Rensselaer Republican, Volume 20, Number 48, Rensselaer, Jasper County, 2 August 1888 — METHODS OF TRUSTS. [ARTICLE]

METHODS OF TRUSTS.

The Standard Oil’. Way of Miking a Monopoly and Combination—The Coogr«i *ioi,ai Conimi tee’s llrpor,. The House committee on manufactures Monday submitted the following report concerning trusts and investigations: The committee on manufactures respectfully report that, acting under the authority and direction of a resolution of this House, they have proceeded to investigate and inquire into matters and things referred to in said resolution and have examined witnesses and papers thereto. Your committee further report that the names of various combinations and trusts have been ifom time to time furnished to your committee, that the number of such combinations is very large, and that your committee in calling witnesses and taking testimony proceeded upon the following plan of investigation, i. e. to inquire. L With relation to trusts or combinations in lines of business, which are connected with or use articles in which there exists a competition in our markets between domestic product and the foreign product imported and dutiable under our tariff laws.

2. With relation to such combination dealings for articles which are not importea into this country or are not subject to import duties. 3. With relation to such combinations dealing on articles which are subject to taxation under the internal revenue laws of the United States. Your committee has particularly directed its inquiry into the" method and extent of the business owned or controlled by the Sugar Trust and the Standard Oil Trust, and respectfully submit herewith the testimony taken before it in relation to these two trusts. In submitting this testimony your committee desire to call the attention of the House to the form of organizations of these two trusts. Both oi them are organized on substantially the same plan. From the testimony it appears that there exists a certain number of corporations organized under the laws of the different States and subject to their control; that these corporations have issued their stock to various individuals, and that these individual stockholders have surrendered their stock to the trustees named in the agreement creating these trusts, and accepted in lieu thereof certificates issued by the trustees named therein. The agreements provide that the various corporations whose stock is surrendered to the trustees shall preserve their identity and carry on their business.

In the Sugar Trust agreement, the provision is that the several corporations shall maintain their separate organization and each shall carry on and conduct its own business. In the Standard Oil Trust agreement is provided that all property, real and personal, assets and business shall be transferred to and vested in the said several companies. The duties of the trustees are restricted to the receipt of dividends declared by the various corporations and the distribution of the aggregate of them to the holders of the Trust certificates pro rata, and to hold and voting upon the stock of the corporation. The trustees, in both cases upon the stand as witnesses, specifically denied that trustees, as such ever do any other business than to receive and distribute these dividends and exercise the only other function given to them by the Trust agreement—that is, to hold the stock of the various corporations and exercise the right ofstocknolders in such corporation. The care with which the trustees avoid making any agreement relating to commodities appears from the testimony as to the arrangement with the Oil Producers’ Association in the fall of 1887. The officers of the Producers’ Association testified than an agreement was then made with the Standard Oil Trust by which 5,000,000 barrels of oil belonging to the Standard Oil Trust was set apart for the benefit of the association, upon its agreeincto curtail the production of crude petroleum at least 17,500 barrels per diem. These witnesses undoubtedly understand that their arrangement was with the trustees of the Standard Oil Trust. But the written agreement produced and now in evidence shows it was made with and signed by the Standard Oil Company, of New York, one of the companies whose stock is held by the trustrees, and that the Standard Oil Trust, or the trustees thereof as such, are not parties to it, nor is either of them responsible for the carrying out of .that agreement. This form of combination was obviously devised for the purpose of relieving the trusts and trustees from the charge of any breach of the conspiracy laws of the various States, or of being a combination to regulate or control the price of production of any commodity; hence they assert that the corporations themselves which control and regulate the price of commodities and the extent of production and have tangible property, remain with their organization intact and distinct, and not in combination with each other; that the stockholders who owned only the stock, aud by well settled legal rules had no legal title in the property of the corporations entered into the agreements, and sold their stock in the corporations and accepted in payment trust certificates, and that the trustees receive and hold only the stock of corporations, and have no legal title to any of the property of the corporations, and neither buy or sell anvtnirg, nor any one to fix prices or regulate production of any commodity. Your committee have deemed it proper to call their attention to this feature of these combinations because it is believed that it will be found that all trade combinations having similar aims, either have adopted this method or will speedily do so, and also because the legislation whichhas been proposed to this House and referred to your committee has been directed against

combinations to fix the"price or regulate the production of articles of merchandise Or commerce. It is plane" that the combinations, the testimeny concerning which is herewith submitted, have-beem intentionally formed so as to avoid, if possible, the charge that the trust as such orAhe-trustees in that capacity either fixed the price or regulated the production of—any'article of merchandise or commerce. Complaint having been made to Him by citizens of the State of New York against the Sugar Trust and one of the corporations whose stock it hoids, the Attorney General of that State, has, after hearing, directed prosecutions to he commenced against that Trust and the corporation complained of, upon grounds which are set forth in an elaborate opinion which is submitted as part of the evidence in relation to that Tiust and as containing a careful

statement of the law of the State, so far as it affords any remedy against such Trusts.