Breen and President Schaefer seemed to get along nicely throughout the last half of 1941. If there were conflicts between the two men, no evidence exists to confirm them. A major quarrel did develop between Schaefer and J. R. McDonough, however. It commenced shortly after McDonough took control of the B unit. Believing that the new block-of-five selling system would demand higher-quality program pictures, Schaefer instructed McDonough to make ten “special” films for an average of $250,000 each as part of the 1941-1942 schedule.24 McDonough was also responsible for seven other routine “programmers,” made for a little over $100,000 each, and six Tim Holt Westerns, costing about $50,000 apiece.25
At this point, it is interesting to recall J. R. McDonough's early days with RKO. Reputed to be the tough, no-nonsense type, Mac's first responsibilities in Hollywood included riding herd on spendthrift producers, making sure budget estimates were within proper boundaries and were adhered to scrupulously. His position in the executive hierarchy changed several times over the years, but his major duties generally remained the same. During that time, McDonough mellowed as he came to appreciate the mercurial interplay between finances and the creative process. However, he was never considered a pushover by producers hoping to squeeze out a few extra dollars for their pictures.
McDonough was now on the other side of the table. Assigned the task of supervising a substantial group of films, he quickly discovered that holding down costs was no easy task. In March, George Schaefer became concerned when he learned that five of Mac's proposed productions (including Parachute Battalion, Father Takes a Wife, and The Mayor of 44th Street) all had estimated budgets of $300,000 or more. In a letter to McDonough, Schaefer demanded that the figures be “cut down or…justified by the submission to me of the cast to be used and other good reasons.”26 Otherwise, such spending would cause RKO to exceed its total production budget by a considerable amount.
McDonough failed to comply with Schaefer's ultimatum. He estimated that by fall his ten specials would cost some $470,000 more than Schafer desired. In a long memo to Joseph Breen, McDonough attempted to explain the situation and justify his actions.27 He blamed commitments made on Parachute Battalion and Father Takes a Wife before he took them over for the excess of $211,000 on the two productions. Among other excuses offered was the necessity to replace the directors of two films (Call Out the Marines and Sing Your Worries Away) after they had each been shooting for more than a week. Nevertheless, it seemed to McDonough that the extra expenditures would definitely pay off in the long run: “Based on all information given to me, I believe our pictures are being made with a quality comparable with and a cost equivalent to that in the other big studios in town. In every instance where the appropriation of $250,000 has been exceeded there has been an adequate reason for it,—either because of production difficulties or because of the submission of better cast names than afforded us by our contract players.”
McDonough's last argument suggested that $250,000 was an insufficient budget for these specials anyway, thereby challenging George Schaefer's conception of the pictures: “My impression is,—confirmed by experience,—that we have a better chance to make this class of picture for an average of $300,000 than we have for $250,000,—particularly if we want to get quality,—and we can only get quality in them by employing the class of director I have mentioned and the type of cast I have given.”
Joseph Breen wired the contents of McDonough's memo to President Schaefer, who responded with a livid telegram. Schaefer stated that he believed it was “simply impossible for this company to make money on pictures of that quality based on such cost” and emphasized that, all other matters aside, McDonough had been told to make ten pictures averaging $250,000 each and was going to “far exceed” the established target.28 Schaefer ordered Breen to put a vise grip on McDonough: “It is my suggestion that you instruct McDonough to make no further commitments in any respect to any of remaining pictures without consulting you, having in mind these pictures must be brought through at $250,000 budget. We cannot permit him to go overboard on commitments which affects [sic] budget limitations we have established. Other studios are making showmanship pictures and are keeping their cost within $250,000.” As for McDonough's remark that he needed $300,000 budgets to produce the quality pictures Schaefer wanted: “That opinion is not shared here in New York and wish you would please inform McDonough that we will lay out policy and will expect him to adhere to it; that everyone here is greatly concerned with quality we have received so far and at the cost they have come through. In conclusion, repeat my suggestion that McDonough consult with you before any commitments are made on balance of pictures so that we may have full control of his costs.”
