The Man Who Made the Movies

by Vanda Krefft

  Tammany’s money did its job. Although Hyde was convicted by a jury in November 1912 and sentenced to a maximum of three and a half years of hard labor in state prison, he was never much inconvenienced. He spent only a few weeks at the Tombs, in a three-room suite with a private bath, a courtyard view, and two closets full of his clothes. Then, in a very unusual move, the judge who presided over the trial granted a certificate of reasonable doubt and let Hyde out on bail to prepare his appeal. In the spring of 1913, Hyde’s conviction was set aside.

  For Fox, who bridled at such unscrupulous dealings but believed them necessary, there was nothing to do except try to forget. He had Hyde’s houseboat repainted, redecorated, and renamed the Mona Belle, after his two daughters.*

  Despite his outward display of confidence, Fox had moments of great discouragement, times when he questioned whether he had the strength to persevere. Two relationships uplifted him. First, in the early 1910s, he formed an unlikely friendship with Marcus Loew, his principal rival in the so-called “small-time” or “pop” vaudeville business in the New York City area. Each operated a circuit of a dozen or so theaters that offered low-priced entertainment combining live acts with motion pictures. In some neighborhoods, their theaters competed head to head for patronage; they had also fought each other for control of the Academy of Music. But Fox and Loew both believed passionately in the future of motion pictures, and both were also essentially optimists who strived to treat others decently.

  As a result, they often behaved like collaborators. They helped each other with bookings, so that acts often played one week at Fox houses and the next at Loew houses and vice versa, and they stood together solidly against their opposition, which included the Moss & Brill Circuit, whose principals were Benjamin Moss, Fox’s former partner in the Knickerbocker Cloth Examining and Shrinking Company, and Sol Brill, Fox’s former nickelodeon partner. Fox and Loew worked together so closely that in the spring of 1912, a false rumor circulated that they were planning to combine their theater circuits. Loew was a friend when logically he shouldn’t have been. Fox would never forget that.

  The other person who restored his courage was not his wife, Eva, to whom he could show no weakness, but his mother, Anna. One evening, feeling particularly overwhelmed, he told her that he intended to quit the motion picture business. She pulled him from his chair, pushed him up against a wall, and held him there by the shoulders. “You have your back to the wall,” she told him. “You are looking before you. You cannot go backward. Move forward. You will find it that way all through life. Your past is the wall against which you stand. You cannot go backward. You must go forward.”

  Those words changed everything. They gave Fox the strength to try again, he said, and to keep trying until he succeeded. Years later, he would tell the story to other young men who seemed to be losing hope. In tribute to his mother, all good mothers in Fox movies would be like his mother: kind, self-sacrificing, inspirational, and loving. A great many of them even looked like Anna Fox.

  CHAPTER 8

  The Wizard of Menlo Park

  As he raced to assemble a major movie theater circuit, Fox had to contend with the quirky, curmudgeonly Thomas Edison, the so-called Wizard of Menlo Park.* Having perfected the Kinetograph motion picture camera in the summer of 1889, and having used that technology to develop a successful motion picture projector, Edison believed he had invented the modern motion picture. That, to his mind, entitled him to dictate all aspects of the movies’ commercial development—who would make them, what they should look like, and how and where they would be exhibited.

  Edison’s claim was extravagant. Although he owned crucial camera and projector patents, a long list of other inventors had provided essential foundational work. Edison himself hadn’t even done the hands-on work on the Kinetograph: that task had fallen to his loyal assistant, William K. L. Dickson. Furthermore, at the time of its invention, Edison hadn’t particularly valued the Kinetograph.* After perfecting it in the summer of 1889, he waited two years to apply for a U.S. patent, and in his own words he “carelessly neglected” to patent it abroad. Nonetheless, Edison believed that his inventions were his inventions and that no one else had the right to run away with them. That, in general, was the Edison personality. Observed his good friend, Henry Ford, “He is always in control.”

