The Postwar Motion Picture Industry

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The Postwar Motion Picture Industry

Postwar America, the Global Economy, and the Cold War
Hollywood and Washington
The Postwar Domestic Marketplace
Postwar Foreign Markets
Labor Strife, Politics, and the Resurgence of IATSE
HUAC, the Hollywood Ten, and the Birth of the Blacklist
SAG, HUAC, and Postwar Hollywood
Postwar Censorship
The Antitrust Campaign and the Paramount Decree

After the shooting stops…, Hollywood naturally will go back to the business of making films strictly for profit. But it will also do something else. Now that Hollywood has grown up, it knows that it must play a role in creating the world of tomorrow, just as it helped to destroy the kind of world desired by the enemy.

Robert St. John, Look, January 1945

The American movie industry faced the postwar era with both relief and euphoria. The war boom had been a mixed blessing for the industry, with record revenues and profits accompanied by material and manpower shortages, severe operational constraints, and ongoing anxiety about the Allied cause. The movie industry had thrived and played an important role in that cause, and in that sense Hollywood had indeed "grown up" during the war along with the nation at large. Now as the United States emerged from World War II as a leading global power, the industry was generally upbeat about its own postwar prospects—particularly in 1946, when Hollywood enjoyed its best year ever.

That postwar optimism faded, however, as Hollywood proved to be singularly ill equipped for "the world of tomorrow." While Americas stature as a world power and its economic prosperity continued to grow in the late 1940s, the American movie industry went into an economic tailspin and a sustained fall from social grace. Postwar Hollywood was besieged by labor strife and runaway costs, by rebellious exhibitors and restricted foreign markets, by censorship battles and anti-Communist purges, and, most significantly, by declining domestic revenues and an inglorious end to its decade-long antitrust battles. The Justice Department prevailed in a series of Supreme Court rulings in 1948-1949 that mandated the "dis-integration" of the studio system. Those rulings marked not only the definitive end of the epic Paramount case—arguably the signal event for the American cinema in the 1940s—but also the culmination of Hollywood's postwar woes. It marked, in fact, the climax of the most troubled period in movie industry history.

Postwar America, the Global Economy, and the Cold War

Hollywood's postwar downturn was especially troubling because it contrasted so sharply with the general prosperity of the nation at large. Generally speaking, the United States emerged from World War II in remarkably good shape. The war not only reversed the economic effects of the Depression but also enabled the United States to become a genuine world power. By 1944, America was supplying 40 percent of the world's armaments and feeding citizens and soldiers around the globe. At war's end, estimates put U.S. productivity at nearly half that of the rest of the world combined. And at decade's end, as the British historian Robert Payne noted at the time, "half of the wealth of the world, more than half of the productivity, nearly two-thirds of the world's machines are concentrated in American hands; the rest of the world lies in the shadow of American industry."01

U.S. productivity was due in large part to the relatively minor damage inflicted by the war on the nation and its populace. World War II killed an estimated 50 million people and physically devastated much of Europe and the Far East. Major cities and industrial centers were destroyed, and civilian casualties ranged from 60,000 in Britain and 400,000 in France to 6 million in Poland and 7 million in the Soviet Union. The United States was the only principal combatant to suffer few direct civilian casualties and no significant enemy incursions or attacks within its primary borders. U.S. military casualties of some 290,000, while substantial, were relatively light considering both the degree of U.S. involvement in the conflict and also the losses suffered by the other major combatants—Japan with 1.2 million soldiers dead, for example, and the Soviet Union with 7 million (beyond the 7 million civilian casualties).2

America's postwar "reconversion" was as rapid and extensive as its conversion to war production in the early 1940s had been, but it scarcely signaled a return to prewar conditions. The high employment and productivity of the war era did ease somewhat, while rising costs and spiraling inflation created financial difficulties for middle-and working-class Americans. But the economy remained strong enough to absorb the millions of returning servicemen, and a boom in housing construction—the largest since the mid-1920s—created affordable homes for the ex-GIs and factory workers, who were marrying in record numbers by the late 1940s.3 The birth rate soared as well, and by 1948 the term "baby boom" had entered the popular discourse.4

The baby boom was simply one aspect of a massive family and housing boom after the war, much of which was fueled by Americas vast migration to the suburbs. Keying the migration were low real-estate prices outside urban areas, along with tract housing, improved highway systems, and affordable automobiles. Many cities struggled with the postwar family/baby/housing boom, particularly those which had been war-production centers and had not adequately handled the previous wartime growth. Los Angeles typified this problem. Its population had increased by 300,000 during the war, and during the first postwar year alone the city grew by another 70,000—bringing its total to 2 million. Home construction and transportation simply could not keep up with demand, which drove up costs as well. The cost of living in Los Angeles in 1946 was three times the prewar level, and about twice what it had been only two years earlier.5

Rising costs were the result of not only market demand and material shortages but also the rampant labor strife and related wage increases. The war had solidified the role of organized labor in U.S. industry, while the government's general easing of antitrust restrictions (and litigation) during the war enabled the corporate powers in many major industries, from steel and mining to automobile and motion picture production, to further intensify their oligopolistic control. Thus, the government intensified its "trustbusting" efforts after the war, when conditions were ripe for the strikes, wage disputes, and other labor-management discord that would became a way of life for U.S. industry in the late 1940s.6

Despite inflation and labor conflicts in the United States, the general postwar economic climate remained upbeat—particularly in comparison to conditions abroad. The Axis nations quite literally had to rebuild their economies and industries, with Germany especially hard hit owing to the heavy bombing in 1944-1945. England also faced massive rebuilding and recovery, and its postwar struggles were of deep concern to the United States, given England's status as a trading partner and its enormous wartime debt. The deepening economic and industrial woes in Britain became front-page news in the United States by 1947 and its economy continued to deteriorate through the next two years, culminating in the devaluation of the pound sterling in 1949.7

The postwar global recession coincided with a deepening geopolitical crisis, the cold war, which began soon after World War II and saw the United States radically reshuffle its foreign alliances and redefine its international interests. Anglo-American ties remained strong, although England's economic difficulties caused myriad political problems. However, the Soviet Union, which had been a crucial ally during the war, was recast immediately afterward as a global menace and as Americas principal political foe—along with the other Iron Curtain countries under Soviet control in Eastern Europe. The cold war escalated dramatically in 1949 with the Soviet Union's successful detonation of an A-bomb in August and, some two months later, the fall of China to the Communists.

The cold war seriously limited U.S. economic prospects overseas while fomenting intense anti-Communist fervor and anxiety at home. The cold war also had considerable impact on the American movie industry, in terms of not only overseas trade but also global politics and the nation's international interests. World War II had confirmed the value of Hollywood movies as propaganda, and it had created a direct and intense relationship between the movie industry and the government. But the cold war proved to be a very different kind of war, and thus Hollywood's role as propagandist and its relationship with Washington changed radically as well.

Hollywood and Washington

During the war, the relationship between Hollywood and Washington had been more harmonious than at any time in industry history. There had been a few sore spots, to be sure—the 1943 Senate hearings on the studios' control of and alleged profiteering from military contracts, for instance, or the Justice Department's ongoing (although scaled-back) antitrust campaign. For the most part, however, Hollywood and Washington maintained a state of active and unprecedented cooperation in the war effort. Hollywood lost a valued ally with the death of Roosevelt in early 1945, and in fact his successor Harry Truman, before becoming vice president in 1944, had led the 1943 Senate investigation of the major studios. Not only did the industry garner less support from the White House, but the continued conservative swing in Congress posed an even more direct threat on several fronts, particularly organized labor and purported "un-American activities" in Hollywood.

The most serious postwar threat from Washington involved the government's antitrust campaign against the studios and the large unaffiliated theater circuits—a campaign in which the Justice Department gained increased support from the Supreme Court and the Federal Trade Commission (FTC).8 The postwar antitrust battles also involved the Federal Communications Commission (FCC), which oversaw the development of the television industry, including the approval of the purchasing and licensing of TV stations. The FCC had the authority to prevent the licensing of stations to any company convicted of antitrust violations, and by the late 1940s, it became clear that the FCC might invoke this authority to forestall the studios' efforts to move into the burgeoning industry through television station acquisition and alliances with the upstart TV networks.

Despite the resumption of these "hostilities" on the home front, Hollywood and Washington maintained an alliance of sorts outside the United States. Immediately after the war, this alliance primarily involved the military, which oversaw Hollywood's return to Europe in 1944-1945 and to the Axis countries in 1945-1946. Then, as the cold war began to heat up, it became evident, ironically enough, that many of the same federal agencies that Hollywood was battling at home would look to the movie industry as an ally overseas. Orchestrating this alliance was the Motion Picture Export Association (MPEA), an industry trade organization created in 1945 which was, in effect, a postwar merger between the Motion Picture Association of America (MPAA) and the overseas branch of the governments Office of War Information (OWI).9

As a branch of the MPAA under Eric Johnston, the MPEA was created to facilitate overseas trade in the complex postwar global marketplace. Initially, the MPEA concentrated on regaining the Axis markets, but as the cold war heated up, it served as the "collective bargaining agent" overseas for Hollywood's eight producer-distributors, concentrating on those markets where, as Johnston put it, "monopolistic pressures have hamstrung the American industry." The MPEA enjoyed Washington's support in this effort, since the government recognized that the movies were valuable to its postwar political and economic strategy in two distinct ways: first, movies were a highly desirable commodity in virtually every market worldwide, regardless of local politics, and thus provided an effective means to gain access to foreign markets; and second, movie content was perceived as a means to sell American ideology and American-made products overseas.10

Several government agencies, and three in particular, cooperated with the MPEA. The Commerce Department directly assisted foreign trade, owing to its interest in movies as a means to promote overseas sales of other American goods, from clothing to appliances to automobiles. The Justice Department agreed to relax its trust-busting efforts in the area of the integrated majors' export sales, although the MPEA clearly was a monopolistic enterprise. And the State Department was interested in what the Wall Street Journal termed the "propaganda value of the typical American films in portraying the democratic way of life."11 Indeed, as Thomas Guback points out in his study of the postwar international film industry, the MPEA became known as "the Little State Department" because of the similarity of its "function, scope, and methods" to those of the U.S. Department of State. Besides bargaining for optimal economic advantage on behalf of Hollywood, notes Guback, the MPEA also tried "to win friends and influence local policy."12

Thus, the Hollywood-Washington postwar rapport was ruled by two rather remarkable ironies. One was the government's active support of Hollywood's effort to monopolize foreign markets, even though the Justice Department was suing the studios for similar efforts in the United States. The other was the perceived propaganda value of movies themselves: while Hollywood films were deemed a valuable means of promoting Americanism overseas by the State Department and other agencies, Congress continually accused the studios of employing political subversives and of being overly critical of the American way of life.

