Economic Control of the Motion Picture

Industry A Study in Industrial

Organization Mae D. Huettig
Visit to download the full and correct content document:
https://ebookmeta.com/product/economic-control-of-the-motion-picture-industry-a-stu
dy-in-industrial-organization-mae-d-huettig/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

Now a Major Motion Picture 1st Edition Cori Mccarthy

https://ebookmeta.com/product/now-a-major-motion-picture-1st-
edition-cori-mccarthy/

The Watchers A thrilling Gothic horror soon to be a

major motion picture A M Shine

https://ebookmeta.com/product/the-watchers-a-thrilling-gothic-
horror-soon-to-be-a-major-motion-picture-a-m-shine/

Vitagraph America s First Great Motion Picture Studio

1st Edition Andrew A Erish

https://ebookmeta.com/product/vitagraph-america-s-first-great-
motion-picture-studio-1st-edition-andrew-a-erish/

The Cinema in Flux The Evolution of Motion Picture

Technology from the Magic Lantern to the Digital Era
Lenny Lipton

https://ebookmeta.com/product/the-cinema-in-flux-the-evolution-
of-motion-picture-technology-from-the-magic-lantern-to-the-
digital-era-lenny-lipton/
Bureaucracy and Rural Development in Malaysia A Study
of Complex Organizations in Stimulating Economic
Development in New States Gayl D. Ness

https://ebookmeta.com/product/bureaucracy-and-rural-development-
in-malaysia-a-study-of-complex-organizations-in-stimulating-
economic-development-in-new-states-gayl-d-ness/

Still American Silent Motion Picture Photography 1st

Edition David S Shields

https://ebookmeta.com/product/still-american-silent-motion-
picture-photography-1st-edition-david-s-shields/

The Philadelphia Upholstery Weaving Industry A Case

Study of a Declining Industry in and Old Manufacturing
Center C. Canby Balderston

https://ebookmeta.com/product/the-philadelphia-upholstery-
weaving-industry-a-case-study-of-a-declining-industry-in-and-old-
manufacturing-center-c-canby-balderston/

Regulations in the Energy Industry Financial Economic

and Legal Implications Dorsman A.

https://ebookmeta.com/product/regulations-in-the-energy-industry-
financial-economic-and-legal-implications-dorsman-a/

The Cinema in Flux The Evolution of Motion Picture

Technology from the Magic Lantern to the Digital Era
1st Edition Lenny Lipton

https://ebookmeta.com/product/the-cinema-in-flux-the-evolution-
of-motion-picture-technology-from-the-magic-lantern-to-the-
digital-era-1st-edition-lenny-lipton/
ECONOMIC CONTROL OF THE MOTION
PICTURE INDUSTRY
 UNIVERSITY OF PENNSYLVANIA

ECONOMIC CONTROL OF
THE MOTION
PICTURE INDUSTRY

A S T U D Y IN I N D U S T R I A L
ORGANIZATION

A DISSERTATION
IN INDUSTRY

PRESENTED TO THE FACULTY OF THE GRADUATE SCHOOL IN

PARTIAL F U L F I L L M E N T OF THE REQUIREMENTS FOR
T H E DEGREE OF DOCTOR OF PHILOSOPHY

MAE D. HUETTIG

PHILADELPHIA
1944
 Copyright 1944

UNIVERSITY OF PENNSYLVANIA PRESS

Manufactured in the United States of America

 PREFACE

THIS STUDY was undertaken in conjunction with the Motion Picture

Research Project and made possible by a research fellowship from
the Rockefeller Foundation. T o the Foundation and its representa-
tive, John Marshall, the writer is grateful.
T h e work was conducted in Hollywood over a period of two years
from April 1939 to April 1941. T h e Motion Picture Research
Project, financed by the Carnegie Corporation and directed by L e o
C. Rosten, collected and analyzed a great wealth of material. Much
of it had never before been accessible to anyone outside the industry.
Originally the study undertook to analyze the economics of film
production. However, it quickly became evident that the production
of films is not an industrial phenomenon which can be studied by
itself. Almost every question concerning film production led into dis-
tribution and exhibition. H o w many pictures are produced? By
whom? What are the limits on the number of pictures made? H o w
many producing companies are there? W h y are there not more?
What is the relative importance of each? H o w does a company get
to be a major producer? H o w much do pictures cost? What con-
stitutes "cost" in the making of films? H o w much do they earn? Is
there any relationship between what a film costs and what it earns?
The answers to these and a host of related routine questions are
explicable only in terms of the structure and organization of the
industry as a whole, including distribution and exhibition.
More than most industries, it appeared, the motion picture in-
dustry is a maze of intricate relationships. N o one aspect is intelligi-
ble except as part of the whole. T h e intricacy is due in part to the
nature of the product and in part to the unique interdependency of
the major companies. Every phase of the business as well as the de-
velopment of the film itself has been affected by this interde-
pendency.
Since the objective of the study was a synthesis of the industry
as a whole, it was necessary to put together fragmentary evidence
collected from numerous sources. Confusing, though not unex-
pected, was the fact that most people who were thoroughly familiar
V
vi MOTION P I C T U R E INDUSTRY

with production knew little about distribution or exhibition; to a

lesser extent the people in the latter fields knew little about pro-
duction. The literature on the industry displays the same kind of
split personality. The principal task consisted of piecing together
a variety of information to see what bearing the facts had on each
other and finally to work out a pattern which fitted most of the
industry most of the time.
The results of this study are presented in the following pages.
I am indebted to several persons who participated in one way
or another.
Of the numerous individuals within the motion picture industry
who helped me read meaning into the voluminous data, Matthew
Fox, vice-president of Universal Pictures Company, was invalu-
able. He gave freely of his time and, most important, of his in-
sight and judgment.
Dr. Isador Lubin was intrumental in making available unpub-
lished governmental data.
To Dr. J . Frederic Dewhurst I am indebted for sustained en-
couragement dating from the start of the study. He read the manu-
script tirelessly and made many constructive suggestions.
Dr. Anne Bezanson, in the role of faculty adviser, contributed
patient and thoughtful guidance. For the restraint and patience
which both she and Dr. Ralph A. Young exhibited, I am grateful.
To my co-worker on the Motion Picture Research Project, Doro-
thy B. Jones, I am indebted for the urging and prodding which
completion of this study required.
Several people in the industry and in various governmental
agencies have requested that their contributions remain anonymous.
To them, too, I am grateful.
T o Lester M. Huettig I owe much for the good nature with
which he endured the entire process of my making this study.
It remains only to add that none of the persons named is re-
sponsible for the various sins of commission and omission probably
scattered throughout the text.
MAE D. HUETTIG
December 1943
 CONTENTS
Chapter Peg*

PREFACE ν

INTRODUCTION ι

I. D E V E L O P M E N T O F T H E M O T I O N PICTURE
INDUSTRY 7
Définitions 7
Early History, 1889-1908 9
T h e Motion Picture Patents Company, 1908-15 14
T h e Film Itself, 1903-15 17
Theatres, 1905-16 20
Production as It Affected Distribution Practices, 1912-19 24
Integration of Production, Distribution, and Exhibition,
1917-23 31
Preparation for the Advent of Sound, 1923-26 39
Sound, 1927-29 42

II. T H E M O T I O N P I C T U R E I N D U S T R Y T O D A Y 54
Some Questions to Be Answered 54
W h a t Is the Economic Importance of the Industry? 55
Production versus Exhibition 58
Structure of the Industry 61
T h e Majors 64
W h a t Kind of Theatres Do the Majors O w n ? 74
W h y Are the First-run Theatres Important? 77
Relationship between the Big Five and the Little Three 84
Role of the Majors in Production and Distribution 87

III. H O W P R O F I T A B L E IS T H E M O T I O N PIC-
T U R E BUSINESS? 96
Ratios of Profitability 98
Executive Remuneration and Dividends 101

IV. T H E M A R K E T I N G OF FILMS 113

Films as * Commodity 113
vii
 MOTION PICTURE INDUSTRY

The Principal Trade Practices: General Description 1141

Block-Booking 116
Arguments For and Against 117
How Block-Booking Works 120
Designated Play Dates 124
Protection 125
Circuit Buying Power 131
The Consent Decree 139
V. C O N C L U S I O N 143
BIBLIOGRAPHY 151
INDEX 155
 TABLES
I. Volume of Business, Eight Major Motion Picture Com-
panies, 1935-41 52

II. Reported Volume of Business of Motion Picture Corpora-

tions as Compared with Corporations in Other Industries,
*937 56

I I I . Number of Persons Employed in the Motion Picture

Industry, 1939 57

IV. Analysis of Asset Items on Individual Balance Sheets

of Six Major Motion Picture Companies, 1939 68

V. Analysis of Liability Items on Individual Balance Sheets

of Six Major Motion Picture Companies, 1939 68

VI. Income from Domestic Film Rentals as Per Cent of

Total Volume of Business, Five Major Motion Picture
Companies, 1939 70

VII. Gross Film Rentals from Distribution Within the United

States of T e n Motion Picture Companies, 1939 71

VIII. Number of Exhibitions Received by Feature Releases of

Six Major Motion Picture Companies during 1936-37
Season 72

IX. Size and Location of Theatres in United States, 1938 75

X. Film Rentals, by Exchange Cities, for Five Major Produc-

ing Companies, 1938 j6

XI. Number of Feature Films Released by Eight Major

Motion Picture Companies 86

XII. Net Profits per $100 of Tangible Net Worth after All
Charges of Six Major Motion Picture Companies 98
ζ MOTION PICTURE INDUSTRY