  At least, he tried to be in control. As Edison unhappily discovered, that wasn’t always possible. When profit-hungry entrepreneurs began to rush into the field after the first public exhibition of motion pictures on April 23, 1896, at Koster & Bial’s Music Hall at Thirty-Fourth Street and Broadway in New York City (now the site of Macy’s), his elegant scientific mind went slightly haywire. Not only did these philistines seem likely to ruin the reputation of his fine inventions, they were also benefiting richly from his hard work. While “the money end of the movies never hit me the hardest,” Edison always had to be sensitive to the financial demands of his career. As he later wrote, “The experiments of a laboratory consist mostly in finding that something won’t work.” Most inventions took him from five to seven years to complete. Some he never finished because he never solved their problems. And then there were the immense difficulties of marketing an innovation. “Society is never prepared to receive any invention. Every new thing is resisted,” he found. It had taken him more than seven years to persuade people to adopt the incandescent lightbulb, he said, and about thirteen years to properly introduce the phonograph.

  Now, serendipitously, the public had embraced motion pictures. Why should others carry off the immense profits he needed to continue his important work for the benefit of all mankind?

  Further to Edison’s annoyance was the fact that so many of the new motion picture businessmen were Jewish. Although he never became as venomously anti-Semitic as his friend Henry Ford, Edison didn’t like Jews. They were “strange to me in their isolation from all the rest of mankind,” he wrote, and they had made “terrible examples” of themselves by using “almost supernatural business instincts” to take “too great an advantage” of other people. In the motion picture industry, Edison later complained, after he personally had solved many early difficult technical problems, “Well . . . a lot of our enterprising Hebrew citizens jumped on board.”

  He wouldn’t have it. Between 1897 and 1905, Edison filed some thirty-three federal patent infringement and copyright lawsuits against competitors, as much to frighten off potential rivals as to rebuke alleged offenders. His motives weren’t purely selfish. He genuinely wanted “his” motion picture inventions to contribute to the social good, and he believed in the pristine efficiency of monopoly. As he saw it, if he could limit the number of film manufacturers, renters (distributors), and exhibitors to a number that the marketplace could comfortably support, and if he could regulate all of them to ensure high-quality standards, then the whole industry would run like one of his marvelous mechanical inventions. Everyone would profit. All would work together harmoniously to improve products and services.

  But Edison’s legal maneuvers didn’t necessarily deter the sort of adventurers who were drawn to the motion picture business. Back and forth the arguments went. Then, on March 6, 1907, the U.S. Court of Appeals ruled that all U.S. motion picture producers (with the lone exception of the American Mutoscope and Biograph Company, known as Biograph) were using equipment that infringed on the Edison Company’s patents. Thus, from now on, anyone who wanted to make, distribute, or exhibit motion pictures in the United States would have to get permission from either Edison or Biograph.

  Sixty-year-old Edison then made a strategic mistake. After assigning all his motion picture patent rights to the Edison Manufacturing Company, he turned away from active management. He didn’t really like the movies. He considered them a waste of his valuable time and believed they were best suited for women and children, who, in his view, had limited intellectual capability. In order to return to work on his most beloved invention, the phonograph, Edison appointed William E. Gilmore, who had su
ccessfully managed Edison’s phonograph business, to handle motion picture licensing. An abrasive, imperious personality, Gilmore licensed seven other “manufacturers” (as movie producers were then called) in addition to Edison’s own filmmaking division—but refused to grant easier terms to Biograph. For the sake of convenience, Biograph had wanted to join the Edison group and believed that because of the March 1907 Court of Appeals decision, it shouldn’t have to pay royalties to Edison. Although evidence indicates that Edison might have agreed to that condition, Gilmore refused. Given no incentive to join the Edison group, Biograph licensed its own rival group of manufacturers. And so the war for control resumed. During the first half of 1908, Biograph and Edison hurled patent infringement lawsuits back and forth at each other and at each other’s renters and exhibitors.

