Dodge v. Ford is another very fun purpose case. It's sometimes remembered as the case that announces the principle of shareholder wealth maximization. But it's a strange case to get that principle from. Dodge v. Ford involves Henry Ford and the Dodge brothers, who were initial investors in the Ford Motor Corporation. And the Ford Motor Corporation, well, it did very well in the early days of its history and it paid this massive dividend. What the Dodge brothers wanted to do was take that dividend and start their own car company, which would eventually build the Ram truck. But at that time, they were dependent upon the dividend coming out of the Ford Motor Corporation and Ford slashed his dividend. What he did was reinvest a lot of that money back into the corporation. The Dodge brothers sued, and they said, "Look, you can't do that. This money is for the shareholders. You have to pay it out." What's interesting is that the court ultimately agreed that what Henry Ford was doing wasn't motivated to serve the shareholders best interests. And it's a strange conclusion, because if you look at a couple of the things that were complained about, the couple of the things that he did, that were a big problem in the case, you can easily see how they are wealth maximizing from a shareholder perspective. For example, one of the things that Henry Ford did was pay his workers twice the going wage, twice the wage that was going in the area. And you might ask, "Well, why are you doing that?" The story that gets told in the case is that he's kind of a proto socialist. He's paying the wage because he really wants to improve the benefit of the working man. I'm sure that was true in part. But what Henry Ford was really doing at that time was constructing an assembly line. What he needed was the same worker to be at the same spot all the time, 100% of the time reliable. So how did he assure that that would occur? He paid them more. And so, he got sober, trustworthy, reliable workers on his assembly line. What's the other thing that Henry Ford did? He slashed the price of the car. Slashing the price of the car was characterized in the case as another non-shareholder interest, you should be charging as much for the car as you possibly can. But of course, anyone that thinks a little bit about business can see that, well, there are lots of reasons to lower the price of your good, including to capture market share. And so there are plenty of wealth maximizing justifications for what Henry Ford did. If you dig a little bit deeper in the case, there's testimony, you get the testimony of Henry Ford. He's cross-examined by counsel for Dodge and he's asked, "Why is he doing the things that he's doing?" What Henry Ford says in the testimony is, "That he was motivated to help the common man." So there was a disconnect between what Henry Ford's portrayal of himself was and what the business or economic outcomes of the things that Henry Ford ultimately did. At the end of the day, the court believed the testimony and not the underlying economic reality and sided with the Dodge brothers in finding that Henry Ford had not served shareholder wealth maximization, nevermind the fact that he subsequently captured a massive section of the market for the Ford Model T and that he built a massive plant. This was the River Rouge Manufacturing Plant that he was building at the time, which was an industrial marvel to help him capture the market for the automobile. So it's an interesting case because it announces this principle. But it's a strange case to get the principle out of, because in the case itself, Henry Ford is clearly trying to do those things that would serve shareholder wealth. But at the same time, he is found not to have done it. And part of the answer why, is his own testimony on cross- examination.