by Vanda Krefft
507 “rotten” practice: William Gray, quoting Fox, SEPH, Part 3, at 984.
507 “perfectly proper”: William Fox interview with William Gray, June 15, 1932, Part 1, 9; Part 2, 9, US-MSS, Series III, Box 24, File 2.
507 “Short selling is a common practice”: Ibid., Part 2, 6–7, US-MSS, Series III, Box 24, File 2.
507 never having handled theater securities: “An Open Letter by Halsey, Stuart & Co., Inc., And Statement and Affidavit of Winfield R. Sheehan,” Mar. 24, 1930, 2, HTC.
507 solicited the business: William Fox to the Stockholders of Fox Film Corporation and Fox Theatres Corporation, Apr. 8, 1930, in “Answer of William Fox to ‘Open Letter’ of Halsey, Stuart & Co. of Mar. 24, 1930 and to Statement and Affidavit of Winfield R. Sheehan,” 6, HTC.
508 ate up its commission: “An Open Letter by Halsey, Stuart & Co., Inc., And Statement and Affidavit of Winfield R. Sheehan,” Mar. 24, 1930, 2, HTC.
508 another banking firm . . . final $4 million: Ibid., 4.
508 take over the second mortgage bond underwriting: Ibid.; “Fox Floats $4,000,000 Debentures on Poli Chain,” EDR, Sept. 11, 1928, 1.
508 special payment of $1 million: “An Open Letter by Halsey, Stuart & Co., Inc., And Statement and Affidavit of Winfield R. Sheehan,” 5–6. HTC.Transcript, 149.
508 “past services”: Transcript, 149.
508 well compensated . . . $48 million: “Answer of William Fox to ‘Open Letter’ of Halsey, Stuart & Co. of Mar. 24, 1930 and to Statement and Affidavit of Winfield R. Sheehan,” 5. HTC.
508 public oversubscribed . . . made good money: Ibid., 7.
508 Richard F. Hoyt . . . skilled airplane pilot: “Richard F. Hoyt, 46, Financier, Is Dead,” NYT, Mar. 8, 1935, 21; “Richard Hoyt, Financier, Dies After Operation,” BDE, Mar. 7, 1935.
509 fraud charges . . . “If the members of this firm”: Grace Van Braam Roberts letter, SEPH, Part 6, at 1825–26; “ ‘Lambs’ Have Day in Market Inquiry,” NYT, June 24, 1932, 1.
509 ingratiating manner: USPWF, 94–95.
509 huge inverted pyramid: Oral History interview with Ferdinand Pecora (1962), 689, CCOHA.
509 $2 billion in largely watered Insull securities: “Broker for Insull Made $20,000,000,” NYT, Nov. 13, 1934, 21; Arthur R. Taylor, “Losses to the Public in the Insull Collapse: 1932–1946,” Business History Review 36, no.2 (Summer 1962): 192.
509 believed Stuart led him astray: Ralph W. Hidy, “Insull by Forrest McDonald,” The Journal of Economic History 23, no. 3 (Sept.1963): 372.
509 in 1928: “Bond Flotations,” NYT, Nov. 1, 1928, 39.
509 $2.5 million . . . in Washington, DC: “H. L. Stuart Yields on Fraud Charge,” NYT, Oct. 6, 1932, 2.
509 $16 million in prior liens: Ibid.
509 foreclosure proceedings in 1927: “Sues for Equity in $12,025,000 Deal,” NYT, Sept. 9, 1930, 29.
509 charged with mail fraud: “H. L. Stuart Yields on Fraud Charge,” 2.
510 “tuneful . . . high order”: Halsey, Stuart & Co. ad, The Milwaukee Journal, Dec. 20, 1928.
510 profiled business leaders: Julia C. Ott, When Wall Street Met Main Street (Cambridge, MA: Harvard University Press, 2011), 183.
510 companies whose securities Halsey, Stuart was selling: Ibid., 183.
510 mellow-voiced: Pecora, Wall Street Under Oath: The Story of Our Modern Money Changers (New York: Simon and Schuster, 1939), 233.
