BUSINESS AND THE PUBLIC
The relationship between business and the public has become closer
in the past few decades. Business to-day is taking the public into
partnership. A number of causes, some economic, others due to the
growing public understanding of business and the public interest in
business, have produced this situation. Business realizes that its
relationship to the public is not confined to the manufacture and sale
of a given product, but includes at the same time the selling of itself
and of all those things for which it stands in the public mind.
Twenty or twenty-five years ago, business sought to run its own affairs
regardless of the public. The reaction was the muck-raking period, in
which a multitude of sins were, justly and unjustly, laid to the charge
of the interests. In the face of an aroused public conscience the large
corporations were obliged to renounce their contention that their
affairs were nobody’s business. If to-day big business were to seek to
throttle the public, a new reaction similar to that of twenty years
ago would take place and the public would rise and try to throttle big
business with restrictive laws. Business is conscious of the public’s
conscience. This consciousness has led to a healthy coöperation.
Another cause for the increasing relationship is undoubtedly to be
found in the various phenomena growing out of mass production. Mass
production is only profitable if its rhythm can be maintained—that
is, if it can continue to sell its product in steady or increasing
quantity. The result is that while, under the handicraft or small-unit
system of production that was typical a century ago, demand created the
supply, to-day supply must actively seek to create its corresponding
demand. A single factory, potentially capable of supplying a whole
continent with its particular product, cannot afford to wait until the
public asks for its product; it must maintain constant touch, through
advertising and propaganda, with the vast public in order to assure
itself the continuous demand which alone will make its costly plant
profitable. This entails a vastly more complex system of distribution
than formerly. To make customers is the new problem. One must
understand not only his own business—the manufacture of a particular
product—but also the structure, the personality, the prejudices, of a
potentially universal public.
Still another reason is to be found in the improvements in the
technique of advertising—as regards both the size of the public which
can be reached by the printed word, and the methods of appeal. The
growth of newspapers and magazines having a circulation of millions
of copies, and the art of the modern advertising expert in making the
printed message attractive and persuasive, have placed the business man
in a personal relation with a vast and diversified public.
Another modern phenomenon, which influences the general policy of
big business, is the new competition between certain firms and the
remainder of the industry, to which they belong. Another kind of
competition is between whole industries, in their struggle for a share
of the consumer’s dollar. When, for example, a soap manufacturer claims
that his product will preserve youth, he is obviously attempting to
change the public’s mode of thinking about soap in general—a thing of
grave importance to the whole industry. Or when the metal furniture
industry seeks to convince the public that it is more desirable to
spend its money for metal furniture than for wood furniture, it is
clearly seeking to alter the taste and standards of a whole generation.
In either case, business is seeking to inject itself into the lives and
customs of millions of persons.
Even in a basic sense, business is becoming dependent on public
opinion. With the increasing volume and wider diffusion of wealth in
America, thousands of persons now invest in industrial stocks. New
stock or bond flotations, upon which an expanding business must depend
for its success, can be effected only if the concern has understood how
to gain the confidence and good will of the general public. Business
must express itself and its entire corporate existence so that the
public will understand and accept it. It must dramatize its personality
and interpret its objectives in every particular in which it comes into
contact with the community (or the nation) of which it is a part.
An oil corporation which truly understands its many-sided relation
to the public, will offer that public not only good oil but a sound
labor policy. A bank will seek to show not only that its management
is sound and conservative, but also that its officers are honorable
both in their public and in their private life. A store specializing
in fashionable men’s clothing will express in its architecture the
authenticity of the goods it offers. A bakery will seek to impress the
public with the hygienic care observed in its manufacturing process,
not only by wrapping its loaves in dust-proof paper and throwing its
factory open to public inspection, but also by the cleanliness and
attractiveness of its delivery wagons. A construction firm will take
care that the public knows not only that its buildings are durable
and safe, but also that its employees, when injured at work, are
compensated. At whatever point a business enterprise impinges on the
public consciousness, it must seek to give its public relations the
particular character which will conform to the objectives which it is
pursuing.
