32:, and Merrick Dodd, a law professor. In this debate, Berle argued that corporations should "serve ... all society" through legally enforceable rules, and argued that shareholders' interests should ultimately be "equal" or "subordinated to a number of claims by labor, by customers and patrons, by the community". Dodd argued that corporate powers should be regarded as held on "trust" by directors and managers, and considered it "undesirable ... to give increased emphasis ... to the view that business corporations exist for the sole purpose of making profits for their stockholders". This debate has become well known in
110:
purpose of giving stockholders much-needed protection against self-seeking managers, to give increased emphasis at the present time to the view that business corporations exist for the sole purpose of making profits for their stockholders." He held up the examples of the executives and president of
General Electric Company, who argued that to cure instability, "organized industry should take the lead, recognizing its responsibility to its employees, to the public, and to its stockholders rather than that democratic society should act through its government".
127:
bound to follow shareholder interests as a matter of law, this should not be the case. In later years, Berle said squarely that the law had changed, and his original theory that the law required directors to pursue shareholder profit was now completely reversed by 1954, so that the contention that directors' exercise of corporate "powers were held in trust for the entire community". The same remains true today including in the leading state of incorporation, Delaware.
118:, by proposing "the development of an economic declaration of rights, an economic constitutional order." According to Berle, the "shareholder ... may ultimately be conceived of as having an equal participation with a number of other claimants" or be "subordinated to a number of claims by labor, by customers and patrons, by the community" but this needed to be worked out in enforceable laws, not just by giving managers power "on trust".
109:
Responding to this article, Merrick Dodd stated he was "in sympathy with Mr. Berle's efforts to establish a legal control which will more effectually prevent corporate managers from diverting profit into their own pockets from those of stockholder" but that it was "undesirable, even with the laudable
126:
The Berle–Dodd debate has been widely cited and often misinterpreted as involving Berle, who represented a pro "shareholder value" stance, and Dodd, who represented a pro "public interest" stance. This takes Berle's original view out of context, as he had argued that while directors had been in 1931
101:
that it was better that there was shareholder control of companies than pure-director control. He originally stated that corporate powers should be used ‘only for the ratable benefit of all the shareholders’ as opposed to being left to director discretion: (1931) 44(7) Harvard LR 1049. This followed
52:
but like others he had returned disillusioned by the lack of progress, particularly in the claims of labor. His first paper argued that labor should control enterprises, through increasing ownership of stocks. He went on to write a textbook on corporate finance, adjusting his views, to say that this
113:
Berle quickly responded by clarifying that his 1931 article was merely a historical theory expressing the need for accountability to shareholders "as a matter of law", and the goal was to change this. However, wrote Berle, "you can not abandon emphasis on "the view that business corporations exist
387:
271:
230:
114:
for the sole purpose of making profits for their stockholders" until such time as you are prepared to offer a clear and reasonably enforceable scheme of responsibilities to someone else." This is what Berle proposed to do, including through speeches that he had written for
102:
his view that directors of companies had become too unaccountable, and that tight legal control was needed. At this time, most shareholders were workers saving for retirement, because
299:
See in detail, WW Bratton, 'Collected
Lectures and Talks on Corporate Law, Legal Theory, History, Finance, and Governance' Legal Theory, History, Finance, and Governance' (2019)
270:) written by A. A. Berle. See R. Eden, 'On the Origins of the Regime of Pragmatic Liberalism: John Dewey, Adolf A. Berle, and FDR's Commonwealth Club Address of 1932' (1993)
106:
had been held illegal by the US Supreme Court. This meant people had saved vast sums of money in the stock markets: Berle thought directors should be accountable to them.
374:
WW Bratton, 'Collected
Lectures and Talks on Corporate Law, Legal Theory, History, Finance, and Governance' Legal Theory, History, Finance, and Governance' (2019)
76:
Merrick Dodd was a professor at
Harvard Law School, and decided to respond to Berle's 1931 article that argued directors needed to be held accountable in law.
40:" or the "public interest". Berle and Dodd agreed that the corporation should pursue the public interest, but were initially at odds in how this was achieved.
364:
164:
386:
R Eden, 'On the
Origins of the Regime of Pragmatic Liberalism: John Dewey, Adolf A. Berle, and FDR's Commonwealth Club Address of 1932' (1993)
229:
R Eden, 'On the
Origins of the Regime of Pragmatic Liberalism: John Dewey, Adolf A. Berle, and FDR's Commonwealth Club Address of 1932' (1993)
267:
420:
169:
405:
326:
57:
struck in 1929, Berle became an adviser and speech writer to the next presidential candidate for the
Democratic Party,
49:
36:, with widely conflicting interpretations, for the conflict over the extent to which corporations should pursue "
53:
should not be individual ownership but diversified ownership through pension or other saving funds. After the
66:
392:
E McGaughey, 'Democracy in
America at Work: The History of Labor's Vote in Corporate Governance' (2019)
216:
E McGaughey, 'Democracy in
America at Work: The History of Labor’s Vote in Corporate Governance' (2019)
115:
58:
33:
97:
264:
Campaign
Address on Progressive Government at the Commonwealth Club in San Francisco, California
399:
393:
375:
300:
242:
217:
88:
54:
37:
136:
92:
398:
CRT O'Kelley, 'Merrick Dodd and the Great Depression: A Few Historical Corrections' (2019)
241:
CRT O'Kelley, 'Merrick Dodd and the Great Depression: A Few Historical Corrections' (2019)
103:
180:
159:
155:
29:
414:
371:
AA Berle, ‘Property, Production and Revolution’ (1965) 65(1) Columbia Law Review 1
62:
21:
325:
See L Stout, ‘Bad and Not-so-Bad Arguments for Shareholder Primacy’ (2002)
359:
355:
346:
70:
25:
404:
L Stout, ‘Bad and Not-so-Bad Arguments for Shareholder Primacy’ (2002)
381:
350:
283:
201:
184:
20:
is the name for a series of exchanges over the purposes of the
380:
EM Dodd, 'For Whom Are Corporate Managers Trustees?' (1932)
349:, 'For Whom Corporate Managers Are Trustees: A Note' (1932)
200:
EM Dodd, 'For Whom Are Corporate Managers Trustees?' (1932)
183:, 'For Whom Corporate Managers Are Trustees: A Note' (1932)
73:, including a new "economic declaration of rights".
