The Domestic Uses of Electricity.” Other payments for expenses, hotel bills, etc., were made to Professor McNeeley and Professor Fred A. Fish for attending the utility conventions and “entering into the discussions.” [Idem, p. 21.]
The dues of college men in the National Electric Light Association were paid by the Nebraska bureau of the utilities organization. [Idem, p. 37.]
John T. Madden of the School of Commerce of the University of New York was paid $193.26 for helping in a revision of one of the correspondence courses.[Idem, p.70.]
A rather interesting instance of an engineering company that served part time in lecturing for a university and part time service to the utility companies, and part time in independent business is mentioned in the testimony of Mr. Davis of the Nebraska Information Bureau. He referred to Mr. V. L. Hollister of the Hollister Engineering Company, who gave lectures at the State University of Nebraska on electrical engineering, and was at the same time “off and on” compiling data for the utility companies, for which he was paid, according to the testimony, “not to exceed $200 in one year.” [Pt. 11, pp. 107-08.]
Professor Hollister, it seems, was also employed by the Nebraska Electrical Association to prepare an electric light rate schedule which was sent to every plant in Nebraska, both private and municipal. It also developed in the evidence that Mr. Hollister was chairman or at least a member of the Rate Valuation and Rate of Return Committee of the Nebraska section of the National Electric Light Association. [Pt. 11, pp. 114-15.]
Breaking down the Government Service
Out in Idaho the United States Government has owned and operated for a great many years an irrigation district known as the Minidoka project. It was established and is operated as a part of the United States Bureau of Reclamation. As a by-product of the irrigation service it produces a considerable quantity of electric light and power. This power it retails to a co-operative company of farmers and others which enables them to get service at a very low cost.
Now comes the Idaho Power Company, through its General Manager, William R. Putnam, to testify in regard to their activities in this connection. Mr. Putnam is a member of the Committee on the Relation of Electricity to Agriculture. The Idaho Power Company is a member of the Northwestern Electric Light and Power Association, which is one of the geographical divisions of the National Electric Light Association.
On this Committee on the Relation of Electricity to Agriculture was Mr. M. R. Lewis who is connected with the University of Idaho. He severed his connection with the university and became connected with the Oregon State Agricultural College and the United States Department of Agriculture. A meeting was held, attended by representatives of the colleges, universities, utility men, and others for the purpose of devising ways and means to promote the greater use of electricity on the farms in Idaho. The committee was in charge of Mr. Sheppard, Dean Iddings of the agricultural department of the University of Idaho being vice-chairman. The Idaho Power Company, when it was found that the agricultural college had no funds available for carrying on the work, agreed to underwrite it; and, in fact, the whole expense of the work was borne by that particular company.
Among other things this committee undertook an investigation of the cost or success of the government hydroelectric project at Minidoka. The committee made a survey of all the rural customers of the principal power companies and of the mutual companies on the Minidoka project. In its report the committee pointed out that there were certain serious limitations to the possibilities of service through these mutual companies, operating in connection with the government owned project of Minidoka. The mutual company, according to the report of the committee, is not required or expected to earn any interest on the investment. Just why this should operate as a disadvantage to the mutual companies and their consumers is not made clear.
The committee also enters into a discussion of whether or not there are sufficient reserves for depreciation, whether proper allowance is made for. taxes, and finally concludes that “the saving to the rural consumer entirely disappears when the distribution of electric energy and the tax burden become co-extensive.” [Pt. 7, p. 266.] The committee further argues that to offset the possible savings of the mutual companies, the large private utility company has the very great advantages of better organization, more skilled employees, greater purchasing power and greater diversity of use. [Idem.] Publicity was given to this report of the university and utility companies’ committee through the Hofer Agency.
Thus we find the utility corporations co-operating with the State university and other educational agencies in the preparation and circulation of a report calculated to discredit the government owned hydroelectric power project and the mutual organization of the rural communities, and the small cities which were operating together in a co-operative or mutual arrangement by which they were securing electric service at low cost and at the same time promoting the advantages of the public service. In this operation, Mr. Lewis, the head, and Mr. Beresford, instructor of the department of agricultural engineering of the college of agriculture, were employed to devote as much time as possible to this particular work. The university released Mr. Beresford from his duties and he accepted a position as project manager of the Idaho State Committee and went on the payroll of that committee, funds for which were supplied by the power companies. And Dean Iddings of the agricultural department of the university consented to that arrangement. [Pt. 7, p. 267.]
Thus we have Mr. Beresford in the employ of the University of Idaho, and then in the employ of the Idaho State Committee on the Relation of Electricity to Agriculture, and then on the payroll of the company itself and, finally, back at the head of the agricultural engineering department of the college. Such is the testimony almost word for word. [Idem, pp. 267-68.]
The contributions of the Idaho Power Company to the State Committee on the Relation of Electricity to Agriculture in four years amounted to $4,792.53. [Idem, p. 269.]
Speaking of the organization of the national committee on the relation of electricity to agriculture, reference is made to the way the committee is made up. “This committee,” it is stated, “is made up of representatives of the American Farm Bureau Federation, the National Grange, the American Society of Agricultural Engineers, the Federal Government, the National Electric Light Association, and the manufacturers of home-lighting plants. [Pt. 7, p. 271.] Mr. Putnam affirmed that the service of his company constituted a real farm relief plan. “It is an honest effort to help the farmer,” he testified. “This year we have connected up over t,5oo farms to supply electrical service. The farmers using that service say it is the cheapest thing they are buying and that it is saving them many times over what they are paying for the service…. The farms are buying electricity delivered at the farm for an average Of 2 I/3 cents per kilowatt hour.” [Pt. 7, pp. 272, 275.]
A Versatile Professor
A very interesting and significant relation between the utilities information bureaus of the corporations and the state universities is brought out in the testimony of J. S. Thomas who was director of the Alabama bureau and was at the same time on the payroll of the University of Alabama. He had been the state high school inspector and Professor of Secondary Education in the University of Alabama, and for four months he received a salary of $300 a month, and for the next two months $666.66 per month. And during this period he was also on the payroll of the university. [Pt. 7, p. 131.]
This same Mr. Thomas, who designates himself as “a sociologist and economist,” traveled over the state addressing Rotary Clubs, Kiwanis Clubs, Civitan Clubs, mass meetings of farmers, and all-day singing meets, promoting, as, he said, the development of the public schools, roads and colleges of the state, meanwhile receiving his regular salary from the university and frequently being introduced as director of extension of the university..
Later on, that is following July, 1928, he became the associate director of the Alabama State Board of Industrial Development and after that was not on the payroll of the power companies, according to his testimony. [Idem, pp. 136: 37.]
However, judge Healy inquired specifically as to whether the power companies were not paying money into the funds of this newly organized State Board of Industrial Development. Confronted with certain letters which indicated that the utility companies were to some extent at least supporting this new enterprise of his, Mr. Thomas explained that he had sent a telegram which appeared in the Times-Picayune of New Orleans, “telling about the heroic work the utilities people had done in restoring communication and light after the flood,” etc. [Pt. 7, p. 137.] He also testified that the Birmingham Electric and Alabama Power Company made contributions from which certain salaries and expenses at the university were paid. [Idem, p. 139.]
Utility Professors at Summer Schools
The utility companies seem to have been quite clever and very successful in persuading teachers and professors in various colleges and universities to take up the subject of utilities and present them at teachers’ conventions and otherwise along lines that were, to say the least, very friendly to the utility companies.
In July, 1927, Mr. J. B. Sheridan of the Missouri Committee on Public Utility Information, wrote to Ray Harrison of the Maryville Electric Light and Power Company, saying that “at its meeting in Kansas City on June 28, this committee voted to initiate steps to have a carefully selected college professor address teachers attending the summer schools at the state teachers’ colleges during the summer upon the economics of public utility operation.” He wished to know of Mr. Harrison whom he would suggest as the proper man from the Missouri State University to address the teachers at the summer school that was to be held in Maryville during the month of August. [Exh. Pt. 5 & 6, p. 111.]
Finally Dean E. J. McCaustland of the College of Engineering, University of Missouri, was secured and he delivered an address before the Missouri State Teachers’ College at Kirksville, Springfield, and Warrensburg during the summer school session in 1927. This address by Dean McCaustland is given in full as Exhibit No. 2629. The address deals largely in generalities but brings out the usual line of thought acceptable to the utility companies regarding the effectiveness of regulation by commission control of the utilities, so that the people were fully protected; discusses the terminable permit law with approval and commends the idea of customer ownership, saying: “This widespread ownership of the securities of local utilities is bound to promote thrift in the customer and owner and to develop a sympathetic attitude towards the utilities which serve them.”
The professor also argues that very few utilities are really monopolistic “except in a limited manner”; he insists that the public is fully protected, and then enters into the discussion of valuation and rate-making, expounding the usual theory upon these matters held by the utility corporations. The address seemed to have pleased the utility companies, for Mr. J. E. Hillemeyer, Manager of the Steam Heating Department of the Union Electric Light and Power Company of St. Louis, wrote Mr. Sheridan suggesting that the address should be printed and distributed to the various teachers and students enrolled at the summer school session at the several teachers’ colleges in Missouri. Thus it appears that the utility companies first carefully canvass the field and select a man that they think will present matters in a way favorable to their views to the teachers’ colleges; then arrange to have him deliver an address, and then publish it in large numbers to be circulated widely among the students of the schools. [Exh. Pts. 5 & 6, pp. 112-13.]
And the utilities companies bear the expense. Mr. Sheridan writes under date of November 16, 1927, to Mr. J. V. Anderson of the Missouri Power and Light Company at Kirksville, Missouri, saying: “The committee thinks so well of the lecture of Dean McCaustland that it has determined to publish the lecture in pamphlet form.” He then asks for a roster of the teachers and students who are attending the colleges and says: “The committee will be glad to defray this expense” (Italics. ours): of the distribution. [Idem.]
One Professor All Wrong
In the course of the testimony in regard to a certain conference that was to be held, it appears that Mr. Carmichael of the Iowa Committee on Public Utility Information, wrote to the Illinois Committee, asking for information concerning “a college professor of the University of Chicago,” evidently referring to Professor Charles Merriam. The Illinois Committee wrote to Mr. Carmichael, telling him to “be prepared for the worst.” “Specifically,” Mr. McGregor said, “he is all wrong on the questions you ask about.” [Exh. Pt. 2, p. 402.]
Texts That Terrified the Utilities
Perhaps one of the most far-reaching influences of the public utility corporations upon the educational institutions of the country is the work they have done in making a survey of the textbooks on economic subjects, used in the schools throughout the country, and their activities in having the books that were unsatisfactory to them revised and in some cases eliminated entirely. This phase of their work in educational institutions goes very deeply into the sources of education and information of the youth of the country.
“Unsound, out of Date, Poisonous”
That the work has been thoroughly and exhaustively done is evidenced by the fact that practically all of the state committees on utility information seem to have undertaken the review and revision of textbooks in their respective states. Later the national organization took up the matter and completed the work. As usual in matters of this kind, Illinois seems to have led off in the work. In a letter to Mr. H. C. Abell of the Electric Bond and Share Company of New York City, under date of December 9, 1924, Mr. B. J. Mullaney of the Illinois Committee on Public Utility Information, says that his committee has reviewed 105 textbooks approved for use in the public schools of Illinois. This work, he says, emphasizes the conclusions drawn from the 41 textbooks reviewed by the National Electric Light Association Committee. Mr. Mullaney writes:
“The National Electric Light Association executive committee will receive a report from the association’s educational committee next Thursday on a matter to which I venture to draw your personal attention, namely, the character of teaching, as affecting public utilities in particular, that is to be found in textbooks on civics and economics now in common use in public schools throughout the country.”
Mr. Mullaney then offers the following as the net result of the survey of textbooks made by the Illinois Committee, which he says coincides with the findings of a similar survey made by the committee of the National Electric Light Association
(1) Most of the textbooks thus reviewed are no less than poisonous.
(2) These books usually ignore state regulation.
(3) The books reflect unsound teaching in relation to the entire commercial, industrial, and economic structure of the country.
(4) The books are mostly out of date.
He then concludes as follows:
“Therefore, this would seem to be a matter of fundamental and vital concern-one for consideration by a joint committee representing all three national public utility associations, or otherwise, as may be determined, but consideration to the end that action may be on the broadest possible basis with all possible weight behind it.” [Exh. Pt. 2, pp. 437-8.]
That Mr. Mullaney’s views as to the seriousness of the situation regarding the textbooks in the educational institutions of the country were shared by the representatives of the utility corporations generally is evidenced by letters which passed between the various representatives of the utility associations in different states regarding this matter.
For example, Mr. John C. Parker of the National Electric Light Association Committee on Relations With Educational Institutions, writes that “our committee can hit this stuff at the source when the source happens to be a professor in one of the higher educational institutions, such as Professor Monroe of Harvard.” [Exh. Pt. 2, p. 438-9.] Similarly, Mr. F. J. Hanlon, Chairman of the Iowa Committee, writes that the committee has taken up with each of their managers the question of getting information to the proper parties “in order that the textbooks which gave the matter correctly could be adopted in place of the socialistic ones.” And he adds: “We have had a great deal of success in getting this corrected.” [Exh. Pt. 2, p. 439.]
John N. Cadby of the Wisconsin Utilities Association writes from Madison under date of January 21, 1925, to John F. Gilchrist, Chairman of the Illinois Committee on Public Utility Information: “I find that fully a dozen of these textbooks reviewed by your committee are also in use in this state; some of the worst ones being used very widely.” [Exh. Pt. 2, p. 440.] It is interesting to note in this connection that Mr. Cadby took this matter up with Chairman Gettle, then of the Wisconsin Railroad Commission. Mr. Cadby said that Mr. Gettle “was so amazed at many of the statements it contained that he discussed the subject at a meeting he was addressing. He was formerly a teacher and would be very well fitted to present a criticism either before a teachers’ association or through some magazine.” (Italics ours.) [Exh. Pt. 2, p. 440.]
Mr. Cadby also seems to be sure that “we can get the co-operation of educators, publishers, or any one in this state (Wisconsin) who can best contribute to a solution of the problem.”
Radical, Misinformed Educators
Meanwhile, Mr. Frank W. Smith, Vice-President of the United Electric Light and Power Company of New York, writes to Mr. Gilchrist saying:
“I must say that it was a great shock to me to be brought to a realization of what the situation is with respect to this subject. . . . For a long time we have all understood that much of the misunderstanding of the utility business and problems was created in the minds of the young student by misinformed and radical educators, but I doubt if any considerable number of executives and utility operators appreciate the character of stuff that is contained in these textbooks, of which the State of Illinois is probably but one of many examples….
“It seems to me that there is no more important subject before our interests than this question of text books that deal with public utilities and, personally, I do not think that the public-relations section could have any more important subject to deal with at the coming convention than this question of an analysis of these publications in several of the states and some definite and well-laid plan schemed out to really do something about it. It has been talked of for a long time and there have been committees on the subject, but until some action is taken about these books that dish up such trash and absolutely criminal food for the digestion of school children, college students, etc., we can expect a new radical born or created every so often. (Italics ours.) [Exh. Pt. 2, p. 441.]
Mr. J. B. Sheridan, Director of the Missouri Committee on Public Utility Information, writes on January 10, 1925, to Mr. A. T. Perkins of the United Railways Company of St. Louis, in the course of which he says:
“I have recently completed a survey of standard textbooks upon civics and economics used in the public schools in several states, and a survey of educational tendencies in the schools, and I am irresistibly driven to the conclusion that the chief effort of the public schools appears to be manufacture and production of socialists and communists.” [Exh. Pts. 5 & 6, p. 327.]
Texts That the Utilities Dislike
Exhibit No. 446 covers more than eighteen pages in Part 2 of the Exhibits of the Federal Trade Commission, and starts out with a resume of the work done by the Illinois Committee on Public – Utility Information in a survey of the textbooks used in the public schools of Illinois in classes in civil government, economics, and citizenship. There are twenty-seven textbooks in the list of this review, and of these twenty-seven, fourteen are designated as being “bad,” one as being “very bad,” one as unfair, six as fair, and only four as good. [Exh. Pt. 2, p. 418.]
“Bad,” and “Very Bad” Textbooks
It is interesting to read the report of the Illinois Public Utility Information Committee on their survey of textbooks, for it sheds a great light on just what the utility corporations regard as “bad,” “very bad,” and what they regard as “good” and “fair.”
Let us consider first what these committees have found in the textbooks of the educational institutions that seems to them so objectionable-material which they think is “no less than poisonous”; that is so “amazing”; that brings such a “shock” to the utility officials; that is “such trash and absolutely criminal food,” etc.
Here is the report of the Illinois Commission on the textbook entitled Our Government, Local, State, and National, by J. A. James, Ph.D. of the Northwestern University, and A. H. Sanford, M.A., published by Scribner’s. And the committee reports this as one of the “bad” textbooks and then gives the following quotations as indicating the committee’s idea of what constitutes the bad:
Public Utilities.: In nearly every case the industries in question are monopolies; i. e., competition between rival plants is not possible. For this reason the public may suffer either from high rates or from imperfect service. [Idem, p. 419.]
That is bad!
“The Question of Municipal Ownership.: The opinion is gaining ground that no amount of municipal control will cure the evils of private ownership in these industries. Since they are “natural monopolies” it is argued they should be operated by the city government. This opinion is seen to have great weight when we consider the corruption and the lack of attention to the public welfare that accompany the granting of franchises to corporations. The bribery of aldermen and the granting of valuable privileges without compensation are frequent occurrences. On the other hand, the facts that bad officers are sometimes elected in our cities and that they ignore public interest, raise a very serious question whether they should be intrusted with the management of great industries, such as water and lighting plants and street car systems.
“Reasons for Poor City Government.: Individuals and corporations have found it necessary to secure franchises from cities for the operation of important industries; this has opened many opportunities for corruption in city affairs.” [Exh. Pt. 2, p. 419.]
Why Mention It?
Howard C. Hill’s book on Community Life and Civic Problems was regarded as particularly bad. It offended the utilities in several respects. One was a reference that it made to the campaign contributions of Samuel Insull in support of Frank Smith to the United States Senate from Illinois. The particular sentence that was so offensive in this respect was as follows:
“As late as 1926 a man then serving as the president of a number of electric light companies in the Middle West gave in a single primary election over $200,000 to the campaign funds of candidates of both parties.” [Exh. Pt. 4, p. 946.]
A Mr. Fred R. Jenkins of the Commonwealth Edison Company of Chicago, co-operating with Bernard J. Mullaney, went over the . text of Mr. Hill’s book and recommended that this passage be stricken out. It was stricken out and did not appear in the revised edition. [Pt. 4, p. 634.]