Just as the production manager must be familiar with every element
and detail concerning the materials with which he is working, so the
man in charge of a firm’s public relations must be familiar with the
structure, the prejudices, and the whims of the general public, and
must handle his problems with the utmost care. The public has its own
standards and demands and habits. You may modify them, but you dare
not run counter to them. You cannot persuade a whole generation of
women to wear long skirts, but you may, by working through leaders of
fashion, persuade them to wear evening dresses which are long in back.
The public is not an amorphous mass which can be molded at will, or
dictated to. Both business and the public have their own personalities
which must somehow be brought into friendly agreement. Conflict and
suspicion are injurious to both. Modern business must study on what
terms the partnership can be made amicable and mutually beneficial. It
must explain itself, its aims, its objectives, to the public in terms
which the public can understand and is willing to accept.
Business does not willingly accept dictation from the public. It should
not expect that it can dictate to the public. While the public should
appreciate the great economic benefits which business offers, thanks
to mass production and scientific marketing, business should also
appreciate that the public is becoming increasingly discriminative in
its standards and should seek to understand its demands and meet them.
The relationship between business and the public can be healthy only if
it is the relationship of give and take.
It is this condition and necessity which has created the need for a
specialized field of public relations. Business now calls in the public
relations counsel to advise it, to interpret its purpose to the public,
and to suggest those modifications which may make it conform to the
public demand.
The modifications then recommended to make the business conform to
its objectives and to the public demand, may concern the broadest
matters of policy or the apparently most trivial details of execution.
It might in one case be necessary to transform entirely the lines of
goods sold to conform to changing public demands. In another case the
trouble may be found to lie in such small matters as the dress of the
clerks. A jewelry store may complain that its patronage is shrinking
upwards because of its reputation for carrying high-priced goods; in
this case the public relations counsel might suggest the featuring
of medium-priced goods, even at a loss, not because the firm desires
a large medium-price trade as such, but because out of a hundred
medium-price customers acquired to-day a certain percentage will be
well-to-do ten years from now. A department store which is seeking to
gather in the high-class trade may be urged to employ college graduates
as clerks or to engage well known modern artists to design show-windows
or special exhibits. A bank may be urged to open a Fifth Avenue
branch, not because the actual business done on Fifth Avenue warrants
the expense, but because a beautiful Fifth Avenue office correctly
expresses the kind of appeal which it wishes to make to future
depositors; and, viewed in this way, it may be as important that the
doorman be polite, or that the floors be kept clean, as that the branch
manager be an able financier. Yet the beneficial effect of this branch
may be canceled, if the wife of the president is involved in a scandal.
Big business studies every move which may express its true personality.
It seeks to tell the public, in all appropriate ways,—by the direct
advertising message and by the subtlest esthetic suggestion—the quality
of the goods or services which it has to offer. A store which seeks a
large sales volume in cheap goods will preach prices day in and day
out, concentrating its whole appeal on the ways in which it can save
money for its clients. But a store seeking a high margin of profit on
individual sales would try to associate itself with the distinguished
and the elegant, whether by an exhibition of old masters or through the
social activities of the owner’s wife.
The public relations activities of a business cannot be a protective
coloring to hide its real aims. It is bad business as well as bad
morals to feature exclusively a few high-class articles, when the main
stock is of medium grade or cheap, for the general impression given
is a false one. A sound public relations policy will not attempt to
stampede the public with exaggerated claims and false pretenses, but
to interpret the individual business vividly and truly through every
avenue that leads to public opinion. The New York Central Railroad has
for decades sought to appeal to the public not only on the basis of the
speed and safety of its trains, but also on the basis of their elegance
and comfort. It is appropriate that the corporation should have been
personified to the general public in the person of so suave and
ingratiating a gentleman as Chauncey M. Depew—an ideal window dressing
for such an enterprise.
