TRUST 



among the conspicuous features of the town, as 

 are also the local Dominion building, com- 

 pleted in 1884 at a cost of $75,000, the town 

 hall or civic building, erected in 1913 at a cost 

 of $55,000, and the Canadian Government Rail- 

 ways depot, erected in 1914 at an expense of 

 $200,000. 



>ria Park, covering a thousand acres, is a 

 pleasure ground of great natural beauty. Its 

 hills of red sandstone surround a roomy glen or 

 valley, which gradually contracts till it becomes 

 a rocky gorge less than a hundred feet wide and 

 more than a hundred feet deep. Through the 

 valley flows Lepper Brook, which at the narrow- 

 ; t of the gorge forms the Waddell and 

 I alls, before it joins the Salmon River 

 on the out-kirts of the town. 

 TRUST, in economics, the name commonly 

 1 to a great industrial or business com- 

 n. By virtue of its size it possesses 

 u complete monopoly or sufficient control 

 -ources of production to regulate to some 

 extent the conditions of production, the mar- 

 ket and prices. The word trust should not be 

 applied to legal monopolies or to natural mo- 

 nopolies ; it applies only to monopolies built up 

 by combinations of capital. 



Pools. Trusts are distinctly of American 



origin, and their development began with the 



close of the War of Secession. The first form 



of combination was the pool, which was not 



technically a tru.-t. A pool was merely an 



agreement whereby a number of producers di- 



territory, or restricted their output, or 



;se eliminated competition. Each pro- 



however, retained the management of 



his own factory. Pooling agreements were a 



reaction from a period of intense competition; 



the easiest way to avoid disastrous competition 



was to make some such agreement with other 



producers. 



Pools have become numerous in Europe, 

 operative except in stress of war, particularly in 

 Great Britain, France, Austria and/jermany, 

 where they usually take the form of an agree- 

 ment restricting production. Many of the pools 

 maintain a single selling organization, which is, 

 <-t, a sort of clearing house. In these 

 European countries pools have generally flour- 

 rven in France, where the law against 

 monopoly created by unfair means is very 

 In Germany, indeed, the pools have 

 been encouraged to feel that the law and the 

 ;;) -nt are not hostile to them. Pools in 

 iron, coal and sugar have been notably success- 

 ful. 



TRUST 



In the United States, the system of pools 

 reached its highest development in agreements 

 between railways, although pools existed in 

 other industries. Railway pools may divide 

 the territory, the traffic or the income from 

 traffic. The development of these pools, un- 

 fortunately, coincided with the spread of the 

 granger movement and an almost universal atti- 

 tude of distrust towards all railroads. The 

 courts held that pooling in any form was illegal 

 under the common law, and in 1887 the 

 state Commerce Act declared railroad pooling 

 illegal. Many students of the subject 

 clined to believe the prohibition of pooling to 

 be unwise, and that pooling under government 

 supervision is really desirable. 



The Voting Trust. The fact is that about the 

 year 1880 pooling was generally viewed as con- 

 trary to law. The courts refused to enforce 

 such agreements, on the ground that the 

 in restraint of trade, and in a number of cases 

 ordered the dissolution of pools. A new method 

 of combination had to be devised ; this was the 

 trust, or, as it is often called to distinguish it 

 from the general term, the voting trust. Under 

 this system the stock of several corporations 

 was assigned to one board of trustees, who 

 voted the stock and thus controlled the affairs 

 of all the companies. The stockholders, in re- 

 turn for their stock, received trust certificates, 

 which could be transferred like ordinary 

 cates of stock. The Standard Oil Company, 

 founded in 1882, was the first to use this form 

 of organization; the word trust as first applied 

 to this company has become a 

 wider meaning. But this form was not j 

 it left abundant opportunities for waste and 

 mismanagement. Furthermore, the Sherman 

 Anti-Trust Law of 1890 was a danger signal 

 (see, below, subhead Trust Legislation). So 

 still another form was developed, which was 

 called the holding corporation. 



Holding Corporation. In this form of organi- 

 sation a new company was organised with suffi- 

 cient capital to buy the controlling interest of 

 the independent companies. The officer? of the 

 new corporation, therefore, could control the 

 policies of all the subsidiary companies. All 

 the great trusts, including the United States 

 Steel Corporation, the Standard Oil Company 

 and the International Harvester Company, were 

 organised on this plan. Occasionally, after such 

 a holding corporation had purchased < 

 of a number of smaller companies, the latter 

 would be dissolved, leaving only the on. 

 company. Even this form, however, did not 



