by Vanda Krefft
Energy and inventiveness, however, could not overcome broad economic forces. At the outset of the new decade, a severe postwar recession hit. Following the Armistice in November 1918, the United States had continued to sell merchandise to war-ravaged European countries on credit. That kept prices high and factories humming—but unfortunately, many buying nations had neither money nor goods to send to satisfy their debts. In early 1921, with foreign countries owing the United States more than $12 billion, the bottom dropped out. U.S. manufacturers stopped issuing meaningless credit, and by 1922, exports had tumbled to less than half their 1920 level. During those two years, the United States spiraled into deflation, with wholesale prices falling a staggering 36.8 percent. Jobs disappeared, wages declined, and fear froze consumer spending.
At the same time, competition intensified for entertainment dollars. Radio, introduced in 1920, was poised to divert a significant amount of movie industry revenue because it offered the convenience of in-home amusement and because it required only the one-time expense of buying a set rather than a continual outlay at the box office. By 1922, some three million American homes had a radio.
Furthermore, European movie producers were mobilizing for a comeback. Germany seemed particularly threatening: as of 1920, some 100 German production companies were turning out a total of fifteen movies weekly—more than the U.S. output. These were not all ragtag efforts. Robert Wiene’s modernist masterpiece, The Cabinet of Dr. Caligari (1920), imported to the United States in 1921 by Goldwyn Pictures, stunned viewers with its highly stylized scenery full of jagged edges, bending walls, and objects askew. While the bizarreness of Dr. Caligari kept it mostly in art houses, two other German movies—Ernst Lubitsch’s Passion, originally titled Madame DuBarry; and Deception, formerly Anna Boleyn—filled the cash drawers at big U.S. theaters. German imports were especially appealing because they were cheap. With production costs one-fourth to one-fifth those of American movies, in part because of German government subsidies, U.S. distributors found many seeming bargains. In early 1921, after a group led by First National bought more than 50 German movies and Famous Players–Lasky contracted to import 129, many feared that a flood of foreign product would devastate U.S. production.
Never a calm lot under any conditions, American studio heads panicked. Had they overbuilt to an unsustainable level? During the mid- to late 1910s, they had invested in a huge infrastructure, with acres of facilities, large payrolls that were top-heavy with star salaries, and immense overhead costs. Amid this triad of cheerless conditions—economic recession, the growing popularity of radio, and the threat of renewed foreign competition—it seemed unlikely that the public would continue to buy tickets at the pace necessary to support the industry’s financial burden. By the summer of 1921, about 25 percent of the nation’s movie theaters had closed, and those that remained open were demanding that producers charge lower movie rental fees. In early 1922, distributors reported a 50 percent decline in gross revenue compared to 1919 and 1920. Studios shut down intermittently, began layoffs, and suffered labor strikes when they tried to cut wages while lengthening the workday.
There was one clear way out: to take Wall Street money. That path had been lit by the shining example of Famous Players–Lasky, which had accepted $10 million from Kuhn, Loeb & Co. in 1919 and now ranked as both the world’s largest movie studio and the world’s largest exhibitor, owning more than four hundred theaters in the United States and Canada and controlling thousands more through partnerships and affiliations. By 1921, according to the Federal Trade Commission, about sixty-seven cents of every dollar spent at the box office went to FPL.
