Motion picture exhibitors must keep their houses open or quit business. Through the exactions of Famous Players, accused of being a trust, they have many times lost money or at best broken even. But they have no recourse. There are not enough independent films in the market to keep them going if they quit Paramount, a subsidiary of Famous Players. So they have stayed with it and been content to eke out a bare existence.
And why have the independent producers not been able to supply them? Because it takes money to make motion pictures. It is virtually impossible to make film under $100,000. Money had always been a feature abundance by the banks supplied in Los Angeles and New York, at a price, of course. Every producer who his borrowed money from the banks has paid a big tribute in the form of a bonus besides a high rate of interest. But the picture game was a money-maker and the producer was willing to divide the spoils with the banks that supplied him with working capital. Then came the hard times and many of the banks shut down on their loans, especially to the independent producers, claiming that the motion picture industry came under the head of somewhat speculative ventures.
Famous Players, like the rest, needed money. It went into Wall Street and got it, but- at the sacrifice of its independence- because the finance committee of the banks that loaned it the cash insisted on having a voice in the management of the business.
Since then there has been but little if any curtailment of production by the Famous Players-Lasky Corporation. True, this company recently closed down its New York studio and Jesse L. Lasky announced that production for the present would be confined to its Los Angeles studio. But the clue to this move will be found later, when the question of foreign films is taken up.
Thus when other producers have been shutting up their studios while they are on a still hunt for ready cash, Famous Players has been steadily turning out pictures.
If Messrs. Adolph Zukor, Frank A. Garbutt et al had been content to let circumstances take their course there could be no criticism. That they enjoyed superior banking facilities was but a credit to their financial acumen.
Rival producers say that they were not so content, but that they used their influence in banking circles to curtain the credit of other concerns.
For instance, Hewlings Mumper, partner and active business manager of Benjamin B. Hampton's various picture enterprises, went to one of the big Los Angeles banks regarding a loan on a forthcoming production. The cashier assured him that there would undoubtedly be no difficulty in obtaining the money. Several days later, where Mr. Mumper returned for his answer, the cashier said the loan was impossible.
When pressed for a reason, the cashier refused to give one. He admitted that the bank was in the market for good loans and that the security offered by Mr. Mumper was sufficient.
The men interested in the syndicate with Hampton and Mumper are men of means, several of them being rated as millionaires. Mumper, himself, had at the time, on deposit in the bank, within $2,000 of the amount he desired to borrow for the corporation.
Mr. Hampton also was refused a loan by a Los Angeles bank, but Mr. Hampton had had experience in the ways of such corporations. He threw down a package of bonds issued by the city of Los Angeles and told the bank official that those bonds had been purchased from the bank through his recommendation.
"You'll either loan me the money I ask on them or I'll take the story to the newspapers of Los Angeles," he declared. He got the money.
Thus aided by the money stringency and the use of its own financial power, Famous Players has succeeded in cutting down to a minimum the product of independent producers.
And it also has furnished the banks with another argument against loaning money to its rivals. For instance, a successful producer went to a bank with plans for a new production.
The banker looked them over. He said, "Yes, you seem to have a fine story, a good cast and all the elements of a money-making picture, but where are you going to show it?"
The producer was stumped. With Famous Players, Goldwyn, Loew and Universal controlling all the first run houses in the country, where could he obtain assurance that his picture would get the first run showing so necessary for its success?
Thus, you see, is completed the vicious circle. The independent exhibitor must buy from either Famous Players or First National, because he cannot get enough independent productions. The independent producer cannot make more pictures because they have no theaters in which to show them.
At first glance this looks like a hopeless situation. But it is not as hopeless as it appears. Both the independent exhibitors and the independent producers have a weapon strong enough to curb the head of the Famous Players- a weapon that will restore control of his own house to the exhibitor and restore thereby control of its theaters to the community.
This weapon is the co-operation of the independent motion picture theater owners of the United States with the independent distributors and the independent producers.
The independent exhibitors already have a powerful organization in the Motion Picture Theater Owners of America.
The solution of the distribution problem will eventually come through a form of co-operation between the producer and exhibitor which may eliminate the distributor as a separate entity altogether. Plans along these lines are now being worked out.
The present great problem is that of financing the independent producer. If he cannot get money to make his pictures, the exhibitor is left to the tender mercies of the big controlling corporations in Wall Street.
Let us hark back to this financing for a moment, because therein lies the key to many matters not understood by the general public nor, in fact, by many men in the industry itself.
The financing of motion pictures from the production angle has been almost entirely in the hands of Jews. From the big banking house of Kuhn, Loeb & Company in Wall Street, which now handles the finances of Famous Players-Lasky Corporation, down to the little syndicates which are always ready to back a venture in the film industry, the money has come from the Jews. This is not said in disparagement of the Jews. The production of a motion picture is somewhat of a gamble. It may either be a huge financial success, or it may be a financial failure. Independent producers have appealed in vain to non-Jewish financiers to back them in their productions. But Gentiles with millions to invest have preferred to place their money in safe five and six per cent bonds or mortgages rather than take the risk of a big return or a big loss in the rather speculative picture industry.
