The Man Who Made the Movies

by Vanda Krefft

  No one close to him was fooled by Fox’s attempted show of strength. Mutinous impulses stirred. In early August 1929 his Grandeur, Inc. partner, Harley Clarke, called on him at Fox Hall and genially offered to buy Fox’s voting shares in Fox Film and Fox Theatres. Implicit was the assumption that Fox would never recover from his injuries. No, Fox snapped. Then perhaps not all the voting shares, Clarke suggested, perhaps just half of them. Never, Fox replied. Clarke shrugged off the rejection, assuring Fox that he’d simply wanted to help. Fox believed him. He also overlooked the fact that after Grandeur’s financial arrangements were finalized on August 1, 1929, Clarke told him next to nothing about the company’s management and refused to let him examine the books.

  Within the Fox companies, long-held resentments flared up. Saul Rogers, Fox Film’s in-house counsel, wanted a raise from $60,000 to $160,000 a year, guaranteed for five years. According to Fox, “he was not requesting it, he was demanding it.” Rogers had negotiated with the Justice Department at the beginning of the year to get clearance for the Fox-Loew’s merger and had been told, Fox believed, that the deal was approved. Fox gave Rogers the new contract because “Fox Film or Fox Theatres could not afford to have Rogers become forgetful, as sometimes men do.” It was, Fox said, a “hold-up.”

  On the West Coast, forty-eight-year-old Winfield Sheehan was tired of second place at Fox Film. Since his official installation in 1926 as head of production, the studio had soared financially and artistically. Sheehan credited himself and, amid Hollywood’s worshipful cult of personality, began to think of himself as a genius. Fox, he believed, merely rubber-stamped his decisions.

  With Fox debilitated, Sheehan aggressively publicized himself. In early October 1929, an article appeared in the Evening World (where as a young man Sheehan had worked as a reporter and where he still had contacts) touting Sheehan as the real brains behind Fox Film. According to the article, Sheehan had invented Theda Bara’s publicity campaign, created Fox News, organized the Movietone City lot, and produced all the studio’s most successful recent movies. The article dubbed him a “Hollywood Dynamo” and gushed, “He is a supervisor of supervisors. His personality is thus impressed on every production.”

  That same month, with Fox’s support, Sheehan left for Europe to seek medical treatment for liver trouble, probably caused by excessive drinking. He settled in London and, without telling Fox, met regularly with his former enemy Alfred C. Blumenthal, Fox’s partner in Foxthal Realty. Blumenthal, who was there to work on the Gaumont theaters deal, had never stopped simmering over the fact that Fox required him to give 50 percent of all his commissions to Fox Theatres. Two highly placed executives secretly exchanging grievances against the boss—there would be consequences.

  Personal sorrows compounded the task of recovery. On September 11, 1929, Louis Marshall, one of the pillars of the Jewish American philanthropic community, died in Zurich at age seventy-two. Having worked with Marshall on various Jewish fund-raising campaigns, Fox had come to love and respect him. Although Marshall was physically unimpressive, a short, stocky man with eyesight so poor he could barely see in front of him, Fox saw him as having “the vitality and voice of a roaring lion” and idealized him as “the man who gave almost all of his life for the benefit of others.” Marshall’s death extinguished a shining light in Fox’s increasingly perilous world.

  A few weeks later, Fox’s older daughter, Mona, went to divorce court in Mineola, Long Island, to end her marriage to Douglas Tauszig. Because of Fox’s prominence, the trial drew widespread newspaper coverage that repeated the facts of Tauszig’s infidelity. Although Mona’s lawyers tried their best to humiliate him, Tauszig withstood the assault. In most articles, it was Mona who came across as the pathetic figure, unable to keep her family intact despite her father’s wealth and power. A judge granted the divorce on October 22, 1929.

  Fox’s younger daughter, Belle, was heading in the same direction, as rumors circulated that her husband, Milton J. Schwartz, had been unfaithful. Unsurprisingly, he was out as sales manager of Movietone News by early October 1929 and would soon move on to a position with Columbia Pictures. Schwartz had never been given much of a chance by his father-in-law. Nominally a vice president of Fox Theatres, he was kept in the dark about the company’s business. When, for instance, the company sold a theater in Newark, New Jersey, Schwartz was called in only when the deal was completed. Company lawyer Saul Rogers pushed the papers in front of him, and Schwartz signed them without knowing what they said.

