Adolf A. Berle
Encyclopedia
The Modern Corporation and Private Property
The Modern Corporation and Private Property is a book written by Adolf Berle and Gardiner Means published in 1932. It explores the evolution of big business through a legal and economic lens, and argues that in the modern world those who legally have ownership over companies have been separated...
, a groundbreaking work on corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
, and an important member of U.S. President Franklin Roosevelt's "Brain Trust
Brain Trust
Brain trust began as a term for a group of close advisors to a political candidate or incumbent, prized for their expertise in particular fields. The term is most associated with the group of advisors to Franklin Roosevelt during his presidential administration...
".
Childhood, Education, and Early Career
Berle was born in BostonBoston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, Massachusetts. A child prodigy, He entered Harvard College
Harvard College
Harvard College, in Cambridge, Massachusetts, is one of two schools within Harvard University granting undergraduate degrees...
at age 14, earning a bachelor's degree in 1913 and a master's in 1914. He then enrolled in Harvard Law School
Harvard Law School
Harvard Law School is one of the professional graduate schools of Harvard University. Located in Cambridge, Massachusetts, it is the oldest continually-operating law school in the United States and is home to the largest academic law library in the world. The school is routinely ranked by the U.S...
. In 1916, at age 21, he became the youngest graduate in the school's history.
Upon graduation Berle joined the military. His first assignment as an intelligence officer was to assist in increasing sugar production in the Dominican Republic by working out property and contractual conflicts among rural landowners. Immediately after World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
Berle became a member of the American Delegation to the Paris Peace Conference
Paris Peace Conference, 1919
The Paris Peace Conference was the meeting of the Allied victors following the end of World War I to set the peace terms for the defeated Central Powers following the armistices of 1918. It took place in Paris in 1919 and involved diplomats from more than 32 countries and nationalities...
, advocating for smaller nations' rights of self-determination. In 1919 Berle moved to New York City and became a member of the law firm of Berle, Berle and Brunner.
Academic Career and The Modern Corporation and Private Property
Berle became a professor of corporate law at Columbia Law SchoolColumbia Law School
Columbia Law School, founded in 1858, is one of the oldest and most prestigious law schools in the United States. A member of the Ivy League, Columbia Law School is one of the professional graduate schools of Columbia University in New York City. It offers the J.D., LL.M., and J.S.D. degrees in...
in 1927 and remained on the faculty until retiring in 1964. He is best known among economists and corporate law specialists for his groundbreaking work in corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
. His book, The Modern Corporation and Private Property
The Modern Corporation and Private Property
The Modern Corporation and Private Property is a book written by Adolf Berle and Gardiner Means published in 1932. It explores the evolution of big business through a legal and economic lens, and argues that in the modern world those who legally have ownership over companies have been separated...
, which he co-authored with economist Gardiner Means
Gardiner Means
Gardiner C. Means was an American economist. He worked at Harvard University where he met Adolf Berle. Together they wrote the seminal work of corporate governance, The Modern Corporation and Private Property. Means followed the institutionalist tradition of economists...
, remains the most quoted text in corporate governance studies. Berle and Means showed that the means of production in the U.S. economy were highly concentrated in the hands of the largest 200 corporations, and that within the large corporations managers controlled firms despite shareholders' formal ownership.
Berle theorized that the facts of economic concentration
Market concentration
In economics, market concentration is a function of the number of firms and their respective shares of the total production in a market...
meant that the effects of competitive-price theory were largely mythical. While some advocated trust busting, breaking up the concentrations of firms into smaller entities in order to restore competitive forces, Berle believed that that would be economically inefficient. Instead, he argued for government regulation and became identified with the school of business statesmanship, which advocated that corporate leadership accept (and theorized that they had to a great extent already accepted) that they must fulfill responsibilities toward society in addition to their traditional responsibilities toward shareholders. Corporate law should reflect this new reality, he wrote in The Modern Corporation: "The law of corporations, accordingly, might well be considered as a potential constitutional law for the new economic state, while business practice is increasingly assuming the aspect of economic statesmanship."
Roosevelt's Brain Trust
Berle was an original member of Franklin D. RooseveltFranklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
's "Brain Trust
Brain Trust
Brain trust began as a term for a group of close advisors to a political candidate or incumbent, prized for their expertise in particular fields. The term is most associated with the group of advisors to Franklin Roosevelt during his presidential administration...
," a group of advisers who developed policy recommendations—Berle's focuses ranging from economic recovery to diplomatic strategy -- during Roosevelt's 1932 election campaign. Roosevelt's 'Commonwealth Club Address', a speech written by Berle on government involvement in industrial and economic policy, was ranked in 2000 as the second best presidential campaign speech of the 20th century by public address scholars.
While remaining an informal adviser of Roosevelt after the election, Berle returned to New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and became a key consultant in the successful mayoral election campaign of reformer Fiorello LaGuardia. From 1934 to 1938 Berle managed the city's fiscal affairs as its last Chamberlain
Chamberlain (office)
A chamberlain is an officer in charge of managing a household. In many countries there are ceremonial posts associated with the household of the sovereign....
