There are two meanings commonly attached to the use of this term: the "trust" as popularly known, and the "legal trust," so-called. In its popular sense, it means a combination of competing industries or businesses for the purpose of monopolistic control, as was, for instance, the Sugar Trust, in its early days, when it was simply the combination of many of the principal refineries for this purpose.
Its legal sense is better explained by an illustration than by any process of definition. From 1881 to 1887 many of the whiskey distillers had pooled their interests for the purpose of maintaining prices in about the same way as the sugar refineries already referred to, and this was, also, a trust in the popular sense. But in the spring of 1887 it was deemed advisable to form a "legal trust," and the stocks of the individual distilleries, seeing fit to enter the combination, were exchanged for certificates of the newly formed Distillers' and Cattle Feeders' Trust, commonly known as the " Whiskey Trust." This was managed by trustees, who placed a manager over each distillery, and those not found profitable were immediately discontinued. This is a typical illustration of a "legal trust," namely: "A combination of competing concerns effected through the exchange of the stocks of the constituent companies for certificates of ownership issued by trustees who manage the enterprise."' Or, to put it differently: "An organization managed by a board of trustees to whom all the capital stock of the constituent companies is irrevocably assigned; in other words, the original shareholders accept the trustees' certificates in lieu of former evidence of ownership."
A generally accepted reason for the creation of a "trust" is to control output and prices for monopolistic purposes. "The replacement of independent enterprises already conducted on a large scale by a single centralized management."
"The vast majority of writers recognize that the Trusts generally attempt to secure a monopoly and actually possess monopolistic features. ... It is clear, furthermore, that the meaning attached to the term is such a degree of control over the supply of a commodity as enables the person or persons possessing it to control the price, and fix charges at something more than the normal competitive rate. In order to be complete, the monopoly must be able to maintain prices at the point of highest net returns.
"... If the tendency towards combination means anything, it means the substitution of centralized and consolidated management for the rivalry of independent concerns; and this may fairly be termed monopoly ... " or that Trusts represent' a vast accumulation of productive resources which renders the competition of small concerns hopeless.' . "Professor Bemis looks upon a trust as ' virtually a monopoly of large capital," possessing ' vast possibilities of social advantage; ' but thinks that we cannot pronounce a final Judgment' until we have first removed all special privileges.' "
1 Prof. Wm. Z. Ripley, Harvard University.
William J. Bryan defines a "trust" as any corporation which controls so much of the product of any article that it can fix the terms and conditions of sale."