The Postwar Domestic Marketplace

Hollywood's initial postwar optimism was fueled by a huge box-office surge in late 1945 and into 1946. The surge actually accelerated immediately after the war, thanks to millions of returning servicemen, increased courtship activity, the easing of wartime restrictions, and a generally upbeat populace with both time and wartime savings on their hands. The postwar era was ushered in by three huge late-1945 hits, Sspellbound, The Bells of St. Mary's, and Road to Utopia, 1946 closed with three even bigger hits, The Jolson Story, Duel in the Sun, and The Best Years of Our Lives. These hits capped off what was by far Hollywood's biggest year ever in terms of box-office revenues and studio profits. The studios' year-end gross revenues rose from a record $1.45 billion in 1945 to just under $1.7 billion in 1946. And while revenues were up some 10 percent over 1945, profits were astronomical. After record profits of just over $66 million in 1945, the studios' total net in 1946 shot up to $120 million.13

Hollywood's staggering profits in 1946 were due in part to its overseas income. But the principal factor was the domestic market, spurred by long-running hits and also by the release of major productions that had been backlogged during the later war years. Top revenues could be earned from pictures that, already "in the can" and awaiting release, had been made when production costs were considerably lower, in fact, three of the top ten hits of 1946, MGM's The Yearling, Warners' Saratoga Trunk, and Paramount's Road to Utopia, had been on the shelf and ready for release for quite some time—over two years in the case of Saratoga Trunk.14

By late 1946, however, the war boom had peaked and the domestic market began its postwar readjustment. The Hollywood trade papers and the Wall Street Journal began to note the decline in early 1947, and by summer both attendance and gate receipts were falling sharply.15 Many in the industry refused to believe that the boom was over, but in fact the industry had entered a period of serious decline, owing primarily to falling attendance and, despite ticket price hikes, falling box-office receipts.16 Meanwhile, rising production and operating costs meant eroding profit margins for studios and exhibitors alike. Thus, all sectors of the industry were feeling the squeeze in the late 1940s, as the figures in table 9.1 well indicate:

YearBox-Office Gross (in $ billions)Studio Profits (in $ millions)Exhibitor Profits (in $ millions)
*Figures on total box-office grosses are based on Department of Commerce statistics and are more conser vative and reliable than those reported in the trades. The 1950 Film Daily Year Book reported the postwar grosses as: $1.285 billion in 1945; 1560 in 1946; 1.565 in 1947; 1545 in 1948; and 1.350 in 1949.

Figures on theater attendance for this period vary widely, but they all signal a decline. In 1946, Film Daily and the MPAA both gauged weekly admissions at 95—100 million, while Gallup's ARI put weekly attendance at only 66 million.17 By 1949, even the ever-optimistic MPAA acknowledged the slide, reporting a drop from 90 million per week in 1948 to 70 million in 1949—a one-year decline of nearly 30 percent.18Wall Street Journal figures, meanwhile, indicated a steadier decline, with weekly admissions falling from 80.5 million in 1946 to 78.2 million in 1947, 67 million in 1948, and 62 million in 1949. That 1949 total jibed with the ARI's figures, and in fact most estimates put weekly ticket sales in the 60-65 million range.19

Along with declining attendance and revenues, Hollywood saw a decline in the number of top box-office hits as well. In 1946, as the war boom peaked, five films earned over $5 million; The Best Years of Our Lives and Duel in the Sun both surpassed $10 million. At that point, the succession of big hits simply stopped, and even the mid-range hits tapered off severely. No release earned over $6 million in 1947, although there were a few in the $5-6 million range. In 1948-1949, however, Hollywood's output of big hits—and even modest hits in the $3-5 million range—fell dramatically, as these figures indicate:

More than $2 million73756550
More than $3 million43352219
More than $4 million181575
More than $5 million51101

The sharp decline in major hits in the late 1940s brought changes in production and market strategies as rising costs and falling attendance discouraged producers from taking on big-budget pictures designed to clean up at the box office. The postwar era also saw the employment of more defensive market strategies, notably an increase in both  pictures and reissues, in fact, reissues became a veritable programming staple in the late 1940s. While only a half-dozen or so films were re-released in the later war years, the studios reissued twenty in 1946 and forty in 1947. By 1947, remarkably enough, some theaters had gone exclusively to first-run reissues. Exhibitors complained about the increasing number of reissues being offered only on a percentage basis (a sales practice usually reserved for A-class product), but audiences clearly were buying, in fact, a few A-class reissues—MGM's The Great Waltz (1938) in its 1947 reissue, for instance—were earning more than they had initially.20 The trend accelerated in the late 1940s: Variety reported 105 reissues in 1948 and 136 in 1949." While reissues could scarcely turn around Hollywood's fading postwar fortunes, the booming business for reissues clearly was a major development in the postwar movie industry. Business was so good, in fact, that Paramount's Barney Balaban considered selling "reissue rights" to old pictures, and in 1948 he refused to rent or lease the company's products to television for fear of reducing their theatrical reissue value.22

The falloff in major box-office hits signaled much more than simply declining attendance. It also indicated changes in the tastes and composition of movie audiences, changes in the lifestyles and media habits of middle-class Americans, and changes even in movie theaters themselves. Postwar trends in theater construction are especially revealing. In the months immediately after the war, with the movie industry's war boom still going strong, several hundred movie theaters were either under construction or being planned. Those plans were stymied in March 1946, however, when the Civilian Production Administration put a freeze on all construction except low-cost housing. That freeze lasted until June 1948, and by the time it was lifted the movie industry's economic climate had changed drastically.23 The earlier plans for theater construction were not revived, and in fact theaters were now closing by the hundreds. From 1945 to 1949, the number of movie houses operating in the United States fell from more than 20,300 to about 17,350, a decline of 15 percent—the first decline since the early Depression era, and nearly as severe.24

While traditional indoor theaters were closing, however, outdoor theaters underwent an explosive growth. The drive-in theater phenomenon, begun in the 1930s but stalled by the war, quickly took off in the late 1940s, and by 1949 drive-ins had compensated for the decline in operating indoor theaters:


The drive-in explosion was propelled by several crucial postwar factors: suburbanization, affordable automobiles, interstate highways, and, most of all perhaps, the "baby boom." Designed to accommodate from 250 to more than 1,000 cars, drive-ins clearly were geared for family traffic. Besides alleviating parking and baby-sitting problems, drive-ins included playgrounds and elaborate concession stands, in fact, concession stands still were considered undignified by many indoor exhibitors, and it was the drivein that demonstrated the tremendous cost benefits of selling popcorn, soda, candy, and the like to movie patrons.25 Thus, the postwar rise of the drive-in coincided with a marked rise in exhibitors' concession income, which steadily climbed from $34 million in 1946 to $128 million in 1949.26

The drive-in phenomenon gave the movie industry a moderate boost; continuing through the following decade, the number of outdoor theaters reached 6,000 in 1961. But the drive-in was yet another sign of the changing times and overall decline of the motion picture industry—at least as it had evolved since the 1910s. With its clientele of young marrieds getting out of the house for a few hours with the kids in the family car, the drive-in heralded the rise of the suburbs and the passing of the downtown area as the center of social and cultural activity for most Americans. And thus, it signaled the passing of the downtown deluxe movie house, which had been the lifeblood of the motion picture industry for decades.

There were other signals of the downtown theater's imminent extinction as well. The Wall Street Journal reported in 1947 that the once-denigrated "nabes" (neighborhood theaters) were beginning to do better business than the downtown houses—a remarkable development after the tremendous growth of urban markets during the war. Moreover, the Journal noted in 1948 that the burgeoning drive-in was a "competitive headache" for neighborhood theaters. Clearly both the nabes and drive-ins were siphoning off the traditional first-run audience. A Gallup study in early 1949 found that the number of "average A customers" had declined from about 16 million in 1946 to 13 million in 1948—a decline of nearly 20 percent in only two years—and that over 60 percent of A-picture customers were now under 30 years old. Variety reported in 1949 that the ARI's long-held view that the teenager was the "most faithful" (i.e., habitual) movie-goer was now widely accepted in the industry. And industry studies late that year indicated that the drive-in provided one means of recapturing that "lost" (i.e., over 30) movie audience.27

Hollywood's struggle simply to adapt to the changes in the composition and behavior of movie audiences, let alone exploit them, was especially galling because the "lost"—or fast disappearing—audience of young marrieds and suburbanites was remarkably affluent. Variety reported that revenues fell 21 percent between 1946 and 1949, while the disposable income of Americans increased 22 percent.28 Some argued that postwar conditions still compared favorably to prewar levels, but this was scarcely the case. Although Hollywood's 1948 box-office gross of $1.5 billion was up 34 percent over 1941, the increase was due primarily to a 60 percent increase in the average ticket price; meanwhile, attendance was falling despite a population increase of over 10 percent since the prewar era. In 1948, as Hollywood's decline accelerated, personal income in the United States was up 172 percent over 1940, and the gross national product was up 153 percent.29

Movie attendance also comprised an ever-smaller portion of Americans' recreational expenditures in the late 1940s. Moviegoers were growing more selective, and they also were opting for other activities as a wider range of amusements and diversions became available—from night baseball to bowling to night classes on the GI Bill. Through the 1930s and into the war years, moviegoing amounted to 20 percent of Americas recreation expenditures. That figure climbed to 25 percent during the war but then declined steadily in the late 1940s, falling to 12.3 percent by 1950.30

The import of foreign films reflected yet another telling aspect of the changing postwar marketplace. As in the war years, a number of top British films enjoyed considerable success in the United States; most were relatively modest dramas in much the same style as the wartime pictures—David Lean's Brief Encounter (1945; U.S. release 1946), for example, and Carol Reed's Odd Man Out (1947). But a number of more ambitious British pictures were released in the United States as well, notably Henry V (1944; U.S. release 1946), Caesar and Cleopatra (1946), Great Expectations(1946), Hamlet (1948), and The Red Shoes (1948). All of these prestige-level productions were critically well received and did roughly $2 million in the United States, and all were nominated by the Academy for best picture—which Hamlet won in 1948. Moreover, both Great Expectations and Hamlet were Anglo-American coproductions released via Universal, which underwent a complex merger in 1946 giving such British-made films direct access to the U.S. market. Similarly, Britain's Eagle-Lion in 1947 purchased Producers Releasing Corporation (PRC), a B-grade producer-distributor, to secure access to the U.S. market.31

While these Anglo-American deals provided mainstream release for quality English-language imports, the postwar era also saw the rapid rise in the United States of an art cinema movement which catered to foreign-language imports. For the most part, these imports were far more obscure—and far less lucrative—foreign films playing in smaller, more exclusive venues geared to the growing ranks of American cinephiles. Most of the art cinema venues, in fact, were second- and third-run downtown theaters whose owners turned to foreign-language fare rather than close down.

The 1948 Film Daily Year Book stated that the trend was catching on "because of an alleged product shortage; because some of the low-budget films were disappointing; and because many of the better films were only available as third and fourth runs." The exhibitor operating an art house also did not have to rely on a neighborhood clientele, "since devotees of the foreign film will travel from one end of town to another to see an import."32 According to successive editions of the Film Daily Year Book, 118 foreign films were imported in 1947, 93 in 1948, and 123 in 1949. One major distributor of imports, Vog Films, gauged the number of theaters regularly playing foreign films in 1947 at about 250. Variety reported a similar total in late 1949 (226 theaters) and put the total of "strictly artfilm theaters" in the United States at 57. The center of the artfilm universe was New York, which had over 30 theaters devoted to foreign films and to the burgeoning market of cinephiles.33

The art cinema movement was keyed to the gradual recovery of film production overseas after the war, especially in Western Europe. French and Italian films dominated the movement, and Italian neorealist films such as Open City (1946), Shoeshine (1946), and The Bicycle Thief (1949) garnered most of the critical attention and box-office support. By the late 1940s, because European art films were well publicized and actively promoted by major film critics, a few were able to break into major distribution in the United States. Bosley Crowther's rave review of The Bicycle Thief in the New York Times in late 1949, for example, and his naming that film and Frances Devil in the Flesh (1946; U.S. release 1949) as the "best foreign language films" of 1949, helped propel both films into the mainstream market.34

For the most part, however, foreign films were consigned to play in the marginalized art-house circuit, where both the exposure and economic prospects were limited. Many overseas producers and distributors, in fact, considered that circuit little more than a dumping ground for foreign product—a means, essentially, of preventing foreign films from gaining a foothold in the United States, while the Hollywood studios satisfied market demand with B's and reissues. Even quality British pictures were "not getting proper distribution in America," said Alexander Korda in a blistering tirade in the New York Times in late 1946—a situation that would only get worse as the U.S. market declined.35

While these complaints were often justified, the Hollywood studio powers actually grew more sensitive to them as the domestic market declined and foreign sales became more important. Never before, in fact, had the American producer-distributors been so keenly aware of both the importance and difficulty of selling their pictures in foreign markets, and of maintaining favorable relations with their overseas clients.

