The Man Who Made the Movies

by Vanda Krefft

  Oddly, two days after Fox’s car crash, his father also ended up in a hospital as a result of a traffic collision. Michael had just checked into the Rose Garden Hotel in Catskill, New York, and feeling ill, called for an ambulance to take him to the nearby Red Cross Hospital. En route, the ambulance was sideswiped by a truck. Although Michael was not seriously injured, Eva would not allow her husband to hear about the incident. Once again, his birth family was causing trouble. Her job was to protect him from such agitation.

  Had the Rolls-Royce been speeding? Fox said no. The Chrysler’s driver, Dorothy Kane, said yes. That was the reason, she told police, that she hadn’t seen Fox’s car until it loomed up right in front of her. Some speculated that chauffeur Boyes, not wanting to make a bad impression while substituting for his brother, had been intimidated by Fox into pressing down harder on the gas pedal. On the other hand, Kane had been driving without a license. That wasn’t as bad as it sounded. She’d had a license but had neglected to renew it when it expired sixteen days before the accident because she was out of town. Unlicensed driving wasn’t unusual at the time. New York State hadn’t started requiring driver’s licenses until 1924, and many people like Kane, who had been driving for fourteen years, didn’t pay strict attention to the new law.

  In the end, all that was clear was that no one had intended harm and everyone had suffered too much already. Certainly no one was going to blame the dead chauffeur, Boyes. Dorothy Kane received only a suspended sentence for driving without a license. Officially, the Nassau County district attorney ruled that the accident had been completely unavoidable—an act of fate that a few seconds’ difference either way might have changed.

  Fox remained in Nassau Hospital for ten days. It was a task that strained credibility, but everyone around him kept insisting that he was recovering well and would return to work soon. Prying eyes could get no information to the contrary. After the first day’s display of vigor, Fox’s visitor list was winnowed down to only Eva, his sisters Tina and Bessie, Zukor, and a few high-ranking Fox employees. To fend off interlopers, a policeman was stationed outside Fox’s door.

  Zukor, known as the “icicle tactician,” visited every day until Fox was discharged on Saturday, July 27. Then, Fox said, “I never again heard from Zukor by telephone, mail, or otherwise. Once I was safely out of the hospital, I was of no further interest to him.” Evidently, Zukor had hoped to be first in line to get the Fox companies in the unfortunate event of Fox’s demise.

  Leaving Nassau Hospital with Eva and her brother Jack Leo, Fox seemed back in command. After thanking the staff for their kindness, he left checks for the nurses and attendants; for Reginald Moore, the lawyer who had driven him to the hospital; and for stage actor J. Carrol Naish, who had donated blood for his transfusion. (Naish would also receive a Fox Film contract in Hollywood later in the year.) He showed no sign of discomfort and had no bandages, only a piece of court plaster on his head.

  He was fully recovered, Dr. Post said. That was another lie. The truth was too terrible to admit.

  CHAPTER 39

  Recovery

  The past is behind me, the future before, and it is to the future I look.

  —WILLIAM FOX, OCTOBER 12, 1929

  I was wrecked,” Fox later admitted, describing his health upon returning from Nassau Hospital to Fox Hall on July 28, 1929. It would be three months before he felt well enough to return to his office in New York.

  During his convalescence, he lived not in the main house but in the boathouse overlooking Woodmere Bay. An incapacitated William Fox was not a William Fox suitable for display, not even to the closest members of his family. Although on August 12, 1929, he played a full round of golf at the Woodmere Club, adjacent to Fox Hall, and allegedly shot a hole-in-one on the 150-yard seventeenth hole, that was a carefully staged performance—and the subject of a widely disseminated press release. Afterward, he returned to seclusion.

  Publicly, no one knew Fox was away from his office. His previous reclusiveness now served him well. Few people outside the Fox companies’ upper ranks ever saw him anyway, so there was very little to miss—and nothing, at least at first, that a publicity smokescreen couldn’t cover. During the late summer and early fall of 1929, as the press reported vigorous activity at Fox Film and Fox Theatres, it was natural to assume that Fox was orchestrating it all.

