products are sold at prices that are fair to producers and to consumers alike.
When any industry falls into the deplorable condition brought by extreme competition, what recourse is there but for the producers to meet and endeavor to agree upon a course that will permit the attainment of remunerative prices by all; that will lead to the production of only so much output as, according to their combined judgment, can be absorbed without strain to either producer or consumer, to the abandonment of needless and excessive expenditure for solicitation, and to the sale of products only to reputable merchants of sound credit? Such conferences have led to compacts of various kinds, that usually have been but of short duration. The temptation to extend sales by a stealthy cut from the agreed price is too strong to be resisted, and the abandonment of the agreement quickly follows. Then more binding compacts are made—some providing a penalty for the cutting of agreed prices; some providing for a division of territory in which sales can be made by competing establishments; some providing for the distribution of the total sales of a product in certain percentages between different establishments. All such compacts are combinations in a greater or less degree of different establishments, any of which may be owned by an individual, a firm, or a corporation, and, with indefiniteness of meaning, have variously been designated as trusts.
They are, however, but the embryo of the trust properly so called, which is a complete amalgamation of different interests in the same industry. Stock is issued covering an appraised valuation of the several properties to be combined, and distributed in proportion to the owners of these properties, who surrender it to trustees, receiving in return therefor trust certificates issued by these trustees, who become the actual directors of the organization. By such a combination competition between its constituent members is removed. The concentration of management permits economy of administration, the organization, as a whole, obtaining the benefit of appliances and methods that before were peculiar to but one or a few of its constituent elements. The interests of the various producers are placed as a trust in the hands of the men whose mental grasp, practical knowledge, and executive ability enable them to direct to most efficient results the efforts of a great number of workers, to adopt and use to greatest advantage the best appliances, to obtain large quantities of the requisite material upon the most favorable terms, to perceive and meet the conditions of a varying market. And thus it is that the formation of a trust is a uniting of the conditions that permit the attainment in the highest degree of the advantages gained in smaller degree by the first industrial differentiation which marked the beginning