  Fox signed contracts with the Edison group, and by late May 1908 he had been sued twice by Biograph. Nonetheless, the situation was tolerable. Competition between Biograph and Edison kept prices down and caused both companies to enforce contract terms leniently. Fox’s theaters thrived and his Greater New York Film Rental Company earned healthy annual profits.

  Unfortunately, the Edison-Biograph duopoly, relatively benign for film renters and exhibitors such as Fox, didn’t last. In July 1908, Edison fired Gilmore, not for incompetence but because of dishonesty. Gilmore owned a Newark printing business that had been grossly overcharging on its contract with the Edison companies. To replace Gilmore, Edison appointed Frank L. Dyer, the Edison Company’s general counsel. A gray company man, a patent lawyer from a family of patent lawyers, Dyer had less interest in achieving Edison’s stated goal for motion pictures (“a system of business in which everybody is satisfied, everybody making money . . . A square deal for everybody”) than in extracting every possible dollar from every possible source.

  Disdainful of movie business entrepreneurs, regarding them as “not yet . . . thoroughly civilized,” Dyer immediately moved to establish a production monopoly. By the end of 1908, he had forged a peace treaty with Biograph, which agreed to pool its patents with those of the Edison group in the newly created Motion Picture Patents Company. With Dyer as president, the MPPC then licensed ten film manufacturers, including the Edison Company and Biograph, to make movies under those patents. Instead of each company marketing its movies competitively, all ten MPPC licensees would sell their movies exclusively to the MPPC, which would rent them out to distributors and exhibitors at a uniform price. For Fox and his peers, this arrangement was very bad news. They would no longer have any bargaining power to get the movies they needed. The ten licensed producers were standing together as a bloc, and because of the MPPC’s control of the patents, no one else in the country could legally make a movie. Film renters and theater owners would have to accept whatever terms the MPPC established.

  Fox’s hopes for fairness evaporated in mid-January 1909, when he attended a meeting at New York City’s Hotel Imperial where an MPPC executive read the new contract aloud. It had all the charm of a slap in the face. Among the more stinging points: All rental exchanges and exhibitors would have to get re-licensed. Some in each group would get put out of business—an unfortunate move, but necessary to “conserve the interests of the better class.” Each exchange, and each of its branch offices, would have to order at least $2,500 worth of films per month. Films would have to be returned to the manufacturer within six months. The previous Edison group agreement had had a similar requirement, but it had never been enforced, so renters had been able to build up extensive libraries with which to supply theaters in newly opened territories.

  Furthermore, because the MPPC controlled motion picture projector patents, every U.S. exhibitor would have to pay a two-dollar royalty fee per projector every week. The fee applied even for projectors purchased before the MPPC’s inception.

  Film renters had to sign the new contract by January 20—only a few days away—or get cut off from film shipments. Exhibitors had until February 1.

  Take it or leave it, MPPC officials shrugged. But remember, they counseled, leaving the MPPC would mean leaving the industry.

  Fox and others stood up to protest the harshness of the terms. The MPPC refused to budge. Take it or leave it. They meant that.

  Fox struggled mightily about what to do with his Greater New York rental exchange company. Because he was his own best customer, the decision to commit the company to an MPPC license would mean that he was also committing all his theaters. On January 20, 1909, the last possible day, he signed the new MPPC contract. He had no choice. The average illegally produced independent movie was so bad, he said, that “a man would simply ruin his business to try and exhibit it.”

  Many other exhibitors and film renters, small-time entrepreneurs who wanted to sustain their dreams rather than fight a giant, also fell in line. License applications from both groups flooded the MPPC offices. By mid-March 1909, the MPPC had received applications from 4,800 of the country’s 10,000 theater owners, and would soon approve 120 film renters.

  Beneath the appearance of compliance, resentment festered. The rank and file loathed the MPPC from the start and immediately began referring to it as “the Trust,” an epithet that rankled company leaders because of growing public outrage over huge business combinations. Particularly odious was the $2-a-week royalty fee that the MPPC demanded per film projector. Exhibitors fumed about the fact that after buying the projector at an average cost of $150, they now had to pay another $104 every year for the right to use it.

