The Luther H. Hodges Jr. and Luther H. Hodges Sr. Series on Business, Entrepreneurship, and Public Policy

Hill & Knowlton and Postwar Public Relations

Karen S. Miller

• Publisher: The University of North Carolina Press
• Year: 2000
• ISBN:
  9780807866948
• Topic: Business
• Subtopic: Pubbliche relazioni
• Index: Business

In 1933, John W. Hill opened the New York office of what would
become the most important public relations agency in history:
Hill & Knowlton, Inc. By 1959, the combined sales of its
clients--which included Procter & Gamble, Texaco, Gillette, and
Avco Manufacturing as well as the steel, tobacco, and aviation
industries' trade associations--amounted to 10 percent of the
gross national product. The Voice of Business chronicles Hill
& Knowlton's influence on American public discourse in the
years following World War II.
Guided by its founder's conservative ideals, Hill &
Knowlton developed a twofold mission: to influence public
discussion about issues important to its clients and to educate
Americans about big business. Karen Miller shows how the agency
tried to manipulate public opinion, political debate, and news
media content about such issues as postwar military aircraft
procurement, the deregulation of margarine production, President
Truman's seizure of steel mills in 1952, and the cigarette health
scare of 1953-54. Though its campaigns did not change many
opinions, she says, Hill & Knowlton affected the public
indirectly by reinforcing the ideas of its clients and other
conservatives.

Part One
Policies and Practices

Chapter One
Forged in Steel

Founding Hill and Knowlton

When John Hill opened a “corporate publicity” office in 1927 in Cleveland, Ohio, he embarked on a long, distinguished career in public relations. Hill would take a partner, Don Knowlton, in 1933, creating an agency that was grounded in the reputation, ideology, and public relations philosophy that Hill developed during this formative stage of his life and work. H&K’s approach to public relations was strongly influenced by the Depression and the New Deal, watershed events for the agency and its first clients.

Hill’s early career, especially his work for the steel industry, indicates that he was a conservative who wholeheartedly believed in the free-enterprise system and resented organized labor and an active federal government. In his view only public understanding of corporate responsibility could halt the intrusion of government and labor into industry’s territory. His job as public relations counsel, then, was to encourage industry to behave in the public interest and to publicize those actions and business leaders’ opinions as widely as possible. Hill’s professional and personal relationships with his clients, a handful of influential steel, oil, and aircraft executives, made him a respected equal, setting him apart, at least by reputation, from much of his competition when he moved to New York to open shop.

Hill and Knowlton of Cleveland

John Wiley Hill was born on a farm near Shelbyville, Indiana, on 26 November 1890. He was the third of the four sons born to T. Wiley and Katherine (Jameson) Hill. Although his grandfather had been wealthy, his father’s Wichita, Kansas, grain elevator failed, his Indiana farm fared little better, and Hill later recalled that his father “was a first rate farmer but a poor business manager and died poor.” After his high school graduation in 1909, Hill worked for the local newspapers and then got a job at the Akron (Ohio) Press. In 1911 he left the paper to study journalism and English at Indiana University, but after two brief stints there he quit school and returned to Akron, this time to work for the Beacon-Journal. Hill and a friend founded in 1913 the short-lived Chicago Daily Digest, and a few months later he and another friend founded a paper in Shelbyville that also folded. In 1915 he moved to Cleveland, where he reported for the Press and then the Plain Dealer. He remained there, holding various newspaper positions, for several years.¹

Hill took his first steps toward a career in public relations in 1920. He began by creating a newsletter for local executives for Cleveland’s Union Trust Company, while also serving as financial editor for the Daily Metal Trade. These activities exposed him to executives who had no desire to deal with the press and to reporters who relayed financial news with “incredible ineptitude,” while also providing him with important connections in both communities. Thus, Hill both saw the need and knew the right people, enabling him to open a “corporate publicity office” in April 1927 (the term public relations was not yet commonly in use). That month, the head of Union Trust, John Sherwin Sr., offered to retain Hill for $500 a month. Hill replied that he would accept the offer provided that the banker would help him obtain more business. Sherwin called the president of Otis Steel, securing Hill’s second account. As clients spread the word, the publicist added United Alloy Steel, Standard Oil of Ohio, and Republic Steel.²

Hill and his first client were not alone in recognizing a need for public relations during the 1920s. The first public relations counseling firm, Parker and Lee, had been founded in 1904, but the first period of rapid growth occurred after World War I. A number of men—and a few women—who had worked for the federal government’s Committee on Public Information and for such civilian organizations as the Red Cross transferred their experience from the war effort to the corporate sphere in the 1920s. Carl Byoir, Edward Bernays and his wife Doris Fleischman, John Price Jones, and William Baldwin all established influential agencies in New York after the war. Public relations also moved into industrial centers like Pittsburgh and Cleveland, where Carlton Ketchum and Edward D. Howard opened agencies in 1919 and 1925.

