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The U.S. Defense Buildup and the Domestic Movie Market

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The war-induced decline in foreign revenues and the problems over British remittances forced the studios to focus more heavily than ever on the domestic market. In 1940, the movie industry gauged its "potential " audience (comprising “frequent” and “occasional” moviegoers) at 90-100 million out of a total population of just over 130 million. According to the Film Daily Year Book, weekly ticket sales in the United States totaled 80 million in 1940, and 55-60 million Americans went to the movies every week. 80 Movie tickets made up one-fifth of all U.S. amusement expenditures and fully four-fifths of all spending on spectator amusements, including theater and sports. 81 Although moviegoing was integral to the everyday lives of most Americans in 1940, the industry still was struggling to shake the lingering effects of the Depression and harbored grave concerns about the effects of war on the domestic market.

As the U.S. defense buildup gained steam in 1940, however, it became clear that the motion picture industry would be a major beneficiary, particularly because the buildup was centered in the urban-industrial areas where Hollywood did most of its business. Thus, the film industry’s guarded optimism about a possible war boom tended to grow right along with the defense buildup. A June 1940 report from Poor’s on Wall Street suggested that the improving domestic movie market should more than compensate for losses overseas. 82 Industry performance in 1940 actually bore out that prediction: domestic revenues climbed from $659 million in 1939 to $735 million in 1940, up nearly 12 percent. 83 In January 1941, the Wall Street Journal reported that “Hollywood is on the road to becoming more domestically self-contained, even though the road may be a rough one,” and went on to note that the movie industry “has by now pretty well adjusted to the loss of a large part of its foreign revenues.”

While the movie industry was enjoying the benefits of the defense buildup by late 1940, it actually lagged behind other major industries as the buildup went into high gear in the early months of 1941. In fact, many feared that the full force of the defense boom might not reach the movie industry. “All Other Biz Up But Pix,” ran a banner Variety headline in May 1941, and in June Bosley Crowther of the New York Times devoted several columns to what he termed Hollywood’s “Boxoffice Blues.” 85 By late June, according to the Office of Government Reports, defense contracts and expenditures totaled $17 billion, but still the movie business was in the doldrums.

All that changed overnight—or over a single weekend, actually. During the Fourth of July holiday weekend, theaters reported a surge in attendance—and in fact, virtually all amusement and recreational spending in the United States surged." 87 The Wall Street Journal reported in September 1941 that the boom was still going strong. “The amusement world says the Fourth of July touched off a spending explosion,” said the page-one story. “So sharp and so sudden was the spurt that those affected dismissed it as a flash in the pan. But succeeding summer weeks … continued to pile up cash in the box offices, book and liquor stores, railroad, bus, and airline ticket offices.”

By the autumn of 1941, the sustained boom had become an accepted way of life in the movie industry, with even better business expected as new factories, urban labor migration, the draft, new army camps, and rearrangement of work schedules (night shifts, swing shifts, and the like) all pushed movie attendance and ticket sales ever upward. The box office was up a reported 20-25 percent in Washington, D.C., and about 15 percent in the Twin Cities. Business in Indianapolis was even better, with city payrolls having increased 50 percent over the preceding year. The boom also hit heavily in Detroit and Los Angeles owing to the concentration of airplane factories in those areas. One city that lagged behind, ironically enough, was New York, the nation’s movie exhibition leader, since there were relatively few defense plants in the metropolitan area.

Perhaps the number-one beneficiary of the defense buildup was Pittsburgh, the nation’s steel center and capital of heavy industry, and thus a crucial city in the U.S. defense arsenal. New munitions factories, shipyards, airplane plants, and military bases added millions of dollars to payrolls and pushed movie theater revenues up well over 20 percent—and even higher in department store sales, auto purchases, home building, and some luxury expenditures. Factories were still being built as of 1 November 1941, with 22,000 new jobs expected within the next fifteen months. Virtually all of the city’s 150 theaters were feeling the effects of the boom, with the biggest rise occurring in the neighborhood and suburban houses.

This latter point touches on one of the more interesting aspects of prewar exhibition, namely, the trend in American life toward suburbanization as the population shifted away from urban centers to outlying suburbs and small communities. Prior to the defense buildup, in fact, the population shift away from the downtown theaters where the industry did most of its business had been a growing concern among exhibitors. In August 1940, the Motion Picture Herald reported that Census Bureau figures indicated that “a substantial part of the future of motion picture exhibition lies in the suburbs.” This change reversed the trend of the 1910s and 1920s when urban centers grew rapidly. According to the Census Bureau, the total population of nine of the thirty U.S. cities with over 300,000 in population had actually declined since 1930.

One obvious factor in this shift, stated the Herald, was the “commuter mode of life,” which was also contributing to the slow but steady rise of the drive-in movie theater—a trend that accelerated in 1941 with the development of in-car speakers. 92 There were some sixty-five drive-ins operating in 1941, with another fifty or so under construction, most of them in the South and in California, spurred by population growth and favorable weather. Another phenomenon related to suburban and commuter lifestyles, said the Herald, was “the construction of well planned ‘shopping centers’ … creating situations in which motion picture theaters can and do thrive.” Los Angeles provided a prime example. Downtown retail sales in L.A. had been declining since 1929, while department stores like Bullock’s and the Broadway had opened successful suburban Page 29  branches. Sears, Roebuck, and Company had five stores in the L.A. area, none of which was located downtown.

