Trust
2 of the 7 encyclopedias on this shelf carry an entry for Trust. Both are reproduced below, so you can see where they agree and where they differ.
Collier's New Encyclopedia (1921)
an arrangement by which property is handed to or vested in a person, in the trust or confidence that he will use and dispose of it for the benefit of another. In England, land was in early times frequently conveyed to persons in whom the owner had confidence that they might hold it to the use of other persons indicated by him. The use was turned into a legal estate by statute in 1535, but the equitable powers the Chancery remained, and were freeof ly used to enforce any trust, whether relating to land or to personal property. Trusts of land must be declared in writing, but this rule does not apply to trusts raised by implication or construction of law. Thus, if A purchases land with the money of B, he holds it as trustee for B, although there may be no written agreement between them. The person who holds property in trust is a trustee; the person for whose benefit he holds is called cestui que trust (he that has the benefit of the trust). In declaring a trust no special formula is necessary, but the intention of the party making it must be clear. Thus, in wills, a testator sometimes uses words which do not amount to an express trust, but speaks of his "wish and desire" or his "confidence," that the executor or trustee shall do certain things. These are called in the law precatory trusts; they are enforced if no uncertainty exists as to the the purposes or mode of carryin out trust. A trustee's is not a compulsory office, but gratuitous; but if he once accept he is not at liberty afterward to renounce, unless the trust deed contain a provision enabling him to do so, or the court for good reasons discharge him. A trustee cannot delegate the office to a third person, but continues personally bound to do his duty. Where there are several trustees appointed, the office is considered joint, so that if if one dies, the survivors continue to exercise the office. As a rule, all must join in doing any act; but if the trust is of a public nature a majority may bind the minority. Each trustee is liable only for his own acts or defaults, and this is so even though, for form's sake, he join his co-trustees in signing a receipt, if he can show that he never received the money in point of fact. When money lies in the hands of one trustee the others ought not to be satisfied with his mere statement that the money has been invested by him, but should see that it is actually done. Another rule is that a trustee is not allowed to make a gain of his office, and so jealous is an English court of this rule that trus-ers of one commodity whereby each agrees tees have sometimes been restrained by the court from shooting over the trust estate. A trustee is personally liable if he trade with the trust funds, or buy shares in a joint stock bank; for, even though the trust deed authorize this to be done, he will be liable to pay the debts of the trading concern, though far exceeding the amount of the trust funds. So, if a trustee is a solicitor, and does legal business for the estate, he will not be allowed to charge for his care and trouble, but at most will be allowed only the cost out of pocket. It is seldom that a trustee can get any benefit to himself from the trust estate. Formerly if cestui que trust died without heirs land held in trust belonged to the trustee, but the rule has been altered by statute, and the escheat is now to the State. It is the duty of a trustee to keep the trust funds safe and if they consist of moneys, then he ought to invest them in government bonds, and not let the money lie unproductive. He is not entitled to lend money on personal security, or in the shares of any private company; but he may invest in mortgages, unless he is forbidden by the deed or will. If there is no power to invest in mortgages, the trustee must invest in State, city, or government bonds, or in some security authorized by the orders of the Supreme Court. As a rule, trustees must pay interest whether they invest the funds or not (if they have had time to invest) to the cestui que trust; and they must account for all the profits they make with the trust funds whether rightly or wrongfully. If a trustee has grossly misconducted himself as to the trust funds he will be charged five per cent. interest. A trustee is entitled to be indemnified for all the reasonable expenses or outlays attending the execution of the trust, but he must in general bear the loss of any mistake as to the law; but if there is any peculiar difficulty in carrying out the trust, he is entitled to take the opinion of, or even to throw the chief management on the courts, as the only safe protection. When trustees are guilty of gross negligence, mismanagement, or misconduct, the court will res move them and appoint others. Trusts, broadly speaking, and as a term of of common acceptance, any combination of manufacturers