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Adolf Berle During the New Deal: The Brain Truster as an Adolf Berle During the New Deal: The Brain Truster as an
Intellectual Jobber Intellectual Jobber
Robert Thompson
Georgetown University
, thompson@law.georgetown.edu
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Adolf Berle During the New Deal: The Brain Truster as an Intellectual
Jobber
Robert B. Thompson
Abstract
Thirty-seven year old law professor Adolf Berle had a career year in 1932. His book published
that year, THE MODERN CORPORATION AND PRIVATE PROPERTY (written with Gardiner Means), framed
the fundamental twentieth century change in understanding modern corporations. Berle’s
exchange with Merrick Dodd on the purpose of the corporation that played out that spring on
the pages of the Harvard Law Review launched a still fierce debate over the role of shareholders
and other stakeholders. His service as a brain truster for Franklin Roosevelt during the fall
election gave voice to the transformative economic policies of the New Deal. This article looks
at what came next, particularly Berle’s career development and policy impact during the twelve
years of the Roosevelt administration. Somewhat surprisingly, he didn’t join the government for
its first five years, and when he eventually moved to Washington it was for a job in the State
Department. This exploration of his role between 1933 and 1945 reveals a driving force of these
career choices—his strong affinity (evidenced not just in this period but in the time before and
after) to work as a brain truster. What that meant to Berle was to be an intellectual jobber and
free-lancer, taking on a series of important tasks, often suggesting big ideas, before moving on
to the next challenge. Part II takes a deep dive into the planning for post-war international
economic policy that commenced immediately after World War II broke out in Europe in 1939,
not long after Berle had joined the State Department, and in which he was assigned a key role.
This examination provides a fuller picture of the process leading to new international
institutions in trade, monetary policy, and assembling global capital while at the same time
illustrating the familiar characteristics of Berle as an intellectual jobber.
Adolf Berle’s ideas have attained a remarkable longevity in corporate law with an
influence exceeding that of any other twentieth century law professor.
1
Participants in the now
ten Berle symposia often have framed the discussion of his career as an intellectual history,
usually built around the powerful transformative effect of The Modern Corporation and Private
Peter P. Weidenbruch Jr. Professor of Business Law, Georgetown University. I am grateful to Bill Bratton, Daniel
Ernst and Brad Snyder for sharing comments and sources about the New Deal and Berle and to Elizabeth Pollman
for linking Berle the corporate academic to his writing on broader policy issues. Jeremy Goldstein and Sherry Yu
provided helpful research on this project.
1
Some have gone further, such as the editors of the Letters of Louis Brandeis who described Berle as “one of the
most influential public policy intellectuals of the Twentieth Century.” See LETTERS OF LOUIS D. BRANDEIS, vol. 4 at 36-
37 (edited by Melvin I. Urofsky and David W. Levy) (State University of New York Press 1975).
Thompson, Berle During the New Deal
2
Property (“MCPP”).
2
Yet this approach is insufficient to explain large parts of Berle’s
professional career including what Berle did during the twelve years of the Roosevelt
administration that immediately followed MCPP. This article offers an alternative focus that
better accounts for the career of an intellectual jobber, as Berle described himself. Intellectual
history is still relevant—how it could it not be when ideas were Berle’s stock in trade—but
political history is at the forefront of this account, with particular attention to the interaction of
Berle’s personal traits in this historical context, particularly his inclination to focus on one-off
settings into which he could parachute and quickly exit.
This opening section provides introductory observations as to: Berle’s biography before,
during and after the New Deal; the evolution of his writing during those periods; and the
personal traits that shaped his entire professional life. Parts I and II focus on Berle during the
Roosevelt administration, the first five years based in New York City (but still an important
participant in the president’s circle) and the last seven at the State Department (and
immediately adjacent to the White House). Part III is a briefer treatment of his time after the
New Deal. Each part develops an observation visible in each setting—Berle as a brain truster,
intellectual jobber, and public intellectual. He was able to command most any topic on short
notice and articulate a vision of a changed role for government in the economy, but less able to
effectively implement policies reflecting those ideas. PartIIB takes a deep dive into the
preparations of the American government during the time that Berle was at the State
Department for a post-war international economic order, particularly planning for new
international institutions in trade, monetary policy, and assembling global capital. This
examination is valuable, independently of any discussion of Berle, for framing Brexit, Trump
and key current disagreements on the global economic stage but it is also helps understand
Berle and his role during the New Deal.
Berle was raised mostly in the Boston area, recognized as a child prodigy before
entering Harvard College at 14, followed by Harvard Law, and a job at the Brandeis firm. World
War I intervened, providing experiences that stimulated his life-long interests in Latin America
and diplomacy, but even more significantly led him to turn away from his Boston and Harvard
roots and make his way in New York City. There his public commentary on foreign affairs,
involvement in native American issues in the west, and living in the Henry Street settlement
gave way to a determined focus to reframe corporate law for a new era.
3
In 1932 his book with
Gardiner Means, MCPP, set out the separation of ownership and control in the American
corporation that shaped federal regulatory policy in corporate law for the remainder of the
2
Adolf A. Berle, Jr. and Gardiner Means, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932) (hereafter MCPP).
3
Jordan Schwarz’s biography of Berle very effectively covers this and other parts of Berle’s life. Jordan Schwarz,
LIBERAL, ADOLF A. BERLE AND THE VISION OF AN AMERICAN ERA (MacMillan, 1987). For Berle’s focus on foreign affairs in his
writing between 1919 and 1923, see the 13 articles listed in that period in the bibliography, The Published Works of
Adolf A. Berle 64 COLUM. L. REV. 1973 (1964) (hereafter “Published Works”). Between 1923 and 1931, Berle
published fourteen law review articles on corporate law, mostly in the Harvard and Columbia Law Reviews. Id.
Thompson, Berle During the New Deal
3
century.
4
A contemporaneous exchange on the pages of the Harvard Law Review with Merrick
Dodd framed a debate on the purpose of the corporation—for the benefit of shareholders or
other stakeholders—that still anchors contemporary discussions of that topic.
5
During that
same year, as a member of the brain trust for Franklin Roosevelt (and the speechwriter for the
candidate’s important Commonwealth Club Speech during the fall campaign), Berle’s voice
helped elect a president and bring in the New Deal with its massive changes in American
government.
6
For the thirty-seven year old law professor, those three accomplishment in one
year amounted to an intellectual trifecta.
Somewhat surprisingly, Berle did not go into the new administration after the election,
as did other brain trusters. Rather, he went back to New York City to his law practice and
teaching at Columbia and being a brain truster for Fiorello LaGuardia in the 1933 and 1937
mayoral campaigns. In between he served as chamberlain for the city (the last chamberlain
before the job was abolished), all the while maintaining access to the President, taking on
specific tasks for him, and regularly helping develop and explain economic policy.
7
Berle joined
the Roosevelt administration full time in 1938 as Assistant Secretary of State, staying for the
next seven years and then an additional year as U.S. Ambassador to Brazil. His portfolio still
reflected his access to the President and presidential assignments, including some delicate
matters related to intelligence and alleged communist infiltration. He was positioned to have a
key role in planning the post-war international economic structure, which was ongoing from
the time war broke out in Europe in mid-1939. This process led to the creation of the
International Monetary Fund, the World Bank, and the World Trade Organization that provide
the basis for contemporary international interaction in monetary affairs, development, and
trade. One of the earliest meetings with John Maynard Keynes on the British side took place in
4
See MCPP, supra note 2.
5
See, Merrick Dodd, For Whom are Corporate Managers Trustees? 45 HARV. L. REV. 1145 (1932) and Adolf A. Berle,
For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365 (1932), which were published
respectively in the May and June 1932 issues of the Harvard Law Review, after the Berle and Means book had been
finished but before its publication and just as Berle began working on FDR’s campaign. Dodd’s piece had been a
response to an earlier article by Berle published the prior year. See Adolf A. Berle, Corporate Law as Powers in
Trust, 44 HARV. L. REV. 1049 (1931).William Bratton and Michael Wachter have shown that the actual 1932
exchange between Berle and Dodd does not have as much purchase for the contemporary
shareholder/stakeholder primacy discussions as modern writers may see. The two professors were on different
wings of a then-current corporatist approach to corporate theory and each writer later changed his position in
ways that blur where they would stand in the modern debate that invokes their names. See William W. Bratton
and Michael L. Wachter, Shareholder Primacy’s Corporatist Origins: Adolf Berle and the Modern Corporation, 34 J.
CORP. L. 99 (2008). For a discussion of the Berle-Dodd personal relationship in which this exchange was embedded,
see Charles O’Kelley, this symposium.
6
See William Bratton, this symposium, for a discussion of the Commonwealth Club speech and Berle’s role in the
campaign.
7
See Part I below.
Thompson, Berle During the New Deal
4
Berle’s office and he was a key link in discussions with the British about post-war economic
matters.
8
After the war, with a new president and a new set of presidential advisers, Berle
returned to New York City to teach at Columbia, working with foundations, and generally
pursuing the role of a public intellectual.
9
Having essentially stopped publishing in law
reviews
10
and producing little in the way of books
11
during the twelve years of the Roosevelt
administration, Berle again picked up his writing. Much of Berle’s law review writing of the
post-war period returned to specific aspects of corporate law.
12
The books picked up on the
themes of MCPP but the corporatist threads of the earlier work has given way to what Bill
Bratton has called a happier story where “big stick” government had emerged to keep
corporations in line.
13
By the time of Berle’s death in 1971, this political economy approach had
been challenged by competing ideologies including what would become the market-based
deregulatory corporate law theories that flowered during the 1980s.
14
The political history of the period enhances the understanding of the evolution of
Berle’s career. In the 1920s he was still gathering ideas and data about structural changes in
the corporate space in a post-industrial revolution economy. His focus was on building-out a
new understanding of corporate finance in an economic environment where the Berle and
8
See Part II below.
9
See Part III below.
10
See, Published Works supra note 3. There were two law review articles in the 1933-1945 period, one a five-page
printing of his commencement remarks at Cornell Law School in 1938 and the other a fourteen page, post-1934
follow-up of his 1931 article on liability for stock market manipulation. See Adolf A. Berle, Stock Market
Manipulation, 38 COLUM. L. REV. 393 (1938).
11
See Published Works, supra note 3. Between 1933 and 1945 he published a new edition of his casebook on
corporate finance (with a co-author), a short French tract on man and property, a twenty-one-page book on
NATIONAL REALISM AND CHRISTIAN FAITH, and a book on liquidity co-authored with a student that addressed new forms
of liquidity for property including particularly ownership of shares in modern corporations. Two books from this
period related to his government service are addressed later in this article, one a book based on his testimony to
TNEC in 1939 regarding government providing of capital and the other his 1940 book, NEW DIRECTIONS AND THE NEW
WORLD, based on a series of articles he had written about the state of world affairs. See notes 63, and 72 infra and
accompanying text.