While the concrete recommendations of the public relations counsel may
vary infinitely according to individual circumstances, his general plan
of work may be reduced to two types, which I might term continuous
interpretation and dramatization by high-spotting. The two may be
alternative or may be pursued concurrently.
Continuous interpretation is achieved by trying to control every
approach to the public mind in such a manner that the public receives
the desired impression, often without being conscious of it.
High-spotting, on the other hand, vividly seizes the attention of the
public and fixes it upon some detail or aspect which is typical of the
entire enterprise. When a real estate corporation which is erecting
a tall office building makes it ten feet taller than the highest
sky-scraper in existence, that is dramatization.
Which method is indicated, or whether both be indicated concurrently,
can be determined only after a full study of objectives and specific
possibilities.
Another interesting case of focusing public attention on the virtues
of a product was shown in the case of gelatine. Its advantages in
increasing the digestibility and nutritional value of milk were proven
in the Mellon Institute of Industrial Research. The suggestion was
made and carried out that to further this knowledge, gelatine be used
by certain hospitals and school systems, to be tested out there. The
favorable results of such tests were then projected to other leaders in
the field with the result that they followed that group leadership and
utilized gelatine for the scientific purposes which had been proven to
be sound at the research institution. The idea carried momentum.
The tendency of big business is to get bigger. Through mergers and
monopolies it is constantly increasing the number of persons with whom
it is in direct contact. All this has intensified and multiplied the
public relationships of business.
The responsibilities are of many kinds. There is a responsibility
to the stockholders—numbering perhaps five persons or five hundred
thousand—who have entrusted their money to the concern and have the
right to know how the money is being used. A concern which is fully
aware of its responsibility toward its stockholders, will furnish them
with frequent letters urging them to use the product in which their
money is invested, and use their influence to promote its sale. It has
a responsibility toward the dealer which it may express by inviting
him, at its expense, to visit the home factory. It has a responsibility
toward the industry as a whole which should restrain it from making
exaggerated and unfair selling claims. It has a responsibility toward
the retailer, and will see to it that its salesmen express the quality
of the product which they have to sell. There is a responsibility
toward the consumer, who is impressed by a clean and well managed
factory, open to his inspection. And the general public, apart from its
function as potential consumer, is influenced in its attitude toward
the concern by what it knows of that concern’s financial dealings,
its labor policy, even by the livableness of the houses in which its
employees dwell. There is no detail too trivial to influence the public
in a favorable or unfavorable sense. The personality of the president
may be a matter of importance, for he perhaps dramatizes the whole
concern to the public mind. It may be very important to what charities
he contributes, in what civic societies he holds office. If he is a
leader in his industry, the public may demand that he be a leader in
his community.
The business man has become a responsible member of the social group.
It is not a question of ballyhoo, of creating a picturesque fiction for
public consumption. It is merely a question of finding the appropriate
modes of expressing the personality that is to be dramatized. Some
businessmen can be their own best public relations counsel. But in the
majority of cases knowledge of the public mind and of the ways in which
it will react to an appeal, is a specialized function which must be
undertaken by the professional expert.
Big business, I believe, is realizing this more and more. It is
increasingly availing itself of the services of the specialist in
public relations (whatever may be the title accorded him). And it is
my conviction that as big business becomes bigger the need for expert
manipulation of its innumerable contacts with the public will become
greater.
One reason why the public relations of a business are frequently
placed in the hands of an outside expert, instead of being confided
to an officer of the company, is the fact that the correct approach
to a problem may be indirect. For example, when the luggage industry
attempted to solve some of its problems by a public relations policy,
it was realized that the attitude of railroads, of steamship companies,
and of foreign government-owned railroads was an important factor in
the handling of luggage.
If a railroad and a baggage man, for their own interest, can be
educated to handle baggage with more facility and promptness, with
less damage to the baggage, and less inconvenience to the passenger; if
the steamship company lets down, in its own interests, its restrictions
on luggage; if the foreign government eases up on its baggage costs and
transportation in order to further tourist travel; then the luggage
manufacturers will profit.
