of trustees-seven or nine-giving thus an irrevocable power of attorney to these trustees to vote the stock as they see fit. The trustees issue trust certificates to the stockholders in lieu of their assigned stock, and it is upon these certificates that profits are divided. All of the earnings from all of the different members of the combination are put into a common treasury, and whether one of the manufacturing establishments is running or closed makes no difference in the profits received by the stockholders of that special company. The trustees, by having in their hands the voting power of all of the separate corporations, of course elect whatever officers of the corporations they see fit, and direct thus, as seems to them wise, the affairs of each separate corporation.

The decision* of the New York Court of Appeals against the Sugar Trust, declaring that the act of a corporation in thus putting its stock into the hands of trustees and abdicating its own independent power of self-direction, was ultra vires, together with hostile legislation in other States and an apparent hostility of public opin

*The People of the State of New York v. The North River Sugar Refining Co., 121 N. Y., 582.

ion, led the old Trusts to give up this form of organization and to reorganize. The Sugar

Trust and the Whiskey Trust organized as individual corporations, the certificate holders becoming stockholders in a new corporation which owned all of the plants that had been owned by the individual corporations before the formation of the Trust. In both cases there was substantially no change in the management, the trustees of the former Trust becoming directors of the new corporation and the officers of the new corporation remaining substantially the same as the officers of the Trust. It was a change in name, a change in technical legal form, but no change as regards the practical management of the organization.

The Standard Oil Trust followed a different plan. It so happened that the nine trustees of the Trust owned a large majority of the Trust certificates. The Trust then dissolved into separate corporations, the holders of Trust certificates being given shares pro rata in each one of the twenty corporations into which the Trust was divided. Inasmuch, however, as the former trustees then owned a majority of the stock in each one of these twenty different corpora

tions, they were enabled, without any formal organization among themselves, to direct the affairs of all these corporations in perfect harmony just as efficiently as they had done while acting as trustees and holders of a majority of the Trust certificates. Here, again, there was

a change in form; but in this case, instead of the Trust becoming a single corporation, it became twenty corporations, the majority of the stock in each being held in the same few hands, and all of the corporations being managed in perfect harmony.

A comparatively late change in this company of a different kind has been made. One of the separate corporations, the New Jersey corporation, has increased its stock, and so arranged that it can take control of the business of all of the different companies. The stocks of the separate companies are therefore now being exchanged gradually for the stock of the New Jersey corporation, and in the course of time it is expected that this one corporation will own all of the stocks of the twenty different corporations, so that the management will thereafter be not merely practically one, but also technically and legally one under the directors of one

corporation, they voting all the stock of each of the corporations. It is practically a return to the Trust form in all but name.

A voting Trust, somewhat different from the kinds of Trusts described before, is also frequently found. In this form the Trust applies ordinarily only to one corporation. The holders of a majority of the stock of this corporation put into the hands of some few trustees or possibly of a trust company the voting power of the stock, with specific instructions in certain instances as to the way in which this stock is to be voted and the affairs of the corporation carried on. In other cases the power is left to the trustees to carry on the business of the corporation as seems to them wise in accordance with a certain general line of policy laid down beforehand. The individual shareholders may then pledge or sell or dispose of their stock in whatever way seems to them best, but the voting power remains in the hands of the trustees. The purpose of such a voting Trust is, of course, to secure continuity of the policy which, for whatever reason, the stockholders prefer. In some cases it may be that the majority of the stockholders of the original corporation think it

desirable to devote all the earnings for a specific period to the improvement of the property instead of to the payment of dividends. It might be impossible to continue such a policy with a shifting body of stockholders, many of whom might wish to receive annual dividends. If, however, the stock can be transferred, but the voting power remain in a few hands, the policy can be carried out consistently for a fixed period of years.

In the case of the Pure Oil Company and other competitors of the Standard Oil Company, it was thought desirable to place the majority of the stock in the hands of a few trustees, because many stockholders felt that otherwise the Standard Oil Company might in time buy from individual stockholders a controlling number of shares, and thus succeed in absorbing more or less completely one of its chief rivals. It is claimed by the managers of the Pure Oil Company that, owing to experience with some other companies, they had reason to believe that this was the purpose of the Standard Oil Company, and, in consequence, the Pure Oil Company had its stock placed in the hands of a voting Trust.