The American film industry, expanding hugely during World War I, continued to grow during the postwar decade. Despite the short recession of 1921, the era was one of general prosperity and intensive business investment. For the first time, major Wall Street investment firms became interested in the young film industry, fueling its expansion. Between 1922 and 1930, total investment in the industry leaped from $78 to $850 million. The average weekly attendance at American movie theaters doubled from 1922 (40 million) to 1928 (80 million). Hollywood’s exports continued to grow nearly unchecked until the mid-1920s and leveled off only because virtually all foreign markets were sated.
Central to the industry’s expansion was a strategy of buying and building movie theaters. By owning theater chains, the big producers ensured an outlet for their films. Producers could then confidently raise budgets for individual films. Studios competed in offering eyecatching production values. A new generation of directors came to prominence, and Hollywood also attracted more foreign filmmakers, who brought stylistic innovations. If the 1910s had seen the basic formation of the film industry, the next decade witnessed its expansion into a sophisticated set of institutions.
The most obvious indication of the growth of the film industry was its increasing vertical integration. The biggest firms jockeyed for power by combining production and distribution with expanding chains of theaters.
At first, the main theater chains were regional. In 1917, in an attempt to challenge the power of the big Hollywood firms, a group of local theater chains formed its own production company, First National Exhibitors’ Circuit. Its main member was the Stanley Company of America, a Philadelphia-based regional chain. Thus Hollywood firms like Famous Players-Lasky, Universal, and Fox were suddenly faced with a competitor that combined production, distribution, and exhibition.
This three-tiered vertical integration guaranteed that a company’s films would find distribution and exhibition. The bigger the theater chain owned by the firm, the wider its films’ exposure would be.
Although First National’s production wing never became really profitable, it goaded other firms to integrate vertically. Adolf Zukor, head of Famous Players-Lasky and its distribution wing, Paramount, began buying theaters in 1920. In 1925, during a second wave of theater-buying by the major firms, Famous Players-Lasky merged with Balaban & Katz, a Chicago-based theater chain controlling many of the biggest auditoriums in the Midwest. The result was the first production-distribution-exhibition firm with a truly national theater chain. Zukor marked the change by naming the theater circuit Publix Theaters. The firm as a whole became Paramount-Publix. By the early 1930s, it owned 1,210 North American theaters, as well as some theaters abroad. Paramount-Publix’s extensive holdings made it the subject of repeated government antitrust investigation and litigation that would lead to major changes in the film industry after World War II.
Another important firm that achieved vertical integration during this era was Loew’s, Inc. Marcus Loew had begun as a nickelodeon owner, expanded into vaudeville, and built up a large chain of movie theaters by the late 1910s. In 1919, he moved into production by acquiring a medium-size firm, Metro, run by Louis B. Mayer. With the purchase of Goldwyn Pictures in 1924, Loew combined his production wing into Metro-Goldwyn-Mayer (MGM). After Paramount, MGM became the second largest of the Hollywood companies.
The chains owned by the vertically integrated firms encompassed a small portion of the nation’s 15,000 theaters. In the mid-1920s, the Publix chain had roughly 500 houses, while MGM had a mere 200. Yet the three main chains included many of the big first-run theaters, with seating capacities in the thousands and higher admission prices. By late in the decade, about three-quarters of box-office receipts came from these large theaters. Smaller urban theaters and those in rural areas had to wait to get a film on a subsequent run and often received worn prints.
As the big Hollywood companies expanded, they developed a system of distribution that would maximize their profits and keep other firms at the margins of the market. In dealing with the theaters they did not own, they employed block booking, which meant that any exhibitor who wanted certain films with high box-office potential had to rent other, less desirable films from the same company. Some exhibitors might be forced to book an entire year’s program in advance. Since most theaters changed programs at least twice a week and each big firm usually made only around fifty films a year, a theater could deal with more than one firm. Similarly, the big companies needed films from other firms to keep their theater programs full. Thus the biggest firms coopera ted among themselves. The movie business developed into a mature oligopoly during the 1920s.
