"Why have stockholders?... What contribution do they make, entitling them to heirship of half the profits of the industrial system, receivable partly in the form of dividends, and partly in the form of increased market values resulting from undistributed corporate gains? Stockholders toil not, neither do they spin, to earn that reward. They are beneficiaries by position only. Justification for their inheritance must be sought outside classic economic reasoning.... [and] can be founded only upon social grounds... that justification turns on the distribution as well as the existence of wealth. Its force exists only in direct ratio to the number of individuals who hold such wealth. Justification for the stockholders existence thus depends on increasing distribution within the American population. Ideally the stockholders position will be impregnable only when every American family has its fragment of that position and of the wealth by which the opportunity to develop individuality becomes fully actualized."
Adolf Augustus Berle Jr. was an American lawyer, educator, writer, and diplomat. He was the author of The Modern Corporation and Private Property, a groundbreaking work on corporate governance, a professor at Columbia University, and an important member of US President Franklin Roosevelt's "Brain Trust."
"The property owner who invests in a modern corporation so far surrenders his wealth to those in control of the corporation that he has exchanged the position of independent owner for one in which he may become merely recipient of the wages of capital... [Such owners] have surrendered the right that the corporation should be operated in their sole interest..."
"[The communist state has thus far proved itself a] brutal, blunt, and fumbling instrument, [while elsewhere capitalism has been evolving its own"
"Major corporations in most instances do not seek capital. They form it themselves."
"[The corporation is an invaluable auxiliary to the conduct of foreign affairs by the Government, and] has become an international as well as a national instrument. It is a mighty institution which thus far has not become, and has manifested no great desire to become, an independent political force. In international life it is an experiment in non-national organization, pledged only to discharge certain economic functions."
"Essentially these stockholders, though still politely called "owners", are passive. They have the right to receive only. The condition of their being is that they do not interfere in management."
"Where such a separation is complete one group of individuals, the security holders and in particular the stockholders, performs the function of risk-takers and suppliers of capital, while a separate group exercises control and ultimate management. In such a case, if profits are to be received only by the security holders, as the traditional logic of property would require, how can they perform both of their traditional economic roles? Are no profits to go to those who exercise control and in whose hands the efficient operation of enterprise ultimately rests? ...Furthermore, if all profits are earmarked for the security holder, where is the inducement for those in control to manage the enterprise efficiently? When none of the profits are to be received by them, why should they exert themselves beyond the amount necessary to maintain a reasonably satisfied group of stockholders."