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74 MONEY BEHIND THE SCREEN
covered, however, that the price demanded by his banking and telephone friends for this normal service was the abandonment on his part of control over his companies. Efforts to find alternative financial backing, although for a time apparently successful, proved fruitless in the end. Fox found himself face to face with, a banking ring determined to wrest control from his hands and powerful enough to buy off even those banl^ers who at first were prepared to support him. After a long legal battle in which the telephone group attempted to tlirow the Fox concerns into receivership and which was further complicated by the filing of an anti-trust action against Fox on account of the Fox-Loew merger, the matter was finally settled by a victory of the telephone-banking ring. W. Fox sold out his voting stock for $18,000,000 to a business friend of the Halsey, Stuart firm, H. L. Clarke, a Chicago utihties magnate associated with the Insulls. Fox, who remained on the board of his former concerns for a short period after these events, offered the free use of his Tri-Ergon sound patents to these companies, but their new controllers preferred to enter into a Ucensing arrangement with the Western Electric interests at a cost to their shareholders of approximately $1,000,000 a year. (See Upton Sinclair Presents WiUiam Fox, p. 324.)
This part of the struggle between Fox and the telephone interests serves to illustrate the ultimate inter-relation in the present financial position of the American film industry of the indirect form of patent control we have so far examined and the direct form of voting stock and management control to which we must now turn. It is necessary, however, at this point to stress the fact that here, as in any other sphere, control is not necessarily identical with ownership. The Fox case again provides a pertinent example. Prior to the change we have described control of these companies was vested exclusively in 5 per cent, of the total capital which alone carried voting rights (although W. Fox also o^vned a substantial block of nonvoting shares). After the change the situation was even more striking : the Fox companies, then affiHated to Clarke's General Theatres Equipment Inc., were controlled by three voting trustees, each of whom owned only one share of stocks, the value of which in 1931 was a little over one third of a dollar. (See Sinclair op. cit.)
COIVIMENTS ON THE EIGHT MAJOR COMPANIES
The direct financial control of the eight major companies insofar as it could be ascertained from the information at present available in this country, is illustrated in Chart 2. Taking the companies one by one the following situation emerges :
Paramount : All the Paramount interests were merged in 1930 in a new company known as the Paramount Publix Corp., which continued the expansion operations of the group on a large