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TRUSTS, BUSINESS

The word trust can be used to designate a group of companies that join together to control a domestic industry. The term was widely used in the late nineteenth century and early twentieth century. The American economy changed substantially following the American Civil War (1861–1865). Cottage industries, artisan production, and small-scale manufacturing declined, and a new, larger, factory-based manufacturing sector grew. Operating under relatively relaxed state business laws, financiers and manufacturing moguls became rich, often by suppressing the competition.

This led to a concentration of capital in just a few huge corporations, especially in transportation and heavy industry. The giant manufacturing and mining companies that survived the period of cutthroat competition soon folded into nationwide monopolies known as trusts. In a trust, the companies transferred their properties and stocks to a board of trustees who ran the companies in a way that avoided competition—for instance, by dividing the markets up to protect regional monopoly. Such business arrangements substantially restricted the opportunities for new competitors.

See also: Standard Oil, Tobacco Trust, Trust-Busting, William Howard Taft,