Postwar Foreign Markets

Hollywood's overseas performance in the late 1940s ran directly parallel to its performance at home—a record high in 1946 followed by a sustained period of economic decline and general disarray. Hollywood's troubles overseas were the result of three postwar developments: first, cold war tensions, which rendered Americans' access to many countries behind the Iron Curtain difficult if not impossible; second, the trend toward tariffs, frozen revenues, and other protectionist policies in nations like Britain, France, and Italy that were determined to build up their own film industries and to prevent Hollywood from completely dominating their markets; and third, Britain's deepening financial crisis.

Even as the U.S. producer-distributors lurched from one foreign crisis to another in the late 1940s, however, overall revenues from overseas held up fairly well. After a record overseas take of about $125 million in 1946, foreign revenues were an estimated $120 million in 1947 and $100 million in both 1948 and 1949.36 This performance compares favorably to the industry's overseas take of about $110-15 million during the later war years, although rising costs in the late 1940s render such comparisons dubious at best. Moreover, the declining domestic market put increasing pressure on successful sales overseas. By the late 1940s, foreign trade still provided about 35 percent of Hollywood's total revenues, but that income often meant the difference between profit and loss.

This was scarcely the case immediately after the war, when the overseas outlook was remarkably upbeat. The Hollywood studio-distributors saw record overseas revenues in 1946, much of it from pre-1946 films in markets that had been closed during the war.37 Johnston stated at mid-year that foreign revenues made up fully 45 percent of rental income, and that he hoped to push that total to 50 percent.38 In October, the Motion Picture Herald reported that the "lid" on the foreign markets had been "pried open," and that the MPEA seemed to be fending off protectionism overseas.39 At year's end, the studios reported that their overseas income of $125 million was virtually identical to their overall net profits—a situation that many in the industry considered ideal, with the domestic market on a break-even basis and overseas income amounting essentially to pure profit.

England remained Hollywood's chief client after the war, and a veritable extension of the U.S. market. Hollywood's total revenues in England were just over $90 million in 1946; roughly $20 million was frozen and remained in England, while $70 million was remitted to the studios. Thus, England accounted for over half of the industry's overseas income—somewhat less than in the war era, when England supplied three-fourths of Hollywood's overseas income, but still a sizable share. So understandably enough, good relations with England remained the single most important item on Hollywood's overseas agenda.

To ensure those positive relations as well as the efficient investment of any funds not remitted, most of the major studios either established production units or studios in England or entered coproduction deals with British producers. The most significant of these was the 1946 merger of Universal and International Pictures orchestrated by England's J. Arthur Rank, in fact, Rank already had an elaborate coproduction and codistribution deal with Universal; the merger was described by Variety as "a major reorganization of the Universal-J. Arthur Rank worldwide film empire."40 A clear indication of both the unbridled postwar optimism and the need to invest overseas, the merger was designed to coproduce A-class pictures for the global movie market.41

The postwar Anglo-American alliance was doomed to failure, however, owing to the declining movie market in the United States and the rapid deterioration of the British economy. With each postwar year the British crisis worsened, with devastating impact on the American movie industry, in fact, in both 1947 and 1948, despite the severe crises at home, the Film Daily Year Book gauged the deteriorating British market as the single most acute problem facing the American movie industry.42 While England did remain Hollywood's major overseas client, by the late 1940s it no longer supplied any-where near the proportion of foreign revenues (60–75 percent) that it had during the peak war years. Remittances from Britain fell from $70 million in 1946 to $56 million in 1947, $35 million in 1948, and $17 million in 1949.

The so-called Anglo-American impasse stemmed from not only the severe economic situation in Britain but also the long-standing resentment over Hollywood's trade practices by the British government, especially the Board of Trade. Significantly enough, the British film industry in general, and especially the exhibition sector, was far less hostile toward Hollywood than the British government. While some British producers (particularly Rank) often complained that Hollywood films routinely earned at least five times more in England than did British productions, no one really questioned the general superiority of Hollywood product. During the war, the British film industry foundered while the American film industry flourished, and by 1945 the British industry was geared primarily to second-rate product to be double-billed with more popular American films. These "quota quickies" were produced to satisfy government-mandated quotas on the amount of screen time devoted to British product—about 20 percent in 1944 and 1945. These films were barely passable with British audiences, and they simply were not suitable for U.S. release. Both Rank and Korda planned to upgrade production after the war, however, and the various deals with Hollywood promised to improve the general state of the British industry.43

Things took a turn for the worse in early 1947, however, when Sir Stafford Cripps, the president of the Board of Trade, started speaking out about the need to "de-Americanize" British exhibition at the same time that the British economy began to show signs of postwar exhaustion.44 By the summer of 1947, England was mired in an economic crisis which was threatening all of Europe—and much of the globe, for that matter—and the Board of Trade prepared to take active measures against Hollywood and a number of other foreign industries. England's leading producers and distributors warned Cripps that the British film industry could not function without American product, and there was a flurry of activity on both sides of the Atlantic to forestall any serious action by the British government.45

Unfazed by these appeals and efforts, the Board of Trade took extreme measures—more extreme, in fact, than anyone expected. On 7 August 1947, an ad valorem tax of 75 percent was placed on all future film imports: in effect, foreign distributors were to pay three-fourths of the expected earnings on a picture prior to its release in England. Hollywood's reaction was swift and equally extreme. On 8 August, the MPEA announced an immediate boycott of the British market, to remain in effect until the tax was lifted."6

The Board of Trade stood firm despite laments from British exhibitors that they could not "carry on" without American pictures.47 England's producers were equally disturbed by the tax, since it jeopardized cooperative arrangements with U.S. companies. Several leading British producers did plan to upgrade product in an effort to compensate for (and exploit) the lack of U.S. product.48 These plans meant little given the state of the British economy, however, and in fact at year's end Rank announced substantial losses for 1947 in his production sector.49

The Anglo-American impasse continued into 1948 as conditions in England worsened and as Hollywood faced the prospect of doing without British revenues. The embargo finally ended in early March, when a settlement was announced that was to take effect in May 1948—on the same day as the Supreme Courts momentous Paramount decree. The settlement removed the ad valorem tax, which was to be replaced by a four-year agreement whereby a maximum of $17 million could be remitted from England by the American companies, plus an amount equal to the combined earnings of all British product released in the United States. The intent here, of course, was to induce the Hollywood studio-distributors to upgrade their efforts to sell British pictures in the United States, the results of which in turn would raise the $17 million remittance ceiling. The excess revenues—those not remitted—would not be taxed by the government but instead could be invested by the studios in various "permitted uses" in England. These included film production, buying story properties, hiring British talent, obtaining real estate (theaters, film labs, or studios, for example, with prior approval from the government), and so on.50

The Board of Trade also announced that the government would support the financially troubled British film industry with subsidies and loans, which along with the new accord (and the renewed rapport between British and American producers) promised to improve the quality of British films.51 Clearly both Hollywood and Britain were counting on that improved quality, and both stood to gain. The benefits to Britain were obvious enough, especially in terms of access to the lucrative U.S. market. Hollywood, meanwhile, could make room for quality British films, whose box-office performance would increase the majors' take at home (in exhibitors' fees) and also in England (in the equivalent add-on to the $17 million).

Unfortunately, however, England's economy continued to slide in 1948, and the British film industry's performance in the U.S. market fell to a postwar low despite the success of Hamlet, The Red Shoes, and a very few other pictures. Matters worsened with Parliament's passage of the Film Act of 1948, which raised the screen quota on British product from 20 to 40 percent. Again Hollywood countered, this time decreeing (via Eric Johnston) that as of 1 October 1948, no American import could be doublebilled in England with a British picture. This announcement dealt a severe blow to British exhibitors, since their patrons generally watched British films only if they played along with Hollywood products.52

Britain's film industry and national economy continued to deteriorate, a fact underscored by England's devaluation of the pound sterling in September 1949. One British studio after another closed down as production slowed drastically, especially on what were termed "first features," that is, films which could be dualed with quota quickies in England and released in the United States. Both Rank and Korda were bailed out repeatedly with government subsidies through the National Film Finance Corporation (NFFC), but both were still in desperate straits. Rank lost over $9 million on his production operations in 1949 and was all but inoperative at year's end.53 Nor did the investment by Hollywood of unremitted funds in England help all that much. The studios found permitted uses for $25 million in 1949, but very little of this money went into actual film production, since more concrete investments (in theaters, film labs, and the like) were less risky. As of June 1949, the studios were sitting on another $40 million and simply waiting for conditions to improve.54

Despite the myriad crises in England, Hollywood continued to dominate that market in 1949. Of the 571 features released in Great Britain in 1949, 392 were American-made films—versus 131 British productions and only 22 from France, England's second-largest foreign supplier.55 And by the same token, England remained Hollywood's major overseas client. No other foreign country played anywhere near the number of American-made films, and while $17 million per annum was far short of what the U.S. studio-distributors had been earning in England in earlier years, it was a good deal more than they earned in any other overseas market.

The limited take from England did force the studios and the MPEA to concentrate more heavily on other markets and to think increasingly in terms of the global market-place.

There were problems there as well, however, owing primarily to the growing protectionist trend, the deepening cold war, and the painfully slow process of rebuilding the German and Japanese film industries. In the late 1940s, the MPEA handled all distribution of Hollywood films in the dozen or so countries where these problems were most severe, including Austria, Bulgaria, Czechoslovakia, the East Indies, Germany, Hungary, Japan, Korea, the Netherlands, Poland, Rumania, the Soviet Union, and Yugoslavia. There were a few other trouble spots besides Great Britain, like France, Spain, and China, where the MPEA tried to facilitate trade and negotiated agreements but did not serve as the sole bargaining agent for the studios. By 1949, with the former Axis nations on the rebound and now becoming viable U.S. trade partners, the MPEA focused its attention more exclusively on the Soviet Union and other Iron Curtain countries.56

As in the prewar era, protectionism inevitably posed a dual problem for Hollywood in that it tended to be most acute in those nations which not only represented the largest overseas markets but also were interested in developing their own indigenous motion picture industries. Consider France in the late 1940s. In 1946, after a year of difficult negotiations (discussed in chapter 5), the MPEA negotiated a Franco-American pact whereby a ceiling of $3,625,000 in remittances was placed on American films. But owing to various difficulties, the studios took out only about $1 million per year in both 1947 and 1948, while roughly $10 million in revenues on U.S. pictures was frozen in France. As in England, the U.S. companies could invest the frozen funds in a number of industry-related areas in France: coproduction with French companies, purchase or construction of theaters, acquisition of distribution rights to French-produced films, and so on.57

Meanwhile, France was trying to strengthen its own industry, which had not suffered too severely during the war and in fact had remained in operation under German occupation. This was a daunting task, however, given the difficulties of France's general postwar recovery. In 1946, France produced 91 features at a total cost of $20.3 million (2.4 billion francs)—on a par with B-picture standards in the United States but roughly ten times what France spent on production before the war. Yet the industry showed losses of $7.7 million, while both exhibitors and audiences clamored for more American pictures. In 1948, the Franco-American pact was renewed but limited the total number of Hollywood imports to 121 and set a quota stipulating that French films appear five weeks out of every thirteen.58 Still, the French industry faced a struggle—mainly because of the deepening economic crisis in Europe in 1948-1949—and it was far from healthy as the decade ended.