Χ Ι Π . Ratio of Total Profits to Invested Capital of Six Major

Motion Picture Companies

X I V . Total Profit per $ 1 0 0 of Invested Capital of Eighteen

Industries

X V . Executive Remuneration as Per Cent of Net Earnings

of Seven Major Motion Picture Companies, 1941

X V I . Executive Remuneration per $ 1.00 of Dividends of Seven

Major Motion Picture Companies

X V I I . Number of Theatres Operated by Five Major Motion

Picture Companies, 1940
 INTRODUCTION
No I N D U S T R Y in the world has had so much publicity lavished
on it as the motion picture industry. The press happily pub-
lishes studio handouts, movie gossip columns, reviews of the latest
films, and paid advertisements. A startling number of magazines
are devoted to the lives and loves of the stars. News of the latest
Hollywood coiffure is brought to the housewife over the air waves.
Anyone who ventures out of doors is beset by poster and theatre
marquee whether he be in Times Square or Las Vegas, Nevada.
But for all this purveyance of glamour, remarkably little is known
about the basic structure and economics of the industry itself.
In many ways the motion picture industry is unique. It is most
certainly complex. This chapter is intended as a point of departure
for the understanding of the details. Many questions will doubtless
occur to the reader, but it should be remembered that detailed
argument and evidence are omitted at this point and follow in
the later chapters.
T h e motion picture business includes the production, distribution,
and exhibition of films. Although the three functions are quite
distinct, requiring different types of skill and organization, the de-
velopment of the industry has been such that the major corporate
units are highly integrated, combining the various functions. There
are eight such companies today, known throughout the industry as
"the majors." They are: Warner Brothers} Paramount Pictures,
Inc.; Loew's, Inc.; Twentieth Century-Fox; Radio-Keith-Orpheum
Corporation ; Columbia Pictures, Inc. ; Universal Corporation ; and
United Artists. Of these, the first five are fully integrated, i.e.,
they make, distribute, and exhibit films. Columbia and Universal
engage in production and distribution only. United Artists is a
rather special case, acting until late in 1941 as distributor only.
The importance of the majors with respect to control of various
aspects of the industry is indicated in the following figures: There
were ninety-two companies reported actively engaged in produc-
tion in 1939; the eight major companies alone released 396 or 82
per cent of the 483 full-length feature pictures produced in this
I
2 MOTION PICTURE INDUSTRY

country.1 There are approximately 3,700 active motion picture

corporations with a gross income of $936 million from production,
distribution, and exhibition.1 The total income of the eight major
companies is nearly $500 million, or 53 per cent of the total. This
clearly establishes the concentrated importance of the small group
of companies constituting the majors.
The importance of the major companies is greatest in the realm
of production and distribution. Whether the criterion of impor
tance be volume of output, value of product, volume of business,
or invested capital, producing companies other than the eight majors
pale into insignificance. Independent distributors of films are en-
tirely marginal. On the other hand, in the exhibition phase of the
business, as will be shown in greater detail later, there is an im-
portant group of theatre-owning companies not affiliated with the
majors. These are the independent circuits. According to the most
recent figures available, 394. independent theatre chains operated
a total of 4,130 theatres, or 24 per cent of the total number of
theatres in the country.8 The nature of the relationship between
these chains and the theatres operated by the integrated majors will
be discussed elsewhere. For the moment it is sufficient to note that
the independent chains operate, for the most part, in areas where
affiliated theatres are few. Competition in such situations is between
the chains and the independently operated, individual theatres.
In order to understand the way in which the industry functions it
is important that the role of the "independent" in both production
and exhibition be understood. In the trade all companies other
than the big eight are customarily referred to as "independents."
There are several independent producing companies, notably Re-
public and Monogram, with their own distribution facilities;
most independent producers, however, sold their films until re-
cently through independent distributors known as "states-right ex-
changes." These independent organizations bought film outright
or secured exclusive leasing rights for a specified period, leasing
the film in turn to exhibitors within their territories. For a number
1 U . S. D e p a r t m e n t of C o m m e r c e , M o t i o n Picture D i v i s i o n , Bulletin, March 15,
1940. A c a d e m y of M o t i o n Picture A r t s and Sciences, Reference List of Productions,
1934-39.
1 U. S. T r e a s u r y , B u r e a u of Internal Revenue, Statistics of Income, 193g.
1 U. S. D e p a r t m e n t of C o m m e r c e , M o t i o n Picture D i v i s i o n , Bulletin, March 15,
1940.
 INTRODUCTION o
J

of reasons the states-right exchanges have rapidly declined in num-

ber and importance.
T h e r e is a group of producers whose status is somewhat anom-
alous. T h e y are "independent" in the sense that they finance their
own productions in whole or part, secure talent, and make pictures.
H o w e v e r , their pictures are released by one of the majors, an
arrangement usually made in advance of production. Once finished,
the pictures are treated by the releasing company as part of its
season's product and handled for the producer on a percentage
basis. So far as the market for films is concerned, the important
thing to the buyer of films is not that the picture ivas independently
produced but that it is distributed by one of the majors. F o r all
practical purposes producers operating in this manner are not in-
dependent in any important sense, inasmuch as access to the market
for their pictures is dependent upon distribution by a major com-
pany. T h e exhibitor, too, in making his arrangements to secure
the films of independent producers, deals not with the producer
but with the same majors that control the bulk of his needed prod-
uct. F o r this reason, the term "independent producers" as used
hereafter refers to those whose product is not distributed through
the major companies.
As will be demonstrated later, it is no accident that the test of an
independent producer is his method of distribution. As an indirect
result of the integrated structure of the major companies, the film
itself is but a part of the commodity sold. In its entirety the product
consists of the right to look at a film, in a given type of theatre,
at a given time with reference to the original release date of the
film. This has resulted in a differentiated market which makes pos-
sible the high degree of integration and control existing today.
Still another characteristic of the business has greatly influenced its
development. Namely, the fact that only briefly in the commercial
history of the motion picture has the chief emphasis been on the
product itself. At first the business was dominated by companies
interested primarily in the manufacture and sale of motion picture
equipment. This is attested to by the formation of one of the most
famous and successful patent pools in this country's history, the
Motion Picture Patents Company. Organized in 1908, soon after
the new industry was definitely launched as a commercial enter-
prise, the pool consisted of seven producers of equipment operating
4 MOTION PICTURE INDUSTRY
with Edison patents, the Edison Company itself, and several pro-
ducers and distributors of films. T h e company extended licenses
to exchanges f o r handling films produced by the company; the
exchanges, in turn, agreed to sell only to such theatres as used pro-
jection equipment made under the pool's patents. T h e power of
this group reached its peak in 1 9 1 2 , by which time it had succeeded
in buying fifty-seven of the fifty-eight exchanges then in opera-
tion under threat of revocation of licenses. 4
T h e story of the patent pool and what happened to it will be
told elsewhere. H e r e it is sufficient to note that f r o m the beginning
the film has often been exploited, not primarily as a thing profitable
in itself but as a means of profiting f r o m the exploitation of related
merchandise, i.e., equipment, real estate, etc. T o d a y , the motion
picture industry is once again closely affiliated with manufacturers
and distributors of certain types of equipment, 5 primarily electrical.
T h i s development f o l l o w e d immediately the advent of sound in
film since, with unimportant exceptions, financial control of the
basic patents in the sound equipment field is held by two groups:
Western Electric C o m p a n y , subsidiary of the American Telephone
and T e l e g r a p h , and R . C . A . Photophone, a subsidiary of Radio
Corporation of America. As is generally known, these two groups
are dominated by M o r g a n and R o c k e f e l l e r interests respectively.
H o w e v e r , the nature of the current relationship between film pro-
ducers and the manufacturers of equipment differs f r o m that of
the early period, as will be shown later.
T h e fact that the m a j o r producers of films have not been forced
to rely exclusively on the excellence of the product itself f o r profits
may contribute to an understanding of many questions concerning
the progress of the film as an art-form. Originally, a movie was an
object of curiosity; people went to see what it was like. W i t h aston-
ishing rapidity, movie-going became a mass habit f o r which there
is no strictly analogous precedent. T h e habit is based on the fact
that there is virtually no other activity which inexpensively meets
so many differing needs of large numbers of people. A s Seldes
has pointed out in his refreshing book," most people g o to the
movies simply to be at the movies :

4 F . L . Vaughan, Economics of Our Patent System, p. 55.

° Howard T . Lewis, The Motion Picture Industry, p. 2.
"Gilbert Seldes, The Movies Come from America, ρ 9.
 INTRODUCTION 5