By the end of the year, Schaefer had given up on McDonough completely and was preparing to dismiss him. Not only had he failed to keep costs down, but his pictures were disappointing. J. R. McDonough had not developed the creative abilities demonstrated by Lee Marcus. Through the years, Marcus had made many poor pictures, but his overall record as “king of the RKO Bs” was respectable. Of course, George Schaefer had been responsible for Marcus's departure from the studio, just as he had driven Berman and others away. The tribulations of Marcus's successor therefore represented an addition to the growing list of Schaefer's executive errors.
Above and beyond the personalities involved, one has to question the new B-unit philosophy. Over the years, a strong belief had developed that “in- between” films were an economic liability. B pictures costing more than $150,000 had shown a clear record of losses, which had convinced the executives to abandon them in the late 1930s. This policy continued during Schaefer's first year as well, but then he suddenly decided to start making “specials.” As mentioned, Schaefer thought he had to upgrade the quality of the Bs because of the new sales requirements. Still, the idea disregarded the lessons of the past, lessons learned by RKO the hard way.
Neither Schaefer nor Breen nor Lesser nor McDonough was able to boost the quality or box-office performance of RKO pictures during the remainder of 1941. Films like Father Takes a Wife, Unexpected Uncle, and Weekend for Three all lost more than $100,000 each, and even when the company managed a surprise hit, such as Look Who's Laughing, starring Lucille Ball and some popular radio comedians, it was dismissed by the critics. The one exception that made sizable money and impressed the full spectrum of movie enthusiasts was Suspicion.
Back in 1935, RKO had paid $5,000 for the rights to an unusual novel entitled Before the Fact.29 Written by British author Anthony Berkeley Cox under the pseudonym Francis Iles, the book told the story of Lina McLaidlaw, a woman so in love, and obsessed, with her husband that she allows him to plot and perpetrate her own murder. For various reasons, RKO could never get the picture off the ground. In 1938, an unsuccessful attempt was made to sell the property. Upon reading a synopsis in January 1940, George Schaefer wrote: “I really do not think ‘BEFORE THE FACT' is important enough for an outstanding personality. It seems very ordinary,—certainly, nothing unusual and, as a matter of fact, just another motion picture. I think when you make an important picture now-a-days, you must get away from anything trite and commonplace. It would be a good ‘B' picture and not a specialty picture.”30
For a time, the story was planned as a B production with George Sanders and Anne Shirley earmarked for the main roles. But then Alfred Hitchcock expressed a desire to make a film based on the novel, thereby changing everything. With a director of Hitchcock's caliber, the project immediately became viable and gained A status. J. R. McDonough described Hitchcock's conception for the film in a June 3, 1940, memo to Harry Edington: “In a conversation that Danny Winkler and I had with Hitchcock last night he said he would shoot ‘BEFORE THE FACT' in seven weeks. He also told us that he would follow the novel as to story, persons, locale, and sets, excepting only that he would tell the story through the eyes of the woman and have her husband be villainous in her imagination only.”31
The original plan for the picture included Laurence
Olivier and Frances Dee as the principals and called for a total budget of $680,000.32 George Schaefer, however, thought the film should cost no more than $550,000 and postponed it while Hitchcock directed his only screwball comedy, Mr. and Mrs. Smith. In the meantime, the script was prepared by Samson Raphaelson, along with Hitchcock's wife, Alma Reville, and his former secretary Joan Harrison. When a new preproduction budget was prepared in January 1941, the estimate had climbed to $845,423.33 A healthy percentage of the additional budget came from the casting of Cary Grant and Joan Fontaine as the two leads. Fontaine—like Hitchcock, borrowed from David Selznick—would cost RKO $44,750 more than Frances Dee. Ironically, RKO had discharged Fontaine two years before when she was earning a small fraction of the money she now commanded. The RKO executives had been blind to her acting ability and star quality, attributes subsequently made manifest by George Cukor in The Women and Hitchcock in Rebecca.
