When Corporations Pretend To Not Care About Money

In 1919, the Michigan Supreme Court explicitly bound Henry Ford to the notion of shareholder wealth maximization primacy when it held that Henry Ford couldn’t decline to pay the Dodge Brothers special dividends in the pursuit of employing more Detroit auto-laborers.

Henry Ford showed up in court and started talking about the embarrassment of profits that he had made from Ford’s explosion and discussed how it had become time for him to do his part to help “men…build up their lives and their homes.” In testimony, Ford did absolutely nothing to link the desire to employ more people into a belief that greater profits awaited shareholders down the line. For that reason, Ford was ordered to pay a dividend to the Dodge Brothers, as the Court reasoned that the corporate form was not the proper vehicle for advancing ends unrelated to shareholders.

Specifically, the Michigan Supreme Court held: “A business … Read the rest of this article!