its products, and all the materials used in such business, and transact other business collateral thereto. . . . transfer erty to (7) All of the property, real and personal, assets, and business They are to of each and all of the [combining] corporations and limited partnerships . shall be transferred to and vested in the said several Standard Oil Companies. All of the property, assets, and business in or of each particular state shall be transferred to and vested in the Standard Oil Co. of that particular state. (10) The consideration for the transfer and conveyance of the money, property, and business aforesaid to each or any of the Standard Oil Companies shall be stock of the respective Standard Oil Company to which said transfer or conveyance is made, equal at par value to the appraised value of the money, property, and business so transferred. III. The trusts upon which said stocks shall be held, and the number, powers, and duties of said trustees, shall be as follows: (1) The number of trustees shall be nine. [Here follow their names, the first mentioned being J. D. Rockefeller.] . . . (11) The trustees shall prepare certificates, which shall show the interest of each beneficiary in said trust, and deliver them to the persons properly entitled thereto. They shall be divided into shares of the par value of $100 each, and shall be known as "Standard Oil Trust Certificates," and shall be issued subject to all the terms and conditions of this agreement. The trustees shall have power to agree upon and direct the form and contents of said certificates, and the mode in which they shall be signed, attested, and transferred. . . . (14) It shall be the duty of said trustees to receive and safely to keep all interest and dividends declared and paid upon any of the said bonds, stocks, and moneys held by them in trust, and to distribute all moneys received from such sources or from sales of trust property or otherwise by declaring and paying dividends upon the Standard Trust Certificates as funds accumulate, which in their judgment are not needed for the uses and expenses of said trust. . . . (15) It shall be the duty of said trustees to exercise general supervision over the affairs of said several Standard Oil Companies, and as far as practicable over the other companies or partnerships, tion in their state and receive in exchange stock in the said corpo ration. The combining busibe controlled by nine nesses to trustees who shall hold the stock of the combined businesses, and issue to the stocktrust certificates holders on which the stock holders are to receive dividends. to manage and direct the combined businesses. The trustees any portion of whose stock is held in said trust. It shall be their duty as stockholders of said companies to elect as directors and officers thereof faithful and competent men. They may elect themselves to such positions as they see fit so to do, and shall endeavor to have the affairs of said companies managed and directed in the manner they may deem most conducive to the best interests to the holders of said trust certificates. . A chief objection to the trust is that it tends to abuse its power. The charge against the National Cash Register Company: Attempts to learn the secrets of competitors Economists are accustomed to say that up to a certain point integration in industry may result in numerous economies. When businesses combine, some of the wastes of competition are avoided. Often combination means more effective management. Up to a certain point, too, it is often true that the product can be manufactured more cheaply. The trouble, however, has been that very often these advantages have been outweighed, from the point of view of the public at least, by certain evils of trust development. Of these evils, the chief is the tendency of the trust to abuse its power. For example, the trust may attempt to further its own interests at the expense of competing businesses, and at the expense of the public. Illustrative of the evil practices of the trust are the following extracts from the indictment of the National Cash Register Company in the case of United States v. Patterson et al.: [The program of the National Cash Register Company included the following items]: 1. The inducing, hiring, and bribing of employees and ex-employees of [competitors] . . . deceitfully and wrongfully to disclose to said the National Cash Register Company the secrets of the business of the concerns by which they were respectively employed, or had been employed. . . . 2. The inducing, hiring, and bribing of employees of carters, truckmen, express companies, railroad common carriers, telegraph companies, and telephone companies, wrongfully and unlawfully to disclose to said the National Cash Register Company the se 1 From the United States v. Patterson et al. District Court, S. D., Ohio. W. D. June 26, 1912. crets pertaining to the carriage and transportation of cash registers for such competitors. . . . 3. The instructing and requiring all sales agents of said the National Cash Register Company to ascertain and report . . all facts and details pertaining to the business and activities of said competitors... ... credit of those com 4. The using of the influence of said the National Cash Register and to inCompany and of its agents with, and the making of unwarranted jure the and false statements to, banking and other institutions, to injure the credit of said competitors and prevent their securing accommoda- petitors. tions of money, credit, and supplies convenient and necessary to the carrying on of their business; with the sales of 5. The instructing and requiring of all sales agents of said the Interference National Cash Register Company to interfere with, obstruct, and prevent in every way possible sales of such competitive cash registers by said competitors. 6. The making, in some cases, by said the National Cash Register Company, to such competitors, and to purchasers and prospectfve purchasers of such competitive cash registers, of threats to begin suits in the courts againts them for infringing and for having infringed its patent rights pertaining to ts genuine cash registers, when as said defendants each well knew, no such patent rights existed, and no such suits were contemplated or would really be begun, and such threats were made merely to harass such competitors, purchasers, and prospective purchasers. . . . competitors. Use of threats, concerns. 8. The organizing of cash-register manufacturing concerns and and bogus cash-register sales concerns, and the maintaining of them, ostensibly as competitors of said the National Cash Register Company, but in fact as convenient instruments for use in gaining the confidence and obtaining the secrets of said real competitors of said the National Cash Register Company. . . . away the employees of competi 9. The inducing, by offers of much greater compensation than Winning they were receiving from said competitors, respectively, agents and servants of said competitors . . . to leave the employment of said competitors. . . to enter the employment of . . . said National Cash Register Company; and this principally for the purpose of embarrassing said competitors. . . . tors. Attacking the patent rights of competitors. Encouragement of other tactics of an unfair and unlawful nature. 10. By applying . . . for letters patent of the United States, in some cases upon the cash registers of said competitors and in other cases upon improvements upon such competitive cash registers, and this merely for the purpose of harassing such competitors by interference proceedings and suits and threats to institute such proceedings and suits; and II. The using of, or originating and using of, and the instructing and requiring of such agents and sales agents of said the National Cash Register Company to use or to originate and use, such other unfair, oppressive, tortious, illegal, and unlawful means, unlawfully, wrongfully, and irresistibly excluding other concerns beside said the National Cash Register Company from engaging in said interstate trade and commerce, as might at any time become, or appear convenient. Evils of trust devel opment give rise to antitrust legislation. In 1890 the Anti-trust illegal all combinations in restraint of trade. 160. The Sherman Anti-trust Act of 1890 1 Though it did not begin until about 1880, trust development proceeded so rapidly that within a few years the trust device had been adopted in a considerable number of important industries. Very soon the unfair practices of the trusts gave rise to a demand for restrictive legislation. One result of this demand was the enactment by Congress of the Sherman Anti-trust Act of 1890. Practically the full text of this important measure follows: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SEC. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. 1 From the Statutes of the United States, The Federal Anti-trust Law. July 2, forbidden. the act. SEC. 2. Every person who shall monopolize, or attempt to monop- Monopoly olize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. SEC. 3. Every contract, combination in form of trust or other- Geographical scope of wise, or conspiracy, in restraint of trade or commerce in any territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such territory and another, or between any such territory or territories and any state or states or the District of Columbia, or with foreign nations, or between the District of Columbia and any state or states or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. SEC. 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. ... SEC. 5. Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof. Relation of the courts to the exe cution of the act. for the for SEC. 6. Any property owned under any contract or by any com- Provision bination, or pursuant to any conspiracy (and being the subject feiture of thereof) mentioned in section one of this act, and being in the course property. of transportation from one state to another, or to a foreign country, shall be forfeited to the United States, and may be seized and con |