510 middle-aged: “Bertram G. Nelson, Retired Professor” NYT, Dec. 30, 1938, 15.
510 University of Chicago professor of public speaking: “Old Counsellor Bares Parrot Role,” Pittsburgh Press, Feb. 19, 1933.
510 Bertram J. Nelson . . . for fifty dollars a week: Ibid. In its 1938 obituary, the New York Times would give Nelson’s middle initial as “G” (“Bertram G. Nelson”).
510 prepared . . . at the Halsey, Stuart offices: Harold L. Stuart testimony, Feb. 17, 1933, SEPH, Part 5, at 1625.
510 investment of $375,000 . . . more than $65,000: “Hayden Stone & Co., account 703, participations,” SEPH, Part 3, at 1040.
510 $10.4 million in cash profits to him personally: Ferdinand Pecora statement, SEPH, Part 6, at 2851.
510 helped draft the Federal Reserve . . . 1914 to 1918: “H. Parker Willis, Economist, Is Dead,” NYT, July 19, 1937, 15.
510 violated “[p]ractically every maxim”: Willis, “Who Caused the Panic of 1929?,” 181.
510 “a national disgrace”: Ibid., 183.
511 increased its assets to nearly $31.6 million: “Bankers Securities Corporation Condition,” June 29, 1929, AMG.
511 “the most damnable practice”: USPWF, 363.
CHAPTER 37: TROUBLE
512 Shortly after . . . Fox News interview: William Fox testimony, SEPH, Part 8, at 3662–63.
512 Mitchell rebuffed him . . . charge of antitrust: Ibid.
512 end of May 1929: “J. L. O’Brian Chosen As Aide To Mitchell,” NYT, May 24, 1929, 16.
513 arm-twisted by Hoover: Oral History interview with John Lord O’Brian (1967), 335, CCOHA.
513 “considerable sacrifice”: Ibid.
513 “as I read this record”: Transcript, 140.
513 answer only if O’Brian asked: William Fox testimony, SEPH, Part 8, at 3664.
513 O’Brian didn’t: Ibid.
513 Fox had no idea: Ibid.
513 divestiture order . . . consent decree: “Fox’s Control of Loew’s For Stock-Only,” Variety, June 5, 1929, 5 and 36.
513 only about $60: “Securities Price Range,” EH-W, May 25, 1929, 26.
513 merger talks with Paramount: “Declare Film Mergers Are Muddled; Paramount-Warner and Fox Deals Set,” MPN, Aug. 31, 1929, 783.
514 “illegal acquisition”: “Fox Says He Saw Hoover on Merger,” New York Journal, Nov. 23, 1933.
514 how many did Fox own . . . money: Transcript, 141.
514 1,334,453 outstanding Loew’s shares: “William Fox Buys Control of Loew’s, Inc.,” NEN, Mar. 2, 1929.
514 met Hoover . . . through . . . Greenfield: Transcript, 324.
514 “desirous of working”: Ibid.
514 put the Fox Movietone News . . . in service: Ibid; William Fox to Herbert Hoover, Nov. 7, 1928, HHP.
514 at great expense . . . audience of about 10 million: Transcript, 324.
514 sent Fox an autographed photo: William Fox to Herbert Hoover, Nov. 7, 1928, HHP.
515 “I have issued instructions” . . . “government stand for”: Ibid.
515 “fine assistance”: Herbert Hoover to William Fox, Nov. 15, 1928, HHP.
515 Pittsburgh lawyer . . . presidential campaign adviser: “James F. Burke Dies,” NYT, Aug. 9, 1932, 1.
515 “vitally interested”: Transcript, 327.
515 “I am sure they will understand”: William Fox testimony, SEPH, Part 8, at 3665.
515 “it got him nowhere”: Ibid., 3669.
515 “true liberalism”: Richard Hofstadter, The American Political Tradition, And the Men Who Made It (New York: Vintage Books, 1989, originally published 1948), 383.
515 too cozy with big business: “Government’s Approval Policy On Mergers Now Slated To Be Modified,” MPN, Aug. 10, 1929, 525.
