20 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1950

The Outstanding Interlocks in Various Industries

The food industry exhibited an extensive array of interlocking directorships which appeared to be significant both for competition within the industry and for its relations with other industries. In the meat-packing branch of the industry, Armour & Co. was indirectly interlocked with the third and fourth largest packers; three of the largest meat packers had indirect ties with three of the largest bakers. Armour and Swift & Co. had direct interlocks with equipment manufacturers.

Three of the 10 largest dairies were directly or indirectly interlocked with each other; the 3 largest dairies were also indirectly interlocked with General Foods Corp., Standard Brands, and Best Foods. The largest of the dairy products companies was indirectly interlocked with 2 large baking companies, which were potential customers, and with a large manufacturer of metal and paper containers.

Four of the 12 largest canners had direct or indirect interlocks with companies producing competitive products. The direct interlock between Libby, McNeil & Libby and Minnesota Valley Canning Co. is illustrative of the probable competition-reducing ties found in the industry.

Six of the 12 grain-mill-products companies had interlocking relations with competitors. General Mills, the largest, had a direct interlock with Best Foods and indirect interlocks with Pillsbury Mills, International Milling Co., and Russell-Miller Milling Co. The three large milling companies also had one or more direct or indirect interlocks with bakers or distillers. Both General Mills and Pillsbury Mills were directly interlocked with a large manufacturer of kraft paper. Pillsbury Mills was also interlocked directly with a foodcontainer stock manufacturer.

The producers of bakery products were also tied together through interlocking directors, 6 of the 10 companies being involved. Purity Bakeries Corp. interlocked directly with American Bakeries Co. The two largest-National Biscuit Co. and Continental Baking Co.—had indirect interlocks with each other and with a number of other baking companies. National Biscuit was also directly interlocked with American Sugar Refining and had indirect ties with five other potential suppliers in the food industry; one of its most notable ties outside the food industry rested upon five directors in common with American Can. United Biscuit, Ward Baking, and Interstate Bakeries also had direct interlocks with container stock or container manufacturers. A highly concentrated pattern of interlocks occurred among the sugar companies. Sixteen of the 23 largest of these companies had direct or indirect ties with each other. Six Hawaiian sugar com

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panies were both directly and indirectly interlocked with each other, while sugar companies outside Hawaii were equally intricately interlocked. The sugar companies also had direct or indirect ties with the country's largest producers of dairy products, bakery products, and beverages. American Sugar Refining alone had direct and indirect interlocks with 16 potential customers.

Eight of the 23 largest beverage products companies were directly or indirectly interlocked with each other. Canada Dry Ginger Ale, for example, had a direct tie with National Distillers Products; both companies manufacture soft drinks as well as alcoholic beverages. Ties between beverage manufacturers and potential customers or suppliers were varied and numerous. National Distillers Products, the third largest of the distilled beverage manufacturers, for example, had indirect ties with the largest corn products and sugar refining companies. It also had a direct tie with the country's largest manufacturer of glass bottles.

General Foods, Standard Brands, and Best Foods were interlocked with each other through a variety of third companies. General Foods also had direct ties with the country's two largest dairy companies, and indirect ties with the largest bakery company and the two largest grain-mill-products companies, all of which manufacture products with which General Foods' lines compete. General Foods also had a direct interlock with American Can and with the Mead Corp., which sells paperboard.

The interlocking relations within the primary iron and steel industry fell into four major categories. U. S. Steel maintained indirect interlocks with 11 other members of the industry-7 integrated steel companies, a nonintegrated strip steel producer, a coke and chemical company, and 2 ferro-alloy companies.

The second group of steel companies included Republic Steel Corp., Youngstown Sheet & Tube, Inland Steel, Wheeling Steel Corp., Jones & Laughlin, and National Steel Corp. These companies were all interlocked through a group of important Cleveland companies, including four ore companies and two Cleveland banks. The interlocks consisted of both stock ownership and common directors.

The third group centered in the Mellon family and in a number of companies in the Mellon sphere of influence, including Mellon National Bank & Trust Co., Gulf Oil Corp., Koppers Co., Pullman, Pittsburgh Plate Glass Co., and Westinghouse Electric Co. Through these corporations, interlocking relations were maintained among Bethlehem Steel Corp., Armco, Crucible Steel, A. M. Byers, Superior Steel, Granite City Steel Co., and Vanadium Corp. of America. In

22 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1950

Mellon group and the Cleveland group; and U. S. Steel was linked to the group through Pullman.

Finally, Pittsburgh Steel Co., Alan Wood Steel Co., Follansbee Steel Corp., and Pittsburgh Coke & Chemical Co. were interlocked. through ties among themselves and with the Peoples First National Bank & Trust Co. (Pittsburgh). This group was interrelated with the Mellon group through Jones & Laughlin and with the Cleveland group through both Jones & Laughlin and National Steel.

The nonferrous metals industry was characterized by multiple indirect interlocking relations among companies within the industry, principally through financial institutions but also through a number of leading industrial corporations. The concerns thus interlocked were among the industry's most important. Within the industry, American Metal Co. interlocked with 10 companies; Kennecott Copper Corp. and Phelps Dodge Corp. with 8; Anaconda Copper Mining Co., St. Joseph Lead Co., and American Smelting & Refining Co. with 7; U. S. Smelting, Refining & Mining Co. with 6; Magma Copper Co. with 4; and National Lead Co., New Jersey Zinc Co., Mueller Brass Co., Doehler-Jarvis Corp., and Anaconda Wire & Cable Co. with 3.

