Although propaganda as a term is relatively modern, referring perhaps most famously to the lie machines of the Fascist, Nazi and Soviet dictatorships, the term propaganda is often used interchangeably with the far more ancient, and noble term rhetoric. In Classical Greece and Classical Rome, as well as in The Renaissance, the term rhetoric was applied to the art of speaking eloquently, not to the art of shystering others.
The entire idea of propaganda has always seemed to be very strange to me: especially during the eras when Goebels was named the Minister of Propaganda, as if hearing something from someone named the Minister of Propaganda would not immediately alert you to the fact that whoever was informing you of something for a very clear and obvious purpose. Unless, of course, you wished to believe what the person was about to tell you already: and in that case, why bother having someone else tell you? The answer to this, is perhaps that neither communists or Nazis are known for their sensical natures.
Of course, very little propaganda is so obvious to come out and call itself propaganda. Perhaps it doesn't admit to itself that it is such, and perhaps it is not purely so. Their if, after all, such a thing as rhetoric, that hopes to somehow affect a listener in a not totally disinterested way, while not being used totally as a tool just to elicit a response.
Propaganda, is at heart, the commodification of discourse. Human speech is stripped of its normal day to day function of mutual communication, and pared down to the bare essentials of what is its main task: producing a single tangible result. In other words, there is no room for the speech to flower on its own. The entire point and purpose of the speech is used for one thing, and one thing only: making someone do something.
There is not much to say about propaganda. After all, it is a rather basic, base affair. Rhetoric is a bit more complicated. Rhetoric does not attempt to give someone a fixed result. Rhetoric attempts to give someone a set of tools, and hope they come to a good result with them. To use a more clear example, consider two people trying to reform the Ohio State Prison system. The first uses propaganda, coming up with a string of statistics, facts and emotional invective. These are all tools of propaganda, but are not actually propaganda itself. They are meant to make it so people will only vote one way a specific time. . Another person is concerned about the same issue, and perhaps wants the same legal changes made. But he does it a different way. He says something like "Criminals still feel pain", or perhaps "Criminals may have done something bad, but they still feel pain". or "Causing more suffering for people doesn't make them get better". In any case, what the rhetorician is doing is opening up a new field of thought, a new way of looking at things. He is, in mechanical terms, giving people a new set of tools to examine the facts with. Whether they use those tools in the way he intended is of secondary to having the set of cognitive tools or mental viewpoints to deal with affairs. The rhetorician wishes to give someone the same viewpoint or openness to the situation that he has, and trusts their own ethical nature to take it from there.
Another difference between propaganda and rhetoric is the same difference between all consumables and tools: the consumables are used once and left useless. A tool, on the other hand, can be used by many people in many different ways. Great lines of rhetoric such as "We hold these truths to be self-evident, that all men are created equal" opened people's minds to a possibility for generations to come, apart from their momentary usefulness in a group of slave-owning aristocrats to form their own nation. On the other hand, posters extolling the people of Vladvistok to all try their hardest for the Communist Party in Great Red Victory Steel Surplus Month are today useless for anything besides kitsch and horror.