515 prioritize antitrust law enforcement: Francis L. Burt, “Hoover to Study Enforcement of Laws Affecting Film Trade,” EH-W, Mar. 16, 1929, 25.
516 eliminating cross bidding: Transcript, 136–37.
516 in mid- or late June 1929: Ibid., 141.
516 long conversation . . . Mayer: William Fox testimony, SEPH, Part 8, at 3665–66.
516 “While no one had told me”: Transcript, 143.
516 worked aggressively on his presidential campaign: Harry Carr, “Delegates in Corners,” LAT, June 12, 1928, 1.
516 serious tactical error: William Fox testimony, SEPH, Part 8, at 3666.
517 late February: Transcript, 141.
517 fighting mad: Ibid., 142.
517 none of the three owned: Ibid.
517 “What they would have liked”: Ibid
.
517 “they hadn’t expressed any faith”: Ibid.
517 “didn’t make friends”: Ibid.
517 Irving Thalberg really did matter: Ibid.
517 a check for $250,000: Ibid., 143.
517 “rather intimate friends”: William Fox testimony, SEPH, Part 8, at 3668.
517 “I went to the telephone” . . . “next train out”: Ibid., 3667.
517 Four days later: Transcript, 143.
517 “Louis went into a tirade”: William Fox testimony, SEPH, Part 8, at 3667.
518 “I told him that was his right”: Ibid.
518 only fair for Mayer, Thalberg, and Rubin: Ibid., 3667–68.
518 “We would have paid it”: Ibid., 3668.
518 $2 million in cash: Ibid.
518 “I know all about that” . . . “perfectly simple matter”: Ibid.
518 talking through his hat: Ibid., 3669.
518 “rather ashamed of being a citizen”: Ibid., 3668.
518 he thought he could do it: Ibid.
518 “the best of friends”: Transcript, 145.
518 $12 million due . . . on April 1, 1930: Ibid., 687.
518 Within a week: Ibid., 132.
519 Harry Stuart came to Fox’s office . . . “terrific blunder”: Ibid., 3657.
519 no guarantee of control: Transcript, 132.
519 “or you will be wiped out”: Ibid., 133.
519 493,000 Loew’s shares changed hands: “Fox Nabbed Control Buying Open Market and Loew Stock,” FD, Mar. 1, 1929, 11; “Financial,” FD, Mar. 1, 1929, 2.
519 $75–$80 in early March: “Financial,” FD, Mar. 3, 4, 5, and 6, 1929, 2.
519 assumed that Fox had been buying: Peter Vischer, “Fox Buys Loew’s, M-G-M; Assets Now 230 Million; Industry’s Largest Deal,” EH-W, Mar. 9, 1929, 18; “Fox Nabbed Control Buying Open Market and Loew Stock,” 11.
519 in other people’s names: Transcript, 133.
519 Otterson also began to pressure: Ibid.
519 To make sure, he asked: William Fox testimony, SEPH, Part 8, at 3659.
519 they intended to stand by: Ibid.
519 make sure that none of their friends: Ibid.
519 “I stripped the companies”: Transcript, 133.
519 borrowed all the money he could: William Fox testimony, SEPH, Part 8, at 3662.
519 bought on margin from stockbrokers: Ibid.
519 after spending about $23 million: Ibid.
519 “We probably would have bought”: Ibid., 3661.
520 “with little or no competition”: Ibid., 3659.
520 1 million by the end of the year: Charles Estcourt Jr., “New York Skylines,” Atlanta Constitution, Mar. 10, 1929, A2.
520 largest acquisition . . . early July: William Fox to Halsey, Stuart & Co., Jan. 10, 1930 (Draft), 1. US-MSS; William Fox testimony, SEPH, Part 8, at 3691.
520 49.5 percent stock interest: F. D. Klingender and Stuart Legg, Money Behind the Screen (London: Lawrence and Wishart, 1937), 73.
520 Britain’s most important . . . more than 300: Transcript, 237.
520 renting less than $500,000 . . . ten times as much: Ibid., 238.