12
For example, a 1952 article on corporate personhood reflects some of the big picture ideas of the separation of
ownership and control, brought forward a couple of decades with analysis of links to contemporary debates on
constitutional rights of corporations Adolf A. Berle, Jr., Constitutional Limitations on Corporate Activity—Protection
of Personal Rights from Invasion Through Economic Power, 100 U. PA. L. REV. 933 (1952). Other articles address
control theory in corporations and enterprise liability, that seem to grow out of early Berle. See, Published Works,
supra note 3.
13
Bratton, this symposium. Bratton discusses Means’ focus on administering prices --in Means’ dissertation but
omitted from MCPP, yet essential to understanding the ideas in the book.
14
A conference held at Stanford in 1982 on the 50
th
Anniversary of the publication of MCPP represents the new
movement’s challenge to Berle and Means. See 26 J. L. ECON. 235 (1983). Bill Bratton’s contribution in this
symposium discusses Means’ participation in that conference and the newcomers’ challenge to the Berle and
Means thesis evidenced at that conference.
Thompson, Berle During the New Deal
5
Means corporation held center stage.
15
Even so, most of his ideas for reform clustered around
protecting shareholders against management overreaching, ideas that by themselves in the
“normalcy” of the 20s would not have commanded lasting attention. Yet, with the return of a
progressive Democrat to the presidency, and the transformative expansion of the federal
government in the wake of the unprecedented economic calamity of the Great Depression and
then world war, there was room for new approaches. The New Deal essentially added one new
financial statute per year until the outbreak of the second World War that cumulatively sought
to bring more social control over finance.
16
Berle’s explanations provided fertile ground to
support the growth of such broad change.
17
During this time, Berle was in (or within sight of)
the mainstream of political developments. Thereafter, politics became too wide and too deep;
his sallies into the larger political space were briefer and fewer and he spent more time in the
protected coves of foundations and the university.
18
Berle’s personal traits certainly shaped his political role and he surely benefited from
another political development of the period—changes in the staffing of the presidency and the
executive branch that made room for the brain truster role he most valued He served such a
function for David Lilienthal in Wisconsin before FDR and for LaGuardia in New York City
afterwards.
19
The term, however, does not necessarily suggest a precise definition. For Berle it
meant a freelancer as to ideas and a free agent. As he described himself in a letter after the
election in 1932, “I shall choose merely…being an intellectual jobber and contractor from time
to time when jobs come forward.”
20
This was “to have the thing in life that he most wants.”
21
The “free” part seems to have been key. Full of ideas, he believed he could take on a wide
15
See Brian Cheffins’ contribution, this symposium.
16
This legislation included the Securities Acts of 1933, the Securities Exchange Act of 1934, and the Public Utility
Holding Company Act of 1935, among others. See generally, Securities Act of 1933, 48 Stat. 74; Securities Exchange
Act of 1934, 48 Stat. 881; Public Utility Holding Company Act of 1935, 49 Stat. 803; Chandler Act of 1938, 52 Stat.
40; Maloney Act of 1938, 52 Stat. 1070; Trust Indenture Act of 1939, 53 Stat. 1149; Investment Company Act of
1940, 54 Stat. 789; Investment Advisers Act of 1940, 54 Stat. 847.
17
There is something of a disconnect between Berle’s early corporate law writings from the 1920s and his
responses to the Depression. Both are contained in MCPP and the relationship is sometimes hard to reconcile.
William Bratton and Michael Wachter in a series of articles singly and together, have provided a helpful typology
identifying “early”, “middle”, and “late” Berle. Both early and middle Berle are interspersed in MCPP, a
disconcerting result, but one that reflects the changing political trends in the wake of the economic calamity at the
end of the 1920s. See, Bratton & Wachter, supra note 5 at 121.
18
This analogy derives from an insight of Dan Ernst.
19
See Schwarz, supra note 3 at 72.
20
Letter from August A. Berle to John Hanna, Columbia Law Professor, November 16, 1932 in NAVIGATING THE RAPIDS
1918-1971, FROM THE PAPERS OF ADOLF A. BERLE (Beatrice Bishop Berle and Travis Beal Jacobs Eds. 1973) at 80-81
(“short of some particular set of circumstances imposing a real obligation, I should be merely foolish to trade this
for the mazes of official life in Washington”). For Berle’s use of this “intellectual jobber” term in a different
context, see Harwell Welles’ contribution in this symposium.
21
Letter from August A. Berle to John Hanna in NAVIGATING THE RAPIDS, supra note 20 at 81.
Thompson, Berle During the New Deal
6
range of issues and then was on to the next challenge, often without the need to stay long on a
particular topic.
22
At the same time, other personal traits limited his effectiveness in the roles he
undertook after 1932. He was unquestionably smart. He believed he could do almost anything:
solve the sugar problem in the Dominican Republic; become a Russian expert simply by
stepping behind a desk at an Army hall in World War I; join in the heady days of peace talks
with little more than university degrees.
23
Two other qualities, however, limited his
effectiveness. First, he regularly preferred one-off tasks, serving as the intellectual jobber and
free-lancer that he described in his 1932 explanation as to why he would go back to New York
City. Implementation of policy did not hold nearly the attraction for him that ideas or solving a
particular problem did. Even when he went to the State Department (in 1938 and again in 1961
as discussed below) he thought he could do what needed to be done in six months and then be
on to something else. The semester-long period of a professor’s typical class may have been his
optimal time target. Second, (and probably a side effect of the first quality), it was a challenge
for him to work as part of a team. As a New York newspaper columnist concluded when Berle
went to Washington, “the widespread conviction that Berle is just as good as he says doesn’t
make him any easier to take.”
24
Co-workers found him a challenge, not just for his ego and
vanity, but also for his impact on team production. “He works in every direction, with or
without instructions,” one colleague said, “Berle’s sphere of activity is still more or less of an
enigma.”
25
His strengths that stood out in drafting speeches for the President or presenting the
structure of an academic article worked less well in a two or three-year process to build out a
detailed system of post-war international economic agencies. Berle’s quick mind didn’t give
him the detailed knowledge of monetary control and trade restrictions that the international
process needed.
22
His biographer Schwarz includes an example of how Berle “acquired expertise quickly” as “a clever man bent
upon capturing the ears of men in power.” See Schwarz supra note 3 at 23-24. As Berle told the story in an oral
history at Columbia Law School in 1969 he was at the Army War College near the end of World War I awaiting
reassignment after service in the Dominican Republic. The officer at the desk where Berle was standing received
orders for Siberia and immediately left the building. Berle assumed the position behind the desk, soon be
confronted by an orderly with a colonel’s request for the current exchange rate of Finnish marks. Berle retrieved a
newspaper from the trash, answered the colonel’s question and soon received several additional queries which
Berle answered. When the colonel subsequently appeared to see who had been answering his questions, he made
Berle his “expert” on Russian economics. See, The Reminiscences of Adolf A. Berle, Jr., Manuscript of Transcript of
Oral History Interview, Oral Research Office of Columbia University, December 5, 1969 at 32-34.
23
These examples are discussed supra note 22 and in Parts I and II below.
24
Rodney Dutcher, “In Washington”, a syndicated column as published in the Dubuque TELEGRAPH-HERALD, February
16, 1938 at 6.
25
Diary, Breckenridge Long Papers December 20, 1940 at 233 Library of Congress. Long was an assistant secretary
of state.
Thompson, Berle During the New Deal
7
I. Influencing the New Deal from New York City, 1933-1937
After the election in 1932, other prominent members of the brain trust entered the
administration—Raymond Moley as assistant secretary of state, for example, and Rexford
Tugwell as assistant secretary of agriculture. Berle continued to be based in New York, teaching
law at Columbia and practicing law with his brother.
26
That did not keep him from regular tasks for the President. During the period between
the election and inauguration (then a four-month period, six weeks longer than the current
transition), Berle worked on railroad reorganization, sparking a disagreement with another FDR
advisor from academia, Felix Frankfurter, his former professor.
27
Berle was willing to
acknowledge the reality of size in the modern economy and have government regulate big
corporations while Frankfurter’s approach was aligned with the Brandeisian model of breaking
up large entities to enhance competition among small participants.
28
Right after the
inauguration, Roosevelt designated Berle and others to meet at Treasury with the Federal
Reserve, private bankers, and others on the banking crisis. Berle was named secretary of a
subgroup of five to develop a specific scheme for Congress.
29
Over the first six months of the
new administration he commuted from New York as a special assistant on railroad matters to
Jesse Jones, chair of the Reconstruction Finance Corporation. He resigned that position
September 1 when Roosevelt sent him with Sumner Welles (later the Undersecretary of State
who brought Berle to the State Department) on a special mission to Havana to deal with Cuban
instability.
30
26
Berle also served on the advisory board of the New York Stock Exchange during his time in New York, among
other activities.
27
See Raymond Moley Diary January 11, 1933, Raymond Moley Papers Box 1, Hoover Institution, Stanford, CA.
(noting Berle conversation with Moley including Berle expressing the view that Frankfurter was out to ruin him.). In
a letter to FDR about Frankfurter’s intervention, Berle signed the letter “Yours truly, in a mean state of mind, with
considerable admiration for F.F’s public career and an intense personal desire to see him shot.” Letter from Adolf
A. Berle to Franklin Roosevelt January 11, 1933 in NAVIGATING THE RAPIDS, supra note 20 at 83.
The Berle-Frankfurter relationship seemingly was never good. Frankfurter had joined the Harvard law faculty
during Berle’s second year as a law student. See Roscoe Pound, Frankfurter at Harvard at 137 in FRANKFURTER, A
TRIBUTE, edited by Wallace Mendelsohn (Reynard & Co. 1964). Joseph P. Lash, in a biographical essay
accompanying the Diary of Felix Frankfurter suggested, “There was always an edge to Berle’s opposition, a touch
of resentment, at having been excluded from Frankfurter’s little elite group of disciples at Harvard Law School.”
Joseph B. Lash, Biographical Essay, FROM THE DIARY OF FELIX FRANKFURTER (W. W. Norton 1975) at 44. Jordan Schwarz
suggested the student had given offense to the somewhat older professor: “Their ambition seemed to need each
other’s enmity.” Schwarz supra note 3 at 15.
28
See telegram from Frankfurter to Raymond Moley Jan. 12, 1933: “am greatly disturbed after talking with Berle
lest governor be embarrassingly involved in support of railroad reorganization bill” Raymond Moley papers, supra
note 27 Box 68. A reorganization bill passed on the last day of the Hoover administration. This disagreement
between Berle and Frankfurter reappeared at various points in the future.
