Business trusts;

              18 HASKINS & SELLS March
ONE of the notable developments of all
industrial history is that of the busi­ness
corporation. This form of business
organization now dominates industry the
world over. The rapidity and magnitude
of its growth is remarkable in view of the
fact that the use of the corporate form of
organization in the conduct of business is
confined almost entirely to the last hundred
years. The corporation has been an im­portant
factor, both economically and
socially, in the progress of our country,
chiefly through the development of vast
resources.
The principal advantages of the cor­poration
as compared with other forms of
organization are the following: (1) limited
liability of stockholders; (2) transfer­ability
of shares; (3) continuity; (4) ease in
obtaining capital. Perhaps the most im­portant
of these advantages is that of
limited liability. Without this protection
to stockholders, sufficient capital to con­duct
the volume of business which is now
being carried on by corporations probably
could not be obtained. The chief charac­teristic
upon which the several advantages
hinge is the fact that the corporation is a
separate entity—a creature of the state.
Notwithstanding its advantages, there
is a growing dissatisfaction among business
men with the corporate form of organiza­tion.
Apparently the fundamental charac­teristic
which has given such value to the
corporation—the fact that it is an artificial
entity distinct from the persons composing
it—is being utilized as the basis for im-pairing
its usefulness. Since the corpora­tion
owes its existence to the state, legis­latures
have made greater demands of
business organizations conducted as cor­porations
than of those operating under
any other form of organization. The ex­actions
which have been imposed by way of
taxation, investigation, reports, and so
forth, indicate that the legislative attitude
toward corporations is not entirely con­structive.
Add to this the difficulties in
complying with the different laws of the
several states which are becoming more
burdensome with the constantly changing
legislation, and it is only natural that
business men should be seeking another
device which will secure the advantages of
a corporation and yet not be subject to
irritating legislation.
Any agency designed to take the place
of the corporation must have as its essen­tial
characteristic the limited liability of
the investor. Unless it is possible for men
to contribute to a business enterprise
without thereby endangering their entire
private fortunes, it is useless to attempt to
raise capital in amounts sufficient to trans­act
any considerable part of the business of
the country. The co-partnership and
joint-stock company, therefore, are elim­inated
from consideration.
The business trust has been suggested
as a possible substitute for the corporation,
not as a panacea, but as a satisfactory
method of carrying on business under cer­tain
conditions. This type of organization
is known also as an "express trust," "trust
Business Trusts