. Then, from 1938 to 1944, Berle was Assistant Secretary of State for Latin American affairs. Berle's official duties in New York City and as an Assistant Secretary of State did not limit his perception of his real responsibilities or expertise, and in any case Roosevelt appreciated both his speech-writing skills and his advice on a wide range of international and economic concerns. As a result, throughout the Roosevelt administration Berle consulted on important international and industrial New Deal
New Deal
The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were Roosevelt's responses to the Great Depression, and focused on what historians call...
projects, such as creation of the St. Lawrence Seaway, development of the administration's Good Neighbor Policy
Good Neighbor policy
The Good Neighbor policy was the foreign policy of the administration of United States President Franklin Roosevelt toward the countries of Latin America. Its main principle was that of non-intervention and non-interference in the domestic affairs of Latin America...
toward Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
, and establishment of the International Civil Aviation Organization
International Civil Aviation Organization
The International Civil Aviation Organization , pronounced , , is a specialized agency of the United Nations. It codifies the principles and techniques of international air navigation and fosters the planning and development of international air transport to ensure safe and orderly growth...
. Outside of Latin America, Berle argued "that control of the incomparable energy reserves of the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
would yield 'substantial control of the world.'"
Berle also was a major architect in the development of federal farm and home owners' mortgage programs and in the expansion of the Reconstruction Finance Corporation
Reconstruction Finance Corporation
The Reconstruction Finance Corporation was an independent agency of the United States government, established and chartered by the US Congress in 1932, Act of January 22, 1932, c. 8, 47 Stat. 5, during the administration of President Herbert Hoover. It was modeled after the War Finance Corporation...
. He was elected a Fellow of the American Academy of Arts and Sciences
American Academy of Arts and Sciences
The American Academy of Arts and Sciences is an independent policy research center that conducts multidisciplinary studies of complex and emerging problems. The Academy’s elected members are leaders in the academic disciplines, the arts, business, and public affairs.James Bowdoin, John Adams, and...
in 1944.
After World War II
After the war Berle served as AmbassadorAmbassador
An ambassador is the highest ranking diplomat who represents a nation and is usually accredited to a foreign sovereign or government, or to an international organization....
to Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
from 1945 to 1946, and then returned to his academic career at Columbia. Berle was a founding member of the New York State Liberal Party
Liberal Party of New York
The Liberal Party of New York is a minor American political party that has been active only in the state of New York. Its platform supports a standard set of social liberal policies: it supports right to abortion, increased spending on education, and universal health care.As of 2007, the Liberal...
and for nearly a decade served as its chair, and also chaired the Twentieth Century Fund for the two decades following World War II.
Berle briefly returned to government service for the first half of 1961, serving under President John F. Kennedy
John F. Kennedy
John Fitzgerald "Jack" Kennedy , often referred to by his initials JFK, was the 35th President of the United States, serving from 1961 until his assassination in 1963....
as head of an interdepartmental task force on Latin America
Latin America
Latin America is a region of the Americas where Romance languages – particularly Spanish and Portuguese, and variably French – are primarily spoken. Latin America has an area of approximately 21,069,500 km² , almost 3.9% of the Earth's surface or 14.1% of its land surface area...
n affairs. During that time he was primarily involved in forming the U.S. response to a newly communist Cuba, which included both the failed Bay of Pigs invasion and the initiation of the Alliance for Progress
Alliance for Progress
The Alliance for Progress initiated by U.S. President John F. Kennedy in 1961 aimed to establish economic cooperation between the U.S. and South America.-Origin and goals:...
, an economic development policy aimed at the region. He died in New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, aged 76.
Publications
Books- (with Gardiner Means) The Modern Corporation and Private PropertyThe Modern Corporation and Private PropertyThe Modern Corporation and Private Property is a book written by Adolf Berle and Gardiner Means published in 1932. It explores the evolution of big business through a legal and economic lens, and argues that in the modern world those who legally have ownership over companies have been separated...
(New York, Macmillan 1932) oclc 1411248 - The 20th Century Capitalist Revolution (New York, Harcourt, Brace 1954) oclc 231023
- Economic Power and the Free Society (New York 1957)
- Power without Property: A New Development in American Political Economy (New York, Harcourt, Brace 1959) oclc 582368
- Latin America: Diplomacy and Reality (New York, Harper & Row 1962) oclc 5147758
- Power (New York, Harcourt, Brace & World 1967)
- (with Victoria J. Pederson) Liquid Claims and the National Wealth
- The Natural Selection of Political Forces
- Tides of Crisis
- The American Economic Republic
- The Three Faces of Power
Articles
- 'Non-Voting Stock and Bankers Control' (1925–1926) 39 Harvard Law Review 673
- ‘Corporate Powers as Powers in Trust’ (1931) 44 Harvard Law Review 1049
- 'The Theory of Enterprise Entity' (1947) 47(3) Columbia Law Review 343
- 'The Developing Law of Corporate Concentration' (1952) 19(4) University of Chicago Law Review 639
- 'Constitutional Linmitations on Corporate Activity-Protection of Personal Rights from Invasion Through Economic Power' (1952) 100 University of Pennsylvania Law Review 933
- 'Control in Corporate Law' (1958) 58 Columbia Law Review 1212
- 'Legal Problems of Economic Power' (1960) 60 Columbia Law Review 4
- 'Modern Functions of the Corporate System' (1962) 62 Columbia Law Review 433
- 'Property, Production and Revolution' (1965) 65 Columbia Law Review 1
- 'Corporate Decision-Making and Social Control' (1968–1969) 24 Business Lawyer 149