Zukor’s magic formula was to slash moviemaking’s burgeoning economic risk by buying theaters to ensure ample bookings. Never mind the ruthlessness of his tactics. Called “the Wrecking Crew” and “the Dynamite Gang,” his representatives would storm into a town and threaten either to buy or build a rival theater near the one they wanted, or else to cut off film service unless the targeted exhibitor sold his property to them. Who couldn’t guess the outcome of a battle against Zukor? A Federal Trade Commission report noted, “They bought them so fast it was hard to tell when they bought the next theater.” Sometimes Zukor didn’t actually want to own the theater, just to book all his movies into it. According to the trade journal Harrison’s Reports, “With blueprints under the one arm and crushing prices under the other, a Famous Players–Lasky representative would walk up to an exhibitor and ask him to choose between the two.” Those who resisted might find themselves harassed after FPL took out large newspaper ads encouraging movie patrons to buttonhole the theater owner on the street and ask him why he was refusing to show FPL’s wonderful movies. Such activities led the Federal Trade Commission to file an antitrust lawsuit against FPL in August 1921, alleging a conspiracy to monopolize the U.S. motion picture industry. However, neither that nor a series of scandals—the three sensational trials of FPL star Roscoe “Fatty” Arbuckle for the rape and murder of actress Virginia Rappe, the unsolved murder of FPL’s chief director William Desmond Taylor, and the suicide of FPL screenwriter Zelda Crosby (reportedly after being jilted by a high-ranking studio executive)—nothing could knock the mighty ship off course.
Wall Street was eager to help other movie producers adopt Zukor’s so-called chain store model of product marketing. Financiers looked beyond the present storms and saw an industry that was still fundamentally strong. Every week, thirty-five million Americans (one in three) went to the movies, making the pastime more popular than baseball, and nationwide, annual box office revenues totaled nearly $1.5 billion. Even the worrisome business indicators were misleading. If the rental fees that exhibitors paid to studios were declining, to some extent that was the result not of reduced demand but of collective bargaining by exhibitors. If some film companies were going out of business, that fact, in the eyes of the financial community, represented a shake-out of weak organizations. As for foreign competition, of the four hundred European movies bought by American producers and distributors at the start of the decade, fewer than a dozen were actually released and most of those lost money.
Money “is going to wholly rule” the motion picture industry, Variety predicted in January 1920. Wall Street’s rulers “want pictures and they have got some of them. They want more and will get those before they are through.”
Fox Film was a prime candidate for investment. The studio had been in business about as long as most and had, if not necessarily a lot of present luster, then at least a brilliant past. Moreover, Fox had always managed money extremely well. Bolstered by Over the Hill, Fox Film profits for 1920 reached a record high of $2 million and would continue in that region for the next few years. Certainly the New Jersey financiers who had provided $400,000 to start Fox Film in 1915 were happy. In June 1919, Fox had retired the preferred stock, paying back all of the initial investment, plus 8 percent interest. Control of the company had then shifted to 100,000 shares of common stock—owned equally by the investors and by Fox—which paid annual dividends of $4 per share. Thus, since 1919, the original investors had been reaping pure windfall profits.
A massive cash infusion from Wall Street could have jolted Fox back into the forefront of the industry and multiplied his earnings by speeding up his acquisition of a nationwide chain of first-run theaters. At the outset of the 1920s, he had only about thirty-five or forty theaters, most of them in the New York metropolitan area and most of them smaller and older. That was the reason he couldn’t make many ambitious, expensive movies. He had nowhere to show them.
He wasn’t tempted. He would not sacrifice the independence that had always been at the center of his proud, striving nature. He now had absolute power at Fox Film. Shortly after the company’s formation in 1915, a relative of one of the New Jersey investors had sold him ten shares of stock, giving him majority ownership.* Although Fox hadn’t told the other investors about the purchase and instead always managed to achieve unanimous decisions by his board of directors
, he nevertheless knew that, if necessary, he could overrule them. Were Fox to accept a major outside investment, he would have to cede control to outsiders who, above all, would want a large, fast return on their money. He well knew where that might lead. As the former chairman of FPL’s finance committee would explain in 1923, “You know what they do with the corporations in Wall Street that do not pay dividends. They take them out and place them up against the wall and that is the end of them.”
