#EthicsMatter - Ivy Lee and The First Code of Ethics
“The public? Let the public be damned.”
—Cornelius Vanderbilt, 1882
It was the late 19th century, a time when the railroad operator was king in the US. In this laissez-faire environment, unaccountable to any government bodies at all, railroads could charge exorbitant fees to passengers, while often leaving them in perilous riding conditions. Nonetheless, operators prospered, regardless of their relationship with the passengers. The value of public opinion was inconsequential to railroads, or frankly, to most businesses and businessmen, during this time.
One often-recalled example was railroad magnate Cornelius Vanderbilt, who by his own account, was the richest man on earth, with a fortune nearing $1 billion. During this period— appropriately nicknamed the Robber Baron era—Vanderbilt seemed to take fullest advantage of lax regulations by the government. Not until decades later did the federal government assume passenger safety or price-gouging as part of its mandate.
One day in 1882, on a rail trip out west, Vanderbilt encountered a surprise guest in his sleeping car: an ambitious freelance newsman named Clarence Dresser, looking for a scoop. Dresser started the questioning:
“Does your limited express between New York and Chicago pay [make a profit]?”
“No, not a bit of it. We only run it because we are forced to do so by the action of the Pennsylvania Railroad. We would abandon it if not for our competitor keeping its trains on.”
“But don’t you run it for the public benefit?” asked the reporter.
“The public?” snapped Vanderbilt. “The public be damned. What does the public care for the railroads except to get as much out of them for as small a consideration as possible. I don’t take any stock in this silly nonsense about working for anybody’s good but our own. When we make a move, we do it because it is in our interest to do so, not because we expect to do somebody else some good. Of course, we like to do everything possible for the benefit of humanity in general, but when we do, we first see that we are benefiting ourselves. Railroads are not run on sentiment, but on business principles, and as to pay—and I don’t mean to be egotistic when I say that the roads which I have had anything to do with—have generally paid pretty well.”1
Within a day’s time, the story appeared in papers throughout the nation, quickly sparking the worst PR disaster in the business world, up until then. Of course, this was years before there were any formal PR counselors to advise business magnates like Vanderbilt about the consequences of acting so disparagingly about his passengers (especially to a scoop-hungry reporter). While the public innately understood during that era businesses did primarily act in their own self-interest, with little, if any, regard for ethics, they likely never heard a billionaire like Vanderbilt say the “quiet part” out loud.
Not until the Progressive Era did businesses start to gain a conscious, and then derive the benefits—monetary and otherwise—of acting ethically, with the public’s interest in mind.
By the early days of the 20th century, the idea of acting in the public’s best interest seemed to be catching on, in no small part thanks to the muckraking journalists whose exposés appalled the public and shamed the companies. And the public relations people, who would years later steer these companies through crises, or avoid them altogether, started to counsel their clients about enacting fair employee relations policies and honest relations with the press.
PR ethics would in the next several decades become codified, by practitioners like Ivy Lee and Arthur Page and professional associations, like the Public Relations Society of America, the Global Alliance and the International Association of Communications. As a result, it would become de rigueur for business leaders to talk about working in the best interests of all their stakeholders, satisfying not only the interests of customers and shareholders, but employees, communities and environment. As one such early corporate PR officer put it, “All business in a democratic society begins with public permission and exists by public approval.”2
PR people have held many roles since the beginning of the profession, none more vital than the guardian of ethics. So it’s important to go back to the Robber Barron Era to see the impact of Vanderbilt’s statements on the business world, and the subsequent rise of a business community that embraced public sentiment. This led to a drastically changed business culture referred to as the Progressive Era. It was then that our profession found its raison d’être.
In 1904, Ivy Lee and partner, George Parker, created what we consider the first code of ethics in our profession: The Declaration of Principles. A former New York Times reporter, and son of a minister, Lee was highly conscious not only of popularizing ethics in the business world but maintaining a respectable and mutually beneficial relationship with the press. Although some have since come to question Lee’s own ethics relative to working with the Germans and Soviets in his later years, the work he did counseling clients at the early part of the century showed him to believe that acting in the public’s best interest was the only way for a company to build and maintain its reputation.
Lee didn’t believe businesses should be a charity, but that acting charitably with the public would serve them well.
Because of the tragedies that befell his clients in 1904—at both a coal mine and railroad bridge—Lee, having no precedents or case studies to rely upon, pioneered what is now known as the practice of crisis communications, a practice that flourished over the next 117 years.
One of the first crises handled by the Parker and Lee firm was to handle an anthracite coal company, whose workers had gone on a multi-month strike, nearly destroying the company. Few industries were as despised as coal mining, in no small part because of their treatment of the workers, forced to work in the dangerous underground, earning barely enough pay to sustain their families. No surprise, then, that operators were relentlessly ravaged by the muckrakers, who exposed publicly for the first time the horrific manner in which the operators treated their workers.
