Shamed Citizen

In Washington last week William Fox, onetime head of Fox Films and Fox Theatres, told the U. S. Senate Committee on Banking and Currency about things that made him ashamed of being a U. S. citizen. In his latest version of how he was robbed of his great enterprise he gave the U. S. Government as sound a drubbing as U. S. finance.

High-spot in his two-day testimony dealt with his purchase (February-June 1929) of a controlling interest in Loew's, Inc. The deal cost him $73,000,000. Because it included Metro-Goldwyn-Mayer as well as the Loew theatres, the deal made Mr. Fox incomparably the No. 1 Cinema Man. U. S. anti-trust laws, however, frown on such acquisition of shares in a competing company, and Mr. Fox kept after the Department of Justice to see if he could get an official okay on the transaction. He actually bought the Loew shares on the strength of a reported verbal agreement between one William Thompson, of the Attorney General's staff, and Saul E. Rogers, Fox lawyer. Then the Coolidge Administration ended, the Hoover Administration began and--as Mr. Fox put it last week-- "a gentleman from somewhere in the Minnesotas" became the new Attorney General.

Fearing that the previous verbal agreement might no longer hold. Mr. Fox sought out the gentleman from Minnesota, who was William DeWitt Mitchell. Attorney General Mitchell referred him to Assistant John Lord O'Brian. Mr. O'Brian, consulting his files, said the record showed not acquiescence in but disapproval of the Loew purchase. Said Mr. Fox to the Senate Committee: "You can well imagine that I was alarmed about all this."* Next Mr. Fox talked to Claudius Hart Huston, then Chairman of the Republican National Committee. Mr. Huston said he would look into the matter, but while he was looking Mr. Fox became impatient. So he took his troubles to none other than Herbert Hoover, lunching at the White House with the President.

Said Mr. Fox: "I told him . . . that I had made this commitment of all these millions of dollars and that I was in a terrible place and wouldn't he please adjust the matter for me." Whereupon Mr. Hoover referred Mr. Fox back to the Attorney General.

Soon Mr. Fox saw Mr. Huston again. This time Mr. Huston asked him if he knew Louis Burt Mayer. Since Louis Mayer, besides being a potent California Republican, was also the Mayer of Metro-Goldwyn-Mayer (which Mr. Fox was absorbing), Mr. Fox knew him very well. He also knew that Mr. Mayer did not approve of the terms of the Loew sale. So Mr. Fox looked up Mr. Mayer.

And, said Mr. Fox, as soon as he mentioned his anti-trust troubles, Mr. Mayer said: "I know all about that. I caused that record to be changed from a consent to a restriction. That was a perfectly simple matter for me to do." Mr. Mayer added that getting the record changed back again would not be "quite so easy." but he thought he could accomplish it. It was at this point that Mr. Fox told the Committee: "When I learned that a man had the power to go into the Department of Justice to change the records, I was rather ashamed of being a citizen of this nation." But Mr. Fox no longer thinks that Mr. Mayer changed the record. "When he said that," observed Mr. Fox. "he was full of ego." Mr. Fox now believes that the record was changed by Harley Lyman Clarke, the man to whom Mr. Fox sold his companies in the spring of 1930 and who is Mr. Fox's special and most bitter hate.

Mr. Fox had so over-extended himself in the Loew deal, and also in paying an additional $20,000,000 for a group of British theatres, that in 1929 his companies owed about $90,000,000, all in short-term loans. In the summer of 1929 Mr. Fox was hurt in an automobile accident, laid up for several months. Whether lor this or for other reasons, neither Mr. Fox nor his bankers took the obvious step of selling to the public new stock in Fox Film and Fox Theatres. Then the market crash of October 1929 threw the whole problem of refinancing Mr. Fox into the banks.

Yet Mr. Fox, the first great victim of the crash, came out of the corporate ruin with a large sum of ready cash. He was paid $21,000.000 for his shares in Fox Film, Fox Theatres and for various minor considerations. Robbed or not, Mr. Fox stands as a prosperous victim.

Gravy. In February 1931, Murray Witherbee Dodge was a vice president of Chase Securities Corp. and Albert Wiggin was chairman of Chase National Bank. Mr. Dodge sent a memorandum to Mr. Wiggin, said that Kuhn, Loeb & Co. might be brought in on Fox financing, added, "I am loath to do [this] unless necessary, as the splitup of the gravy would hurt my feelings." Faced last week, with this memo, Mr. Dodge at first claimed that by gravy he had meant prestige.

Said Mr. Pecora: "Stick to gravy."

Said Mr. Dodge: "All right, sir. The gravy will stick to me."

Chase Losses. Mr. Winthrop Williams Aldrich, now Chase chairman, sent an itemized list of his bank's investments in Fox Film and General Theatres Equipment. These figures showed a total investment of $89,330,047, now carried at $19,757,866. Loss to Chase: $69,572,180.

Today, Mr. Fox, Mr. Wiggin and Mr. Hoover have the common bond of being ex-presidents and Mr. Dodge is an ex-vice president. Harley Clarke's General Theatres Equipment company is in a receivership and so is Fox Theatres. Loew's, Inc. (and Metro-Goldwyn-Mayer), again independent, remain solvent and prosperous, having made a profit of $4,034,000 for the year ending Aug. 31, 1933. But the disputed 660,000 shares of Loew's. Inc. (the majority holdings bought by Mr. Fox) have been segregated by the U. S. Government. They may be sold next month to satisfy Fox creditors.

* But legal or not, the sale made by the estate of Marcus Loew, and by others, had been made in good faith, could not be rescinded.

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