The New Public Corporations and The Law
| Date | 01 July 1947 |
| DOI | http://doi.org/10.1111/j.1468-2230.1947.tb00050.x |
| Published date | 01 July 1947 |
| Author | W. Friedmann |
THE
MODERN
LAW REVIEW
Volume
10
July
1947
No.
3
THE
NEW
PTJRLIC CORPORATIONS
AND
THE
LAWT
1.
BACKGROUND AND GENERAL CHARACTERISTICS
OF
THE
PUBLIC CORPORATlONS
THE
Public Corporation is emerging
as
the chosen legal
instrument of the Labour Government for the public control
of
basic industries in an economy still based on private
enterprise.
The public corporation is not a novelty either here
or
abroad. In this country various institutions which might, with
greater
or
lesser justification, be described
as
public corpora-
tions have developed since before the first world war' and
especially between the two wars.' Some of these are now
being replaced by public corporations
of
the new pattern.
Abroad, the public corporation has appeared
in
different
countries and forms. Both its value and its elasticity can be
gauged from the fact that
it
has been adopted in the Socialist
and entirely State-controlled economic system of Soviet Russia
as well as in the capitalist system of the United States.
The Soviet Union proceeded, only a few years after the
Revolution, to develop the institution of the State Trusts'
for the running of major industrial State enterprises. These
trusts are constituted as autonomous legal units
;
they received
their charter from the Supreme Council of National Economy,
which also appoints the members of the board
;
they have
two
types of capital assets which roughly correspond to the
distinction between fixed and floating assets of British com-
pany law. The fixed assets belong to the State, the floating
assets belong to the trusts. That is to say, they are State
property at one remove and can be freely disposed of. The
Such as the
Port
of London
Authority,
1908
(P.L.A.).
A
description and critical analysis
of
the then existing
Public
Corporations
will
be
found
in Lincoln
Gordon's
Public
Corporations,
1937, and
in
PI(
blic
Enterprise
(ed.
Robson),
1937.
The
first
decree was of
.4pril
10, 19B.
VOL.
10
233
16
234
MODERN
LAW
REVIEW
VOL.
10
trusts enter into contractual and other legal transactions, and
legal disputes between them are settled by State arbitration
which appears to have developed principles of mixed contract
and administrative law.4
In Germany the public corporation appears in two forms.
One, which cannot be described as a genuine type of public
corporation, is the undertaking organised in the form of
a
joint stock company and governed by company law, with
the State
or
other public authorities holding a controlling or
substantial interest as
hare holder.^
A more genuine form of
public corporation was devised when the Dawes Plan
constituted the German State railways as an independent
commercial company, under a control board with allied
participation, charged with reparation obligations and
separated from the State budget.
By far the most highly developed and instructive type of
public corporation for the British lawyer is the Tennessee
Valley Authority (T.V.A.), one of the greatest triumphs of
the public corporation as an institution of public control in
a
non-Socialist economy.
It
will frequently be referred
to
for
comparison.
Finally, the international public corporation is the obvious
legal form for the functional international institutions con-
stituted by a number of different Governments. Thus, both
UNRRA
and the International Monetary Fund are consti-
tuted as international public corporations.'
General Characteristics
of
Public
Corporations
While the idea
of
an autonomous corporation person respon-
sible not
to
private shareholders but to public authority has
thus commended itself to the most diverse legal and social
systems, the structure and characteristics of the public
corporation are inevitably determined by the difference in the
legal, and constitutional systems in which they are established.
The objective is given in President Roosevelt's classic sum-
mary (in his message to Congress in
1933
recommending the
formation of the T.V.A.): 'Clothed with the power of
Governments but possessed of the flexibility and initiative of
4
Cf.
Schlesinger,
Soviet
,Legal
Theory,
pp.
137-139,
847.
5
This is
known
as
Mixed Public Enterprise
'
(Gemischt,-Wirtschaftliche
IJ
Cf. Friedrnann,
'
The
International Public Corporations
',
in
6
MoD.L.REv.,
Unternehmung).
p.
185
et
seq.,
and
World
Unity Booklets
No.
3
(Michael Joseph,
1946).
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