T o leave one's home, to enter a place designed for entertainment,

to experience the sort of contagious pleasure which several hundred other
people feel at the same time—all of these things used to be the privilege
of a comparatively small number of people. . . . The movie is mass enter-
tainment and both these words are important because the feeling that a
large crowd is sharing one's experience is cherished by almost all human
beings. A comic movie is funnier, a tearful one draws more tears, if it
is seen in a large company . . . so we must write down that people
go to the movies for a kind of physical pleasure which is not directly con-
nected with the quality of the movies themselves. . . . The phrase "going
to the movies" is the magic formula upon which the success of the
moving picture as an industry is based. . . . The producers may spend
vast sums of money to attract people to see this or that star, or a film
based on a popular book, or on a great classic ; and it is perfectly true that
people will say: "There is a Garbo picture playing tonight, let's go see it."
Or they may say : "I want to see that film about Robespierre or Nero" ;
or they "cannot wait" for the next Chaplin or Marx Bros, picture. But
these are the refinements; the fundamental passion is a desire to go to
the movies which means to go to any movie rather than not go at all.
This is the prime phenomenon of our time. The radio can reach more
people at any given moment but one does not pay every time the radio
is turned on, one does not leave home to go to an auditorium to listen
to what the radio may bring. Never before in the history of the world
has there been an actually universal entertainment. . . . Everything that
is strong and everything that is weak in the moving pictures must have
its source in this same attempt at being universal—its wealth in money,
its poverty in taste, its splendid achievements, and its disastrous failures.
All the other arts were aristocratic in their beginnings. Books were
written for the few who could read; music composed for court circles;
paintings and sculptures made for patrons. And only the church, which
used these arts to a certain extent did anything to save the arts from
becoming exclusively the pleasure of a very few.
Seldes' statement of the reasons why people go to the movies
furnishes an indispensable clue to the nature of the demand for
films, a basic factor in any discussion of the economic aspects of the
motion picture industry.
The outstanding economic fact about the motion picture industry
is this: that by means of the ownership of a relatively small num-
ber of theatres, five firms have achieved within less than twenty
years apparently stable control over an industry consisting originally
of thousands of independent units, operating as three fairly dis-
6 MOTION PICTURE INDUSTRY

tinct branches of the industry, scattered geographically, and quite

unorganized.
There are some 15,OCX) theatres operating in the United States
at the present time.* Approximately 16 per cent, or 2,600, are
owned by the five integrated major companies.8 Through the owner-
ship of this relatively small proportion of the total number of
theatres, these five companies dominate the industry. The term
"dominate" in this context means several things: ( 1 ) The majors
can and do influence substantially the business practices of thousands
of non-affiliated theatres. (2) The affiliated theatres by reason of
their nature and location enjoy the bulk of theatre attendance.
They are the source of as much as from 50 to 65 per cent of the
total film rentals received by the majors. This leaves a dispropor-
tionately small share of the market for both the unaffiliated theatres
and the independent producers. (3) By means of their ownership
of these strategic theaters, the majors can, if they so desire, prevent
independent producers from securing effective distribution of their
product thereby blocking off alternative sources of film to inde-
pendent theatre owners. The majors are then in a position to
charge the independent theatres for their films what the traffic
will bear. In other words, the control mechanism works from two
directions: first, by their ownership of key theatres they are able
to skim the cream off the market and influence a much larger
number of theatres than they own; second, by virtue of this same
ownership they can prevent films other than those released by
them from reaching the market, thereby enhancing the value of
their product to the independent theatre owners who are left with
no alternative but to buy the majors' films if they are to continue
operations.
What made possible this particular form of concentration and
control? How was it achieved, and with what effects? These are
among the questions discussed in the following pages.
* U. S. Dept. of Commerce, Bureau of the Census, Places of Amusement, 1939·
* U. S. Dept. of Justice, Petition of United States v. Paramount Pictures, Inc.,
et al., amended October 1940. The five companies are : Paramount, Warner Brothers,
Twentieth Century-Fox, R.K.O., and Loew's, Inc.
 I

D E V E L O P M E N T OF T H E MOTION
PICTURE INDUSTRY

DEFINITIONS
DESPITE THE integrated nature of the major companies it is still
convenient for descriptive purposes to use the old classification of
functions. 1 Several self-evident definitions follow. Producers are
those who make pictures. A distinction should be made between
individual producers and companies which produce pictures, since
the term "producers" as commonly used may refer to either. An
individual producer is usually retained on a salary basis by a com-
pany to supervise the production of a picture. Or a producer may
be one who secures his own financing, story material, and stars for
a picture to be distributed by one of the major companies on a share-
the-profits basis. Unless otherwise stated, the term "producer"
will refer here to a company engaged in producing pictures.
T h e constituent elements of pictures are primarily story ideas,
personnel (actors, directors, writers, cameramen, and various other
specialists), plant, film, and photographic equipment. Production
involves the entire film-making process up to and including the
printing of the necessary number of positive prints.
Distribution includes the process of selling (or more accurately,
leasing) film to exhibitors, arranging for play dates and delivery,
and collection of film rentals. The physical aspects of distribution
are in themselves complicated, involving large sales staffs, the
maintenance of branch offices (known as exchanges) with fireproof
vaults, and efficient film delivery service. Each film, before a theatre
receives it, is inspected, rewound, and repaired between showings.2
1
The term "integration" as applied to the motion picture industry refers always
to the vertical type of integration in which operations are combined in such a way
that the finished product of one is the raw material of another. Cf. Arthur R.
Burns, The Decline of Competition, pp. 418 ff.
' The costs of distribution for the industry as a whole are very high, since each
of the major companies maintains its own exchange in the thirty-one key cities of
the country. This duplication of facilities has been pointed to as one of the most
wasteful practices of the industry. See, for example, The Public and the Motion
Picture Industry, by W. M. Seabury, written as long ago as 1916 but still ap-
plicable to the industry today.

7
8 MOTION PICTURE INDUSTRY

The complexity of physical distribution is as nothing, however,

compared with the problems of iftarketing, pricing, and trade prac-
tices which constitute distribution in the economic sense.
Exhibition is the retailing division of the industry. The principal
function of the exhibitor is securing a supply of films and operating
theatres. According to the most recent census figures, there were
1 5 , 1 1 5 motion picture theatres in operation in 1939. Their total
receipts amounted to $673 million, or 67.5 per cent of the total
receipts of all places of amusement in the United States.® Of the
total number of theatres in operation it is estimated that 450 or
approximately 3 per cent are first-run theatres located in cities
with population of over ιοο,οοο.4
Of necessity, any coherent account of the economic development
of the motion picture industry must proceed along the three parallel
levels—production, distribution, and exhibition. The important
thing is not what happened in any one of these phases at a given
time, but the repercussions and interaction between each of them.
This complicates the narrative and probably makes for difficult
reading, but failure to relate the events in the various phases of
the industry to each other would mean an inaccurate and incom-
plete account. Once the industry got under way, many things
happened simultaneously.
The motion picture industry dates from the invention of movie
cameras and projectors, both of which were in existence by 1895.
In large part, its early history was dominated by problems of
equipment. Until cameras and projectors became reasonably ac-
cessible, all other problems of production were secondary. There
was not much point in a producer's worrying about cast, story ma-
terial, or production costs until he possessed the indispensable camera.
Similarly, the would-be theatre entrepreneur of those days was
relatively untroubled by problems of pricing or trade practices.
His first concern was to get a projector. His next concern was oper-
ating the projector free of legal or even physical attack by the
representatives of the tightly controlled Edison equipment.
Later, the emphasis shifted. With the lifting of the restrictions
* U. S. Department of Commerce, Bureau of the Census, Places of Amusement,
•939-
' Motion Picture Producers and Distributors of America (the Hays Office),
Film Facts, 1941.
 DEVELOPMENT 9
on motion picture equipment, distribution and market problems
assumed more importance. Demand for better films forced increases
in production costs ; these, in turn, required more effective distribu-
tion so as to increase the return on films. More effective distribu-
tion first took the form of national organizations of independent
distributors handling the product of several producers. Later, this
proved unsatisfactory to the stronger producing elements; they
assumed the distribution of their own product. As distribution be-
came organized and film costs rose, horizontal consolidation of
theatre interests took place. This was followed by vertical integra-
tion of production, distribution, and exhibition in the five major
companies.
This account, it need hardly be said, vastly oversimplifies the
process. At times the sequence of events was so rapid that cause and
effect are indistinguishable. This chapter is devoted to an analysis
of the major forces affecting the development of the industry in
each of its phases.
E A R L Y HISTORY, 1889-I9O8