There were other objectionable features in Mr. Hill’s book which Messrs. Mullaney and Jenkins wished to have eliminated or changed. A statement was made to the effect that “In all, the Union Pacific Railroad is estimated to have received from the government $830,000,000, although the enterprise from the beginning was private property.” [Exh. Pt. 4, p. 941.] Mr. Mullaney had “one of his young men” spend a Saturday at the Crerar Library checking up on these figures and reported that the aid from the United States Government to the Union Pacific Railroad amounted to only $48,724,691.42.” Thus he claimed that Professor Hill’s figures were “a long, long way from the facts.” [Idem, p. 938.]
Mr. Mullaney did not question Mr. Hill’s statement to the effect that “thousands of acres of public land and millions of dollars of public funds were given to help construct lines, especially in the West. In the building of the Union Pacific Railway, for example, Congress gave the company a strip of land 400 feet wide from Council Bluffs, Iowa, to San Francisco, and in addition granted the company 20 sections of land for each mile track laid.”
Messrs. Mullaney and Jenkins did not like Mr. Hill’s statement to the effect that the government had helped in the building of the telegraph, telephone, railroad, and other utilities, and wished this stricken out. And, of course, they were particularly offended at his treatment of the subject of watered stock. They could not deny the truth of the statements made, it seems, but wished to have them explained and softened. Mr. Hill referred in the text to the fact that “several years ago the cost of replacing the property of the Chicago Street Railway Companies was estimated at about $45,000,000, while the market value of the securities issued on the property was at the time over $120,000,000. Brand Whitlock, formerly Mayor of Toledo, declared on one occasion that the actual investment of the street railway company in Toledo was about $5,000,000, while it was capitalized at almost $30,000,000.” Particularly objectionable also was the conclusion which Mr. Hill drew from these facts in saying:
“In order to pay interest on their securities, companies often levied high charges and gave poor service.” [Exh. Pt. 4, p. 946.]
Another statement in Mr. Hill’s book that was objectionable was that “railroads ruined shippers and even entire communities at times by granting lower rates or better service to some than to others.” [Exh. Pt. 4, p. 948.] That must be eliminated in order to make this a “good” textbook.
And, of course, the statement about government ownership was “bad”: “very bad.” It said:
“Believers in public ownership point to its success in Europe and maintain that similar results have taken place where it has been tried in the United States. This is true, they say, particularly of water works and electric light plants which in many American communities are the property of the city. Here, they declare, rates are lower, services are better, and politics are purer than under private ownership.” [Idem, p. 949.]
So this, they thought, should be stricken out.
Even if true, why mention it?
Other “Bad” Books
And here is an example of what the companies consider “very bad.” It is a textbook entitled City, State and Nation for elemental schools and junior high schools, by William L. Nida, Superintendent of Schools at River Forest, Illinois, published by Macmillan Company. Now let us see what it is in this textbook, according to the Illinois Committee, that is so “very bad”:
The first reference given by the committee is to the statement about the prevention of noise. The quotation from the textbook reads:
“Street cars are often our worst noise offenders. Some of them create a maddening sound by rocking on their springs. In other cases the car tracks, are allowed to get out of repair, and the people must suffer torture from the noises thus made. This would be remedied by the car companies if the city authorities insisted on quiet.” [Exh. Pt. 2, p. 419.]
Now just what is there that is so bad about that?
But here comes a quotation from the textbook that really is bad. It talks about the graft evil, and of course, the private companies object to this and particularly to the way in which it is presented by the textbook. Let us see what the author says:
“The Graft Evil.: The reason why street car companies in some cities can not reduce fares is because the company has “watered the stock.” By this is meant that a company, for example, builds and equips a car line at a cost of, say, $100,000. Instead of issuing exactly this amount of stock, which is the honest procedure, the company doubles the amount by issuing $100,000 in stock and sells it to the stockholders, many of whom do not know that it is half “water.” The men who organized the company pocket the difference between the cost of the road and the amount of stock sold. It would be an easy matter to pay a good interest on the $100,000 honestly invested in the road and still give the people cheap fares. But the company insists that the fares must be kept high enough to pay dividends on the entire $200,000, consequently the fares are double what they by right should be.” [Exh. Pt. 3, p. 916.]
One can readily understand why the street car companies would object to having this kind of a statement in a textbook. It is not a question of whether it is true or not, of course, but the effect on the companies, it must be admitted, would not be very favorable.
But now comes a section that is perhaps still worse: from the standpoint of the utility companies. It reads:
“The Remedy.: The American people are coming to realize that “watering the stock” of railroad and street car and other public service companies is an injustice to the public, and the time is not far distant when it will be unlawful to sell more stock than represents the actual investment in the property. When the “water is all squeezed out” of our transportation companies, the fares will be reduced, and this will enable more people to move toward the suburbs where there is less crowding, more health and greater happiness.
City-owned Car Lines.: The City of San Francisco now owns and operates some 5o miles of its street car lines. The City of Seattle also owns a considerable mileage of its street cars. Chicago has a plan whereby a part of the net profits of the privately owned car lines must be paid to the city, and this money is accumulating in large amounts to be used for a future subway. It is likely that American cities will come more and more to own and operate their car lines.° [Exh. Pt. 3, p. 916.]
And here comes another particularly objectionable section in this particular textbook. The author has interjected a number of very disquieting questions. He wants the students to ask themselves the following questions and answer them:
Questions on Your Home City.: Do you know of any city where fares are cheaper than in your city? Are enough cars always furnished to allow each passenger a seat? Why or why not
And here are some sentences from the book on street car franchises:
“So valuable are these rights that very often in the past unfair means have been used to secure votes in the city council to gain an ordinance agreeable to the public service companies. It is a disgrace that men who have been elected to the council to look after the welfare of the people and the city as a whole will grant away the public rights for a long term of years as a personal favor or for a bribe. For this reason we must see to it that honorable men be chosen for office in the council.” [Exh. Pt. 3, p. 916.]
It is a little difficult to see the “poison” in this particular suggestion, especially in the last sentence. Is there anything bad, or poisonous, or shocking in the suggestion that “we must see to it that honorable men be chosen for the office in the council?”
Here is another objectionable sentence that is “very bad.” It reads:
“Many cities, especially in Europe, own and operate their own car systems, giving the people cheaper fares and serving the public more satisfactorily,” [Exh. Pt. 3, p. 916.]
But no doubt the most objectionable feature in this particular textbook and the one to which the companies have so strenuously objected is its discussion of the question of public ownership of public service plants. The report quotes the following sections as particularly objectionable:
Public Ownership of Public Service Plants.: It costs a great deal of money for a city to buy or build their street railways, to construct telephone or gas plants; and few of our cities have the money to do this. But the time seems to be coming when more of these public concerns that use the people’s streets will belong entirely to the people. Some citizens are opposed to public ownership because they dislike to see everything fall into the hands of unprincipled politicians, but when the time comes we shall place only expert men in control of our city governments. This will be the only plan. In many countries in Europe the cities own and operate all these public service plants, and where this is done money is saved for the people.” [Exh. Pt. 3, p. 917.]
Further quotations from the textbook in the report submitted by the committee deal with the matter of political corruption, pointing out the fact that this is often due to the attempts of selfish interests on the part of private corporations seeking to secure valuable franchises. There is no discussion as to whether or not these statements are true. They are objectionable from the standpoint of the private corporations and, therefore, they must be eliminated. Here are some examples:
“Why Cities Are Badly Governed.: One reason why so many cities have been badly governed is that it is not always an easy matter to elect a good mayor and council. . . . Sometimes the public service corporations, such as the street car companies, the gas and electric light corporations, have been interested because they wanted a new franchise. They naturally desired to elect the easy-going candidate, for he might not insist on driving a hard bargain with them in favor of the citizens of his community. These companies are sometimes ready to join with the other people who have selfish purposes and to devote time and money to the election of such a man.
“Corruption in City Government.: Some of them (officeholders) have been elected to their positions because of their friendship for political “bosses” or interested corporations; and when they are in office they deliberately play into the hands of those who elected them, turning over to them valuable franchises or contracts for city improvement wherein there is a chance to get more than is – earned.” [Exh. Pt. 2, p. 421.]
In one of the textbooks the statement is made that “behind the boodle alderman one always finds the respectable banker or financier.” [Idem, p. 449.] In another it is argued that political corruption comes by way of the exploitation of public franchises by private corporations [Exh. Pts. 5 & 6, p. 1018.]
We have quoted rather extensively from the report of the Illinois Commission on this particular textbook because it is the one which they have designated as “very bad.” It is doubtless considered by them one of the very worst instances. So in the above review in the quotations made we have a very good means of judging what these utility corporations and their representatives regard as being bad, dangerous, and poisonous to the youth of this country.
Each one of the twenty-seven books which are mentioned in the list by the Illinois Committee are reviewed and quotations given of the parts that are regarded as bad, harmful, and dangerous. It will not be necessary to quote at length from these other examples but perhaps a few references may be helpful instill further illustrating what the utility companies are objecting to in the textbooks in use in the educational institutions in the country.
Public Ownership Favorably Mentioned
Here is a reference to the referendum or popular vote on franchises which is found in a textbook on Government and Politics in the United States by William Backus Guitteau, Ph.D. Professor Guitteau says that the referendum would “eliminate a great source of municipal corruption by placing the ultimate decision concerning franchises in the hands of the people:” [Exh. Pt. 2, p. 422.]
And here is a section from Professor Guitteau’s book in which he quotes Professor Ely:
“Public ownership eliminates one of the greatest evils in municipal government the corruption of officials by private corporations desiring to secure franchises or other privileges. On this point Professor Ely says: ‘Our terrible corruption in cities dates from the rise of private corporations in control of natural monopolies, and when we abolish them we do away with the chief cause of corruption.’”
And, of course, the following would very naturally be very objectionable to the private power companies:
“Public ownership gives a fuller and more efficient service, securing the enlargement and extension of facilities as public needs may require. Private companies supply only those services which pay; public ownership those which are needed .” [Idem.]
One could hardly blame the companies for objecting to such a statement, for obviously it is a complete refutation of their claims and of their position. But the question that will naturally arise in the mind of the disinterested party is: Are not the statements true? If they are true, why should they be eliminated from the textbooks?
In Economic Civics by R. O. Hughes of the Peabody High School, Pittsburgh, occur a number of statements which to the close student of economic affairs appeals with peculiar interest as indicating a very discerning and accurate understanding of the questions involved. But they are not in accord with the views of the utility companies. Therefore, they are objectionable: and must come out or the book be eliminated. Some of the quotations from this particular book are as follows:
“The Waste of Natural Resources.: The water power of this great country has also been abused. The greater part of it already is in the hands of individuals and corporations which use it for their own private gain. To let this enormous power go to waste is certainly not desirable, but to give the control of it to a few men who use it to make money out of the people is almost as bad.”
Another section reads:
“Controlling Big Business.: We have seen that under conditions as they often exist in the business world today a small group of men may sometimes make themselves masters of enormous financial interests. When anything like a monopoly exists, the interest of the people is in danger, especially if the thing that is monopolized is a necessity of life. If such people are left alone, they can tell us exactly what we may do and may not do in order to live.” [Exh. Pt. 2, p. 422.]
There occurs also a section dealing with the government ownership and operation of industries, with some special reference to the government operation of the railroads, telegraphs, and telephones during the war. Professor Hughes’ statement on this particular point is particularly exact but, of course, it is quite at variance with the usual statements made by utility corporations and their representatives who hold, and never tire of reiterating the statement, that the government ownership of railroads during the war was a failure. Professor Hughes says:
“During the war the railroads, telegraphs, and telephones were under government operation for a while in order to make them more useful to the country for carrying on the war. Much fault was found with the way this government operation was carried on. But the difficulties under which it was attempted make it impossible to judge how successful it might have been in normal times. We must. notice, too, that what we had was government operation under private ownership, which is a more difficult situation to deal with than government ownership and operation.
“Now that these activities are in private hands again we have another chance to see what private management can do. If it succeeds in giving good service without raising the rates very much, probably there will be little demand for government ownership and operation for a while. If it does not do this, people may conclude that government operation was not so much of a failure after all. Especially if labor disputes should be frequent, government ownership will undoubtedly be actively advocated again.” [Exh. Pt. 2, p. 423.]
Professor Henry G. Adams, Ph.D., Professor of Political Economy and Finance at the University of Michigan, has a book on In Introduction to Economics in which there are several objectionable passages, according to the utility companies, among them he following:
“The common experience of cities with privately owned waterworks illustrates quite ‘well the change in public opinion with regard to public service industries. At one time it was supposed that water rates and water service could be controlled by competition, provided a city could bargain with two or three companies for price and for service. It is now universally conceded that such a policy fails to work; that, sooner or later, the competing water companies will combine and by this means throttle competition. Then the price for water goes up and the grade of the service goes down.
“The same is true of telephone companies, gas companies, and companies organized for the production and the sale of electric light and power. Street railways and public wharves fall within the same class; and perhaps steam railways should also be added.” [Exh. Pt. 2, p. 428.]
Professor Howard Copeland Hill, in his textbook on Community Life and Civic Problems, explains the matter of watered stock in a way that is very distasteful to the private companies:
“Watered Stock.: In the past, public service corporations have often “watered” their securities; that is, they have issued shares of stock and bonds beyond the real value of their property. A few years ago the cost of replacing the property of the Chicago railways companies was estimated at about $45,000,000, while the market value of the securities issued on this property was at the time over $120,000,000. Brand Whitlock, formerly mayor of Toledo, declared that the actual investment of the street railway company in Toledo was about $5,000,000, while it was capitalized at almost $30,000,000,” [Exh. Pt. 2, p. 429-30.]
This statement is, of course, objectionable to the companies but in the next section Professor Hill makes other statements that are even more objectionable from their standpoint, for he insists that the inflation of securities frequently results in higher rates and poorer service, and to this the Professor adds another sin in saying that the companies sometimes bribe city officials, break laws, and, worst of all, control the newspapers through advertising (italics ours): and even influence state legislatures. The exact words are as follows:
“In order to pay interest on such securities, companies have frequently levied high charges and given poor service. When the franchises which have made their high profits possible have been in danger they have at times bribed city officials, broken the laws, misled public opinion by controlling the newspapers through their advertising, and expended large sums of money to elect men to city councils, and even to state legislatures, who would vote for measures they wanted. In these ways they have menaced . good government and have caused many people to become advocates of government ownership.” [Exh. Pt. 2, p. 430.]
There are many other quotations from textbooks made by the Illinois Committee on Public Utility Information, but the above are perhaps sufficient to make clear just what is so objectionable to the utility corporations in the textbooks mentioned.
Influencing Writers of Textbooks
Naturally, in their efforts to secure the revision of the textbooks which they desired, the representatives of the utilities approached the writers of textbooks and in various ways endeavored to persuade them to revise their texts so as to make them accord with the views of the utilities.
Mr. M. G. Glaeser of the Economics Department of the University of Wisconsin undertook the preparation of a textbook covering the utility field. The proof sheets were submitted to the National Electric Light Association for review. [Pt. 11. p. 57.] Dr. Ely had written an introduction. The power companies did not like it. Mr. George F. Oxley, Director of the Department of Information of the National Electric Light Association, suggested that the introduction be eliminated. A Mr. Smith of the Macmillan Publishing Company called Mr. Glaeser, telling him that “the representatives of the National Electric Light Association had indicated that they might enjoin the publication of the book unless this particular paragraph was withdrawn. He also stated that the contents of the book had been criticized generally by representatives of the Association and that they would not want to be considered as if this book in any way represented their opinions.” [Idem, p. 56.] One of the principal objections to Mr. Glaeser’s book, according to his testimony, was a quotation from Commissioner B. H. Meyer of the Wisconsin Railroad Commission, now of the Interstate Commerce Commission, stating in effect that “the State of Wisconsin was by the initiation of public utility regulation literally streaked and plastered with discriminatory rates.” (Italics ours.) [Idem, p. 58.]
When Mr. Glaeser’s book was finished it seems to have been quite satisfactory to the utilities. It came to the attention of Fred R. Cutcheon, Vice-President and General Manager of the St. Joseph Gas Company. Mr. Cutcheon wrote to J. B. Sheridan, calling his attention to this textbook, saying that he felt that it would be very desirable that “every high school principal in the State (Missouri) should have a copy of this textbook.” (Italics ours.) Mr. Cutcheon suggested that if the other companies would enter into such an arrangement, the St. Joseph Gas Company would be willing to bear its share of the expense. [Exh. Pts. 5 & 6, pp. 102-03.]
Mr. Davis, Director of the Information Bureau of the Nebraska Utilities, testified to the fact that a Professor Kirchman of the College of Business Administration came in to see him in regard to a chapter on public utilities for a textbook. According to Mr. Davis, Mr. Kirchman was undertaking to see things “as we would have him see them,” and the chapter on utilities as finally written was in a way that. would be satisfactory to the utility people. [Pt. 11, pp. 110-11.]
Must Have Utilities’ Approval
In their efforts to eliminate objectionable texts and textbooks the utilities left no stone unturned. They first made a survey of . the textbooks that were being used in the schools throughout the country and then set about it in a systematic manner to have the objectionable textbooks removed.
This they did, as the record shows, in various ways. For example, they took the matter up with the local school boards. In some cases they took the matter up with those who were writing the textbooks and tried to prevail upon them to modify or eliminate statements that were objectionable to the utilities. They even went so far as to go to the publishing companies that were publishing school textbooks and endeavor to arrange with them to see that only textbooks that were “safe and sound and fair” from their standpoint were published. They finally succeeded in getting “an agreement with the leading book publishers under which textbooks would be submitted to the National Electric Light Association so as to avoid the things in textbooks which you criticized.” [Pt. 4, p. 631.] In a letter to Mr. Sheridan Mr. Jenkins said that “the largest publishing house had agreed to let the Association review its most popular textbook.” [Idem, p. 632.]
This rather astonishing procedure led Judge Healy to ask of Mr. Edward F. McKay of the Oklahoma Utilities Association:
“Do you think textbooks should be submitted for review to men appointed by utilities before they are published and put into circulation in the schools?
“Answer: If they deal with economic subjects I think they should be submitted to some one who has the information from which the correctness of them can be determined.
“Question: Should that always be somebody selected by the utilities?
Answer: It should be the person best qualified. If he happens to be a utility man, why, yes. If not, why, no.” [Pt. 5, pp. 25-26.]
So it appears that hereafter if textbooks are to be written and published for use in the educational institutions of the country, they must first be approved by the utility companies. And if so approved, then, we learn further, the utilities will assist in marketing the books. [Pt. 2, pp. 145, 148.]
What Are “Good” Textbooks?
