DuPont-GM Consolidation Creates Model of Interlocking Corporate Control

Pierre du Pont assumes the presidency of General Motors in December 1920 and installs Alfred P. Sloan as operating head, consolidating DuPont family control over the nation’s largest automaker after DuPont Company acquires 23% of GM stock. The arrangement creates a paradigmatic example of interlocking corporate directorates and vertical integration that will shape American corporate governance for decades while evading antitrust enforcement. DuPont, as GM’s primary supplier of paint, chemicals, and other materials, gains guaranteed markets while controlling GM’s purchasing decisions through board dominance.

The DuPont-GM relationship exemplifies how corporate consolidation operates through financial control rather than formal merger. DuPont director John J. Raskob engineers the stock purchases and serves on both boards, ensuring alignment of interests. GM becomes DuPont’s largest customer for automotive finishes, artificial leather, plastics, and other products, with purchasing contracts negotiated between related parties. This self-dealing arrangement transfers value from GM’s independent shareholders to DuPont while appearing as arm’s-length commercial transactions. Similar interlocking directorates connect major banks, insurance companies, and industrial corporations throughout the 1920s, creating informal coordination that antitrust law struggles to address.

Sloan develops at GM the organizational innovations of the modern multidivisional corporation: separate operating divisions, centralized financial control, systematic management accounting, and planned obsolescence through annual model changes. These techniques spread throughout American industry, professionalizing corporate management while concentrating power in a new managerial elite connected through overlapping board memberships, club affiliations, and shared class interests. The DuPont-GM arrangement finally draws antitrust scrutiny in 1949, resulting in Supreme Court divestiture order in 1957 - but only after decades of preferential dealing. The case demonstrates how corporate interlocks can persist for generations before legal challenge, and how judicial capture allows consolidation to become fait accompli before enforcement occurs.