Standard Oil Attorney Develops Trust Legal Innovation to Circumvent Anti-Monopoly Laws

Samuel C. T. Dodd, chief attorney for Standard Oil Company, developed a revolutionary legal structure in 1879 that adapted the common law instrument of a trust to create the modern business trust, circumventing Ohio’s anti-trust laws and state restrictions on interstate corporate ownership. This legal innovation solved Standard Oil’s fundamental problem: existing state corporation laws prohibited companies chartered in one state from owning stock in companies chartered in other states, and simple contractual agreements among competitors were unenforceable and often illegal. Dodd’s trust structure allowed Standard Oil to consolidate ownership and control across state lines while avoiding regulation, taxes, and legal restrictions that applied to traditional corporations. The mechanism was ingenious: instead of Standard Oil of Ohio directly owning refineries in other states, shareholders would convey their shares ‘in trust’ to a board of trustees who would manage all Standard Oil assets as a unified entity. This circumvented the prohibition on cross-state corporate ownership because technically no corporation owned another corporation—instead, individual trustees held the shares. The trust structure spread rapidly across industries in the 1880s, enabling the consolidation of railroads, steel, sugar, tobacco, and other industries into massive monopolies. This represents a critical moment in the evolution of corporate power: when existing laws threatened monopolistic consolidation, corporate attorneys simply invented new legal structures to evade those restrictions. The pattern—regulatory constraint followed by legal innovation to circumvent that constraint—became the template for corporate regulatory evasion that continues today through tax havens, regulatory arbitrage, and complex corporate structures designed to avoid oversight while maintaining centralized control.