The problem then, to increase the sale of their luggage, was to have
these and other forces come over to their point of view. Hence the
public relations campaign was directed not to the public, who were the
ultimate consumers, but to these other elements.
Also, if the luggage manufacturer can educate the general public on
what to wear on trips and when to wear it, he may be increasing the
sale of men’s and women’s clothing, but he will, at the same time, be
increasing the sale of his luggage.
Propaganda, since it goes to basic causes, can very often be most
effective through the manner of its introduction. A campaign against
unhealthy cosmetics might be waged by fighting for a return to the
wash-cloth and soap—a fight that very logically might be taken up by
health officials all over the country, who would urge the return to the
salutary and helpful wash-cloth and soap, instead of cosmetics.
The development of public opinion for a cause or line of socially
constructive action may very often be the result of a desire on the
part of the propagandist to meet successfully his own problem which
the socially constructive cause would further. And by doing so he is
actually fulfilling a social purpose in the broadest sense.
The soundness of a public relations policy was likewise shown in the
case of a shoe manufacturer who made service shoes for patrolmen,
firemen, letter carriers, and men in similar occupations. He realized
that if he could make acceptable the idea that men in such work ought
to be well-shod, he would sell more shoes and at the same time further
the efficiency of the men.
He organized, as part of his business, a foot protection bureau. This
bureau disseminated scientifically accurate information on the proper
care of the feet, principles which the manufacturer had incorporated in
the construction of the shoes. The result was that civic bodies, police
chiefs, fire chiefs, and others interested in the welfare and comfort
of their men, furthered the ideas his product stood for and the product
itself, with the consequent effect that more of his shoes were sold
more easily.
The application of this principle of a common denominator of interest
between the object that is sold and the public good will can be carried
to infinite degrees.
“It matters not how much capital you may have, how fair the rates may
be, how favorable the conditions of service, if you haven’t behind
you a sympathetic public opinion, you are bound to fail.” This is
the opinion of Samuel Insull, one of the foremost traction magnates
of the country. And the late Judge Gary, of the United States Steel
Corporation, expressed the same idea when he said: “Once you have
the good will of the general public, you can go ahead in the work of
constructive expansion. Too often many try to discount this vague and
intangible element. That way lies destruction.”
Public opinion is no longer inclined to be unfavorable to the large
business merger. It resents the censorship of business by the Federal
Trade Commission. It has broken down the anti-trust laws where it
thinks they hinder economic development. It backs great trusts and
mergers which it excoriated a decade ago. The government now permits
large aggregations of producing and distributing units, as evidenced
by mergers among railroads and other public utilities, because
representative government reflects public opinion. Public opinion
itself fosters the growth of mammoth industrial enterprises. In the
opinion of millions of small investors, mergers and trusts are friendly
giants and not ogres, because of the economies, mainly due to quantity
production, which they have effected, and can pass on to the consumer.
This result has been, to a great extent, obtained by a deliberate use
of propaganda in its broadest sense. It was obtained not only by
modifying the opinion of the public, as the governments modified and
marshaled the opinion of their publics during the war, but often by
modifying the business concern itself. A cement company may work with
road commissions gratuitously to maintain testing laboratories in order
to insure the best-quality roads to the public. A gas company maintains
a free school of cookery.
But it would be rash and unreasonable to take it for granted that
because public opinion has come over to the side of big business, it
will always remain there. Only recently, Prof. W. Z. Ripley of Harvard
University, one of the foremost national authorities on business
organization and practice, exposed certain aspects of big business
which tended to undermine public confidence in large corporations.
He pointed out that the stockholders’ supposed voting power is often
illusory; that annual financial statements are sometimes so brief and
summary that to the man in the street they are downright misleading;
that the extension of the system of non-voting shares often places the
effective control of corporations and their finances in the hands of
a small clique of stockholders; and that some corporations refuse to
give out sufficient information to permit the public to know the true
condition of the concern.
