The Arizona sentinel., 1888-01-14
TRUSTS OF ALL KINDS.
A Noted Jurists Opinion on the Recent
 Combi nations of Special Interests.

O-A lions of special interests, under the title of trusts" for the alleged pur- pose of preserving those interests, has attracted the attention of both legal and commercial minds, and a re- porter called on MT. Austin Abbott, whose works on law and reports of law courts have been acknowledged by the judges of the Court of Appeals and others connected with the bench as authority in all matters before the courts to ascertain the nature of these trusts. Said he:
 ''The mystery which in the minds of some obscures this subject is busi- ness mystery, not legal one. Each of the legal principles which have rendered these combinations possible is easily comprehended and generally famil jar. Nearly all of them have long been recognized and ire quently separately applied. The modern spirit of organization has recently discerned the results that can be worked out through the combina- ton of these familiar principles, and the secrecy which has attended the operation of the device is simply matter of business policy. Hereto fore efforts to obtain concert of action among corporations have been princi- pally made either by one corporation taking stock in another, by one leas- ing the property of another, or by contracts between the boards of di- rectors having one or more common members. These involve, in one form or another. embarrassments arising out of the limits of the powers of cor porations and their directors, and also out of the fduciary relation of direct ors to stockholders, and the incapacity of a director in two boards to sanction a contract between them. It was the fact that stockholders have not hither- to been regarded as holding any fidu- ciary relation to each other, or to their company, that has led to the inven- ton of these trusts of stock for the control of corporations.
 What is a trustP"
 "A trust so called. Is device to secure concert of action among num- Der of corporations of similar inter- ests, by separating the voting power and the ownership of the stock, in each one, to sufficient extent to concen- trate the voting power of majority of the stCck, in each corporation, in the hands of single committee or asso- ciat1on. whose policy will, therefore, animate all the boards of directors, or who may even put tho same persons in the several boards. so that the cor porate action of all may be identical without contract Under this arrange ment it is intended that the bene- ficial interest in the stock, minus the voting power shall rest where it was before. while the pecuniary value of the stock may be enhanced by the termination of all competition between the corpor ations thus brought under one control, and by the consequent advantage gained from the combined corporations in their competition with corporations and individuals in the same business, but not in the combina- ton"
 Are such combinations legal?'
 1.-The legal principles upon which this devIce rests are in the first place ihe characteristic features of corporate organiza ation; in the next that the cor porate combination by a trust needs no corporate act; next the alleged jus tification of the objects of 'trusts;' next the legal theory of the trusts, and lastly, inc function of the trustees Half the stock, plus one share, cau elect a board of direction, to whose hands all the ordinary powers of that body are transferred. leaving the other half no right either of con- trol or voice in the board These directors are trustees of the franchise granted by the State, but can not bind the corporation by contract to exercise corporate powers in- consistent with the property rights of the stockholders. Hence all attempts 10 secure concert of ac- ton between such boards are of un- certain duration, as is seen in the pool ing arrangements of carrying com panics. But if the power to elect the boards in the several companies be lodged in one hand, then no contract is necessary. The directors who would not act in concert would simply be dropped at the next election, and others more subservient take their places. This leaves the corporations in legal sense free, but the boards of direction act in concert, without en- tering into any contract in restriction of their franchises, consequently the conduct of the different directories can not be impeached. The trusts are alleged to be justified by the fact that the object of the concert of action is thegenhahcement of the value of the stock, as the proprietorship remains where itewas, the owners having only parted with their right to vote for the purpose of enhancing the security of the prospects of dividends. The mis- chiefs feltor feared from these trusts are not in'the injury to the interests of the stockholders. but in the aggran- dizement of corporate power result ing from this concert of action. Of course, the, remarkable power which such com bin ations wicld, both in en-, hancing the business of the compa- nies thus securing the benefits of common experience and concert of action, and in crushing out, one after