Among the foremost of the causes usually assigned for the formation of trusts is cutthroat competition. Where competition has reached that degree of ferocity where each competitor is mainly interested in driving his opponent from the field and where no one is making profit, a stage of sanity is usually arrived at where the surviving competitors realize the futility of the struggle and see the advantage of living in harmony. They are now in a good frame of mind for organization, and trusts have often been formed under such circumstances as these.

A second cause often assigned for trusts is to be found in the saving which comes from consolidation. Wasteful advertising is eliminated; superfluous salesmen are discharged; collections from customers may be more vigorously prosecuted; cross freights may be avoided; and the more efficient plants may be run at full capacity while the less efficient may be run or not as the demand for the product of the trust dictates.

A third important cause of trusts lies in the fact that at certain periods the investing public is eager for new securities in which to invest. At these times promoters and financiers are able to reap fortunes by organizing trusts even where there is no industrial reason for their organization and supplying the eager public the much desired stocks and bonds. That the trusts may not be able to pay interest and dividends is often a matter of only secondary consideration to the promoters and underwriters. They make sure, at any rate, that their own profits are secure.

The tariff has sometimes been called the Mother of Trusts. While a great many of the trusts do not owe anything to the existence of a protective tariff, it is undoubtedly true that where the trust product is protected from foreign competition by a protective tariff some of the success of the trust may be ascribed to protection. Other forms of special privilege which sometimes aid the trusts in maintaining their positions are the control of patents, trade marks, or other forms of legal monopoly.