The Depression quite literally made Hill and Knowlton. No one, least of all business leaders, understood the economic calamity. Only recently have economic historians pinpointed the multifaceted causes of the Depression, including the international return to the gold standard, contradictory fiscal and monetary policies in the United States, and the imbalance of world wealth caused by World War I and postwar reparations. But lack of understanding only increased the desire to find a scapegoat. The historian William Leuchtenberg argues that because publicists had spent the 1920s trumpeting the genius of business leaders as the cause of prosperity, many Americans blamed them for poverty as well. Business and financial leaders were as bewildered as anyone else, and they wanted to explain that it was not their fault, thus creating an opportunity for public relations. For a few, like John Hill, the Depression brought success. Among the victims of the banking crisis was Hill’s first client, Union Trust. When the bank went under, Hill invited its director of advertising and publicity, Don Knowlton, to join him in a partnership in March 1933—by which point he was already grossing $100,000 on Republic Steel and six other accounts. Moreover, Republic’s Tom Girdler secured for the new firm its most important client, the American Iron and Steel Institute, in 1933.³

Hill and Knowlton’s most important account, the AISI requested that the agency open a branch in New York, where it made its headquarters in the Empire State Building. The institute had been made the steel code authority, given the power to write and enforce National Industrial Recovery Actmandated regulations on what Hill called “ruinous price cutting” and “fair practices with regard to wages, hours of work, and collective bargaining.” Although industry generally opposed regulation, steel executives realized that drastic action must be taken to halt the grinding deflation of unemployment, output, and prices that marked the economic slump, and they favored composing their own codes to having rules written for them. The institute hired a public relations agency because only four of its members—Bethlehem, Armco, National Steel, and Jones and Laughlin—had their own PR directors in 1933, and because hiring outside counsel freed its administrators, according to Hill, “of the burden of selecting and supervising people in the specialized work of public relations.”⁴

From 1933 to 1946 John Hill traveled between Cleveland and New York, working at both the headquarters and the new branch. Because almost none of the agency’s papers from this era survive, little is known about its growth, clients, or programs, but in a few instances the agency’s work is part of the public record. H&K wrote an institutional advertisement for Standard Oil of Ohio during FDR’s “first hundred days,” to “allay the feeling of panic and to bolster confidence” in business and the new president. In 1934 the agency began publication of a bulletin called Steel Facts, which became the authoritative source of steel data for the press and the government. It also prepared pamphlets such as The Men Who Make Steel, which described what it saw as the harmonious relationship between management and labor, due to the implementation of employee representation plans; the high wages and standard of living enjoyed by American steelworkers; and the exorbitant cost of running a steel mill.⁵

The glory years of the 1920s far behind them, business managers like Hill’s clients found that “there are no longer any laurels for the corporate manager,” according to Fortune. The people now turned to the political manager “for an improvement in their condition.” Executives by contrast believed that the conditions of business should be determined by owners and managers exclusively. Although many business leaders initially favored the New Deal, this public faith in government intervention left industrialists—and John Hill—shocked and horrified. “It is one thing for the public to have the power of evaluating dollars in terms of products, as it chooses this or that in a free market,” Hill later wrote of the New Deal. “It is enormously different for Public Opinion, via government, to emerge as the sole standard back of the dollar system by which corporate management computes the value of goals, measures the efficiency of work, and judges the worth of its enterprise.” Such concerns occupied the firm until its first major crisis, the Little Steel strike of 1937.⁶

The New Deal and Labor Relations in the Steel Industry

The steel industry had a long history of repressing unionization, an obsession that peaked in 1937. The mere size of the industry made it a target for unionization. At its founding in 1901, United States Steel was the largest corporation, the biggest employer, and the first company worth $1 billion in the United States. Together with the many smaller companies, it propelled the nation to preeminence in world steel production. Steelmakers considered themselves a bulwark against industrial unionism, and steelworkers refused to give up their attempts to organize, so throughout the history of the American labor movement, steel conflicts stand among the most protracted and vicious of all. Attempts to unionize were defeated time and again by the immense political and economic power of the steel magnates and in 1919 by the Red Scare, an effective weapon against collectivism of any kind.⁷