Despite the fact that movies seem an intrinsic part of our cul-
ture, the commercial origins of the industry extend only as far
back as 1896, the year in which the first screening of a film took
place. Edison's motion picture camera was invented in 1889. By
1895 projection machines were in existence. Seldes, referring to
Edison's underestimation of his own invention, has suggested that
the history of the motion picture industry might well be called
" T h e Mistakes of Edison." 5 H e was interested in motion pictures
only as an adjunct to the talking machine.® Even after he had seen
a moving picture, Edison considered the underlying inventions
useful only because they made possible photographic reproduction
' Gilbert Seldes, of. cit., p. 18.
* "Edison, deep in numerous laboratory experiments, was too far removed from
the public to realize that his invention was anything· more than a toy. His mind
was so occupied with other research work which he regarded as more important
that he did not even carry out his original intention to combine talking machine
and movies, and let his business partners manage the kinetoscope department with-
out giving it much of his own thought." Β. B. Hampton, A History of the Movies,
P· 7·
"Edison, however, persisting in his belief that the moving picture was a short-lived
novelty, refused to consider the idea of screen shows, and the many mechanical
and electrical difficulties involved in making them a reality were worked out by
half a hundred other inventors." Ibid., p. 10.
IO MOTION PICTURE INDUSTRY
of operas or plays. T h e projection of movies on a screen did not
seem commercially feasible to him. H e reasoned that if hundreds
of people could see it at one time a picture would too rapidly ex-
haust its potential public. A s Seldes has said: " T h e moving picture
had to be taken away from its inventors by aggressive and ignorant
men without taste or tradition, but with a highly developed sense
of business, before it could be transformed from a mechanical
toy into the medium of the first popular art."
F e w industries are of lowlier origin than the motion picture.
Originally made in single rolls fifty feet long, films were used in
peep-show machines, the forerunner of the motion picture theatre.
T h e first peep show was opened at 1155 Broadway, N e w Y o r k
City, on April 1 4 / 1894. T h e business was so disreputable that
even later, when the peep show had been displaced by the nickel-
odeon, David Warfield, the actor, kept secret his investment in
one of these enterprises for fear his name on the stage would be
ruined. Despite the unsavory surroundings of peep shows, penny
arcades, and their like, public demand for the medium itself, the
moving picture, was insatiable. Viewing a film was still an indi-
vidual matter; only one person at a time could look through the
peep-show device. Edison, besieged by demands for a device which
would liberate the films from the peep show and permit projection
on a screen, showed no enthusiasm for the idea. Raff and Gammon,
his agents, however, sensed the enormous money-making possibili-
ties of screen-projected films; they investigated a projector invented
by Thomas Armat, named it the Vitascope, and arranged for its
manufacture and marketing as an Edison device. 8
T h e first screening of a motion picture took place as the last act
on a vaudeville program at Köster and Bial's Music H a l l , at
Broadway and Thirty-fourth Street, N e w York, in April 1896.
T h e intimate association between the movies and vaudeville is im-
portant. It was there that most of the men later responsible for the
development of the motion picture industry had their early train-
ing in showmanship, the effects of which are still evident in many of
the films made. "Vaudeville and Pictures" was what the Loew
houses offered; not for another ten years was the line changed to
"Pictures and Vaudeville." Vaudeville circuits showed films as

1 Will Hays, See and Hear, p. 9.

p. II.
 DEVELOPMENT II

added attractions, thereby unwittingly digging the grave of vaude-

ville. Their patrons clearly enjoyed the novelty of the film, but
the real devotees from the very beginning were a new class of
amusement buyers—the customers of the arcades, the peep shows,
and the dime museums. Men, women, and children who had never
before been inside a theatre crowded to the converted storerooms
to gaze with awe and delight at the flickering celluloid—at first
because it answered the need for amusement which was inexpensive
and soon because it provided undreamed-of new pleasures. A de-
mand for apparatus and films came from suburban and country
towns throughout the land. Nothing like this had ever happened
before; no one was prepared for the feverish growth of a toy into
an industry.
First to feel the pressure of demand and to sense the real money-
making opportunities of films were the exhibitors. They made
every effort to keep pace with the public but were at once confronted
with the shortage of equipment and films.
T h e youthful industry, with no experience . . . to guide it, with insuffi-
cient machinery to satisfy the sudden, astonishing desire of the public—
even without tools to build the machinery—and with no internal or
external organization to give it direction or cohesion, was forced by the
populace into a maelstrom of expansion that is without counterpart in
business history.®

During this time, as was to be true in a different sense later, the

industry was dominated by companies engaged primarily in the
manufacture of motion picture equipment. The value of the equip-
ment was clearly dependent upon a supply of films since neither a
motion picture camera nor a projection machine has any other use.
Consequently, the companies which manufactured equipment under-
took the production of films.
While the industry was still in the peep-show stage, the market
for both films and equipment was almost entirely dominated by
Edison's Kinetoscope Company. Edison, however, in his general
disregard for the value of his own invention had neglected to obtain
foreign patents, with the result that men in France and England
were soon producing peep-show cabinets and cameras.
These quickly found their way to this country, partially meeting
the avid demand for equipment. The Edison Company was still
*B. B. Hampton, of. cit., p. 17.
12 MOTION PICTURE INDUSTRY
the foremost manufacturer of projectors as well as films, but it was
quite unable to meet the demand of the exhibitors. The company
policy was to rent projectors, and later to sell them; but it would
neither sell nor rent cameras, the intention being to retain control
of the production and sale of pictures.
Little by little, however, thinly disguised versions of the original
Edison camera came into circulation. Patents were granted amateur
inventors on devices which were real or purported improvements on
the basic principle. Within three years from the time movies were
first shown, several new companies had entered the business of
making cameras, projectors, and producing films. Anyone in those
days who could rent, buy, or steal a camera could become a picture
producer; he needed no experience or elaborate equipment. All
that was required was to set up the camera, shoot anything animate,
develop the negative, print positives, and sell them at virtually
any price.
Without an understanding of the intensity and suddenness of
the demand for movies, much of the history of the industry is
incomprehensible. Edison's company held the major patents
through which control of equipment and film was being perilously
maintained; it was the bottleneck of the industry. The company's
lawyers insisted that all inventors and manufacturers and all pro-
ducers of films in America were violating the basic patents. They
started lawsuits and enjoined the violators, but to no avail. The
opportunity for quick profits was too alluring; equipment and films
continued to appear in the market, where they were absorbed with
no questions asked by the exhibitors or the public.10
Problems of distribution were few. Since the demand for films
was vastly greater than the supply, little sales promotion was
needed. Exhibitors ordered films from a catalogue describing the
10 "Violations of Edison's patent rights, and allegations of violations, increased

in proportion to the general prosperity of the industry in America. Cameras had

to be acquired by men who wanted to make pictures, and without projection
machines no screen show could operate. I f cameras and projectors could be ob-
tained legally and at prices satisfactory to the buyers, they would obtain them
legally j if legal machines were hard to get, or if the prices seemed too high, many
men were willing to traffic with illegal makers and dealers. 'Bootleggers' of movie
equipment, raw stock, and completed films violated the patent laws as nimbly and
cheerily as the liquor oligarchy later scorned the Volstead A c t . " Β . B. Hampton,
of. cit., p. 6+.
 DEVELOPMENT 13

subjects and listing prices; they bought the films outright, paying
from $10 to $25 a film, using them until they literally fell apart.
Marketing problems became much more involved, however,
when screen projection took the place of the peep show. The need
for variety of films, plus the fact that films no longer useful to
one exhibitor still had value to other exhibitors, led to the idea of a
film exchange. In 1902, Harry J. Miles, a San Francisco exhibitor,
set up the first exchange. H e purchased films from producers, leas-
ing them to various exhibitors for a week at a time at half the
original price.11 By 1907 there were a number of film exchanges
throughout the country, perhaps 125 to 150, which bought films at
ten cents a foot from the producers and rented them to exhibitors.
Movie patrons paid five to ten cents admission at this time.
The number of producers or suppliers of film was small. Ten
concerns, some of which manufactured both equipment and films,
were the principal competing sources for the rapidly growing in-
dustry.1 2 This competition lasted a short time only; the patent
situation was too inviting to permit continuation of vigorous and
costly rivalry between the manufacturers of either equipment or
film. Since each manufacturer was concerned with selling films, it
became common practice for the seller to restrict the use of his
machine to his films, or, if the film was sold, to restrict its use to
projectors made by him. But the rapid expansion of the motion
picture market made it exceedingly difficult for the leading manu-
facturers to retain control.

" Howard T . Lewis, of. cit., p. 4.

