The Man Who Made the Movies

by Vanda Krefft

  As Clarke linked arms with these two pillars of American business, the Chase Bank and AT&T, the circle closed. The phone company was Chase’s largest depositor, and impending Chase Bank president Winthrop Aldrich would join the board of directors of AT&T in August 1930.

  Fox, on the other hand, was well known for his scorn of bankers; known to have marketed Fox Theatres stock through his own trading syndicates in 1928 and 1929, rather than pay commissions; and known to be at war with AT&T. He was a deliberate outsider. He didn’t want to collaborate—or, as he saw it, conspire against his stockholders, employees, and customers by putting another set of interests ahead of theirs.

  And so history had replaced William Fox, the old-fashioned captain of industry, with Harley L. Clarke, the twentieth-century corporate executive.

  The new modern business broom swept away Fox loyalists on the boards of directors. In came a cadre of supposed financial experts. At Fox Film, these included Clarke himself; a fire insurance company president, a former senior partner in a stock brokerage firm that had failed for $12 million in 1923 and was suspended from the New York Stock Exchange; Harry Stuart’s brother, Charles B. Stuart; and Matthew C. Brush, president of the American International Corporation, and a prominent stock market operator. Fox believed that Brush—“careful, cunning, smiling”—had divided his “tremendous” profits from various stock raids with Wiggin and others and had been rewarded with a Fox Film directorship.

  The only holdovers from Fox’s board of directors were Fox, as required by the voting shares sale contract; Sheehan; and Fox Film lawyer Saul Rogers. Thus, at its highest governing level, Fox Film now had only two out of eight people with any experience in film production. One of them, Fox, was unwanted. The other, Sheehan, usually stayed in Los Angeles to run the studio. At Fox Theatres, new board members included a surety company president; a St. Louis, Missouri, attorney; and several stockbrokers.

  Announcement of the refinancing plan prompted, within days, two stockholders’ lawsuits from several familiar faces. In state court, Stanley Lazarus, representing the Fox Film stockholders protective association, attacked Clarke’s plan as fraudulent and illegal, involving wrongful transfers of assets from Fox Film to Fox Theatres and GTE. In federal court, brothers Arthur and Lawrence Berenson, the Boston lawyers who had filed one of the receivership lawsuits, accused Clarke of a bait-and-switch scheme and pointed out two important facts that had been almost completely overlooked amid the hubbub over the $103 million influx. First, the Halsey, Stuart refinancing plan advocated so vociferously at the March 5, 1930, stockholders meeting had disappeared without any explanation. Second, the substitute plan was not really permanent financing because $55 million of the $103 million had come from one-year notes that would have to be repaid on April 15, 1931.

  Money made those shareholder complaints go away, as it concurrently did the receivership lawsuits. The Berensons received $300,000 from Fox Film and $200,000 from Fox Theatres, even though they represented only Fox Film shareholders and had sued only Fox Film. Lazarus also withdrew his lawsuit after settling for an undisclosed amount. Isidor Kresel, who had buffaloed Susie Kuser into the receivership lawsuit that she repudiated once she understood it, got $50,000. Elsewhere, the Hughes, Schurman & Dwight law firm received $500,000, and Clarke paid $500,000 to Blumenthal and $100,000 to Courtland Smith, as commissions on the voting shares sale.

  Ongoing rewards were also distributed. Sheehan, who had earned $130,000 a year under Fox, received a new five-year contract that immediately boosted him to $250,000 for the first year and provided $50,000 annual increases thereafter until the fifth year, when his salary would jump from $400,000 to $500,000. Over the life of the new contract, Sheehan was to receive $1.8 million, compared to the $625,000 he would have had under the Fox regime. Courtland Smith and John Zanft, evidently fired by Fox in early 1930 for sedition, were rehired. The brother of Judge Aaron Levy, who had tried to prevent Fox from controlling the voting shares at the March 5 stockholders meeting, was hired around June 1930, by the Fox Film Ladies’ Wardrobe Department in Los Angeles at $150 per week. Although he had publicly remained neutral, Sol Wurtzel also hadn’t made waves; his salary increased from $52,000 to $130,000 a year.

  Fox was aghast. All those wasteful fees and excessive salary payments would ultimately come out of the shareholders’ pockets by reducing the Fox companies’ net profits and imperiling their ability to operate efficiently amid the worst economic crisis in American history.