Figure 23. Suspicion (1941). Director Alfred Hitchcock and star Joan Fontaine examine costume sketches for her character. The film would earn Fontaine an Oscar for Best Actress. (Courtesy of the Academy of Motion Picture Arts and Sciences)
George Schaefer believed $845,423 to be “more money than I think we should spend” and asked J. R. McDonough to pare the budget of the film to $800,000 or less.34 There was no question of postponing or canceling the picture now, however. Commitments to Grant, Fontaine, Hitchcock, and others had already been made, and shooting commenced shortly thereafter. Instead of cutting costs, however, McDonough and Harry Edington, the actual producer of the picture, watched helplessly as the budget mounted. Illnesses affecting Grant, Fontaine, and Hitchcock put the company behind schedule. By April 18 the picture was already $80,000 over the estimate.35
After shooting was completed, retakes were deemed necessary. They pushed the final cost to $1,103,000, making it the most expensive RKO picture since The Hunchback of Notre Dame. Thus, there was considerable trepidation about the economic impact the film might have on RKO. Although scant evidence exists to support this view, it appears that George Schaefer blamed the excesses on Hitchcock and Edington. The files contain cryptic remarks about Hitchcock shooting things not in the script and not giving the picture his full attention, and Schafer refused to allow Edington a producer credit when it was released.36
Throughout the filming and after, the question of a title plagued the individuals involved. Before the Fact was felt to be stuffy and incapable of arousing any curiosity. Hitchcock's suggestion was Fright, a title that George Schaefer believed would “frighten people away.” Schaefer's preferences were Suspicion, That Suspicious Lady, or On Suspicion.37 Other suggestions included Here Is a Man and Riches and Sin, neither of which was close to satisfactory. It was decided to use Before the Fact. In August, however, the Audience Research Institute conducted a poll and discovered that Before the Fact was “seriously lacking in audience appeal.” Not only that, but it created the impression that the film was another Cary Grant comedy. The associate director of the institute, David Ogilvy, informed George Schaefer: “We have also tested the title SUSPICION. It outpulls BEFORE THE FACT by no less than three to one. The customers think SUSPICION would be a mystery. It arouses a lot of curiosity. It goes a long way towards killing the expectation of comedy implicit in Grant's name.”38 And so the studio chose Suspicion as the release title.
It was a wise decision, for the film earned $440,000 despite its high cost. Part of the profits no doubt came as a result of Joan Fontaine winning the Academy Award for her performance. Clearly the financial value of an Oscar had increased enormously since the early thirties when a film like Cimarron could cop the major prize and still post a startling loss for its company.
Joan Fontaine's performance was an able job, though many of her votes were probably cast because she had been passed over for her work in Rebecca the previous year. At any rate, RKO films had now won Best Actress Oscars in two consecutive years—Ginger Rogers for Kitty Foyle and Fontaine for Suspicion—and their films had helped the RKO bottom line considerably. Unfortunately, both actresses, as well as director Hitchcock, were working elsewhere by the end of the year.
Around the time Suspicion went into wide release, the Japanese bombed Pearl Harbor, and America became an official participant in World War II. Since the film industry had been feeling the effects of war for more than two years, the immediate impact on the studios was not dramatic. Everyone in Hollywood pledged his or her support for the war effort, and defense precautions were inaugurated at the various plants. RKO, for instance, issued instructions that no more visitors would be allowed, any packages brought on the lot would be subject to careful inspection, and an air raid siren would alert employees to danger.39 Evacuation procedures were disseminated to all employees. Shooting schedules also had to be rearranged to avoid night work, thus saving electricity and gas and enabling workers to get to their homes without traveling in the dark.