29
Schwarz, supra note 3 at 86.
30
Id. at 82, 90-91.
Thompson, Berle During the New Deal
8
Throughout this early period, Berle was central in developing core economic ideas of the
New Deal. He shared with other brain trusters Moley and Tugwell a faith in more state
planning for the economy. Early on this was evidenced in the corporatist planning approach of
the National Industrial Recovery Act that was passed in the first hundred days of the New Deal
providing space for corporations collectively to decide on rules for competition.
31
This
centerpiece of the early New Deal industrial policy empowered the National Recovery
Administration to oversee broad industry agreement on prices and other matters, but
ultimately proved unsuccessful in practice even before it was struck down by the Supreme
Court in 1935.
32
During FDR’s second term, as the economic malaise continued, Berle
embraced the Keynesian idea of government spending to stimulate the economy. Throughout
the first two terms, Berle advocated for multiple means to provide more state capital, a view
shared by Jesse Jones, whose Reconstruction Finance Corporation financed multiple New Deal’s
programs. Berle looked to others with similar ideas including, for example, Robert Moses,
whose planning for New York City was just beginning to takes shape when Berle was
Chamberlain, and Hjalmar Schacht, the finance chief of the Third Reich until 1937.
33
The idea of
using government capital to enhance the growth of private corporations was an idea that Berle
shared with John Maynard Keynes even before the specific interactions between the two
discussed in Part II.
These tasks and the ideas Berle wrote about provided him a seat at the table but did not
make him a major actor in FDR’s now famous first hundred days. Berle had a public role in the
debate around each of the economic ideas just discussed, although (equally as telling) he had
no significant role in drafting any of the statutes of 1933 or thereafter or in organizing the
agencies that were created to administer the burgeoning administrative state, other than a
brief stint at the RFC in 1933.
For example, in the drafting of the Securities Act of 1933, Roosevelt had instructed two
different groups to prepare drafts in the period after his election in 1932.
34
After the resulting
legislation ran into difficulty when it got to Congress soon after the inauguration, the President
quickly moved to a third group (Felix Frankfurter et al.) who quickly came to Washington for a
31
P.L. No. 73-67, 48 Stat. 195 (1933).
32
A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).
See generally, Ellis Hawley, THE NEW DEAL AND THE PROBLEM OF MONOPOLY (at 28). See also id at 460-461 (describing an
early version of the planning orientation –versus competition enhancing or spending—as set forth by Berle in a
widely publicized memorandum in July 1938 discussing the lines of inquiry that TNEC might pursue in which Berle
argued TNEC“ should not assume that all monopoly was bad, that cartels were necessarily harmful, that small
business was necessarily competitive or necessarily humane, or that big business necessarily grew by predatory
tactics, and it should realize that there were immense practical difficulties in the way of applying the theory of an
‘elastic price.’”).
33
See Schwarz, supra note 3 at 119.
34
One version came from the work of Samuel Untermyer who had a prominent role in hearings during what had
been the most recent Democratic administration and the other by Huston Thompson, a former chair of the Federal
Trade Commission. See Arthur Schlesinger, Jr., THE COMING OF THE NEW DEAL 1933-1935 at 440 (1956).
Thompson, Berle During the New Deal
9
weekend drafting session that produced the legislation that eventually passed Congress in the
first hundred days.
35
Berle, over that winter, had received a grant from the Commonwealth
Fund for a project on state securities laws and would have been as well situated substantively
as Frankfurter to take on the task.
36
Berle later told William O. Douglas, his former colleague on
the Columbia faculty, “I have always felt unhappy that our good friend Felix Frankfurter, who
knows next to nothing about the subject except on paper, felt that he had reached the final and
everlasting answer.”
37
Berle had more interest in a federal incorporation bill that would have enacted a federal
law of corporations, having drafted a bill for a House committee during the transition.
38
A year
later he wrote to Douglas, then a law professor but soon to be SEC chair and later a Supreme
Court justice: “Confidentially, we are working on a federal incorporation law, which I hope will
be presented to Congress in the next session.”
39
Implementation is often more difficult than
proposing; that idea failed to make it into the Securities Exchange Act of 1934 or any federal
legislation since. Frankfurter, who was in England on leave from the Harvard law faculty, had a
greater role in the drafting of the 1934 Act than Berle. Similarly, the breakup of public utilities
and various new regulatory regimes for investment advisers, mutual funds and broker-dealers
all went forward without Berle.
40
Berle’s access to Roosevelt did provide him with a recurring role in policy discussions
including, for example, those between Supreme Court Justice Louis Brandeis and Roosevelt.
Berle’s connections with Brandeis dated back to his youth. Adolf A. Berle Sr. was a
Congregationalist minister in Boston and aligned with Brandeis in progressive causes.
41
The
elder Berle provided written testimony for Brandeis during his highly-contested four-month
confirmation process in 1916 that made him the first Jewish justice on the Supreme Court.
42
35
Schwarz, supra note 3 at 82.
36
Minutes of Legal Research Committee October 22, 1932, Learned Hand Papers, Box 125 Harvard Law School
Library, Historical and Special Collections Dept.
37
Letter of Adolf A. Berle to William O. Douglas December 30, 1933, available at http://3197d6d14b5f19f2f440-
5e13d29c4c016cf96cbbfd197c579b45.r81.cf1.rackcdn.com/collection/papers/1930/1933_1230_DouglasBerle.pdf
[https://perma.cc/MPB3-57RF].
38
Schwarz, supra note 3 at 82.
39
Id.
40
This is not to say that Berle did not offer ideas. See, Letter of Adolf A. Berle to Benjamin Cohen (then at the
National Power Policy Commission, December 8, 1934 (enclosing “miscellaneous remarks on the general subject of
holding companies”) Box 9, National Public Power Committee (Entry 907), Records of the Department of the
Interior (Record Group 49). See also Letters to Felix Frankfurter, Secretary of the Treasury William Woodin and
Representative Sam Rayburn concerning the Securities Act of 1933 in NAVIGATING THE WATERS, supra note 20 at 86-
87.
41
The Brandeis Letters contain several letters of Brandeis to the elder Berle and other references to common
causes. See Letters of Louis D. Brandeis, supra note 1 vol. 2 at 91 (Feb. 26, 1908), 152 (September 27, 1906), 161
(May 20, 1908).
42
See Senate Report # 409 (1916) at 294-295 (letter of A.A. Berle of February 18, 1916: “many of the interests
represented by the protesting gentlemen are now and have been ever since I have resided in the Commonwealth,
Thompson, Berle During the New Deal
10
Berle’s first job after graduating from Harvard Law School that same year (assisted by his
father), had been at the Brandeis firm, where he practiced for a year before joining the army
when the United States entered World War I.
43
Even so, there was a large gulf between how
Berle and Brandeis viewed the best response to incorporated enterprises that had come to
dominate the economy since the Civil War. Brandeis long favored breaking up the big entities
through antitrust and otherwise while Berle recognized the seeming inevitability of the
corporate form and sought ways to combat them, particularly via government controls, part of
the corporatist approach described earlier. Berle did not confront Brandeis on these
differences, but neither did he accede to the justice’s preferred economic solution.
44
The New Deal’s legislative agenda faced intense headwinds from the Supreme Court
during Roosevelt’s first term and Roosevelt had no opportunity to make an appointment to the
Court until August 1937.
45
At times, Roosevelt could not even count on the support of
Brandeis, Benjamin Cardozo, or former Columbia Law dean Harlan Fiske Stone. In the spring of
1934 Brandeis told Jerome Frank that he wanted to see Berle and Tugwell; after meeting with
the justice, Berle reported to the President of Brandeis’s concerns about New Deal Programs.
46
During that summer, Brandeis summoned Berle to his vacation home on Cape Cod to again
express worry about an approach allowing concentration in the economy and the merits of an
administration response centered on balancing such concentration with government power as
opposed to decentralizing.
47
In September, at Roosevelt’s invitation, Berle participated in a
against any emergence into public influence and power of anyone not of their number and clan…. [Brandeis] would
adorn the bench and add to the glory…of the greatest court in the world”).
43
Berle’s oral history at Columbia describes the elder Berle’s reaching out to Brandeis after the younger Berle saw
a notice of a job opening at the Brandeis firm. See Reminiscences, supra note 22 at 18. The Brandeis Letters
contain a letter from Brandeis to the elder Berle responding to Berle Sr.’s letters of January 24, 1906 regarding
Berle Jr. and of January 30, 1906 (after the announcement by President Wilson of his nomination of Brandeis to
the court) congratulating Brandeis. The Brandeis response on February 9, 1916 said “It is a great pleasure to have
your letter[s] of the 24
th
and 30
th
as it was recently to meet your son and to be reminded of our more frequent
meetings years ago.” See Letters of Louis D. Brandeis, v. 4 at 36 supra note 1.
44
Berle wrote to Justice Brandeis in 1923 seeking advice on whether he should take on a particular client, but the
exchange probably indicates the lack of mentors Berle had at the time, more than particular closeness between
the two. See Letters of Louis D. Brandeis, supra note 1 at vol. 5 page 101 (September 28, 1923).
45
After a continuing string of non-success before the Court into 1936, Roosevelt launched his Court Packing Plan in
the winter after the election that year. The plan was rejected by the Senate in mid-1937, but within a month
Roosevelt made his first appointment to the Court with six more following over the next four years. See A. C.
Pritchard & Robert B. Thompson, Securities Law and the New Deal Justices, 95 VA. L. REV. 84 (2008).
46
Letter of Adolf A. Berle to Franklin Roosevelt (April 23, 1934) (“Mr. Justice Brandeis has been revolving matters
in his head and I think requires some attention”) in NAVIGATING THE RAPIDS, supra note 20 at 95. Berle’s letter
opened with the greeting “Dear Caesar” a salutation Berle was prone to use until Roosevelt sent word in the heat
of the court-packing dispute to desist. See Berle Diary, March 4, 1937 in NAVIGATING THE RAPIDS supra note 20 at
125.
47
Schwarz supra note 3 at 166.
Berle was not directly involved in perhaps the most-pointed message from Brandeis to Roosevelt. After the
Schechter decision in 1935, supra note 32 and accompanying text, Brandeis told Corcoran and Cohen “This is the
end of this business of centralization, and I want you to go back and tell the president that we are not going to let
Thompson, Berle During the New Deal
11
discussion including the President, SEC chair Joseph Kennedy, and a railroad president at Hyde
Park about the administration’s approach to concentration in the economy.
48
During this time, when not performing tasks for the President, Berle was actively
engaged with the Fiorello LaGuardia’s campaign to become mayor of New York, an election that
took place in November of 1933.