  The end of his daughters’ marriages shamed Fox. He’d believed he could construct happy lives for his children, yet both lost their husbands within a handful of years and ended up as single mothers. The embarrassment was so great that, either at Fox’s instigation or that of his very loyal daughters, each of the two Fox grandsons was made to drop his father’s surname and become known as William Fox. Mona’s son at least retained the middle initial T as an acknowledgement of his paternal heritage. Neither grandson would ever reclaim his real name.

  Despite no hopeful signs from the Justice Department, Fox began to act as if approval for the Fox-Loew’s merger were imminent. In September 1929 he restructured his companies financially, increasing Fox Film’s authorized Class A nonvoting shares from 900,000 to 4.9 million and Fox Theatres’ authorized Class A shares from 3.9 million to 7.4 million. The action was widely interpreted as the first step toward absorbing Loew’s into the Fox organization. Fox Theatres went first in marketing some of the new stock.

  Having sold 700,000 new Fox Theatres shares during the past few years through private trading, Fox now devised an even bolder plan. He would sell shares directly to the public, using his theater screens to advertise them to audiences.* To launch the sales campaign, the whole Fox Theatres circuit would begin a one-week Silver Jubilee on Saturday, October 12, 1929, marking twenty-five years since Fox’s entry into the motion picture industry. Fortunately, no one in the press remembered that on four previous occasions, Fox had claimed to be celebrating his silver anniversary: in June 1928, August 1928, December 1928, and January 1929.

  In early October 1929, Fox began running full-page ads for Silver Jubilee festivities in newspapers in all the principal cities where Fox theaters were located. The noisy publicity raised an awkward question. Where was William Fox and why, other than during his August 12 golf course appearance, hadn’t anyone seen him for the past two and a half months? An Associated Press reporter phoned Fox Film publicist Glendon Allvine and asked him to confirm a rumor that Fox had gone insane. Fox instructed Allvine to issue a denial and let the matter go at that, but Allvine advised Fox to hold a press conference to show that he was mentally and physically fit. So, on October 12, 1929, Columbus Day, the studio had six limousines bring some thirty reporters from Manhattan to Fox Hall.

  Sun-tanned and wearing a dark three-piece suit and tie, Fox still had the showman’s flair. Appearing relaxed and carefree, he escorted the reporters on a tour of his estate, chatting casually and answering questions. Then, settling them into wicker chairs around a table on the Fox Hall boat landing, he delivered the dramatic moment. According to one account, “Suddenly, out of a clear sky, he laughingly admitted that he knew what was in the minds of the reporters and then asked them openly, ‘Well, do you think I behave, or talk or act like an incompetent?’ It couldn’t have been staged better in any picture.”

  With that matter settled, and none of the resulting articles would express any doubt, Fox ran through his standard recital of the official William Fox life story and then addressed his main topic: his vision for the next twenty-five years. “The past is behind me, the future before, and it is to the future I look,” he said. Three main ambitions concerned him. Sidestepping the Fox-Loew’s merger, which was an inconvenient topic, he pledged to spend one-quarter of his estimated $36 million personal fortune to improve public education, religious life, and medical training through the movies. He would install a motion picture projector in every U.S. classroom and make movies o
f the best teachers lecturing on every subject. He would film speeches by great religious leaders because “every man, woman and child will be a finer citizen if a God-fearing one.” To improve medical education, he would install equipment in hospitals to film operations by top surgeons. This project would be, Fox explained, his expression of gratitude toward the country that had given him such a happy and prosperous life.

  If it all sounded unrealistic or inconsistent with Fox’s imperialistic, self-aggrandizing activities, none of the reporters said so in print. In fact, his plan wasn’t so implausible. For several years, Fox had shown educational movies in the New York City public schools without making a profit, and he had provided feature films to religious organizations for free. Fox Film had also recently made the first talking picture of an operation, showing Chicago surgeon Nelson H. Lowry operating with a radium knife on a cancer patient. That film was scheduled to be shown the following week in Chicago, at the annual convention of the American College of Surgeons.