Most of the companies stepped up their preparations to make pictures with war themes. RKO announced that the starting date for Bombardier would be advanced from January 15 to December 15.40 One of the most worrisome aspects of the crisis was the loss of many talented members of the industry who enlisted in the military shortly after Pearl Harbor. John Ford, Frank Capra, and William Wyler led the directorial contingent. RKO came out all right in this regard, principally because it had few major figures under contract.
Around this time, George Schaefer began to deal with another fiscal crisis at his company; RKO's cash position had been deteriorating steadily for weeks. The block-of-five selling meant the distribution department had to hold valuable merchandise on the shelf much longer than had been the case in the past, and this factor, combined with the mediocre earnings of most of the films when they did reach the marketplace, was endangering the repayment of RKO's revolving bank loans.41 Floyd Odlum was well aware of the problem and had been growing more and more disenchanted with Schaefer's performance for some time. Indeed, rumors had floated around Hollywood for several months that Schaefer would be sacked. And, at the very moment when the RKO board was poised to begin considering a new contract for Schaefer, his number-one fan, W. G. Van Schmus, had taken ill and been hospitalized.42 Van Schmus would die in early 1942. Meanwhile, Nelson Rockefeller was ensconced in Washington, having accepted the invitation of President Roosevelt to become coordinator of inter-American affairs, and did not have time to devote to the travails of Schaefer or RKO. And David Sarnoff continued to remain preoccupied and aloof.
Another ominous note was sounded in mid-December when Floyd Odlum had one of his personal favorites, N. Peter Rathvon, elected an RKO vice-president.43 Although Rathvon devoted some of his energies to other Atlas interests, including Madison Square Garden and Bonwit Teller's Department Store, he had spent most of his time on RKO business during the past six years. He badgered the Rocke fellers to reduce their claims against RKO throughout the receivership proceedings, which did not endear him to Schaefer's principal allies. George Schaefer was also well aware that Odlum had backed Rathvon for the corporate presidency before Nelson Rockefeller and David Sarnoff secured the position for him. Subsequently, he had often locked horns with Rathvon regarding company policy. Therefore, Schaefer had good reason to feel uneasy about the appointment. Odlum was also able to get another of his associates, Garrett Van Wagner, named comptroller of the parent organization. Should RKO continue to falter, Floyd Odlum was well positioned to assert himself and protect his investment.
Just before Christmas, Schaefer received a memo from the new head of his theater company. Charles Koerner, who followed box-office trends closely, recommended his boss consider making some low-budget horror pictures:
It is interesting to note the successes of several pictures of the horror type at the present time.
Fox's SWAMP WATER is doing exceptionally good business in the so-called B or exploitation houses. The horror and gruesome angle is stressed very strongly in this picture.
While we have not had as many boo
kings on Universal's WOLF MAN the first indications are that this will also prove an uncommonly good grosser.44
Schaefer, uninterested in horror films and coping with much bigger issues, disregarded Koerner's suggestion. Charles Koerner would, however, find himself in a position to act on this idea sooner than he could have known.
President George Schaefer predicted that 1942 would be “a great year for RKO” because the studio had “more holdover pictures in theaters and more important plays in production than at any other time in the studio's history.”45 In reality, the organization was a tottery mess at the beginning of the new year. Besides Odlum's determination to become more involved, there was much conjecture about new policies and personnel changes. Among the possibilities mentioned were dissolution of the executive committee of the board of directors, reduction of the number of members on the board, and changes in the studio's executive personnel. Since Joseph Breen was “expected to remain in charge of production,” the implication was that either Sol Lesser or J. R. McDonough (or both) might be going the way of Harry Edington in the near future.46 Edington had been persona non grata throughout 1941. Because of the executive producer's contract, Schaefer could not get rid of him, so he assigned Edington to work on pictures while refusing to give him producer credit. Although Edington remained on salary until January 1942, he stopped reporting for work in early November.47 It is not possible to say if Harry Edington was as big a bust as he appeared to be, or simply a scapegoat for the president's own blunders.
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