49
Arguing on behalf of the reforming Republican against a
weak Tammany incumbent and an anti-Tammany Democrat whom FDR could have backed,
Berle played a key role in keeping the President neutral.
50
LaGuardia won the election with a
plurality of the vote and offered Berle the job of chamberlain of the City where he could take
on the task of coordinating the response to the city’s financial crisis. The position was made for
a brain truster. Berle biographer Jordan Schwarz described it as “providing the opportunity to
delve into anything he and LaGuardia considered fair game.”
51
Berle described the job as
permitting him “to cover a good deal of general brain trusting for the administration on a wide
variety of subjects including elevator strikes, transit unification, the rehabilitation of the credit
of the City of New York, salvaging the real estate mortgage bond situation, and so forth.”
52
II. Moving Inside the Administration: The State Department 1938-1944
A. Initial Expectations
There were recurring efforts to get Berle to Washington. Undersecretary of State
Sumner Welles pushed during 1937 for Berle to join the State Department.
53
He had the good
sense to make the pitch to Berle as a position that would permit double brain trusting, for both
the President and the State Department.
54
What evolved was a mix of economics, diplomacy,
and politics that appealed to Berle’s free agent/intellectual jobber approach to life.
The Great Depression hung on despite New Deal efforts (including a second new deal in
1935-36) and the economy took another dip in the fall of 1937 through most of 1938. After
LaGuardia’s re-election and with the economy suffering, Berle was among eight men—
the government centralize everything.” See Jeff Shesol, SUPREME POWER, FRANKLIN ROOSEVELT V. THE SUPREME COURT at
598 quoting Harry Hopkins, “Statement to Me by Thomas Corcoran Giving His Recollections of the Genesis of the
Supreme Court Fight”, April 3, 1939, Harry Hopkins Papers, Franklin D. Roosevelt Presidential Library.
48
Schwarz, supra note 3 at 106.
49
See George Whitney Martin, CCB: THE LIFE AND CENTURY OF CHARLES C. BURLINGHAM, NEW YORK’S FIRST CITIZEN, 1858-
1959 (2005) at 339-340 (describing Berle in a group of four reform leaders that helped LaGuardia to power).
50
Id at 95.
51
See letter of Adolf A. Berle to Arthur Mann, March 31 1965 and April 21, 1965. “Roosevelt considered he had a
half-commitment to [Democratic candidate Joseph] McKee…I like to think I neutralized his influence…Roosevelt
said nothing and stayed out” in NAVIGATING THE RAPIDS supra note 20 at 89.
52
Schwarz, supra note 3 at 97.
53
Berle Diary, April 29, 1937 in Navigating the Rapids, supra note 20 at 126.
54
See Schwarz supra note 3 at 110.
Thompson, Berle During the New Deal
12
industrialists, union leaders, and brain trusters—who gathered at the Century Club in New York
in December, 1937 to debate possible changes in the administration’s economic policies. Most
of the group then met with the President early in the new year pushing broader federal
spending, although the effort failed to gain much traction.
55
As Berle began work at the State Department after he was confirmed by the Senate on
March 4, 1938, he continued to be active in formulating economic policy. In 1939, for example,
he testified before the Temporary National Economic Committee, a joint group of members of
both houses of Congress and cabinet/agency representatives, on proposals for access to capital;
he suggested, for example, a bank where government agencies could go for public works or
congressional creation of a capital credit bank for public or private enterprises in need of
financing not available via private lending —all ideas consistent with the state-provision of
capital that was a familiar Berle theme.
56
Similarly, Berle continued to be active in politics during his time at the State
Department. For example, he made a trip to Colorado to speak to Democrats in August of 1939
and to Texas in February of the following year.
57
Of course, his day job was in the department
entrusted with American foreign affairs and he had been hooked on diplomacy since his World
War I experience. After joining the Army when America joined the war, Berle was sent to the
Dominican Republic to secure legal title to Dominican sugar for United States interests, an
experience that engendered a lifelong interest in Latin America and in foreign affairs.
58
Berle’s
experience in Paris, when the Army rushed him and many others for the sudden arrival of peace
negotiations in 1918, impressed upon him (and many others in the American government) the
need to plan for peace in an entirely different way when faced with another world war. Prior to
his State Department tenure, Berle had been an American commissioner to the 1936 Buenos
Aires conference on peace in the hemisphere, also attended by the President and Secretary of
State Cordell Hull.
59
The conference, which reflected the administration’s Good Neighbor
policy, sought to create a tighter bond between the U.S. and the Americas at a time of
darkening clouds internationally. Berle’s continuing interest in Latin America and his resistance
to British trade restrictions and its imperialistic desires could be seen in this period and later
when he got to the State Department.
But even the diplomatic tasks he undertook once he joined the administration as
assistant secretary—a trip to Lima for an Inter-American Conference in 1938, negotiating a deal
with Canada regarding the St. Lawrence seaway, speechwriting after the Munich conference--
55
Navigating the Rapids, supra note20 at 154-157, 159-160.
56
Ernest K. Lindley, “The Capital Bank, Mr. Berle’s New Idea” Washington Post May 28, 1939 at 9.
57
See notes 84, 90 and accompanying text.
58
See Reminiscences, supra note 22 at 5.
59
See Beatrice Bishop Berle Diary December 2, 1936 in NAVIGATING THE RAPIDS supra note 20 at 119
Thompson, Berle During the New Deal
13
had a strong flavor of one-off tasks of a freelancer.
60
A British foreign office reported, “Neither
I, nor anyone else I know of, has any idea of why Mr. Berle was appointed or what he did in
office….he has told me that he was engaged in economic work and was attending to no routine
matters at all.”
61
Consistent with that approach, Berle didn’t see himself staying long at the State
Department—perhaps six months in his original conception. As that period was running out,
and after he had submitted a resignation letter to the president, he got caught up on the
Czechoslovakian crisis.
62
He helped advise Secretary of State Hull and write the President’s
speech after the Munich agreement and his resignation was delayed.
63
After going to Lima as a
commissioner to the Inter-American conference in December 1938 he took a leave of absence
for six weeks or so to ponder approaches before returning to daily work at the department.
During 1940, Berle again expressed his expectation to return to New York after the election.
64
Over this period of his early time at the State Department, three developments reset his
decision space, extended his tenure, and changed the focus of his work. The most dramatic
change, of course, was the outbreak of war in Europe in mid-1939 and the fall of country after
country in the spring of 1940 leaving the United Kingdom seemingly isolated against the Axis.
65
But it wasn’t just a change in world events; there were unexpected political changes afoot in
domestic politics as a possible third term for Franklin Roosevelt was broached and moved to
reality. After his trip to Colorado in August of 1939, Berle reported to Roosevelt that
Democrats there saw the choices as a third term or Hull.
66
Before going to speak to Texas
Democrats in February of 1940, Berle went to see the President, so as to be warned off of any
incorrect messages in the anticipated speech; Berle then told the Texans “the President does
not want a third term” but would accept a draft.
67
Three weeks before the election he was
60
See Schwarz supra note 3 at 123-1287, 147-155.
61
See Schwarz, supra note 3 at 125.Such a status was not unprecedented. Ray Moley had been assistant secretary
of state at the beginning of the Roosevelt administration with no diplomatic duties. Rather he spent his time in the
early months as the primary intermediary between the administration and Congress as to the legislative project of
the first hundred days. Even so, Moley’s lack of connection to the Secretary and the department likely hurt him
when the planning and implementation of the London Economic Conference in mid-1933 took unexpected turns,
leading to his resignation. See Albin Krebs, Raymond Moley, Roosevelt Aide, Dies; Brain Trust Leader Coined ‘New
Deal” New York Times, February 19, 1975.
62
See Letter of Adolf A. Berle to Franklin Roosevelt (August 16, 1938) in NAVIGATING THE RAPIDS, supra note 20 at
181.
63
Berle Diary September 14, 1938 in NAVIGATING THE RAPIDS, supra note 20 at 184 (“The Secretary also asked the
President if he would hold my resignation until we saw where this came out, which the President promptly agreed
to do.”)
64
Schwarz supra note 3 at 125, 142.
65
By the fall of 1940, Berle, in a letter to Columbia University president Nicholas Murray Butler, said “there is no
more fascinating place in the world than the State Department just now.” See Schwarz, supra note 3 at 125 citing
Berle diary October 11, 1940 Berle Papers Box 30. Franklin D. Roosevelt Library.
66
Berle Diary, Memorandum to the President August 14, 1939, Berle Papers Box 66, Franklin D. Roosevelt Library.
67
Schwarz supra note 3 at 142.
Thompson, Berle During the New Deal
14
summoned to the White House for campaign speech-writing duties: “it was the old brain trust
back again, except the scene was the cabinet room, instead of the Hotel Roosevelt.”
68
Berle
was to serve the third term in DC, but his focus changed. Economics was still a key topic, but
world events made it more international than domestic and more focused on structuring a new
approach to international economic relations.
B. Designing the Post War Economic Structure for the World
With the outbreak of war in Europe and the increasing likelihood of a third term for Roosevelt,
Berle’s time horizon for his tenure in government lengthened and the pursuit of a new
international economic structure occupied a large and continuing place in his work. This Part
first outlines the general approach that Berle and other New Dealers had in addressing these
problems, the evolving understanding of economics in the world order, and the competition
between different parts of the administration to plan this structure. Subsequent Parts outline
the evolution of this planning and Berle’s role in it focusing on the distinctively different tenor
of the early part of this period from the later part.
1. Laying down a marker: This time would be different.
Berle, Roosevelt, and other New Dealers who had seen the peace process after World
War I up close approached their task in a new war resolved that it would be different for them;
the time for making peace was during the war, not after it. Berle had initially served in the
Dominican Republic in World War I, as discussed above. He arrived back in Washington for a
new assignment just as the war ended and a mad scramble began to negotiate the peace.
69
He
was among a large number of army officers dispatched to Paris, talking his way into a room at
the main hotel, joining a group of then-youthful officers who would go on to high positions in
American government—John Foster Dulles, Allen Dulles, William Bullitt; Berle, with Bullitt and
others were the “jeunesse radicales” who had protested the penal nature of the peace that
constricted post –war development.
70
Franklin Roosevelt, then assistant secretary of the navy, formed his own perception of
the process that shaped his own approach as president.
71
Berle and Roosevelt had
68
Id.
69
Reminiscences supra note 22 at 32-34.
70
Berle Diary December 7, 1918 in NAVIGATING THE RAPIDS supra note 20 at 7. See also Arthur M. Schlesinger, Jr., The
CRISIS OF THE OLD ORDER, 1919-1933 (1988) at 11-12 (describing “a young man’s world at Versailles” including Berle
as “acting chief of the Russian section”).