" A m e r i c a n Mutoscope and Biograph Company, New Y o r k C i t y ¡ a New Jersey
corporation known as the Biograph Company; Edison Manufacturing Companys
Essenay Film Manufacturing Company; Chicago Kalem Company, New Y o r k ;
George Kleine, a large importer of films, representing nine foreign companies;
Lubin Manufacturing Company, Philadelphia; George Milies Manufacturing
Company, Chicago, an important importer of foreign films, and also a producer
of American films; Pathé Frères, New Y o r k C i t y ; Selig Polyscope Company,
Chicago; and Vitagraph Company. Each principal producing company was, in
fact, a manufacturer of equipment, holding patents on various devices which
modified or improved the basic machinery designed by Edison. Each contended
that its patents gave it the right to continue in business without the consent of
Edison. In addition to fighting against Edison, they fought bitterly among them-
selves, and still more bitterly against the group which was then still on the outside
trying to break into the industry by means not strictly legitimate. Equipment was
rented, borrowed, or stolen, to be taken to machine shops where copies were made.
14 M O T I O N PICTURE INDUSTRY
T H E MOTION P I C T U R E P A T E N T S C O M P A N Y , I 9 0 8 - 1 5

Competition of this kind has a logic all its own. It did not take
the ten manufacturers long to realize that all would benefit from
some "stabilization" program. In 1908, less than five years after
the organization of the motion picture industry on a commercial
basis, the Motion Picture Patents Company was formed. Four
of the ten companies assigned their sixteen patents to the Patents
Company." This company owned no property except the patents
assigned to it with the understanding that it was to reassign these,
upon dissolution, to their former owners.14
The patents pool granted uniform licenses to the ten member
companies to manufacture and use cameras and to manufacture and
lease motion pictures. They agreed to lease their films only to ex-
changes and exhibitors using licensed machines, to lease films only
to those exchanges that dealt exclusively in the films of the ten
manufacturers and at prices not lower than those stipulated in the
agreement. In addition, each manufacturer contracted to place con-
spicuous labels on all boxes containing films stating the conditions
under which they could be leased by a rental exchange. The trust
undertook to collect royalties of two dollars a week for its mem-
bers from all exhibitors using projection machines embodying its
patents, to issue licenses to make and sell such machines upon con-
dition that they be used solely for exhibiting films leased by one
of the ten manufacturers, and to charge a royalty of five dollars
on every such machine manufacturered.
An attempt to control competition from abroad was also made.
George Kleine, an importer, not a manufacturer, was licensed to
import positive films from two foreign manufacturers in amounts
not exceeding three thousand feet per week, although he had
previously imported much greater amounts from nine or ten
foreign manufacturers.
License agreements between the trust and individual exchanges
were very restrictive. The big ten could lease their pictures only
to licensed distributors or exchanges; the latter could lease pictures
only from licensed manufacturers—those who conformed to all the
restrictions described above. The trust reserved the right to termi-
u Editon, Biograph, Armât, and Vitagraph.

" F. L . Vaughan, of. cit., p. j j .

 DEVELOPMENT 15

nate or change the license agreement on fourteen days' written

notice to the distributor.
For a period of two years, between 1908 and 1910, there was an
armed truce in the industry ; independent producers, unregimented
exchanges, and dissatisfied exhibitors were gathering strength for
battle against the pool. Until 1910, the patent combine maintained
the structural distinction between the three groups—manufacturers
(or producers), distributors (exchanges), and retailers (exhibitors)
— b y virtue of its restrictions on entering the business. But not for
long. T o o many persons were interested in the possibilities of the
motion picture to enable the Patents Company simply to close the
door to newcomers. Unlicensed and unregulated producers of pic-
tures continued to make pictures and managed, somehow, to find
a market for them, thanks to what seemed an unlimited demand on
the part of exhibitors for films. Independent exchanges also con-
tinued to operate; even the licensed exchanges of the trust suc-
cumbing to the temptation of greater profit in unsanctioned deals
did not always abide by the terms of their licenses."
Consolidation and control of the exchanges by the Patents Com-
pany seemed the only method by which the situation could be kept
in hand by the equipment manufacturers. In 1910 they organized
the General Film Company as a distribution subsidiary. This marks
the beginning of the integration process in the motion picture
industry. T h e General Film Company bought out sixty-eight
rental exchanges; others were driven from business by withdrawal
of the supply of film, price-cutting, discrimination, etc.18 T h e simple
withholding of films served in most cases to exterminate the small
distributor whose business depended on a constant stream of new
product. Within a year only one of the former rental exchanges
remained." W i t h this exception, the General Film Company was
u " T h r o u g h its ability to influence, usually to determine, the price to be paid

to the producers and the rentals to be charged to exhibitors, the wholesaling branch
of the business had acquired the balance of power, and prosperous exchange owners
were very unwilling to accede to any conditions that interfered with their freedom.
T h e y evaded or defied trust regulations, and many of them were suspected of
g i v i n g preference whenever possible to manufacturers not licensed by the patents
company." B. B. Hampton, of. cit., p. 69.
* F. L . Vaughan, of. cit., p. J5.
" W i l l Hays describes the period as one during which discipline came into the
industry and it prospered as never before. Of. cit., p. 1 g.
16 MOTION PICTURE INDUSTRY

then the sole distributor of motion pictures. It established fifty-two

branch exchanges throughout the country and divided the territory
between them. T h e one exception, however, was partly instru-
mental in the later undoing of the combine. William Fox, then
operating theatres, was the owner of the exchange which refused
to disappear. Faced with a shortage of film, he opened a studio
of his own and undertook national distribution of his films. H e was
very successful and steadily increased his holdings of theatres in
the N e w Y o r k area. Carl Laemmle, then also an independent
producer, chose to fight the trust, both in the market and in court.
Despite the logical system of control built up by the trust and
its creature, General Film Company, the stability which it brought
was not destined to endure. Patent disputes continued to harass the
original ten companies ; some of their patents expired. Finally the
Federal government brought suit against both companies, charging
them with combination in restraint of trade aimed at monopolizing
the industry
T h e end and purpose of the combination . . . was not to protect the
patent rights . . . but the control of the patents was made a feature of the
scheme in the belief, or at least the hope, that this would render the
scheme (otherwise illegal) not open to the condemnation of the law.

e court concluded that the combination was illegal, finding that

the contracts enumerated in the petition and the combination there de-
scribed, were a conspiracy in restraint of trade a m o n g the several states
. . . and were and are illegal . . . and that the defendants have monop-
olized a part of the trade . . . among the several states . . . consisting
of the trade in films, cameras, projecting machines, and other accessories
of the motion picture business. 18

T h e contracts used by the General Film Company were declared

void j together with the trust, it was ordered to abandon the
methods used in the conduct of its business.
This was in 1915. Not until the introduction of sound a decade
later did patent rights again assume the importance of this early
period. Although patents were apparently ruled out as instruments
of control in the motion picture industry, the history of the patents

"225 Federal Reporter, 8oo, 8 1 1 , October 1 9 1 5 , quoted in F. L . Vaughan,

°t· "t., p. J 8.
 DEVELOPMENT 17

trust had been very instructive. It had demonstrated that control

rested with distribution and that distribution had to be on a na-
tional basis to obtain maximum earnings on films. T h e strategic
element in distribution worked in two directions} exhibitors were
dependent upon distributors for films ; producers were equally de-
pendent upon them for outlets. In barest outline, these were the
mechanics indicated for achieving domination of the motion picture
industry at that time. Later, when the process of integration had
rendered distribution an almost mechanical subsidiary of producing
companies, the emphasis shifted to first-run theatres, but this did
not happen until the early twenties.

T H E F I L M ITSELF, I9O3-I5

In the production phase of the business, other factors were at

work. Changes in the nature of the product, improvements in the
quality of films, played an important role in the development of
the industry as a whole. Movies, in the early days, had been pri-
marily fodder for nickelodeons and consisted almost entirely of
serial thrillers, one reel in length. T h e companies licensed to pro-
duce films by the trust felt this was an entirely satisfactory form
of entertainment for a class of people probably incapable of ap-
preciating anything on a loftier level; besides, other types of film
would undoubtedly be more costly. T h e y lacked faith in the future
of the film as a medium of mass entertainment and failed complete-
ly to anticipate that day, not far off, when patrons would stand in
line to pay two dollars to see The Birth of a Nation. T h e members
of the trust approached the selling of films as a merchandising
problem, most easily solved by dealing with standardized units.
W h a t they sold was a service—so many feet of film, furnished
regularly at certain times of the week, and paid for by the foot.1®
It was the policy of General Film Company to take no account of

" A price of ten cents per foot for the positive prints was charged by the pro-
ducers. " I f , for example, fifty copies of a one-reel negative were used by the
exchanges, the producer received approximately $100 per copy, or a total of about
$5,000. . . . T h i s figure of ten cents had not been determined arbitrarily¡ it repre-
sented the average costs of experienced producers plus an attainable commercial
profit, and was based on wage scales that presumably would remain at about the
existing levels, or would advance no more rapidly than wage scales in other indus-
tries." B. B. Hampton, of. cit., p. 84.
18 MOTION PICTURE INDUSTRY

