prompt to devices of this character have their springs in that corrupt inclination of human nature, under which men, in all ages, have sought to advance their own pecuniary interests by taking advantage of the necessities of their fellows. But while the motives and the ends sought in schemes of this character are not original with modern financiers, the capitalists of the later decades of the nineteenth century have outstripped all the generations of the past in devising new methods for the accomplishment of their purposes. And while their capacity in this direction. may be of a higher order than that of the great financiers of earlier periods, the degree of their success is attributable, doubtless, to the industrial conditions which are peculiar to the present age. What they have accomplished would not have been possible at any earlier period. acter. § 2. Origin of the Term.-The term "trust," as a designation of business or trading and corporate combinations, was first employed by the Standard Oil Trust. As employed by this organization it was a name, not for a corporate body, in the ordinary sense of that term, but for a business association of a new and peculiar charThe compact which was the charter or bond of the Standard Oil Trust was an agreement between the individuals who constitute the association. Under this agreement stockholders in corporations engaged in this branch of business placed their stock in the hands of trustees, for which they received the trust certificates of the new organization. The individuals who held the stock constituted the association, and chose the trustees, each stockholder casting votes proportionate to the amount of his stock. As in the ordinary trust, the trustees hold the legal title to the stock and elect the officers, not only of the association, but, as well, of the corporations by which the stock was issued. They control the entire business. They receive the entire income in the form of dividends on the stock of the corporations, and pay the dividends on the stock certificates. The purpose of the "trust" is to reduce the cost of production, to prevent competition and to regulate the price of their products. Another form of "trust" is that of an unincorporated association of the nature of a joint stock company, and still another is an organization in which a corporation becomes the trustee of a "trust," consisting of a union of other corporations. In this organization the corporation which is vested with trustee powers holds the legal title to the co-partnership property.1 For the various agreements upon which the Standard Oil Trust is based, see State ex rel. v. Standard Oil Co., 49 Ohio St. 137. "That the nature of the agreement is such as to preclude the defendant from becoming a party to it, is, we think, too clear to require much consideration by us. In the first place, whether the agreement should be regarded as amounting to a partnership between the several companies, limited partnerships and individuals, who are parties to it, it is clear that its observance must subject the defendant to a control inconsistent with its character as a corporation. Under this agreement, all but seven of the shares of the capital stock of the company have been transferred by the real owners to the trustees of the trust, who hold them in trust for such owners; and being enjoined by the terms of the agreement to endeavor to have the affairs' of the several companies managed in a manner most conducive to the interest of the holders of the trust certificates issued by the trust, have the right, in virtue of their apparent legal ownership, and by the terms of the agreement, to select such directors of the company as they may see fit; nay, more, may, in fact, select themselves. The law requires that a corporation should be controlled and managed by its directors in the interest of its own stockholders, and conformable to the purpose for which it was created by the laws of its State. By this agreement, indirectly it is true, but none the less effectually, the defendant is controlled and managed by the Standard Oil Trust, an association with its principal place of business in New York City, and organized for a purpose contrary to the policy of our laws. Its object was to establish a virtual monopoly of the business of producing petroleum, and of manufacturing, refining and dealing in it, and all its products, throughout the entire country, and by which it might not merely control the production, but the price at its pleasure. All such contracts are contrary to the policy of our State and void. The word "trust," says Mr. Cook, 'was first used to mean an agreement between many stockholders in many corporations to place all their stock in the hands of trustees, and to receive therefor trust certificates from the trustees. The trustees own the stock, vote it, elect the officers of the various corporations, control the business, receive all the dividends on the stock, and use all these dividends to pay dividends on the trust certificates. Their trustees are periodically elected by the trust certificate holders. The purpose of the trust is to control prices, prevent competition, and cheapen the cost of § 3. A Wider Significance.—In its later use the term "trust" has acquired a broader and more general signification than that above given. It is used to designate any corporation, association or other combination, the object of which is to create a monopoly, either complete or partial, with a view to increasing prices by suppressing competition and obtaining control of the market. It is the claim of combinations of this character, as a rule, that the effect of such "trusts" is to increase the profit of production without an increase of prices, and that, as a direct and necessary result, the public receives a benefit from it. In many instances there is an arrangement between individuals, firms or corporations for the purpose of controlling the market and regulating prices, while the business is continued as it was originally established. Where the object is to maintain prices by limiting the production, a part of the individuals or companies included in the association suspend or close their business operations, and in consideration share the profits of the concerns that continue. Arrangements of this nature, while popularly denominated "trusts," are, strictly and properly, contracts in restraint of trade. § 4. Some Early Illustrations.