Adolf Berle

Adolf Berle

Adolf Augustus Berle was born in Boston in 1895. The son of a Zionist, he was a child prodigy who matriculated at Harvard University at the age of 14. He took his B.A. in History, M.A. in History, a law degree, and the bar exam by the age of 21.

During the First World War he served as an intelligence officer. In 1919 Berle attended the Paris Peace Conference as a delegate but resigned over the terms of the treaty. He returned to New York City and became a member of the law firm of Berle, Berle and Brunner. A member of the Democratic Party he provided advice to Mayor Fiorello LaGuardia.

The Modern Corporation and Private Property

In 1927 he was appointed as professor of corporate law at Columbia University. He told his students: "The art and science of asking questions is the source of all knowledge." Berle joined forces with economist Gardiner Means, to write The Modern Corporation and Private Property (1932). The authors looked at the development of capitalist society: "The factory system, the basis of the industrial revolution, brought an increasingly large number of workers directly under a single management. Then, the modern corporation, equally revolutionary in its effect, placed the wealth of innumerable individuals under the same central control. By each of these changes the power of those in control was immensely enlarged and the status of those involved, worker or property owner, was radically changed. The independent worker who entered the factory became a wage laborer surrendering the direction of his labor to his industrial master. The property owner who invests in a modern corporation so far surrenders his wealth to those in control of the corporation that he has exchanged the position of independent owner for one in which he may become merely recipient of the wages of capital."

Berle and Means went on to argue that control of the U.S. economy was mainly concentrated in the hands of the largest 200 corporations. “The economic power in the hands of the few persons who control a giant corporation is a tremendous force which can harm or benefit a multitude of individuals, affect whole districts, shift the currents of trade, bring ruin to one community and prosperity to another. The organizations which they control have passed far beyond the realm of private enterprise - they have become more nearly social institutions.” They argued that this meant that the effects of competitive-price theory were largely mythical. Berle and Means suggested that governments needed to regulate these corporations. Jordan Schwartz has argued: "Aspiring to be the Marx of the shareholding class, a great social critic who rallied people to corporate liberalism, he sought to transform the system rather than abolish it - a task he considered as revolutionary as uprooting capitalism itself."

Brains Trust

President Franklin D. Roosevelt found Berle's ideas interesting and invited him to join his Brains Trust, a vital aspect of the New Deal. Other members included Ernest Cuneo, Hugh Johnson, Rexford Tugwell, Frances Perkins , Harry Hopkins , Harold Ickes , Louis Brandeis , Cordell Hull, Henry Morgenthau, Raymond Moley, Thomas Corcoran, Robert Wagner and Felix Frankfurter .

In May 1940, Roosevelt asked Berle to look at the activities of the German Library of Information. He reported back that the Germans had 162 registered agents, of whom 34 worked in propaganda; but the British fielded 247 registered agents, 132 of whom were certified propagandists. Berle, who was an isolationist, argued that the British Library of Information should also be closed down: "I see no reason why we should allow any of this. British, German or other" and suggested that we "close up all of the existing foreign propaganda offices".

Nicholas J. Cull, the author of Selling War: The British Propaganda Campaign Against American Neutrality (1996), has pointed out: "While many of Berle's subordinates regretted the perceived need to close the British Library of Information, Berle did not. He was an American liberal. He had served as a New Deal brain truster; he had championed the cause of the poor, worked to better the lot of the American Indians, and attempted to build links with the Latin American republics. Unfortunately, his dislikes were no less heartfelt. He loathed big business, European wars, and unpaid war debts. By some accounts, he hated Jews; by all accounts, he detested the British."

John Franklin Carter

On 13th February, 1941, the President Franklin D. Roosevelt approved the establishment of "a small special intelligence and fact finding unit" under John Franklin Carter, a journalist. Carter later admitted: "The overall condition was attached to the operation by President Roosevelt that it should be entirely secret and would be promptly disavowed in the event of publicity."