  But a new day had dawned! Clarke promised to “pour the greatest amount of money and gather together the most outstanding aggregation of brain power” to produce the greatest hits the motion picture industry had ever seen.

  CHAPTER 47

  The Meter Reader and the Banker

  Fox’s vision of ruin came to pass more swiftly than he expected. In less than two years after he sold his voting shares in April 1930, Fox Film became a gaunt, income-starved skeleton, and Fox Theatres was on its deathbed. While it’s impossible to specify the extent of damage done by the Great Depression, it’s also impossible to ignore the devastating actions and atmosphere of the companies’ new management. Leaving aside the not-irrelevant matter of character, one trade publication remarked about Clarke’s takeover, “This marks the first time in film history that a man of no Broadway experience, no experience in film production, no experience in chain theatre management, has ventured to direct a vast amusement enterprise of Fox calibre.”

  Having spent almost his entire career in the utilities business, forty-seven-year-old Clarke—“the meter reader,” Fox called him—showed little interest in learning about Fox Film. He also did nothing to alleviate, but instead exacerbated, the internal strife generated by the five-month fight for control. Rather than changing course now that he had won, he continued the trickery and deception that had helped him win command of the Fox empire.

  As one of Fox’s friends, a German who met Clarke shortly after the takeover, commented to Fox, “This man is cold—he has no heart. He doesn’t care whether this company is good or bad.” Events of the next eighteen months would prove the point. Clarke didn’t love the movies the way Fox had. That attitude sealed the doom of the Fox companies.

  “Neither Clarke nor his efficiency experts knew one solitary thing about making pictures. Chaos compounded confusion,” said Fox Film publicity head Victor Mansfield Shapiro.

  Clarke’s first pronouncement was that henceforth Fox Film would produce only clean pictures. Clean pictures, Clarke reasoned, were what the American people really wanted, and therefore clean pictures were guaranteed to make money. Clarke might have taken a look around. While it was true that Paramount’s Tom Sawyer would become 1930’s top-grossing movie, with an estimated $11 million box-office take, the emerging Depression-era market was grittier and multi-shaded. Other major commercial hits of the year included Hell’s Angels, with eighteen-year-old platinum blonde Jean Harlow as a scantily dressed bombshell who declares that she “couldn’t bear” to be tied down to a husband and children; All Quiet on the Western Front, which bluntly depicted the soul-killing horrors of war; and the rogue release Ingagi. Made by the small independent Congo Pictures, Ingagi marketed itself as a documentary about African women snared into sex slavery by a giant gorilla. One poster, headlined “Wild Women—Gorillas—Unbelievable!”, showed a drawing of a gorilla holding a short-skirted woman by her bare breast. Although the movie was soon exposed as a complete fake made from scraps of old travel pictures and newly shot low-budget Hollywood footage, with an actor playing the gorilla, it did sensational business in many cities nationwide. Nineteen thirty-one brought the Warner Bros. gangster movies The Public Enemy and Little Caesar; M-G-M’s Mata Hari, with Greta Garbo as an exotic dancer-courtesan-spy; and from Universal, Dracula, as well as the year’s top-earning movie, Frankenstein. Dark times required some acknowledgment.

  Clarke went his own way. Fox Film’s movies from this period weren’t so much clean as weary and insipid, the output o
f a studio that had lost its vision and that had been badly traumatized by recent events. The new regime’s main attempt at originality, Are You There? (1930), starring British comedic actress Beatrice Lillie, cratered, losing almost all its $430,000 in production costs, while Fox’s biggest hit of 1931, Daddy Long Legs, traded on the legacy appeal of Janet Gaynor and Warner Baxter. Otherwise, remakes and sequels proliferated, much more so than at any other major studio. Some succeeded. New versions of the mother love tearjerker Over the Hill (1931), Merely Mary Ann (1931), and The Man Who Came Back (1931), the latter two with romantic favorites Janet Gaynor and Charles Farrell, held their heads above water. Others might have done well, had they not been burdened by overblown budgets. A Connecticut Yankee (1931), starring Will Rogers, sank under the weight of its $868,000 cost and lost $94,000.