  All the major papers reported glowingly on Fox’s plans, and none questioned his ability to accomplish them.

  Hours after the press conference ended at Fox Hall, the Fox Theatres stock sales campaign began throughout the circuit. Advance ads had promised that Fox would deliver a special message via a Movietone talking picture, but he didn’t appear on-screen. Instead, Lawrence Chamberlain, an investment banker and author of the 1911 book, The Principles of Bond Investment, repeated words allegedly just spoken to him by Fox. “My friends,” Chamberlain, speaking for Fox, began. “I have something important to say to each one of you sitting there in your chair.” The message urged the audience to buy Fox Theatres stock as a way to share in the profits they generated every time they attended a Fox Theatre. No one should buy more shares than he or she could afford to pay for in full right now, and if that were as little as one share, fine. On their way out of the theater, patrons received a brochure titled The Story of Motion Pictures and the Fox Theatres Corporation, which included an order form to be sent to a banker or broker to buy Fox Theatres stock at market price. No share price was mentioned, but on October 11 the stock had closed at 28⅜.

  Similar promotional films featuring various Fox representatives were shown throughout the Silver Jubilee week in all eight hundred of the U.S. movie theaters Fox controlled. On opening night, the sales campaign got an extra boost when New York City mayor Jimmy Walker strode onstage at Fox’s Academy of Music during the show to provide a personal endorsement. “I have known William Fox personally for years and I admire him for many things,” Walker said in a speech that was broadcast over radio station WMCA. “His is a real benevolent and charitable heart.”

  Despite all the fanfare, the new Fox Theatres stock moved slowly, evidently selling only about 83,000 new shares during the first few weeks, with many bought by Fox company employees. The stock was a tough sell. It paid no dividend and had a volatile history. Furthermore, for anyone who cared to think about it—and Fox didn’t care to point it out—Fox Theatres’ purchase of the Loew’s shares still hadn’t received government approval. Altogether, Fox Theatres was the unsteady prodigal child of the family. If one were going to buy anything Fox, Fox Film, with its long, profitable history and $4 annual dividends, made more sense.

  Nonetheless, the Silver Jubilee festivities and the anticipation of a tremendous future at hand reinvigorated Fox. On Thursday, October 24, 1929, he left Long Island for the first time since his July 17 accident. He was still not back to normal, but he had been in seclusion far too long. It was time to find out what exactly had been going on in the world.

  CHAPTER 40

  Disaster: October 1929

  And then came this thunderbolt out of the sky, or earthquake, or whatever it was. To me it looked like more than an earthquake. It looked like a canyon had opened up, that hell had broken loose and the earth had caved in.

  —WILLIAM FOX

  The occasion that brought Fox back into Manhattan on Thursday, October 24, 1929, was a private dinner at the University Club for wealthy Republicans hosted by investment banker Jeremiah Milbank. The event was supposed to be social, a chance to introduce the recently appointed Republican National Committee chairman, Fox’s friend Claudius H. Huston, to the New York banking establishment and to drum up enthusiasm for the next year’s congressional elections. Hoover’s vice president, Charles Curtis, came from Washington, DC; so did four Cabinet members and three senators. Otherwise, the one hundred-plus guests were either top-level financiers or, like Fox, rich contributors.

  Because the U.S. Justice Department still had not approved the Fox-Loew’s merger, Fox could not afford to pass up any opportunity to salute the colors. He had only four months left until his $15 million loan from AT&T came due and about a month after that he would have to repay Halsey, Stuart’s $12 million loan. Claudius Huston, Fox believed, could push the Hoover administration to approve the Fox-Loew’s merger.

  Instead of good cheer, worry and dread hovered over the University Club gathering. Since September 3, 1929, when it hit its peak at 381.17, the Dow Jones Industrial Average had been sliding downhill. For weeks, it had been possible to dismiss that movement as part of the normal business cycle. Yesterday, however, the whole tumbledown structure of the U.S. economy had started to heave and convulse on its foundations. In afternoon trading on October 23, “a sudden deluge” of selling orders hit the stock market, causing a steep, fear-driven decline in share prices.