From the study of the review of the school textbooks made by the representatives of the utilities it is evident that the “good” textbooks are the ones that say that private ownership is better than public ownership. For example, in the list appearing in Exhibit No. 446 there are only four of the textbooks that are designated as “good:’ In each case these textbooks are quoted as saying that private ownership is better than public ownership. For example, Social Civics, by William Bennett Munro, according to the review, “discusses municipal ownership of utilities in an entirely fair manner … giving the conclusion that privately owned utilities are the better.” [Exh. Pt. 2, p. 419.] Similarly, the Elements of Economics by Charles J. Bullock, Ph.D., presents the “commonly advanced theories for and against municipal ownership with the author’s conclusion that private ownership is the better.” [Exh. Pt. 2, p. 424.]
And, again, Elementary Community Civics by R. O. Hughes is classed as good and the review states:
“The attitude of the author is very fair. After an unbiased discussion of public ownership of utilities he says on page 199: ‘But it is not likely that government ownership and operation of railroads, at least, will be considered seriously is this country for some time.’” [Idem, p. 430.]
These then are the “good” books; the others are “bad.”
Most of the Objectionable Ones Eliminated
Thus by one means or another the utility companies seem to have done a pretty thorough and effective job of revising the school textbooks to suit their ideas and plans.
That the utilities were successful in their drive to have the textbooks revised, or, failing in that, to have them eliminated entirely, was very generally successful is indicated by a statement made by Mr. Carmichael of the Iowa Public Utility Information’ Bureau, who said:
“We believe we have this matter pretty well in hand here; after three years’ work most of the really objectionable textbooks have been eliminated.” [Pr. 3, p. 618.]
Good Textbooks Are Those the Utilities Write
We have seen in the previous chapters that the utility corporations are very much dissatisfied with the great majority of the textbooks in economics and civics that are in use in the schools, colleges, and universities at the present time and, furthermore, that they have been very active in having these books reviewed, parts that were objectionable to them revised and eliminated; in getting ‘directly to those who have written textbooks, and even to those who might be writing textbooks, with the purpose of getting their views incorporated; that they have been active in influencing school boards to eliminate the use of objectionable texts; and that they have taken these matters up directly with the publishers of textbooks, hoping by that means to prevent the publication of objectionable texts.
But the utility companies do not stop there. They go further. They encourage the use of textbooks in economics and civics that are favorable to them and to their views. And, finally, they prepare literature of their own which they have very industriously worked into the schools of the country from the kindergarten to the university.
School Pamphlets by the Utilities
The utilities prepared, first of all, a series of booklets for use in the public schools. There were four in the series on “Our Public Utilities.” One was on electric light and power; a second on gas; a third on street railways, and the fourth on telephones. [Pt. 3, pp. 327-28.]
Used Throughout the Schools
The extent to which these school pamphlets were used may be judged from the fact that, according to the records, 60,000 of them were put into the schools in Illinois; [Exh. Pts. 10-16, p. 125.] 88,000 in Missouri; [Exh. Pt. 4, p. 75.] 30,000 each of the four pamphlets, or 120,000 in all, in Pennsylvania; [Pt. 3, p. 328.] 60,000 in Ohio, with a prophecy that the circulation would soon reach 200,000. [Exh. Pt. 3, p. 1098.]
In Illinois it is stated that 635 high schools, more than three-fourths of the total number, use this especially prepared literature of the utilities in their class rooms. Mr. Mullaney of the Illinois organization insists, as others do that no effort is made to press or obtrude this literature upon the schools. The claim is made that it was given to them only in response to requests.
Writing of this matter, Mr. Horace M. Davis of the Nebraska Information Bureau had a letter in which he stated that “our committee has engaged an educator with a nation-wide reputation to prepare an outline of a course of study for a project method in electricity to be inaugurated in the secondary colleges and the high and junior-high schools at the opening of, next year. This is an amplification of the gas study which went over very acceptably during the preceding year, but it will be more supplementary and more intriguing to the elementary grades.” [Pt. 11, p. 90.]
In Missouri the Public Utility Committee reported that in four months it had received requests from 230 of the 637 high schools in the state. for this service. [Exh. Pts. 5 & 6, p. 117.]
In Oklahoma utility organizations have what they call an Association on Educational Information Service. This committee, reporting on May 8, 1926, submitted a list of the bulletins which they had supplied to the various high school superintendents throughout the state, and the list covers eight pages in the hearings of the Federal Trade Commission, arranged by county and city. The bulletins cover the subject of electricity and telephones and the number of bulletins sent out ranged from 10 or 15 to as high as 400 to each school. [Exh. Pts. 5 & 6, p. 53.]
The New Jersey Public Utility Information Committee prepared four textbooks for use in the public schools of that state dealing with electricity, gas, street railways, and telephones. Five thousand copies of these books were printed and efforts were made to have them introduced as textbooks in the public schools of New Jersey. [Pt. 7, pp. 46-48.] The New Jersey Utilities Association considered it so important that these pamphlets be distributed to all the high school seniors in New Jersey that a special appropriation of $1,000 was made for this purpose. Idem, p. 49.]
And, of course, the smaller universities and schools and colleges, even the denominational schools are not overlooked. Beloit and Marquette in Wisconsin, Doane College in Nebraska, and others were approached by the utilities and urged to send their professors to attend their conferences. [Exh. Pts. 5 & 6, p. 1050; Exh. Pt. 4, pp. 95, 98.] The parochial schools and teachers are also supplied with this literature of the utility corporations, so that no part of the educational system is overlooked. [Exh. Pts. 10-16, p. 126.
Besides the pamphlets that were prepared for use in the high schools and grade schools, there were several other special pamphlets that were used widely throughout the educational system. Among the more popular of these were the following:
“Aladdin U. S. A.” On the preparation of this pamphlet the utilities are said to have spent $7,500. [Exh. Pts. 7 8 & 9, p. 207.] In Ohio alone 85,000 of these pamphlets were distributed. [Exh. Pt. 3, p. 1102.] The full text is found in the records of the Commission. [Idem, p. 1107.]
“Connecticut Catechism.” Another one of the pamphlets prepared by the utilities, and one that has been the subject of a good deal of discussion and criticism is the catechism on the utility question prepared by the Information Bureau of Connecticut. The text appears in the records as Exhibit No. 1052. [Exh. Pt. 3, p. 795.] This pamphlet was in use as a textbook in 59 different schools by 8,159 students in Connecticut in 1927 and 1928. [Idem, p. 807.]
“Electricity: How It Is Made and How Distributed.” This pamphlet has been widely circulated in many different states. To all appearances it is a perfectly innocent document. It tells of the wonders of electricity, how it has abolished drudgery, gives a history of its discovery and development, etc. A casual reading would indicate that it is entirely unbiased and a legitimate educational publication. However, a careful reading of the pamphlet discloses the fact that there are very cleverly introduced many of the very important and controverted questions which the utility companies are anxious to impress upon the public mind.
These are but a few of the textbooks and publications gotten out by the utilities for special use in the educational institutions.
Besides the pamphlets above referred to, which were prepared especially for use in the high schools, grade schools, and to a greater or less extent for general distribution, the utilities were also diligent in the preparation of textbooks of a more advanced and technical nature for use in colleges, universities, and technical schools.
As explained elsewhere in detail, the utilities were heavily subsidizing such great universities as Northwestern, Harvard, Michigan, Illinois, and numerous others, with a special view to helping in preparing technical material and textbooks for use of students in the higher institutions of learning.
The Institute of Research in Land Economics and Public Utilities had taken up this particular work, and in addition to the publication of a periodical magazine were getting out special bulletins on various phases of the utility problems; and with all the rest were planning to prepare 22 different volumes in this particular field. [Exh. Pts. 10-16, p. 220.] Similarly, as we have pointed out in other places, special textbooks were being prepared for advanced students by various authors in co-operation with the representatives of. the utility companies.
In the various letters that passed between the representatives of the utility information bureaus of the corporations regarding this matter, there is here and there evidence of a realization of the fact that something that was not entirely above board or legitimate was being put over. The matter was approached cautiously and stealthily.
For example, on October 28, 1924, Mr. Samuel E. Boney, Director of the North and South Carolina Public Utility Information Bureau, wrote to the Vice-President of the Roanoke Rapids Power Company as follows:
“We are scanning the textbooks on civics and economics which are being used in our colleges and schools. . . . Please, for the present, regard this as confidential for we are hoping through quiet and diplomatic measures to have some of these inimicable textbooks discarded.” [Exh. Pt. 4, pp. 114-115.]
In Colorado, as elsewhere, suggestions are found in the correspondence to the effect that in the approach to the universities in the matter of securing their co-operation in employing professors, the development of their courses, etc., caution should be exercised and the universities approached indirectly, so that they might not suspect the purposes of the companies in the matter. Mr. W. C. Sterne, Chairman of the Rocky Mountain Committee on Public Utility Information, writing to the Executive Secretary of the Georgia Utilities Committee, said:
“Doubtless you are more or less familiar with the plan recently inaugurated by this committee for carrying forward certain phases of its activities in the institutions of higher education in Colorado. . . . A suggestion that I would make to those who contemplate taking up this activity is that an educational program of this nature should be launched by the universities, themselves. I feel that you will not get quite the results you wish if you go direct to the educators yourself. In this state, while the idea originated in the committee, it reaches the colleges and universities through a man high in educational circles who broached the subject without mentioning the public utilities as being interested. Therefore, the colleges on their own volition developed the idea and the committee volunteered to render all possible assistance.” [Exh. Pt. 4, pp. 266-267.]
Another characteristic of this work of the corporations in the universities is the tendency to conceal the fact that the work was done at the request, and with the support and payment of the companies. This was illustrated in the case of Professor E. A. Stewart of the University of Minnesota, referred to elsewhere in connection with his study of rural service of the Ontario Hydro-Electric Power System. Despite the fact that he was in the pay of the utilities in 192 and 1926, the joint committee of the national utility associations, in its weekly letter, issued September 17, 19271 declared:
“Since Professor Stewart was highly qualified to make this study, and approached the situation from a wholly disinterested standpoint, his conclusions may be accepted as authoritative.” [Exh. Pt. 1, p. 365.]
Thus the claim is made that the study is wholly disinterested, whereas it is being paid for by the corporations. Professor Stewart’s statements have been widely quoted throughout the country and the impression has been given that it is an impartial and scientific study of the situation.
Similarly, an advertising campaign of certain utility courses was carried on in Colorado, in which a deliberate effort is made to make it appear that the advertising is an effort on the part of the university, although the utilities committee was its author and was bearing its expense. [Idem, p. 491.]
The persistence and care with which the utilities work their way into the universities is interesting. For example, the Oregon Utilities learned that Arnold Bennett Hall, professor of political science at the University of Wisconsin, was coming to a position of importance in the universities of their state, and made anxious inquiries of the utilities in the state from which he was coming as to his position, and were assured that he was not a radical but “quite the opposite.” [Exh. Pts. 5 & 6, pp. 1049-50.]
Are Their Teachings Truthful and Unbiased?
It might be argued that the efforts of the utility companies to get their views presented through the educational institutions of the country and to have their literature widely diffused and generally used in the schools would not be objectionable in view of the fact that they presented important and necessary information and material that was truthful and unbiased. But if the material prepared by the companies proves upon examination to be misleading, untruthful, or false, a wholly different judgment would be passed upon the matter. The testimony gives us considerable light as to the truthfulness, accuracy, and dependability, and the unbiased nature of the information which the utility corporations have succeeded in introducing so widely into the school system. We have discussed this matter at some length in Chapter L.
One instance of an absolute misstatement has been made public by Mr. Ernest Gruening in his recent book, The Public Pays. Mr. Gruening says that he had some “first hand experience with Professor Stewart which illuminates the whole educational propaganda process.” [the Public Pays, by Ernest Gruening, p. 72.] When an editorial based on the authority of Professor Stewart appeared in the Portland (Maine) Press Herald, Mr. Gruening wrote to him (Stewart), asking whether he had been correctly quoted and “whether his statements which seemed so contrary to the facts as the writer understood them, were surely correct.”
On March 21, 1928, Professor Stewart replied to Mr. Gruening, in the course of which he said:
“The data as given in your paper is correct and the statement made in my report, in which I quote the Engineering Department of the Hydro-Electric Power Commission of Ontario as approving my statement, is also correct. My data were all checked by their engineers before being published.” [Idem, p. 73.]
Thereupon Mr. Gruening, in order to verify Professor Stewart’s assertion that the Engineering Department of the Hydro-Electric Power Commission had approved his statements, and that his data were all checked up by the engineers before being published, wrote a letter to Mr. C. A. McGrath, Chairman of the Ontario Hydro-Electric Power Commission, which brought-the following reply:
“Professor Stewart obtained information from the Commission regarding rural electrification in Ontario. When draft of report was completed, the same was submitted to commission’s engineers for a check.
“Stewart left Toronto before the check was completed, and on March 16, 1926, forwarded a letter stating: ‘I am enclosing a copy of changes and additions agreed upon at conference with engineers; we will agree to include all of these corrections and additions; our agreement to do this is proof positive that it will be done.’
“Changes and additions to report as requested by commission’s engineers were never made by Stewart. (Italics ours.) His original incorrect report was printed and his excuse for doing same was that the corrections did not arrive in time to be included in his publication. Not only are figures published in Stewart’s report incorrect in many instances, but statements throughout the report are not in accordance with facts.” [The Public Pays, by Ernest Gruening, pp. 74-75.]
Here then is a case in which an absolutely false statement is made as proved by the assertions of no less a person than the Chairman of the Hydro-Electric Power Commission of Ontario.
Again, in one of the school pamphlets published by the utility committees the statement is made that “in every case in which a community has attempted to operate a public service industry, it has been found that the costs of the service are higher than when the service is furnished by a private corporation.” It is also claimed that “the higher costs (under municipal ownership) are not reflected in the rates for service but in the higher tax rates which the citizens of the community must pay in order to keep their utilities in operation.” [Exh. Pt. 3, p. 799.] Here again is a statement which is not borne out by the facts. The attention of those who are responsible for the distribution of this kind of literature in the schools was called to statements of this kind and it was finally admitted that they were untruthful. [Idem.]
The nature and intent of this literature is further revealed in the fact that there occurs in it over and over again the usual appeal to prejudice by connecting the advocates of municipal and public ownership with Socialism, Bolshevism, and the like. [Idem.]
Another idea that is presented in these school pamphlets is that the power industry is owned by the public. This is an idea that is advanced quite commonly by the utilities in connection with their customer ownership campaigns. The Connecticut pamphlet also emphasizes this fact in the following words:
“Who owns the utilities? . . . In all probability, you, the reader, are one of them. If you own a share of stock in any one or more of them, you are. If you have money deposited in any bank, you are. If you carry life insurance, you are .” [Exh. Pt. 3, p. 799.]
Even the old expression that has now come to be regarded as more or less of a joke with regard to widows and orphans is used in some of these pamphlets. In the Missouri edition, for example, we read:
“The public service companies are owned in large part by the people generally, by persons of small means who own in small amounts bonds and stocks of the companies.. Regulation of this service, therefore, must be carried on with the interests of these investors in view, many bf whom are widows and orphans.” [Exh. Pts. 5 & 6, pp. 100-101.]
In these various ways these pamphlets seek to inculcate the idea that the utilities are already publicly owned.
Another idea that is advanced in these pamphlets is that electric light and power plants to be successful must be large scale projects. This, naturally, implies that the municipal plants which are, in the majority of cases, in the smaller cities, and in nearly all cases are isolated plants, must necessarily be unsuccessful.
Another idea that is set forth in these pamphlets which the utility companies are eager to have the high school students read and accept is that the utility companies do not earn a profit: that the public utility business in this respect is unlike other businesses. And they emphasize the thought that the utilities are strictly regulated both in the matter of rates and in the soundness of their securities as investments and that, therefore, under these conditions, they, of course, could not make profits as other business do. We read:
“In one important respect, public utilities are unlike almost any other business in the nation…. Under the prevailing system of regulation, they can make no “profits” in the sense other businesses do. They are allowed to charge only rates that will permit the earning of operating expenses, plus a fair return on the money invested in their properties” [Exh. Pt. 2, p. 108.]
The Connecticut school pamphlet discusses the matter of regulation and securities as follows:
“Supervised by government, which is you, the operation of utilities is so regulated as to make them safe and desirable investments for insurance companies, banks, estates, small savers, and in fact, every one. If the credit of the public utilities were to be impaired and their service endangered, your money, which is in the form of bank deposits, insurance policies, or public utilities securities, would be endangered, for even though you may not know it, much of it has been invested in utilities because utilities securities are one of the safest investments on the market. Banks, insurance companies, etc., take no chances with your money. They invest it where they know it is safe: in utilities securities. So the destiny of the entire public and its business enterprises is intertwined with the destiny of its utilities.” [Exh. Pt. 3, p. 799.]
Thus it will be seen that the utility corporations, through their various committees, bureaus, individuals, and organizations have carried on a far-reaching campaign to influence and control the educational institutions of the country, so that they might be steadily presenting the utility view to the youth of the country. They have not only sought to influence and employ the teaching forces, to influence the courses of instruction, and the research work that is carried on, but they have also sought to revise and re-edit the textbooks of the schools, and in many cases to have books that were unsatisfactory to them eliminated. And, finally, they have sought to inject into the school system literature and texts of their own which would carry to the students, as well as the teaching forces, their own ideas and views with regard to utility problems; and that in all of this much false, misleading, and untruthful material has been disseminated in the schools, and especially material that would prejudice the minds of the students against municipal and public ownership.
“One of the Greatest Agencies of Popular Education”
As stated elsewhere, the utility corporations and their managers fully appreciate the importance of controlling public opinion if their plans and purposes are to prevail. We discussed in other chapters the influence and control exercised by the utility corporations over the Press, the public schools, and other publicity agencies. We now come to the consideration of influence exercised by these organizations over the platform.
It is possible that with the rise of the radio, the moving picture show, and the automobile, the influence of the platform in the United States may be declining. But until recently it has been recognized by all as a very important factor in the education of the public and in the molding of public opinion. In this connection we shall take the liberty of quoting from an exhibit of the Federal Trade Commission, No. 2714, which will be found on page 149 of Part 5 of the Exhibits. The article was written by Carl D. Thompson, Secretary of the Public Ownership League of America, and published in The New Republic. This article was taken from the files of the Missouri Committee on Public Utility Information and, it is stated, was sent to all member companies and to all members of the committee. The introductory paragraphs of the article are as follows:
Is the Chautauqua a Free Platform?
“’If our civilization is to become an instrument for the betterment of man, it must be tolerant of divergent opinions, and let them find public expression to the end that good, not evil, may survive to guide and help us to an ultimate goal.”