Furthermore, no matter how favorably disposed the public may be toward
big business in general, the utilities are always fair game for public
discontent and need to maintain good will with the greatest care and
watchfulness. These and other corporations of a semi-public character
will always have to face a demand for government or municipal ownership
if such attacks as those of Professor Ripley are continued and are, in
the public’s opinion, justified, unless conditions are changed and care
is taken to maintain the contact with the public at all points of their
corporate existence.
The public relations counsel should anticipate such trends of public
opinion and advise on how to avert them, either by convincing the
public that its fears or prejudices are unjustified, or in certain
cases by modifying the action of the client to the extent necessary
to remove the cause of complaint. In such a case public opinion might
be surveyed and the points of irreducible opposition discovered. The
aspects of the situation which are susceptible of logical explanation;
to what extent the criticism or prejudice is a habitual emotional
reaction and what factors are dominated by accepted clichés, might be
disclosed. In each instance he would advise some action or modification
of policy calculated to make the readjustment.
While government ownership is in most instances only varyingly a remote
possibility, public ownership of big business through the increasing
popular investment in stocks and bonds, is becoming more and more a
fact. The importance of public relations from this standpoint is to be
judged by the fact that practically all prosperous corporations expect
at some time to enlarge operations, and will need to float new stock or
bond issues. The success of such issues depends upon the general record
of the concern in the business world, and also upon the good will which
it has been able to create in the general public. When the Victor
Talking Machine Company was recently offered to the public, millions of
dollars’ worth of stock were sold overnight. On the other hand, there
are certain companies which, although they are financially sound and
commercially prosperous, would be unable to float a large stock issue,
because public opinion is not conscious of them, or has some unanalyzed
prejudice against them.
To such an extent is the successful floating of stocks and bonds
dependent upon the public favor that the success of a new merger
may stand or fall upon the public acceptance which is created for
it. A merger may bring into existence huge new resources, and these
resources, perhaps amounting to millions of dollars in a single
operation, can often fairly be said to have been created by the expert
manipulation of public opinion. It must be repeated that I am not
speaking of artificial value given to a stock by dishonest propaganda
or stock manipulation, but of the real economic values which are
created when genuine public acceptance is gained for an industrial
enterprise and becomes a real partner in it.
The growth of big business is so rapid that in some lines ownership is
more international than national. It is necessary to reach ever larger
groups of people if modern industry and commerce are to be financed.
Americans have purchased billions of dollars of foreign industrial
securities since the war, and Europeans own, it is estimated, between
one and two billion dollars’ worth of ours. In each case public
acceptance must be obtained for the issue and the enterprise behind it.
Public loans, state or municipal, to foreign countries depend upon the
good will which those countries have been able to create for themselves
here. An attempted issue by an east European country is now faring
badly largely because of unfavorable public reaction to the behavior of
members of its ruling family. But other countries have no difficulty
in placing any issue because the public is already convinced of the
prosperity of these nations and the stability of their governments.
The new technique of public relations counsel is serving a very useful
purpose in business by acting as a complement to legitimate advertisers
and advertising in helping to break down unfair competitive exaggerated
and overemphatic advertising by reaching the public with the truth
through other channels than advertising. Where two competitors in a
field are fighting each other with this type of advertising, they are
undermining that particular industry to a point where the public may
lose confidence in the whole industry. The only way to combat such
unethical methods, is for ethical members of the industry to use the
weapon of propaganda in order to bring out the basic truths of the
situation.
Take the case of tooth paste, for instance. Here is a highly
competitive field in which the preponderance of public acceptance of
one product over another can very legitimately rest in inherent values.
However, what has happened in this field?
One or two of the large manufacturers have asserted advantages for
their tooth pastes which no single tooth paste discovered up to the
present time can possibly have. The competing manufacturer is put in
the position either of overemphasizing an already exaggerated emphasis
or of letting the overemphasis of his competitor take away his markets.