Berle was placed in charge of distributing the funds. On 20th February, Berle recorded: ""Jay Franklin (J.F. Carter) came in to see me today. He stated as a result of his conversation with the President and with you, and preparatory to the work he had been asked to do, he had spent some seven hundred dollars, and that he would be broke by the end of this week.... He wanted an advance of some kind against the compensation which he would eventually receive for his work. Accordingly I lent him seven hundred dollars.... I am not, of course, familiar with what the President has asked him to do, nor do I wish to be."

Whittaker Chambers

Isaac Don Levine arranged for Whittaker Chambers to meet Adolf Berle. Chambers later wrote in Witness: "The Berles were having cocktails. It was my first glimpse of that somewhat beetle-like man with the mild, intelligent eyes (at Harvard his phenomenal memory had made him a child prodigy). He asked the inevitable question: If I were responsible for the funny words in Time. I said no. Then he asked, with a touch of crossness, if I were responsible for Time's rough handling of him. I was not aware that Time had handled him roughly. At supper, Mrs. Berle took swift stock of the two strange guests who had thus appeared so oddly at her board, and graciously bounced the conversational ball. She found that we shared a common interest in gardening. I learned that the Berles imported their flower seeds from England and that Mrs. Berle had even been able to grow the wild cardinal flower from seed. I glanced at my hosts and at Levine, thinking of the one cardinal flower that grew in the running brook in my boyhood. But I was also thinking that it would take more than modulated voices, graciousness and candle-light to save a world that prized those things."

After dinner Chambers told Berle about Alger Hiss being a spy for the Soviet Union and other NKVD agents working for the government: "Around midnight, we went into the house. What we said there is not in question because Berle took it in the form of penciled notes. Just inside the front door, he sat at a little desk or table with a telephone on it and while I talked he wrote, abbreviating swiftly as he went along. These notes did not cover the entire conversation on the lawn. They were what we recapitulated quickly at a late hour after a good many drinks. I assumed that they were an exploratory skeleton on which further conversations and investigation would be based."

According to Chambers, Berle reacted to the news about Hiss with the comment: "We may be in this war within forty-eight hours and we cannot go into it without clean services." John V. Fleming, has argued in The Anti-Communist Manifestos: Four Books that Shaped the Cold War (2009) Chambers had "confessed to Berle the existence of a Communist cell - he did not yet identify it as an esp[ionage team - in Washington." Berle, who was in effect the president's Director of Homeland Security, raised the issue with President Franklin D. Roosevelt, "who profanely dismissed it as nonsense."

British Security Coordination

Roosevelt appointed Berle as Assistant Secretary of State for Latin American Affairs. According to Joseph E. Persico, the author of Roosevelt's Secret War (2001): "Adolf Berle typified the tough, brainy breed drawn to the New Deal. He had been the youngest graduate ever of Harvard Law School, then served as an intelligence officer in World War I. He later went into private practice, taught at Columbia, and became a member of Roosevelt's legendary Brain Trust. By 1938, the stocky, square-faced, stern-visaged Berle at age forty-three was appointed assistant secretary of state. So comfortable was he with the President that Berle addressed memos to FDR as 'Dear Caesar'. The practice temporarily ended when Roosevelt directed an aide to 'Get hold of Berle and tell him to be darn careful in what he writes me because the staff see his letters and they are highly indiscreet.' But soon, Berle resumed using the imperial salutation, which seemed not to displease the President all that much."

Berle became concerned about the activities of William Stephenson, the head of the British Security Coordination (BSC). Berle reported to Sumner Welles on 31st March, 1941: "The head of the field service appears to be Mr. William S. Stephenson. He is nominally, in charge of providing protection for British ships, supplies etc. But in fact a full size secret police and intelligence service is rapidly evolving. There are, or about to be, district officers at Boston, New York City, Philadelphia, Baltimore, Charleston, New Orleans, Houston, San Francisco, Portland and probably Seattle. We know that to the existing offices there are now reporting a very considerable number of regularly employed secret agents and a much larger number of informers, etc. we likewise know that the information is by no means limited to the work of safeguarding ships and munitions, but enters into the whole field of political, financial, industrial, and probably military intelligence... I have reason to believe that a good many things being done are probably in violation to our espionage acts." Berle warned Welles that "should anything go wrong at any time, the State Department would be called upon to explain why it permitted violation of American laws and was compliant about an obvious breach of diplomatic obligation... Were this to occur and a Senate investigation should follow, we should be on very dubious ground if we have not taken appropriate steps." However, Roosevelt refused to close BSC down.