If Fox had any doubt about that advice, he had only to look to the case of his friend Sam Goldwyn. In 1919, Goldwyn had aligned himself with wealthy, urbane international entrepreneur Frank Godsol, who negotiated a multimillion-dollar investment in Goldwyn Pictures from the du Pont family. With two du Ponts and a host of their bankers joining his board of directors, Goldwyn began buying theaters and renovating his studio’s facilities in Culver City. Godsol—who during the war was charged with taking $1.6 million in illegal kickbacks from U.S. automobile manufacturers on the sale of cars and trucks to the French army* and who later prompted the suicide of his brother, a well-regarded home builder, by refusing to help him avoid bankruptcy—promptly betrayed Goldwyn. In September 1920, Godsol aligned the board of directors against Goldwyn and forced him to resign as president. Goldwyn regained the position about two months later by bringing in new money from the Harriman National Bank. In March 1922, Godsol got Goldwyn kicked out again, this time for good. Taking over as president, Godsol drove Goldwyn Pictures into the ground. By 1923, the company was in such distress that Godsol offered to give it away to the Warner brothers if they assumed its debts. The Warners refused.
Fox couldn’t take the chance of winding up with a Frank Godsol type. Just as Fox Film was William Fox, so William Fox would be nothing without Fox Film. He would have to find another way to restore his studio’s position and prestige.
For years, Fox couldn’t find any pathway back into the industry’s top tier.
His plan to make spectacular movies overseas initially seemed like a good idea. In postwar Europe, studio space rented cheaply, materials were inexpensive, and performers and crew members would work for next to nothing. The first attempt, Nero (1922), was a fiasco. Fox had intended to help the recovering Italian economy by taking a five-month lease on the two-hundred-acre property of the Ultra studios in Rome, using local laborers to build sets, and casting only one American, the ingénue Violet Mersereau, in a principal role. Italy liked the money, but little else. The Italian press greeted Nero with hostile articles insisting that American studios ought to leave Italian history to the Italians. Riots broke out among angry workmen who didn’t get hired by the supposedly rich Americans. When director J. Gordon Edwards applied for permission to film in the Coliseum and at other historic sites, the government ensnared him in red tape before finally granting permission. Also, as had been the case years earlier with A Daughter of the Gods in Jamaica, crowds that worked cheaply displayed a low level of commitment. For a Circus Maximus scene of Christians being thrown to the lions, Edwards offered five lire a day to ten thousand extras. They showed up—but it was a sunny day, and many were wearing straw hats, which they refused to take off even though there had been no straw hats in Nero’s time. Abraham Carlos, who had been reassigned from Fox Film’s Paris office to help with logistics, offered an extra five lire for each hat checked. A new hat cost less than five lire, so thousands took the deal. When noon came, though, most decided they’d made enough money for the day and left to go spend their earnings.
Edwards later commented, “Anyone who tries to make pictures in Italy must console himself to their methods. It takes three Italians to do what one American can do.”
Edwards finished Nero more or less on time, but the footage he sent back to New York was so discombobulated that Fox ordered additional scenes shot in the United States, and the studio’s editors had to spend several months putting it all together. The story thus deteriorated into standard Fox Film melodrama, with the dissolute Roman emperor portrayed as the victim of both societal pressures and an overbearing mother, who won’t let him pursue either his longed-for singing career or the beautiful ex-slave he loves. Although some critics were kind, praising Nero as “gorgeous, brilliant, and thrilling,” the public turned a cold shoulder. Film Daily mused, “But who made any money out of Nero? Fox didn’t—that’s a bet. Exhibitors didn’t. That’s a certainty.” Fox himself hated the movie.
Immediately after Nero finished filming, Fox had sent Edwards and Carlos on to Palestine and Egypt to film The Shepherd King, about the life of King David. (The project appears to have been a substitution for Joseph and His Brethren, which Fox abandoned.) It was a heartless assignment for fifty-four-year-old Edwards. Exhausted from more than seven years of continual work directing some of Fox Film’s biggest movies, he was welcome there no more than he had been in Europe, and Egyptian authorities harassed him into hiring an entire military regiment as extras.