He turns to the weapon of propaganda which can effectively, through
various channels of approach to the public—the dental clinics, the
schools, the women’s clubs, the medical colleges, the dental press and
even the daily press—bring to the public the truth of what a tooth
paste can do. This will, of course, have its effect in making the
honestly advertised tooth paste get to its real public.
Propaganda is potent in meeting unethical or unfair advertising.
Effective advertising has become more costly than ever before.
Years ago, when the country was smaller and there was no tremendous
advertising machinery, it was comparatively easy to get country-wide
recognition for a product. A corps of traveling salesmen might persuade
the retailers, with a few cigars and a repertory of funny stories, to
display and recommend their article on a nation-wide scale. To-day, a
small industry is swamped unless it can find appropriate and relatively
inexpensive means of making known the special virtues of its product,
while larger industries have sought to overcome the difficulty by
coöperative advertising, in which associations of industries compete
with other associations.
Mass advertising has produced new kinds of competition. Competition
between rival products in the same line is, of course, as old as
economic life itself. In recent years much has been said of the new
competition, we have discussed it in a previous chapter, between
one group of products and another. Stone competes against wood for
building; linoleum against carpets; oranges against apples; tin against
asbestos for roofing.
This type of competition has been humorously illustrated by Mr.
O. H. Cheney, Vice-President of the American Exchange and Irving
Trust Company of New York, in a speech before the Chicago Business
Secretaries Forum.
“Do you represent the millinery trades?” said Mr. Cheney. “The man at
your side may serve the fur industry, and by promoting the style of big
fur collars on women’s coats he is ruining the hat business by forcing
women to wear small and inexpensive hats. You may be interested in
the ankles of the fair sex—I mean, you may represent the silk hosiery
industry. You have two brave rivals who are ready to fight to the
death—to spend millions in the fight—for the glory of those ankles—the
leather industry, which has suffered from the low-shoe vogue, and the
fabrics manufacturers, who yearn for the good old days when skirts were
skirts.
“If you represent the plumbing and heating business, you are the mortal
enemy of the textile industry, because warmer homes mean lighter
clothes. If you represent the printers, how can you shake hands with
the radio equipment man?...
“These are really only obvious forms of what I have called the new
competition. The old competition was that between the members of
each trade organization. One phase of the new competition is that
between the trade associations themselves—between you gentlemen who
represent those industries. Inter-commodity competition is the new
competition between products used alternatively for the same purpose.
Inter-industrial competition is the new competition between apparently
unrelated industries which affect each other or between such industries
as compete for the consumer’s dollar—and that means practically all
industries....
“Inter-commodity competition is, of course, the most spectacular of
all. It is the one which seems most of all to have caught the business
imagination of the country. More and more business men are beginning
to appreciate what inter-commodity competition means to them. More
and more they are calling upon their trade associations to help
them—because inter-commodity competition cannot be fought single-handed.
“Take the great war on the dining-room table, for instance. Three times
a day practically every dining-room table in the country is the scene
of a fierce battle in the new competition. Shall we have prunes for
breakfast? No, cry the embattled orange-growers and the massed legions
of pineapple canners. Shall we eat sauerkraut? Why not eat green
olives? is the answer of the Spaniards. Eat macaroni as a change from
potatoes, says one advertiser—and will the potato growers take this
challenge lying down?
“The doctors and dietitians tell us that a normal hard-working man
needs only about two or three thousand calories of food a day. A
banker, I suppose, needs a little less. But what am I to do? The fruit
growers, the wheat raisers, the meat packers, the milk producers, the
fishermen—all want me to eat more of their products—and are spending
millions of dollars a year to convince me. Am I to eat to the point
of exhaustion, or am I to obey the doctor and let the farmer and the
food packer and the retailer go broke! Am I to balance my diet in
proportion to the advertising appropriations of the various producers?
Or am I to balance my diet scientifically and let those who overproduce
go bankrupt? The new competition is probably keenest in the food
industries because there we have a very real limitation on what we can
consume—in spite of higher incomes and higher living standards, we
cannot eat more than we can eat.”
