No. 4.] TRUSTS AND THE FARMERS. 187 



after paying C, will have $1,666.66 profit. Let A then take 

 the $666.66 increased profit and with it buy the business of 

 B. Then A will produce 3,000 barrels, and, after paying B 

 and C $1,000, will have $2,000 left, thereby doubling its 

 own profits. By this means C is satisfied, B is happy, and 

 A is making twice what it did before, and, having now the 

 whole business to itself, is in a position to extend and im- 

 prove it to a marvellous degree. 



Such possibilities, when once clearly seen, led men to sub- 

 stitute combination for competition, and the trust came into 

 existence. Fierce competition ])rought corporations to the 

 brink of bankruptcy. A few of the leading corporations 

 sent their managers to confer. The question discussed was, 

 "How can prices be kept from falling, and how can profits 

 be once more secured?" The answer was, "Let us form 

 a trust." 



The best managers were chosen trustees. In their hands 

 was placed the stock of the several corporations combining, 

 and to the stockholders were given in exchange trust cer- 

 tificates in amount of sufiicient value to amply pay for the 

 stock surrendered. The trustees then have the whole busi- 

 ness in their hands, to manage it as they please. They are 

 industrial dictators. Under their management competition 

 ceases ; the business prospers ; the cost of production is 

 smaller ; prices increase ; profits are large ; on each share of 

 the trust large dividends are paid. 



This is the trust in its original form. A corporation is a 

 body made and recognized by the law, capable of suing and 

 being sued, but the trust had no legal status. It could have 

 no standing in the courts ; it could not make or enforce con- 

 tracts ; it was a conspiracy to create a monopoly. At the 

 first real attack in the courts this form of organization fell to 

 pieces ; hence reorganization was necessary. The individual 

 corporations were dissolved. The stockholders formed them- 

 selves into a new corporation, to which the property and 

 business of the old corporations were transferred. This 

 huge monopolistic corporation, organized according to law, 

 is what is now meant by the trust. The name remains as a 

 convenient word to designate the old organization in a new 

 form, seeking the same ends. 



