It was clear that by the second half of the 1930s, that the quota had failed to create a flourishing industry, even the contributions of Michael Powell himself couldn't help stave off its inevitable demise. Those producers who believed that the production of quality films was only viable if they had an American market had found that the vital cinema circuits were controlled by American production interests and so were implacable barred to those people attempting to distribute British films in America. Producer and director Victor Saville claimed that even in Britain the financial terms of distribution were far less favorable to British producers than to Americans.
By the second half of the decade, the slump hit the British film industry. Gaumont-British had decided to cease production at Shepherd's Bush by the end of 1936. Around the same time Korda was running into financial trouble after building the large studios at Denham. Financiers in the City of London were now coming to the realization that they had been lending short-term capital without adequate security and at lease one producer, Julius Hagen (1884-1940) of Twickenham filed chapter eleven. All the Quota Act had done was to encourage an unhealthy expansion of low-cost production. The Act was due for a reinstatement in 1938 in any event, but a government committee under Walter Guinness, 1st Baron Moyne convened several times during 1937 to reconsider the Quota and other means of dealing with the American influence. During this crucial period of uncertainty investment in production fell away and the big American companies began to take over studios that had been expanded during the boom period. Britain was by this time a fully geared-up movie colony ripe for big-budget American productions.