Latin America remained an important but generally difficult area for the United States in the late 1940s. Mexico was Hollywood's principal client to the south, returning $3-5 million per year. Mexico's own wartime production boom slowed somewhat in 1946, when its output fell to only 60 pictures. But by 1948–1949, its output was approaching 100 features per annum, and thus it reestablished its position as Hollywood's chief competitor in other Latin markets. Hollywood continued to look longingly at the vast potential in South America, especially Brazil and Argentina, but the slow pace of industrialization and economic development kept those markets from being of any real consequence.59

By the end of the decade, the global economic crisis threatened Hollywood's overseas trade in virtually every sector. According to MPAA estimates in late 1949 (in the wake of the devaluation of the British pound), the U.S. film industry would have to increase its foreign revenues by some 50 percent to offset losses due to devalued currency.60 Despite that dire forecast, however, the international marketplace was growing at an impressive rate at the time, and Hollywood continued to dominate the global movie business. The number of movie theaters worldwide increased from 79,000 to just over 90,000 between 1947 and 1949, with the Far East and former Axis nations showing tremendous growth. And in every significant overseas region, Hollywood product accounted for anywhere from one-half to three-fourths of the screen time, as these figures indicate:

RegionNumber of Theaters% U.S. Product
South America5,00064
Far East3,50047
Middle East2,70052
South Pacific2,30075
United States18,35095

Despite its problems with England, widespread protectionism, and the global recession, 38 percent of Hollywood's revenues in 1949 came from overseas, and its foreign income of roughly $100 million was on a par with the previous year.61 Thus, Hollywood was clearly holding its own in the turbulent international marketplace of the late 1940s—a vital necessity, considering the deepening crises at home.

Labor Strife, Politics, and the Resurgence of IATSE

Besides the market-related postwar crises, Hollywood faced a number of other industrial and political crises as well. Labor unrest was among the most important and underrated of them. As discussed in chapter 5, the Hollywood labor scene was relatively quiet through most of the war era before flaring up in an early 1945 jurisdictional dispute between the industry's two dominant labor organizations, the International Alliance of Theatrical and Stage Employees (IATSE) and the Conference of Studio Unions (CSU). That conflict led to an eight-month CSU strike, which was resolved in October through the efforts of the MPAA's president, Eric Johnston. Thus, the industry looked to postwar labor conditions with guarded optimism, and in fact, the Motion Picture Herald ran a headline in January 1946 boldly asserting: "Labor Amity on Coast Assured for the Future."

At that point, Hollywood's labor arena comprised 43 distinct craft and talent groups, most of which fell under the purview of the American Federation of Labor (AFL). Twothirds of Hollywood's 30,000 studio employees belonged to craft unions associated with either IATSE or the CSU (both of which were in the AFL). IATSE was the larger and more powerful of the two, with an estimated 12,000 Hollywood members in 13 locals, most of which were involved in the production of films. IATSE had another 50,000 members outside Hollywood; indeed, the IATSE membership of virtually all projectionists in the United States continued to be IATSE's trump card in negotiations with the studios.63 The CSU, created five years earlier when IATSE was mired in scandal, developed under Herb Sorrell's leadership as a viable challenger to IATSE's dominance over the Hollywood labor scene. By 1946, the Hollywood-based CSU boasted 7,000 members in 12 locals, most of them involved in pre-production crafts (carpenters, set designers, painters, and so on).64

Hollywood's other significant labor contingent comprised the talent guilds—the screen actors, directors, and writers guilds, along with the American Federation of Musicians. While all of these organizations attempted to steer clear of the IATSE-CSU dispute, they inevitably were caught in the crossfire and eventually were drawn in, most notably the Screen Actors Guild in league with IATSE and the Screen Writers Guild with the CSU.

Management in postwar Hollywood was represented by three groups, the most powerful of which was, without question, the Association of Motion Picture Producers (AMPP), the major studio-distributors' trade outfit which was presided over by the ubiquitous Eric Johnston (also president of the MPAA and the MPEA). The industry's two dozen or so major independent producers were represented by the Society of Independent Motion Picture Producers (SIMPP), while the minor independents like Monogram and PRC had their own trade outfit and labor negotiator, the Independent Motion Picture Producers Association (IMPPA).

"Movie labor is like nothing else in the labor world," Fortune magazine asserted in 1946. Hollywood's labor scene was indeed both volatile and complex, owing to the virtually complete unionization of its workers, the high economic stakes involved (in terms of salaries and wages), and the ongoing struggle between IATSE and the CSU.65 That struggle had scarcely been resolved with the October 1945 settlement, which in fact had only fanned the flames of jurisdictional conflict. Johnston had won peace among the warring factions by convincing the studios to let the striking CSU workers return to work, while continuing to employ the 1,000 or so set erectors who had replaced the carpenters during the strike. A similar compromise was reached with striking machinists, so there too the studios were employing two workers for every job.

This had led to padded payrolls, gross inefficiency, and endless jurisdictional hassles, with workers arguing over whether a boat was a set or a prop, or whether costumers or makeup artists were responsible for the padding in an actress's undergarments. The conflict went much deeper, of course. As Fortune aptly noted in an in-depth piece on Hollywood labor, "Jurisdiction increases fantastically the size of the standing labor force required" for film production. This tendency intensified the rampant "feather-bedding" whereby union contracts required the presence on the set of paid employees who, in effect, did nothing. The studios, meanwhile, seemed resigned to the impasse, leading the Wall Street Journal to observe in mid-1946, "By nurturing this rivalry, [the studios] have finally achieved what is described as the 'worst' and 'most complicated' labor situation in the country."66

While the CSU's Sorrell pressed for a resolution to the impasse, the studios balked, for two reasons: first, the producers did not want to jeopardize their long-standing (and generally favorable) relations with the IATSE unions; and second, Sorrell was pressing for substantial wage increases.67 A series of walkouts and continued pressure convinced the IMPPA (Monogram and PRC) to agree to a 25 percent pay hike in June 1946, retroactive to 1 January, but still the majors held out. In July, a two-day "quickie " strike brought them around, and in what became known as "the treaty of Beverly Hills," the AMPP agreed to a 25 percent wage hike.68

The wage hikes put CSU members among the nation's highest-paid salaried workers, but the strike settlement did not resolve the jurisdictional conflicts. In September, the ongoing flap over IATSE set erectors and CSU carpenters led to a full-scale CSU strike against the AMPP.69 With this interminable squabble over some seventy-five carpenters taking thousands out of work and throwing studio production into turmoil, much of the CSU's credibility and industry support began to erode. A key factor was an effort by the Screen Actors Guild to broker a settlement on behalf of the AFL (with which it also was affiliated). SAG, by now clearly the leading labor organization in Hollywood, abandoned that effort in October and voted to publicly denounce the CSU—an action that was endorsed by twenty-four other Hollywood unions. In November, SAG issued a "Report to the Motion Picture Industry" which stated: "The Guild board reluctantly has been forced to the conclusion that certain of the leaders of the CSU do not want the strike settled." The producers also began to publicly disparage the CSU, arguing that only three hundred jobs were really at issue and that the vast majority of its members did not support the strike. But the CSU stood firm, and in December a pro-CSU rally was held with a sizable turnout at the Hollywood Legion Stadium.70

IATSE, meanwhile, proved much more adept at maneuvering through the troubled postwar waters. Much of its success was due to Roy Brewer, IATSE's West Coast head who had arrived in early 1945, sent by the IATSE president, Richard Walsh, at the outset of the first CSU strike. Brewer represented a new breed of IATSE labor leader, without the taint of racketeer associations or big-city labor struggles. He had started in the picture business as a projectionist in Nebraska, and while still in his early twenties (in 1933), he became one of the nation's youngest state-level labor leaders. By the mid-1940s, Brewer was a rising star in the IATSE hierarchy, and he quickly proved himself after his arrival in Hollywood. Indeed, the 1945 strike provided valuable experience for the young labor leader, and in the ensuing labor crises Brewer put that experience to very good use.71

Brewer's success and IATSE's postwar resurgence turned on several strategic factors, notably favorable relations with the major studios and the Screen Actors Guild, and Brewer's savvy exploitation of the growing anti-Communist fervor. As in the 1945 strike, IATSE supplied replacements for most of the striking CSU workers during the 1946 walkout. This time, in fact, the studios were counting on it, having conducted secret negotiations with IATSE while the CSU was threatening to strike. Thus, the studios and IATSE effectively joined forces against the CSU, whose militancy disturbed the producers and whose very existence posed a threat to IATSE.72 And despite the "natural" enmity between labor and management, the alliance between the studios and IATSE was really no surprise given their history of "cooperation" (legal or otherwise) over the previous decade. Brewer also forged an alliance with SAG, based largely on the anti-Communist sentiments he shared with the guild leadership.

in fact, as the labor strife intensified, Brewer took advantage of the anti-Communist climate through two related tactics: flagrant red-baiting of the CSU, with Herb Sorrell as his primary (and admittedly vulnerable) target; and appeals on behalf of IATSE to the studios and the guilds to form an anti-Communist coalition in Hollywood. Brewer found a valuable ally in the Motion Picture Alliance for the Preservation of American Ideals (MPA), the organization of right-wing filmmakers—Sam Wood, Walt Disney, Gary Cooper, et al.—formed in 1944 to counter Hollywood's left-liberal drift. The Alliance not only responded to Brewer's overtures but accepted him into the fold, eventually making him president of the organization.73

By 1947, Brewers red-baiting of Sorrell and his crusade to root out industry subversives began to pay off. The general sentiment in the industry—and elsewhere—was turning against Sorrell and the red-tainted CSU, and political pressures mounted nationwide against left-leaning and strike-oriented organized labor. Congress was now involved, both directly through the pending House Un-American Activities Committee (HUAC) investigation of Hollywood subversives, and indirectly through the Taft-Hartley Act, which became law in August. Essentially a revision of the 1935 Wagner Labor Relations Act, the Taft-Hartley Act required loyalty oaths of union members and outlawed both wildcat and jurisdictional strikes. Meanwhile, the HUAC hearings were scheduled for late October, and the committee's agenda was clearly anti-labor as well as anti-red. The upcoming hearings put enormous pressure on the striking CSU unions, which began returning to work, settling individually with the studios and abandoning the CSU. In late October 1947, days before the HUAC hearings, Sorrell's own painters union voted to cross the picket lines, effectively finishing the CSU.74

Thus, by 1948, IATSE had regained control of organized labor in Hollywood, and the industry reverted to a more routine process of labor-management discord over salaries and working conditions. IATSE would continue to win wage concessions from the studios, although as wages increased the total number of union employees in Hollywood fell dramatically. Thomas F. Brady of the New York Times in late 1949 noted that IATSE had "established undisputed jurisdiction in its field," but also that Hollywood's overall cost-cutting efforts had been paid for primarily by labor, "not in wage levels, but in the amount of employment." And indeed, union employment in the film production sector had fallen from 22,000 in 1946 to 13,500 in 1949.75

HUAC, the Hollywood Ten, and the Birth of the Blacklist

The House Un-American Activities Committee, popularly known as HUAC, became a standing (permanent) committee in 1945, but not until the November 1946 elections did HUAC really become a major political force. In those elections, both the House and Senate attained a Republican majority for the first time since the pre-Depression Hoover era as cold war conservatism swept through the nation and into Congress. The elections brought a new generation of zealous anti-Communist ideologues to Washington—including Richard Nixon and Joseph McCarthy—and it also installed a conservative anti-Communist, J. Parnell Thomas, as chairman of HUAC. It was soon evident that the new Congress would exact its revenge after four terms of FDR and the left-liberal politics of the New Deal, and that the motion picture industry would be in its direct line of fire.

