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MONEY BKHINI) THE SCUEEN 73
the Westom KIcrtric s\ stern. Tin* followin^^ fij/urcs relating in tlic profits of " Kr|)i " (liirinj.^ tlic cij/lit y<ars from .Janiiarv Ist, li>27, to the end oi" 1!).'M and puhhslied in the Wall Street J(jurn/il of July 18th, 11)35, will serve to convey an impression of tlie aggregate value of those licenseH. During tliis period " Erpi " : —
Uopaid Sr>,7r>().(MH> siM-nt l>y it on n-Hrnn h iirul (Irvj-loprnrnt.
Paid So.TOO.dOO royiiltiiH to tlic j)aniit ( (.inpuiiy (A.'l'. k T.C.).
Puid Sl,()()0,(K)0 dividciulH to the intirnudiiito (omimny fW.K).
Accuimilated S5,4r)0,(H)0 undiHtributt'd profits in its treasury.
In other words the net revenues ohtained by this eoncern from the sale and licensing of sound e(piipment during eight years (including the early j)hase when sound was not yet generally adopted) amounted 'to $2()/J(X),0(X).
As wo have indicated, the establishment of this monopoly was not achieved without violent oj)position involving prolonged litigation. Both the WarniTs and b'ox had done a considerable amount of pioneer work before the telephone and radio interests decided to enter the sound film sphere on a large scale. In the ease of Warner Bros, a long law suit between that company, on behalf of the \'ita})hone Corj)oration, and Erpi was settled in 1935 with the payment by Erpi of back royalties on sound equipment and its release from further royalty obligations.
The struggle with Fox was even more dramatic. It involved not merely the personal owTiership by W. Fox of the American Tri-Ergon patents (the patents used in the continental Klangfilm system), but also his retention, up to the period under discussion, of personal control over his film companies. Litigation concerning the Tri-Ergon rights was not settled until 1935, when the vSupreme Court annulled W. Fox's patents, reversing the findings of all the lower courts by its decision. While there was still a possibiUty that W. Fox's Tri-Ergon claims might be corroborated, the vast market represented by the Fox companies might, however, be conquered for the Western Electric interests, if W. Fox w^re removed from their control. This was the objective of the bitter struggle fought out by^ the telephone group and the Fox bankers Halsey, vStuart & Co. on the one hand and W. Fox on the other betw^een October, 1929, and April, 1930. At the commencement of this period the Fox companies were at the height of their prosperity, earning a net income of §17,000,000 per year. W. Fox had embarked on three vast expansion schemes : the purchase of an important theatre circuit (the PoU group), the acquisition of the controlling interest in Loew's Inc. and of 49J per cent, voting stock in the holding company controlling Gaumont -British. In order to finance these deals Fox had obtained a $15,000,000 loan from the telephone group and other loans amounting together to about the same figure from his bankers. These short term loans were to be repaid in the ordinary course of business by new stock issues. To his surprise Fox dis