Note 175 — Chapter XX · THE ORGANIZATION AND CONTROL OF INDUSTRY

In order to evade the provisions of the Sherman Act many large corporations resorted to the plan of “interlocking directorates”. While forming no combination, merger, or holding company, they merely arranged that the various companies should elect the same men to their respective boards of directors, thus placing control of the companies in the hands of the same group of men. To put an end to this practice Congress in 1914 enacted the Clayton Act, which provided, among other things, that no person may serve as a director in two or more large competitive interstate corporations except banks and railroads, these latter being under separate regulations.