Until Kuhn, Loeb & Company and other Jewish Wall Street bankers began to take an interest in the picture industry, production money was largely supplied by small Jewish syndicates.
After the production center had shifted to Los Angeles, certain banks in that city begin to take an interest in the financing of motion pictures.
Of course, these banks could not loan their depositors' money direct to producers, as this is contrary to law. But methods were found to get around this obstacle. Some of these methods resulted in scandals and the indictment of certain bank officials, but on the whole picture financing was accomplished.
Independent producers who could show a reasonable percentage of successes in the past and could furnish fair collateral had little difficulty in obtaining the money they needed. They had to pay more for the use of money than other industries, but this was to be expected, as the hazard was greater.
Since the gradual domination of the field by the big Wall Street companies this condition has changed. Independent producers with ample security have been refused money as has been previously shown. The banks on which the independent producers has relied for capital have come under the influence of interests antagonistic to them and their source of supply has been shut off. Not all sources, however; there are still some banks that will obtain money for the independents at a price. But what a price! Listen to the experience of David Hartford, a successful independent producer, a man who has made clean pictures in the past and who is absolutely opposed to the salacious sex pictures of the present.
Hartford was prepared to produce four pictures this coming year. He needed money. He sent his business manager to the banks. The following is the report of the manager as given the writer by Hartford:
"On a loan of $75,000 we are required to pay an immediate bonus of $9,500, which is deducted from the money loaned, leaving us a working capital of but $65,500. In addition we are to pay interest at the rate of 12 per cent on the entire $75,000.
"Assuming that we produce four pictures a year, disposing of each picture immediately, we will be required to pay to the parties loaning the money four times $9,500 plus 12 per cent interest.
"In addition to this there is an agent's commission of 10 per cent, or $7,500. Four times this commission makes a total commission to be paid during the year of $30,000. Four times the bonus of $9,500 makes a total of $38,000. The interest would equal $9,000. The total sum therefore we would be required to pay for the use of $75,000 would be $77,000.
In addition, we are to furnish, ourselves, 25 per cent of any money required, which would mean in this case $25,000 of our money to be expended before the borrowed money would be available. The money is to be advanced us each week on certified vouchers which we are to render before the weekly advance is made, so that the parties loaning the money will benefit by the interest allowed by the bank during the time the money is on deposit previous to being advance to us."
After reading over this report Hartford looked in the mirror to see if the gold fillings in his teeth were still intact. [1]
The half of the extortions practiced against independent producers who have tried to keep their business from the clutches of the Jewish money lenders probably never will be told. When the writer began gathering the material for these articles he anticipated little difficulty in obtaining the stories from those who had been squeezed. But he found those who had been hardest hit reluctant to talk. Why? Because the motion picture business is one of the most complicated and involved of any industry. Although some of these men were being slowly strangled to death- in a business sense- they dared make no open protest. They feared that if they told the truth about conditions, the half a loaf which they had would be taken from them.
This man, if he would talk, could tell a remarkable tale of the inside workings of the picture industry. But he cannot talk, yet. For a number of years he has been making pictures for Paramount release. Recently his contract expired and he became his own distributor. But Famous Players-Lasky Corporation is still showing his previous pictures, will still be showing them for some years.
Should Zukor and Garbutt wish to discipline him for telling what he knows about them, they would simply put his pictures on the shelf, as they have those of others who offended, and his whole source of income while he is getting his new productions under way would be stopped.
Others are in the same position. Through controlling distribution and exhibition, Famous Players-Lasky still holds most of the independent producers under its thumb, preventing them from squealing while the noose is being tightened.
But they are not all tamely submitting. While this is being written a corporation is being formed by independents, backed by business men and bankers of Los Angeles, to finance independent producers. This corporation to be known as the Cinema Finance Corporation is to have a capital of $2,000,000 divided into equal portions of preferred and common stock. Business men of Los Angeles, who realize that their interests lie with the independent producers, rather than the Wall Street dominated group of Jewish producers, have agreed to subscribe for most of the stock.
Thus comes the dawn of a better era in picture making. An era in which a producer can go ahead with clean, wholesome and artistic pictures without being hampered by the exactions of a group of usurious money lenders.
The problem of distribution is also in a fair way to be solved through the agency of the Motion Picture Theater Owners of America. This organization had its inception but little more than a year ago at Cleveland, Ohio. The independent theater owners of America found that Famous Players-Lasky Corporation was gradually but none the less surely depriving them of their liberty through the acquisition of theaters, curtailing the production of independent producers and driving independent distributors from the field.
With a membership of more than 12,000 independent theater owners, organized to do battle for their very existence, the second convention of the organization was held at Minneapolis in June.
[1] This is an especially nasty slam, but the author seems to contradict himself. The author despairs the Jewish control of Wall Street financing (available to large companies like Famous Players). This anecdote describes the treatment from local banks, which the original author doesn't claim are Jewish-controlled.
[2] The author is probably referring to Thomas Ince, who was at that time concluding a distribution agreement with Paramount. Ince was anti-Semitic, and distrustful of Jews.
"Independent Movie Men Denied Bank Loans," Baring The Heart of Hollywood Part V, The Dearborn Independent, November 26, 1921, page 12.
© 1998, David Pierce, on editing and revisions (if any)
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