-"Trusts" of the character above noticed are not of recent origin. Combinations for increasing or maintaining prices make their appearance under some very ancient forms of civilization. Of the financiering and of the business methods of Assyria and of Egypt, we know little more than is inferable from the inclinations of fallen human nature. But in this form of industrial progress Greece and Rome were no mean rivals of the originators of the modern "trust." One of the problems with which the governments of that period were confronted, was that of the equitable method of suppressing combinations for the control of production and of prices. An illustration of the summary manner in which this class of financiers were some times treated is presented by the following translation of an edict of Zeno, Emperor of the production.'" State ex rel. v. 185. See also Cook on Stock and Standard Oil Co., 49 Ohio St. 137, Stockholders, § 503a. East, issued to the Prætorian Prefect of Constantinople, A. D. 483: "We command that no one may presume to exercise a monopoly of any kind of clothing, or of fish, or of any other thing serving for food, or for any other use, whatever its nature may be, either of his own authority, or under a rescript of an emperor already procured, or that may hereafter be procured, or under an Imperial decree, or under a rescript signed by Our Majesty; nor may any persons combine or agree in unlawful meetings, that different kinds of merchandise may not be sold at a less price than they may have agreed upon among themselves. Workmen and contractors for buildings, and all who practice other professions, and contractors for baths, are entirely prohibited from agreeing together that no one may complete a work contracted for by another, or that a person may prevent one who has contracted for a work from finishing it; full liberty is given to any one to finish a work begun and abandoned by another without apprehension of loss, and to denounce all acts of this kind without fear and without costs, and if any one shall presume to practice a monopoly, let his property be forfeited and himself condemned to perpetual exile. And in regard to the principals of other professions, if they shall venture in the future to fix a price upon their merchandise, and to bind themselves by agreements not to sell at a lower price, let them be condemned to pay forty pounds of gold. Your court shall be condemned to pay fifty pounds of gold if it shall happen, through avarice, negligence, or any other misconduct, the provisions of this salutary constitution for the prohibition of monopolies and agreements among the different bodies of merchants, shall not be carried into effect."1 This form of "trust" became a subject of legislation in England at an early period. In the 5th & 6th of Edward VI., we find "An Act against Regrators,2 Fore 1 Code IV., 59. The foregoing translations of this edict is by A. H. Marsh, Q. C., and first appeared in 8 Canadian Law Times, 299, 300. See same also in 23 Am. L. Rev. 261. 2 "Regrating. In old English law, the offense of buying or getting into one's hands at a fair or market any provisions, corn, or other dead victual, with the inten The first six sections of this stallers, and Ingrossers." act are as follows: "Albeit divers good statutes heretofore have been made against forestallers of merchandises and victuals, yet for that good laws and statutes against regrators and ingrossers of the same things have not been heretofore sufficiently made and provided, and also for that it hath not been perfectly known what person should be taken for a forestaller, regrator or ingrosser, the said statutes have not taken good effect, according to the minds of the makers thereof: Therefore be it enacted and declared by the King, our Sovereign Lord, with the assent of the Lords, spiritual and temporal, and the commons in this present parliament assembled, and by the authority of the same, that whatsoever person or persons, that after the first day of May next coming shall buy or cause to be bought any merchandise, victual, or any other thing whatsoever, coming by land or by water toward any market or fair to be sold in the same, or coming toward any city, port, haven, creek or road of tion of selling the same again in the same fair or market, or in some other within four miles thereof, at a higher price. The offender was termed a regrator." Black, Law Dictionary. "Regrating. In criminal law, every practice or devise, by act, conspiracy, words or news, to enhance the price of victual or other merchandise, is so denominated." Bouvier, Law Diction ary. 1 "Forestalling the market. The act of buying or contracting for any merchandise or provision on its way to the market with the intention of selling it again at a higher price; or the dissuading persons from bringing their goods or provisions there; or persuading them to enhance the price when there. 4 Blackstone's Comm. 158. This was formerly an indictable offense, but is now abolished by St. 7 & 8 Vict., chap. 24." Black, Law Dictionary. See also Bouvier, tit. Forestalling the Market. "Engross. In criminal law, to buy up such large quantities of any article as to obtain a monopoly of it for the purpose of selling at an unreasonable price. The tendency of modern English law is very decidedly to restrict the application of the law against engrossing; and it is very doubtful if it applies at all, except to obtaining a monopoly of provisions. 1 East, 143. And now the common law offense of the total engrossing of any commodity is abolished by St. 7 & 8 Vict., chap. 24. Merely buying for the purpose of selling again is not necessarily engrossing. 14 East, 406; 15 East, 511. See 4 Blackstone Comm. 159n, for the law upon this subject." Bouvier, Law Dictionary. |