  Some decisions to revisit the past were incomprehensible. The creaky Victorian melodrama East Lynne, about an upper-class Englishwoman exiled from her home by her sanctimonious husband and able to see her children only by returning in disguise as a governess, had failed twice before for Fox Film. The 1916 effort, with Theda Bara in the lead role of Lady Isabel, elicited howls of laughter from audiences who wanted to see her only as a vamp, and the 1925 version came across as an “admitted antiquity” despite capable acting by Alma Rubens. By 1931, the story was older than ever, yet the studio cast Broadway star Ann Harding in the main role, spent $734,000 and lost $57,000. The generally tolerant magazine of the National Board of Review commented, “It has no relation to the modern cinema beyond being photographed by a motion picture camera, any more than it has any relation to modern human behavior.”

  Clarke’s biggest mistake as a producer, the one with the greatest consequences for both Fox Film and the motion picture industry, was his handling of The Big Trail, which introduced handsome, twenty-three-year-old John Wayne in his first starring role. The movie had been planned during the Fox administration as a showcase for the studio’s Grandeur widescreen technology. After two previous outings in The William Fox Movietone Follies of 1929 and Happy Days (1930), Grandeur was now virtually flawless.

  At first, Clarke followed Fox’s blueprint. When The Big Trail began filming on April 18, 1930, eleven days after Clarke’s takeover, it had first-class director Raoul Walsh, two complete camera crews (one for 70mm Grandeur and one for the standard 35mm format), and a lavish budget that would ultimately total $1.76 million, more than Fox Film had ever spent to make a movie before. Production lasted four months and took place mostly on location in seven western states, with ninety-three actors in important speaking parts. Also on hand were 20,000 extras; 1,800 head of cattle; 1,400 horses; 4,000 elk, deer, and moose; 500 buffaloes; 200 chickens; two full-grown black bears; and three bear cubs. Positioning The Big Trail as the flagship release of its 1930–1931 season, the studio scheduled splashy premieres in Grandeur at the Fox-controlled Chinese Theatre in Hollywood on October 2, 1930, and at the Roxy Theatre in New York on October 24, 1930. With classic Fox Film verve, publicists proclaimed The Big Trail as “the most important picture ever produced.”

  If not exactly that, The Big Trail was still a spectacular achievement. Portraying settlers crossing the Oregon Trail in the mid-1800s, with Wayne in the role of their scout and defender, the movie has held up well enough that, in 2006, the Library of Congress chose The Big Trail for preservation in the National Film Registry. In its own day, critics praised the movie as “a rich credit to the very business of picture making,” and “a vivid record of our country’s growth, which should swell every American citizen with pride and patriotism . . . a four-star production.” Both opening engagements did robust business.

  In wide release, however, The Big Trail flopped, earning domestic rentals of only $945,000 and, after marketing expenses, losing more than $1 million. The usual explanation is that because of the Great Depression, and having so recently invested in sound conversion, theaters were in desperate straits and couldn’t afford to install the 70mm equipment necessary to show The Big Trail to best advantage. The facts are more complicated.

  While it was true that very few exhibitors had installed Grandeur equipment by the fall of 1930, their reluctance to adopt the new technology did not stem primarily from economic gloom. At the time, very few people realized they were in the Great Depression: the downturn wouldn’t hit bottom until July 1932, and the Hoover White House was still touting the economy’s fundamental soundness. Within the motion picture industry, optimistic boosterism prevailed. As of July 1930, the major Hollywood studios planned to spend a record $200 million in the coming season, with $175 million going for movies themselves and the rest to be invested in new facilities. Studios were also continuing to buy theaters as retail outlets for their movies, and the houses that closed during 1930 seem to have done so more as a result of the consolidation process than because of suddenly empty cash registers. Instead, resistance to Grandeur arose mainly from concern over a lack of standardization—other companies were developing rival widescreen technologies with different screen aspect ratios—and from a sense of being already overburdened by adaptation to talking pictures.

  As they had with sound-on-film, the Fox companies might have led the way. They had the money, having received $103 million from the April 1930 refinancing. And they were spending it. In June 1930, Sheehan announced that Fox Film would pay out $5 million during the next six months for additional buildings and landscaping at the Movietone City lot, which had opened only two years before. At Fox Theatres, the outlay was even more abundant. In May 1930 the new board of directors appropriated $20 million for theater renovations during the coming year, despite the fact that Fox had kept the properties in tip-top shape. Six months later, $9 million had been spent on about 45 percent of the circuit. That money would have covered the installation of widescreen equipment in many Fox theaters, even though in addition to the $7,000–$8,000 projectors, expenses would have included a new screen, additional amplification, and possibly rebuilding of the projection booth.*

  However, out of about seven hundred U.S. theaters controlled by Fox Theatres, only eighteen were deemed suitable for Grandeur installation. For about twenty of the forty or fifty Fox theaters that had closed in the New York City area, rather than try to revive them with Grandeur, Clarke planned to transform them into indoor miniature golf courses, at a cost of $25,000 each.

