trust (n.) [=] ... Meaning "businesses organized to reduce competition" is recorded from 1877. ...

Most of the definitions for this noun connote positivity, but not the commerce one above.
So how did this reversal (ie about-face; volte-face) develop?

Please help me dig deeper than the definition, which I already understand and so ask NOT about. Please amplify, explain and reveal this etymology's (hidden and missing) semantic drifts and links, which I struggle to connect and perceive. What are some right ways of interpreting the etymology, to make the semantic jumps less abstracted and severed from the original literal meaning?

I don’t quote the OED’s brusque entry, which does not appear to explain the etymology.

  • Hello again—I see you have changed your usename. – Brian Hitchcock Jun 16 '15 at 4:59

It wasn't so much that the word "trust" evolved to mean "businesses organized to reduce competition"; it's that the businesses organized to reduce competition evolved to become trusts. A trust is a fictive legal person authorized to perform actions ordinarily associated with real persons, including operating a business, owning property, borrowing money, buying, selling, renting, litigating, etc. The details of the allowable operations are spelled out in the trust document, which is animated by one or more actual persons called trustees who act on behalf of the person who established the trust, the trustor. The trustees have a fiduciary duty to exercise their trust powers in the best interests of the trustor. The details of the trust are generally secret and with no official oversight, the trustor must have confidence in the trustees, hence the name.

The original bad player in the trust business was the Standard Oil Trust, set up in 1882 by John D Rockefeller to hold the assets of his company the Standard Oil Company of Ohio. It eventually came to hold all of the Standard Oil businesses. This would not have been possible had Standard Oil remained a corporation because in an attempt to control monopolies, states had restricted the ability of one company to own the shares of another.

In return for their shares, stockholders in the Standard Oil Company received certificates in the Standard Oil Trust, entitling them to a percentage of earnings of the conglomerate. You can still buy trust certificates signed by John D, but, of course, they are of historical interest only.

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  • Thanks. Would you please just clarify how a trust allowed for companies 'to reduce competition'? You explained superlatively that Standard Oil bought all of the Standard Oil businesses, but was competition reduced? – Accounting Jun 24 '15 at 14:56
  • Would you please respond in your answer, which is easier to read than comments? – Accounting Jun 24 '15 at 14:56
  • Perhaps, but your question isn't one about English usage. The answer is that monopolies reduced competition by vertical integration (owning the all resources, in this instance oil wells) and horizontal integration (owning the manufacture and distribution of that resource, here refineries and pipelines to the tune of 90%). The trust arrangement facilitated ownership since it was private and could operate in secrecy and evade state laws regulating public companies. – deadrat Jun 24 '15 at 18:06

According to the following extract the shift in meaning took place in the second half of the 19th century:

  • An 1888 article explained the difference between trusts in the traditional sense and the newfangled corporate trusts:

    • A trust is . . . simply the case of one person holding the title of property, whether land or chattels, for the benefit of another, termed a beneficiary. Nothing can be more common or more useful. But the word is now loosely applied to a certain class, of commercial agreements and, by reason of a popular and unreasoning dread of their effect, the term itself has become contaminated. This is unfortunate, for it is difficult to find a substitute for it. There may, of course, be illegal trusts; but a trust in and by itself is not illegal: when resorted to for a proper purpose, it has been for centuries enforced by courts of justice, and is, in fact, the creature of a court of equity.

(Theodore Dwight, Political Science Quarterly)

  • Although the "corporate trusts" were initially created to improve the organization of large businesses, they soon faced widespread accusations of abusing their market power to engage in anticompetitive business practices. This caused the term "trust" to become strongly associated with such practices among the American public and led to the enactment of the Sherman Antitrust Act in 1890, the first federal competition statute.

The Rockefeller-Morgan Family Tree (1904), the first great U.S. business trust. The Rockefeller-Morgan Family Tree (1904), the first great U.S. business trust.


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