of a given commodity, ranging from a verbal agreement among them, to centralized ownership and management, tending toward a monopoly in an industry. Within this general field there are many types and degrees of combination. First of these is an understanding between manufacturto restrict its business to a limited ter ritory, the agreement apportioning to each manufacturer a certain amount of territory, in proportion to the trade done. Another form is an agreement whereby each manufacturer agrees to limit the output of his manufacturing plants to a certain amount, which is usually in proportion to the amount of capital invested. A third form, or degree, of this type of "gentlemen's agreement," and most pernicious of all, is that by which all members of the ring agree to fix a standard price, by which all must abide, any change of price being made by a conference of representatives of all concerned. Such a pact, naturally, is only possible when practically all the manufacturers in the country of the commodity in question adhere to it, the outing so few that they may be siders being crushed by a temporary lowering of prices, entailing a loss which only the members of the trust are strong enough to sustain. It was this type of trust that was exposed by the Lockwood Investigation Committee in the building. trades in New York, during the latter part of 1920, and the early months of 1921. Higher types of trusts include two main forms: federated unions and centralized unions of manufacturers. The federated unions may again be di vided into two types-trusts proper and holding combinations. The centralized union is a type by itself, and includes single ownership and management, under one corporation, involving a financial union and the purchase or sale of securities or physical assets. To create a trust proper the heads of the various firms meet, a trust deed is drawn up, similar to a corporate charter, which provides, first, that the common stock of the members be exchanged for trust certificates and, second, that the trustees manage the several corporations in the manner they deem most conducive to the best interests of the holders of the trust certificates. Such a combination constitutes a permanent financial union. The first trust created in the United States was the Standard Oil Company, through the remarkable genius of S. C. T. Dodd. Within the next ten years, trusts were also organized in the cotton, sugar, and whisky industries. As these and other similar combinations appeared, however, restrictive legislation was passed in the various States, with the exception of New Jersey, whose laws remained so accommodating that most combinations established their headquarters in that State. The stockholding method was that which was most in practice during the earlier period of trust formation in this country. As an illustration, the American Sugar Company, known as the sugar trust, was formed by the corporation acquiring a majority interest in its rivals, in 1894. During the following ten years this method was widely practiced among the railroads. In 1900 a new and advanced step was taken, when James J. Hill organized the Northern Securities Company, which acquired possession of the Great Northern railroad companies and the Northern Pacific. Later suit was brought by the State of Minnesota to have this merger dissolved, the Supreme Court finally passing a decision that this form of trust was illegal. The rapid growth of these various forms and types of corporations in the United States was recognized as a constantly growing menace to the social interests, which could not be met by the legislation of the individual States. The vast capital available to certain combinations made it possible to crush small competitors by economic oppression, without redress before the courts of the country. On the other hand, the creation of a monopoly made it possible for them to levy what amounted to heavy taxes on the consuming public in the form of arbitrary profits, unlimited by competition. By the pooling arrangements, already described, competing firms were transformed into partners in one gigantic concern that could restrain trade and control the market. In 1890, when ten States had already enacted anti-trust legislation, without much effect, the popular demand became so strong that Congress was compelled to take action. On July 2 of that year the famous Sherman Anti-Trust Law was passed, which for the first time gave the Federal Government power to take legal action against combinations in any part of the country. Though drawn up with care and debated at length, the new law could only declare those combinations illegal which were in "restraint of trade." Tremendous efforts were therefore made to amend the provisions of the law so as to render their application impotent. The best legal talent available was employed to have incorporated the phrase which would define a trust as enjoying a complete monopoly of the market for its particular commodity. The law was also