Trust

an association formed to control some particular line of business. The term is difficult to define, but trading on a large scale, the ability to shut others out of the business, and the power to fix prices are essential features of a trust. This use of the word is widespread. It sprang from its use by the Standard Oil Trust, the first business organization to adopt the term in a business sense. The idea is that competitors trust their various properties to a holding company to be operated, at least so far as sales and prices and profits are concerned, as though they were held by a single owner. The laws of New Jersey are so favorable to these holding companies that nearly all the prominent trusts of the United States are organized under the laws of that state and maintain their home offices in New Jersey. Some of the larger American trusts, omitting railroad companies, with estimates of capitalization, are:

The various combinations control several thousand manufacturing plants and include almost every important line of manufacture. The total capital controlled by American trusts is not less than $25,000,000,000, a sum twenty times as great as our national debt.

During the last twenty years the term trust has fallen into disrepute, but the principle of organization is utilized everywhere. When farmers organize a creamery association and appoint an agent to receive their milk, to make it into butter or cheese and to market the product, they have formed a small trust. The egg raisers of Denmark have an organization that collects eggs from a thousand farms, puts them on the London market, and makes returns to the share-holders who supply the eggs. Fruit raisers in various parts of the country organize to market the products of their orchards. They do this to save expense and to obtain better prices. If the creamery owners, egg exporters, and the fruit raisers were so widely organized as to be able to name prices, they would become real trusts.

Some of the purposes of trusts are fair and are to be commended. The employment of a single agent to sell for many factories, the purchase of raw material for manufactories in large quantities, the making of fewer kinds of articles in any one factory, in short, all features calculated to save expense and to cheapen the cost of articles, are legitimate.

A trust is to be distinguished from a natural monopoly. There are some sorts of business, such as a telephone system, a lighting system, a system of water supply, and the like, which are natural monopolies. Rivals competing get in each other's way, keep streets torn up, and cannot do as well by their customers as single companies could do.

The great evil of trusts is the power to control prices--to cut off natural competition. Experience has shown that with apparent competition it is possible for a meat packing trust to so control the market as to put the price of cattle down and the price of dressed meat up.

Public opinion is divided as to the remedy. Some hold that trusts should be forbidden by law, others that the government should establish and regulate prices, and others that the government should take over such lines of business as have fallen into the hands of trusts.

Moody's Manual of Corporation Securities for 1908 lists 287 industrial trusts. Some of the more familiar companies, rail-roads omitted, are:

Name of Company. Capital Stock Outstanding.

A total footing of Moody's list, including the companies omitted above, is $6,972,448,851. From this statement should be substracted, however, a bonded indebtedness of $1,169,217,251, leaving stocks worth $5,803,231,600.

See Monopoly; Communism; Socialism