Because the big theaters were so important, the major companies made them opulent to attract patrons, not simply through the films being shown but through the promise of an exciting moviegoing experience. The 1920s were the age of the picture palace, seating thousands of patrons and offering fancy lobbies, uniformed ushers, and orchestral accompaniment to the films. The Balaban & Katz chain pioneered the use of air-conditioning in 1917; this was a major draw in a period when home airconditioning was unknown and theater business ordinarily dropped off sharply in the summer months. Balaban & Katz houses and other big theaters also offered a lengthy film program in addition to the feature, including newsreels and comic shorts. Silent films always had musical accompaniment. In the big palaces, this would usually entail a live orchestra; a smaller palace might have a chamber group or pipe organ; and small-town and second-run houses could offer only a piano player. Any of these might perform an overture and musical interludes. Some theaters even had live-action playlets and musical numbers interspersed with the film program.
The architecture of the picture palaces gave working-and middle-class patrons an unaccustomed taste of luxury. There were two types of design: conventional and atmospheric. Conventional palaces were imitations of legitimate theaters, often incorporating elaborate ornamentation based on Italian baroque and rococo styles. Huge chandeliers, domes, and balconies were covered with stucco and gilt. The atmospheric palace gave the spectator the impression of sitting in an auditorium that opened onto a night sky. The dark-blue dome would have light-bulb stars, and moving clouds were cast onto the ceiling by projectors. The decor might imitate exotic places, such as a Spanish villa or an Egyptian temple. As the 1920s progressed, theaters got more and more flamboyant (7.1). The Depression would soon put an end to such extravagant theater building.
The Big Three and the Little Five
The vertically integrated firms that controlled big theater chains—Paramount-Publix, Loew’s (MGM), and First National—constituted the Big Three at the top of the American film industry. Trailing behind them, but still important, were the Little Five, firms that owned few or no theaters: Universal, Fox, the Producers Dis-
7.1 Part of the interior of the Brooklyn Paramount (built in 1928). This theater combined conventional and atmospheric approaches to picture-palace design, incorporating trees and false sky glimpsed through the alcoves, topping it all with an elaborately decorated ceiling.
Tributing Corporation, the Film Booking Office, and Warner Bros.
Under founder Carl Laemmle, Universal continued into the 1920s to concentrate on relatively low-budget films aimed at smaller theaters. Despite a strong distribution wing, the firm had few theaters. Universal attempted to build a chain in the mid-1920s but found the venture unprofitable and soon sold the theaters off. Several major directors (John Ford, Erich von Stroheim) and stars (Lon Chaney) worked there early in the decade, but they were soon drawn away by higher salaries. For a time Universal employed the successful young producer Irving Thal-berg, who helped the firm move into higher-quality, big-budget films; soon Thai berg also left, becoming a major force in shaping MGM’s policies. Later in the decade, German-born Laemmle was in the forefront in hiring emigre directors, who brought a brooding, distinctive style to the studio's output.
Fox also continued to concentrate on lower-budget popular fare, including its Westerns with William Far-num and Tom Mix. Fox began to create a modest theater chain in 1925, making it one of the strongest of the Little Five. The company had a small stable of prestige directors: John Ford, Raoul Walsh, F. W. Murnau, and Frank Borzage.
Warner Bros. was smaller, possessing neither theaters nor a distribution wing. It scored a considerable success, however, with a series of films starring a German shepherd, Rin-Tin-Tin. More surprisingly, Warners hired German director Ernst Lubitsch, and he made several important films there. In 1 924, Warners drew upon the new willingness of Wall Street investors to put money into the film industry. It began a major expansion, acquiring theaters and other assets. The firm’s investment in new sound technology would thrust it to the forefront of the industry within a few years.
The two other members of the Little Five were relatively small firms. The short-lived Producers Distributing Corporation (1924-1928) was notable mainly for producing a series of Cecil B. De Mille’s films after he left Famous Players-Lasky in 1925. The Film Booking Office was formed in 1922 and turned out popular action films for several years. In 1929, it became the basis for the production portion of a much more important new firm, RKO.
Standing apart from both the Big Three and the Little Five was United Artists (UA), formed by Mary Pick-ford, Charles Chaplin, Douglas Fairbanks, and D. W. Griffith in 1919. UA, which was an umbrella distribution firm, owned neither production facilities nor theaters. It existed to distribute films produced independently by its four owners, who each had a small production company. Prior contractual commitments by the four founders delayed the firm’s initial releases for a, year, and Chaplin’s first UA film, A Woman of Paris, was not a hit. In 1924, producer Joseph Schenck took over management of the firm. By adding stars Rudolph Valentino, Norma Talmadge, Buster Keaton, and Gloria Swanson, as well as prestigious producer Samuel Goldwyn, Schenck stepped up the rate of release of UA films. However, UA still failed to make a profit in most years.
World History