  The next morning, the day of the University Club dinner, the stock market shuddered with aftershocks. Speculative buyers whose stocks had taken a beating and who could not meet their brokers’ demands for margin payments were forced to liquidate their accounts wholesale. During the first thirty minutes of trading on October 24, more than 1.6 million shares were sold on the New York Stock Exchange. As prices careened downhill, many amateur investors tried to salvage what they could by making a mad dash for the door. One Wall Street brokerage firm characterized the first two hours’ activity as “hysteria . . . without rhyme or reason.” Some stocks tumbled 50 to 150 points. Even bargain hunters who wanted to buy shares couldn’t because no one knew the correct prices. The terror quickly spread to the New York Curb Exchange and then to other cities, causing a nationwide “avalanche of selling.”

  By noon that day, after only two hours of trading, the whole stock market was in such desperate shape that five leading bankers (Thomas W. Lamont, senior partner of J. P. Morgan & Co., and the executive heads of the Chase National, National City, Bankers Trust, and Guaranty Trust banks) met at the Morgan offices and agreed to throw an estimated $1 billion at pivotal stocks that afternoon in an attempt to stanch the bloodletting. On behalf of the group, Lamont issued a statement affirming that U.S. financial conditions were fundamentally sound and that the panic was unwarranted.

  The bankers’ intervention worked, more or less. By 2:00 p.m., a vigorous upswing was under way, and an hour later the Dow Jones closed at 299.47, representing an overall decline of only 6.38 points from the previous day. Nonetheless, during the five-hour trading period, nearly 12.9 million shares had been sold, topping the previous record of 8.2 million shares on March 26, 1929. The New York Times characterized the day’s total losses as “staggering, running into billions of dollars.” Thursday, October 24, 1929, ranked as the worst day so far in stock market history.

  That was what everyone at the University Club was either thinking about or trying not to think about. Was the market break merely a technical correction, a temporary interruption of robust prosperity, as members of the Federal Reserve Board reportedly assured Wall Street leaders? Or was it, as Sen. William H. King (D-UT) contended, the start of a long and inevitable “day of reckoning” necessary to eliminate billions of dollars in “water and hot air” from hundreds of bloated, grossly overvalued stock issues?

  While several of the University Club dinner speakers avoided the grim subject, U.S. secretary of commerce Robert P. Lamont (no relation to J. P. Morgan’s Thomas W. Lamon
t) faced it squarely and predicted big trouble. Fox recalled, “He went on to tell these men that no nation could continue when its citizens refused to buy bonds, that all great nations were built on the public’s willingness to buy bonds and that unless a great market could be created for bonds and this speculation in common stock would terminate, that the nation was threatened.” According to Fox, Lamont diagnosed the United States as suffering from financial “cancer,” and “he used the old Roosevelt term, ‘You can’t cure a cancer by smearing salve on it. When you have cancer, you must have a surgical operation.’ ”

  About a third of the way into Lamont’s thirty-minute speech, Fox turned to a friend and said, “That man is either the most damn fool man I ever listened to or the most intelligent man I ever listened to. Which is he?” The friend wasn’t sure, either.

  The more Lamont talked, the more frightened Fox became. “He drew a picture so black that I trembled at the thought of what would occur the next day when these 100 bankers would reach their offices and when the bell would ring at ten o’clock in Wall Street. No one could have listened to him that night without wanting to sell every share of stock he owned the next morning.”

  The next day, Friday, October 25, 1929, Fox returned to his office after an absence of more than three months. As soon as the stock market opened, he phoned his brokers and ordered them to start selling all the stock he owned in every company other than his own and Loew’s—some $20 million worth.

  Fortunately, buoyed by reassurances from leading financiers and industrialists, the New York Stock Exchange opened relatively calmly. That afternoon, Hoover issued his soon-to-be-famous statement, “The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.” By the closing bell, the market appeared to have stabilized. Trading volume amounted to less than half that of the previous day, involving a nearly normal 5.9 million shares compared to Thursday’s record 12.9 million shares, and prices of leading securities had fluctuated within a narrow range. Fox had done well. Because he had bought many of his shares a long time before, he got at least as much as he had paid for them. He continued selling through the short session on Saturday, October 26, which turned out to be another quiet, steady day.