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in law, arrangement whereby property legally owned by one person is administered for the benefit of another. Three parties are ordinarily needed for the relation to arise: the settlor, who bequeaths or deeds the property for another's benefit; the trustee, in whose hands the control of the property is vested and who receives a fee fixed by law; and the beneficiary, for whose use the proceeds of the property are to be applied. In some cases the settlor may be the trustee or beneficiary, but it is indispensable that the trustee (legal owner) and the beneficiary (equitable owner) be different persons. The trustee's duty is to make the capital or earnings available to the beneficiary in the manner prescribed by the settlor and to manage the property prudently and honestly. The beneficiary may bring suit if this duty is breached. In modern times banks and trust companies, with their special facilities for handling investments, are often named the trustees of substantial properties.

Business Applications of Trusts

The arrangement at which the Sherman Antitrust ActSherman Antitrust Act,
1890, first measure passed by the U.S. Congress to prohibit trusts; it was named for Senator John Sherman. Prior to its enactment, various states had passed similar laws, but they were limited to intrastate businesses.
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 was directed was a business application of the trust form. The Standard Oil Company, for example, induced stockholders in various enterprises to assign their stock to a board of trustees and to receive dividend-bearing trust certificates in return. The board was thus able to manage simultaneously enterprises that many believed should have been in active competition. Soon most business combinations in restraint of trade came to be called trusts, whether in the legal form of a trust or otherwise.

A horizontal trust is a combination of corporations engaged in the same line of business. A vertical trust is an organization that controls all or part of a series of operations extending from the procuring of the raw materials to the retailing of the finished products. In Europe the term cartelcartel
, national or international organization of manufacturers or traders allied by agreement to fix prices, limit supply, divide markets, or to fix quotas for sales, manufacture, or division of profits among the member firms.
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 is applied to a monopoly or trust, but the term is broader in that it may have international scope, and there, as in the United States, it may be either vertical or horizontal.

Business trusts have been opposed as monopolies, and laws have been enacted to prohibit or control them. They have been defended as reducing costs through large-scale operations and avoiding the expenses of competition. In the United States trusts grew rapidly from 1880, and by 1905 most of the important mergers in American industry had been formed. The Sherman Antitrust Act, passed by Congress in 1890, made illegal all "agreements in restraint of trade" and all "attempts to monopolize" industry; but the law was not vigorously enforced. The Clayton Antitrust ActClayton Antitrust Act,
1914, passed by the U.S. Congress as an amendment to clarify and supplement the Sherman Antitrust Act of 1890. It was drafted by Henry De Lamar Clayton.
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 (1914) was designed to stop various practices of "unfair" competition, and the Federal Trade Commission was given power to issue "cease and desist" orders when violations were found.


See A. A. Berle, Jr., and G. C. Means, The Modern Corporation and Private Property (1932, rev. ed. 1969); W. Berge, Cartels (1944); R. R. B. Powell, Cases and Materials on Trusts and Wills (1960); M. Handler, Cases and Materials on Trade Regulations (4th ed. 1967); A. Hunter, ed., Monopoly and Competition (1969).


confidence in the reliability of a person or a system (GIDDENS, 1991). A degree of basic trust in others and institutions, acquired in childhood, is often viewed as essential to satisfactory long-term social relations (see ONTOLOGICAL SECURITY AND INSECURITY). With the detachment of individuals from traditional social bonds it is characteristic of modern societies that more abstract types of trust – e.g. MONEY or ‘expert systems’ – become central as relations are extended across distances of time-space (see TIME-SPACE DISTANCIATION, DISEMBEDDING AND RE-EMBEDDING MECHANISMS), though there are problems associated with these developments (see RISK SOCIETY, REFLEXIVE MODERNIZATION).

What Giddens (1994) terms active trust becomes increasingly significant in the degree to which post-traditional social relations require trust to be specifically cultivated in contexts ranging from intimate personal ties (see INTIMACY) through to global systems of interaction.



(1) A form of capitalist monopoly, under which all the associated enterprises lose their independence as commercial and production units and become subordinate to a single management. Trusts arose in the USA in the last third of the 19th century and are most common in that country. The first trust is considered to have been Standard Oil, an association founded by J. D. Rockefeller in 1879, which came to control the bulk of the oil industry in the USA.

In law, the formation of a trust represents the transfer of control—in the form of a controlling interest or a special trust certificate—over formerly independent enterprises to a group of big capitalists, who, as founders of the trust, constitute the board of trustees. Such transfer leads to an enormous centralization of capital, which enables the management of the trust to enforce a single technological and economic policy for all the consolidated enterprises and to derive monopoly profits. The formation of trusts in the USA led to the rise of many monopolies in the major branches of industry, such as metallurgy, petroleum refining, agricultural machine building, and sugar production.

