Under the studio system, it was common practice for a studio to loan out a contract star to another studio. Since actors were owned by the studios, they really didn't have a choice in the matter (to refuse a role usually meant suspension without pay). It is said that loaning out their stars was a way for the studios to discipline them and keeping them in line. For instance, when Clark Gable objected to being typecast by MGM, the studio punished him by loaning him out to Columbia --at the time considered a lesser studio-- to do "It Happened one Night" (1934). (This 'punishment' eventually got Gable the Best Actor Oscar). But even more than that, these loan-outs were simply very profitable as the borrowing studio had to pay the loaning studio an extra fee on top of the star's salary.
In 1936, Warners Bros. made "Cain and Mabel", starring Clark Gable and Marion Davies. Davies' lover, the influential publisher William Randolph Hearst, wanted Gable to play Davies' leading man and convinced Jack Warner, an old friend of his, to hire Gable from MGM. Although the deal with MGM was a one-picture deal, in advertisements of a few Australian trade papers it was made to look as though Gable was one of Warners' contract players. The letter for this post --addressed to Harry Warner, President of Warner Bros.-- refers to this matter, saying that "such unethical advertising should be avoided in future". The letter is unsigned but presumably written by Will Hays, head of the MPPDA.
Trade magazine advertisement for "Cain and Mabel"
Source: mppda digital archive
January 2, 1937
Mr. Harry M. Warner
Warner Bros. Pictures, Inc.
321 West 44th Street
New York, N.Y.
Dear Mr. Warner:
At a meeting of the directors of publicity and advertising of member companies, constituting our Advertising Advisory Council, at the Association offices on December 29th, it was unanimously agreed that the companies should refrain in their advertisements from giving misleading impressions regarding borrowed stars and talent.
An example was cited of advertisements in two trade papers in Australia. The advertisements of a company which had borrowed a star for a single picture were so worded that it was made to appear that the borrowed player was a regular player of the company which in fact had obtained his services for one picture only.
The meeting agreed that this type of advertising was unfair and unjust to the company which had the player under regular contract and which had merely lent the player to the other company. As a matter of policy, those present at the meeting felt that such unethical advertising should be avoided in future. While a company is perfectly justified in advertising borrowed talent, it should not attempt to convey the impression that the player is on its regular studio roster. I know that you will readily agree with the fairness of this proposal.
It was suggested at the meeting that I bring this problem to your attention with the request that you pass the matter along to foreign and sales department managers as well as to your advertising and publicity executives.
With kindest personal regards, I am