individual pictures or of individual actors or directors, and the

flat rate per foot applied without regard to the number of separate
pictures furnished, the quality or character of the pictures, or the
size of the theatre.10
The advantages of such a policy, in terms of merchandising ease
are apparent. But in the motion picture industry, considerations
other than simplicity of sales systems were then more important.
Both the movie-going public and theatre operators were interested
in better pictures. As soon as the novelty of films paled somewhat,
merely viewing a given number of feet of film was insufficient.
Marcus Loew, operating a string of nickelodeons, was one of the
first to realize that the industry would be stifled at birth unless
production improved. He constantly demanded pictures that told
stories, pictures that were dignified, pictures that would appeal to
a more intelligent public than the peep-show addicts. The demand
of such theatre operators as Loew, reflecting their greater intimacy
with the public wants, received no recognition from the trust or
its affiliates. It displayed an imperviousness to public taste which
contributed largely to its downfall. All demands for better quality
in films were met by the argument that increased cost of produc-
tion would necessitate higher film rentals from the theatres; these
presumably would force higher admission prices, and it was the
opinion of the trust members that admission prices could not be
raised above the prevailing five- and ten-cent level without dis-
couraging consumer demand. Their only concession to the ex-
hibitors' request was the making of two-reelers instead of one-
reelers. Probably an important factor in the resistance of the trust
to the demands for better films was its remoteness from the
film audience. Most of the men who dominated the major com-
panies at that time had never been exhibitors and made no effort
to discover what the public might want. It was sufficient for them
that they had developed a system for standardization of production
and distribution; let the film fans see serials, they said. But their
opponents were, for the most part, former exhibitors; many of
them retained their interests in nickelodeons after becoming pro-
ducers. Frequent visits to their theatres and daily reports from
their managers kept them constantly advised of audience responses
" H o w a r d T . Lewis, of. cit., p. 7.
 DEVELOPMENT 1
9
and built up an invaluable sense of showmanship. They were quick
to realize that habits of discrimination and selection were growing
in their audiences, that interest in screen personalities was replacing
an omnivorous passion for the novelty of "living pictures."
Thus the demand which the trust refused to meet was both
fostered and supplied by the independent producers, struggling to
prevent obliteration by the pool. They made good use of the
trust's inflexibility. Following the example of European producers
already making longer, more serious pictures, several of the more
intelligent independents started turning out features, gambling on
the chance that the formula of the serial thriller could be dis-
placed. In 1903 the Edison studios had made a one-reel film
called The Great Train Robbery. It marked a turning point in the
history of the movies. It had a complete story, a chase which became
the stereotype of both serious and comic films, a dance sequence}
it was based on a crime, and ended with a touching close-up. It
ran for years in the nickelodeons which, until nearly 1914, consti-
tuted the major part of motion picture exhibition.
With The Great Train Robbery as a model, the independent pro-
ducers began turning out four- or five-reel features. Until 1914
there were only three producers of feature films in the United
States.81 With longer and better pictures, these independents hoped
to undermine the trust. For three or four years, Lasky, Zukor,
and Bosworth, Inc., stole their way into the market with ingeni-
ously contrived films, catering to public demand for something
other than the standardized one- or two-reel serials produced by
the Patents Company. Not until 1915, the year before its dissolution,
did the trust awaken to the possibilities of better films; even then
recognition was halting and half-hearted. One of the greatest film-
makers of all time, D . W . Griffith, then at Biograph, a member of
the trust, made The Birth of a Nation in 1915. This picture not
only summarized all that was then known about the art of making
movies but set a standard which was not surpassed for many years.
It exceeded all previous records for cost, however, and frightened
the members of the trust. They refused to advance the additional
funds required and, after the original allotment had been spent,
tried to withdraw. T h e president of Mutual Film put in $25,000.

" U. S. Federal Trade Commission Decisions, XI, 200.

20 MOTION PICTURE INDUSTRY

W h e n the directors of his company refused to approve, he made

it a private investment, profiting by a quarter of a million dollars. 22
But even when the twelve-reel film was completed, the heads of the
industry were so unaware of its value that they seriously considered
cutting it up and issuing it serially, one reel a week. Only Griffith's
determined opposition prevented the act of mayhem. Opening in
N e w Y o r k City at a regular theatre, charging theatre admission
prices, the picture was an overwhelming success. Nearly ten years
later it was still breaking attendance records in large movie houses.
It is said that no picture made in the next decade came within
$2 million of earning as much as this film did} nor did any other
movie contribute as much toward making the industry reputable
and esteemed. This, it should be remembered, was in 1915. T h e
lesson it contained came too late to save the Patents Company from
the combined effects of internal dry rot and legal disapproval, but
it pointed unmistakably the road to be taken by the independent
producers. 13
THEATRES, 1905-16

W h i l e the independent producers were struggling with problems

of production, changes were taking place in the realm of exhibi-
tion. Between 1896 and 1905, with very rare exceptions, films
had been exhibited as the incidental part of vaudeville bills. There
had been tentative beginnings of a screen theatre ; the first opened,
appropriately enough, in Los Angeles. T . L . T a l l y , famous show-
man, announced in 1902 that the Electric Theatre would provide
for the price of ten cents an hour's amusement in a "vaudeville of
moving pictures," including Capture of the Biddle Brothers and
New York in a Blizzard. Business was so good that matinees were
instituted following the opening night." In 1903, a small movie
theatre was opened in New Castle, Pennsylvania, by two brothers,
Sam and Harry Warner. But for the most part, showmen regarded
the film as an appendage to the stage except in the underworld of

" Gilbert Seide«, of. cit., p. 24.

11 Still further evidence of the trust's attitude towards attempts at improvement
of the quality of films is the treatment accorded an imported five-reel film, The
Life of Moses. General Film distributed it, but at the rate of one reel a week, just
like any other serial ; they then pointed to its lack of success as proof of the public's
dislike for quality films.
" W i l l Hays, of. cit., p. 16.
 DEVELOPMENT 21

the film, the peep shows, shooting galleries, and penny arcades. It
was here that the men who later dominated the industry had then-
start. Adolph Zukor, Marcus Loew, and William Fox all ran
penny arcades during this period. Zukor and Loew were partners
in the Automatic Vaudeville, a company which exploited peep-show
motion picture devices in penny arcades. Their first show place was
opened in Union Square and made $20,000 the first year.
In 1905, a real estate operator in Pittsburgh took a vacant store-
room and turned it into a motion picture theatre by the simple
expedient of putting in a movie projector, a piano, and ninety-nine
seats. T h e film shown was The Great Train Robbery, admission
was five cents. Response was overwhelming. Nickelodeons swept
the country, replacing the penny arcades. By 1907 there were five
thousand of them,25 vastly increasing the demand for films.
This period has been described elsewhere as follows:

From the time that movies made their first appearance in low-priced
exhibition rooms, the public demand had increased so rapidly and per-
sistently that every department of the infant business had been in a
money-mad turmoil. T e n million—maybe twenty million . . . new
entertainment buyers had suddenly appeared in all parts of America, and
were pouring their nickels into the ticket-windows. T h e small coins of
the masses had created, within a decade, a business larger in volume than
that of all spoken-drama theatres, dime museums, variety houses, lecture
bureaus, concert halls, circuses, and street carnivals combined. Experi-
enced purveyors of entertainment and amusement were dazed. There
were no precedents by which such an extensive public movement could be
appraised. Not only were movies new to the world, but this surge of mil-
lions of people to ticket-windows was something incomprehensible, in-
credible, fantastic. It could not be real—or if, by any chance, it was real,
it could not endure. Soon the appetite of this vast new public would be
satisfied, the craze would die, the nickelodeons would be empty, the
movie business would be "busted flat." Everyone in the film business
worked in feverish haste to grab a share of the golden flood of nickels
before the inevitable day of reckoning. 26

One of the showmen of this period was Girl Laemmle, later

president of Universal. H e employed a bright messenger boy

"Ibid., p. 17.
" Β. B. Hampton, of. cit., pp. 56-57.
22 MOTION PICTURE INDUSTRY

named Sam Katz to play the piano. This same M r . Katz later be-
came head of the powerful chain of Paramount theatres.
By 1913, the motion picture theatre was a fixture on Broadway
and the Main Streets of the lesser cities. At first, as the need for
a setting other than that of the penny arcades and nickelodeons
seemed desirable for the showing of the feature films, legitimate
theatres were leased. Soon, however, the showing of films com-
manded larger audiences than regular stage presentations. Men
like Loew began unloading nickelodeons and purchasing larger,
more dignified houses, carefully selected with reference to popula-
tion shifts and neighborhoods. It is said that occasionally it was
necessary to regenerate particular theatres before nice people would
start going to them." One of the theatres purchased by Loew
was an old burlesque house in Brooklyn called the Cosy Corner.
It had been raided by the police so often that it was finally closed
and taken over by the Salvation Army. Loew bought it cheap,
fumigated it physically and then morally by putting on a troupe
of Italian actors who played only Shakespeare and d'Annunzio. In
a few months, as The Royal, it had become one of the most digni-
fied motion picture theatres in Brooklyn, a worthy addition to the
Loew circuit.
Almost as soon as it became evident that the movies were here
to stay, chains of theatres appeared as well as booking combines
for theatres individually owned. As early as 1912, local theatre
chains were important factors in the market for films.28 In 1916,
theatre chains in New Orleans and Philadelphia were strong
enough to force their own terms on producers, insisting on lower
film rentals for all the theatres of a particular chain on threat of
refusing to book the pictures at all. Circuit booking, as it came to
be called, became a recognized method of defense on the part of
exhibitors against the dominant producers.2®
In 1918 the Federal Trade Commission issued an order against
the Stanley Booking Corporation of Philadelphia, one of the largest
and most successful combinations in the country. It was declared
* " L o e w ' s Inc.," Fortune Magazine, September 1939, p. 18.
" T h e Gordon theatres in Boston, Kunsky in Detroit, M a r k in N e w Y o r k , and
Swanson in Salt Lake City. Howard T . Lewis, of. cit., p. 9.
" W . M . Seabury, of. cit., p. 17.
 DEVELOPMENT 23

to be guilty of unfair methods of competition and directed to cease

and desist from the following practices:
( a ) Procuring the cancellation of contracts for the exhibition of films
made by its competitors and the producers of films.
( b ) Procuring films which had been announced for exhibition by its
competitors and displaying them in advance of the date announced
by its competitors in their neighborhood, for the purpose of harass-
ing and embarrassing its competitors.
(c) M a k i n g contracts for rental of films conditional on the understand-
ing that the exhibitor will not rent films from any competitor of the
respondent.
( d ) Employing threats and intimidation to induce exhibitors to pay it,
the respondent, a sum equal to 10 per cent of the cost of the films
booked, or any sum whatsoever.
( e ) T h r e a t e n i n g independent exhibitors that unless they booked through
the respondent their supplies of film would be cut off.
( f ) T h r e a t e n i n g producers of films and film exchanges with with-
drawal of patronage in order to induce the producers to cease
supplying certain of their competitors with films.

