The film that became "Towed in a Hole" was scheduled to start shooting on October 17, 1932, but was postponed for two weeks whilst Stan Laurel and his gag writers struggled to come up with a workable story. Director George Marshall described how he found the way out of this impasse: "I drove to the studio one morning, and in Culver City I passed one of these little fish wagons; and this fellow was touting his wares with a long horn as he drove down the street. So I thought, 'Well, maybe that could be the answer, with the boys selling the fish, but to make more money, catching their own fish.' I had about that much when I came to the studio. Stan was sitting in his room. I told him about the idea and he said, 'Yeah, that just might work.'. The script developed from there. Filming began on November 1 and lasted ten days. The result is considered one of Laurel & Hardy's finest short comedies.
The third and final Laurel & Hardy film directed by George Marshall. On November 11, 1932 - one day after shooting for "Towed in a Hole" wrapped - Marshall was fired by Roach Studios general manager Henry Ginsberg over the production delays involved in its making. Marshall never worked with Stan and Ollie again, but retained fond memories of the duo, especially of Stan, whom he claimed made him a better director.
The title "Towed in a Hole" is a pun on the name of a traditional British dish, "Toad in the Hole," consisting of sausages in Yorkshire pudding batter. English-born Stan Laurel would use the term again as an insult in the Laurel & Hardy feature "Way Out West" (1937).
Other than a very brief appearance by Billy Gilbert, Laurel and Hardy are the only characters in the film.
The first time we see the boat, the name "Ruth L" appears on the bow. This was the name of Stan's yacht. The yacht was named after his wife, Ruth Laurel.