  It seemed to make no sense. The studio spent a fortune on The Big Trail, promoted it effusively, and then sent it out into a market that was literally unequipped to receive it.

  Yet, it did make sense. Between the start of production and the release of the movie, Harley Clarke realized that William Fox was not going to fade away into retirement, but meant to harass him at every possible turn. At Fox Film and Fox Theatres, Clarke could beat back his predecessor with the big stick of the voting shares, but at Grandeur, Fox was equally armed because the two of them owned the company fifty-fifty.

  It soon became clear that they would not get along. Blind with rage at having lost his companies, Fox scratched and clawed to regain whatever he could, even if it was nothing he particularly wanted. Immediately after the voting shares sale, he picked a fight over his contractually provided right to participate in 10 to 20 percent of the Fox companies’ refinancing. Although he had no faith in Clarke’s leadership, he demanded that Clarke sell him 320,000 of the newly issued 1.6 million Fox Film Class A shares. Fox knew Clarke needed to keep as many shares as possible to generate dividends to support the rickety General Theatres Equipment. Indeed, Clarke offered Fox only 116,000 shares—10 percent of the number he had left after giving 440,000 shares to his bankers. Using the scorched-earth tactic used so recently against him, Fox threatened to file a receivership lawsuit unless he got the full 20 percent. Would he really destroy Fox Film? Clarke’s lawyers counseled that Fox was probably bluffing, but Clarke knew the strength of Fox’s will. Fearing that if Fox got any shares at all he might vindictively dump them on the market en masse, causing the price to collapse a
nd ruining the refinancing, in August 1930 he bought out Fox’s entire claim to refinancing participation with $2.8 million in GTE one-year notes.

  Fox also hounded Clarke about Grandeur, demanding a directors meeting and insisting on his right to examine the company’s books. Clarke tried ignoring him, but Fox wouldn’t relent. That spelled trouble because Clarke had been playing fast and loose with Grandeur’s finances, borrowing as much as $500,000 without Fox’s knowledge and letting GTE bilk the Grandeur-owned Mitchell Camera Company, Hollywood’s leading motion picture camera manufacturer, for a phony 10 percent commission. Grandeur would be no good to Clarke if he had to put up with a vengeful, interfering partner like Fox.

  In early May 1930, as tension with Fox escalated, Clarke hinted that Fox Film might drop the Grandeur format.* By October 1930, when The Big Trail premiered, he had decided to do so. The studio would never make another Grandeur movie.

  It was a huge mistake, Fox believed, to shelve a dazzling new technology at a time when the industry needed to do everything possible to retain its patronage. In mid-1932, with the U.S. economy at a nadir and the motion picture industry suffering the effects, Fox said of Grandeur, “It would have given them the finest kind of business during this period of depression. They would never have felt the Depression if they would have gone forward with this project.” Perhaps he was wrong. Perhaps nothing could have mitigated the loss of entertainment revenues during these dark years. If so, it would have been the first time in a quarter of a century that Fox had completely misjudged the mind of the motion picture audience.

  Clarke’s administration made other careless blunders. In March 1931, rather than raise John Wayne’s salary from $100 to $125 a week, the studio dismissed him, despite his well-praised performance in The Big Trail. Later that year, the studio deemed John Ford too expensive at $3,000 a week and dropped him, too. Instead, for less than half Ford’s price, Sheehan hired six would-be directors to work in pairs—a production manager, an actor, a prop man, a film editor, and two writers. None produced any memorable work. Other future legendary names who passed through Fox Film during this time with scant appreciation included Humphrey Bogart, who made his film debut in A Devil with Women (1930), inexplicably teamed with Victor McLaglen as a comedy act; Jeanette MacDonald; Joel McCrea; and three former vaudeville comedians then called the “Racketeers”—brothers Moe and Shemp Howard along with Larry Fine, who would soon achieve success elsewhere as the Three Stooges.