Customer Stock Ownership as Monopoly Utility Political Strategy in the 1910s and 1920s

In the beginning of the twentieth century, as Americans erupted in righteous indignation over the flagrant abuses of monopoly utilities, utility executives responded by developing several strategies to improve public opinion, rein in regulation, and thwart public ownership. One of the most widely used and successful of these strategies was selling gas, electricity, and telephone company stock directly to customers. To reach these local customers, utility managers required their employees to peddle stock directly to their friends, family, and customers. Using this method, utilities reached a large number of Americans who would not normally have set up a brokerage account or been solicited by a securities sales agent. By farming these interstitial regions of America’s financial landscape, utility executives harvested millions of dollars in capital, but as executives explicitly made clear, the goal of customer stock ownership was not to raise capital but to raise political support. By the crash of 1929, utilities directly sold stock to 20 percent of the total number of stockholding Americans directly through customer stock ownership programs and not through traditional brokerage firms. This article situates the development of customer stock ownership in the political economic context from which it emerged as an organizational response, reveals the social and organizational processes by which utility monopolies sold stock, and appraises the effect of customer stock ownership on antimonopoly sentiment in America.