The Bottineau pioneer. (Bottineau, N.D.) 1885-1895, 1889-12-14
TRUSTS ARE M%ON0P0LIES.
HOW A FULL BLOWN TRUST IS
FORMED.

HOW A FULL BLOWN TRUST IS
FORMED.
Origin Of the Sugar Trust-How orpor a-
tions Differ from Ordinary Partnerships.
How the Copper Monopoly is Sustained.
Why Farmers Cannot Form a Trust.
A trust is an agreement among inter-
ested parties to control prices Of the arti-
cles which they handle in common. The
parties concerned may be either persons,
stock companies or corporations. For
reasons, afterwards shown, the parties
in a trust are usually corporations.
Tie trust agreement may have many
forms while aiming at its primary OBJ
ject Of controlling prices. If there were
three men, each in business for himself,
who controlled among them the entire
product Of a certain article, a trust
might be formed by each of them honor
ably agreeing not to sell his manufac-
lures below a certain sum-, or, not to sell
his manufactures except in certain To-
calities. This would practically be a
trust, and a perfectly legal n at that.
There is nothing illegal or immoral in
men verbally agreeing to sustain prices
or to restrict output, provided they stop
at that point.
A more usual form Of trust, however,
is that formed by a number Of corpora
lions. There are two ways in which this
is done. One is to agree that each cor
poration will combine to manage its own
affairs, but that in cases of necessity
the concerns which make profits will
transfer some portion Of their earnings
to those that make one This was the
chrysallis form of many Of the present
full blown trusts. As an arrangement
between corporations, this was perfectly
legal in itself, though it could not be put
in the form of a binding contract.
The full-blown trust is made by the
pooling Of interests Of the shareholders
of more than m corporation. For ex-
ample. the sugar trust comprises all the
refners Of that article except one in the
United States, and several of these re-
finers were in the form of incorporated
companies. Before the trust was formed
other refiners fastened to incorporate
themselves and their associates.
When all were ready, the sugar trust
was formed. A number of trustees, rep.
resenting each Of the larger interests
involved, were first selected. To these
trustees were confided by the sharehold-
ers in the various corporations. the en-
tire script which represented their inter.
est in a refinery. The trustees at once
locked up these Share certificates and is
sued against them new certificates, call
ed trust certificates. in which the receipt
of the shares was acknowledged.
These trust certificates represented a
proportional share Of all the refneries
comprised in the trust. Each of these
-efneries was previously valued, and
this valuation was added on to the total
amount of the sum for which trust cer-
t~ificates were issued.
In this form of trust there is something
illegal, though not very much. A cor
poration is in it's very nature more or
less of a monopoly. 1t is a kind of legal
lied conspiracy among a number of men
to do something which mono of them
could do separately. In olden times
corporations were regarded in this light,
and had to pay large sums to the king
or to the state for their charter of incor-
poration.
Even in these modern days the state
does not recklessly confer privileges on
favored individuals. Corporations are
expressly prohibited by law from en-
gaging in any other pursuits than those
for which they have been incorporated.
In most cases they are forbidden by the
state to amalgamate with similar bodies
or take any other steps at the dictation
Of a majority Of the stockholders which
might impair or render powerless the
rights Of the minority. So that a COM
bination, which really amounts to ANAL
gamation, Of several corporations, with
out the express sanction Of the state, is
illegal, and can be punished, 50 far as the
corporation is concerned, by the forfeit
ure of it's charter.
But the real objection to trusts does
not lie in their combining together, or in
the pooling of their interests. 1t lies in
the illegal methods which are too often
used by such combinations to crush out
competition. If two parties, A and B.
sell sugar in village, it is perfectly lega!
and perfectly justifable that A should
undersell B in the price of his sugars
But it is neither legal nor justifable for
A to enter into a conspiracy with @, D,
E and F, all doing business in other
towns, to sell sugar at a profit in theil
respective towns in order to give a certain
proportion Of those profits to A, in order
that he may undersell B at a loss to him
self, until B is ruined and has to go out
of business.
The usual effect aimed at in combin.
ing different concerns is to save some Of
the expenses of management, and s<
turn out products at a cheaper rate
But as full blown trusts are illegal, theil
management is expensive, and also thu
corporations from which the trust wa
evolved still remain in form, though
not in substance, IS before. There ar
still boards of directors to register tn
DEGREES of the trust magnates, the chair
man still signs his name and the secre
tary still afixes the common seal of tn
corporation. For these futile services
good payments are made.
So that trusts in this present form d.
not a v any money in expenses of ma
agement. The suppression of competi
ton and the Limitation of production ar
the two factors by which trusts max
large profits.
BY including all the principal concern
in the trust when first formed, the ele
ment of competition is soon eliminate
by running the smaller concerns. TIL;
is done, as before told, by undersellin