Crucial to HUAC's incursion into Hollywood, and in fact its prime ally, was the Motion Picture Alliance. Since its founding in late 1944, the members of the Motion Picture Alliance had sought to accomplish two goals: first, to demonstrate to the public that the "silent majority" of movie industry employees were conservative, hardworking, freedom-loving Americans; and second, to purge the industry of those who were not. The Alliance already had invited the Dies Committee to look into Hollywood's leftist leanings. That earlier inquiry had come to naught, but the recent conservative swing in Congress encouraged the Alliance to try again. HUAC's Parnell Thomas, a savvy politician and a strident anti-labor, anti-Communist, anti-New Deal Republican, proved most receptive. Thomas was eager to showcase his committee and dramatize the "red menace" in those early months of the cold war, when allegations of Communists working in government and industry were rampant. Seizing the opportunity, Thomas announced that HUAC would be looking into Communist infiltration of the Hollywood movie colony, and into the content of the movies themselves.76

MPAA's president, Eric Johnston, hoping to head off a full-blown investigation, went to Washington in April 1947 to testify before HUAC. He acknowledged that there were Communists working in the movie industry but maintained that it was their constitutional right to do so as long as they did not advocate the overthrow of the government. Johnston insisted that "the Communists hate and fear American motion pictures," pointing out the Soviet efforts to prevent Hollywood films from penetrating the Iron Curtain. Johnston also assured the committee that attempts by Communists to attain positions of power in Hollywood or to influence movie content in any way had "suffered an overwhelming defeat." The committee was not persuaded, however, and at one point the archconservative Mississippian John Rankin stated: "Unless the people in control of the industry are willing to clean house of Communists, Congress will have to do it for them."77

HUAC took the initiative in May 1947, when Thomas and two other committee members went to Hollywood and took up residence in the Biltmore for a series of informal interviews. Most of these were with Alliance members who readily identified those in the industry whom they suspected were Communists or "fellow travelers." Convinced that a full investigation was warranted, Thomas revealed (primarily through well-placed news leaks) that subpoenas would be issued and a congressional hearing conducted later in the year.78 Although Thomas earlier indicated that the investigation would include the CSU strike and the jurisdictional dispute, he ruled that out after the initial sortie to Hollywood. He decided instead to pursue three premises: first, that Communists had attained positions of power in the Screen Writers Guild and in studio writing departments; second, that Communists were successfully introducing subversive propaganda into pictures; and third, that Roosevelt and his administration had pressured Hollywood to produce pro-Soviet pictures during World War II.79

From all indications, Hollywood simply did not take HUAC and the pending investigation all that seriously, deeming it little more than a political sideshow—a view that apparently was shared by much of the public and the press. That view changed in September, however, when Congress issued subpoenas to forty-three studio executives, labor leaders, and filmmakers. The summonses were divided about evenly between the so-called friendly and unfriendly witnesses, all of whom were requested to appear in Washington on 20 October to testify about "Communist Infiltration of the Motion Picture Industry." Several summonses went to Alliance members, along with studio executives, like Jack Warner and Louis B. Mayer, who were outspoken anti-Communists; another nineteen went to those suspected of being politically subversive or having direct ties to the Communist Party.80

Johnston announced that the industry would be represented by Paul V. McNutt, a liberal attorney and onetime presidential aspirant who had served as national commander of the American Legion, governor of Indiana, head of the War Manpower Commission, and most recently as U.S. ambassador to the Philippines. Reminiscent of the late Wendell Willkie, who had defended Hollywood in the 1941 Senate propaganda hearings, McNutt was highly touted for his legal and courtroom skills, and he was expected to ably defend the industry against the congressional inquisitors. As the battle lines were drawn, however, it quickly became evident that this inquiry would be altogether different from the propaganda hearings. First of all, Congress let it be known that even though many studio executives had been summoned, they and their companies were not under investigation. HUAC, in other words, was convinced that the studios were not knowingly or willingly producing Communist propaganda. There would be questions about such overtly pro-Soviet pictures as Warners' Mission to Moscow (1943), but the issue was pressure from the Roosevelt administration more than anything else. And second, McNutt was not secured to defend or represent the nineteen unfriendly witnesses; mostly writers and SWG members, they were left to secure counsel on their own.81

The only organized industry support for the unfriendly witnesses came from the Committee for the First Amendment. Something of a counter to the Alliance, the Committee was formed shortly before the hearings and was spearheaded by John Huston, Philip Dunne, and William Wyler. Membership included many of the industry's leading liberals: John Garfield, Katharine Hepburn, Billy Wilder, Groucho Marx, Paulette Goddard, Humphrey Bogart, Fredric March, George S. Kaufman, Walter Wanger, and Jerry Wald. After collecting some five hundred industry signatures in support of the First Amendment rights to free speech and peaceable assembly, the Committee planned to send a contingent to Washington at the end of the first week of testimony, just before the unfriendly witnesses were scheduled to testify.82

The hearings were held in Washington from Monday, 20 October, to Thursday, 30 October, during which time forty-one witnesses were heard. The first week of testimony was devoted to friendly witnesses; Jack Warner was the first to be called. Warner's testimony set the tone and outlined the studios' general defense strategy. He condemned communism and assured the committee that the vast majority in the Hollywood filmmaking community were deeply patriotic. Warner acknowledged that there were reds in Hollywood, but he testified that any efforts to influence either the industry or the movies had been thwarted. HUAC had flatly stated before the hearings that it expected witnesses to "name names," and Warner readily complied—although most of those he named already were on the roster of unfriendly witnesses. Louis B. Mayer and the Alliance president, Sam Wood, both of whom also appeared on the opening day of the hearings, presented similar testimony.83

Through the first week, the hearings followed much the same pattern, which smacked of a carefully rehearsed publicity effort and a setup for HUAC to go after the "unfriendlies" during the following week. Press coverage was mixed, not only in its treatment of the testimony but in its regard for the proceedings in general. The Washington Post on the eve of the hearings referred to them as "the biggest show of the fall investigating season" and devoted its front-page coverage to the sideshow aspects as well as the testimony. When the Alliance member Robert Taylor appeared on 22 October, for instance, the Post's page-one headline read "Bobby Soxers and Mothers," followed by the subhead "Women Cheer Robert Taylor as He Urges Ban on Reds."84 Robert Montgomery, another Alliance member and former president of the Screen Actors Guild, wryly stated, "For too long a time a vociferous minority has misled the public to believe that the majority of Hollywood actors and actresses are radicals, crackpots or at least New Deal Democrats."85

Most of the testimony was deadly serious, of course, and some of it quite vindictive—Walt Disney testified that Herb Sorrell was "a Commie," for instance, and that reds had tried to "ruin" him in the strike of 1940-1941. And the industry attorney Paul McNutt repeatedly maneuvered the testimony into assurances that, despite the Communist presence in Hollywood, there was no clear evidence of their ideology within the movies themselves.86

While the first week of the hearings produced no major revelations or surprises, the second week promised a good deal more drama. The unfriendly witnesses received an obvious boost over the weekend by the much-publicized arrival late Sunday of a twenty-six-member delegation of the Committee for the First Amendment in Washington (in a plane furnished by Howard Hughes). In an impromptu 11:00 p.m. press conference at the Statler Hotel, Committee spokesman John Huston stated that they were there simply to observe, that they intended neither to "attack" HUAC and the friendly witnesses nor to "defend the hostile witnesses." But the name of the group, along with its full-page ads in various newspapers, left no question as to the Committee's allegiance.87

The second week's testimony proved to be even more eventful and dramatic than expected, beginning on Monday morning with the first unfriendly witness, John Howard Lawson. The nineteen had decided not to cooperate with the congressional committee, insisting on their individual rights accorded by the Constitution. The strategy of noncooperation went beyond refusal to answer, however: Lawson demanded to read a prepared statement (as the friendly witnesses had been allowed to do the week before). When Thomas denied the request and demanded answers to the committee's questions ("Are you now or have you ever been…"), Lawson launched a verbal tirade against Thomas and the committee. Thomas ordered Lawson removed from the House chamber, and according to the Post, he was bodily carried from the packed room "screeching 'Hitler Germany—Hitler tactics!'"88 Lawson was immediately cited for contempt of Congress, and this pattern of refusal to cooperate, disruptive behavior, and contempt citations was repeated with each of the next ten unfriendly witnesses throughout the week.

Whatever their intent, the general strategy and tactics of the unfriendly witnesses proved to be woefully ill advised. Huston and Philip Dunne, not only a highly respected screenwriter but a student of constitutional law, had encouraged the witnesses to openly disclose their political affiliation outside the House chamber in a press conference, and then once inside to inform HUAC that it had no right to ask them such questions and that they had every right not to answer. Clearly the unfriendly witnesses opted for a more aggressive and hostile strategy. With each raucous confrontation, Huston later recalled, he grew more appalled. "It was a sorry performance," said Huston. "You felt your skin crawl and your stomach turn. I disapproved of what was being done to the [unfriendly witnesses], but I also disapproved of their response."89

More reasoned testimony was heard during the second week, notably by Dore Schary (then head of RKO) and the Writers Guild president, Emmett Lavery. But that was lost in the chaos as the hearings degenerated into a sideshow of a very different sort than had occurred in the previous week. On 30 October, after only eleven of the unfriendly witnesses had testified, Parnell Thomas suddenly and unexpectedly suspended the hearings, with assurances that they would resume within a matter of weeks. (The sudden stoppage was never explained, and it would be another three years before HUAC resumed its investigation of Hollywood.) One of the eleven, the German playwright Bertolt Brecht, testified that he was not a Communist and promptly left for France. The remaining unfriendly witnesses, all of whom had been cited for contempt, were dubbed the "Hollywood Ten"—writers Lester Cole, Dalton Trumbo, Albert Maltz, Samuel Ornitz, John Howard Lawson, Alvah Bessie, and Ring Lardner Jr., directors Edward Dmytryk and Herbert Biberman, and producer Adrian Scott.90

The Ten returned to Hollywood and, by some accounts, were confident they had faced down the committee and weathered the storm. That was hardly the case. Although HUAC had confirmed virtually none of its charges, still it had been eminently successful. Congress voted overwhelmingly on 24 November to cite the Ten for contempt of Congress. That same day, Eric Johnston convened a two-day, closed-door session in New York's Waldorf-Astoria Hotel with about fifty top industry executives from both the Hollywood studios and the home offices in New York. On 25 November, Johnston, on behalf of the industry, issued what came to be known as the Waldorf Statement.91

"Members of the Association of Motion Picture Producers deplore the action of the 10 Hollywood men who have been cited for Contempt of Congress," the statement began, and it went on to state that none of the Ten would be employed in Hollywood "until such time as he is acquitted or has purged himself of contempt and declares under oath that he is not a Communist." And on the "broader issue of alleged subversion and disloyal elements in Hollywood," the producers asserted that they would not "knowingly employ" any Communists or subversives. The producers recognized "the danger of hurting innocent people" and also "the risk of creating an atmosphere of fear," and they invited "the Hollywood talent guilds to work with us to eliminate any subversives; to protect the innocent; and to safeguard free speech and a free screen."92

Thus, the Ten were sacrificed to political expediency, and the Hollywood powers instituted blacklisting—a practice that technically was illegal in California but that the studios rationalized via the "morals" clause in workers' contracts. (That rationale ultimately held up in court.) The Motion Picture Herald reported in early December that the talent guilds were "reluctant to rush to the aid of the cited ten but … equally reluctant to accept blacklisting as an industry policy."93 But the guilds and the labor unions ultimately did accept the blacklist—which was, after all, only a step beyond the loyalty oaths already mandated by Taft-Hartley.