After World War I, trust formation in industry became wide-spread in the European capitalist countries as well. For example, in Germany, the chemical trust I. G. Farbenindustrie was founded in 1925 and the steel trust Vereinigte Stahlwerke in 1926; in Great Britain, Imperial Chemical Industries was founded in 1926.

In a trust, the process of centralization of capital remains incomplete, since the total profit of the trust is distributed among its previously independent enterprises according to their respective shareholdings—a practice that serves to slow down the formation of a general fund of capital investments. In this respect the trust is a forerunner of tighter forms of monopoly associations, such as the holding company and the concern. Developed capitalist countries have passed antitrust legislation to restrict some types of activities of trusts and other forms of monopoly. Antitrust legislation is primarily directed against the monopolization of the market, chiefly by single-industry trusts and cartels. Since the mid-20th century, however, the most common forms of economic monopoly have been diversified associations, against which antitrust legislation has proved ineffective.

(2) In the USSR the formation of trusts was part of the tasks and goals established under the New Economic Policy. Founded as profit-and-loss associations of enterprises in a particular branch of industry, trusts were based on public ownership of the means of production. By the middle of 1923, there were 477 trusts in the system of the Supreme Council on the National Economy. The Apr. 10,1923, decree of the All-Russian Central Executive Committee and the Council of People’s Commissars defined a trust as “an industrial state enterprise that enjoys independence in its operations according to the statute confirmed for it and that operates on the basis of commercial accounting with the aim of deriving a profit.” After the restoration of the national economy and the beginning of industrialization, the position of the trusts in the system of industrial management changed. The change was reflected in the Statute on State Industrial Trusts of June 29, 1927, which broadened the trusts’ economic independence.

At the beginning of the first five-year plan (1923–32), however, large-scale capital construction gave rise to major new industrial enterprises, and the increasing scale of production led, in turn, to a greater role for the enterprise in the national economy. As a result of changes in the administration of industry, the functions of the trusts were restricted in 1929, so that trusts became merely intermediate administrative agencies; they were finally abolished later during the first five-year plan.

(3) In the construction industry of the USSR, the trust is the basic unit of organization and production. Examples are the industry’s building and assembly trusts.


Lenin, V. I. “Imperializm, kak vysshaia stadiia kapitalizma.” Poln. sobr. soch., 5th ed., vol. 27.
Politicheskaia ekonomiia sovremennogo monopolisticheskogo kapitalizma, 2nd ed., vol. 1. Moscow, 1975.
Venediktov, A. V. Organizatsiia gosudarstvennoi promyshlennosti v SSSR (1922–1934gg.), vol. 2. Moscow, 1961.
Avdakov, Iu. K., and V. V. Borodin. Proizvodslvennyeob”edineniia i ikh rol’ v organizatsii upravleniia sovetskoi promyshlennosti (1917–1932 gg.). Moscow, 1973.




one of the most common institutions in Anglo-American law, under which one person—the trustee—is empowered to administer property vested in him by the person creating the trust—the settlor. The trustee, who acts before third persons as the owner of the property, accounts for the administration of the property to the person or persons for whose benefit the trust has been created. The trust arose under the equity system when the excessive formalism of common law made the transfer of the right of property difficult. Subsequently, however, it extended to various other situations, so that the term “trustee” came to be applied to agencies of a juristic person, to a guardian who administers the property of his ward, and to the administrator of a succession. Trust relations also arise in the bankruptcy administration of a bankrupt’s estate. In some cases a trust arises on the basis of law. For instance, in Great Britain, because of the complex and lengthy procedure required to formalize the sale of real estate, the seller is deemed to be the trustee between the time a contract is signed and the time it is officially formalized.


1. a group of commercial enterprises combined to monopolize and control the market for any commodity: illegal in the US
a. an arrangement whereby a person to whom the legal title to property is conveyed (the trustee) holds such property for the benefit of those entitled to the beneficial interest
b. property that is the subject of such an arrangement
c. the confidence put in the trustee
3. (in the British National Health Service) a self-governing hospital, group of hospitals, or other body providing health-care services, which operates as an independent commercial unit within the NHS


(1) In network directories, a trust is the passing of the rights of one group to another. See trust relationship and network directory.

(2) A computer system that is secure. See trusted computer system.

(3) The belief that a document or message has not been tampered with and that it is coming from the person indicated and not forged in any manner. See digital signature.