71
Roosevelt was not part of the official delegation to the Peace Conference but visited Europe while it was going
on and was a fellow-traveler on the U.S.S. George Washington to the United States when the president took a brief
break from his four-month attendance at the conference. During the voyage, the future president joined
conversations about the League of Nations with the incumbent president. See Frank Freidel, FRANKLIN D. ROOSEVELT,
A RENDEZVOUS WITH DESTINY (Little Brown 1990) at 31 (describing Roosevelt’s luncheon with Wilson).
Thompson, Berle During the New Deal
15
conversations on these issues going back to the 1932 campaign.
72
John Maynard Keynes, to
become a key player on the British side in the negotiations to come, had argued in the earlier
period for American wealth to bankroll the reconstruction of Europe.
73
He was not successful in
blocking a penal peace coming out of the Versailles conference but his book on the deficiencies
of the peace process increased his stature.
74
His challenge to the neoclassical paradigm as to
government’s role in priming the economy from his 1936 book, THE GENERAL THEORY OF
EMPLOYMENT, INTEREST AND MONEY, influenced New Deal efforts on spending in 1938 and
thereafter. From mid-1940 he was a key figure for the Treasury on the British side in the
process described in the following section.
Berle continued to have a highly visible profile. His 1940 book, NEW DIRECTIONS IN THE NEW
WORLD, written in part during his State Department sabbatical, supported a post-war economic
system in which American wealth would play a role similar to what Keynes had suggested for
the post World War I period.
75
Another book that year by Joseph Alsop and Robert Kintner
relied on Berle’s unpublished diaries in examining American diplomacy after the Munich crisis,
suggesting America could be drawn into war.
76
In 1941 Berle was active in several important pre-war issues for the American president.
Early in that year, a fight between State and Treasury on freezing foreign assets while America
was still neutral went to the White House where Roosevelt upheld Berle and the State
Department’s view against such action.
77
Berle also played a key role in early 1941 in securing
Canadian agreement to an agreement for the St. Lawrence Seaway. During talks in Ottawa
where Berle initialed the agreement for the United States, Berle seemed to build Canadian
interest for more integrated defense and economic planning involving the two neighbors. Later
that spring in a meeting at Roosevelt’s home at Hyde Park, the Canadian prime minister
secured Roosevelt’s assent for American lend-lease to, in effect, subsidize UK purchases from
Canada, a concession that seemed to dull the Canadian interest in Berle’s larger plans for
integrated government planning.
78
72
Schwarz supra note 3 at 211.
73
Berle describes first meeting Maynard Keynes during this period, although not working closely with him. See
Reminiscences, supra note 22 at 13.
74
J.M. Keynes, THE ECONOMIC CONSEQUENCES OF PEACE (1919).
75
Adolf A. Berle, NEW DIRECTIONS IN THE NEW WORLD (1940).
76
Joseph Alsop and Robert Kintner, AMERICAN WHITE PAPER: THE STORY OF AMERICAN DIPLOMACY AND THE SECOND WORLD
WAR (1940).
77
Berle diary, February 17, 1941 in NAVIGATING THE RAPIDS, supra note 20 at 358. But by June events of the ground in
the form of German military strikes against more countries led to the State Department agreeing that freezes were
justified.
78
Schwarz supra note 3 at 155.
Thompson, Berle During the New Deal
16
2. The Substance to be Covered by the Economic Plan: Trade, Monetary Issues, and
Development.
While the key players agreed on the value of planning, it took longer to identify what they
wanted to plan and longer still to arrive at an agreement on the plan. Twenty-first century
commentators regularly look back to the economic changes in the international order resulting
from World War II and focus on three international institutions—the International Monetary
Fund, the World Bank, and the World Trade Organization (and its predecessors)—created at
Bretton Woods in 1944 and in other international conferences of the period. Indeed, the
planning from the very beginning of the war focused on the three overlapping set of
international economic issues associated with these organizations—monetary policy, capital for
development, and trade. Plummeting international trade after the stock market crash and
increased tariffs of the period cut wealth across borders. Currency manipulation and
continuing challenges from efforts to return to the gold standard in many countries fueled
economic unrest. Insufficient capital was available for stabilization and development, a
challenge made so much greater by war. Problems in each exacerbated worries in the other
two.
The text for international agreements had only been completed for the IMF and World
Bank when the delegates gathered at Bretton Woods in New Hampshire in the summer of
1944, but Roosevelt’s message to the delegates was clear as to the integral role of trade in the
overall approach to international economic relations. He noted that the program to be
discussed at Bretton Woods “concerns the basis on which [ordinary men and women] will be
able to exchange with one another the natural riches of the earth and the products of their own
industry and ingenuity. Commerce is the life blood of a free society. We must see to it that the
arteries which carry that blood stream are not clogged again, as they have been in the past, by
artificial barriers created through senseless economic rivalries.”
79
The post-war path of the
trade portion of this agenda is beyond the scope of this article except to say that that path
illustrates the interconnectedness of the various parts of international economic law that the
Berle-era drafters saw clearly, the enduring centrality of the questions that were the focus of
the initial planning, and the continuing relevance of that period to contemporary debates.
80
79
See Franklin Roosevelt, Proceedings of Bretton Woods, Volume 1 at 71(U. S. Government Printing Office).
80
US and UK diplomats picked up the trade discussions in 1945 leading to a conference in Havana in 1948
approving a treaty that would have set up the International Trade Organization. Insufficient support in Congress
for American ratification in the new Cold War political climate blocked the ITO leading to a more informal
operation under the General Agreement on Tariffs and Trade (GATT). This international cooperation grew and
became more formal and very successful over time leading eventually to multilateral acceptance via treaty of the
World Trade Organization in the 1990s. Disruption of the previous seven decades of international trade policy via
Brexit and Trump is the reality of the current world. See generally Douglas A. Irwin, CLASHING OVER COMMERCE, A
HISTORY OF US TRADE POLICY (University of Chicago Press 2017) Part III.
Thompson, Berle During the New Deal
17
Secretary of State Cordell Hull, Berle’s boss, had long dreamt of structural response to
the tariffs that had grown substantially in response to the Great Depression and to the
disruptions of war that had undercut trade.
81
American planners saw the importance of trade
to produce employment at home and how opening trade for undeveloped countries could
increase the standard of living around the globe. Trade traditionally held out the lure of
comparative advantage. One country (or producer) could focus more on products in which it
had a relative advantage (e.g. natural resources available to it, more than to other producers)
and could trade those products for other products which were not as available within its
borders, but more so in some other country. Tariffs could distort this exchange as countries
sought to protect their domestic producers and gain a greater share of market exchanges. This,
in turn, caused countervailing tariffs and other acts by other countries and the decline of
international trade.
International trade, even with no tariffs, is unlikely to leave any country with an exact
match of its exports and imports, such that there will be a need for an adjustment mechanism
for the currency received in exchange of the goods. The gold standard provided a long-used, if
imperfect, mechanism for such adjustments. The national currency of a country that regularly
imported more than it exported may well see the value of its currency (relative to gold) become
less valuable and take steps to bring its imports and exports back into line. But such change in
the exchange rate could lead to inflation or deflation of the country’s currency that would
impact the health of the domestic economy in ways that the government may wish to
encourage or avoid. Thus, there would be a temptation for a country to manipulate the
exchange rate, for example to make its goods cheaper and the goods from other countries
more expensive. German, Japanese, and even British currency manipulation during the 30s
illustrated such distortions to the economic status quo.
82
Our own times provide current
examples of fears of currency manipulation and imbalances in trade and efforts and a need for
international agreements to prevent crises that have led to currency wars in the past. The gold
standard had another disadvantageous effect in that the natural scarcity of the mineral and its
somewhat random distribution about the globe made it difficult for governments to quickly
provide the liquidity necessary in periodic panics that gripped economies.
83
Finally, the destruction of war across the globe greatly exacerbated the capital needs
generated by years of economic depression. The likelihood of private capital sufficient to meet
81
Richard Gardner, STERLING DOLLAR DIPLOMACY (New Expanded Edition 1969) at 101.
82
Ed Conway, THE SUMMIT, BRETTON WOODS 1944, J.W. KEYNES AND THE RESHAPING OF THE GLOBAL ECONOMY (2018) at 83.
83
See Mervyn King, THE END OF ALCHEMY, MONEY, BANKING AND THE FUTURE OF THE GLOBAL ECONOMY (2017) at 162
discussing the importance of central bank responsibility of two key aspects of the management of money in a
capitalistic economy: “to ensure that in good times the amount of money grows at a sufficient rate to maintain
broad stability in the value of money” and “to ensure that in bad times the amount of money grows at a rate
sufficient to provide the liquidity…required to meet unpredictable swings in the demand for it by the private
sector… These two functions are rather simple to state, if hard to carry out.”
Thompson, Berle During the New Deal
18
such needs seemed remote; the ability of many individual countries to generate sufficient
capital internally called for an international response.
Planners seeking to put the post-war economy on firmer footing, particularly in the
United States and the United Kingdom, saw all three of these challenges- trade, monetary and
capital for redevelopment - as requiring an international structure beyond that which then
existed. As the planning process evolved, initial attention was given first to the monetary
challenge with separate plans being developed each by American and British teams. The capital
needs of reconstruction were coupled with these negotiations, often as a junior partner until
the second week of Bretton Woods when discussion about the World Bank took center stage.
84
Trade negotiations ended up on a different track, taking somewhat longer to complete. That
description, however, blurs a much more nuanced development that merits additional
attention, both for what it tells us about Adolf Berle, and better understanding where we are
today on these same questions.
3. A Rumble Along Pennsylvania Avenue: Competition among agencies of the American
government in responding to post-war planning
Richard Gardner in his classic book on the period, STERLING DOLLAR DIPLOMACY, observes that, “by
the time the United States entered the Second World War, its great executive departments
were engaged in a major struggle over their respective responsibilities for the planning of post-
war foreign economic policy.”
85
The topic naturally linked to both foreign affairs and financial
policy so both State and Treasury could claim a natural interest. Roosevelt was known to not
rely on fixed lines of authority and preferred to let his advisers and agencies fight it out, as in
the drafting of the federal securities act described above. The early planning for a post-war
economic structure followed a similar path of shared effort. Roosevelt wanted both State and
Treasury involved and also the Board of Economic Warfare, which at the relevant time was run
by Vice President Henry Wallace, a possible candidate to be Roosevelt’s successor.
86
State and Treasury, the bigger institutional and political players, were situated along
Pennsylvania Avenue on either side of the White House.
87
Hull occupied the senior cabinet seat
and had a political role to match, based his previous time in the Senate and House and his
regular mention as a possible successor to Roosevelt. At Treasury, Henry Morgenthau had the
84
Conway, supra note 82 at 237.