  What did they get back for the $2? The MPPC had promised marketplace protection: licensed exhibitors were supposed to get movies that non-licensees couldn’t. As it turned out, many licensees soon found that their unlicensed competitors were offering the exact same movies, obtained from unlicensed rental agencies. Exhibitors knew that the MPPC knew about the violations because many of them wrote to the company, providing names, addresses, and dates. The MPPC took no action.

  The MPPC had also pledged not to license any more theaters than a particular territory could support. To all appearances, though, it seemed to hand out a license to virtually anyone with $2 a week to spare. An exhibitor in Albia, Iowa, reported to Moving Picture World in January 1910 that in his town of only 4,500, the MPPC had licensed at least seven other theaters during the previous two years, and all of them had failed.

  Better films, then? The MPPC had claimed that by eliminating “destructive” competition, it would free up resources to improve the quality of American motion pictures. In fact, the ten licensed manufacturers made very little creative progress. Senseless plots, bad acting, and sloppy camera work proliferated. With their market contractually sewn up, the MPPC’s member companies had no incentive to innovate. To the contrary, experimentation would have created a financial risk for very little potential reward. Further blocking advancement, the ten licensed manufacturers colluded to suppress costs: all agreed to pay no more than twenty-five dollars for a film script, causing many successful writers to decide that they couldn’t afford to work for the movies, and weekly salaries no greater than fifty dollars for directors and sixty dollars for performers.

  Even the technical aspects of MPPC movies remained amateurish. “I wish to know why it is that the Lubin and Edison films are so shaky?” a Dothan, Alabama, exhibitor complained in a letter to Moving Picture World. “I dread to exhibit the films on this account. Some of them are so shaky that you can scarcely read anything on the screen.” Another licensed exhibitor received film with no sprocket holes, so that it wouldn’t go through the projector. A Hartford, Wisconsin, theater owner found his incoming film shipments “in an actual state of putrefaction. ‘Gee, what the h–kind of a game is this!’ I said to my partner.’ ”

  No protection, mediocre if not execrable merchandise—still, the MPPC kept its hand out to exhibitors for the $2 per week. By July 1909, some six to seven thousand movie theaters nationwide* (out of an estimated eight to ten thousand) had been licensed. That generated $624,000 to $728,000 annually in
projector royalty revenues alone for the MPPC. As far as many observers could see, the MPPC’s only expenditures were for office space, an office manager, a couple of stenographers, and the self-congratulatory circulars that the company mailed out regularly. One exhibitor seethed to a reporter, “As a collection agency I think the Motion Picture Patents Company is a grand success. It has the electric power companies beaten to a frazzle. Its one great aim is to get in the $2 per week, and it scores every time.”

  In short order, many exhibitors became so enraged that they refused to fork over the $2. In early May 1909, the MPPC dumped the royalty collection responsibility on film rental agencies, including Fox’s Greater New York company, assuring them this was a favor that would allow them more flexibility in conducting their business. The renters weren’t fooled, only further annoyed because now they were the ones who had to confront the exhibitors’ fury. Like many other renters, Fox decided to bear the cost himself rather than antagonize his customers.

  With the MPPC having largely abandoned its obligations, independent companies rushed in to exploit customer dissatisfaction. Chicago became the hub of this activity, with Carl Laemmle, future head of Universal Pictures, the most visible and vocal leader. A German immigrant whose previous career included farming in the Dakotas, clerking at a Chicago wholesale jewelry house, and managing a clothing store in Oshkosh, Wisconsin, Laemmle owned one of Chicago’s largest rental exchanges. In early 1909 he’d signed on as an MPPC licensee, but in April he quit to form an independent production company tauntingly named IMP (Independent Moving Pictures Company). Thanks to his and others’ efforts, by the end of 1909, the output of good, non-MPPC U.S.-made films had increased so much that many exhibitors began to believe they had a viable alternative.