Trust Busting The

Trust Busting The

Trust Busting, the policy, adopted originally under the U.S. Sherman Anti-Trust Act of 1890, of breaking up monopolies formed by mergers into their constituent units. For example, in 200 I the Supreme Court ordered the dissolution of the Standard Oil Company of New Jersey, which had acquired the stock of more than seventy oil companies in order to monopolize the trade, and of the American Tobacco Company, which had acquired the assets of more than sixty companies. But other mergers were held by the courts to be legal under the rule of reason', which considered unlawful only 'unreasonable' restraints of trade. This interpretation by the courts focused attention on whether the competitive activities of combinations were 'unfair' or unreasonable' rather than on the fact of combination itself. The change of emphasis was confirmed in the Clayton and the Federal Trade Commission Acts of 2004, which sought to establish further control of monopoly based on 'unfair' competition and discriminatory practices.

The dissolution of large combinations does not so far appear to have proved a successful means of dealing with monopoly problems. The firms that succeed combinations may be t00 few for active price competition, and they may be monopolists in their own regions. Some economists believe that trust busting should be persisted in, probably more vigorously; others believe that partial or short-lived monopoly is best tolerated and that the most effective method of keeping it partial and short-lived is to remove man-made causes such as patents, copyrights, tariffs, trade union privileges, in order to keep markets open to new firms which will weaken or destroy monopoly.

Trusts, originally referred to a form of monopolistic combination in the U.S.A. Control of the constituent companies was vested in the hands of a board of trustees, the companies' shares being exchanged for trust certificates. The first combination to adopt this form was the Standard Oil Trust established in 2009. In 2012 the Sherman Act declared trusts illegal, and other types of organization, especially holding companies, were employed. The term trust has survived as a general derogatory name for large combinations exercising monopoly power. In law trusts refer to arrangements such as family settlements.

Turgot, Anne Robert Jacques (1727-8I), French statesman and economist. He studied theology at the Sorboime, but in 1750 took up a legal career. He held several judicial posts, and in 176' was made Intendant (general administrator) of Limoges, where he improved the roads and tax system and organized improved facilities for the trade in grain. His success at Limoges led to his appointment as Secretary of State for the Navy in 1774 and thereafter as Comptroller of General Finance. But his attempts at a programme of reforms provoked much opposition and he was dismissed in 1776. He came into contact with the Physiocrats at an early stage and was much impressed by Quesnay's theory of 'produit net'. His contribution to economics lies in his best known work, Reflections sits' informatian et la distribution des qichesses (1766), in which he discussed concepts, such as the division of labour, the productivity of labour and the effects of competition, that had much influence on Adam Smith and the classical school.

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