Gallup's ARI conducted a public opinion study of the HUAC investigation and, interestingly enough, concluded that it would be "easy to overestimate the harm done to date." The public was evenly split about the way the hearings were handled, and only 10 percent felt that there were "many Communists in Hollywood"—a figure consistent with public opinion about other industries and labor organizations. But that 10 percent included many "citizens over 30 years of age," who happened to be the most strident anti-Communists and also, crucially, the most infrequent moviegoers in the United States. Because this group "offers the greatest opportunity for increasing domestic revenues," said the ARI, their response "warrants serious consideration."94

The Ten were tried for contempt in the spring and summer of 1948; all were found guilty, fined, and sentenced to prison terms. They appealed the sentences and also filed a suit against the studios' blacklisting policy in May 1948; SWG filed a similar suit in June. Not surprisingly, considering the cold war mentality of the courts as well as government and industry, all of those legal efforts failed. One clear indication of that mentality was the June 1949 ruling by the U.S. district court of appeals in Washington in the Lawson and Trumbo cases. "No one can doubt in these chaotic times that the destiny of all nations hangs in the balance in the current ideological struggle between communist-thinking and democratic-thinking peoples of the world," said the court. Movies are "a potent medium of propaganda dissemination," and Hollywood "plays a critically prominent role in the molding of public opinion." Thus, reasoned the court, "it is absurd to argue, as these appellants do, that questions…[which] require disclosure of whether or not they are or have ever been a Communist, are not pertinent questions."95

An "atmosphere of fear" was indeed permeating the landscape, and although the Hollywood producers accepted and even exploited that climate, they scarcely created it. As Robert Sklar has aptly noted, "The behavior of the studios during the period was contemptible, but given their unwillingness to take a stand on principle (along with nearly every American university, newspaper, radio and television station, and the vast majority of intellectuals), what choice did they have?"96

The Hollywood labor unions and talent guilds also buckled under to HUAC and to public opinion—even the writers guild, which, as Victor Navasky points out in Naming Names, was a "vocal critic of HUAC's practices" but ultimately followed the same pattern as the other guilds, "condemning the Committee's practices but conceding its premises."97 While Navasky makes a valid point, there is no question but that SWG paid dearly for its leftist bent and its "vocal" challenges of HUAC and the anti-Communist forces. The guild emerged from the HUAC debacle with its reputation tattered, its authority undercut, and its organization in utter disarray. Moreover, its fate stood in sharp contrast to that of the Screen Actors Guild, which not only survived but continued to flourish in the turbulent postwar era. As Gorham Kindem points out in the following section, these two different fates had as much to do with changing economic conditions as the charged political climate.

SAG, HUAC, and Postwar Hollywood

Gorham Kindem

The Screen Actors Guild enjoyed steadily increasing power and influence during the 1940s, owing mainly to the vital importance of top stars in the volatile and uncertain movie industry. In the postwar era, SAG's stature also signaled a shift in the relations of industry power, as the studios' long-standing control of stars—and of the star system in general—began to erode.98 At the same time, an anti-Communist ideology shared by many stars who were guild leaders reflected the mutual financial interests and a new degree of labor-management cooperation between SAG and the studios.

This cooperation was largely a function of SAG's domination by top stars, of the unique status of stars as workers within the Hollywood system, and also of a basic rift within the guild between the elite stars and the low-salaried rank-and-file players. As the industry's most visible and bankable assets, movie stars also represented a breed of worker very different from their colleagues in the other talent guilds. This difference was evident in not only SAG's privileged status with the producers but also the role which the guild played during the 1940s in the labor disputes and the anti-Communist crusade. SAG generally supported the producers' position concerning strikes, jurisdictional disputes, and even the post-HUAC blacklisting of the late 1940s. These principal issues involved not only national ideology and industry politics but also the mutual economic interests of Hollywood's top stars and its major studios powers.

SAG's postwar rapport with the producers contrasted sharply with the labor-management antagonism which had led to the guild's formation in the 1930s. A relatively conservative union which emerged during a period of fierce labor dispute, SAG was formed in reaction to the studios' attempt in early 1933 to enact both the 50 percent salary cuts and the salary-fixing provisions of the NRA. Responding to public outcry during the Depression about the industry's high-salaried personnel, studio executives sought to extend the salary cuts to movie stars. While previous attempts by stars to organize collectively had been either co-opted or undercut by the studios, SAG succeeded for several reasons: the number of top stars involved; its avowed autonomy from the New York stage actors' unions and relative independence within the AFL; and the Supreme Court's validation of the National Labor Relations Act (the Wagner Act) in April 1937.

This last event served as a catalyst for SAG's official formation and recognition by the studio-producers in May 1937, within days of a SAG vote indicating that 90 percent of its members favored a strike. In that initial agreement, the studios granted SAG a 90 percent closed shop and made a number of important concessions which benefited lower-paid actors by establishing and clarifying minimum standards of employment. In the early 1940s, SAG achieved 100 percent closed-shop status—in other words, only guild members could appear in major studio films—and by then its interaction with the producers was characterized by a spirit more of cooperation than of antagonism.99

This cooperation revealed conflicts in the makeup of SAG itself, as well as the guild's paradoxical status as a Hollywood labor union. SAG traditionally had boasted about the altruistic motives for its founding (evinced in the guild motto, "He best serves himself who serves others"), and its major focus had always been to preserve and protect the economic interests of both its lowest- and its highest-paid members. But the background of most stars and feature players was not working-class but middle-class, and the incomes of some stars rivaled those of top studio executives.100 Meanwhile, the vast majority of SAG's members were relatively little-known players who were low-paid and infrequently employed. Classification of members within SAG gave the more prosperous, more visible, and better-known actors more power, and it eventually led to the departure of screen extras from SAG in 1945.

SAG's fundamentally conservative bent and rapport with the producers first became evident in the guild's involvement with IATSE and the jurisdictional disputes before and after the war. As seen in chapter 2, that earlier dispute involved IATSE and the United Studio Technicians Guild (USTG) in 1939, and it occurred while SAG was still Struggling to establish its own identity and autonomy within the film industry. SAG initially was favorably disposed to the USTG, but the guild became embroiled in its own jurisdictional dispute with the American Federation of Actors (variety actors in nightclubs, cabarets, and vaudeville), which was linked to IATSE. In the heat of the battle between the USTG and IATSE, SAG abandoned the former and forged an agreement with IATSE to protect itself from any incursion by the American Federation of Actors into its domain. While this strategy proved most effective, it brought the guild into an alliance with the IATSE—a labor organization with its own rapport with the producers, albeit one involving collusion, racketeering, and extortion.101

SAG again found itself allied with IATSE immediately after the war in IATSE's jurisdictional battle with the Conference of Studio Unions (CSU). But now SAG was operating from a position of strength and seeking to further enhance its power within the industry. The CSU had the support of non-AFL unions, the CIO, and most of Hollywood's independent unions, including the Screen Writers Guild. IATSE had the support of most AFL unions and the producers, who vowed to break the CSU and its leader, Herb Sorrell. Early on, SAG had remained neutral and even tried to broker a settlement, but the guild eventually backed IATSE.

Key to the IATSE-SAG alliance was Roy Brewer's vehement anticommunism, which he shared with several SAG officers—most notably the reformed liberal Ronald Reagan, who became president of the guild in early 1947.102 IATSE portrayed itself as the bulwark of Americanism throughout its battle with the CSU, and its anti-Communist agenda clearly coincided with SAG's. Indeed, in 1946 the guild had publicly stated that it "has in the past, does now and will in the future rigorously oppose by every power which is within its legal rights any Fascist or Communist influence in the motion picture industry or ranks of labor."103

The labor dispute and anti-Communist crusade brought SAG into an alliance of sorts not only with IATSE but with the producers as well. in fact, a special subcommittee of the House Committee on Education and Labor investigating the CSU-IATSE dispute in 1946-1947 took note of this alliance. The hearings were confined to labor grievances and excluded testimony about alleged communism and racketeering. In September 1946, the subcommittee chair, Carroll D. Kearns, a Pennsylvania Republican, made an allegation of conspiracy and collusion between IATSE and the producers, and he suggested that they were aided by unnamed officers and employees of the Screen Actors Guild. Little came of Kearns's hearings, however; they were concluded in September 1947 with a mild condemnation of conspiracy between the producers and IATSE.104 By then, of course, another House committee, HUAC, had stolen the industry spotlight and the political climate had changed considerably. The CSU was broken, the Taft-Hartley Act had supplanted the Wagner Act, and an anti-Communist—and anti-labor—agenda dominated the proceedings.

SAG avoided HUAC's wrath because of its conservative leadership, its implicit alliance with management, and its avowed anticommunism. This last point is obvious perhaps, but it clearly involved more than simply geopolitical and cold war ideology. The postwar leaders of the guild—Leon Ames, Robert Montgomery, Ronald Reagan, and George Murphy—were staunchly anti-Communist, as were most voting members, by all accounts.105 But that scarcely explains the motivations behind SAG's opposition to the CSU, SAG's failure to come to the aid of its own members and those in other guilds who were blacklisted, and its general support of producer policies.

To ensure their respective positions of power, IATSE, the producers, and SAG allied in the anti-Communist crusade to rid the industry of "troublemakers." It was convenient for these groups to portray the CSU strike in early 1945 as Communist-inspired, despite the fact that, according to Nancy Lynn Schwartz, the Communist Party opposed the strike and supported the no-strike pledge out of solidarity with the United States as a Soviet ally.106 in fact, failure initially to support the strike stimulated dissent within the Communist Party. Meanwhile, IATSE publicly adhered to the no-strike pledge, but it also threatened a projectionist shutdown if the producers attempted to conclude negotiations with the CSU. The efforts by SAG, IATSE, and the producers to save the industry from communism clearly were also motivated by a desire to maintain the status quo and protect their common economic self-interests.

SAG's support of the producers and alliance with IATSE also proved to be a crucial factor in the 1947 HUAC investigation and its aftermath. Significantly, all three groups adopted essentially the same position with regard to Communist influence—admitting that radicals, leftists, and even a few CP members had infiltrated their midst and then relying on their own outspoken anti-Communist avowals to convince Parnell Thomas and his committee of their zero-tolerance for these contaminants. This view was hammered home repeatedly in the HUAC testimony by SAG's past and present officers Robert Montgomery, George Murphy, and Ronald Reagan. As Reagan stated in his testimony:

University of Wisconsin Press, 1988], pp. 53-54">

Ninety-nine percent of us are pretty well aware of what is going on, and I think within the bounds of democratic rights… we have done a pretty good job in our business of keeping these people's activities curtailed…. We have exposed their lies when we came across them, we have opposed their propaganda, and I can certainly testify that in the case of the Screen Actors Guild we have been eminently successful in preventing them from, with their usual tactics, trying to run a majority of the organization with a well-organized minority. (1947 HUAC hearings testimony, p. 217; see also David Prindle, The Politics of Glamour [Madison: University of Wisconsin Press, 1988], pp. 53-54)

It should be noted that the SAG officers were included among the friendly witnesses, along with the Alliance members Adolph Menjou, Robert Taylor, and other stars. The one actor among the nineteen unfriendly witnesses, Larry Parks, was not called to testify and continued to work after the 1947 hearings—although he eventually was blacklisted in the course of HUAC's second investigation of Hollywood in the early 1950s.