85
Gardner, supra note 81 at 71.
86
This agency went through various name changes and reorganizations of its own in the period before and after
the United States joined the war. The Economic Defense Board, chaired by the vice president, was established in
the summer of 1941 while the United States was still ostensibly neutral. After Pearl Harbor, the name changed to
the Board of Economic Warfare, although recommendations to the President from both the Board and the State
Department would be made through the office of the Secretary of State Harley A. Notter, Postwar Foreign Policy
Planning Preparation 1939-1945, Department of State Publication 3580 (1950) at 33.
87
State was then located in the building currently known at the Eisenhower Executive Office Building, adjacent to
the West Wing of the White House.
Thompson, Berle During the New Deal
19
advantages of more detailed knowledge of financial matters and closer personal ties to the
president as his neighbor along the Hudson River. The State Department with its traditional
dominance in foreign affairs probably should have been considered the favorite in betting on
how this competition might come out and the topic seemed a natural for Adolf Berle to have a
major role within the department. Schwarz described Berle as “probably the highest-ranking
official in Washington conversant with Keynes’ ideas in 1938.”
88
Berle’s proposals for
government’s response to the economic crisis the late 30s were influenced by and consistent
with the stimulus favored by Keynes in times of economic weakness.
89
Berle repeatedly wrote
about the need for capital and new ways government might provide it.
90
Like Keynes, Berle was a public intellectual of the day, comfortable in writing and
speaking about a variety of topics. This period also showed Berle’s ability to present a broader
message of America’s changing role in the world economy, a topic on which Berle was
optimistic. In a Fortune magazine piece before Pearl Harbor, he forecast that the United States
would emerge from the war as the richest country and with an altruistic policy, because in the
natural order of things any economics is moral.
91
In a speech before the Yale Political Union the
previous year, he presciently observed that it may seem “fantastic today to suggest handing
over some of our accumulated gold as a free gift to re-establish international currency, to let
other nations set their house in order, and thereby reestablish trade and normal life. But this
may not seem so fantastic a few years hence. It seems impossible today to think of using the
enormous resources of the Federal Reserve System as a means of rebuilding the shattered life
of another continent, but when the time actually comes… we may find the idea looks more like
an immediate necessity than a fairy tale.”
92
The actual outcome, in which Treasury, not State,
ended up with the major role and Berle was eclipsed, not just in dealings with the British, but
also within State, is a revealing part of the Berle story.
4. The Evolution of Post-war Planning in Three Acts: During American Neutrality; the Rumble
along Pennsylvania Avenue; and Treasury Triumphant
a. During American Neutrality before Pearl Harbor
Planning for the post-war period began almost as soon as Germany invaded Poland in
1939. Two weeks later, Hull appointed Leon Pavolsky as special assistant to work on the
88
Schwarz, supra note 3 at 119.
89
See text accompanying note 84, 90.
90
See note 33 and accompanying text.
91
Adolf A. Berle, “And What Shall We Do Then”, FORTUNE, October 1941 102, 124.
92
“Eden Statement Issued in Capital”, New York Times (September 25, 1941) at page 4, quoting from Berle’s
speech on post-war adjustments in 1940 before the Yale Political Union. See Leo Strine’s piece in this symposium
describing Berle’ role in presenting an optimistic message of America’s place in the world in this period.
Thompson, Berle During the New Deal
20
problems of peace.
93
By the end of the year, Hull had appointed a 10-member committee on
the Problems of Peace and Reconstruction that included most of the senior officers on duty,
including Pavolsky and Berle.
94
In another two weeks, the title morphed into the Advisory
Committee on Problems of Foreign Relations to work through three subcommittees: politics;
armaments (soon folded into politics) and economics. Berle served on the economics
subcommittee, which was the first to organize and focused on a conference of neutrals.
95
In May, after large Germany gains across western and northern Europe, a new
interdepartmental committee was created—the Interdepartmental Group to Consider Post-
War International Economic Problems and Policies. The State Department numerically
dominated this group, but its membership went outside the State Department to bring in
officials from Treasury, Commerce, and Agriculture.
96
This group included Treasury Secretary
Henry Morgenthau and his chief advisor on monetary policy Harry Dexter White, who would
play a large role as the Bretton Woods process unfolded. The last seven meetings of this group
in the last quarter of 1940 were devoted wholly to post-war preparations.
97
During this period Berle worked with Harry Dexter White on an Interamerican bank to
finance development in Latin America, in part as a means to withstand totalitarianism in the
western hemisphere. As Berle biographer Jordan Schwarz described it, Berle’s idea was based
on “little more than a casual conversation” with Jesse Jones at the RFC and faced resistance
from Treasury secretary Morgenthau, but White’s “first-class missionary work” at Treasury and
Jones’ efforts with bankers got the backing of the president.
98
Congressional resistance to
funding and the failure of several countries to subscribe their shares eventually put this
proposal on the shelf. Nevertheless, White and his treasury team in the first half of 1942
developed a Stabilization Fund and Development Bank proposal for a global response which,
along with Keynes proposal for a clearing union, became the fulcrum of discussion from that
time through the Bretton Woods conference in 1944, as discussed in the next section.
99
Anglo-American discussions in the period prior to Pearl Harbor about Lend-Lease, the
American provision of key armaments and supplies to the United Kingdom and other countries
without immediate payment, raised the curtain on what would be the most contested issues of
post-war economic planning. In preparing for talks to be held in Washington during the
summer of 1941, the State Department was attuned to Hull’s interest in trade and the rising
tide of American dominance in international exchange; they wanted to see trade free of
discrimination in favor of British colonies as part of the tradeoff for Lend Lease. Keynes, making
93
Notter, supra note 86 at 17-19.
94
Id.
95
Id.
96
Schwarz, supra note 3 at 131.
97
Notter, supra note 86 at 38.
98
Id.
99
Gardner, supra note 81 at74.
Thompson, Berle During the New Deal
21
his first trip to Washington on behalf of the Treasury, pushed back on such ideas arguing that
the post-war recovery of the UK’s economy sufficient to repay the loans taken out to fund the
heavy costs of fighting Germany would require discrimination in favor of future trade between
London and its colonies. This issue became a key topic of discussion at the Atlantic Conference
between Churchill and Roosevelt in Newfoundland in August 1941. Welles, in reaction to
Keynes’s earlier statements in Washington, pushed for a strong prohibition of discrimination in
trade. Churchill balked. Roosevelt suggested language papering over the divergent views with
the precise meaning to be worked out in later discussions which extend well past the end of the
war.
100
b. After Pearl Harbor
In 1942 with America now at war, interdepartmental planning for post-war efforts
stepped up again and became more detailed. An Advisory Committee of officials at State and
other Departments and members of Congress was formed and organized into six
subcommittees that met weekly. Berle was active in the economic subcommittees of this
group, chairing 16 meetings in the first half of 1942 with Dean Acheson, at this point also an
undersecretary of state, chairing other meetings.
101
Monetary and banking strategizing was typically a concurrent activity under the
leadership of Treasury. Here is where the most important preparatory work for Bretton Woods
actually occurred. Keynes, after the Lend Lease brouhaha, had begun drafting a new plan for
monetary policy based on a sophisticated concept of a “Clearing Union” which would permit
countries to trade “bancor” units. This new currency unit, as an alternative to gold, would
provide more flexibility than a gold standard to debtor nations (as the United Kingdom had
become, with the necessity of war borrowings). After Peral Harbor, Treasury Secretary
Morgenthau put White in charge of Treasury’s foreign relations and asked him to “provide a
basis for a postwar international monetary arrangement.
102
White proceeded to develop his
own stabilization and development plan more reflective of the United States position as a
creditor nation and the rising hegemon in international financial affairs. The Keynes and White
plans formed the basis for US-UK discussions culminating with the agreements at Bretton
Woods.
In July 1942, one of the interdepartmental planning committees—this one chaired by
White—decided on bilateral discussions of memoranda (i.e. the Keynes and White proposals)
100
Gardner, supra note 81 at 41-42, 46-47. Churchill relied on a statement by Roosevelt in Newfoundland that the
UK was no more committed to the abolition of Imperial Preferences than the American government were to their
high protective tariffs. In speaking to the House of Commons, Churchill suggested this left the British “perfectly
free” in terms of actions it could take. Whatever the ambiguity of the language, economic realities of the war and
immediate post-war years left the UK with much less room for action than Churchill’s words might have suggested.
See Conway, supra note 82, at Chapter 14 “Starvation Corner”
101
See Notter, supra note 86 at 79-92.
102
David Rees, HARRY DEXTER WHITE, A STUDY IN PARADOX, (Coward, McLean & Geoghegan 1973) at 137.
Thompson, Berle During the New Deal
22
with the British as the way forward and these conversations occurred in September. While
Berle had pushed for discussion of the White plan at the July meeting, in between that meeting
and the bilateral discussions, he promoted his own proposal for a United Nations Bank for
economic reconstruction.
103
When Keynes came to Washington to discuss these plans in
September of 1942, the first meeting was in Berle’s office
104
and Berle continued to be the
point person at state in the months that followed. Assistant Secretary of State Dean Acheson
had told the British representative that financial matters were under Berle.
105
The American
questions to the UK about the Keynes plan went through Berle in October and came back to
Berle in November.
106
In between Berle gave a major speech on foreign policy on October
15.
107
In late 1942, it seemed to the British and the Canadians that Berle was calling the shots
“for the financial aspects of post-war planning.”
108
c. Treasury Triumphant
Behind the scenes things were shifting. In October Morgenthau and White went to
England ostensibly to discuss finances for the invasion of North Africa. But the Americans
arranged for White and Keynes to meet for a long substantive session of the two monetary
plans.
109
After the State Department’s formal notification in November that it was ready to
proceed with talks on monetary policy between the US and UK governments, White and Keynes
plans picked up their earlier discussions. In the first part of 1943 as differences still remained;
Berle agreed to continue bi-lateral conversations but didn’t want it to appear that other nations
were being presented with a fait accompli. Thus, Berle initiated discussions with the Chinese.
110
Over the next two months the two US and UK camps bickered back and forth as to whether the
two competing plans would be published as if so, by whom, leading to eventual leaks and
publications of both. As the plans had become more detailed and more public, the role of
Treasury had become more entrenched. By early spring clarity came in the form of an official
U.S. announcement that Treasury “though consulting with others, would be expected to ‘carry
the ball’.”
111
In the future the British would go to Morgenthau, not Berle.
112
When Keynes
103
Berle diary, July 29, 1942, “Memorandum of Post-War Economic Mechanisms of the United Nations” in
NAVIGATING THE RAPIDS, supra note 20 at 418-419.
