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58 Colum. L. Rev. 1212 (1958)
Control in Corporate Law

handle is hein.journals/clr58 and id is 1262 raw text is: COLUMBIA LAW REVIEW

The phenomenon of control is perhaps the most important single fact
in the American corporate system. As the corporation increasingly is rec-
ognized as an institution of primary significance (even Mr. Justice Brandeis
called it a master instrument of American economy), the importance of
control will grow in law as it has grown in economic and social fact. Cor-
poration law has never surrounded this phenomenon. Rules have been de-
veloped with respect to isolated aspects of it; but the rules derive chiefly from
a time when corporations were still truly private and relatively small, and
they were and still are directed primarily toward the protection of the property
interests of minority stockholders.
Meanwhile the large corporations have long outgrown the incorporated
partnership phase. Practically all of American industry is now held in
corporate form. Probably two-thirds of it is held or operated by not more
than 600 large corporations.' They comprehend the most basic operations of
American economy. The directors, or management, of any of these cor-
porations are no longer merely stewards (trustees, fiduciaries, agents,
to use any of several words which have been invoked for analogy) for their
stockholders. The late Professor E. Merrick Dodd of Harvard insisted, and
history seems to have vindicated him, that they are also stewards for the
employed personnel, for customers and suppliers, and indeed for that section
of the community affected by their operations.2 Any reasonable consideration
of the responsibilities resting on the management of any large corporation,
especially of the two or three hundred giants, will support this view.
This article seeks to deal with the subject of control in the hope of
developing the elements of a concept which may prove useful in the future
development of the law. Control may be defined as the capacity to choose
directors. As a corollary, it carries capacity to influence the board of directors
and possibly to dominate it.
* Professor of Law, Columbia University.
1. Professor Adelman, in an unbiased and careful survey, calculated that 139 cor-
porations own 45% of the industrial assets of the United States. Adelman, The
Measurement of Industrial Concentration, 33 REV. OF EcoNomIcs & STATIsTics 269,
289 (1951).
2. Dodd, For Whom Are Corporate Managers Trustees?, 45 HARv. L. REv. 1145


[Vol. 58

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