Certain obvious consequences followed from such practices as

"those described above. First, the exhibitor who entered into such a
booking combine was unable to make individual choices of pictures
particularly suited to his neighborhood needs; he had to take and
exhibit the picture selected for him under the blanket rental con-
tracts which were negotiated by the company in control of the
predominant chain of theatres in his neighborhood. If he wished
to reject the picture, he was subject to all the coercive pressure
inherent in the situation, including the knowledge that if he did
not take what the circuit offered he could not have other desirable
pictures which he needed and which the circuit alone controlled.
T h e distributor was no less affected. By virtue of the greatly
increased buying power of the combine, he was confronted with the
alternative of selling to the entire circuit at a price fixed by the
circuit or of having the circuit reject his pictures entirely for all of
its theatres.
Inasmuch as booking combines have declined in number and
importance, the reason for describing them in detail is that their
chief characteristics reappear later in somewhat altered form. T h e y
24 MOTION PICTURE INDUSTRY
also played a not insignificant role in causing the major producing
companies to take the final step in the process of integration, i.e.,
the buying of theatres of their own.

P R O D U C T I O N AS IT A F F E C T E D DISTRIBUTION P R A C T I C E S , I912-I9

Changes in the nature of films produced also took place. T h e

feature film and the star system were rapidly becoming important,
with immediate and resounding repercussions on distribution prac-
tices.
When films had consisted primarily of one-reel serials, all sub-
stantially on the same mediocre level, problems of pricing were
few and simple. But with the variations in quality presented by
the differences in features and the popularity of individual players,
the old program system employed by the trust was no longer suit-
able. The exhibitor could no longer be "serviced" with a regular
number of reels each week at a price based only on total footage
and the film's age from release date. Under the star system, the
exhibitor was offered groups of pictures in which there were sev-
eral series featuring a given star. Six Pickfords, seven Harts, etc.,
were sold rather than so many pictures or so many feet of film.
This system was largely the innovation of Adolph Zukor. A new-
comer to the ranks of producers, his personal history is one of the
fables of our time. An immigrant with $40 in the lining of his coat,
he went from the manufacture of novelty furs to the moving
picture business via penny arcades. H e began producing films,
fighting the trust virtually singlehanded, with ideas about how
great the movie might be if it told a story and had good per-
formers. It was Zukor who organized a company known as
"Famous Players," around the slogan "famous players in famous
plays." H e planned to produce approximately thirty pictures a
yearj but because he did not think there were that many famous
plays or stage stars, the product was to be divided into Class A,
which was to be all that the slogan claimed, and Class B, in which
known moving picture players as contrasted with famous players
were to appear; there were also to be some Class C films for which
few claims were made and the less said the better.30 The system of

" G i l b e r t Seide«, of. cit., p. 18.

 DEVELOPMENT 25
grading films which he started is with us yet. The unpredictable
public, then as now, did not like all the Class A pictures. In the
Class Β pictures they discovered something they did like—Mary
Pickford. Thus began the star system. From then on, the anonym-
ity of motion picture players vanished. The names of persons
supplanted titles such as "the Biograph girl" or "the Gaumont
girl."
Here again the response of the trust lagged conspicuously be-
hind public demand, not entirely without reason, since the sudden
and instantaneous interest on the part of movie-goers in the per-
sonalities of the films was astonishing and completely unexpected.
Once the names of movie actors became known to the public, pro-
duction was scarcely able to keep up with demand. John Bunny,
one of the first comics of the screen, was welcomed in as many
one-reelers as he could make, about two dozen a year. Broncho
Billy, the Gene Autry of his day, called forth packed houses, soon
to be equally enthusiastic about Tom Mix. Mary Pickford made
about twenty pictures a year; not one too many according to the
box office. The lack of awareness on the part of the trust did not
indicate exceptional obtuseness since even the independents who
were sponsoring the star system were overwhelmed by the reaction ;
however, the independents were quick to capitalize on it while the
trust hesitated, fuming over the increased costs. In the hesitant
interval, the independents lured away any players suspected of
being potential stars by the simple expedient of offering higher
salaries. Unlike the trust members, they believed that the profit-
ability of film production justified and supported the increased
salary demands of the players. Most of all, they believed in the
future of their industry.
This was the origin of the apparently extravagant salaries of
stars which, to this day, provokes much eyebrow-raising in other
more sober lines of business. Even then the reaction of the leaders
of the industry, i.e., the Patents Company executives, was that of
annoyance and disgust.
T h e entire performance seemed so childish, and silly, so unnecessary
and ridiculous, so contrary to sane industrial practice and sound eco-
nomics, that the well-trained brains of trust rulers denounced it as a fad,
26 MOTION PICTURE INDUSTRY
an exhibition of popular foolishness that would presently exhaust itself
and depart without having affected their business seriously.' 1

And well they might be annoyed and disgusted. They had planned
their business on certain assumptions with respect to costs; their
distribution practices and pricing policies flowed logically from
these assumptions. Obviously the structure could not be maintained
when suddenly the raw material of their films, the actors, decided
that they were artists, not factory hands, and that as artists they
could perform only when happy. Their state of mind, in turn,
seemed to be a direct function of their salaries. Thanks to the bid-
ding from the side lines by the independent producers, their earn-
ings doubled and tripled overnight.
In the summer of 1913 an English pantomimist, Charlie Chap-
lin, refused an offer to appear in films for $75 a week. After the
offer was raised to $150, Chaplin accepted. He appeared in the
first of the feature-length comedies, Time's Punctured Romance.
Almost at once it was recognized that here was an important
personage. Bidding for his services, other companies pushed his
salary up until, a year after he had begun work at $150 a week,
Chaplin signed with Essanay for $1,250 a week. (Seldes repeats
a delightful story in this connection. It is said that in the course
of the negotiations Chaplin was offered $1,000 a week; he de-
manded $1,075. When asked why he had to have that much, he
said he wanted $75 a week to live on.)" A year later Chaplin
signed for $10,000 a week with a bonus of $150,000.
Even in those days (1914) remuneration in the motion picture
industry was not wholly an economic phenomenon. Factors of
prestige and rivalry were fully as important in determining amounts
paid the stars as any economic considerations of scarcity of talent.
When Chaplin was signed for $10,000 a week, it became impera-
tive that Miss Pickford, under contract to a rival company, should
receive at least as much. Not only did the stars compete with each
other for the highest salaries, but the companies competed for the
privilege of paying the highest salaries. It is said that Mutual at
one time, in an attempt to secure the services of Pickford as well
as Chaplin, then earning over half a million dollars a year,
" Β. B. Hampton, op. cit., pp. 90-91.
" Gilbert Seide», of. cit., p. 29.
 DEVELOPMENT 27
drew up a contract offering Pickford that much as a drawing ac-
count, a 50 per cent interest in the new company, and a guarantee
of a million dollars a year. Some obstacles arose, however, and
Miss Pickford signed again with Zukor of Famous Players, with
a guarantee of more than a million dollars in two years.38
Increased salaries of the stars constituted only part of the in-
creasing cost of production. Story began to assume importance.
During the early days of the industry if a company indulged in
the luxury of a scenario, it rarely paid over twenty-five dollars. But
suddenly and irresistibly every aspect of film production became
more costly, more elaborate. If stars were worth so much money,
surely their directors were worth considerable amounts too; even
more valuable were the individual producers who told the di-
rectors what to do. T h e whole problem was one of derived value ;
once the success of stars was assured and the public appetite for
films appeared insatiable, all the factors involved assumed great
value. In a way, the problem of excessive salaries for stars was
created by the producers; in their selling, their advertising, and
their publicity so much emphasis was placed on the personalities
that the business men themselves fell victims to the publicity. The
basic factor, however, was undoubtedly the enormous rate of return
then available to successful movies. The producers who first grasped
the fact that their market was almost unlimited and that the film
was no passing fancy gave eloquent evidence of their faith in their
contractual commitments for stars' salaries. The producers who
were not quite certain, the men of lesser faith, lost out in the
scramble for stars.
Changes in distribution practices followed directly after the im-
provement in the quality of films, the star system, and the introduc-
tion of features.
At the time that the Patents Company was dominant, it will be
recalled, national distribution was undertaken through General
Film Company. Before that time distribution had consisted for the
most part of states-right exchanges operating through regional
franchises. These exchanges made outright purchases of film which
were rented to exhibitors at approximately ten cents a foot. They
corresponded to local or territorial jobbers in other lines of business;
" Ibid., p. 30.
28 MOTION PICTURE INDUSTRY
their problems were essentially those of any wholesaler or middle-
man. With effective control of the supply of films transferred to the
Patents Company, positive prints were no longer sold to the ex-
changes. They were leased. Title was retained by the producer,
who authorized the exclusive use of the print by the exchange
within a specified territory on fixed terms.
General Film Company set up fifty-two branch exchanges
throughout the country, each located in a city which supplied a
large territory with films. It also introduced marketing practices
which long outlived the trust and influenced profoundly the
entire structure of the industry. Perhaps most important at the
time was the introduction of a system of theatre classification in
accordance with desirability of location. Heretofore, restrictions re-
garding "release dates"—specified days upon which films could be
first shown—had never been adhered to by exhibitors or the inde-
pendent film exchanges. Movie-goers, eager to see new pictures,
flocked to the theatres that first showed a new movie in their town,
thereby placing a premium on "first-runs," for which exhibitors
were willing to pay higher rentals. Furthermore, the films, when
first released, were in better physical condition, less marred and
broken. Under the rules of the General Film Company, theatres
were classified and rentals standardized in accordance with the class
to which a given theatre belonged. This action was intended to
eliminate the bargaining and bribery which went on between
theatre owners and exchange operators for the privilege of ob-
taining first-runs. T h e standard rental scale for a weekly program,
with a daily change of bill, was $100 to $125 for theatres in the
best locations, graduating downward to $ 15 for small or out-of-the-
way houses."
Still another factor in theatre classification at that time was the
differences in quality of film shown. Originally, there had been
little difference between the various nickelodeons and store-shows;
they were all cheap playhouses presenting uniform, standardized
amusement. However, with the gradual change in films from one
to two reels, from serials to features, both audiences and exhibitors
began to recognize distinctions between the various theatres.
Since the production of the longer, better films cost more, rentals
** Β. B. Hampton, of. cit., pp. 70-71.
 DEVELOPMENT 29