  Throughout the summer and early fall, Fox movies continued their surge toward a record year’s income. That August, The Cock-Eyed World, the lighthearted sequel to Fox’s 1926 antiwar hit What Price Glory, grossed $700,000 during its first four weeks at the Roxy Theatre and went on to become a nationwide sensation. Other Fox crowd-pleasers included Lucky Star,* Frank Borzage’s third tearjerker romance starring Janet Gaynor and Charles Farrell; the musicals Words and Music and Why Leave Home?, and the vaudeville love story Big Time. It helped that Fox modified his radical “all talking pictures” policy by deciding to release silent versions of the studio’s most successful sound pictures. The adjustment was essential: as of late July 1929, only about 40 percent of U.S. movie theaters had yet installed sound equipment, and much of it didn’t work properly.

  On Tuesday, September 17, 1929, Fox’s 70mm widescreen process, Grandeur, debuted at the Gaiety Theatre in New York. The system wasn’t really ready for unveiling. The advertised three-dimensional effect didn’t work well, and the featured attraction, a Grandeur version of The William Fox Movietone Follies of 1929, was stale because the movie had been released in regular 35mm format four months earlier. The machinery wasn’t even available for sale yet. The only Grandeur projectors in existence (the three installed at the Gaiety, at a total cost of $150,000, plus $5,000 for the special screen) were prototypes that would have to be broken up and cast in molds to enable mass production. Yet even with marketing at least a year away, many believed that the motion picture industry wasn’t ready for widescreen. Days before the Grandeur premiere, Adolph Zukor and RCA’s David Sarnoff visited Fox to urge him to call off the event. It was too soon for another technology upheaval, they argued. The industry was just catching its breath from the transition to sound, and now Fox wanted to upset it again.

  Fox disregarded such concerns. Having allowed Warner Bros. to preempt him with sound two years earlier, he had to be first with widescreen. And more or less he was first. Widescreen film had previously been shown to the press, but never before had it and sound been combined in a public demonstration. Although Fox was too ill to attend the premiere and see for himself, he got the response he wanted. Grandeur’s technological achievement alone was stunning—a screen that filled the proscenium arch from side to side with images twice the usual width—and if the feature film didn’t fully deliver on the potential, a series of widescreen Movietone newsreel segments did. That was good enough. Bursts of excited applause greeted scenes of the “rushing waters and spray” of Niagara Falls; the “splendidly clear” faces of tennis stars Bill Tilden and Francis Hunter as they competed in a championship final; West Point cadets drilling on a parade ground; the Leviathan ocean liner gliding into New York Bay toward Manhattan skyscrapers; and, because all possible Fox productions had to have a child and an animal, a little girl and her father on a Long Island duck farm. The show sold out every performance during opening week, and critics assessed Grandeur as “perfection” and a “truly marvelous new cinematic idea.”*

  During the late summer and early fall of 1929, Fox Theatres also feverishly gained new ground. Despite $93 million in debt from the Loew’s and Gaumont shares purchases, Fox continued to buy every independent theater chain he could find. It seemed to make sense. Fox Theaters was now locked in a fierce war with Paramount’s Publix theater chain to dominate U.S. exhibition, and far more than pride of place was at stake. The major studios derived about 85 percent of their revenue from their theater circuits, and more theaters meant more film rental fees, wider access to audiences, and lower expenses involved in selling to nonaffiliated exhibitors. No one, neither Fox nor Zukor nor any of thei
r lesser competitors, worried about finding the money to pay for theater acquisitions. The stock market was still rampaging forward. From June 1 through August 31, 1929, the leading index of the era, the Times Industrials, rose almost every day to achieve an overall gain of 110 points, outpacing the entire year of 1928, which had registered a gain of 86.5 points. Everyone, except for a few scorned voices crying in the wilderness, considered national prosperity endless.

  Disregarding the growing body of evidence that supported the doomsayers’ warnings, Fox bid whatever he had to in order to get theater deals away from rivals. From August through early October 1929, he bought more than a hundred theaters in the West, Midwest, and South, spending at least $5 million, and announced plans to build fifteen theaters throughout Arizona, a Publix stronghold. He revived his on-again, off-again project for a $5 million “super theater” at Seventeenth and Market Streets in Philadelphia. In Europe, he was negotiating to buy into UFA’s theater circuit in Germany, the Swedish theater chain Biograf, and the Emelka theater chain in Germany and Central Europe.