Nicholas J. Cull, the author of Selling War: The British Propaganda Campaign Against American Neutrality (1996), has argued that BSC agent, Ivar Bryce, became involved in a conspiracy against the government: "During the summer of 1941, he (Bryce) became eager to awaken the United States to the Nazi threat in South America." Bryce recalls in his autobiography, You Only Live Once (1975): "Sketching out trial maps of the possible changes, on my blotter, I came up with one showing the probable reallocation of territories that would appeal to Berlin. It was very convincing: the more I studied it the more sense it made... were a genuine German map of this kind to be discovered and publicised among... the American Firsters, what a commotion would be caused."

William Stephenson, who once argued that "nothing deceives like a document", approved the idea and the project was handed over to Station M, the phony document factory in Toronto run by Eric Maschwitz, of the Special Operations Executive (SOE). It took them only 48 hours to produce "a map, slightly travel-stained with use, but on which the Reich's chief map makers... would be prepared to swear was made by them." Stephenson now arranged for the FBI to find the map during a raid on a German safe-house on the south coast of Cuba. J. Edgar Hoover handed the map over to William Donovan. His executive assistant, James R. Murphy, delivered the map to President Franklin D. Roosevelt. The historian, Thomas E. Mahl argues that "as a result of this document Congress dismantled the last of the neutrality legislation." Nicholas J. Cull has argued that Roosevelt should not have realised it was a forgery. He points out that Berle had already warned Cordell Hull, the Secretary of State that "British intelligence has been very active in making things appear dangerous in South America. We have to be a little on our guard against false scares."

On 13th February, 1942, Adolf Berle received information from the FBI that a BSC agent, Dennis Paine, had been investigating him in order to "get the dirt" on him. Paine was expelled from the United States. Stephenson believed that Paine had been set-up as part of a FBI public relations exercise. He later recalled: "Adolf Berle was slightly school-masterish for a very brief period due to misinformation, but could not have been more helpful when factual situation was clarified to him." According to Berle the only "dirt" obtained by Paine was the fact that he had two bathtubs in his home so that he and his wife could chat while soaking.

After the war, he acted as ambassador to Brazil. He also published 20th Century Capitalist Revolution (1954), Tides of Crisis (1957), Economic Power and the Free Society (1957), Power without Property: A New Development in American Political Economy (1959), Latin America: Diplomacy and Reality (1962) and The Three Faces of Power (1967)

Adolf Augustus Berle died in New York City on 17th February 1971.

Primary Sources

(1) Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (1932)

We live in a system described in obsolete terms. We have come to believe our own repeated declarations that our society is based on individual initiative – whereas, in fact, most of it is no more individual than an infantry division. We assume that our economic system is based on “private property.” Yet most industrial property is is no more private than a seat in a subway train, and indeed it is questionable whether much of it can be called “property” at all. We indignantly deny that we are collectivist, yet it is demonstrable that more than two-thirds of our enterprise is possible only because it is collectivist: what is really meant is that the State did not do the collectivizing.

(2) Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (1932)

In its new aspect the corporation is a means whereby the wealth of innumerable individuals has been concentrated into huge aggregates and whereby control over this wealth has been surrendered to a unified direction. The power attendant upon such concentration has brought forth princes of industry, whose position in the community is yet to be defined. The surrender of control over their wealth by investors has effectively broken the old property relationships and has raise the problem of defining these relationship anew. The direction of industry by persons other than those who have ventured their wealth has raised the question of the motive force back of such direction and the effective distribution of the returns from business enterprise.

