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The Wartime Surge in Independent Production

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In February 1942, Variety ran a prescient analysis of the unit phenomenon as it had developed over the preceding months. In 1941, noted Variety , “company after company has swung away from the system of front-office assignment of producers, which they have used for years, toward the unit idea.” Now the war economy “is expected to still further spur the rush toward unit production which has marked the Hollywood scene for the past few months.” Thus, predicted Variety , “virtually all of Hollywood’s important pictures will be coming from these more-or-less independent producers.” 34 The qualifier “more-or-less” was necessary because of the studios’ ultimate control of distribution and first-run exhibition, and because the studios provided financing and production resources for most independents.

This latter point meant, in effect, that some filmmakers were more independent than others. Variety posited a “first class” of independents which included producers like Goldwyn and Selznick, who relied on particular studio-distributors but had their own production facilities and contract personnel, and who could handle their own financing. In the “second class” were contract producers and hyphenates like MGM’s Hunt Stromberg and RKO’s Orson Welles, who could “walk out at any time” and sign with a rival studio. Industry conditions were such that top producers were becoming increasingly mobile: “Hollywood has become such a checkerboard of jumping producers that it’s almost impossible to keep up with the moves.”

Variety concluded with the results of a “quick industry survey” naming the top ten unit heads in Hollywood: Sam Goldwyn, David Selznick, Jesse Lasky, Cecil B. DeMille, Walt Disney, Charlie Chaplin, Orson Welles, Preston Sturges, Jules Levey, and Alexander Korda. This group included filmmaking hyphenates, straight producers, and even a few production executives, suggesting that the term “independent” still was being applied rather haphazardly, even in the trade press. And interestingly enough, only a few of those among Variety’s top ten were very productive during the war in terms of a steady output of “important” pictures. But their varied efforts illustrate the range of independent activity during the war, and so a brief survey of Variety’s 1942 inventory of top independents proves rather illuminating.

Charlie Chaplin and Orson Welles, Hollywood’s two most celebrated independents at the time, were essentially inactive during the war. This was no surprise in Chaplin’s case, because he typically spent four or five years between finished films. Since the release of THE GREAT DICTATOR in late 1940, Chaplin still had not decided on his next project. Welles’s situation was quite another matter. His 1942 excursion to South America for the experimental amalgam of documentary and fiction IT’s ALL TRUE went badly owing to cost overruns, inclement weather, and other complications. RKO eventually stopped funding the project, and Schaefer’s departure left Welles without support at the studio. RKO’s new chief executive, Peter Rathvon, refused to renew Welles’s contract, so Welles went freelance and spent the rest of the war era trying in vain to buy the IT’S ALL TRUE footage from RKO so he could complete the project. He also tried to initiate other independent projects, including an experimental documentary-drama about the infamous French “Bluebeard,” Henri Landru. Welles eventually sold the idea to Chaplin and it provided the basis for Chaplin’s controversial postwar satire MONSIEUR VERDOUX (1947).

The two other hyphenates on Variety’s list, the producer-director Cecil B. DeMille and the writer-producer-director Preston Sturges, had units at Paramount and enjoyed considerable success during the war. DeMille produced two prestige pictures, REAP THE WILD WIND (1942) and THE STORY OF DR. WASSELL (1944); both were commercially successful but failed to impress the critics. Sturges, on the other hand, enjoyed tremendous critical success but only modest box-office returns in a succession of outrageous comedies, including THE PALM BEACH STORY (1942), THE MIRACLE OF MORGAN’S CREEK , HAIL THE CONQUERING HERO , and THE GREAT MOMENT (all 1944). After a brilliant creative run of eight pictures for Paramount from 1940 to 1944, and at the peak of his success, Sturges decided to leave for an independent alliance with Howard Hughes—an ill-fated decision that effectively stalled his career.

Three other independents on Variety ’s list simply were not all that productive during the war. Jules Levey and Jesse Lasky produced just three pictures between them, none of which was successful. The British producer Alexander Korda began the war with a hit UA release, TO BE OR NOT TO BE (1942), but his London Films company was plagued by financial problems which eventually caused a split with UA. In early 1943, the New York Times announced that Korda was taking over the MGM-British unit, but that union resulted in only one picture, PERFECT STRANGERS (U.S. release 1945; British title VACATION FROM MARRIAGE 1944). Korda also coproduced several wartime pictures, including SAHARA (1943), directed by his brother Zoltan Korda for Columbia.

The other three on Variety’s list, Sam Goldwyn, David Selznick, and Walt Disney, formed an elite trio as Hollywood’s dominant major independent producers, although they too underwent very different wartime experiences. Of the three, only Goldwyn maintained business as usual during the war, turning out BALL OFF IRE in 1941, THE PRIDE OF THE YANKEES in 1942 and THE NORTH STAR in 1943, THE PRINCESS AND THE PIRATE in 1944, and UP IN ARMS in 1944. All were released by RKO, and all but THE NORTH STAR were major hits.