From 1890–1920, muckrakers essentially played the role of “conscience” for US business and politics. These investigative journalists exposed the hidden workings of meat-packing plants,3 the poor business practices of the oil industry,4 and corruption in local government.5
Lee reasoned that if publicity could be used to attack businesses, couldn’t publicity also be used to defend them? And if, in this muckraking period, reporters were only too happy to find the dirt on companies, couldn’t they also find the good in companies?
So in 1904, when Lee was brought into the coal company as PR counsel, he insisted on a complete shift in communications policy: to open the traditionally press-averse company to journalists, and to proactively provide the press newsworthy and accurate information.
The practice set a new standard for corporate press relations. And because the company materials were written with the same journalistic integrity that Lee himself had used as a reporter for the Times, reporters took notice. Little by little management obliged. For the first time, trust was established between company and the press. And press coverage, consequently, became considerably and consistently more favorable.
It should be noted that during this period, it was not uncommon for publicity agents, looking for quick and favorable “hits” for their clients, to send what they called “handouts” to the press, hoping they’d get “pick-up” by editors in need of copy to fill a few column inches or an infusion of extra cash from the client. And even though the materials were nothing more than hyperbolic advertisements, they were frequently laid out on the page as “copy” (a form of early sponsored content without the disclaimer).
As a means of totally distinguishing his firm from the flamboyant publicity agents of the day, Lee created what to become our first Code of Ethics. He sent it to all the key papers in the US. By doing so, Lee set out to prove that his firm was operating at a level far higher and with far greater legitimacy than the press agents. He wanted reporters to know that he, too, had once been a journalist and he continued to be bound by the same standards of legitimacy as the journalists themselves were. He needed to prove that the work coming from his firm was not—in the word of the day—ballyhoo.
“This is not a secret press bureau. All our work is done in the open. We aim to supply news. This is not an advertising agency. If you think any of our matter ought properly to go to your business office, do not use it. Our matter is accurate. Further details on any subject treated will be supplied promptly, and any editor will be assisted most carefully in verifying directly any statement of fact…. In brief, our plan is frankly, and openly, on behalf of business concerns and public institutions, to supply the press and public of the United States prompt and accurate information concerning subjects which it is of value and interest to the public to know about.”
So important was this statement in the history of our profession that in 1948, business writer Eric F. Goldman said that it “marks the emergence of a new stage of public relations. The public was no longer to be ignored, in the traditional manner of business, nor fooled, in the continuing manner of the press agent. It was to be informed.”6
Following his success with the coal mining company, Lee began working with the Pennsylvania Railroad. In guiding his client during a fatal train derailment in Atlantic City, Lee convinced a reluctant Penn leadership that the press be brought down to the scene to cover the tragedy, convincing the executives that if left to their own devices, reporters might be left to fill in the gaps of information with falsehoods. He wanted his clients to take the high road even though until then corporate executives felt little need to answer to the press, especially one that produced so many deaths. Lee convinced the skeptical executives that by demonstrating openness and honesty they would win the respect of reporters, and subsequently the trust of the riding public. To reinforce this, Lee did something no previous executive had ever done--issue to reporters proactively a full accounting of the tragedy, detailing the death count, the causes for the accident and even quotes from the operators in charge. He called this write-up a “statement from the road,” becoming the first “press release” ever issued.
Surely, the Pennsylvania Railroad was criticized for the way it navigated a train across a narrow bridge. However, it was celebrated for the way it navigated its communications with the press and passengers.
Lee’s pioneering efforts in 1904 laid the groundwork for the next 117 years of public relations practices. And it’s paid off. In the latter part of the 20th century, study after study showed that CEOs who demonstrated what we’ve come to call “social corporate responsibility” (CSR), or “sustainability,” are also the companies who report the best balance sheets and claim a spot on the “most admired” companies in the listings of Forbes and Fortune. At the same time, a wary public has also become distrustful of companies who talk a good CSR game but act not fully ethical (there are all too many cases of this the past few years, despite the counsel of good public relations people).
Today as corporations give ever more credence to the value of the newest acronym, ESG (environmentalism, sustainability and governance), we can give thanks to Ivy Lee, who preached to his clients that there was a direct relationship between the company’s ethics and its bottom line.
1 John Steele Gordon, “The Public Be Damned,” American Heritage, Sept.-Oct. 1989, Vol. 40, Issue 6
2 Page, Arthur W., vice president, Public Relations, AT&T, c. 1929
3 Sinclair, Upton, The Jungle, New York: Doubleday, Page & Co., 1906
4 Tarbell, Ida, History of the Standard Oil Company, New York: McClure, Phillips & Co., 1904
5 Steffens, Lincoln, The Shame of the City, New York: McClure, Phillips & Co., 1904
6 Goldman, Eric F., Two-Way Street: The Emergence of the Public Relations Counsel. Boston: Bellman Publishing Co., 1948.
Shelley J. Spector
Founder, The Museum of Public Relations
Any thoughts or opinions expressed are that of the author and not of Global Alliance.