520 would include two . . . Lord Lee: William Fox to the Stockholders of Fox Film Corporation and Fox Theatres Corporation, Apr. 8, 1930, in “Answer of William Fox to ‘Open Letter’ of Halsey, Stuart & Co. of Mar. 24, 1930 and to Statement and Affidavit of Winfield R. Sheehan,” 11, HTC.
520 pay for themselves within five years: Transcript, 238.
520 encouraged him to buy Gaumont: Ibid., 240; William Fox to Upton Sinclair, July 8, 1932, US-MSS.
520 eight percent commission rate: Transcript, 239.
521 $93 million debt: William Fox testimony, SEPH, Part 8, at 3691.
521 guaranteed the $7.5 million job: Ibid.
521 Otterson had already tried and failed: Transcript, 240.
521 “perfectly secure and safe”: Ibid., 241.
521 the Walter Reade chain . . . Ohio: “Fox Takes Over Walter Reade-Schine Circuits,” MPN, Mar. 6, 1929, 750.
521 $1 million Mayflower Theatre: “Fox Buys Mayflower, Seattle’s New Theatre,” EH-W, Mar. 30, 1929, 72.
521 controlling interest in the Chinese Theatre: “Grauman Sells to Fox Chain,” LAT, May 14, 1929, A1.
521 $4.65 million San Francisco Fox: “Fox Theatre, San Francisco, California,” brochure, Theatre Historical Society of America 30 (2003). HTC.
521 opened on June 28, 1929: “The Fox—A New Motion Picture Palace Opens Its Doors to the San Francisco Public,” MPN, Aug. 3, 1929, 423.
521 largest movie theater west of New York: “50,000 Celebrate Opening of Fox Picture Palace,” SFC, June 29, 1929, 1.
521 $36,000 carpet: “Fox Theatre, San Francisco, California” brochure, HTC.
521 rose-and-gold carpet: Preston J. Kaufmann, Fox: The Last Word (Pasadena, CA: Showcase Publications, 1979), 133–34.
521 “Golden Stairs of Enchantment”: “Fox Theatre, San Francisco, California” brochure, HTC.
521 curved stairway . . . Paris opera house: “Officialdom to Take Part in Celebration,” SFC, June 28, 1929, 12; “Fox Theatre, San Francisco, California” brochure, HTC.
521 original $2 million estimate: Dudley F. Westler, “Contract for $2,000,000 S.F. Theater Is Awarded,” SFC, Sept. 22, 1927.
521 “Utopian Symphony”: Kaufmann, Fox: The Last Word, 83.
522 six-hour outdoor celebration . . . vaudeville show: “New Five-Million-Dollar Fox Theater to be Opened and Dedicated Tonight,” SFC, June 28, 1929, 12.
522 estimated fifty thousand to seventy-five thousand spectators: “50,000 Celebrate Opening of Fox Picture Palace, 1; “Fox Theatre, San Francisco, California” brochure, Theatre Historical Society of America 30 (2003), 2, HTC.
522 television would do far more damage: Transcript, 164.
522 have to become more spectacular: Ibid.
522 patents to a 70mm . . . refining the technology: Angela Fox Dunn, “A Man and His Camera,” Variety, Oct. 27, 1981, 68; William Fox to F. W. Murnau, Dec. 27, 1927, quoted in Bergstrom, “Murnau in America,” 435.
522 Nebraska-born . . . industry’s leading 35mm motion picture camera: Dunn, “A Man and His Camera,” 68.
522 “Gee whiz” . . . “made one, then two”: Ibid.
523 buy the Mitchell Camera Company: Transcript, 165.
523 short, stocky figure: Ibid., 603.
523 more than 75 percent of all movie projectors: Committee Exhibit No. 138, Nov. 17, 1933, SEPH, Part 7, at 3500.
523 met in 1928: Transcript, 596.
523 letter of introduction from . . . Stuart: Ibid., 161–62.
523 “Don’t trust him further”: Ibid., 162.
523 small utility property in Vincennes, Indiana: “Society for Visual Education,” The Educational Screen, Oct. 1940, 334.
