Abstract: Shareholders as PR Tools: AT&T and Federal Regulation, 1927-1941

Karen Miller Russell


In 1921, AT&T created Bell Telephone Securities, whose role was to spread stock ownership among a large number of people. During the Depression, customers cut back on telephone use, but AT&T refused to lower its rates, and the Bell System cut back on employee hours at an alarming rate. At the same time, AT&T maintained its $9 dividend. Why was it so important to AT&T executives that, even at the expense of employees and consumers, the company should have so many shareholders, and shareholders who were so contented? The answer lies in the larger role of public relations in the Bell System. In fact, the head of AT&T's Information Department from 1927 to 1947, Arthur W. Page, was also the president of Bell Securities from 1927 to 1936. Through examination of FCC reports and the archival collections of Arthur Page and AT&T, this paper shows that mass ownership was intimately tied to AT&T public relations and therefore to AT&T's efforts to protect its position as a regulated monopoly. Shareholders served as PR tools by seeming to give truth to an AT&T slogan, "A Publicly Owned, Privately Operated Utility."