“So wrote Col. E. M. House to the President of the International Lyceum Chautauqua Association in August last, on the occasion of the fiftieth anniversary of the first Chautauqua assembly. And in the same vein wrote Irving Fisher, professor of political economy of Yale University, as follows:
“’The success or failure of a democracy depends on public opinion. The Chautauqua movement has probably done more toward keeping American public opinion informed, alert, and unbiased than any other movement. The press has come to be regarded, like advertising, as warped by special interests. The pulpit is restricted as to subject matter and manner of treatment. The moving picture screen is for the future and offers possibilities as yet unknown for good or ill. But the Chautauqua platform has kept above suspicion as the greatest agency of popular education.’
“Splendid ideals of a free platform, these. Are we really realizing them? The Chautauqua is the American people’s summer school. The lyceum is their winter night school. Literally millions of our adult population attend these institutions and depend very largely upon them for their information and education on public problems. Next to the press, the Chautauqua and the lyceum are perhaps the most potent of our educational institutions.
“Most people are quite unaware of the extent and importance of the service of these institutions. There are a score or more of really large Chautauqua and lyceum organizations that serve from several hundred to a thousand cities, towns, and villages, and probably several hundred smaller ones. The size and sweep of the service of these institutions are suggested by a statement made by one of the “talent” recently to the effect that if one lecturer or company should keep going continuously it would require five years to cover the entire field of one of the larger of the systems.
“The opportunities to reach the public afforded by the Chautauqua and lyceum are tremendous. And this fact has not escaped the notice of the private interests who depend so largely upon a favorable public opinion. The temptations that have been placed in the way of the managers of the Chautauqua and lyceum systems, to allow their programs to be influenced and subsidized must have been very great in the past. The fact that up to the present time the Chautauqua and lyceum platform has been able to maintain so fair a reputation for free and untrammeled utterance reflects great credit upon the men who manage them.
“However, we have a bit of recent history in this field that is interesting and significant.” [Exh. Pts. 5 & 6, p. 149.]
The article then recites the experience of Mr. Thompson in encountering the opposition of the power companies to a lecture that he was giving on the Redpath-Vawter Chautauqua Circuit during the summer of 1924. From this point on, however, we prefer to refer more particularly to the record of the hearings of the Commission.
Governor Bryan a Chief Offender
In a letter written by the Executive Manager of the Rocky Mountain Committee on Public Utility Information to M. H. Aylesworth, President of the National Electric Light Association, under date of August 20, 1925, mention is made of the fact that certain so-called radical speakers are being booked on the Chautauqua circuits annually; that among them was Governor Charles Bryan of Nebraska, who was campaigning for municipal ownership of public utilities; that the state committees of the utility corporations could not effectively deal with this menace and that, therefore, the national organization, namely, the National Electric Light Association, should take this matter up and see if something could not be done in regard to the matter.
In this letter Governor Bryan is designated as one of the outstanding offenders. “He succeeded in arousing the people of several towns,” the letter reads, “where conditions are normally satisfactory.”
“At Trinidad [the letter goes on to state], the local light and power manager, who has been a regular contributor to the Chautauqua fund, threatened to withdraw his financial support if the Chautauqua managers persisted in permitting such men as Bryan to speak. Action, I recall, was taken in a Missouri town a year or so ago with the result that no more anti-public utility speakers have appeared there.
“In discussing the situation in a meeting the other day, members of my committee decided that the National Electric Light Association might effectively and in a national way deal with the Chautauqua managers with a view to preventing the Bryans, the Carl D. Thompsons, and their ilk from making their annual barnstorming tours. It is patent that because of the national character of the Chautauqua organization one state can not obtain any results along this line. You can plainly see that concerted action or the influence of an organization such as the National Electric Light Association is needed to remedy the situation. It was suggested by the committee that the National Electric Light Association might take action before bookings are completed for the next season.” [Exh. Pt. 4, p. 359.]
Carl D. Thompson on the Chautauqua
But perhaps the most striking and typical example of the way in which the utility corporations endeavor to control the Chautauqua platform is that of Carl D. Thompson in connection with his lecture on “Public Superpower, What It Means to America,” which he was delivering for the Redpath-Vawter Chautauqua Circuit during the summer season of 1924.
The story of this incident covers 32 pages of closely printed matter in the Exhibits of the Commission, in Exhibits, Parts 5 and 6, pages 120 to 152, Exhibits Nos. 2644 to 2714, inclusive.
According to this record, it appears that very strenuous efforts were made on the part of the representatives of the power companies in the territory covered by Mr. Thompson’s Chautauqua engagements to have his lecture stopped. A meeting of the officials and representatives of electric light and power companies of Missouri, including representatives of the Middle West Division of the National Electric Light Association and the Secretary of the Missouri Committee on Public Utility Information, was held in Kansas City, Missouri, on July 16, 1924, for the purpose of deciding upon “concerted action to be taken in view of the irresponsible statements, not supported in fact, made by Carl D. Thompson, Secretary of The Public Ownership League of America, injurious to private ownership of public utilities (italics ours) in his address on the Redpath-Vawter Chautauqua Circuit in Iowa, Minnesota, and South Dakota.” The minutes of this meeting state that “considerable discussion indicated that the sense of the meeting was that every possible effort should be made to bring about a modification or omission of these paragraphs by Mr. Thompson in future addresses, or entire omission of Mr. Thompson’s address from the Chautauqua program in Missouri. (Italics ours.) . . . It was the sense of the meeting that every effort should be made to induce local Chautauqua committees and guarantors to write to the Redpath-Vawter, protesting against permitting a Socialist-Single Taxer to lecture on the Chautauqua Circuit (italics ours), and a committee of three was designated to confer with Mr. Vawter.” [Exh. Pts. 5 & 6, p. 120.]
Mr. J. B. Sheridan, Secretary of the Missouri Committee on Public Utility Information, was directed to write the companies affected by Mr. Thompson’s tour, asking them to
“1. Secure names and business affiliations of members of local Chauquatau committees in towns served by them as soon as possible (urgent).
“2. Secure names of newspapers, and editors and publishers thereof, in towns served by them.
“3. To ascertain, in so far as possible, the disposition of the local Chautauqua committees regarding Mr. Thompson’s address; also . the disposition of the editors, and to so indicate to J. B. Sheridan.
“4. To get Chautauqua committees to write Mr. Vawter, protesting against Mr. Thompson’s address (by July 20 if possible) and to send copies of such letters to J. B. Sheridan, Room 610, 1017 Olive Street, St. Louis, Mo.” [Exh. Pts. 5 & 6, p. 121.]
These directions, it seems, were carried out. Thus it would appear that in their efforts to secure either the modification of Mr. Thompson’s lecture or his complete elimination from the Chautauqua program, the utility interests made a canvass of the business men and others who were supporting the Chautauqua in various places; collected the names of newspapers and editors, the local Chautauqua committees, etc., and made efforts to get the local committees to write to Mr. Vawter, Manager of the Chautauqua, protesting against Mr. Thompson’s appearance.
“Shall We Annihilate or Modify Him?”
That this effort to arouse opposition to Mr. Thompson’s lecture was successful is indicated by the fact that Mr. Vawter is reported to have said: “I have had ten times more protests from my local Chautauqua committees in Missouri before Thompson gets there than I have had during the two months that he has been lecturing in Iowa, Minnesota, and the Dakotas.” And, finally, Mr. Vawter is reported as having said: “I am so disappointed and troubled that I have notified Mr. Thompson that his lecture will be cancelled after August 3. I have engaged another man named Kline, from another Chautauqua Circuit to take his place.” The question before these people, according to the record, seems to have been “Shall we annihilate Mr. Thompson or modify him?” [Exh. Pts. 5 & 6, p. 123.]
The committee that waited on Mr. Vawter seemed to favor the effort to secure the modification of Mr. Thompson’s lecture but, according to Mr. Sheridan’s report, “while no promises were asked of or made by Mr. Vawter, the judgment of the committee was that if it was ‘found desirable, Mr. Thompson’s lecture could be eliminated from the Chautauqua program.” (Italics ours.) [Exh. Pts. 5 & 6, p. 123.]
Thus it appears that the representatives of the power company made a definite and determined effort, first to modify Mr. Thompson’s lecture, and, failing in that, to have his lecture eliminated entirely from the Chautauqua program.
That all concerned and representatives of all the groups mentioned in connection with this affair responded to the call of the power companies to assist in having Mr. Thompson’s lecture eliminated, and helped to the best of their ability, seems clear from the record.
Joe Carmichael of the Iowa Committee on Public Utility Information writes to Mr. Sheridan under date of May 26, 1924, that “if he (Thompson) shows up in any town in Iowa, I shall try to be there to hear him and get some stuff into the local papers to controvert anything he may say.” [Exh. Pts. 5 & 6, p. 123.]
Mr. Sheridan, writing to Mr. Carmichael, says: “I think Thompson has put a hot one over, but we can hand it back to him next year.” (Italics ours.) [Idem, p. 124.]
F. W. Long, Manager of the Boonville Light, Heat and Power Company, writes to Mr. Sheridan: “I would gladly sign a petition to have Mr. Thompson’s lecture changed or do anything I can to help you nip this sort of propaganda in the bud.” (Italics ours). [Idem, p. 125.]
Industry Urged to Withdraw Support
Sheridan, writing to Mr. Worth Bates of the Missouri Gas and Electric Service Company at Lexington, Missouri, suggests giving “the private protest by bankers, merchants, and other businessmen, who subscribe to the support of the Chautauqua, against such socialistic propaganda as Mr. Thompson is preaching. . . . I believe such protests should be backed up by withdrawal of subscriptions from the local Chautauqua at which Mr. Thompson is a speaker.” [Exh. Pts. 5 & 6, p. 126.]
Under date of June g, Mr. Sheridan writes to Carmichael, saying: “I have written several letters to Mr. Aylesworth (President of the National Electric Light Association) about this matter and he has promised to help all he can, and he can do a lot. I really believe this is a matter that calls for the attention and judgment of the entire industry rather than the industry, or part of it, within any state.” [Exh. Pts. 5 & 6, p. 127.]
Again, under date of June 27, he writes: “I think that we have to put up a pretty stiff fight and keep hammering on him through the local Chautauqua committees, and if it comes to a show down, and he gets too gay, fight him, not upon the private versus public ownership question, but on the socialist, communist, single tax, land nationalization record. As I know the farmers of Missouri, they hate the socialist, communist, single taxer, and land nationalizer as they hate the devil.” [Idem, pp. 128-129.]
The representatives of the utility companies seem to have regarded Mr. Thompson rather highly so far as his ability as a speaker was concerned. We find them writing: “Mr. Thompson is an attractive speaker and a resourceful debater and does not confine himself to absolute facts.” [Exh. Pts. 5 & 6, p. 125.] Again, “He is adroit about it, a seasoned campaigner.” [Idem, p. 130.]
Called for Help
One of the most objectionable features in Mr. Thompson’s lectures, it seems, was the comparisons that he constantly made of the cost of electric service under public ownership and private. One of these particular instances was in regard to the cost of electric service under private ownership in Detroit as compared to the cost of similar service under public ownership in Ontario just across the river. It seems that Mr. Sheridan appealed to Mr. A. Fischer, Director of the Michigan Committee on Public Utility Information, for material that would help in refuting these comparisons. But Mr. Fischer, writing to Mr. Sheridan, said that “previous attempts have been made to set up a comparison between electric rates in Detroit and Ontario. In all instances the results have been unfortunate.” (Italics ours.) [Exh. Pts. 5 & 6, p. 133.] Whereupon a letter was addressed to Harry A. Snow, Assistant Controller of The Detroit Edison Company, who also stated that “superficial comparisons of rates are dangerous things, and even an exhaustive study can not but be open to pointed criticism such as was leveled at the Murray and Flood report on the rates charged by the Hydro Commission of Canada.” And he warns Mr. Fischer in closing: “Please let me warn you again that rate comparisons are dangerous.” (Italics ours.) [Exh. Pts. 5 & 6, p. 133.]
So it would seem that the Missouri Utilities were unable to get any help in refuting Mr. Thompson’s comparisons.
Mr. Sheridan, writing to Mr. Fischer, Michigan Committee on Public Utility Information, July 19, 1924, says: “We are preparing everything possible to head him off.” [Idem, p. 134.]
Succeeded in Keeping Him Off
At two places during the summer the efforts of the power companies were successful in preventing Mr. Thompson from speaking. One of these was at Edina, Missouri. F. R. Schofield, Editor of the Sentinel of that city, wrote to the Redpath-Vawter Chautauqua System at Cedar Rapids, Iowa, under date of July 12, 1924, saying:
“We are opposed to any man who is a socialist appearing on our Chautauqua program to spread his doctrine; likewise we are opposed to any man advocating government ownership of anything appearing on our platform. This is our personal opinion, and our further belief that we need neither in this community, nor any other for that matter.
“This statement is made for present objection to the name of Carl D. Thompson, a socialist of Chicago, but we wish it to be distinctly understood it goes for all others.
“Positively do we object to any spreader of such mental diseases, more so in the present day than ever before, and we have had enough; a decision reached after 25 years of reading and watching.
“Before taking this up too publicly, editorially or otherwise, we would like to hear from you.” [Exh. Pts. 5 & 6, p. 135.]
A little later Mr. J. B. Burcon, Local Manager of the North Missouri Power Company, wrote to Mr. Sheridan, saying that they had finally succeeded in preventing Mr. Thompson from speaking. Mr. Burcon went on to say:
“Besides the letters of protest sent in, of which I sent you the copies, we took the matter up with the local Kiwanis Club and they also protested. As stated on my recent report to you, we were not able to do anything with the local. Chautauqua committee account of one member, so it was necessary for us to resort to other methods. These business men who wrote the letters and the Kiwanis Club would not want to be given any publicity in the matter, so I will ask that you treat this information as confidential.” [Exh. Pts. 5 & 6, p. 135.]
In the list of members of committees of local Chautauquas that were solicited by the power companies to take action against Mr. Thompson appearing on their Chautauquas were found names of business men, lawyers, newspapers, and, in one or two cases, ministers of the gospel.
Why Thompson Was Opposed
An interesting side light on the reason for the earnest opposition to Mr. Thompson appearing on the Chautauqua program, in one case at least, comes out in a letter written by P. B. Linville of The Bank of Edina, dated July 11, 1924- Mr. Linville, writing to the Redpath-Vawter Chautauqua System, protesting against the appearance of Mr. Thompson on the platform at Edina, has this to say by reason of explanation:
“We feel that a socialist of this type, undoubtedly of the most dangerous, should not appear and spread his propaganda in our peaceful community, especially at a time like this when our farmers are in a receptive mood for any panacea that will assist them in their depressed financial condition. Another thing that prompts us to take this matter up, our people have just voted down a renewal of the street lighting contract, which was a very fair and just one, simply on a mistaken idea of economy and our town is now in darkness, so you can readily see what will happen should Mr. Thompson broadcast his figures of cheap electricity at this time.” [Exh. Pts. 5 & 6, p. 136.]
In other words, the danger that this banker saw in Mr. Thompson’s appearing on the program was that it might prevent the passage by the City Council of a contract for street lighting because it involved a cost much higher than what might be secured from a publicly owned plant.
The Newspapers Take a Hand
Both editors of the newspapers in Edina promised to condemn Mr. Thompson in their editorials, and Mr. Scofield of the Democrat wrote a letter of protest to the Manager of the Chautauqua at Cedar Rapids. [Idem, p. 137.]
Ralph Y. Pool, Vice-President of the Western Public Service Company, with headquarters at Colorado Springs, writes to Mr. Sheridan under date of July 24, 1924:
“I am pleased to advise that in all of these cities (where we have our properties) we carried the matter to all the responsible business houses and others in a very clear, concise form, and accomplished some sincere, active results: better than we expected: and have eliminated a large amount of support from the Chautauquas and have made some very heavy inroads on Mr. Vawter’s activities in these districts. (Italics ours.) [Exh. Pts. 5 & 6, p. 137.]
Mr. Pool further writes:
“Some of the cities have gone so far as to attempt to cancel the Chautauqua engagements in their entirety, but not being able to do this, they have reduced their activities to the lowest possible minimum, and, all in all, I believe that Mr. Vawter will hesitate for some time before he makes another attempt to use such lecturers on his circuits.” [Exh. Pts. 5 & 6, p. 137.]
Mr. L. H. Sommers, Editor of the Tarkio Avalanche, is reported to have been very much opposed to Mr. Thompson, and that he would publish a very strong editorial against his lecture.
The Chatauqua Program
Mr. J. B. Sheridan of the Missouri Committee on Public Utility Information, did not agree with the committee that wished to try to have Mr. Thompson’s lecture modified rather than to have him eliminated entirely from the Chautauqua program. Mr. Sheridan wanted Thompson completely eliminated and used some rather strong language to that effect. Under date of August 6, 1924, he writes to Mr. J. F. Duncan of the North Missouri Power Company at Edina, as follows:
“I think you ought to have a gold medal for what you did in regard with the Chautauqua at Edina. Some of our people seem to think it a bad idea to stop this fellow talking, telling a lot of lies and half truths, advertising himself as something which he is not, and failing to advertise himself for what he really is, a land nationalizer, single taxer, socialist propagandist. But I think the best way would have been to have him thrown in a ditch…. Let him say what he wants to say. He can not say anything worse than he has said in his own publications. I think he ought to be shown up for what he really is.” [Exh. Pts. 5 & 6, p. 143.]
On the other hand, not all of the newspaper editors seem to have agreed with the power companies’ views in this matter. At any rate, E. E. Swain, Publisher of the Kirksville Daily Express and Daily News, writing to Mr. Sheridan on August 5, 1924, said:
“I think the utilities of the state were needlessly alarmed about what Carl Thompson was saying in his Chautauqua lecture. From what 1 can gather, his remarks were no more radical than those of Secretary Hoover in his plan for zoning water power of the country. I believe the local power men made a mistake in trying to keep Thompson off the platform here and fear they will do it elsewhere if the same tactics are used.” [Exh. Pts. 5 & 6, p. 143.]
In a later letter to Mr. Carmichael, Mr. Sheridan expresses himself in much the same way as mentioned above, saying: “I think we should have had him thrown off when we had a chance.” And again, “I believe in throwing him in a ditch.” [Idem.]
