Abstract

"To Change What We See Fit: The Gilbert Brothers’ Transition from Gadflies to Activists"

Brian Sarginger, University of Maryland (bsarging@umd.edu)

Shareholders in 20th Century America needed reinvention. Lewis Gilbert, his brother, and their allies would be the ones who struggled to do it. Their efforts were primarily familial with Lewis taking precedent over his brother John, with periodic appearances from others. Their struggle took place during an expansion of shareholding creating more shareholders than ever who were increasingly distant from the companies themselves. The Gilberts were concerned that the sudden expansion of ownership meant that corporate management would now be in control without oversight from the legal owners of these firms. Gilbert promoted a more robust role for shareholders in corporate governance and to empower them as a check against management using “other people’s money.” Those in their Shareholder Movement were interested in reducing managerial power that they saw as bureaucratic, insular, and self-perpetuating. Without control by shareholders, exploitation was inevitable and capitalism at risk. To fix this, Gilbert and his allies offered a solution in shareholder democracy.
Gilbert’s vision of shareholder democracy attempted to reinvent shareholders by expanding their role in the corporation. Expansion meant more protection for the rights of shareholders to vote on directors of their choosing and the ability to push for their own shareholder resolutions. Gilbert linked these demands to his perception of what shareholding looked like in the 19th Century. Using the venues available in corporations, Congress, and courts, the Shareholder Movement pushed for shareholder reforms including cumulative voting and proxy resolutions. The Shareholder Movement persisted for decades during the middle of the 20th Century though suffered from being a mostly personal crusade. Though successful in pushing for legal changes and influencing later shareholder activists, the particular conditions and personality of Gilbert meant that the Shareholder Movement ended with his retirement.