523 Utilities Power . . . eastern states: Willard Howe, “Where Goes Fox Film Under Harley L. Clarke?” Motion Picture Review and Theatre Management, June 1930, 9.
523 in Great Britain: “British Power Chain Sold to Americans,” NYT, Feb. 15, 1929, 19.
523 total assets of $400 million: Ibid.
523 made a lot of money: Transcript, 604.
523 “fine, decent sort of chap”: William Fox testimony, SEPH, Part 8, at 3670.
523 Clarke proposed that they go into business together: Transcript, 165.
523 On May 24, 1929 . . . formed Grandeur: Committee Exhibit No. 169, SEPH, Part 8, at 3674–75.
523 negotiating to buy Mitchell Camera: Exhibit B, SEPH, Part 8, at 3675.
523 provided $50,000 as half: William Fox testimony, SEPH, Part 8, at 3688.
523 bought Mitchell Camera for himself: Harley L. Clarke testimony, SEPH, Part 7, at 3432, 3629.
523 several weeks later: William Fox testimony, SEPH, Part 8, at 3683.
523 for himself, four projector-lamp: William Fox testimony, SEPH, Part 8, at 3676; Harley L. Clarke testimony, SEPH, Part 7, at 3410–11, 3432, 3437.
52
4 only U.S. companies licensed: William Fox testimony, SEPH, Part 8, at 3673.
524 intended to buy the companies himself: Ibid., 3672.
524 turn Mitchell Camera . . . price he’d paid: Harley L. Clarke testimony, SEPH, Part 7, at 3435.
524 let Clarke keep: Ibid.
524 paid Fox $2 million: Ibid., 3436.
524 June 24, 1929 . . . Grandeur projectors: Murray W. Dodge testimony, SEPH, Part 7, at 3463–64.
524 (GTE), on July 11, 1929: Harley L. Clarke testimony, SEPH, Part 7, at 3400.
524 Rather than follow . . . “book value”: Ibid., 3412.
524 He used . . . “nominal value”: Ibid., 3407.
524 its future earning power: Ibid.
524 known as stock watering: Ferdinand Pecora statement, SEPH, Part 7, at 3409.
524 book value of $4.76 million: Ferdinand Pecora statements and Harley L. Clarke testimony, SEPH, Part 7, at 3411–12.
524 worth about $43.05 million: Ibid.; “Flow of Bank Loans to Wall Street Traced,” WP, Nov. 17, 1933, 3.
524 did not include a consolidated balance sheet: Ferdinand Pecora statement, SEPH, Part 7, at 3512–13.
524 He owned one: Harley L. Clarke testimony, SEPH, Part 7, at 3405.
524 Two of his bankers: Ibid.
524 Bankers also made up GTE’s eleven-member: Ferdinand Pecora statements, SEPH, Part 7, at 3488.
524 share price up from $20 to $65: “Senate Delves Into Struggle for Fox Film,” MPD, Nov. 22, 1933.
524 intrinsic value of no more than $1: Transcript, 600.
524 “a bag of wind”: Ibid., 601.
525 cash capital of $25 million . . . $750 million: “Financial Trust with Fox A Sponsor Offers Stock,” FD, May 16, 1929, 2.
525 William C. Durant and . . . David Bernstein: “Big Interests Form Investment Trust,” NYT, May 8, 1929, 46.
525 saloon owner in Bridgeport, Ohio: “Riotous Scenes in Ohio As State’s Saloons Close,” Dallas Morning News, May 25, 1929, 7.
525 margin account for President Harding: Joseph Borkin, The Corrupt Judge: An Inquiry into Bribery and Other High Crimes and Misdemeanors in the Federal Courts (New York: Clarkson N. Potter, 1962), 42.
525 three weeks, Fox resigned: “Quits Directorship,” CDT, May 28, 1929, 36.
525 bribing . . . mayor Jimmy Walker: “Chief Points on Which the Mayor Rests Defense in Removal Proceedings Before the Governor,” NYT, July 29, 1932, 6. Walker would deny all accusations of corruption, but resigned from office in September 1932.