Boycotting the Chautauqua
Not only did the utility companies undertake to have Mr. Thompson’s lecture first modified, and failing in that, to have him entirely eliminated from the program, but they sought also to make sure that he and similar lecturers should nob be allowed to speak on the Chautauqua programs at all. And further than that, it seems from the record that in one case at least the local manager of the electric light and power company, who was at the same time local secretary for the Chautauqua in his particular city, was successful in preventing the Redpath-Vawter Chautauqua from securing a contract in that city for the following year, and managed instead to have a contract made with another company. The letter is as follows:
“In answer to your letter of January 6, will say that the local Chautauqua committee severed relationship with the RedpathVawter system because their talent was below par this year.
“Our friend Thompson did not take very well and did not leave the best feeling in the world.
“I believe you know that I was local secretary for several years and at the present time our investment man is secretary. At a recent meeting with the Loar representative we selected talent which we believe will take well in the community and not be a detriment to any line of business. Might say that I personally would not support Vawter’s system for this year, but am a guarantor for the Loar Chautauqua, and I believe there are many others who take the same attitude.
“Very truly yours,
“T. W. Long, Manager.” [Exh. Pts. 5 & 6, p. 147.]
Furthermore, it seems that the representatives of the utility corporations pursued this matter after Mr. Thompson’s lectures were over to see that Mr. Thompson and similar men should not be employed by the Chautauquas in the future. For example, Joe Carmichael, Director of the Iowa Committee on Public Utility Information, writing to Mr. Sheridan under date of September 12, 1924, says:
“Just one more word on an old subject–Carl D. Thompson. The White and Brown Chautauqua and the Redpath-Horner Chautauqua companies have headquarters in Kansas City, Mo. It occurred to me that it might be well to get in touch with these folks and let them know how Vawter got in bad by employing Thompson this year.” [Exh. Pts. 5 & 6, p. 146.]
Similarly, Mr. Sheridan, writing to Mr. Carmichael under date of September 16, 1924, says:
“I have had your thought about our friend Thompson and other Chautauqua circuits, and consulted Davis about the matter. Davis seems afraid to touch it. He said that Horner was the sort of a man who was a bit inclined toward the radicals, and it might be a hint to him to put a fellow like Thompson on.
“I have made suggestions similar to yours to all the committees, and 1 will try to develop means of acquainting the Redpath-White and Redpath-Horner Chautauqua systems of Kansas City of the facts in the case.” [Exh. Pts. 5 & 6, p. 146.]
And, finally, Mr. George F. Oxley, Director of Publicity of the National Electric Light Association, writing to Mr. Sheridan under date of December 27, 1924, says:
“Carl D. Thompson is busy as usual. This time he is at work in the Southeast, apparently trying to get a little publicity in connection with the Muscle Shoals controversy. We are keeping as close tabs upon him as is possible and really do not believe that he will be able to get on to any of the Chautauqua circuits next year as his own article in the New Republic has unquestionably branded him as a self-confessed socialist spreading ideas and theories detrimental to the best interests of the American public.” [Idem, pp. 146-47.]
The article in The New Republic, referred to by Mr. Oxley in the quotation next above, appears in full in the proceedings of the Federal Trade Commission, Exhibit No. 2714, beginning on page 148 of Exh.. Pts. 5 & 6, and following.
Paragraphs That Paralyzed
The meeting of representatives of electric light and power companies affected by the address of Carl D. Thompson, held at Kansas City, Missouri, July 16, 1924, read a verbatim report of the lecture and found that there were only “three short paragraphs (in Mr. Thompson’s address) that could be called objectionable.””
This statement evidently attracted the attention of the Federal Trade Commission, who wrote us under date of January 9, 1932, asking if we could locate and send them a copy of those particular paragraphs. We replied under date of January 13, 1932, explaining that it was the custom of the speaker to get electric light and power bills in the towns where the lecture was given and then in the lecture compare these bills with similar bills in Ontario; that accordingly the “three objectionable paragraphs” varied, but that the following were typical:
“Here is a bill for 70 kilowatt hours paid by a café in Canton, South Dakota, May, 1924, amounting to $10.30. A similar bill for 70 kilowatt hours paid by a Dr. Wing in Guelph, Ontario, in December, 1923, was $1.78.
“A hotel in Eldora, Iowa, used 313 kilowatt hours in April, 1924, for which it paid $34.92. About the same time Mr. J. Simpson, a business man in Windsor, 200 miles from the source of the power, used 385 kilowatt hours in a month, being 72 kilowatt hours more than the Eldora hotel used, yet it cost him only $6.96 as over against $34.92 Eldora bill.
“Judson King has published facsimiles of two electric power bills, one rendered by the Ontario System to a customer at Niagara Falls, the other by the private power company in Washington, D. C., both for 334 kilowatt hours in a certain month. The Ontario bill is $3.55; the Washington bill is $23.18.”
As we explained to the Commission, we still have on file some of these original paid bills that were used in these comparisons, soiled and worn by the years of platform use in the vicissitudes of Chautauqua and lyceum work.
They are still interesting: and still “objectionable.”
They do not appear in Chautauqua programs any more.
They were eliminated by the utilities in 1924.
Everything But Sky-Writing
An organization which, according to the testimony presented in the hearings of the Federal Trade Commission, utilized every means of publicity in its efforts to sway and mold public opinion, with the possible exception of sky-writing, would, of course, not overlook the two most subtle and effective of modern publicity agencies, namely, the radio and the moving picture. Not only did the utilities make wide use of these agencies, but in the case of the radio at least succeeded in developing a considerable degree of actual control.
Widespread and Constant Use of Radio
The utility companies have made widespread and constant use of the radio in getting their views to the public. J. F. Owens in the Transmitter and Electrical Journal of December, 1927, says: “Radio broadcasting stations throughout the world carried feature programs Friday night, October 21,” and “in the United States a network of forty broadcasting stations carried a forty-minute program originating in New York City. One of these stations was KVOO which broadcast a program from Tulsa, Oklahoma. J. F. Owens of Oklahoma City, Vice-President and General Manager of the Oklahoma Gas and Electric Company, gave a twenty-minute talk over this station.”
This address by Mr. Owens is quoted at length in Exhibit No. 2585, which is the usual eulogy of the achievements of the private utility companies, insisting “that the industrial prosperity and progress in the United States and the high standard of living enjoyed generally by the people of the United States, and especially the working men, are found to be due in no small measure to the exceptional electrical development in this country.” . . . “And yet there are today subversive movements at work in our own land fathered and fostered by those who knowingly or unknowingly would foist on America the shockingly, brutally lowering system of certain backward civilizations.” [Exh. Pts. 5 & 6, p. 5.]
Radio Regarded Most Effective Publicity
The importance attached to the use of the radio in publicity work is well illustrated in the case of the Edison Company of Boston. This company had spent $267,000 in 1924 in advertising and had been asked to increase the amount to $373,000 for 1925. Instead, however, it reduced the appropriation to $116,000 for that year. And the reason given was that it had found that the radio was a much more effective means of publicity? Accordingly, the Edison Company installed a 5oo-watt station, together with a studio and all necessary equipment on the roof of the company’s office building, for approximately $100,000. And as a result of this development much of the other advertising was eliminated. The broadcasting was widely used for entertainment, educational programs, the presentation of political opinions, etc. “In the opinion of the head of the company’s public relations bureau the broadcasting station was the greatest builder of good will which the company ever had developed.” [Exh. Pt. pp. 390-91.]
P. S. Arkwright, President of the Georgia Power Company, made use of the radio broadcasting station of the Atlanta Journal, celebrating the 48th anniversary of Edison’s demonstration of the first successful electric incandescent lamp. [Exh. Pts. 7, 8 & 9, p. 256.]
The National Industrial Conservation Board, one of the subsidiary propaganda organizations of the utility companies, made use of the radio in broadcasting their views. [Pt. 15, p. 234.]
Showing the interest of the utility organizations in the radio field, we find that Judge Davis was at one time Chairman of the American delegation to the International Radio Convention. [Pt. 3, p. 84.]
Utility Man President National Broadcasting Company
M. H. Aylesworth, who preceded Mr. Oxley as publicity director of the National Electric Light Association, is now president of the National Broadcasting Company. [Pt. 3, p. 119; Pt. 4, p. 198.]
The New York State Public Utility Information Bureau gave a series of talks over W E A F in New York. There was a broadcasting station of the Rensselaer Polytechnic Institute, W H A Z, which was used by the utilities in broadcasting their message,’ for the use of which the National Electric Light Association paid $517 in January, 1926. The New York Edison Company has a regular broadcasting station. [Idem.]
In California the utilities bought time on a farm bureau station for broadcasting its messages on the application of electricity to farm problems. [Pt. 12, p. 19.] And the radio was used in other parts of California. [Pt. 13, p. 16.] Some of the exhibits give quite extended lists of radio talks that were delivered by their various representatives. [Exh. Pts. 5 & 6, pp. 769-72.]
Utilizing the Movies
The utility corporations also made very general use of the moving pictures.
The National Information Bureau appropriated $3,000 at one time as its share towards the cost of a motion picture film to encourage and develop rural electrification. Mr. Oxley testified that there were 14 other organizations or individuals making appropriations to this work, totaling $45,000. [Pt. 1, p. 37.]
There was an organization known as the Society for Visual Education, which prepared films on utility questions “from the standpoint that public utilities must be privately owned in order to obtain the greatest efficiency in operation.” [Exh. Pt. 2, pp. 342-3.] The Society for Visual Education, in writing to the Middle West Utilities Company, stressed the importance of motion pictures to be used in utility publicity work, and said, among other things:
“All of our films will be produced in such a way that after viewing them, the people will understand what their own public utility company means to them . . . and why they should cooperate with the private ownership of the public utility which serves them in their everyday-life.” [Idem, p. 343.]
Two special films were prepared by the national organization of the utilities, which were placed with the circulating library which made the films, and reports indicated that during three months these films had a circulation of over 10,000 of the Yours To Command, and 10,500 of the film entitled Back of the Button.
All Hear the Gospel of Private Power
In their efforts to reach every class of people in every possible community, utility companies worked their representatives and their propaganda into every conceivable civic, social, and even religious organization.
Chambers of Commerce
We have shown in another place how the Chambers of Commerce of the State of Ohio organized and conducted an aggressive fight in behalf of the private utilities against the government project at Muscle Shoals. [p. 559.] Quite generally, it would seem from the record, the Chambers of Commerce were utilized in this way. For example, Mr. Wyer, whose various pamphlets were prepared against municipal ownership and operation of electric light and power companies, was employed by a committee of the Ohio State Chamber of Commerce. On that particular committee were three public utility men. [Pt. 3, p. 467.] Down in Chattanooga the Chamber of Commerce appropriated $2,350 in support of the Southern Appalachian Power Conference which, as the records show, was one of the propaganda efforts of the utility corporations. [Pt. 7, p. 163.] In some cases the utilities paid for memberships of their representatives in Lions Clubs and Junior Chambers of Commerce, thus establishing their influence within the organization. [Pt. 3, p. 545.]
The Chambers of Commerce were used quite effectively in the fight by the utilities to retain the regulatory commissions. [Exh. Pts. 5 & 6, p. 546.] Frequently the utility men were elected as presidents of Chambers of Commerce, Young Men’s Business Leagues, and other civic organizations, thus increasing their influence within the groups. [Exh. Pt. 4, p. 611.]
Rotary and Lions’ Clubs
A very fertile field for the propagandists of the power companies was found in the various Rotary Clubs and Lions’ Clubs, as well as in Chambers of Commerce. For example, F. G. R. Gordon, former socialist, was kept busy by the National Electric Light Association in addressing civic organizations of this kind. It is claimed that he delivered over 1,000 addresses and wrote over 5,000 articles from the private utility standpoint during five years. [Pt. 10, p. 58.]
Innumerable references are found throughout the hearings of the appearance of representatives of the utilities before the Kiwanis Clubs. The Kiwanis Club at Batavia, Illinois, and a church organization at Marion, Indiana, for example, are mentioned by one of the propaganda organizations that are working in a more or less independent manner in promoting the utilities’ views. [Pt. 15, p. 225.]
F. G. R. Gordon, mentioned above, appeared before the Grand Rapids Kiwanis and Rotary Clubs, as well as speaking “on the soap boxes, on the sidewalks,” etc. [Pt. 10, p. 51.]
The Boy and Girl Scouts
The utility companies even took advantage of the opportunity to make use of the Boy Scouts and Girl Scouts. Exhibit No. 2719 of the Commission’s hearings in an article entitled “Reasons Why Public Utility Officials Should Become Active In The Affairs Of The Boy Scout Organization.” This document points out the many advantages to the boys of the Boy Scout movement, and says that it is one of the “surest, quickest, and most effective antidotes for radicalism in America.” The author then goes on to say that the trained officials of a public utility company and his various assistants should use these organizations in dealing with the public. “The general manager should identify himself with the Boy Scout movement by becoming a member of some of the important committees of that organization,” etc. [Exh. Pts. 5 & 6, p. 155.]
Special reference is made to the Scout oath, pointing out that here was a fine opportunity to lecture the boys on good citizenship “and especially the essentials involved in healthy public relations.” The same pamphlet points out that a similar work can also be done through the organization of Girl Scouts. [Idem.]
In one case at least the utilities made good use of the Boy Scouts in the delivery of their propaganda publication “Utility News,” paying the boys for the service, and allowing them to retain a part of the pay for the Boy Scout endowment fund. [Pts. 18 & 19, p. 278.]
These are but a few instances out of a great number referred to in the record in which the utilities made use of the various civic bodies to very good effect in creating friendly relations.
“For They Are All Jolly Good Fellows”
One of the very clever and cordial methods by which the utilities made friends with all classes of people whom they wished to influence, and especially the members of the Press, was their various forms of entertainment. Excursions were organized for members of the Legislature, educators, business men, and editors, the power companies paying all of the expenses. [Pt. 14, p. 17.] Regular entertainments were organized, especially for the editors. [Exh. Pts. 5 & 6, p. 165.] At Jefferson City, the capital of Missouri, houses were rented and the utilities entertained “lavishly.” [Idem, p. 542.] At Coral Gables, Florida, 681 dinners were served at one time. [Pt. 3, p. 488.] Over $150 was paid for tips. One of the features was deep sea fishing. [Idem, p. 491.] Some $7,480 was spent in this way in entertaining.
In Indiana a Mr. Cuppy received $3,500 for the sixty days’ session of the Legislature. During this time “theater parties, dinners, and lunches” were served for the entertainment of the members of the Legislature and their friends. Most of the $3,500, it was stated, was spent for “expenses.”[Pt. 5, pp. 520-22.] In Missouri, besides theater parties, baseball games, and other forms of entertainment, friends of the utilities were favored with duck shooting parties. [Exh. Pts. 5 & 6, p. 231.]
Over and over again in the testimony occur references to these expenditures of the utilities in the cordial and kindly entertainment of those whose friendship they needed in carrying forward their plans.
The Church Hears the Gospel
In this complete and all-inclusive propaganda work of the utility organizations, the Church and various church organizations, of course, are not overlooked. Frequent efforts are made to give the propaganda of the utilities a sort of religious setting and, wherever possible, speakers are supplied to the churches, women’s clubs, etc. [Exh. Pts. 5 & 6, pp. 949 & 955.]
Corporations Are No Longer Soulless
We are told by one of the articles in the Exhibits that corporations are no longer soulless. The United Gas Improvement Company, according to the record, had purchased a lot upon which it was to build an additional office structure. On this lot stood the old house in which had been written the old gospel hymn, which read:
He leadeth me, O blessed thought!
O words with heavenly comfort fraught!
Whate’er I do, Where’er I be,
Still ’tis God’s hand that leadeth me.
This hymn, “sung throughout the world, was written by the Rev. Dr. Joseph H. Gilmore, in the home of Deacon Wattson, immediately after preaching in the First Baptist Church…. The United Gas Improvement Company, in recognition of the beauty and fame of the hymn,” erected a “tablet as a permanent mark of the birthplace of the hymn.” [Exh. Pts. 7, 8 & 9, p. 293.] And then, commenting on this, the article goes on to say:
“Corporations may not have souls, but the men who operate the successful ones do, and they are good Christian gentlemen who are constantly helping to make the United States a better nation.” (Our italics.)
In another place we are told that the American Constitution was created in a “sacred atmosphere that fell upon that convention,” and “that it was an ever-watchful, kindly, and guiding Providence that made it possible for it to embody, not alone the essence of human wisdom and the sum total of human experience in politics, economy, and government, but also the prophecy of this fulfillment from on high.” (Our italics.) [Exh. Pts. 3, p. 257.]
A Strange New Light From the Holy Land
In one case the utilities sent one of their men, Mr. Wm. L. Crittenden, Chairman of the Oklahoma Speakers Bureau of the utilities organization, to Europe and the Holy Land, and upon his return sent him out as a speaker, making a specialty of addressing Kiwanis and Rotary Clubs and church organizations of various kinds. The representatives of the utilities, and especially Mr. Weadock, were very particular to introduce letters in the evidence to show that there was no propaganda whatever in Mr. Crittenden’s lecture on the Holy Land. He produced letters from pastors of Methodist, Baptist, and Catholic churches, all of which show that what Mr. Crittenden spoke of was the Holy Land and nothing but the Holy Land, and no reference was made to utilities. [Pts. 18 & 19, p. 73.]
Another subtle way in which the utilities ingratiated themselves into the good favors of church people is indicated by their desire to be helpful to the ministers. The ministers, according to these men, belong to one of the three starveling professions: teachers, editors, and ministers. Mr. A. W. Robertson, writing to the Director of the Pennsylvania Committee, says:
“The thought occurs to me that the reason why so many educators are more or less hostile to big business is in many cases due to the fact that they themselves are not successful in a business way. There ought to be some way in which educators could be better paid. It would certainly help to cure at least some of their mental bias.”
“The same thought has come to me in regard to ministers who are generally unfairly critical of corporations, including public service companies. . . . I believe that leaders in our business life could well consider the advisability of giving some real attention to the economic welfare of educators and others who are largely responsible for training the minds of our children.” [Exh. Pt. 3, p. 943.]
The director of the Pennsylvania Committee expressed appreciation and said:
“If the utility companies, in a discreet way, could foster a movement for adequate remuneration of teaching personnel in our schools, I am convinced good results would come. The reason some of those superintendents approve the use of so-called government and municipal ownership propaganda in textbooks is the usual reason for endorsing such stuff. They are sour. Their outlook is distorted and their judgment warped through personal disappointment. That is true also of some denominational ministers, though not to the. same extent.” [Exh. Pt. 3, p. 944.]
They Let Their Light Shine
We find the representatives of the utilities active in the Methodist University of Texas, [Exh. Pt. 3, p. 567.] and also in various church organizations. [Exh. Pt. 4, p. 764.] In one case an exhibit of the utility companies is set up in the Methodist Church. [Idem, p. 248..] The Indiana Speaking Committee reports 42 addresses delivered to church groups during 1927, and 5 in four months in 1928. [Exh. Pts. 5 & 6, p. 769.]
