Sun. Jun 16th, 2024

On Sept. 26, 2023, Federal Trade Commission (FTC) Chairwoman Lina Khan launched an antitrust lawsuit against Amazon. The company is an exploitative monopoly, Khan’s case argues, and must be restructured to “restore the lost promise of free and fair competition.” Yet Amazon has said the case is “wrong on the facts and the law.” Her crusade has echoes of her commission’s investigation of monopolies in the electricity industry in the late 1920s.

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Like Amazon in 2023, the electricity companies had built an enormous distribution network that proved popular with customers even while they ruffled regulatory feathers. The FTC’s investigation in the 1920s turned up juicy details of nefarious business practices and underhanded dealings. Newspapers splashed the revelations on the front pages, while a few members of Congress thundered about the “fangs” of monopoly fastened on to the necks of consumers. But for the most part, Americans just shrugged.


It wasn’t just because the electricity monopolies offered good electricity service at a reasonable price, although they did. It was because executives had spent two decades courting public opinion. By the time the FTC issued subpoenas, presented evidence, and heard witnesses in 1928, the electricity industry had already won over Americans. And in the mind of electricity executives, that was all that mattered. They were right. This lesson provides clues as to what might determine the outcome of the FTC’s battle with Amazon today.

In the first decade of the 20th century, electricity executives encountered a public relations nightmare. They had treated customers with scorn and gotten caught bribing city councils, which precipitated demands from reformers for strict government regulation of electricity companies or outright government ownership of their networks.

In responding to this crisis, electricity company executives learned from a fatal mistake made by 19th century railroad monopolies. The railroad companies had expressed a “public be damned” attitude, which fueled animosity from Americans and aggressive government interference in their industry.

To avoid any similar limitations on their control of the electricity industry, executives undertook the largest non-governmental public relations campaign the U.S. had ever seen. Their logic was simple—though at the time it was revolutionary. Public opinion now ruled the political economy of the nation, these executives believed. No monopoly operating permit, rate hike, or regulatory structure could survive if it failed in the court of public opinion. “Public sentiment controls the ultimate destiny of every utility company,” declared an electricity executive in 1922.

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Accordingly, in 1908, the industry announced a new slogan: “the public be pleased.” This motto encapsulated the insight that customers wanted to at least feel like they were in charge of corporations. To generate that feeling, executives intensively engaged in PR activities.

They compelled their clerks, telephone operators, even linemen to exude “courtesy,” “friendliness,”and “sympathy” toward customers. Managers required “a smile and a pleasant word,” a “friendly feeling,” and “the human quality” from workers. Clerks had to display “a smiling courteous demeanor,” exhibit “a world of patience,” and emit a “ray of sunshine during the entire day.” The idea: if customers received courteous treatment, they would warm up to the idea of corporate monopolies controlling a crucial utility service.

But executives didn’t just tell their employees to mind their manners with customers. Instead, they developed intensive training programs that amounted to huge finishing schools for the working class. This instruction perpetuated and expanded Victorian culture, even as a new consumer culture emerged. To ensure that their staff followed the lessons of these programs, managers sent out mystery shoppers to secretly grade clerks on their customer service. 

The cost to low-level employees was high. Their plastered smiles and scripted pleasantries represented a great loss of emotional freedom and a new level of managerial control.

In addition to courtesy, executives remodeled their customer service offices where customers went to sign up for service, pay their bills, and complain about charges. At thousands of branch offices around the country, workers tore down the iron bars and glass partitions that utilities had inherited from bank designs, and replaced these barricaded offices with new open and inviting layouts. The interiors of these offices now looked like a middle-class living room, while their exteriors resembled the single-family homes in the surrounding residential neighborhoods. 

If monopoly corporations lived here, perhaps corporations really were people.

Electricity monopolies also advertised, of course. But this advertising was mostly intended as a bribe to get editors to publish articles written by electricity managers. These articles—not the ads—would do the real work of convincing Americans that corporate monopolies operated in the customer’s best interest, executives calculated. In many states, between 70 and 95 percent of newspapers participated in this ads-for-articles scheme. 

Executives had once bribed city councils, but muckraking journalists had exposed that practice. So instead, executives simply bribed the journalists. 

The campaign to convince the public of the value of monopolies also included employee speeches at civic clubs, political tracts about the horrors of “communist” municipal ownership of utilities stuffed into billing envelopes, and company-authored textbooks that praised corporate electricity companies. In several states, over 70% of children received instruction from civics books authored by electricity monopolies. 

Finally, electricity companies engaged in diverse community activities aimed at painting themselves in a positive light. These included donating to the local orphanage and YMCA, inviting school groups on field trips to corporate facilities, and producing innovative radio cooking shows.

This massive public relations campaign proved exceptionally effective. Even critics of electricity monopolies admitted by the late 1920s that public opinion toward these companies had dramatically improved. Not even the Great Depression and President Franklin D. Roosevelt’s New Deal in the 1930s could dislodge corporate electricity monopolies from their privileged position within the American economy.

The success of the electricity monopolies at winning over the public points to what may determine the success of the FTC’s campaign against Amazon: what the public thinks of the shopping giant. 

Crucially, people have complained that Amazon has driven mom and pop shops out of business and mistreated warehouse workers. But despite such criticisms, the company has not seemed to focus much energy on combating that idea.

Read More: FTC and 17 States Sue Amazon, Alleging Price Inflation and Overcharging of Sellers

That may be starting to change. Earlier this year, Amazon sent out a glossy mailer to residents of Arlington, Va., the home of Amazon’s second headquarters, filled with pictures of community organizations that received Amazon donations. Next, Amazon began sponsoring the area’s Little League.

Even so, these local efforts are only a trickle compared to the flood of PR activities that electricity executives employed long before their own dust up with the FTC in 1928.

While Amazon is not facing a jury trail, the jury of public opinion is still out. Whether Amazon can get public opinion behind it remains to be seen. If the company’s executives don’t start seeing the link between public relations at the lowest levels of their corporation and political regulation at the highest levels of government, as electricity executives did, America’s long wait for another good old-fashioned antimonopoly movement may come to an end. Perhaps it already has.

Daniel Robert is the author of Courteous Capitalism: Public Relations and the Monopoly Problem, 1900-1930; he holds a PhD in American history from Berkeley. Made by History takes readers beyond the headlines with articles written and edited by professional historians. Learn more about Made by History at TIME here.


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