Along with the antitrust suit, noted the Herald, the move to the suburbs and shopping centers could render the industry’s movie palaces “unprofitable” and could even “break the first-run monopoly which the ‘downtown’ theatres have enjoyed.” But as yet, these trends were deemed to be “of too recent origin for any conclusive results.” 94 Those “results” would not be forthcoming for quite some time, since the defense buildup and the ensuing war conditions would keep the population concentrated in urban centers. In fact, in 1941 the suburban trend was effectively quashed by government mandate: new home construction was suspended so that both labor and material could be utilized for war-related production. For the time being, however, the limited suburban boom provided a strong complement to soaring downtown movie attendance and helped push revenues to record levels.

Another factor in the improving market situation in 1941—and another distinct manifestation of the nation’s deepening prewar mentality—was the public’s growing appetite for news about the war overseas as well as about U.S. “preparedness.” By late 1940, Hollywood newsreels, documentary shorts, and features were increasingly devoted to war-related subjects. The public was buying, and, in fact, news-hungry audiences were changing the very nature of moviegoing. By spring 1941, theaters routinely interrupted their programs to provide news bulletins, and some houses actually began scheduling radio broadcasts of FDR’s Tuesday evening “Fireside Chats”—broadcasts which were drawing total radio audiences of up to 70 million, fully one-half the U.S. population. 95 Another barometer of public interest in the war was the prewar rise of the newsreel theater. These theaters enjoyed their heyday before and during World War II, with approximately twenty-five in operation in the largest U.S. cities by late 1941. Nearly all of these were converted second-run downtown houses, and many had news tickers in the lobby and radio piped into the auditorium between newsreel programs.

Newsreel houses were one of several forms of specialty theaters operating in the United States in 1940, virtually all of which were affected by the defense buildup and the war. The effects were most pronounced in those theaters that catered to foreign films, including both ethnic theaters and art-cinema houses. The former were located in ethnic neighborhoods in large cities, primarily in the Northeast, although Spanish-language theaters in the Southwest were not uncommon. Art cinemas catered to the growing ranks of cinephiles and connoisseurs interested in critically acclaimed foreign films, primarily from France, Germany, and England. Just before the war in Europe, the Motion Picture Herald reported that foreign-language films played regularly at about 175 theaters in 85 different localities, about 100 of which screened only foreign films. That total actually had declined during the 1930s, with the assimilation of immigrant audiences into the American (and Hollywood) mainstream and also the increased control over the movie marketplace by the Big Eight. By 1940, in fact, the ethnic theater was being eclipsed by the art cinema as a site for viewing foreign-language films. With the war in Europe, however, the market for foreign-language films quickly dried up altogether.

By far the most significant form of specialty theater in the United States at the time was the so-called Negro theater. The number of these theaters, designed to serve the nation’s 12 million African Americans, had increased steadily in the 1930s and would explode during the 1940s as African-American participation in the war effort made that population an increasingly viable market segment. Not surprisingly, given the marginal social and economic status of blacks before the war, statistics on these theaters and their audiences are even less accurate and reliable than those on mainstream moviegoing. According to an in-depth Motion Picture Herald story in July 1939, the Motion Picture Division of the Department of Commerce estimated that there were some 400 Negro theaters in 175 cities in 28 states at the time—an increase of 65 percent in the previous two years. 98 Variety in January 1940 reported that there were some 500 theaters in the United States devoted to “all-Negro” films. Most of these were located in the Deep South, although New York City’s Harlem district alone boasted seventeen Negro theaters."

Variety also noted that an increasing number of mainstream theaters in more openly segregated areas, especially in the Deep South, were adopting policies to accommodate blacks, such as reserving a portion of the theater for blacks (usually the balcony, entered through a separate entrance) or devoting the final screening of the day (usually a late-night program) to black-only audiences. These changes enabled blacks to see Hollywood films at the same time as white audiences in these areas, which was scarcely the case in Negro theaters. 100 The latter generally received Hollywood films in their final runs—sometimes one to two years after their initial release in large cities in the North, and about six months later in the South. 101 But the Negro theaters also had the advantage of being able to run all-Negro films created specifically for African-American audiences.

By late 1941, the U.S. movie marketplace was booming and Hollywood’s late-Depression economic woes clearly were over. The industry had become “domestically self-contained” to an unprecedented degree, no longer relying on overseas revenues to turn a profit. Domestic revenues reached a record $809 million in 1941, up from $735 million in 1940. And the British remittances in late 1941 came as a tremendous windfall, pushing studio profits to their highest levels in over a decade. The combined profits of the Big Eight totaled $35 million, nearly double the $19 million profits of 1940.

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