In Idaho the master of the Idaho State Grange and a member of the Utilities Committee is listed as a minister. [Exh. Pts. 7, 8 & 9, p. 350.]
As we have mentioned in a previous chapter, Dr. Charles Eaton of New Jersey, Manager of the Industrial Relations of the National Lamp Works, and a member of Congress, was also a minister. Rev. L. B. Campbell of the Bible Institute gave a course in public speaking for the utilities. At one time the utilities conducted a propaganda in the churches on the subject of church lighting, taking advantage especially of the Easter time, when, as they said. “anything about churches is news. We have just written a story about the recent development in the art of church lighting by electricity for release Easter week. Material was taken from ‘a very fine pamphlet published by the Edison Lamp Works,” etc. And then he adds: “If you think the idea worth passing on as a tip to any of the other boys, I wish you would do so.
There is a lot of good will propaganda worked into the story and it is adaptable everywhere.” This from George F. Oxley, Director of the Department of Public Information of the National Electric Light Association.
In Georgia 10,000 copies of the utilities’ literature was mailed out to ministers, lists of persons in every community, public officials and lawyers-ministers being mentioned firsts’ Material was also furnished to the Young Women’s Christian Association and the Y. M. C. A. [Idem, p. 530.]
The First Congregational Church of Springfield, Massachusetts, had a lecture from S. T. MacQuarrie of the New England Bureau of Public Service Information. [Pt. 17, p. 5.] Professor James S. Thomas, Director of the Alabama Utilities Information Bureau, traveled over the state addressing Sunday Schools. [Pt. 7, p. 136.]
In Little Rock, Arkansas, the utilities were active “organizing” the ministers. They brought them together, had a “splendid” meeting and “they organized a ministerial alliance, and we have been thanked a thousand times for the help we rendered there.” [Pt. 5, p. 256.]
Earle W. Hodges, former Director of the Arkansas Public Service Information Bureau, testified that he knew “practically every minister in the State.” [Idem, p. 247.]
Movies were used in some of the California churches.
In one case, at least, the utilities seem to have found a church man who has taken a decidedly different position and attitude towards the utilities. Mr. J. F. Rutherford of Toronto, Canada, of the International Bible students Association, applied for part of the wave length of Station WJZ which was managed by the National Broadcasting Company. Mr. Rutherford accused the National Broadcasting Company of being a monopoly, according to Mr. Aylesworth, in an address which he delivered over the Red and Blue Radio Chain Sunday afternoon, July 24, 1927. Mr. Sheridan wrote to Mr. Aylesworth, complaining that “Mr. Rutherford’s address was inimical to public utilities.” However Mr. Aylesworth assured Mr. Sheridan that no harm was done, as this was “just one of those things which is not apt to occur again in the near future.” [Exh. Pts. 5 & 6, pp. 485, 486.]
Where Lie the True Interests of Labor?
Organized labor is recognized as one of the powerful influences in the economic and political life of the nation. Accordingly, in their efforts to influence and control the public opinion and political activities of the country, the utilities have, very naturally, given thought to this element in the public life.
President Green Quoted
President William Green of the American Federation of Labor is quoted at length in one of the utility documents from an address delivered before the National Electric Light Association at Atlantic City June 8, 1927. In this address President Green emphasizes the fact that American labor welcomes the extended use and development of electric power and service and wishes “to be helpful in promoting the success of this great industry.” He points out that “both employers and employees have been free from the domination of autocratic control and governmental dictation such as prevails in some of the other lands. This condition creates a feeling of security and assurance and encourages private initiative and private enterprise. (Our italics.) … Industrial freedom is as essential to human happiness and human welfare as political freedom. Let us hope that our nation will always remain free from governmental, autocratic, and dictatorial control of its industries and its workers.” [Exh. Pt. 3, p. 205.]
Other Labor Leaders and Papers
In Exhibit No. 177 of the Commission’s hearings we have presented “a labor leader’s view of government ownership.” This is an excerpt from the radio talk of W. N. Doak, Vice President of the Brotherhood of Railroad Trainmen, broadcast from Washington, D. C., October 17, 1924. In part it reads:
“If a government ownership plan, as advocated for railroads and other utilities, were to go through, it would ultimately be extended to the farms, mills, factories, and other industries, resulting in super-government, which will control all activities of the country. This is not a theory. It is a fact in Russia, where this program is in full force.” [Exh. Pt. 2, p. 117.]
The Union Labor News of Indianapolis, Indiana, has a long editorial which is published as Exhibit No. 3106 in the Commission’s hearings under the caption “Play Fair With Utilities.” In this editorial the Union Labor News expresses the opinion that much of the criticism of the utilities is unjust. All should consider well before protesting too vigorously when the rate of a utility is increased.
“The Union Labor News hopes that its friends and readers will not permit themselves to become unduly exercised over advancing rates on the part of utilities. These are times of high prices. It takes more money to live. The utilities must have their share or perish of strangulation. . . . Moreover, most of these utility corporations have been fair with the organized worker. They pay as good wages as are to be found in any line of industry. They are so placed that they will do much to avoid conflict with labor…. They render public service under strict regulation…. In the words of Dooley, “let labor kape its shirt on” before it joins the ranks of the utilities grumble brigade.” [Exh. Pts. 5 & 6, p. 767.]
We are told by the representatives of the power companies in Kansas that “two representatives of the Labor Party in Wichita, the principal city which we serve, came to the head of one of our departments and asked him if he would allow his name to be used as a candidate for the Legislature.” And then this speaker went on to say:
“During the course of the conversation they made the statement that they had become convinced that we were on the square; and that conviction had come through our publicity; and, therefore, they did not hesitate to ask a man connected with the public utilities to go to the legislature somewhat attached to a labor party.” (Applause.) (Our italics.) [Exh. Pts. 5 & 6, p. 956.]
Solemn Warning Against Public Ownership
John Spargo, former socialist, employed by the utility companies, is very favorably mentioned and quoted at length in an editorial from the Birmingham News on “Capital And Labor United In Silencing `Agitators: ” Mr. Spargo is presented as “one of the most sympathetic and understanding friends the cause of labor now has in America.” In this editorial he sounds a solemn warning against the agitators who would “pit the workers against the capitalists,” and “tempt the country to wrest this industry from the hands of private ownership and direction and to place it in control of federal authorities.” In defense of this position Mr. Spargo quotes President William Green of the American Federation of Labor at length, and the Birmingham News adds to this a quotation from Charles A. Eaton, representative in Congress, and closes by saying that it wishes to present to public attention the “well-considered views like those of Mr. John Spargo’s, Mr. William Green’s and Mr. Charles A. Eaton’s. They represent three distinct groups in our national life–that of enlightened labor leadership in Mr. Green, that of the philosopher-economist in Mr. Spargo, and that of the courageous and intelligent man in public life in Mr. Eaton.” [Exh. Pt. 3, pp. 602-03.]
Labor Leader Paid $10,000
In another chapter we have told how the utilities, in their campaign against the public power act in California, paid P. H. McCarthy, who had been for many years president of the Building Trade Council of San Francisco, $10,000 for his work in their behalf and against the public ownership measures. [Exh. Pts. 10-16, p. 446.] In the same chapter is reviewed the activities of other labor leaders and labor papers in behalf of the utilities in their fight against the public ownership measure. (See Chapter LIV, p. 522, “War on State Ownership in California.”)
On the other hand, we find in Exhibit No. 882, in which is printed a list of newspapers for and against the Swing-Johnson bill, a number of labor papers listed as being for the measure as follows: “The Molders’ Journal; The Union Herald, Raleigh, N. C.; Labor Advocate, Nashville, Tenn.; The Colorado Labor Advocate, Denver; Minnesota Union Advocate; The Trade Union News (largest weekly labor paper); Machinists Journal.” [Exh. Pt. 3, p. 369.]
Our readers must bear in mind that in this review of the position of organized labor, as in the case regarding the farmers’ organizations, or any other group, we are presenting here only the evidence that we find published in the hearings of the Federal Trade Commission. And, even so, we have not been able to present fully all that the record contains. What is written here is in no way intended as either a reflection upon or commendation of any of the organizations discussed, being merely a brief review of the records as we have found them in the hearings of the Commission.. We have not here referred to the long record of organized labor and innumerable instances of resolutions and actions by local, state, and national bodies in support of municipal and public ownership. For these have not come into the records of the Federal Trade Commission and, therefore, have no part in the proceedings. For obvious reasons these matters would not interest the representatives of the utilities and would, therefore, not be presented since, with but two or three exceptions, they and their records are the only ones examined in this investigation.
The Dilemma of Rural Electrification
The problem of rural electrification is recognized by the utilities as one of especially serious difficulty. The high cost of transmission and distribution in the thinly settled rural communities makes it difficult for the companies to meet the requirements of these districts. The utilities warn some of the agricultural colleges to “step softly on the electrification of farms in a wholesale way, unless you have the approval of the local power companies affected.” This was given merely as a hint “that somewhere, some time, some place, some company might object to too rosy a picture of what electricity can do for farmers.”
The Danger of Public Ownership
And yet, while recognizing the difficulties of rural electrification, the utilities realize that unless they supply electric service in rural territories, they are very likely to have trouble on their hands in the form of a demand for service and a possible promotion of public development. Writing on this subject, Mr. Sheridan says:
“There is always the danger that if farmers can not get power from the companies they may try to form “power districts” of their own, as is being tried in Nebraska, etc. It is a tricky business.” [Exh. Pts. 5 & 6, p. 574.]
Thus the companies are in somewhat of a dilemma in the matter of rural electrification, it would seem. Moreover, the utilities sometimes find themselves confronted with serious competition in the way of low rates from publicly owned projects. Thus in the State of Idaho mutual companies have been formed by the farmers which buy their current wholesale from government-owned hydroelectric plants operated in connection with the Minidoka Reclamation Project. The rates are very low and the utilities have had considerable trouble in meeting the competition. In this case, as in so many others, they have resorted to the device of having a very elaborate survey made, the purpose of which was to show that when the costs of the service are properly “weighted” and the accounts of the mutual companies “properly kept,” according to the methods of accounting recommended by the Idaho Power Company’s engineers, the rates in this case to the farmers are not as low as the rates offered by the private company. [Exh. Pt. 7, 8, & 9, pp 340 ff.]
Difficulties of Rural Service
The Director of the Nebraska Public Utilities Information Bureau, writing to the editor of a Nebraska paper about this matter of rural electrification, has this to say:
“This is a big and growing problem. As strange as it may seem, the electric industry is not anxious to have the farmers calling for electric service. The electric men realize that the responsibility rests upon them to give service to all comers, but they also know that if electric service is carried to the farms, it will necessarily be so expensive that the users will not be pleased; on the other hand, if the complaint about high bills is to be avoided, the companies must afford a service that will lose them money.” [Exh. Pts. 10-16, p. 831.]
Here again is a recognition of the serious nature of the problem of rural electrification when looked at from the standpoint of the private companies. Mr. Oxley, Director of the Department of Information of the National Electric Light Association, seems also to have recognized this difficulty. There is a great diversity of opinion, he says, regarding the electrification of farms and the possibility of it being made a profitable business from the viewpoint of the electric light and power company. However, he says:
“I believe that the power companies sooner or later must extend their lines into rural communities. Their task then is to see that the greatest possible use of electricity is made on the farm in order that the business may be profitable. If it is made profitable, so that the farmer can secure electricity at an economical advantage to himself, then the farmer will at least acquiesce in private ownership and development of the rural territory from the electrical viewpoint. If, however, the farmer can not secure electricity from the private companies, then, regardless of cost, or regardless of taxation, sooner or later he is going to demand municipally owned, or county owned, or district owned, or state owned and operated electric light and power, companies that will serve him.” (Our italics.) [Pt. 11, p. 84; also Exh. Pts. 10-16, pp. 313-14.]
Here then is a clear recognition of the absolute necessity on the part of the private companies of rendering service in the rural sections at reasonable rates in order to forestall the public power district movement and, on the other hand, the extreme difficulty that the private companies experience in rendering such service on a basis that will make it profitable to them.
Elaborate Research and Experiment
In view of this dilemma confronting the industry, extensive and quite elaborate efforts have been made in the way of experimentation in rural electrification and study of the problem. Several experimental stations and surveys of this kind have been conducted in various parts of the country, generally in co-operation with universities and colleges, as well as representatives of the farm organizations and utility groups. Notable among these surveys and experimental projects are the Red Wing, Minnesota, experiment, the Idaho Commission on the relation of electricity to agriculture, and other similar organizations.
In Iowa, as in many other states, the utility corporations set up a co-operation with the state universities and farm organizations in carrying on what they called a “co-operative research and experimental activity on the relation of electricity to agriculture.” [Pt. 7, p. 6.] Under date of March 6, 1925, an appropriation of $1,500 was made by the Iowa Section of the National Electric Light Association to promote this co-operative investigation and experimentation. The first move in this matter, according to the testimony of Mr. Weeks, Assistant Secretary of the Iowa Section N. E. L. A., was made by the President of the Iowa Farm Bureau Federation. [Idem.] On the committee, besides the Farm Bureau Federation, were representatives of the Iowa State College and representatives from the community of Garner, Iowa, where there was an experimental farm line. Also, of course, the Iowa Section of the National Electric Light Association was represented. From time to time other appropriations were made by the utilities through their Iowa Section, amounting to $15,600 in all up to 1929.
In this connection, Judge Healy wanted to know: “Was one of the purposes of the carrying on of this experimental work here to disprove the claims which have been made on the subject of rural electrification by the advocates of municipal ownership?” [Idem, p. 8.] Mr. Weeks did not answer this question very definitely, although he had previously admitted that he knew that in the campaigns for municipal ownership the argument was advanced by those who advocated it that electricity could be furnished to the farmer under that plan at very low rates. But Mr. Weeks insisted that the only purpose of these investigations and experiments in rural electrification was to “secure information on farm lines, the construction of farm lines, the utilization of electricity on the farms, and all information which would be useful in connection with further extending electricity to the farmers.” [Pt. 7, p. 9.]
The attempts of the utility companies to discredit such public projects as the Ontario Hydro Electric Power System and especially its service to the rural communities, which we have recounted elsewhere, [p. 350.] is a part of the efforts of the utility companies to forestall public ownership movements in rural communities and safeguard their position.
Cultivating Farmer Friendship
In view of the difficulties and dangers in this problem of rural electrification, the utilities have made strenuous efforts to enlist and hold the sympathy and co-operation of the farmers and farm groups. We find, for example, that they spent in one case $2,436 for paid advertising as news items in various farm journals. [Pt. 7, p. 86.] Advertising in the magazine Successful Farming amounted to $1,800; [Idem, p. 87.] in the Country Gentleman $2,250. Efforts are also made to enlist the sympathy and co-operation of farm leaders by having them attend and address the utility conventions. L. J. Tabor, for example, President of the National Grange is paid $157.78 to cover his expenses in attending and addressing the National Electric Light Association Convention in San Francisco in 1925. [Pt. 7, pp. 73-74.] Farmers’ expenses in Iowa are paid for attending utilities’ conventions. The New Jersey Grange and county agents co-operate with the New Jersey Public Utility Information Committee. [Idem, p. 50.] The New Jersey Electric Association called upon its membership for a contribution of $10,000 to carry on the work of education among the farmers. This “educational” work was being done jointly by the utility corporations and the New Jersey State Grange, the State Board of Agriculture, and the so-called agricultural county agents. [Pt. 7, p. 50.]
That these efforts at establishing friendly relations between the leaders of the farm movement are more or less successful is indicated by such facts as the Farm Bureau in Iowa starting the movement to get the Iowa State College to make a survey of the problem of farm electrification; [Pt. 7, p. 6.] or again by the fact that the Farm Bureau Federation of Missouri seems to have been instrumental in saving the day for retaining the regulatory commission in that state. [Exh. Pts. 5 & 6, pp. 548, 550.]
Looking to Public Ownership
And yet the rural situation is not altogether satisfactory to the utilities. For, according to the record, farm organizations have actually begun a demand for the extension of municipal and public ownership as the only means by which they can secure rural electrification at reasonable rates. In Michigan, as we have shown, [pp. 435-436.] this movement has become quite definite and strong.
In Oregon we are told by one of the exhibits that the “Grange has entered politics” and that the master of the Washington Grange has attacked the utilities. The writer in this case, Mr. Franklin T. Griffith, speaking for the utility corporations, told how the master of the National Grange had spoken very favorably, at the national convention of the Electric Light Association at San Francisco, of the utility companies. But he said, unfortunately, the opinion expressed by the master of the National Grange “does not appear to be that of the master of the Washington State Grange.” He then read an excerpt from the address of the master of the State Grange of Washington, in which that official had said: “Probably the biggest trust of all times is the power trust,” etc. And the quotation concludes with the statement: “A measure should be enacted enabling the country people to form power districts under which they can enjoy the same rates as the people of our cities, and cities and towns should join into such districts if desired.” [Exh. Pts. 7, 8 & 9, p. 465.]
“The Granges of Oregon and Washington,” Mr. Griffith continued, “are advocating public development of water power…. There has latterly grown up a widespread opinion among the farming element and the members of the Grange generally that up in Ontario there has been a wonderfully successful experiment conducted under public ownership which has resulted in untold advantage and prosperity to the farming community.” Mr. Griffith then endeavored to show that studies made by different representatives employed by the utilities had disproved these claims regarding the Ontario situation. [Idem, p. 465.] But the point here is that the utilities realize that the movement demanding public ownership and public power districts is actually getting under way, and thus the danger of losing the support of the rural communities.
Where the Farmer Controls
The seriousness of this danger is realized more especially in view of the fact that in some states at least the rural communities really control the situation. For example, in the State of Georgia, the Director of the Utilities Information Bureau writes to Mr. Sheridan of Missouri:
“In Georgia the farmer is absolutely in control. We pay no attention to the cities of any size, but go to the country weekly newspaper and to the organizations dealing with the farmers. If you can change his opinion, or rather give him a clearer view of the demands of modern business, you are not likely to suffer in your public relations.” [Exh. Pts. 5 & 6, p. 1090.]
Michigan Grange for Public Power
The position of the progressive element in the Grange movement is especially well represented by a report by its Secretary, Miss Jennie Buell, submitted to the Michigan State Grange in January, 1926. [Exh. Pts. 5 & 6, pp. 8681-62.]