The upheaval of the Depression and the encouragement of New Deal reforms spurred the labor movement to take on steel yet again. Passage of the National Industrial Recovery Act (NIRA), which had been such a boon to Hill and Knowlton’s business, provided the primary stimulus to labor organization. The act’s sections 7(a) and (b) guaranteed workers the right to organize without employer domination, which, together with the Wagner Act of 1935, created an environment that workers believed was conducive to unionization. The Committee of Industrial Organizations formed a Steel Workers Organizing Committee (SWOC) in June 1936. By the end of the year, Philip Murray, who headed the effort, announced that 125,000 steelworkers had joined the union in 154 lodges. Employees were not content, and their organization with the apparent support of the government seemed to threaten managerial control within the firm, something manufacturers refused to tolerate.⁸

Executives in all industries sprang into action. Some criticized the Wagner Act, the NIRA, and other aspects of the New Deal for assuming that labor and management held opposing interests, but many also did what they could to discourage unionization. Some companies redoubled their efforts in welfare capitalism, sponsoring corporation choruses, athletic teams, and picnics to build loyalty. Others granted wage concessions and offered to negotiate with company unions (employee representation plans, or ERPs) to identify and address grievances before unions could act, in an attempt to ward off CIO-inspired drives. Company unions had been successful, as ERPs represented over 90 percent of workers in 1934. However, a study of rubber workers indicated that employees remained unsold on ERPs, because representatives were identified not with the workers but with their employers. Perhaps not surprisingly, therefore, workers like those at U.S. Steel in Chicago ignored the company unions to form their own groups that affiliated with the CIO, or even used the ERPs to organize companies from within. More serious employer resistance to the CIO appeared in concerns that employed industrial espionage and private police systems and invested heavily in munitions, notably Republic Steel.⁹

Industrialists also turned to public relations. The National Association of Manufacturers’ (NAM) program of the 1930s is the best-known example of Depression-era corporate public relations. The campaign’s principal tenet was that the profit motive was a vital part of American business, and therefore government regulation was damaging. The crusade included motion pictures and film strips, print and outdoor advertising, direct mail, a speakers bureau, and a radio program, The American Family Robinson. In large part because of these campaigns—NAM’s public relations budget grew from $36,000 in 1934 to almost $800,000 in 1937—public relations was one of the few growth industries of the era; or, as a contemporary critic wrote, “the propaganda of big business is itself a big business.”¹⁰

Institutional advertising like NAM’s became an increasingly popular medium to advocate managerial opinions during the Depression. “Strikes, racketeering, impending legislation, bank crises, equipment breakdowns, harassing politics, whispering campaigns—these are some of the causes from which spring special campaigns to meet the emergency created,” a Printers’ Ink editor wrote. A trade publication for advertisers, PI made frequent reference to antiunion copy during the early 1930s. For instance, one story praised a Cleveland auto manufacturer for an ad that threatened workers with a factory shutdown if unionization occurred. According to the historian Roland Marchand, advocacy ads were used for many other reasons, including boosting employee and business community morale. Public relations agents like Hill favored the ads because, he later explained, “the ‘public relations message’ can be placed before the desired audiences in exactly the desired phraseology.”¹¹

Such advertisements constituted a new weapon in steel’s antiunion arsenal. On the last day of June and the first of July 1936, the AISI sponsored full-page ads in 382 newspapers in thirty-four states, spending almost $115,000—more than one-fifth of the entire SWOC budget. Hill and Knowlton’s broadside suggested that outside agitators had coerced employees into joining the union; that the closed shop (employment of union members only) amounted to forcing a worker to pay for a job; and that the industry, and therefore its employees, would be irreparably harmed by a work stoppage during the recovery from years of depression. Lauded by the advertising community and much discussed on editorial pages, the manifesto did little to redress labor’s grievances, and, according to the steelworkers’ union, it actually propelled the SWOC into public consciousness.¹²

The most fantastic response among steel manufacturers was that of U.S. Steel, which on 2 March 1937 capitulated without a strike, starting a chain reaction of negotiation with the new union. Chairman Myron Taylor recognized the SWOC, granted a 5 percent wage increase and a forty-hour week with overtime pay, and agreed to develop an employee grievance procedure. Taylor chose to negotiate rather than endure a sit-down strike like the one that had paralyzed General Motors, particularly when European orders for steel had begun finally...

Table of contents

• Cover Page
• The Voice of Business
• Copyright Page
• Dedication
• Contents
• Illustrations
• Acknowledgments
• Abbreviations
• Introduction
• Part One Policies and Practices
• Part Two Influencing Discourse
• Part Three Changes at Hill and Knowlton
• Appendix Client Lists
• Notes
• Bibliography
• Index