  Those activities were a skewed mirror, all either initiatives previously set in motion or the result of thoroughly ingrained habits that could almost run on their own. Confronting new situations, Fox’s thinking faltered. Possibly he had sustained brain damage—the truth would never be known because he never consulted a specialist*—or possibly the demands of recovery drained all higher-level energy. In any case, his greatest strength, his monomaniacal self-reliance, now became his greatest weakness. Neither could he ask for help; nor did he have anyone to ask. He had chosen his board members and senior executives for their willingness to defer, not their ability to think independently. “I couldn’t rely on their judgment,” he said later. “This all fell on my shoulders.”

  Alone at the top, he dug in hard to prove himself still in command. Situations that called for flexibility and diplomacy got stubbornness and arrogance. People who wisely would have been courted weren’t. Prime among them was ERPI president John Otterson, who arrived at Fox Hall on August 1, 1929, five days after Fox returned home from the hospital. Highly agitated, Otterson had two urgent matters on his mind. First, his parent company, AT&T, had received a letter from Fox alleging that the sound-on-film equipment being marketed by ERPI infringed on Fox’s Tri-Ergon flywheel patent. Fox denied knowing anything about the letter and blamed his lawyers for having sent it on their own initiative. However, rather than apologize—and he might well have remembered that the due date for AT&T’s $15 million loan was now less than seven months away—Fox commented that if the phone company were infringing on the patents, then he should have every right to complain.

  To resolve the matter, Otterson again tried to buy the Tri-Ergon patent rights. Four months earlier he had offered $5 million, but Fox had wanted $10 million. Otterson now agreed to pay the $10 million. No, Fox said, the current price tag was $25 million. That was impossible, and surely Fox knew it.

  Otterson’s second concern, which had him in a state of near panic, was the patent rights situation in Europe. Having more or less conquered the U.S. market for theater sound equipment, Western Electric was trying to extend its monopoly internationally. In Germany, that effort had encountered a major roadblock. Because Otterson had insisted that Fox buy only the North American Tri-Ergon rights, the German rights had fallen into the hands of Tobis-Klangfilm, a powerful alliance of two German companies. On July 20, 1929, the Prussian Court of Appeal had affirmed the validity of the Tri-Ergon patents in sound-on-film technology, ruling that Western Electric’s sound-on-film technology constituted an infringement. That decision blocked Western Electric from selling its sound-on-film equipment in Germany and gave Tobis-Klangfilm a monopoly there, with implied patent rights for the rest of continental Europe. The ruling was final; there was no higher court of appeal. Because of Otterson’s bad judgment, Western Electric now stood to lose countless millions of dollars in business in Europe, where most movie theaters had not yet converted to sound.

  To minimize the fiasco, Otterson needed Fox’s help. He was about to return to Europe to propose a rights-sharing agreement. This would allow European film producers to exhibit their sound movies, made with Tobis-Klangfilm equipment, royalty-free in the United States while U.S. film producers using Western Electric equipment would receive reciprocal privileges in Europe. Because Fox owned the North American rights to the Tri-Ergon patents, he would have to agree not to charge royalties in the United States.

  He refused. There was nothing in it for him, he said. Angrily, Otterson pointed out that Fox had already received the benefit—AT&T’s $15 million loan in February toward the Loew’s stock purchase and help in getting another $3 million loan from banks. Fox still refused.

  Exasperated, Otterson left Fox Hall with a warning. If Fox was going to stray beyond the motion picture field and create a patents company, then AT&T might also jump over the fence and go into film production. The following day, Otterson backtracked a few steps, offering Fox a chance at reconciliation. In a letter, Otterson urged, “[W]on’t you please consider the ethical situation involved and further, your whole relationship with us and determine whether this consideration modifies in any way the position which you outlined to me yesterday?”

  No, he wouldn’t. Fox scoffed at the notion of the stodgy phone company going into the entertainment business. He offered no concession at all.

