ABSTRACT
One of the more immutable of the immutable economic laws is that every sentence in the Wealth of Nations will eventually become a book. Smith, of course, did not like corporations because he felt that they would be management controlled rather than under the control of the stockholders.
The trade of a joint stock company is always managed by a court of directors. This court, indeed, is frequently subject in many respects to the control of a general court of proprietors, but the greater part of those proprietors seldom pretend to understand anything of the business of the company and when the spirit of faction happens not to prevail give themselves no trouble about it, but receive contentedly such half yearly or yearly dividends as the directors think proper to make them…. The directors of such companies, however, being the managers of other people’s money than their own, it cannot well be expected they should watch over it with the same anxious vigilance which partners in a private co-partnery frequently watch over their own. Like the stewards of a rich man they are apt to consider attention to small matters as not for their master’s honor and very easily give themselves the dispensation from having it. Negligence and profusion, therefore, must always prevail more or less in the management of the affairs of such a company. 1
