60 Colum. L. Rev. 4 (1960)
Legal Problems of Economic Power

handle is hein.journals/clr60 and id is 28 raw text is: LEGAL PROBLEMS OF ECONOMIC POWER
Commentafor: WILLIAM L. CARYt
PROFESSOR BERLE: The background facts on concentration of economic
power are generally known, and need only be summarized here. It is presently
conceded that the American industrial system is dominated by large organiza-
tions of management and labor. On the management and operations side
these are the large corporations; on the labor side they are the trade unions-
a power group with whose law I do not deal, though manifestly some of the
principles applicable to corporate power apply to them, too.
The first phenomenon with which we have to deal is that of sheer bigness
-the vast size of large corporate units. We shall have occasion to consider
the law of bigness a little later. Bigness is both absolute-as in the case
of the American Telephone & Telegraph Company and the Metropolitan
Life Insurance Company (the country's two largest corporations)-and rela-
tive to the particular industry. Small corporations may be very big indeed
in relation to the industry in which they operate. A second phenomenon,
closely allied to the first, is therefore that of concentration-the fact that in
two-thirds of American industry two or three, or at the most four or five,
large units own and operate well over a majority of the industry itself. The
outstanding case, of course, is the motors industry, in which three companies
-Chrysler, Ford, and General Motors-account for more than four-fifths of
the total product. It is enough here to note that five or six hundred large
corporations at the most own and operate more than two-thirds of American
industry, and all of the basic industries of the country. The financial corpora-
tions, like Metropolitan Life, are excluded from this list; they chiefly hold
securities of the other large corporations, as well as other assets.
These large units have obvious power, and this power does not come
from corporate charters-these are today little more than a license to start
economic enterprises and to take them as far as possible. They acquire power
because they produce goods or services upon which the community comes
to rely. Performance by the top group of corporations is vital to the com-
munity-as the recent steel strike proves. Further, the methods by which
these corporations produce, and the distribution made in the course of their
production by way of wages, taxes, dividends, and interest, and also the
-profits withheld and used for further capital progress, are vital both to the
* Professor of Law, Columbia University.
t Professor of Law, Columbia University.
t Associate Justice, New York Supreme Court, Appellate Division, First Department.

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