I believe that competition in the future will not be only an
advertising competition between individual products or between big
associations, but that it will in addition be a competition of
propaganda. The business man and advertising man is realizing that he
must not discard entirely the methods of Barnum in reaching the public.
An example in the annals of George Harrison Phelps, of the successful
utilization of this type of appeal was the nation-wide hook-up which
announced the launching of the Dodge Victory Six car.
Millions of people, it is estimated, listened in to this program
broadcast over 47 stations. The expense was more than $60,000. The
arrangements involved an additional telephonic hook-up of 20,000 miles
of wire, and included transmission from Los Angeles, Chicago, Detroit,
New Orleans, and New York. Al Jolson did his bit from New Orleans, Will
Rogers from Beverly Hills, Fred and Dorothy Stone from Chicago, and
Paul Whiteman from New York, at an aggregate artists’ fee of $25,000.
And there was included a four-minute address by the president of Dodge
Brothers announcing the new car, which gave him access in four minutes
to an estimated audience of thirty million Americans, the largest
number, unquestionably, ever to concentrate their attention on a given
commercial product at a given moment. It was a sugar-coated sales
message.
Modern sales technicians will object: “What you say of this method of
appeal is true. But it increases the cost of getting the manufacturer’s
message across. The modern tendency has been to reduce this cost (for
example, the elimination of premiums) and concentrate on getting full
efficiency from the advertising expenditure. If you hire a Galli-Curci
to sing for bacon you increase the cost of the bacon by the amount of
her very large fee. Her voice adds nothing to the product but it adds
to its cost.”
Undoubtedly. But all modes of sales appeal require the spending of
money to make the appeal attractive. The advertiser in print adds
to the cost of his message by the use of pictures or by the cost of
getting distinguished endorsements.
There is another kind of difficulty, created in the process of big
business getting bigger, which calls for new modes of establishing
contact with the public. Quantity production offers a standardized
product the cost of which tends to diminish with the quantity sold.
If low price is the only basis of competition with rival products,
similarly produced, there ensues a cut-throat competition which can
end only by taking all the profit and incentive out of the industry.
The logical way out of this dilemma is for the manufacturer to develop
some sales appeal other than mere cheapness, to give the product, in
the public mind, some other attraction, some idea that will modify the
product slightly, some element of originality that will distinguish it
from products in the same line. Thus, a manufacturer of typewriters
paints his machines in cheerful hues. These special types of appeal can
be popularized by the manipulation of the principles familiar to the
propagandist—the principles of gregariousness, obedience to authority,
emulation, and the like. A minor element can be made to assume economic
importance by being established in the public mind as a matter of
style. Mass production can be split up. Big business will still leave
room for small business. Next to a huge department store there may be
located a tiny specialty shop which makes a very good living.
The problem of bringing large hats back into fashion was undertaken
by a propagandist. The millinery industry two years ago was menaced
by the prevalence of the simple felt hat which was crowding out the
manufacture of all other kinds of hats and hat ornaments. It was found
that hats could roughly be classified in six types. It was found too
that four groups might help to change hat fashions: the society leader,
the style expert, the fashion editor and writer, the artist who might
give artistic approval to the styles, and beautiful mannequins. The
problem, then, was to bring these groups together before an audience of
hat buyers.
A committee of prominent artists was organized to choose the most
beautiful girls in New York to wear, in a series of tableaux, the most
beautiful hats in the style classifications, at a fashion fête at a
leading hotel.
A committee was formed of distinguished American women who, on the
basis of their interest in the development of an American industry,
were willing to add the authority of their names to the idea. A
style committee was formed of editors of fashion magazines and other
prominent fashion authorities who were willing to support the idea. The
girls in their lovely hats and costumes paraded on the running-board
before an audience of the entire trade.
