Trust (business)

In the broader sense of the term, relating to trust law, a trust is a legal arrangement based on principles developed and recognised over centuries in English law, specifically in equity, by which one party conveys legal possession and title of certain property to a second party, called a trustee.

The OED (Oxford English Dictionary) dates use of the word trust in a business organization sense from 1825.

The existing approach of separately owning and dealing with several companies in each state was unwieldy, often resulting in turf battles and non-uniform practices.

Concerned that other states could follow, Standard Oil had its attorney Samuel C. T. Dodd adapt the common law instrument of a trust to avoid cross-state taxation and to impose a single management hierarchy.

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.

Such accusations caused the term trust to become strongly associated with such practices among the American public and led to the enactment in 1890 of the Sherman Antitrust Act, the first U.S. federal competition statute.