Such an organization of economic activity rests upon two developments, each of which has made possible an extension of the area under unified control. The factory system, the basis of the industrial revolution, brought an increasingly large number of workers directly under a single management. Then, the modern corporation, equally revolutionary in its effect, placed the wealth of innumerable individuals under the same central control. By each of these changes the power of those in control was immensely enlarged and the status of those involved, worker or property owner, was radically changed. The independent worker who entered the factory became a wage laborer surrendering the direction of his labor to his industrial master. The property owner who invests in a modern corporation so far surrenders his wealth to those in control of the corporation that he has exchanged the position of independent owner for one in which he may become merely recipient of the wages of capital.

(3) Adolf Berle and Gardiner Means, The Modern Corporation and Private Property (1932)

Stockholders toil not, neither do they spin, to earn (dividends and share price increases). They are beneficiaries by position only. Justification for their inheritance… can be founded only upon social grounds… that justification turns on the distribution as well as the existence of wealth. Its force exists only in direct ratio to the number of individuals who hold such wealth. Justification for the stockholder's existence thus depends on increasing distribution within the American population. Ideally the stockholder's position will be impregnable only when every American family has its fragment of that position and of the wealth by which the opportunity to develop individuality becomes fully actualized."

(4) Nicholas J. Cull, Selling War: The British Propaganda Campaign Against American Neutrality (1996)

While many of Berle's subordinates regretted the perceived need to close the British Library of Information, Berle did not. He was an American liberal. He had served as a New Deal brain truster; he had championed the cause of the poor, worked to better the lot of the American Indians, and attempted to build links with the Latin American republics. Unfortunately, his dislikes were no less heartfelt. He loathed big business, European wars, and unpaid war debts. By some accounts, he hated Jews; by all accounts, he detested the British.

(5) Adolf Berle, letter to Sumner Welles (31st March, 1941)

The head of the field service appears to be Mr. William S. Stephenson. He is nominally, in charge of providing protection for British ships, supplies etc. But in fact a full size secret police and intelligence service is rapidly evolving. There are, or about to be, district officers at Boston, New York City, Philadelphia, Baltimore, Charleston, New Orleans, Houston, San Francisco, Portland and probably Seattle. We know that to the existing offices there are now reporting a very considerable number of regularly employed secret agents and a much larger number of informers, etc. we likewise know that the information is by no means limited to the work of safeguarding ships and munitions, but enters into the whole field of political, financial, industrial, and probably military intelligence... I have reason to believe that a good many things being done are probably in violation to our espionage acts...

I have in mind, of course, that should anything go wrong at any time, the State Department would be called upon to explain why it permitted violation of American laws and was compliant about an obvious breach of diplomatic obligation... Were this to occur and a Senate investigation should follow, we should be on very dubious ground if we have not taken appropriate steps.

(6) Joseph E. Persico, Roosevelt's Secret War (2001)

The President, who publicly said he "had no wish to be a candidate" for a third term, was, however, moving energetically behind the scenes. On the same day that Ickes sought out Hoover, FDR had dispatched another close aide on a related mission. Adolf Berle typified the tough, brainy breed drawn to the New Deal. He had been the youngest graduate ever of Harvard Law School, then served as an intelligence officer in World War I. He later went into private practice, taught at Columbia, and became a member of Roosevelt's legendary Brain Trust. By 1938, the stocky, square-faced, stern-visaged Berle at age forty-three was appointed assistant secretary of state. So comfortable was he with the President that Berle addressed memos to FDR as "Dear Caesar." The practice temporarily ended when Roosevelt directed an aide to "Get hold of Berle and tell him to be darn careful in what he writes me because the staff see his letters and they are highly indiscreet." But soon, Berle resumed using the imperial salutation, which seemed not to displease the President all that much.

On the strength of his slender World War I experience, Berle had been assigned by FDR, along with a grab bag of other duties, to succeed George Messersmith in the hapless job of coordinating intelligence among the FBI, Army, and Navy. Temperamentally, he hardly seemed an ideal choice. As a strong civil libertarian, Berle found the assignment odious, referring to "this infernal counterespionage which I inherited from Messersmith." His juggling act, he noted in his diary, "is to prevent a`fifth column' ... trying to commit crimes; at the same time to prevent this machinery from being used hysterically, in violation of civil liberties.