  By now, Otterson wasn’t surprised. On the day he wrote to Fox, he also cabled ERPI’s European manager, H. G. Knox, alerting him to prepare to switch loyalties to Paramount. Otterson advised, “Impression created . . . is that if Fox becomes powerful enough he will take position independent and possibly competitive with us. We are following policy of maintaining very friendly relationship with Paramount with view to obtaining their support in all emergencies.” Still, the door wasn’t completely closed. Otterson instructed Knox not to oppose Fox actively and to maintain an outwardly “friendly, cooperative” tone.

  Oblivious to the looming danger, isolated from the voices of reason he might have heard had he been going to the office every day, Fox made another diplomatic blunder. He arranged for 4 Devils, F. W. Murnau’s follow-up to Sunrise, to be shown in Germany’s large, government-subsidized UFA circuit, beginning on August 27, 1929. UFA theaters used Klangfilm equipment. So far, all the major U.S. studios had backed up Otterson by refusing to book their sound movies into German theaters until the patents dispute was resolved. By breaking the boycott, Fox would almost certainly provoke other producers to follow.

  “You are thus put in the position of leading the move to weaken and break down our situation in Germany,” Otterson cabled Fox from Paris. Pleading for only “a very short time” to conclude the negotiations, Otterson warned, “If UFA opens with Four Devils at this time . . . we are hopelessly beaten and . . . our initial action must obviously be against you.”

  Fox did defer the opening of 4 Devils until November 1929, but in the meantime, he created another major problem. In early October he announced plans to enter the home talking pictures equipment market. Soon, he said, the Fox organization would begin selling 16mm projectors on the installment plan and would establish film rental libraries throughout the country so the average person could watch movies at home. This directly threatened the delicate balance that AT&T had established with RCA. So that RCA would back off from marketing its Photophone sound-on-film equipment to theaters, AT&T had given it exclusive rights to the home talking pictures market. If RCA were to lose its consolation prize, it would have no reason not to go back and compete with Western Electric for theater installations.

  Fox had no idea how angry he was making Otterson. He thought they still had a good relationship.

  He also recklessly insulted his other major creditor, Harry Stuart. In late August 1929, when Stuart visited him at Fox Hall, Fox thought the meeting was mainly social, undertaken by Stuart as “a token of his esteem,” and he saw himself as responding magnanimously. After all, he had finally signed the l
etter promising Halsey, Stuart the special $1 million payment for past services. He also assured Stuart that a refinancing deal was imminent, because as soon as he could meet with Adolph Zukor—as he had planned to on the day of the car accident—the last obstacle to the Justice Department’s approval of a Fox-Loew’s merger would be removed. Stuart was, Fox thought, “very friendly.”

  In fact, Harry Stuart was disgusted. From his point of view, Fox had conceded almost nothing. Because of Fox’s prolonged stalling—more than a year’s worth—Stuart had had to draft the $1 million letter himself, and Fox had given himself another year, until September 1, 1930, to pay. As for the refinancing issue, Fox had refused to discuss specifics and had taken the opportunity to remind Stuart that he considered Halsey, Stuart not yet important enough to handle all the Fox companies’ business. For some time, Fox had been pecking at Stuart to expand by starting an investment trust. Stuart had tried to ignore him, but now Fox appeared to make that a condition of their continued relationship. It was a matter of pride: Fox wanted his bankers to be among the largest firms on Wall Street. Stuart would later say that their friendship ended permanently at that meeting.

  No wonder. During the next six weeks, Stuart begrudgingly created an investment trust, the Corporation Securities Company. It was a terrible idea, not only because most investment trusts during the late 1920s were full of hot air, with their securities priced far above the value of their assets, but also because Stuart had hastily stuffed Corporation Securities full of the financially unstable Insull utility stocks. On October 17, 1929, Halsey, Stuart sent Fox a letter inviting him to buy into the Corporation Securities Co. stock offering. Alarmed that the new company was to be run by various members of the Insull and Stuart families and that it appeared to have only “the merest chance” of enriching anyone except them, Fox refused to buy any shares.*