The following is a part of Miss Jennie Buell’s report:
“Time and again this State Grange has gone on record as approving of public ownership of public utilities. While there have always been dissenters to this stand and others of our members have been lukewarm toward it, still the idea has persisted among many Grange members that the people should own and operate certain of the great public-serving utilities…. So when the biennial public ownership conference for 1923 was announced to be held at Toronto, Canada, I resolved to go, for it afforded an opportunity to visit the hydroelectric power plants owned and operated by the province of Ontario.”
Miss Buell then reports briefly on what she found in her visit and study of the Ontario system, and goes on to say:
“In Ontario the farmers can secure electric current for as low as 3 cents a kilowatt hour, whereas elsewhere it costs 9, 1o, and 12, and that power can be secured for pump grinding, sawing, milking, threshing, etc., at $18 to $20 per horsepower per year, whereas elsewhere it costs from $47 to $80; and the Hydro-Electric Power Commission of Ontario makes a special point of helping and encouraging agriculture by extending its transmission lines into rural districts, advancing one-half of the cost of installing the equipment and delivering the current at cost…. Other states: notably, California, Oregon, South Dakota: are moving in this direction: why not Michigan?
“And why should not the State Grange start the project? A project that fits the desperate needs of all rural people. Light and power-all we want to use at a cost which makes it a goal come within the realm of our dreaming. Is it not worth striving for?”
Let the Women Do the Work
Great importance is attached to work among the women and various women’s organizations by the leaders of the utilities. H. T. Sands, Chairman of the Public Relations Section of the National Electric Light Association, at a convention in 1924, said:
“I know of no other phase of our public relations work that gives promise of larger returns in public good will than the work of this (women’s public information) committee.” [Exh. Pt. 1, p. 108.]
Speaking on this same subject Mr. J. F. Owens of the Oklahoma Gas and Electric Company said:
“The thought I want to get over is that this work of the women’s public information committee has demonstrated to me personally that we have been making a very great mistake in the past in employing stenographers solely because they could pound typewriters and not because they had the ability to go out and spread the gospel of the public utility business.
“It is about time we awoke to the fact that through women’s clubs and through the cultivation of the women in the women’s clubs we have one of the greatest avenues for the dissemination of correct information relative to the public utility and of nullifying incorrect information.” [Idem, p. 109.]
Mr. M. S. Sloan, Chairman of the Public Relations Section, in a report of that committee, had this to say:
“The progress made by the women’s public information committee during the year in carrying out its work among the women employees of our companies, and reaching through them the female section of the public has been remarkable. Division organizations have been completed in every geographic division and these committees are working actively. . . . Through addresses delivered by them and information sent out by these women’s organizations, the message of the industry has been put before thousands on thousands of the women of our country.” [Exh. Pt. 1, p. 109.]
A national woman’s committee of the National Electric Light Association is provided for in that organization, “to formulate and put into effect plans for the education of women of the country on the fundamental economic principles of the electric light and power business and the interdependence of the public industry.”
This national woman’s committee has geographic divisions and representatives in 12 sections of the country.
General Federation of Women’s Clubs
That the utilities were successful in enlisting the co-operation of the women’s clubs of the country was very strikingly demonstrated in the case of the General Federation of Women’s Clubs, and especially of the President, Mrs. John D. Sherman. The National Electric Light Association contributed $80,000 in three years to help them in carrying on their work. [Pt. 10, p. 44.]
Mrs. Sherman, the President of the Federation, was paid $600 a month for 24 months, or $14,400, for writing for magazines. [Idem, pp. 488-49.] She insisted that she was not and never had been on the payroll of the National Electric Light Association, but admitted that she was paid these amounts through Lord & Thomas and Logan, a firm which was handling the publicity matter for the utility companies. [Pt. 10, p. 38.] The State Federation of Women’s Clubs in Nebraska gave the public-speaking program of the utilities in that State a “wide open endorsement.” [Pt. 11, p. 115.]
Mrs. John D. Sherman’s Testimony
Following closely through the statement of Mrs. Sherman, submitted to the Commission on January ii, the following facts appear:
Mrs. Sherman was preparing a series of articles to be placed monthly in such magazines as The Country Gentleman, Woman’s Home Companion, Better Homes and Gardens, and The Delineator. The payment for these articles ranged from $Zoo to $500 for each article, one or two articles being placed monthly. [Pt. 10, p. 34.] The articles dealt with all phases of home and community equipment; water, sewer connections, gas, electricity, heating, garbage collection.
The placing of these articles was made by Lord & Thomas and Logan and Mrs. Sherman was paid from that agency. But-and this according to Mrs. Sherman’s statement herself-the National Electric Light Association was supporting a certain survey being made by the General Federation of Women’s Clubs on the subject of home equipment. When the matter of the placing of these articles by Mrs. Sherman came up, the National Electric Light Association was asked whether it would, in addition to its previously pledged contribution, provide the underwriting and revolving fund in connection with the handling of these articles. [Pt. 10, p. 34-35.]
So, while Mrs. Sherman’s statement to the effect that she had never been on the payrolls of the National Electric Light Association may be technically true, it would seem from her own statement that indirectly the National Electric Light Association, through the Lord & Thomas and Logan Agency, was paying her for the articles. Under this arrangement “the National Electric Association paid Lord & Thomas and Logan $690 a month, and they retained $90 a month and turned over to you $600 every month. Is that true?” inquired Judge Healy.
Answer: “Yes.” [Pt. 10, p. 41.]
It further developed in the testimony that the National Electric Light Association was at one time paying the General Federation of Women’s Clubs over $10,000 a year for the support of certain work that they were carrying on. [Idem, p. 44.]
Club Women the Trust Did Not Get
Of course, not all club women were as subservient to the utility interests as Mrs. Sherman. Mrs. Robert E. McDonnell, for instance, a prominent club woman of Kansas City and Missouri, is a fine example of a position and a public service quite in contrast to that of Mrs. Sherman.
Mrs. McDonnell is the wife of an eminent engineer who has distinguished herself as a leader among the club women of her city and state. She served several terms as President of the Athenaeum, Missouri’s largest Federated Women’s Club, and is now State Parliamentarian of the Daughters of the American Revolution.
As a “home engineer,” Mrs. McDonnell was interested in reducing household drudgery. To this end she undertook a study of the possible uses of electricity in the home. She was especially interested in inquiring why electricity was not more widely used in the home and why the cost of domestic service was so much more than the cost of the same service in the stores and workshops of the men. She appealed to the National Electric Light Association and their Public Information Committees for their data on these subjects and received several volumes of statistics which she studied very carefully. .
As a result of her investigations in this field Mrs. McDonnell prepared a report on “Electricity In The Home” which was delivered on many occasions, notably at the last session of the Public Ownership Conference held in Los Angeles in September, 1931. This report proved very popular, and as Mrs. McDonnell is a very able speaker, she has been sought for on many similar occasions. The National Electric Light Association and its committees were anxious to get copies of this report, but when they found that her conclusions were so favorable to municipal plants, showing that they offered lower rates and thereby made possible a wider use of electricity in the homes, and especially in her showing that the Canadian women enjoyed the use of electricity in their homes at one-third the cost of the American women, the National Electric Light Association declined to make any use of Mrs. McDonnell’s report. However, the report has been published as Bulletin No. 56 by The Public Ownership League and is available to those who desire the views of the club women whose independent and unbiased investigations show the possibilities of a wider use of electric service in the homes of the country through lower rates, which may be secured through municipal and public ownership.
Some Features of Women’s Work
Some of the methods by which friendly relations and co-operation was maintained between women’s clubs and the various women’s organizations are interesting. For example, the Ohio Federation of Women’s Clubs conducted a campaign on “adequately equipped homes.” They also managed a state-wide essay contest with elaborate prizes and a free trip to Washington, D. C., for eight students and their mothers. Incidentally, the Ohio Committee on Public Information supported this movement to the extent of some S12,000. This, however, started a fight in the clubs, some of the women opposing the plans, but the difficulty was finally smoothed out. [Pt. 5, p. 427.]
In the Southwest the speakers of the women’s organization proved very valuable in reaching women’s groups. They also prepared playlets, and the Oklahoma Gas and Electric Company even had a girls’ quartet which, according to the record, “was singing its way into the hearts of the people.” [Exh. Pts. 5 & 6, p. 30.]
Mr. Davis of the Nebraska utilities’ organization wrote to Mr. Sheridan of the Missouri organization, saying that he wished he had “2O clever women speakers scattered geographically over the state,” because, he said, “men can’t hit the ball at these tea parties in private parlors.” [Idem, p. 1096.]
In Indiana, “at home” teas were arranged with telling effect as a means of interesting the women in the utility matters. [Exh. Pt. 2, p. 189.] In some communities the women’s committee of the utilities has members in every woman’s club. [Exh. Pt. 2, p. 190.] These women in some cases are very effective in selling stock, merchandising, etc., for the companies. In Georgia some of the women entertain their friends with demonstrations of an electric kitchen. In Florida an electric booth was operated at the State Fair and women were used successfully as means of making proper contacts with the banks. [Exh. Pts. 7, 8 & 9, p. 132-33.]
The women’s clubs and organizations of -all kinds are carried in great numbers on the mailing lists of the utilities, so that they receive their various publications. [Idem, p. 247.]
In Washington, besides their other activities, the women conducted a waffle iron exhibit, company dances, prepared Christmas baskets and scrap books for the cripples in the hospitals. [Idem, p. 448.]
In California, when the great struggle was on over the proposed public power measures, the women and women’s organizations were used by the companies very effectively,.as we have shown in Chapter LIV, p. 5
By these and other methods the utilities sought to keep a constant and effective influence operating upon the women and women’s organizations of the country.
Too Inquisitive: Thumbs Down!
The League of Women Voters seems to have given the utility companies a great deal of concern.
In the first place, they were too inquisitive. They wanted to know. They had a committee on “Living Costs.” And this committee undertook to find out how much electricity cost and what part it played in the cost of living.
The Women Want to Know
They prepared and sent out widely a questionnaire seeking “detailed information concerning public utilities, the rates charged in various localities, amount of securities owned by local customers, etc.” [Exh. Pts. 5 & 6, p. 624.]
The utilities did not look with favor upon this effort of the League of Women Voters to pry into these matters and, according to the minutes of one of the meetings of the Missouri Committee on Public Utility Information, they decided that “it appeared to be the opinion of the Committee that the replies to the questionnaire were desired for political purposes. It was suggested that officials of utilities in Missouri take due notice of the activity and make efforts to find out what use was to be made of the questionnaires in their localities.”
Another committee, after considering the matter, finally decided that the utilities should ignore the questionnaires and not fill them out or supply the information sought. Thus we have the extraordinary instance of the denial of essential information to a considerable and important national group of women who were eagerly seeking for light and information.
Mr. J. E. Hillemeyer of the Union Electric Light and Power Company, Vice-Chairman of the Missouri Committee on Public Utility Information, made the following recommendation, which was adopted: “I have looked over the questionnaire on domestic electric power rates, together with the supplemental sheets thereon, and it strikes me that this was prepared by some one more or less familiar with this entire subject. I can see nothing of any material benefit which can be secured through the use of this questionnaire by’ the league, but suggest that you get out a letter to all electric utility members in which you state that they ignore the questionnaire and do not fill it out or supply the information.” (Italics ours.) [Exh. Pts. 5 & 6, p. 477.]
And yet while refusing to answer these questionnaires of the League of Women Voters, the utilities, on the other hand, write them offering to furnish them speakers and assuring them that there will be no charge. [Idem, p. 464.]
Favor Government Operation of Muscle Shoals
The League of Women Voters, while consistently protesting that they do not believe in or favor public ownership “in general,” have taken a definite stand for the government retention and operation of the Muscle Shoals project and have generally supported the Norris bill in Congress. The utilities were quite disturbed by the fact that the League sent out letters to board members and the chairmen of living costs committees urging them to get in touch with their senators and representatives in support of this bill. [Pt. 3, p. 183; Exh. Pt. 3, p. 523.]
The National League prepared and published a bulletin entitled “Electric Power and the Public Welfare,” by Ann Dennis Bursch. This publication seems to have been taken up by the women of the League in various states as a basis of study of the whole electrical question with particular reference to Muscle Shoals. [Exh. Pts. 5 & 6, p. 898.]
Michigan Women Study Electric Power
The Michigan League of Women Voters, acting apparently under the influence of the national headquarters, we are told by the Director of the Michigan Committee on Public Utility Information, has included in its official state program of work a study of “development and use of electric resources in Michigan. This study is to be under the leadership of the Living Costs Committee, of which Miss Irma Grosse, a teacher in the Home Economics Department of Michigan State College is chairman. [Idem, p. 895.] The utilities regarded this as a serious phase of the situation in Michigan because of the influence of outside leadership in the study, and because this leadership, as evidenced by the pamphlet on electric power and the public welfare, which is urged as a handbook and a guide “is apparently strongly impregnated with the public ownership virus. (Our italics.) It is misleading and mischievous leadership which, if it should gain active strength, might work real harm to Michigan, its industries, its people, including the women, and its utilities.”
The director thought that it might be possible to counteract these “outside unwholesome influences” by establishing contacts with the Michigan leaders and “keeping them informed as to the beneficial part electric power, as developed through private initiative and enterprise, is playing in the material prosperity and social advancement of the people of the state. (Italics ours.) At the same time utility managers might be fortified to meet local manifestations of the suspicion and discontent generated through credulous, unthinking, or unquestioning acceptance of the ideas, suggestions, and innuendoes cleverly planted in `Electric Power and the Public Welfare.”‘ Hence the proposal made by the director, that the analysis of the pamphlet and the suggested answers to its principal points be prepared for distribution among executives and employees in responsible positions. [Exh. Pts. 5 & 6, p. 895.]
Efforts to Reach the League of Women Voters
That the effort “to counteract” the influences of the League of Women Voters “by establishing contacts with their leaders” was well carried out is evidenced by the later record. A conference was held with Miss Anne V. Whitson, Executive Secretary of the Michigan League of Women Voters, at the League headquarters in the Women’s City Club at Detroit on Saturday, December io. And, according to the record, it was found that Miss Whitson “would like to get a utility connection in which she would be doing public relations work somewhat along the lines of her present activities as executive secretary of the Michigan League of Women Voters.” Miss Whitson seemed to be surprised to find that the pamphlet by Mrs. Bursch on “Electric Power and the Public Welfare” favored public ownership. And it developed that both Miss Whitson and her mother were owners of public utility stock, having investments in the Insull companies in Illinois. She suggested that the utilities get in touch with Miss Irma Grosse, Chairman of the Michigan Committee on Living Costs of the League of Women Voters. This was done and there is an extended report on the conference held with Miss Grosse at East Lansing, Michigan, on January 18, 1928.
Thus the utility representatives were going straight to headquarters in their efforts to form contacts with the officials of the leading women of the League of Women Voters in Michigan in order that they might counteract the “public ownership virus” which it was felt that they were disseminating. According to the report of the conference with Miss Grosse, it was stated that “it was very doubtful whether the study will actually be undertaken. She said that she herself was too busy to give it any special attention and unless there was insistent demand for action coming from national headquarters of the League of Women Voters, nothing would be done.” “She did not contemplate calling her committee together.” Nevertheless, “it was evident from various incidental remarks that she had been very favorably impressed with some of the ideas being put forth from the national headquarters of the League of Women Voters along the lines contained in the pamphlet ‘Electric Power and the Public Welfare.’”
“Very Dangerous” Ideas
These ideas, according to the Director of the Public Utility Information Bureau, were regarded as “very dangerous if inoculated under certain conditions in the minds of mislead enthusiasts. They are paternalistic in the extreme and indicate a possible socialistic or communistic origin.” [Exh. Pts. 5 & 6, pp. 898-899.]
Thus the League of Women Voters has fallen under the ban and has been labeled with the fatal words “socialistic, communistic.” The record goes on to say that Miss Grosse still seemed open-minded and, therefore, the director left with her the utilities’ analysis of Mrs. Bursch’s pamphlet together with the answers to the arguments contained. He also left with her a copy of the rate research report of the National Electric Light Association.
In further efforts to counteract these ideas of the League of Women Voters, the women’s section of the utilities organization endeavored to get up arguments to offset what the League of Women Voters was publishing. It was also suggested that the district chairman of the various utility organizations of the women should join the League of Women Voters in order to get inside information and the material which the League of Women Voters was getting out. [Pt. 4, p. 243.]
Illinois League of Women Voters
Exhibit No. 317 of the Commission’s report [Exh. Pt. 2, pp. 268-69.] tells of the annual convention of the Illinois League of Women Voters held at Peoria November 15, 16, and 17, 1927. The main discussion at this conference which interested the utility companies was the address by Mrs. Harris T. Baldwin, Chairman Living Costs Committee of the National League of Women Voters, who discussed the Muscle Shoals question. According to the report, Mrs. Baldwin told of a visit to Muscle Shoals, outlined the possibilities of electric power development, stressed the efficiency of its operation under United States Army engineers, and presented statistics and cost figures obtained during her visit. After reciting the rates at which electricity was sold by the government to the Alabama Power Company, attention was directed to the retail rate charged consumers by the same company. The speaker concluded “with a plea for agitation in all states for action leading to government ownership, control, and operation of the project in the hope that it would result in lower rates for electricity throughout the South.”
Connecticut League of Women Voters Supports Norris Bill
The Connecticut League of Women Voters sent out a letter under date of February 2o, 1928, to board members and living costs chairmen urging support of Senate Joint Resolution No. 46, introduced by Senator Norris of Nebraska as a measure ‘which embodies “most accurately the principles adopted by our convention.” The letter then urges the board members and living costs committees to write to their senators in the matter. The usual admonition is included in the letter which says: “You will, of course, make clear to your senator that on the question of government ownership and operation in general the League takes no position.” [Exh. Pt. 3, p. 523.]
Fear Their Influence
George F. Oxley of the National Electric Light Association wrote as follows regarding the League of Women Voters, to Mr. J. B. Sheridan, Secretary Missouri Committee on Public Utility Information
“The League of Women Voters apparently is composed of women whose husbands are sufficiently successful to permit them ample opportunity and leisure to study matters of interest to themselves. That invariably means that some of the reds or pinks: of the parlor type: go before them and make statements or get them interested in particular matters.
“Although neither name appears in a prominent position in the National League, Ex-Governor Pinchot and Mrs. Pinchot are among the “angels” supporting it. They, of course, have a certain following in nearly every state, which accounts for some of the leading society women and wives of leading business men being interested in the state leagues.
“Of course, the living costs committee of the league is getting information together with the idea in view of tabulating and publishing the reports received. It is my understanding that Morris Llewellyn Cooke, of Philadelphia, has been decided upon tentatively to make the tabulations and the interpretations when the reports are received. He is not entirely sound in his views on public utilities, so you may expect that the report will be adverse, if his is the final say.” [Exh. Pts. 5 & 6, p. 476.]