In November 1947, when HUAC cited the Hollywood Ten for contempt of Congress and the producers issued the Waldorf Statement that they would not employ known Communists, SAG threw its support behind the producers' declaration. SAG did so despite the pleas of the other guilds, particularly the Screen Writers Guild, which advocated coming to the aid of members who had been cited. In a meeting of the SAG board on 8 December 1947, Leon Ames argued against supporting the Writers Guild in its quest to overturn the firings of those cited for contempt of Congress. Ames declared, "I believe that we must approve their [the producers'] actions in firing the five [members of the Writers Guild], from a public relations standpoint, if nothing else," and he offered two reasons to support the producers' position. The first was that movie stars, as highly visible members of the Hollywood community, had an obligation to demonstrate their opposition to communism. According to Ames, "enemies of our country… have no right to share in the bounty of our land while conspiring against the American people." Ames's second reason, which he admitted was "a selfish one," was that, as highly paid actors, the more prominent members of SAG needed "to protect the economic welfare of the industry."107

Ames's second reason for supporting the Waldorf Statement alludes to a fundamental philosophical and economic link between the producers and movie stars—and their reluctant alliance with IATSE as well. Three of the greatest potential threats to the economic welfare of the industry from both the producers' and stars' viewpoints were (1) exhibition shutdowns by projectionists, (2) boycotts of films by audiences due to the unsuitable (read "Communist") content of films, and (3) outside regulation of film content by some agency of the federal government. Producers who were disgruntled with the leftist leanings of screenwriters and the radical activities of the craft unions found an acceptable excuse to scapegoat Sorrell and screenwriters like Biberman and Lawson by supporting IATSE and HUAC. Since many of the most popular and valuable movie stars seemed unlikely candidates to be cited for contempt of Congress or to be blacklisted, producers saw that cooperation with HUAC would preserve their autonomy and protect their economic interests. SAG shared those interests and clearly found it preferable to accede to the corruption of IATSE than to succumb to the radicalism of the CSU, and to support the Waldorf Statement rather than come to the aid of blacklisted talent—especially if these were less valuable and powerful guild members.

While blacklisted guild members were left to fend for themselves, SAG's lower-paid rank-and-file members faced severe struggles of a different sort, owing to changes in the economics and structure of the industry. The general box-office decline and reduced revenues meant that what the studios had traditionally considered resources and assets—including contract stars and players—now looked more and more to them like liabilities. Stars and other personnel under exclusive, long-term contracts suddenly became expendable. The Paramount decree and other antitrust rulings aggravated the industry's economic problems, further encouraging the studios to reduce overhead and production costs while stimulating independent production.

For top movie stars, these dramatic structural changes in the postwar film industry were actually an advantage. Freedom from studio domination and control and renewed market competition gave many stars greater control over their own careers and a chance to become actively involved in production. A key factor was the steady shift to a package-unit system as the primary organizational mode of Hollywood production. As Janet Staiger suggests, the package-unit system "was a short-term film-by-film arrangement," and was directly related to the market-induced need "to differentiate the product on the basis of its innovations, its story, its stars, and its director."108 With the shift to a package-unit system, a star's participation and bankability were essential to obtain funding. Moreover, the increased competition and greater uncertainty in the postwar market-place proved to be a windfall for the most popular stars as their talent agents bargained for higher and higher salaries and percentages of the profits.

While the top stars were able to turn the changes in the industry to their own economic advantage, their success obscures the fact that the demand for and incomes of less popular actors and actresses fell dramatically during the postwar era. Because of rising costs and declining production in the late 1940s, fewer actors were actively employed in production. The percentage of production costs in the average film budget paid to actors dropped from 25 percent in 1947 to 20 percent in 1948.109 Many less popular stars moved into television while the most popular stars, who feared overexposure might jeopardize their careers, restricted themselves to film. And the studios, ironically enough, lacking any incentive to develop new stars through their own apparatus and with fewer actors under long-term contract, often looked to competing media for new stars, and especially to the television and recording industries.

As the decade ended, SAG was still the dominant labor force in Hollywood, although it compromised both its own founding principles and the welfare of many of its members to maintain that status. But in the midst of the widespread public outcry against the alleged Communist infiltration of the movie industry, it is not surprising that SAG's leadership and its top stars, as the most visible members of the Hollywood community, felt obliged to demonstrate their opposition to communism. And it clearly was in the actors' economic best interests to cooperate with both the producers and HUAC, even though such cooperation was inconsistent with SAG's altruistic union aims (not to mention IATSE's) and with unionism's presumed struggle between workers and management. The "altruism" of anticommunism shared by SAG and IATSE was based in part on corruption, the quest for individual power, and the middle-class bourgeois values which the leaders of these labor organizations shared with the producers. This is not to suggest that communism posed no real threat to the democratic ideals of the Hollywood unions or to the American political system in general, or that the goals of the Communist Party were purely altruistic. It suggests, rather, that economic preservation and a pragmatic response to the industry's shifting power structure were the primary motives behind SAG's postwar anti-Communist strategy.

Postwar Censorship

While the studios and leading labor forces buckled under to HUAC and the pervasive cold war mentality, the movie industry was being pressured by external conservative forces in other areas as well, particularly in terms of motion picture content. Various conservative institutions, from religious organizations like the Catholic Legion of Decency and the Protestant Motion Picture Council to the state and local censorship boards and even the U.S. Congress, sought to rein in Hollywood's postwar "liberal" inclinations by regulating subject matter. And perhaps inevitably, these efforts became entangled in the other political developments of the period, adding yet another complex dimension to the movie industry's postwar travails.

During the war, the American cinema had matured in many ways, from its heightened social awareness and growing penchant for realism to its treatment of more complex human issues. Many looked to the cinema to take on an even more progressive posture after the war, and as will be seen in more detail in chapter 13, that was in fact what the movie industry did. In the late 1940s, a number of trends and cycles—noir thrillers and "adult Westerns," message pictures and social problem films, sex farces and romantic melodramas—displayed a frankness and sophistication quite advanced by Hollywood standards. Meanwhile, European imports continually challenged conventional representations of social conditions and human relationships. While Hollywood's independents tended to be the more progressive filmmakers, even the conservative studios were pushing the boundaries of cinematic expression. The Fox executive Darryl Zanuck, who championed both the social problem film and the semidocumentary crime drama, asserted in 1946 that in the heady postwar climate, Hollywood "can sell almost anything but politics and religion."110

The first serious postwar censorship flap involved a film produced before the war and released in 1943, The Outlaw. The producer, Howard Hughes, reissued his adult Western in March 1946 to capitalize on the favorable market conditions. In an odd replay of earlier events, Hughes's refusal to cooperate with either the Legion of Decency or the Production Code Administration resulted in a "C" rating from the Legion and removal of the film's Code seal by the PCA. Hughes personally handled the release and promotion of the film, and he deftly manipulated these controversies—along with the local censorship challenges and boycott threats almost everywhere the film played—to fuel audience interest.111 That led the PCA to challenge Hughes's marketing campaign as well, and ultimately to overhaul its own advertising code. Many deemed Hughes's efforts counterproductive; as Variety put it, "The move toward liberalization of censorship… has been pretty well shelved by the current ruckus over 'The Outlaw.'"112 Still, Hughes defied the Legion of Decency and the PCA, and The Outlaw was among the biggest box-office hits of the decade.

While the ongoing dispute over The Outlaw seemed little more than an extended and somewhat harmless publicity stunt, more serious altercations developed in 1947 over Duel in the Sun, Monsieur Verdoux, and Forever Amber. Selznick's intense Western psychodrama, Duel in the Sun, suffering no doubt from guilt by association with The Outlaw, faced a succession of local censorship setbacks, including an outright ban in Memphis. In June 1947, with HUAC gearing up for its assault on Hollywood, Congress announced that it was considering an investigation of the MPAA and the PCA because of the "filthy and obscene" pictures being released by Hollywood, and Rankin introduced a resolution to ban Duel in the Sun from further showings in the D.C. area. (The resolution failed.)113

Chaplin's Monsieur Verdoux, a dark comedy marketed as a "sex farce" about the French Bluebeard, was withdrawn from release after a disastrous Broadway opening in April 1947 amid threats of boycott and a torrent of negative publicity directed not only at the film but also at Chaplin's left-wing politics. Matters grew worse when Chaplin received a subpoena from HUAC and then publicly declared that he planned to reopen Verdoux during the hearings—a strategy that later was abandoned and certainly would not have helped Chaplin's cause. While Chaplin escaped the immediate wrath of HUAC (he was not called to testify), Monsieur Verdoux was an unmitigated popular and commercial disaster upon general release during the same week of the HUAC hearings.114

Forever Amber, also released during that fateful week in October 1947, was promptly—and unexpectedly—hit with a C classification by the Legion of Decency. That event was lost in the din generated by the hearings, but as Bosley Crowther wrote in the New York Times, "If it hadn't opened against the Washington shindig, [Amber's C classification] might have… bid for the doubtful distinction of being the major 'incident' of the year."115 Significantly enough, Fox's multimillion-dollar sex farce was coscripted by Ring Lardner Jr. (of the Hollywood Ten) and Philip Dunne (cofounder of the Committee for the First Amendment). The writers' affiliations may well have been a factor, since the Legion felt compelled to announce that the condemnation was based "solely on the film itself."116

Fox's president, Spyros Skouras, reacted angrily, noting that Breen and the PCA had complimented Fox's handling of Kathleen Winsor's sensational best-seller. This response scarcely diminished the criticism: boycotts were threatened by various religious and conservative political groups, including the American Legion. So despite the fact that Forever Amber was the top box-office film in the country in November 1947—owing in part, no doubt, to the controversy itself—Fox acquiesced. The studio withdrew Amber from release in early December, removed or reshot the offending passages, and had the film back in release within two weeks—with its Legion of Decency classification upgraded from C to B ("objectionable").117

While it is difficult to ascertain whether the film's box-office performance was helped by the controversy, the popularity of Forever Amber did suggest that the moral judgments and pressure tactics of the Legion of Decency and the American Legion did not necessarily reflect the opinions of the general public. Still, the efforts of such groups intensified in the postwar era and were directed at film imports as well as Hollywood pictures. Indeed, foreign films were even more offensive to these conservative groups, overall, than the American-made pictures. During the 1947—1948 season, the Legion assigned B classifications to just under 15 percent of Hollywood studios releases; meanwhile, while, over one-third of foreign imports were so classified, and six of the eighty-seven imports classified by the Church were condemned. In 1948-1949, the number of B-rated Hollywood films reached 20 percent, while the number of objectionable imports surpassed 40 percent.118

Many filmmakers, studio executives, and critics lamented the pressure by conservative groups, but the groups themselves felt they were fighting a losing battle—particularly as Hollywood increased the on-screen emphasis on both sex and violence in 1948 and 1949 in an effort to stem losses at the box office and appeal to adult viewers. In late November 1949, PCA chief Joe Breen complained to the conservative Catholic publisher Martin Quigley: "We are really having a desperate time of it. During the past month at least, more than half of the material submitted has had to be rejected. We have had nothing like this situation since the early days of 1934."119

As Breen certainly realized, however, the industry could scarcely intervene in 1949 as it had in 1934, when Will Hays created the PCA and thus put teeth into the Production Code. Sharpening those teeth by updating the Code or strengthening PCA enforcement was now out of the question, owing less to economic conditions and recalcitrant filmmakers than to the federal government's antitrust campaign. The prospect of theater divestiture threatened the MPAA with the loss of its implicit control over the exhibition end of the business, which it had long maintained through the studios' affiliated chains and selling policies. In other words, theater divestiture would make the Code seal—and the Code itself—essentially meaningless.