The news of the event affected the buying habits not only of the
onlookers, but also of the women throughout the country. The story
of the event was flashed to the consumer by her newspaper as well as
by the advertisements of her favorite store. Broadsides went to the
millinery buyer from the manufacturer. One manufacturer stated that
whereas before the show he had not sold any large trimmed hats, after
it he had sold thousands.
Often the public relations counsel is called in to handle an emergency
situation. A false rumor, for instance, may occasion an enormous loss
in prestige and money if not handled promptly and effectively.
An incident such as the one described in the New York _American_ of
Friday, May 21, 1926, shows what the lack of proper technical handling
of public relations might result in.
$1,000,000 LOST BY FALSE RUMOR ON HUDSON STOCK
Hudson Motor Company stock fluctuated widely around noon yesterday and
losses estimated at $500,000 to $1,000,000 were suffered as a result
of the widespread flotation of false news regarding dividend action.
The directors met in Detroit at 12:30, New York time, to act on a
dividend. Almost immediately a false report that only the regular
dividend had been declared was circulated.
At 12:46 the Dow, Jones & Co. ticker service received the report from
the Stock Exchange firm and its publication resulted in further drop
in the stock.
Shortly after 1 o’clock the ticker services received official
news that the dividend had been increased and a 20 per cent stock
distribution authorized. They rushed the correct news out on their
tickers and Hudson stock immediately jumped more than 6 points.
A clipping from the _Journal of Commerce_ of April 4, 1925, is
reproduced here as an interesting example of a method to counteract a
false rumor:
BEECH-NUT HEAD HOME TOWN GUEST
Bartlett Arkell Signally Honored by Communities of Mohawk Valley
(_Special to The Journal of Commerce_)
CANAJOHARIE, N. Y., April 3.—To-day was ‘Beech-Nut Day’ in this town;
in fact, for the whole Mohawk Valley. Business men and practically the
whole community of this region joined in a personal testimonial to
Bartlett Arkell of New York City, president of the Beech-Nut Packing
Company of this city, in honor of his firm refusal to consider selling
his company to other financial interests to move elsewhere.
When Mr. Arkell publicly denied recent rumors that he was to sell his
company to the Postum Cereal Company for $17,000,000, which would
have resulted in taking the industry from its birthplace, he did so
in terms conspicuously loyal to his boyhood home, which he has built
up into a prosperous industrial community through thirty years’
management of his Beech-Nut Company.
He absolutely controls the business and flatly stated that he would
never sell it during his lifetime ‘to any one at any price,’ since it
would be disloyal to his friends and fellow workers. And the whole
Mohawk Valley spontaneously decided that such spirit deserved public
recognition. Hence, to-day’s festivities.
More than 3,000 people participated, headed by a committee comprising
W. J. Roser, chairman; B. F. Spraker, H. V. Bush, B. F. Diefendorf and
J. H. Cook. They were backed by the Canajoharie and the Mohawk Valley
Chambers of Business Men’s Associations.
Of course, every one realized after this that there was no truth in the
rumor that the Beech-Nut Company was in the market. A denial would not
have carried as much conviction.
Amusement, too, is a business—one of the largest in America. It was
the amusement business—first the circus and the medicine show, then
the theater—which taught the rudiments of advertising to industry and
commerce. The latter adopted the ballyhoo of the show business. But
under the stress of practical experience it adapted and refined these
crude advertising methods to the precise ends it sought to obtain. The
theater has, in its turn, learned from business, and has refined its
publicity methods to the point where the old stentorian methods are in
the discard.
The modern publicity director of a theater syndicate or a motion
picture trust is a business man, responsible for the security of tens
or hundreds of millions of dollars of invested capital. He cannot
afford to be a stunt artist or a free-lance adventurer in publicity.
He must know his public accurately and modify its thoughts and actions
by means of the methods which the amusement world has learned from its
old pupil, big business. As public knowledge increases and public taste
improves, business must be ready to meet them halfway.
Modern business must have its finger continuously on the public pulse.
It must understand the changes in the public mind and be prepared to
interpret itself fairly and eloquently to changing opinion.