When Mrs. Harris T. Baldwin spoke before the League of Women Voters in St. Louis on January 25, 1928, Mr. Sheridan arranged to have a Miss Brien go to the meeting, take a stenographic report of the address, “catch her attitude on government ownership” and remain after the speech “to ascertain whether there is any discussion of it and to take short stenographic notes of the names of those participating in the discussions and their attitude on the speech.” [Exh. Pts. 5 & 6, p. 475.]
Arthur W. Stace, Director of the Michigan Bureau of Information, urged upon Miss Margaret Hartnack of the Consumers Power Company of Grand Rapids, advising her not to have Mrs. Harris T. Baldwin, Chairman of the National Living Costs Committee of the National League of Women Voters, come to Michigan. In this letter he said
“Her committee, and I judge it is reflecting her views, seems to be laboring over a number of misconceptions as regards the electric power industry, possibly because she is subject to misleading influences. Some one associated with her at Washington seems to be seeking to implant discontent, erroneous views, and socialistic ownership propaganda among the women of the country. She seems to me to need educating herself rather than to be encouraged as an educator of women on electric power matters.” [Exh. Pts. 5 & 6, p. 900.]
Thus the utilities were diligent in watching every movement of the League of Women Voters, checking up on their speakers and literature and preparing in whatever way they could to counteract their efforts and activities.
Keeping Tab on City Officials
Another group of organizations to which the utility companies have given a great deal of attention are the Municipal Leagues or Leagues of Municipalities.
Mr. Arthur W. Stace, Director of the Michigan Committee on Public Utility Information, prepared and had published a table with information regarding the attitude of these various Leagues of Municipalities toward public and private ownership of utilities. The information, it is stated, was secured from the directors of the public utility information bureaus in the states indicated. An especial point was made of the fact that in several states “the leagues are active in efforts to abolish state utility commissions and to restore control of the utilities to local municipal authorities.” [Exh. Pt. 2, p. 503.]
How the Municipal Leagues Stand
According to this information of the utility companies, 7 of the leagues are for municipal ownership. One is “indifferent,” and another “divided.” And 3 are friendly to private ownership, 1 is indifferent and one “fair,” and one divided. The information is as follows:
State Ownership Ownership Remarks
Arkansas Friendly Has no league but an association of mayors, which is friendly toward public utilities.
Colorado Yes Has leaning toward municipal and government ownership. Has taken no action along this line.
Georgia Had a league aggressively favoring municipal ownership but it died after failure of municipal ownership legislative proposal.
Illinois Yes Noisy members for municipal ownership. Others content with private ownership. League at last annual convention in November, 1927, adopted a resolution favoring the Walsh resolution, which Resolution was sent to Walsh and used by him.
Iowa Yes Active for public ownership. Seeks municipal control of the utilities as opposed to commission commission control. Secretary is not friendly toward public utilities.
Kansas Yes Not openly active against public service utilities but is unfriendly in its attitude and favors municipal ownership. Is seeking abolition of public service commission and restoration of regulatory authority to city councils.
Kentucky National league is considering circulating propaganda.
Louisiana Yes Favorable to municipal ownership.
Massachusetts Has mayor’s club; purely social.
Michigan Indifferent Indifferent Michigan league not active for municipal ownership. Has been quiescent but now has new secretary, Harold D. Smith, who proposes to publish a magazine and make the league active. Mr. Smith expresses himself as being neutral
as to public ownership. He comes from Kansas.
Minnesota Yes League headquarters is clearing house for municipal ownership superintendents.
Missouri Organized recently. No definite trend yet.
Nebraska Yes Extremely hostile to private utilities.
New York Friendly Favors legislation permitting cities to own utilities.
Oklahoma Fair now Attitude improved in last few years.
Oregon No record of attitude.
Tennessee Not active. Sentiment in state against municipal ownership.
Texas Friendly Neutral to friendly.
Virginia Neutral. Regards public ownership as local issue.
West Virginia Was once one. Has died out.
Wisconsin Divided Divided Orators are for municipal ownership. Majority satisfied with private ownership.
[Exh. Pt. 2, pp. 503-04.]
The Illinois Municipal League
The records contain a report of the 14th annual meeting of the Illinois Municipal League held in Peoria in November, 1927- It is stated that the League maintained an active lobby at Springfield during the sessions of the Legislature. Special mention is made of “city officials of the type of Mayor J. H. Andrews, of Kewanee, and Commissioner W. J. Spaulding, of Springfield, and municipal ownership advocates such as E. W. Bemis.” [Idem, p. 266.] There was much criticism of the Illinois Commerce Commission from various speakers during the session and the statement of the report by the utilities is that “the policies and attitude of the Illinois Municipal League as clearly indicated by the convention proceedings is opposed to the Illinois Commerce Commission, in favor of unrestricted home rule, and has a decided leaning toward municipal ownership and operation of utilities. Their activities and power is certainly increasing and plans already made denote a very active campaign in behalf of their issues.” [Exh. Pt. 2, pp. 266-68.]
Colorado Municipal League
A rather astonishing arrangement with regard to the Municipal League of Colorado is reported by Elmore Petersen in a letter to Mr. George E. Lewis, Executive Manager, Rocky Mountain Committee on Public Utility Information, under date of May 23, 1928. After explaining the relations which have been set up by the University of Colorado with the various business and utility organizations, including the Rocky Mountain Committee on Public Utility Information, and in connection with an appeal for continued financial support from the utility interests, Mr. Petersen explains the close arrangements which the university has with the Chambers of Commerce of the state and the city governments in the state. “In the first instance,” Mr. Petersen says, “the office of the secretary and the secretary himself of the State Association of Commercial Organizations are also in this department. The Chambers of Commerce pay dues into this department for the operation of the State Association.” And then coming to the Municipal League, he says: “In the second place, the office of the secretary and manager of the Colorado Municipal League are also in this department. The cities themselves pay dues that run into hundreds of dollars a year into this department to be handled by us for which we return a service which we have reason to believe is important.” [Exh. Pt. 2, pp. 266-68.]
Traveling Salesmen as Missionaries for the Utilities
An interesting and unique phase of the propaganda work of the utility companies was the development of a group of traveling salesmen who were sent out over some of the states with instructions to act as “evangelists” for the utilities.
The Idea Originates in Missouri
Under date of December 22, 1921, Mr. J. B. Sheridan of the Missouri Committee wrote to one of the power company men as follows:
“I want to ask your opinion upon the project which came into my mind when I met some men traveling for electrical supply houses in Missouri.
“As I understand it, there are about 40 good men traveling for electrical supply houses in Missouri. Could we not in some way get these men to do missionary work for the committee and for the utilities? I have thought that if we could get these traveling men together and educate them a little bit in what we want done, that they would be excellent agents for us.
“In the first place, they could bring the smaller operators into the Missouri Association of Public Utilities and get them in close touch with this committee. Then they could talk public relations with the smaller operators and with the supply men, and no doubt bring us in some class C and D members. We could get them to call upon the country newspapers, pass a little time with the editors, talk the facts of public utility operation, etc. Then we could get them talking in the hotels and trains and every other place where they would go. I spoke to one or two of the traveling men I met about this idea, and they were strong for it. I would like to have your opinion on the subject.” [Exh. Pts. 5 & 6, pp. 468-69.]
Mr. Sheridan evidently suggested this idea to a number of people in the industry and it seems to have been well received. In fact, the plan took so well that Mr. Sheridan proposed to extend the idea and to interest not only the salesmen along public utility lines, but to include all traveling salesmen. [Exh. Pts. 5 & 6, p. 469.] He even suggested that the utility people get in touch with the Secretary of the United Commercial Travelers, through whom it was hoped that more of the traveling men could be interested.
Under date of June 20, 1922, Mr. Sheridan wrote to C. L. Proctor of the Empire District Electric Company, saying:
“Our salesmen’s bureau, which has interested men selling to the public utilities in this work of public utility information, is operating very nicely. We have some thirty men traveling over Missouri as unpaid, enthusiastic agents of this committee.” [Idem, p. 533.]
The Plan Adopted in Nebraska
About the same time that this idea was being developed in Missouri it was taken up also by the Manager of the Information Committee of Nebraska, Mr. H. Davis, who told of the “moral support we have had in Nebraska from the manufacturers’ representatives.” He says:
“I have done this: I have asked the manufacturers’ representatives, when they have their traveling salesmen in-maybe 15 or 20 of them-to let me come in and talk to them. I think at one time, when I talked in Omaha, I suggested that they call their men “traveling evangelists.”
From this it appears that it was with the Nebraska organization and Mr. Davis that the term “traveling evangelists” arose.. Continuing, Mr. Davis says:
“I suggested that when they go out to the country they take our stuff out to the country and get the reaction in the small towns on the utility problems, and when they come back to headquarters they can report back what they find out there.
“I told one of them in particular, whom I knew made a certain territory, that we had a particularly stubborn newspaper man out in his community, and I asked him to call on that newspaper man when he was out there next time and see if he could not get under his hide some way or other. He did so. He told the editor the lighting system in his office was inadequate, and by changing it a little bit he could make it more satisfactory. The editor also was having trouble with the big motor that was running his cylinder press in the basement. This chap threw off his coat and leveled off that. motor, came up and wiped the grease off his hands and that newspaper man is for him .” [Exh. Pts. 5 & 6, p. 960.]
Mr. J. B. Sheridan of the Missouri Committee added the preparation of a pamphlet for the use of these “traveling evangelists” as a part of the scheme. On this matter Mr. Sheridan wrote to Joseph B. Groce of the New England Bureau as follows:
“This committee is considering the publication of a small pamphlet, chiefly for use by traveling salesmen employed by electrical, gas, and other supply houses.
“The idea of this pamphlet is a smoking car or hotel lobby discussion of the public utilities by the salesman with his auditors. The salesman sets forth the side of the public utilities and replies to such questions as may be asked.” [Idem, p. 469.]
“Thou Shalt Not Bear False Witness”‘
Throughout the literature, pamphlets, press releases, and other publications of the utility corporations occur numerous instances of false and misleading statements. Many of these have been pointed out to the representatives and witnesses and admitted, as shown by the record. Others are so notoriously false or misleading as to need no other comment than the mere statements made.
The following are a few of these false or misleading statements that have been noted in a hasty review of the findings:
(1) That “there is not today one publicly owned electric light and power utility” in the State of Wisconsin. [Exh. Pts. 5 & 6, p. 422.]
(2) “That the heating rate that they put into effect (in Tacoma) was found to be impractical and was abandoned.” [Idem, p. 131.]
(3) That the Cleveland Municipal Light Plant has been a money loser. [Exh. Pt. 2, p. 533.]
(4) That the Chicago Water Works is run at a loss. [Idem, p. 531.]
(5) That the Fremont, Nebraska, Municipal Light Plant is a failure. [Idem, p. 538.]
(6) That the Hamilton, Ohio, Municipal Light Plant is a disastrous failure. [Idem, p. 540.]
(7) That the Seattle Municipal Light Plant charges exorbitant rates. [Exh. Pt. 2, p. 553.]
(8) That the Winnetka, Illinois, Municipal Light Plant is losing $3,000 a year. [Idem, p. 556.]
(9) That the Winnipeg publicly owned telephone system results in huge losses. [Idem.]
(10) That the Wyandotte, Michigan, Municipal Plant has “never paid interest or sinking fund on its bonds.” [Idem, p. 557.]
(11) By Preston S. Arkwright, President of the Georgia Railway and Power Company: “Many such experiments” (municipal ownership) “have been made in America and every single one of them proved a failure.” [Exh. Pt. 3, p. 1240.]
(12) By Josiah T. Newcomb of the National Electric Light Association and the Joint Committee of the Utilities Association: “No objection was raised nor obstacles placed in the way of the Federal Trade Commission in its investigations, and that all of the utilities concerned have co-operated at all times.” [Pts. 5 & 6, p. 1084.]
Regarding Rates in Ontario
(13) That Mayor McBride of Toronto said that “householders are getting current at less than cost, while commercial users are paying about $800,000 a year more than they should:’ (Disproves by photostat copy of the newspaper article mentioned.) [Pt. 14, p. 230.]
(14) This statement that the Ontario domestic consumers are carried at the expense of other consumers is one which was made by Mr. Samuel S. Wyer and repeatedly reiterated in the literature of the utilities. When questioned closely by Judge Healy, Wyer insisted that this was the case and it is a common contention of the utility representatives. This contention has been so frequently and fully refuted that Judge Healy was led to remark
“Well, I would not have the slightest difficulty, if I wanted to take issue with you on that, in proving that they (the officials in Ontario) have also announced exactly the contrary.” [Pt. 14, p. 225.]
J. A. Switzer, professor of hydraulic and sanitary engineering, University of Tennessee, was one among many who used this argument, saying that “domestic rates in Ontario were below cost and were counterbalanced by industrial rates, which were higher than in New York State.” This statement, according to Mr. Switzer himself, was challenged by Senator Norris and categorically denied. [Exh. Pts. 7, 8 & 9, pp. 168-169, also pp. 302, 314.]
That Municipal Ownership Increases Living Costs
(15) That “municipal ownership brings high cost of living.” This statement; which appeared in a news bulletin of the American Electric Railway Association, was considered such an effective argument against municipal ownership that it was widely used by the utilities, as shown by the records. As we have previously noted this statement was said to have been based upon a report “just issued by the National Industrial Conference Board,” and purports to show that the cost of living in the cities where utilities are municipally owned is very much higher than in the cities in which there is no municipal ownership. The names of the cities and the excessive cost of living are given and the question asked: “Is it a mere coincidence that San Francisco, Cleveland, Jacksonville, Florida, Detroit, and Seattle are the most expensive cities in the country to live in at present?” [Exh. Pt. 4, pp. 208-9.] The fact that this statement was based on a report of the National Industrial Conference Board naturally carried great weight. However, the statement was challenged by Leslie Vickers, Economist of the American Electric Railway Association, and finally absolutely repudiated by the National Industrial Conference Board itself. In a letter by J. H. Friedel of the Conference Board, addressed to the Illinois Committee on Public Utility Information, the statement is made:
“The figures that you quote are more than two years old and certainly do not hold for the present time. To assert that these figures are in a report just issued is to put upon us a responsibility for information that misrepresents the present condition in the cities mentioned. Moreover, no statement of ours has drawn any conclusion in respect to municipal ownership and the high living costs.
“As your Bulletin is sent widely to various editors, who accept it as accurate, we regret that in a few instances recently where the matter has been brought to our notice, we have had to disclaim responsibility for the information or for the statements therein given. [Exh. Pt. 2, p. 486.]
Mr. Vickers, in writing to Mr. McGregor on this matter, and sending a copy of the letter just above referred to, makes the statement
“I have a letter from the national industrial board, stating that they have done nothing and have put out no statement. which would in any sense warrant the heading of this article.”
(16) That the Gregory report regarding the Ontario Hydro-Electric Power System had been suppressed. This was disproven on cross-examination by Judge Healy.” [Pt. 3, p. 416.]
(17) That rates of the municipal light plant in Cleveland had been increased. On this matter J. J. Desmond of Corry, Pennsylvania, protested to the Pennsylvania Public Service Committee, saying:
“The writer is constitutionally opposed to public ownership of any kind, but the information contained in the enclosed clipping from your weekly bulletin is not doing the private ownership cause any good. There may be an increase in municipal operation at Cleveland, but when I tell you that we pay two and a half times more after the increase has been added to the Cleveland rate, you will realize that the comparison is not favorable to private ownership.” [Exh. Pt. 3, p. 976.]
A Typical Instance
(18) Robert Montgomery, General Sales Manager of the Louisville Gas and Electric Company, is on the stand. Mr. Montgomery had made the statement in one of his letters to the effect that representatives of the local power companies were in close contact with local newspapers, and as a result the companies were enjoying exceptionally good public relations. He had further stated that “my office has enjoyed very pleasant relations with these papers (the Louisville papers) and I personally keep the editorial departments informed on all matters of importance to the industry at large, such as the Boulder Dam controversy, the Walsh resolution, etc.” Judge Healy asked if that statement was true or untrue.
Answer: “That is untrue.”
Question: “Why did you state it if it was false?”
To this the witness made some lame reply about being careless in the use of his language.
Judge Healy then pressed the witness: “Did you deliberately falsify when you wrote it?”
Answer: “I did not have that intention, but in the light of this investigation I did not say what I meant.”
Later testimony seemed to indicate that Mr. Montgomery had at other times made statements that were unwarranted and untrue, etc?° [Pt. 8, p. 103.]
In addition to the above, reference may be made to the claim made by Professor E. A. Stewart in connection with his study and report on the Ontario Hydro-Electric Power System, to which we have referred in Chapter XL. Professor Stewart claimed that his data had been submitted to the engineers of the Ontario HydroElectric Power System, checked up by them, and approved. This, according to Mr. Ernest Gruening, who made a special effort to verify these statements, was not true? [The Public Pays, by Ernest Gruening, pp. 72-75.]
Secrecy and Disguise
The evidence found in some of the correspondence of the utility corporations indicates that very subtle and clever efforts were often made to disguise the real sources of their support and the real purposes of their efforts. For example, in a copy of a letter which the Secretary of the Iowa Section wrote in regard to Mr. Carmichael, Director of the Information Bureau, it is stated that he (Mr. Carmichael) “aims to avoid getting into situations which might cause questions to be asked as to where his compensation comes from, and I understand he has been very successful in this regard.” [Pt. 7, p. 30.] Mr. Weeks explained to judge Healy that this was a misstatement of the situation. But Judge Healy asked later: “If you have always known this, why did you state in this letter that he had succeeded up to that time in disguising his true connection?” In answer to which Mr. Weeks replied: “I can not imagine. I have wondered since I wrote -it what was in my mind.” [Idem, p. 30-32.]
Mr. Carmichael, it seems, had “made himself very popular with many newspapers because of his work in helping to develop advertising programs which were carried on by various utility companies:” [Pt. 7, p. 33.]
In writing to Mr. Poucher, one of the members of the utility corporations in New Jersey, who was also President of the Atlantic City Sewerage Company and at the same time connected with the Broadway Savings Bank, Mr. Roth, Secretary of the New Jersey Utilities Association, explained how effective his association had been in the matter of “opposing and preventing adverse legislation,” and then added, “This is a matter we do not advertise, for obvious reasons.” [Pt. 7, p. 59.] When Judge Healy asked what these obvious reasons were, the witness did not give a very illuminating answer.
The above, of course, are only typical instances, taken almost at random from the record. The reader will find at different points in the evidence, and especially in references to statements made in the literature and by speakers of the utilities throughout the present volume, many recurring instances of false or misleading, statements similar to those above mentioned.