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Trust (19th century)

 

 
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A special trust or business trust is a business entity formed with intent to monopolize
Monopoly

In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it....
 business, to restrain trade
Restraint of trade

'Restraint of trade' is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v....
, or to fix prices
Price fixing

Price fixing is an agreement between business competitors to sell the same product or service at the same price.In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers....
. Trusts gained economic power in the U.S. in the late 19th and early 20th centuries. Some but not all were organized as trusts in the legal sense
Trust law

In common law legal systems, a trust is an arrangement whereby property is managed by one person for the benefit of another. A trust is created by a settlor, who entrusts some or all of his or her property to people of his choice ....
. They were often created when corporate leaders convinced (or coerced) the shareholders of all the companies in one industry to convey their shares to a board of trustees, in exchange for dividend-paying certificates
Trust certificate (finance)

A corporate Bond backed by other Security , usually a parent corporation borrowing against securities of its subsidiaries....
.






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A special trust or business trust is a business entity formed with intent to monopolize
Monopoly

In economics, a monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it....
 business, to restrain trade
Restraint of trade

'Restraint of trade' is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v....
, or to fix prices
Price fixing

Price fixing is an agreement between business competitors to sell the same product or service at the same price.In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers....
. Trusts gained economic power in the U.S. in the late 19th and early 20th centuries. Some but not all were organized as trusts in the legal sense
Trust law

In common law legal systems, a trust is an arrangement whereby property is managed by one person for the benefit of another. A trust is created by a settlor, who entrusts some or all of his or her property to people of his choice ....
. They were often created when corporate leaders convinced (or coerced) the shareholders of all the companies in one industry to convey their shares to a board of trustees, in exchange for dividend-paying certificates
Trust certificate (finance)

A corporate Bond backed by other Security , usually a parent corporation borrowing against securities of its subsidiaries....
. The board would then manage all the companies in 'trust' for the shareholders (and minimize competition in the process). Eventually the term was used to refer to monopolies in general. In 1898, President William McKinley
William McKinley

William McKinley, Jr. was the List of Presidents of the United States President of the United States, and the last veteran of the American Civil War to be elected....
 launched the 'trust-busting' era when he appointed the U.S. Industrial Commission
Industrial Commission

The Industrial Commission was a United States government body in existence from 1898 to 1902. It was appointed by President William McKinley to investigate railroad pricing policy, industrial concentration, and the impact of immigration on labor markets, and make recommendations to the President and Congress of the United States....
. The report of the Commission was seized upon by Theodore Roosevelt
Theodore Roosevelt

Theodore Roosevelt , also known as T.R., and to the public as Teddy, was the List of Presidents of the United States President of the United States....
, who based much of his presidency on "trust-busting
Trust-busting

Trust-busting is any government activity designed to break up Trust s or monopoly. Theodore Roosevelt is the U.S. president most associated with dissolving trusts....
".

Prominent trusts included Standard Oil
Standard Oil

Standard Oil was a predominant United States integrated petroleum producing, transporting, refining, and marketing company. Established in 1870 as an Ohio Corporation, it was the largest oil refiner in the world and operated as a major company trust and was one of the world's first and largest multinational corporations until it was broken up...
, U.S. Steel
U.S. Steel

The United States Steel Corporation , more commonly known as U.S. Steel, is an integrated steel producer with major production operations in the United States, Canada, and Central Europe....
, the American Tobacco Company
American Tobacco Company

The American Tobacco Company was founded in 1890 by James Buchanan Duke as a merger between a number of U.S. tobacco manufacturers including Allen and Ginter and Goodwin & Company....
 and the International Mercantile Marine Company.

This kind of trust led to the term "antitrust laws" in the United States
United States

The United States of America is a Federal government constitutional republic comprising U.S. state and a federal district. The country is situated mostly in central North America, where its Contiguous United States and Washington, D.C., the Capital districts and territories, lie between the Pacific Ocean and Atlantic Oceans, Borders of the U...
 for what the rest of the world calls "competition law
Competition law

Competition law, known in the United States as antitrust law, has three main elements:*prohibiting agreements or practices that restrict free trading and competition between business entities....
s." The pioneering United States antitrust laws, especially the Sherman Antitrust Act
Sherman Antitrust Act

Antitrust Act was the first United States Federal statute to limit cartels and monopoly. It falls under antitrust law.The Act provides: "Every contract, combination in the form of Trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal"....
, were initially aimed at breaking up these trusts.

See also

  • Cartel
    Cartel

    A cartel is a formal agreement among firms. It is a formal organization of producers that agree to coordinate prices and production. Cartels usually occur in an Oligopoly, where there is a small number of sellers and usually involve homogeneous products....
    , a modern implementation


Bibliography