388:7(1) Studies in American Political Development 74
272:7(1) Studies in American Political Development 74
231:7(1) Studies in American Political Development 74
253:Dodd (1932) 45(7) Harvard Law Review 1145, 1155
48:Berle had been an adviser and attendee at the
8:
365:The Modern Corporation and Private Property
165:The Modern Corporation and Private Property
148:
61:. He became an influential part of the
406:75 Southern California Law Review 1189
314:The 20th Century Capitalist Revolution
95:unfolded, Berle argued in 1931 in the
7:
400:42 Seattle University Law Review 513
394:42 Seattle University Law Review 697
376:42 Seattle University Law Review 755
301:42 Seattle University Law Review 755
243:42 Seattle University Law Review 513
218:42 Seattle University Law Review 697
14:
69:and much of the concepts by the
122:Significance and interpretation
329:Southern California Law Review
1:
382:45(7) Harvard Law Review 1145
351:45(8) Harvard Law Review 1365
65:and led the drafting of the
421:United States corporate law
50:Versailles Peace Conference
437:
67:Securities Act of 1933
368:(1932) Book IV, ch IV
116:Franklin D. Roosevelt
59:Franklin D. Roosevelt
34:corporate governance
286:Harvard Law Review
204:Harvard Law Review
187:Harvard Law Review
98:Harvard Law Review
82:Harvard Law Review
168:(1932), Book IV,
89:Wall Street Crash
55:Wall Street Crash
38:shareholder value
18:Berle–Dodd debate
428:
334:
323:
317:
310:
304:
297:
291:
280:
274:
260:
254:
251:
245:
239:
233:
227:
221:
214:
208:
198:
192:
178:
172:
153:
137:US corporate law
93:Great Depression
436:
435:
431:
430:
429:
427:
426:
425:
411:
410:
343:
338:
337:
324:
320:
311:
307:
298:
294:
281:
277:
261:
257:
252:
248:
240:
236:
228:
224:
215:
211:
199:
195:
179:
175:
154:
150:
145:
133:
124:
104:social security
85:
46:
12:
11:
5:
434:
432:
424:
423:
413:
412:
409:
408:
402:
396:
390:
384:
378:
372:
369:
353:
342:
339:
336:
335:
318:
305:
292:
275:
262:FD Roosevelt,
255:
246:
234:
222:
209:
193:
173:
147:
146:
144:
141:
140:
139:
132:
129:
123:
120:
84:
78:
45:
42:
13:
10:
9:
6:
4:
3:
2:
433:
422:
419:
418:
416:
407:
403:
401:
397:
395:
391:
389:
385:
383:
379:
377:
373:
370:
367:
366:
361:
357:
354:
352:
348:
345:
344:
340:
332:
330:
322:
319:
315:
312:A. A. Berle,
309:
306:
302:
296:
293:
289:
287:
279:
276:
273:
269:
265:
259:
256:
250:
247:
244:
238:
235:
232:
226:
223:
219:
213:
210:
207:
205:
197:
194:
190:
188:
182:
177:
174:
171:
167:
166:
161:
157:
152:
149:
142:
138:
135:
134:
130:
128:
121:
119:
117:
111:
107:
105:
100:
99:
94:
90:
83:
79:
77:
74:
72:
68:
64:
60:
56:
51:
43:
41:
39:
35:
31:
27:
23:
19:
363:
328:
321:
313:
308:
295:
285:
278:
263:
258:
249:
237:
225:
212:
203:
196:
186:
176:
170:ch IV, 355-6
163:
151:
125:
112:
108:
96:
86:
81:
80:Exchange in
75:
63:Brains Trust
47:
24:between the
17:
15:
91:and as the
30:A. A. Berle
28:architect,
22:corporation
341:References
316:(1954) 169
288:1365, 1372
87:After the
44:Background
415:Category
360:GC Means
356:AA Berle
347:AA Berle
181:AA Berle
160:GC Means
156:AA Berle
131:See also
71:New Deal
26:New Deal
282:(1932)
333:, 1204
284:45(8)
202:45(7)
191:, 1372
185:45(8)
303:, 779
220:, 698
143:Notes
358:and
331:1189
268:1932
206:1145
189:1365
158:and
16:The
327:75
417::
362:,
162:,
290:.
266:(
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.