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Trust (19th century)

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Trust (19th century)

A "trust," or "corporate trust" means a large business. Originally, it was Standard Oil, which was already the largest corporation in the world.[1] According to an 1888 article regarding trusts,[2]

A trust is . . . simply the case of one person holding the title of property, whether land or chattels, for the benefit of another, termed a beneficiary. Nothing can be more common or more useful. But the word is now loosely applied to a certain class, of commercial agreements and, by reason of a popular and unreasoning dread of their effect, the term itself has become contaminated. This is unfortunate, for it is difficult to find a substitute for it. There may, of course, be illegal trusts; but a trust in and by itself is not illegal: when resorted to for a proper purpose, it has been for centuries enforced by courts of justice, and is, in fact, the creature of a court of equity.
—Theodore Dwight, Political Science Quarterly

Although the "corporate trusts" were created to improve the organization of large businesses, at the time these large businesses were associated with abusive practices and often used their size to exclude competition. This early history of trusts made them associated with anti-competitive practices and motivated the enactment of the Sherman Act in 1890, the first federal competition statute. American competition laws are known as antitrust laws (or anti-trust laws) for the historical public aversion to trusts, while other countries refer to these laws as "competition laws."

In 1898, President William McKinley launched the 'trust-busting' era when he appointed the U.S. Industrial Commission. The report of the Commission was seized upon by Theodore Roosevelt, who based much of his presidency on "trust-busting".

Prominent trusts included Standard Oil,[3] U.S. Steel,[4] the American Tobacco Company[5] the International Mercantile Marine Company.,[6] and the match companies controlled by Ivar Kreuger the Match King. De Beers had a dominant role in the supply of diamonds.

Other trusts were formed by several companies, e.g. the Motion Picture Patents Company or Edison Trust which controlled the basic movie patents. Patents were also important to the Bell Telephone Company; see The Telephone Cases.

References

Bibliography

  • Boudreaux, Donald J., and Thomas J. Dilorenzo. "The Protectionist Roots of Antitrust " The Review of Austrian Economics 6, no. 2 (1993): 81-96.
  • Barak Orbach and Grace Campbell, The Antitrust Curse of Bigness, Southern California Law Review (2012).tr:Tröst (tekel)
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