104
Armand Van Dormael, BRETTON WOODS: BIRTH OF A MONETARY SYSTEM (Holmes & Meier 1978) at 59.
105
Van Dormael, supra note 104 at 56-57.
106
Van Dormael, supra note 104 at 60.
107
Gardner, supra note 81 at 166
108
Schwarz, supra note 3 at 213-214. This did not mean, even in September 1942, that the White and Keynes
plans were not l the basis for the conversation, as Berle himself acknowledged in the meeting in his office on
September 10. Id. at 214.
109
Conway, supra note 82 at 135.
110
Schwarz, supra note 3 at 214.
111
Van Dormael, supra note 104 at 83 (April 23, 1943) “After struggling for a full year to wrest from the State
Department the authority and responsibility for international postwar monetary planning, Morgenthau and White
had won.” Id. at 81.
Thompson, Berle During the New Deal
23
again visited Washington in September, 1943 Berle sat in on the meeting but deferred to
Treasury leadership.
113
When the two countries and allied nations met the following July in
Bretton Woods for the conferences proposing the IMF and the World Bank, Berle did not
attend.
The State Department retained the lead role in negotiations for trade (labeled by the
two sides as “commercial”), but Berle was not a leading figure in that either. The September
1943 meetings involved a combined British delegation that came to Washington for both trade
and monetary discussions. Berle was involved but not like the previous year. The White-
Keynes talks continued at long-distance through the fall, winter and spring, at Atlantic City in
the week before the beginning of the Bretton Woods conference and then for most of the
month of July at Bretton Woods.
When the President called on Congress to pass the Bretton Woods proposals for the IMF
and the World Bank, he noted his expectation that proposals for the reduction of trade barriers
and other matters “will shortly be ready to submit to you for your consideration” as part of the
United States taking the lead in “establishing the principle of economic cooperation as the
foundation for expanded world trade.”
114
Yet the trade part had not made nearly as much
progress as the monetary portion. While the monetary issues had been assigned to Treasury in
the spring of 1943, trade remained under the State Department, with a delegation led by
Myron Taylor, Harry Hawkins and Dean Acheson—not Berle. Those talks got no further than
broad agreement on the importance of trade to expand employment and to identify the issues
of quantitative restrictions and trade preferences but put off the next steps until the beginning
of 1945. In December, 1945 the United States invited the wartime allies to enter into
negotiations for a multilateral agreement on trade in goods with related talks in London and
Geneva leading to a charter of an International Trade Organization approved in Havana in
March 1948.
115
d. Denouement
As these broader international economic issues moved away from Berle during the war,
one area remained, that of a proposed international civil aviation treaty with the conference to
be held in November, 1944 in Chicago. Differences between the U.S. and the U.K. over rights to
fly the Atlantic held up a final agreement, although eventually there was a treaty and an
international civil aeronautics association that reflected Berle’s work. During the conference
held shortly after Roosevelt’s reelection, White House advisor Harry Hopkins flew out to
112
Sir Frederick Phillips (the UK Treasury’s permanent representative in Washington) to J.M. Keynes (April 22,
1943) in Van Dormael, supra note 104 at 81.
113
Schwarz, supra note 3 at 215.
114
Franklin Roosevelt Message to Congress, February 12, 1945.
115
But the U.S. Congress failed to ratify the treaty and international trade relations were left to the more informal
process under the GATT. See Irwin, supra note 80 at 473—483, 500-501.
Thompson, Berle During the New Deal
24
Chicago to tell Berle there was not a place for him in the fourth term.
116
Sumner Welles left as
undersecretary the previous year and Hull was retiring at the end of the month. The new
secretary would bring his own people.
The position offered to Berle was Ambassador to Brazil, which he did for 13 months with
mixed results.
117
He negotiated to be able to attend a conference in Mexico City in early 1945
and to be able to make a personal report to the President. But by April the President was dead
and Berle soon headed back to New York and Columbia.
C. Responsibility Outside of Economic Planning
While Berle had his largest continuing impact on various matters relating to economics there
were other topics of recurring responsibility. Latin America, a life-long interest discussed
elsewhere in this article, was one, intelligence was another. Berle’s government service first
intersected with intelligence in World War I during his time in the Dominican Republic. After
completing his work relating to land titles affecting sugar he extended his stay at the request of
the governor and the chief of military intelligence to feel the pulse of the countryside.
118
When
the State Department set up an intelligence division in late 1940, Roosevelt soon asked that
Berle coordinate overlap with the FBI and its director, J. Edgar Hoover.
119
The FBI already
operated outside of the U.S. in Latin America and, in consultation with Berle and military
intelligence, decided to create a Special Intelligence Service to operate in South America. When
the U.S. later decided to set up a separate secret intelligence agency the president first
followed his “competition between agencies” approach with Berle negotiating for the FBI to
have the western hemisphere and military intelligence with responsibility for the rest of the
world. As William Donovan’s Office of Strategic Services grew, Berle’s role diminished.
Berle’s role in the State Department intelligence led to his involvement in two other
intelligence matters that subsequently gained political prominence: Whittaker Chambers’ 1939
charges that Alger Hiss was a communist agent, leading to two trials and Hiss’s conviction of
perjury in 1950; and similar charges against Treasury’s Harry Dexter White that led to Berle’s
statement to another Congressional committee later in the 1950s. In 1939, Chambers had gone
to the White House to expose Alger Hiss, then a state department employee, as a
communist.
120
Marvin MacIntyre, the president’s secretary, told Chambers to take it to Berle in
the State Department overseeing intelligence. The day after Germany invaded Poland,
116
Schwarz, supra note 3 at 248.
117
Schwarz, supra note 3 at 254-279. (describing a Berle speech in September that set off a storm of controversy
118
Schwarz, supra note 3 at 21.
119
See generally Schwarz, supra note 3 at 171-2 for a discussion of Berle’s assignments regarding intelligence
discussed in this paragraph.
120
The chronology in this paragraph reflects Schwarz, supra note 3, at 299. See also Benn Steil, THE BATTLE OF
BRETTON WOODS: JOHN MAYNARD KEYNES, HARRY DEXTER WHITE AND THE MAKING OF A NEW WORLD ORDER (Princeton Univ.
Press 2013) at 293 (noting the FBI waited more than a year before requesting Berle’s 1939 memo.)
Thompson, Berle During the New Deal
25
Chambers revealed his charges to Berle, who took notes and reported it to the President. FDR
showed little interest in the report, nor did others seem interested in pushing it along.
Germany was the focus—the Soviet Union had by that time signed a non-aggression treaty with
Germany, eventually becoming an American ally after Germany’s invasion the following year.
Eighteen months after the Chambers visit, Berle went to the FBI in March 1941 and asked what
it knew of Chambers. Fourteen months went by before the FBI interviewed Chambers and an
additional 13 more months went by before the Bureau requested Berle’s memo of 1939. More
time passed until the State Department’s security office questioned Chambers in March 1945.
Elizabeth Bentley, another self-confessed Communist spy, went to the FBI with her own
allegations about Hiss in 1945, but there was still little immediate movement.
121
Once the 1946 elections switched control of the House of Representatives, and in the
face of rising tensions between the United States and the Soviet Union, the activity relating to
the old accusations picked up. The House Un-American Activities Committee (HUAC) held
hearings in 1948 including Chambers’ charges against Hiss, who had risen in the state
department in the nine years since Chambers-Berle meeting, eventually serving as a
presidential advisor at Yalta and helping set up the United Nations.
122
Hiss’s strong defense to
the charges and his libel suit against Chambers provoked Chambers to produce additional
evidence and that provided part of the basis for perjury charges against Hiss. When called to
testify before the HUAC committee, Berle downplayed the importance of Russian surveillance
as an existential threat and took a swipe at Dean Acheson, then undersecretary, for the
Department’s failure to pursue Berle’s preferred hard line toward the Russians.
123
A second parallel thread of Congressional hearings into alleged communist spying
involved charges made against Harry Dexter White.
124
White had been nominated by President
Truman in January, 1946 to be the American executive director of the IMF, with the expectation
that the United States would back him for managing director, the top position of the new
entity.
125
However, White’s name had surfaced in allegations by Elizabeth Bentley who had
named White as part of a group in Treasury and other departments who were funneling
information to Russia.
126
In late 1945, J. Edgar Hoover had informed the White House’s FBI
liaison, with copies to the Secretary of State and Attorney General, warning of the danger of
121
Steil, supra note 120 at 293-295.
122
Hiss was then head of the Carnegie Institute for International Peace. See generally Schwarz, supra note 3 at 300
for a discussion of the HUAC hearings relevant to Chambers and Berle.
123
Schwarz, supra note 3 at 300-301. Berle in testimony that seemed to fit more in the category of settling old
scores than about the matter at hand, said that his opposition to Acheson’s approach in 1944 led to his going to
Brazil “and that ended my diplomatic career.”
124
See generally, R. Bruce Craig, TREASONABLE DOUBT: THE HARRY DEXTER WHITE SPY CASE (University Press of Kansas
2004). See also Conway, supra note 82 at 334-364.
125
For a chronology of the hearings and related activities discussed in this and the following paragraph see. Steil,
supra Error! Bookmark not defined. at 291-324.
126
Steil supra note 120 at 295.
Thompson, Berle During the New Deal
26
appointing White to the IMF, but that information did not seem to have any effect before
White’s nomination was announced. Hoover then prepared a special report for the president
that set off alarm bells at the White House; yet even here the keystone cops caper continued as
the White House’s call to the Senate to stop the vote on the nomination came too late.
127
To
avoid signaling American knowledge of the spy ring, the administration chose to not seek
White’s resignation or removal. However, the administration did choose not to put White’s
name forward for the top IMF job, saying it would support an American instead for the top job
at the World Bank.
128
Even so, White only stayed one-month past the March 1, 1947 official opening of the
IMF doors. He was interviewed by the FBI in August 1947, had a severe heart attack soon after,
testified before a grand jury March 24 and 25, 1948, but was not indicted. After Chambers and
Bentley both testified before HUAC that summer against White, White himself testified on
August 13 gaining positive reports in the press.
129
On the train to his summer home in New
Hampshire the next day he suffered a second severe heart attack and died the following day.
Congressional attacks on White continued posthumously with Richard Nixon revealing in 1950
that he had documents hand-written by White that had been turned over by Chambers, from
the same hidden cache of “Pumpkin Papers” that had surfaced during the Hiss investigation. In
1951 both Bentley and Chambers testified against the deceased White before a Senate
committee.
130
Two years later, counsel for another Senate committee called on Berle looking
for testimony on whether Harry Dexter White was a Russian spy. Berle replied that he had no
knowledge of the now deceased White and did not much care. “There were Soviet spies and
there was Communist infiltration. Taken together, it made a little trouble and probably did not
vary greatly the course of affairs… But directing the whole course of American politics in 1954
to examination of the mistakes of 1944 gets us absolutely nowhere.”