Several of the integrated producers of primary metals are also fabricators and thus compete with their customers, actual or potential. There were a relatively large number of interlocks between fabricated and primary metal producers. Some of these vertical interlocks— for example, that between the Sharon Steel Corp. and the Mullins Manufacturing Corp.-appear to have been the equivalent of forward. integration. Other interlocks-for example those between U. S. Steel, Babcock & Wilcox, and American Radiator & Standard Sanitary Corp.-provided the basis for establishment of a community of interest among companies dominant in their respective fields. The interlocks of fabricated metal producers with users of their products consisted primarily in 36 interlocks with the machinery industry; 24 with the transportation equipment industry; and 19 with the electrical machinery industry.

Companies in the machinery industry were linked primarily with banks, primary metals producers, transportation equipment companies, and electrical machinery manufacturers. In every branch of the industry, competing producers were directly and indirectly interlocked. Among the farm machinery manufacturers, International Harvester, Allis-Chalmers, and J. I. Case were indirectly interlocked with each other and with two of the other six largest producers; the Oliver Corp. was indirectly interlocked with two other farm machinery companies; and Deere & Co. and Minneapolis-Moline Power Implement Co. were interlocked indirectly with each other. Eighteen

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competing engine producers were directly or indirectly interlocked, 5 being classified as manufacturers of engines and turbines and the remainder being otherwise classified. Ten of the large machine tool manufacturers were indirectly interlocked with one another, as were the 7 largest manufacturers of office and business machines. Of the four largest producers of textile machinery, the two largest were directly, and all indirectly, interlocked with each other. They were also directly linked with four of the country's largest textile mills and indirectly with nine others. Six of the major producers of pumping and drilling equipment had direct or indirect ties with one or more competitors. The four leading manufacturers of road-building and earth-moving machinery were indirectly associated through multiple interlocks. The machinery producers were also involved in direct vertical interlocks with primary metals producers and with numerous potential customers.

In the electrical machinery industry, the big four manufacturers— General Electric, Westinghouse Electric, Western Electric Co., and Radio Corp. of America-were indirectly interlocked on a multiple basis through six large commercial banks, two of the largest life insurance companies, a public utility, a railroad, and an industrial company. This industry also presented a pattern of interlocking relations extending backward to suppliers of metals, plastics, and the like, and forward to users of electrical equipment. The interlocking directorates between General Electric and New York Central and between Westinghouse and the Pennsylvania and New Haven Railroads appear to be particularly noteworthy.

The transportation equipment industry presented a picture of extensive and complex interlocking relations. Significant interest groups centered around General Motors Corp.; and the Victor Emanuel enterprises linked companies in all of the major subdivisions in the industry. The railroad equipment companies appear to have established a close network of interlocks-12 of the 15 interlocked directly or indirectly with other railroad equipment companies. Two manufacturers of railway air conditioning equipment-Safety Car Heating & Lighting Co. and the Carrier Corp.-were directly interlocked. The only two manufacturers of railway air brake equipment-Westinghouse Air Brake Co. and New York Air Brake Co.-had multiple indirect interlocking relations. Pullman, an important manufacturer of railway cars, was the nucleus of a far-reaching system of interlocking directorates. Other indirect interlocking relations existed among manufacturers of locomotives, railway rolling stock, and other special types of railway equipment. In the aircraft group there was

24 ANNUAL REPORT OF THE FEDERAL TRADE COMMISSION, 1950

Corp., which, however, appears to have been discontinued. The aircraft group also had a chain of indirect interlocking relations that linked not only aircraft manufacturers but also producers of specialized equipment.

In the motor vehicle field, direct interlocks between the large automotive manufacturers and the parts manufacturers appear to have been of principal importance. No significant interlocking relations were found in the ship- and boat-building field. As in other large and important industries, the pattern of interlocking relations between transportation equipment companies and financial institutions was extensive.

Through directors and officers of leading New York banks, the chemical industry maintained many indirect interlocking relations; there were few direct interlocks. Allied Chemical & Dye Corp., Virginia-Carolina Chemical Corp., Mathieson Alkali Works, Inc., American Enka Corp., North American Rayon, Davison Chemical Corp., and American Bemberg were indirectly interlocked through Chase National Bank. Union Carbide and Carbon, Commercial Solvents, North American Rayon, Sun Chemical, and American Bemberg were indirectly interlocked through Central Hanover Bank & Trust Co. American Cyanamid Co., American Home Products Corp., General Aniline and Film Corp., Sharp & Dohme, and the Lambert Co. were indirectly interlocked through Manufacturers Trust Co. (New York). The chemical industry also exhibited a significant array of vertical interlocks that related producers to sources of supply and to outlets for their products.

The leading petroleum companies-Standard of New Jersey, Socony-Vacuum Oil Co., Texas Co., Standard of California, Standard of Indiana, Gulf Oil Corp., and others were closely tied together by indirect interlocking directorates or by joint ownership of affiliates. The most significant interlocking directorates were through Chase National Bank. On that board were directors of Standard of Indiana, Standard of California, Gulf, and Continental Oil. Texas, Shell Union Oil Corp., and Tide-Water Associated Oil were indirectly interlocked through Central Hanover Bank & Trust Co.

None of the rubber manufacturers had any directors in common in 1946. Indirect interlocking relations existed among the large tire manufacturers, between the large tire companies and some of the smaller tire manufacturers, and between some of the other rubber companies. The most significant of the interlocking relations were apparently those between U. S. Rubber and General Motors, resting on du Pont investments in both companies and the presence of du Pont