Again, Edwards’s footage was heavily edited at Fox Film headquarters, resulting in a stultifying movie that divided its screen time about equally between action sequences and title cards with biblical quotations. At the premiere of The Shepherd King at Broadway’s Central Theatre in December 1923, the audience applauded when Edwards’s name appeared during the opening credits and then remained ominously silent for the rest of the show. An exhibitor who booked the movie for his small-town Southern theater described it as “another example of Fox’s unmitigated nerve.”
Even England was a disappointment. Fox hoped not only for savings but also for visual authenticity when he sent a crew there to film an adaptation of Arthur Stuart-Menteth Hutchinson’s best-selling novel, If Winter Comes, about an English upper-class war veteran who loses his wife and social status after the young, unwed mother he takes in commits suicide. Cinematographer Joseph Ruttenberg recalled, “So we got to Europe. We tried to get ahold of Hutchinson for days. He’d call up and say he can’t make it. So, finally he came to the hotel . . . little bit of a guy . . . and he says, ‘Well, I’m awfully sorry. I’ve never seen these places. I just imagined them.’ And we went all the way to England to get them. So we photographed as much as we could in England. We went to Canterbury, other places, to do as much as we could.” Then the production returned to New York and sets were built of the locations Hutchinson had invented. Fox was so unhappy with the end result that he cut twelve hundred feet from the movie, angering director Harry Millarde so much that he nearly resigned from the studio.
After those failures, Fox canceled further European production. Alexander the Great and Francesca da Rimini were forgotten, and Mary, Queen of Scots began, but was never finished.
He tried buying ready-made European movies. Monna Vanna looked promising. Filmed in Germany, based on a play by Maurice Maeterlinck, and directed by the well-regarded Richard Eichberg, the story told of a virtuous woman in fifteenth-century Pisa who can save her city from attack if she spends the night with the commander of the enemy Florentine army. The U.S. distribution rights were cheap: Fox probably paid no more than $3,000 or $4,000.
“A big, foreign-produced cheese in 9 slices,” complained a midwestern theater owner. “Just a few big sets and a lot of people running around with no place to go, and nothing to do after they get there.”
Within the United States, Fox tried to develop new stars, but his heart wasn’t in it. Either he hired the wrong sort of actors—William Russell, Shirley Mason, Louise Lovely, and Eileen Percy were all competent performers, but they lacked screen magic—or he chose the right sort but didn’t know what do with them. His greatest lost opportunity was John Gilbert, the movies’ future “great lover,” whom Fox signed in 1921 to a three-year contract. Then twenty-four, Gilbert was an up-and-coming actor with no defined screen persona. Fox tried to turn him into a new William Farnum by casting him as Edmond Dantes in Monte Cristo (1922), a part Farnum had lobbied Fox to give to him. But John Gilbert was not William Farnum. He didn’t fit well into the image of the great man tormented by big mor
al issues, and one of Gilbert’s greatest assets, his classic good looks, went largely to waste underneath scraggly beards, rags, and frenzied expressions. M-G-M made no such mistake when it hired Gilbert after his Fox contract expired in 1924. Cast as a romantic heartthrob opposite Greta Garbo, Norma Shearer, Lillian Gish, and Mae Murray, he would soon emerge as Rudolph Valentino’s main rival.
Another miss was Bela Lugosi, who made his American film debut in Fox Film’s The Silent Command (1923), as a foreign spy plotting to blow up the Panama Canal in order to cripple U.S. military strength. Tall, slender, and exuding suave, sinister charm, Lugosi stole the show. Ironically, although The Silent Command borrowed a number of motifs from A Fool There Was—the power of sexual seduction, the husband’s abandonment of his once-happy family, U.S. security at stake—Fox failed to recognize that just as the earlier movie had presented Theda Bara as the archetypal female vampire, here he had in front of him her ultimate male counterpart. Fox let Lugosi walk away, and in 1927, the actor fatefully accepted the starring role in a Broadway production of Dracula.