131
III. Post-War Return to New York City as a Public intellectual, Professor, and Politician
After a rocky 13 months in Brazil, Berle returned to New York to teach, practice law, participate
in state and national politics, and contribute to the public discussion of ideas. With Truman
now President, Berle no longer enjoyed the access to the White House that he had for twelve
years. The Liberal Party of New York became his platform for political involvement when he
became chair in early 1947. The party enjoyed some success in pursuing a balance of power
strategy; for example, it helped Herbert Lehman beat John Foster Dulles in the Senate race in
127
Steil, supra note 120 at 298-99.
128
Thus, the pattern of an American to head the World Bank and a non-American to head the IMF, still followed
today, is the opposite of what was expected at the time, and resulted from the happenstance of the timeline of
revelation of the information about White. Steil, supra note 120 at 299-300.
129
Steil, supra note 120 at 319-322.
130
Steil, supra note 120 at 293-299; 318-324.
131
See Schwarz, supra note 3 at 303 quoting Letter of Adolf A. Berle to Alice Berle, his daughter (November 23,
1954) Berle Papers 82 ( Franklin D. Roosevelt Presidential Library and Museum).
Thompson, Berle During the New Deal
27
1949. Berle retained some personal influence, serving as part of Stevenson’s brain trust in 1952
and 1956 and interacting with the Eisenhower administration via Nelson Rockefeller (then a top
official at State), Allen Dulles at the CIA, and others. He joined a group with roots back to the
Versailles peace conference to help found Radio Free Europe and volunteered more than half of
his time to that cause in the early 1950s. In some ways the pattern parallels his political
involvement in New York between 1933 and 1937 –with one difference: The third party balance
of power strategy did not provide any significant key policy-making influence once the election
was over in contrast to what had happened in the LaGuardia administrations.
Latin America provided a continuing, if still sporadic, entre to policy-making in an area
Berle cared about. In the early part of the Eisenhower administration, he journeyed to Costa
Rica for discussions with its President and was involved in addressing its conflict with Nicaragua,
its larger neighbor. At the later request of the CIA he helped the elected president of Honduras
deal with a military coup. Later in the decade, he continued to be involved as Latin America
responded to the Cuban revolution. More generally he collaborated with Henry Kissinger in a
years-long task of a Rockefeller Fund report chaired by Dean Rusk, putting him in the orbit of
two future Secretaries of State.
132
When John Kennedy was elected president in 1960, Berle
wanted in. He was asked to chair a transition task force on Latin America, leading to a position
as chair of an interdepartmental task force on Latin America with an office in the State
Department near to Rusk (who had said that all roads in Latin American affairs led to Berle.)
133
This was a task an intellectual jobber could appreciate and he signed on for six months.
Unfortunately for Berle, the Bay of Pigs invasion of Cuba, a CIA operation, dominated the
history of those six months that some in Latin America saw as unilateral intervention, and one
which the anti-Castro Cubans saw as Americans leaving them on the beaches. With the failure
of the mission and the administration’s Latin American policy in some disarray, Berle returned
to New York.
Berle had at least one more role on the national political stage. When Lyndon Johnson
became president after John Kennedy’s assassination, New Dealers like Abe Fortas and Jim
Rowe were close to the new president and reached out to Berle to provide an FDR connection
for LBJ.
134
Berle became involved in the Dominican Republic, where his interest in foreign
policy had been sparked a half century before. Berle sought to walk the line between differing
factions, but in late April 1965 Johnson ordered a United States invasion, which Berle, the long-
ago advocate of Dominican self-determination, justified to prevent a Castro-mounted takeover.
132
See generally Schwarz, supra note 3 at 311 for a discussion of Berle’s involvement in Latin America issues in the
1950s.
133
Id at 327-8.
134
See generally Schwarz, supra note 3 at 344-351 for a discussion of Berle’s political activities during the Johnson
administration.
Thompson, Berle During the New Deal
28
The following month, Johnson invited Berle to lunch at the White House.
135
The president also
wanted to discuss an even bigger topic Viet Nam, and here too, Berle seemed willing to have
the United States fight to keep freed colonial people free from communism.
Against this pattern of somewhat humbling results in politics and diplomacy over the
second-half of his career, Berle found a continuing outlet in his academic and policy writing.
Upon rejoining Columbia, he returned to law review writing (which he had abandoned, except
for a couple of exceptions after 1934), and authored a dozen books. Even more, his biographer
Schwarz noted, “Perhaps nothing else during these troubled times gave Berle more satisfaction
than his chairmanship of the Board of Trustees of the Twentieth Century Fund. He saw in the
Fund his last great quest to be a powerful brain truster—a ‘causative’ intellectual making
history.”
136
That public policy think tank permitted him to explore, and support others in
exploring, a variety of issues across a broad range of topics.
Berle’s most lasting impact in the post-1932 period was his own academic writings. His
post 1946 law review articles took some of his earlier topics and developed them in light of
developments since 1932. His 1952 Penn Law Review article on Constitutional Limitations on
Corporate Activity may be the most creative of this group. Anticipating the constitutional
debate of the early 21
st
century on constitutional rights of corporations, Berle started from the
then-current picture of corporate law: “classic corporation law is almost never availed of to
adjust the relations between the corporate enterprise and the community.”
137
For the 1932
Berle, this was a no-brainer: corporations have economic and political obligations and privileges
and are expected to produce an economic result acceptable to the community. The 1952
article saw the challenges in extending individual rights, but not in the way that contemporary
cases like Citizens United
138
and Hobby Lobby
139
have developed. Berle’s focus was more on
corporations being subject to the constitutional limitations which limit the state itself because
of the power that has accrued to those entities.
140
Elsewhere, Berle dealt with a disconnect between corporate theory –the sovereign’s
grant of certain attributes of personality to a corporate group-- and the underlying economic
reality of an enterprise operating via multiple entities within an enterprise.
141
Berle put
forward a revision of the classic conception, arguing for enterprise liability. A principal focus
was the then-recent liability-creating Supreme Court case in Anderson v. Abbott written by his
135
Berle Diary (May 28, 1965) in NAVIGATING THE RAPIDS, supra note 20 (“To enter history again, however modestly, is
I suppose a compliment.”)
136
Schwarz supra note 3 at 351.
137
Adolf A. Berle, Jr., Constitutional Limitations on Corporate Activity—Protection of Personal Rights from Invasion
Through Economic Power, 100 U. PA. L. REV. 933 (1952)
138
Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
139
Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014).
140
Constitutional Limits, supra note 137.
141
Adolf A. Berle. Jr., The Theory of Enterprise Liability, 47 COLUM. L. REV. 343 (1947).
Thompson, Berle During the New Deal
29
former Columbia colleague and fellow-New Deal progressive, William O. Douglas.
142
In another
article, he took on the question of corporate control, as in the then-recent case of Perlman v.
Feldmann, written by another strong New Dealer on the Second Circuit, Charles Clark.
143
A core
foundation of this article, common to his other writing, was the community’s “vivid interest in
the policies and operations of the corporation.”
144
In Berle’s last article, he returned to a theme of the MODERN CORPORATION AND PRIVATE
PROPERTY to emphasize the change in the nature of property resulting from the rise of the
corporation.
145
Unlike his first employer, Brandeis, he long before had cast his lot with
accepting the large corporation and using government to match it. In the Constitutional piece
discussed above, Berle outlined the direction law should follow: “to assure that the market
power of the enterprise shall not be used so as to create or perpetuate conditions that the
state itself is forbidden to create or maintain.”
146
In Property, Production and Revolution, he
suggested the need for a new role for shareholders with a different kind of governance role
reflecting a more transitory ownership of stock in large corporations that was essentially more
liquid than comparable interests in earlier businesses rather than . Shareholders in this view
act less as an allocator of capital and more as a “vehicle for rationalized wealth distribution
corresponding to and serving the American ideal of a just civilization.”
147
In these ideas, Berle
came closest to a reprise of the ideas of his intellectual trifecta of 1932.
Conclusion
Eighty-five years after his most notable intellectual contributions, Adolf Berle’s impact still can
be characterized as distinctive. His public renown has been surpassed by few law professors
before or since. What explains his lasting recognition? Ideas, like people, come in a multitude
of variations. In one sense, his recognition reflects a particular idea at a particular time. There
142
321 U.S. 349, 363 (1944) (applying the statutory double liability of bank shareholders for the bank liabilities to
extend to the individual shareholders of the parent corporation owing the majority shares of the bank despite the
normal effect of corporate existence to act as an insulator from liability: “]t]o allow this holding company device to
succeed would be to put the policy of double liability at the mercy of corporation finance.”) Four justices dissented
arguing that Congress had not “announced a legislative policy such as the Court announces” Id at 374. Berle was
sympathetic to some broadened liability across entity boundaries but would permit a corporate group to preserve
separateness if the parent required the subsidiary to “manage its own affairs, make its own decisions, and operate
as a separate entity.” Enterprise Liability, supra note 141 at 357.
143
Perlman v. Feldmann, 219 F.2d 173 (2d Cir. 1955) (controlling shareholder breached fiduciary duty by siphoning
off for personal gain corporate advantages to be derived from a favorable market situation due to quasi-price
controls during the Korean War, but not saying that a majority shareholder can never dispose of controlling block
for a premium
144
Adolf A. Berle, “Control” in Corporate Law, 58 COLUM L. REV. 1212, 1215 (1958). Berle argued that Perlman went
far in the direction of his position in MCPP that control belongs to the corporation not the shareholders who can
deliver control. Id at 1221 and that those who run corporations are stewards for employees, customers, suppliers
and the community affected by their operations. Id at 1212.
145
Adolf A. Berle, Property, Production and Revolution, 65 COLUM. L. REV. 1 (1965).
146
Id at 10.
147
Id at 17.
Thompson, Berle During the New Deal
30
was a new kind of a corporation in a changed economic setting that required a different
government response. How many professorial efforts could be fit into such a template? The
difference was the timing. The severity of the Great Depression and then the world war that
accelerated the coming of an American hegemon in global economics enhanced and deepened
the questions he addressed and magnified the usefulness of the framework he identified. In
the absence of those factors it is not surprising that he could not replicate the impact of his
1932 ideas as part of the Roosevelt administration over the next twelve years or as a public
intellectual in the quarter-century that followed. The match in those times of ideas and current
political trends was more ordinary. Yet a deeper understanding of both what fit so well in the
early 1930s and less so afterwards can productively inform our analysis of current challenges.
Berle demonstrated that a law professor skilled in the nuances of corporate law could
simultaneously be a force in broader policy matters with an effect lasting generations.
