Evening star. [volume] (Washington, D.C.) 1854-1972, 1933-11-22
|$16,OD0,0)O PROFIT
|NFOX SALE SHOWN
Senate ProberS Get Evidence
Stock Was Purchased
Below Market.
BY the Associated Press.


ter properties of William Fox. General
Theaters Equipment purchased a new
issue Of Fox film stock for $4,000 900
less than the prevailing market price
without offering it to the stockholders
OF that company.
The Fox film stock was purchased by
General Theaters Equipment, the EVIL
dence showed, for $50 a share when
the market price was $40 and up.
Shortly thereafter the stock went up
above $50 share.
Sold 100000 to Bankers.
General Theaters Equipment retained
100000 shares and sold 100000 at the
$50 price to bankers interested in the
financing, it was developed.
If the stock had been sold by the
bankers, 1t would have netted them
profit of more than 100000 at the
prevailing market price.
Murray Dodge. former vice president
of the Chase Securities Corporation,
contended if the stock had been sold to
the public or the stockholders, 1.-The
weight on the market would have car
ried the price much lower than $50
share.
He said $50 1000 of the Fox Film
shares were sold to Fox at the same
$50 price.
The committee previously had OBJ
tanned evidence that huge stock and
bond flotations which brought in about
s60,000,000 failed to save the holding
company after G. T. E. had paid SIS
600, 900 and other considerations to Fox
for control of his financially hard
pressed companies
With noisy creditors on every hand,
lawsuits pending by the score and
obligations running almost up to $780,
100000, Fox not only got the Sl5.000,-
0C0 cash for his control, but agreement
worth many millions more
The agreement under which he sold
out to G. T. E. before its collapse in
February. 1882, guaranteed him year.
ly $4,000 salary for five years, agreed
to pay him $4,000 900 for other salary
claims, provided for payment of pre-
miums on his S3.500.0O0 life insurance
policies and gave him at least 10 per
cent of profit from underwriting Of
Fox Film securities.
Walker Letter Shown.
Pecora placed in the record a letter
showing Elisha Walker, president of the
Bancamerica-Blair Inc. threatened /
legal action unless his group was per- !
mltted to share in the Fox financing
In the letter, written to the Chase !
promised participation in the issues
Several conferences followed Walkers |
protest. Dodge said. and as a result the |
Bancamerica group was given As per !
cent participation in one-year note !
issue by Halsey-Stuart
Going back to the Fox Film stock |
bought at $50 when it was $40 on the |
market Dodge said The Pynchon pool |
which obtained 240,000 shares of the |
Securities West, Hammons g. Eric and |
brewers.
This group, virtually the same that |
did all the general theaters equipment |
financing, could have realized an i'm |
mediate profit of about two and half |
million dollars, it was developed.
Received Total Of $4,000, 900.
AS todays hearing opened, Pecora
estimated Fox received total of about |
s21 900, 900 for controlling interest in |
his vast theater properties
The estimate was made by the COM |
mittee counsel as he reviewed purchase !
Of the property by Gen, General Theaters
Equipment, Inc, in 1890 |
In addition to the cash payment of |
SIS. 000,0 900. Pecora said Fox received |
other considerations which resulted in !
additional payments of about $6,0OO,-
600.
The hearing was moved today to the
Banking Committee room. where all |
sessions were held until the tremendous
crowds at the Morgan investigation last |
June forced transfer to the more spa !
clouS caucus room.
The loud speaker system, which was
used in the caucus room because of the |
poor acoustics there was abandoned.
The return move was made because !
OF difficulty in heating the larger room. |
Starting Time Changed.
At the same time the committee |
changed its starting time from 10 am.
to 1890.
Pecora placed in the record a memo
randum of conversation between
Harley L. Clarke, president of General |
Theaters Equipment, and Harry Stuart |
of Halsey-Stuart just after the trans.
action with Fox was completed.
1t quoted Stuart as saying
Il have been put out on the end of |
a springboard and told to jump off,"
The memorandum was forwarded by
Clarke to the Chase Securities Cor
poration.
Pecora asked if Halsey-Stuart felt it
was being crowded out Of future
Dodge, who was testifying. said the
background OF the conversation was a
previous controversy between the bank
erS over financing the Fox properties.
Dodge said he had told Stuart his
firm should be included in the future
Pr0fited on Debentures.
The committee also received evidence
that the bankers made So $50 900 from
selling General Theaters Equipment de-
bentures within five days without put
ting up a penny.
Pecora asked why General Theaters
Equipment sold the debentures for $50 |
when they were sold to the public i'm
mediately at 991A
THE bankers didn't know the bonds
would be worth that much" Dodge
replied.
The bankers knew the market was
ready to absorb them at 991z, Pecora
asserted.
Their judgment was justified by
future events" Dodge conceded, but
added: They took a large risk"
Dodge testified the original group OF
West & Co., Pynchon & Co., w. s.
HamamonS g. Co. and Halsey-Stuart,
sold the bonds Of the distributing group
for 96L2, netting an immediate net
profit Of s1,8O6,075.
Without putting up dollar"
Pecora remarked
Literally that is true" Dodge re-
piled; but he pointed out the bankers
were liable for the entire $27,000,00
paid for the bonds.
Jesse H. Jones, chairman Of the Re
construction Finance Corporation, de-
MED in a report to the committee yes
terday in executive session that the cor
poration had made any loans to COM |
panieS in which he was interested. The |
personnel of the committee investigat-
ing r. F C. loans is the same as that !
conducting the probe Of the stock
market.
Jones reported that loans OF Sl,5oo,ooo
each had been made to the Bankers