The Antitrust Campaign and the Paramount Decree

Like so many of the problems dogging the movie industry during the 1940s, the government's antitrust campaign took on a new intensity after the war. The Justice Department had eased its trust-busting efforts during the war, and in fact the only significant antitrust decision against the film industry had involved not the studios but the large unaffiliated theater circuits. In March 1943, the Crescent circuit was found guilty in federal court of restraint of trade in a five-state region in the Southeast. The Crescent decision was important to the government's case against the studios as well, however, since it successfully challenged key aspects of vertical integration, particularly the trade policies which enabled the studios and large unaffiliated circuits to control specific regions and markets and to restrain independent exhibitors.120

The Crescent decision was upheld by the Supreme Court in late 1944, bolstering the Justice Department's view that the major studios as well as the big circuits were vulnerable to antitrust litigation.121 In the wake of that court decision, and with the war finally coming to an end, the newly appointed attorney general, Tom Clark, decided to reactivate the Paramount case against the major studios. Once again, theater-chain divorcement was the major objective in an overall effort to dismantle the vertically integrated studio system. In October 1945, the Justice Department and the eight studio-distributors returned to New York federal district court, resuming the antitrust battle that had been dormant since 1940.122

The government completed its case by late November 1945, and a ruling was handed down by the three-judge panel in June 1946. That ruling was essentially a split decision favoring the studios, and thus it appeared that Hollywood's good fortunes at the box office in 1946 might be matched in the courts. The court found that the eight majors indeed had conspired in what amounted to a nationwide restraint of trade, but it was their sales policies, ruled the court, not the Big Five's theater ownership, that was the primary factor in this restraint. "It would seem unlikely," said the court, "that theater owners having aggregate interests of little more than one-sixth of all the theaters in the United States are exercising such a monopoly of the motion picture business that they should be subjected to the drastic remedy of complete divestiture in order to effect a proper degree of free competition."123

"Film Biz Beats Divorcement," blared a page-one banner headline in Variety, and indeed this was a tremendous victory for the studios.124 But the court did rule against the studios on several other major points: it outlawed price fixing, block booking, and all "sweetheart" arrangements between the studios and unaffiliated circuits; it severely curtailed run-zone-clearance policies; it ordered the Big Five either to assume full ownership or to sell off any theaters in which their holdings were between 5 and 95 percent. And in what soon proved to be the most troublesome and controversial outcome of the case, the court demanded that a system of competitive bidding be established to ensure that films were sold on a strict film-by-film, theater-by-theater basis.125

Attorney General Clark still was not satisfied. He publicly criticized the court for falling short of theater divorcement, and he vowed to appeal the decision.126 Nonetheless, in late 1946 a U.S. statutory court upheld the June 1946 decision and issued a new consent decree in line with that ruling.127 At that point, the Justice Department began a series of formal appeals to the Supreme Court, which agreed to hear the case.128

Meanwhile, Justice's pursuit of the large unaffiliated theater circuits also yielded mixed results. After the war, the government's chief targets were the Schine and Griffith circuits in the Northeast and Southwest, respectively. In June 1946, only weeks after the Paramount ruling, a federal judge in Buffalo, New York, found Schine guilty of antitrust violations and ordered the circuit to divest seventy-five of its theaters (the total was later reduced).129 Then in October, a federal judge in Oklahoma found the Griffith circuit not guilty of virtually identical charges. Predictably, appeals were filed in both cases, and they would work their way to the Supreme Court.130

While the government battled the studios and unaffiliated circuits on behalf of the nation's independent exhibitors, several independents won significant antitrust victories on their own. In February 1946, the Supreme Court upheld a lower court ruling that the studios and large circuits had conspired to prevent the Jackson Park Theater in Chicago from securing first-run bookings. Then in July, in another federal lawsuit, the Jackson Park was awarded "treble damages" for unreasonable clearance: the competing circuits and studio chains had to pay Jackson Park three times the estimated profits that were lost owing to a mandatory seven-day clearance behind a nearby Balaban & Katz theater—with the latter's gross receipts used as one measure to determine the award.131 A similar federal court ruling later in the year on behalf of William Goldman Theaters in Philadelphia against the Warner-Stanley chain dealt yet another blow to the industry's entrenched run-zone-clearance system. It also encouraged other exhibitors to sue, and by late 1946 similar cases were filed in Detroit, Baltimore, Memphis, St. Louis, and several other major first-run markets. Both the studios and the unaffiliated circuits appealed the rulings, adding to the tangle of antitrust litigation working its way through the higher courts.132

Thus, while 1946 saw an unprecedented number of major court cases involving antitrust suits against the movie industry, the issues were far from resolved. The studios clearly remained at the center of virtually all the antitrust action—even cases involving the unaffiliated theater circuits, since the circuits' power was essentially a function of favorable treatment by the studios. The majors were encouraged by the favorable rulings on divorcement to keep battling the Justice Department; their resolve only intensified, no doubt, with the deteriorating economic conditions after 1946. Quite obviously, the loss of the studios' theater revenues, coming in the midst of economic crises both at home and abroad, would mean financial disaster.

The year 1947 was relatively quiet on the antitrust front, although the din of complaints about the court-mandated auction-bidding system grew louder with each passing week. The auction system was hardest on independent exhibitors, precisely those whom it was intended to help. The independents simply could not compete with the larger and better-financed theater circuits, and yet they still had to live with the rising cost of film rentals that inevitably accompanied an auction system. With their interests in both production and exhibition, the majors had a more ambivalent reaction to the new system. While auctioning drove up rental fees and thus benefited production and sales operations, the majors' theater affiliates were livid that their once-guaranteed product flow was now subject to the whims of a more competitive marketplace.133

While the antitrust action against the movie industry may have slowed somewhat in 1947, the government's overall trust-busting crusade heated up considerably. A key factor was Truman's campaign strategy, which brought the administration and the Justice Department into an alignment that would have been unthinkable in the Roosevelt years. As the Wall Street Journal noted in August 1947, "The Truman administration has big new plans for hewing a trust-busting program as the capstone of its 1948 presidential campaign."134 The Federal Trade Commission was on the antitrust warpath as well, and by late 1947 antitrust suits had been filed against many major industries, from cement and sugar to steel and auto tires.135

Many of these cases wound up being argued before the Supreme Court in 1948, including various appeals involving the movie industry. By early 1948, the Court had agreed to hear appeals by all of the principals in the recent antitrust cases—the studios, the circuits, and the independent exhibitors as well as the Justice Department. At that point, three distinct types of antitrust cases had emerged: the government's suit against the studios demanding an end to unfair trade practices and theater-chain divorcement (i.e., the Paramount case); the governments suits against the large unaffiliated circuits for conspiring with the studios to monopolize certain regions of the country (the Griffith and Schine cases); and the independent exhibitors' suit against the studios and circuits for withholding product and unreasonable clearance (the Goldman case). These three types of antitrust litigation clearly were interrelated, and thus the Supreme Court decided to consider the Schine, Griffith, and Goldman cases along with the Paramount case, and to rule on all of these cases together.136

The Supreme Court handed down its momentous Paramount decree on 3 May 1948, with Justice William O. Douglas writing a single opinion on the Paramount, Griffith, and Schine cases and making a separate ruling on the Goldman case. The gist of the Court's unanimous Paramount decision can be summarized in four points: first, the mere existence of monopoly power, whether lawfully or unlawfully gained, is basis enough for an antitrust judgment; second, it is not necessary to find specific intent to restrain trade, simply that such restraint results from the defendants' business conduct; third, the Sherman Act can be violated by prevention of competition as much as by destruction of competition; and finally, any theater under any ownership is subject to an antitrust judgment if the theater was acquired or maintained as a result of unreasonable restraint of trade.137

The Court ruled against the defendants—the eight majors and the two theater circuits—in all three cases. In the Paramount, Schine, and Griffith cases, the Court sent the suits back to the lower courts for review and for new judgments in line with its findings. In the Paramount case, the Supreme Court asked the New York district court to reconsider theater divorcement, noting that the majors' cooperative control of the first-run market clearly amounted to monopoly practice. The Court upheld the ruling against Schine and reversed the not-guilty ruling in the Griffith case; in both cases, the lower court was instructed to reconsider the extent of the circuit's monopoly and to write a new decree accordingly. And the Court simply refused to review (thus upholding) a lower court judgment in the Goldman case, which awarded the independent exhibitor treble damages of $375,000.138

Not surprisingly, given the convoluted history of the decade-old antitrust suit, no one in the industry could quite believe that it was over. And for a while it seemed that perhaps it was not. Among the Big Five, only RKO was willing and ready to comply with the ruling. By November 1948, RKO had worked out a consent decree with the government whereby the studio would divest its theaters by creating a separate exhibition company.139 Paramount began discussions with the Justice Department in late 1948, but the other majors refused to abide by the Paramount decree, hoping to forestall divestiture through interminable legal actions or, failing that, to work out some form of partial divestiture. Thus, in its year-end review, the 1949 Film Daily Year Book stated: "New and most important chapters in the lengthy serial, the so-called New York equity suit, were written in 1948, but not finis."140

Not "finis" perhaps, but close to it. Paramount in early 1949 grudgingly signed a consent decree, agreeing to create a separate exhibition company by year's end and to initiate a three-year divestiture process.141 Once Paramount yielded to divestiture, the handwriting was on the wall, and in fact the Paramount agreement provided a veritable blueprint for the other studios' inevitable divorcement. As the Motion Picture Herald stated, the February 1949 consent decree between Paramount and the government represented "a foundation on which the entire future production-distribution-exhibition organization of the industry may be built."142 Still, Warners, Fox, and Loew's/MGM—now referred to in the industry as the "Big Three"—fought on. Injunctions were filed and arguments heard in New York federal district court, and in July Variety ran a headline predicting "No Divorcement Until '55," based on the assumption that "legislation will stall it for years."143

Only days later, however, the federal court ordered the Big Three to divest, virtually mandating a divorce procedure like that conducted by RKO and Paramount.144 Loew's filed yet another appeal to the Supreme Court (which would be refused), but the federal court ruling effectively ended any efforts to sustain the crumbling oligopoly. Aptly enough, the first company to divest was Paramount, and in a corporate reorganization that officially took effect at what was quite literally the end of the decade. At the stroke of midnight, 31 December 1949, Paramount Pictures Incorporated effectively ceased to exist and was replaced by two new entities: Paramount Pictures Corporation, a production-distribution company under Barney Balaban, and United Paramount Theaters, a chain of 1,115 theaters under Leonard Goldenson.145

The Paramount divestiture clearly marked not only the end of the decade but the end of an era for the American motion picture industry. Earlier that year, in fact, Fortune magazine ran one of its occasional in-depth pieces on the industry under the title "Movies: End of an Era?" The question mark in that title might well have been an exclamation point, as the ensuing cutline well indicated: "With box office down, foreign revenues cut, critics pained, older fans dwindling, reorganization at hand and television looming, the motion-picture industry may be turning a historic corner."146

Fortune also noted "a panicky feeling in the air" in 1949 Hollywood, since "the brunt of the recent decline fell…on independent producers and on the production end of the integrated companies."147 Indeed, although the entire American movie industry was pulled into the postwar maelstrom, at the very center of that vortex were the Hollywood studios. And what was at stake was far more than the financial well-being of the major companies, but the very structure of the industry and the nature of the Hollywood studio system itself.

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The Postwar Motion Picture Industry

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