Disney continued to release through RKO, but virtually all of Disney’s wartime output directly supported the war effort. A financially crippling studio strike (and settlement) in 1941 and the disappointing box-office returns of the prewar features (PINOCCHlO and FANTASIA in 1940; DUMBO and THE RELUCTANT DRAGON in 1941) encouraged Disney to abandon commercial operations after the release of B AMBI in June 1942 and to concentrate almost exclusively on war-related films. The Disney studio with its 1,200 employees was the only one designated as an official war production plant by the government, and it turned out scores of animated military training films and informational shorts. Disney’s cartoons were geared to the war effort as well, although they remained extremely popular with wartime moviegoers. Disney’s only feature during the war was an animated doc umentary on strategic bombing, VICTORY THROUGH AIR POWER (1943).

Selznick, meanwhile, remained inactive as a producer during the early war years, but he quickly expanded his efforts as a talent agent to include the packaging of movie projects. He made enormous profits loaning out such contract talent as Ingrid Bergman, Joan Fontaine, Gregory Peck, Jennifer Jones, Joseph Cotten, Shirley Temple, Dorothy McGuire, and the directors Alfred Hitchcock and Robert Stevenson. Selznick also packaged star, story property and/or script, and other top talent for such films as CLAUDIA (1943) and JANE EYRE (1944), both purchased by Fox. In 1944, Selznick returned to active production with three projects, SINCE YOU WENT AWAY , I’LL BE SEEING YOU , and SPELLBOUND (1945).

The wartime careers of Variety’s top ten indicate both the vagaries and the variations of Hollywood independence during that turbulent era, which saw the ranks of so-called independents swell enormously. Indeed, the term was applied to virtually any abovethe-line talent not under conventional long-term studio contract—a roster which included James Cagney, Gary Cooper, Lester Cowan, Buddy De Sylva, Arthur Freed, William Goetz, Howard Hawks, Ben Hecht, Mark Hellinger, Alfred Hitchcock, Fritz Lang, Leo McCarey, Dore Schary, Jack Skirball, Edward Small, Leo Spitz, Hunt Stromberg, Jerry Wald, Hal Wallis, and Walter Wanger. Many of these would have been considered simply freelance talent a few years earlier, but the economic and regulatory conditions during the war encouraged noncontract talent to set up independent production companies.

The wartime income tax was a crucial factor in the rise of independent companies. Its effect was described in detail by the industry executive Ernest Borneman in a Harper’s piece, “Rebellion in Hollywood: A Study in Motion Picture Finance.” The “rebellion,” said Borneman, involved Hollywood’s “inner circle of top producers, highpriced writers and directors, and the cherished stars,” who were “clutching the banner of artistic freedom in one hand and an income tax blank in the other.” The rebellion was “touched off inadvertently by the Treasury Department” in that Hollywood filmmakers and artists, “dismayed by wartime tax rates, went into business for themselves as independent producers in order to pay capital gains tax rather than income tax.” This invariably entailed setting up a so-called single picture corporation—that is, a film production company created to produce a single feature. After the film’s release, the company would be dissolved, its stocks sold, and the profits taxed at the capital gains rate of 25 percent.

This arrangement proved most attractive to those who, by 1942, found themselves in the 80-90 percent income tax bracket. James Cagney, for example, readily acknowledged that his move to independent status with UA in 1942 was motivated largely by the fact that, in 1941, his earnings of over $350,000 with Warners yielded an after-tax income of only $70,000. 40 Established independents took to this strategy as well. Sam Goldwyn, for instance, was advised in November 1942 by his New York accounting firm to liquidate Samuel Goldwyn, Inc., and create a succession of “collapsible corporations” for each of his RKO productions, so that he could “convert ordinary income into capital gains.” Goldwyn readily complied, and thus his wartime productions were put out by a series of new companies, including Avalon, Regent, Beverly, and Trinity Productions.

As the independent trend accelerated and the market continued to heat up, the movie industry also underwent dramatic changes in production financing. As Borneman noted in his 1946 article: “In the unprecedented boom market of the past five years, it has no longer been necessary [for independents] to make pre-production deals with a major distributor in order to get production capital.” Not only were independents less dependent on studios for financing, notes Borneman, but they also found a viable alternative to banks in the form of companies designed to finance movies. “Motion picture finance corporations have arisen in Hollywood, New York, and Chicago, which will put up all the necessary production capital, put up all the salaries, including that of the producer-promoter himself, and take one half of the net proceeds for their pains.” Lester Cowan, for instance, used Domestic Industries, Inc., of Chicago to finance TOMORROW THE WORLD (1944) and THE STORY OF GIJOE (1945), both of which were produced by single-picture corporations and released through UA.

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