It will be noticed that in all of these cases the difference between this form of voting Trust and the original Trust as seen in the case of the Sugar Trust, is that in the later cases provision is made simply for the management in a specific way of the affairs of some one corporation, whereas in the other case the intention of the Trust was to unite many different corporations under a single management and possibly in certain cases to secure a virtual if not a complete monopoly of the output.

After the dissolution of the old Trusts, the form of organization into one great corporation that should own the separate plants, became most common. Under that form, as, for example, in the case of the organization of the American Tin Plate Company or of the National Steel Company, each one of the separate corporations sold its plant outright to a new corporation, and the original corporation then dissolved. When the combination was completed, there remained in existence only the one great corporation owning the plants that had belonged before to the separate corporations or to individual partnerships or owners. In no essential particular did the legal aspect of the single new

corporation differ from that of the separate corporations which had preceded it.

The form of organization that seems to have become most common within the last year or two is one that is closely allied to the old Trust form in its essential character. In this case, when a combination is about to be perfected, a new corporation is formed whose purpose it is to buy up all, or at least a controlling share, of the stock of all of the separate corporations that are to come together. The different corporations then maintain their separate legal existence, but their stock is held by the one company. The officers of the great corporation having thus in their hands the control of the stock of all of the separate corporations, and voting that stock as they see fit, elect, of course, from year to year the directors of all of the corporations, and thus by this absolute control of the officers, direct the affairs of the different corporations. In some cases the " parent corporation" (so called, though born from the others), besides owning the stock of the individual corporations, owns also independently some properties of its own; but in other cases the parent corporation owns only the stock

of the separate ones which have entered into the combination. The profits of the individual corporations are made, of course, as before; their dividends are declared; and these dividends are the only source of profit of the parent corporation.

While this form of combination probably doubles the total capitalization in par of stocks, it should be noted that there is no increase in capital, and that there need be no stock watering-although there often is. Neither

need there be any more speculative securities created. This fact is often overlooked by those who are appalled by the huge capitalization of industries during the past few years. While new companies have formed, old ones have died that they might live, or the constituent companies pay all their dividends to the parent company to enable it to pay its bills. In this way the earnings of the separate corporations are pooled as effectively as they were in the old Trust. The management is kept as effectively in the hands of the officers. The only difference seems to be a legal one. The parent corporation now owns the stock of the different corporations. In the

other case a Board of Trustees held this stock in trust without themselves having any separate legal corporate organization. These new corporations are, it is true, amenable to the courts in a somewhat more direct way than were the former trustees; otherwise there seems to be no essential difference between these two forms of combination. In this later form of combination the constituent companies have their separate boards of directors, their separate officers, and carry on their business independently, managing it, however, under the general direction of the officers of the parent company. It follows of necessity that the work of all the different corporations is carried on harmoniously. one of them may have its plants closed for a time in order to suit the supply of product to the demand; on the other hand it may even be that prices will be fixed by the officers of the several companies; but in case of need they can always be readily controlled.

Some

It should be noted that among these various forms of combinations there are two kinds, as was indicated earlier in Chapter II, essentially different in nature. The first is made

up of companies that have been active com

petitors before the combination was made, as in the case of the original Sugar Trust and Whiskey Trust. In these cases the combination was sought for the special purpose of lessening competition, together with the elimination of the competitive wastes. The combination simply took different competitors out of the market and enabled the price of the product to be fixed by the central organization.

In the second kind of combination, the constituent members have often not been competitors in the same line of work before the combination was made, though they each seek a share of the value of the final product. Instead of being competitors in the same line of business, they have been producers of different products at different stages in the same industry. For example, the Federal Steel Company is a combination of several companies that were not competitors. The Minnesota Iron Company owns iron ore property, also the Duluth and Iron Range Railroad Company, which connects its mines with Lake Superior at two points. It owns ore docks and also twenty-two steel lake vessels that can carry a large proportion of its products each year. The Federal Steel Company bought all its stock.