130 
Strong—The Legal Status of Trusts. 
law and repressive legislation, as is shown by the steady in¬ 
crease in their numbers and capitalization; that it is not the 
trust itself but the wrong-doing that should be the object of 
legislation; consequently, that regulation and control should be 
the aim of the law, not an unwise and fruitless policy of pre¬ 
venting the formation of trusts themselves. In other words, we 
must apply the principle of responsible power to trusts, and 
secure responsible control over this important economic agency. 
It is the purpose of the following pages to state the legal posi¬ 
tion of trusts, and to indicate briefly how far the repressive 
measures have proved effective. 
In considering the legal status of trusts an examination of 
their relation to the common law naturally precedes that of the 
special and recent legislation directed against them by Congress 
and the State legislatures. Three forms of combination, all of 
recent origin, must be distinguished and treated separately, 
namely, partnerships between corporations, corporations con¬ 
trolling other corporations, and lastly, a corporation buying out 
all other corporations in its line of business. This is the order 
of their development, and the last is the most important and 
prevalent form. 
I. A partnership of corporations was the original and formerly 
the most common form of trust combination. Pools and mutual 
agreements between competing manufacturers in regard to prices, 
terms of sale, division of territory proved too weak to be effectual. 
These informal agreements were not only secretly but openly 
broken, and it was because of their failure that the trust co¬ 
partnership was devised in order to bind together more securely 
those entering into the agreement, and also to realize the addi¬ 
tional advantages that would result trom an union that could 
not be dissolved or broken without the consent of all. By written 
agreement all the corporations entering into the combination 
transferred all of their stock to a board of trustees, who held it 
subject to the purposes set forth in the compact. These trustees 
issued trust certificates to each corporation in proportion to the 
value of its plant, and these were in turn divided among the 
stockholders in proportion to the interest of each individual 
holder. These trust certificates were in the form of stock certifi- 
