shares in the original corporations for trust certificates that possessed a claim to earnings of the trust as well as voting rights to elect the trustees that ran the trust. Standard Oil, for example, had nine trustees. Trust certificates traded like common stocks on the stock exchanges. The trust was a useful legal mechanism for the takeover ambitions of the emerging industrialists. Instead of having to issue new shares to raise new capital for a takeover, trusts could pay for the takeover using trust certificates or internal sources of funds. Due to changes in various state corporation laws, the trusts had a relatively short life span. The legal status of trusts did not prevent various states from initiating legal actions under other grounds, such as the common law restrictions on monopoly, aimed at preventing the increasing monopolization of specific industries. In addition, the public perception of economic and social problems posed by the trusts was addressed in with the passage of the Sherman Anti-Trust Act. Though this Act did not result in many successful prosecutions, it did provide a federal definition and jurisdiction for what constituted a monopoly. The trusts gradually reorganized as holding companies and trust certificates were replaced by common shares. Standard Oil, for example, completed the shift in 1899. Whether it was trading in trust certificates or the common shares, the changes in American industrial structure were good for Wall Street. The importance of trading in shares of these industrial companies gradually came to surpass the railroads. The volume and value of trade on the NYSE doubled between 1875 and 1885 with more growth on the horizon. Yet, despite the growth, the US stock market of that era justly deserved the public perception as a speculator’s haven. Henry Clews (1908, p.19), a veteran broker and investment advisor with fifty years experience on Wall Street from 1857-1907, provides an informed view of to “How Make Money on Wall Street”:
shares in the original corporations for trust certificates that possessed a claim to earnings of the trust as well as voting rights to elect the trustees that ran the trust. Standard Oil, for example, had nine trustees. Trust certificates traded like common stocks on the stock exchanges. The trust was a useful legal mechanism for the takeover ambitions of the emerging industrialists. Instead of having to issue new shares to raise new capital for a takeover, trusts could pay for the takeover using trust certificates or internal sources of funds. Due to changes in various state corporation laws, the trusts had a relatively short life span. The legal status of trusts did not prevent various states from initiating legal actions under other grounds, such as the common law restrictions on monopoly, aimed at preventing the increasing monopolization of specific industries. In addition, the public perception of economic and social problems posed by the trusts was addressed in with the passage of the Sherman Anti-Trust Act. Though this Act did not result in many successful prosecutions, it did provide a federal definition and jurisdiction for what constituted a monopoly. The trusts gradually reorganized as holding companies and trust certificates were replaced by common shares. Standard Oil, for example, completed the shift in 1899. Whether it was trading in trust certificates or the common shares, the changes in American industrial structure were good for Wall Street. The importance of trading in shares of these industrial companies gradually came to surpass the railroads. The volume and value of trade on the NYSE doubled between 1875 and 1885 with more growth on the horizon. Yet, despite the growth, the US stock market of that era justly deserved the public perception as a speculator’s haven. Henry Clews (1908, p.19), a veteran broker and investment advisor with fifty years experience on Wall Street from 1857-1907, provides an informed view of “How to Make Money on Wall Street”:
ch_3_gsm-hist_gp_$.docx