The OED (Oxford English Dictionary) dates use of the word
trust in a business organization sense from 1825. The business or "corporate" trust came into use in the 19th-century United States, during the
Gilded Age, as a legal device to consolidate industrial activity across state lines. In 1882
John D. Rockefeller and other owners of
Standard Oil faced several obstacles to managing and profiting from their large oil refining business. The existing approach of separately owning and dealing with several companies in each state was unwieldy, often resulting in turf battles and non-uniform practices. Furthermore, the Pennsylvania legislature proposed to tax out-of-state corporations on their entire business activity. Concerned that other states could follow, Standard Oil had its attorney
Samuel C. T. Dodd adapt the
common law instrument of a
trust to avoid cross-state taxation and to impose a single management hierarchy. The Standard Oil Trust was formed pursuant to a trust agreement in which the individual shareholders of many separate
corporations agreed to convey their shares to the trust; it ended up entirely owning 14 corporations and also exercised majority control over 26 others. with arms wrapped around U.S. Congress and steel, copper, and shipping industries, and reaching for the White House Meanwhile, trust agreements, the legal instruments used to create the corporate trusts, received a hostile reception in
state courts during the 1880s and were quickly phased out in the 1890s in favor of other devices like
holding companies for maintaining centralized corporate control. •
U.S. Steel • the
American Tobacco Company • the
International Mercantile Marine Company • the match companies controlled by
Ivar Kreuger, the
Match King Other companies also formed trusts, such as the
Motion Picture Patents Company or
Edison Trust which controlled the movie patents. Patents were also important to the
Bell Telephone Company, as indicated by the massive litigation that came to be known as
The Telephone Cases. ==See also==