ABSTRACT
In England, as well as in other countries, there are many pitfalls from an income-tax point of view in a direct merger, which would take too long to enumerate, and probably the first point has been a still stronger incentive for preferring financial interconnection to direct fusion. This system, consisting in the formation of different types of "companies" directed towards the same end of financially interconnecting different undertakings, is, as Professor Plummer has rightly put it, the cheapest way of building up a concern or trust. The effects of the interconnections are conspicuous in a double way. Firstly, they bring about a system of financial interlocking which is absolutely novel in the modern history of industrial finance. In German this system is called as the "Verschachtelung". Then there is a second effect of importance. Interlocking has immensely increased the radius of international ramifications of industrial finance.
