Trust (business)

A trust or corporate trust is a large grouping of business interests with significant market power, which may be embodied as a corporation or as a group of corporations that cooperate with one another in various ways. These ways can include constituting a trade association, owning stock in one another, constituting a corporate group (sometimes specifically a conglomerate), or combinations thereof. The term trust is often used in a historical sense to refer to monopolies or near-monopolies in the United States during the Second Industrial Revolution in the 19th century and early 20th century. The use of corporate trusts during this period is the historical reason for the name "antitrust law". In the broader sense of the term, relating to trust law, a trust is a centuries-old legal arrangement whereby one party conveys legal possession and title of certain property to a second party, called a trustee. The trustee holds the property while any benefit from the property accrues to yet another person, the beneficiary. Trusts are commonly used to hold inheritances for the benefit of children and other family members, for example. In business, such trusts, with corporate entities as the trustees, have sometimes been used to combine several large businesses in order to exert complete control over a market, which is how the narrower sense of the term grew out of the broader sense. In the United States, the use of corporate trusts died out in the early 20th century as U.S. states passed laws making it easier to create new corporations. The OED 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 owning and dealing with several companies in each state was unwieldy, often resulting in turf battles and non-uniform practices.