attacked on the ground that it curtailed the fundamental right of free contract. The act having been passed, these same interpretations were put forth through test cases. Several of the lower Federal courts decided in favor of the corporate interests, but after a tedious series of litigations the Supreme Court finally decided that a complete monopoly need not necessarily be proven, and that the liberty to make contracts applied only to legal contracts. But in spite of the fact that several notable convictions were obtained under the Sherman law, in such cases as the Standard Oil Company and the Tobacco trust, both of which were ordered to dissolve into their former component parts, it soon became evident that this piece of Federal legislation was ineffectual. By means of gentlemen's agreements, dummy directors and interlocking directorates, the trusts continued, to operate. To remedy this condition and make the law really effective, supplementary October 15, 1914, known as the passed by Congress, on legislation was passed by Clayton October Anti-Trust Act. By some of its provisions a manufacturer was forbidden to sell goods to a merchant on the understanding that he should not be free to buy from others as well. Another provision forbids a corporation from selling to different dealers at different prices. With certain exceptions holding companies and interlocking directorates were forbidden. The most valuable feature of the law was the establishment of the Federal Trade Commission, which has the power to determine what constitutes unfair methods and acts "in restraint of trade." It also has the power to make special investigations, order hearings and to enforce its decisions through the Circuit Court of Appeals. It has been of real value in exposing to the public the methods of vicious combinations through the publicity attending its investigations, even though the facts made public do not come within the provisions of the law. The report of its investigation of the created such intense public sentiment against the meat trust that the latter was compelled to offer an effective compromise with the Federal authorities, though there was substantial reason to doubt whether a case could have been made out against it. Two important decisions were rendered in 1920 by the Supreme Court in connection with the prosecution of trusts. In both cases the decision was made by a vote of four to three, two members of the Court not taking part in the deliberations. That against the Reading Company was a complete victory for the Government, compelling the coal interests to be separated from the railroad interests of the corporation. The case against the packing companies was also an undoubted victory, though won by other than court proceedings. According to the compromise the trust agreed to sell all its holdings not connected with the actual meat and packing trade and furthermore agreed never to engage in retail distribution.
Aiton's Encyclopedia (1910)
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 United States Steel Corporation $1,370,000,000 The Pullman Trust 74,000,000 The Standard Oil Trust 100,000,000 The Baking Powder Trust 20,000,000 The Sugar Trust 46,000,000 The Copper Trust 175,000,000 The Whiskey Trust 42,000,000 The Tobacco Trust 500,000,000 The Leather Trust 128,000,000 The Telephone Trust 300,000,000 The Harvester Trust 120,000,000 Three hundred smaller trusts 4,055,039,453 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. Amalgamated Copper Co $155,000,000 American Beet Sugar Co 19,000,000 American Chicle Co 9,000,000 American Cigar Co 10,000,000 American Cotton Oil Co 30,435,700 American Glue Co 2,400,000 American Hide and Leather Co 24,500,000 American Ice Co 40,000,000 American Linseed Oil Co 33,500,000 American Locomotive Co 49,100,000 American Malting Co 28,940,000 American Plow Co 75,000,000 American School Furniture Co 8,856,100 American Sugar Refining Co 89,871,100 American Thread Co 10,890,475 American Tube and Stamping Co 2,800,000 American Window Glass Co 17,000,000 American Writing Paper Co 22,000,000 Bay State Gas Co 100,000,000 Borden's Condensed Milk Co 25,000,000 Consolidated Tobacco Co 94,844,600 Corn Products Co 80,000,000 Diamond Match Co $15,000,000 Eastman Kodak Co 19,673,100 General Electric Co 45,000,000 International Paper Co 39,849,400 International Salt Co 30,000,000 National Biscuit Co 53,061,100 National Lead Co 29,809,400 National Enameling & Stamp. Co 23,838,400 National Sugar Refining Co 20,000,000 Pittsburgh Coal Co 59,731,900 Pullman Company 74,000,000 Quaker Oats Co 11,500,000 Royal Baking Powder Co 20,000,000 Standard Oil Co 97,500,000 Standard Typewriter Co 1,000,000 Union Bag & Paper Co 27,000,000 Union Typewriter Co 18,000,000 United Copper Co 50,000,000 United States Envelope Co 4,500,000 United States Leather Co 125,164,600 United States Rubber Co 47,191,500 United States Steel Corporation 1,018,809,300 Western Union Telegraph Co 120,912,360 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