were correspondingly higher; only the more confident and ag-

gressive exhibitors were willing to gamble on the higher rentals.
F o r the most part the exhibitors agreed with the trust that the
public would never justify the greater cost of better films. T h e y
were wrong, as it happened. T h e showmen who displayed the
better films not only attracted larger audiences but were soon able
to increase the admission price from ten to fifteen cents, occasionally
to twenty. T h e y also acquired the reputation of showing first-class
pictures and were in a good position to obtain first-runs.
M o r e will be said later concerning the importance of the first-
run theatre; for the moment, suffice it to say that they were
exceedingly profitable to their owners and formed the initial
basis of theatre chains.
So effective was the trust system of national distribution in
returning higher rentals on films that, even before its final dis-
solution, a number of other national distributing organizations had
come into existence. In 1 9 1 3 , 12.6 per cent of the total number
of films produced were distributed by national exchanges as com-
pared with 74.8 per cent distributed by state-right exchanges and
12.6 per cent by exchanges affiliated with the producers. B y 1 9 1 5
their importance had more than doubled; they distributed ap-
proximately 26 per cent of the total number of features produced.
T h e importance of the states-right exchanges declined rapidly after
1 9 1 3 for reasons closely related to what was happening in the field
of production and exhibition. Today it is safe to say that the major
distributors handle at least 85 per cent of all nationally shown
feature films.
Increased costs of film production were reflected in pressure for
higher rentals. These could be obtained only from distribution
on a national basis. From the point of view of the producer, the
states-right exchanges were unsatisfactory for a number of reasons.
First, most exchanges were run by exhibitors. T h e y were chiefly
interested in getting a supply of film for their own theatres.
Giving an exhibitor territorial rights to the distribution of films
meant, in effect, giving him the power to use the film most ad-
vantageously in his own theatres; a decidedly secondary considera-
tion to him was distribution of the film to other exhibitors." This
" Howard T. Lewis, of. cit., p. 11.
3o MOTION PICTURE INDUSTRY
meant, of course, that the interest of the producer suffered since
less than the maximum rental was derived from other theatres.
Secondly, because even in that period no one source of films sufficed
to meet fully the needs of a theatre, each exchange usually handled
the product of several producers. Most producers felt that their
product received neither the type nor the amount of promotion it
deserved. Very little pressure could be brought by any one pro-
ducer on the exchange because he needed the exchange more than
the exchange needed his films. Moreover, the lack of uniformity
in the practices of the various states-right exchanges left room for
dishonesty as well as the more usual carelessness and incompetence.
The great success of the General Film Company with national
distribution had been an object lesson to the producers. The first
step in the process of vertical integration was the combination of the
functions of producer and distributor. It was clear that the produc-
tion of films could be much more profitable if the producers con-
trolled the conditions of sale. Higher rentals, longer runs, more
favorable play dates—all of these awaited the producer who had
his own selling organization. First in the industry to carry through
the idea was Adolph Zukor, then head of Famous Players. His
pictures, featuring such stars as Mary Pickford, James O'Neill,
James K. Hackett, Lily Langtry, John Barrymore, Fanny Ward,
Minnie Maddern Fiske, and Geraldine Farrar, were among the
most popular of their day. They were distributed by a film-buying
combine called Paramount Pictures. This company had been organ-
ized by William W . Hodkinson through the consolidation of five
regional distributors. Only half of the product distributed by Para-
mount was supplied by Zukor's company; Jesse L . Lasky and
others contributed the balance. The effectiveness of distribution by
Paramount, operating on a basis of 35 per cent of the gross volume,
is attested to by the more than a million dollars earned by Famous
Players in its third year of existence. But Zukor was unhappy be-
cause 35 per cent of the total gross remained in the distributor's
tills while his alone was the grief of production; furthermore,
there was nothing to prevent Mr. Hodkinson from replacing Mr.
Zukor's product with another's any time he chose. With these con-
siderations in mind Zukor suggested to Hodkinson a merger of
Paramount, Famous Players, and Lasky. Hodkinson did not
 DEVELOPMENT 31

agree j he did not believe in integration of the functions of distribu-

tion with production, arguing that better products would be turned
out if active competition for markets were maintained. Within a
year, by the end of 1916, Hodkinson was deposed as head of Para-
mount ; Zukor had bought control and announced the formation of
the "25 million dollar" Famous Players-Lasky Corporation, with
himself as president, Lasky, production head, and Paramount, the
distributing subsidiary.
This was a turning point of major importance in the history of
the industry. It suggested the pattern of things to come, and once
started they came fast. Much of what happened later is traceable
to the aggressive policies adopted by Adolph Zukor at this time.

I N T E G R A T I O N OF P R O D U C T I O N , DISTRIBUTION,
AND EXHIBITION, I917-23

As has been the case in other industries and in the history of

nations, pioneers and rebels on achieving success often revert to the
pattern of behavior of those whom they have overthrown. N o w ,
with a large producing-distributing organization to maintain, Zukor
began to feel the burden of risk in an uncertain, highly speculative
market. Different, too, was the nature of the risk now confronting
him. W h e n he had first begun producing pictures, his chief prob-
lem had been outwitting the patent monopoly of equipment and
films and almost all the essential ingredients of a movie. A l l this
Zukor had faced successfully. But now, suddenly, the problem was
different. N o w he could make movies; he had equipment, film,
and stars. But everything cost so much; he had to be assured of
markets. H i s markets consisted essentially of theatres; there were
already thousands of them, for the most part individually owned
and widely scattered geographically. Direct control of the theatres
then seemed out of the question; the other alternative was control
of talent. Achievement of this was Zukor's first objective.
In this, as in other industries, control of supply need not neces-
sarily be complete to be effective. A strategic hold on the most
essential elements making up the product may suffice. Zukor saw
this clearly and proceeded to concentrate on gathering together in
his organization as many of the popular stars and other talent as
he could. From Triangle, he took Douglas Fairbanks, Gloria
32 MOTION PICTURE INDUSTRY
Swanson, William S. Hart, 'Tatty" Arbuckle, D. W. Griffith, Mack
Sennett, and Thomas Ince; he already had Pauline Frederick,
Marguerite Clark, Blanche Sweet, Cecil B. de Mille. With ap-
proximately 75 per cent of the most popular stars in the industry
under its control," Famous Players-Lasky was soon in a position
to dominate the field. With those producers whose stars he could
not wean away, he made deals. In partnership with Lewis J . Selz-
nick, he formed Select Pictures, built around the Talmadge sisters,
Nazimova, and Clara Kimball Young, all of whom were under
contract to Selznick. His plan bore immediate fruit; in 1916 film
rentals were increased sharply, bearing witness both to the higher
cost of production and the greater power wielded by Zukor.
Zukor also made use of a trade practice, "block-booking," which
survived to plague the industry at a much later date. The practice
was not new in the motion picture industry but it had never before
been particularly effective until Zukor adopted it to push the sales
of his less spectacular merchandise. This is how it worked. The
pictures of Mary Pickford were in great demand; exhibitors
valued them greatly. With the Pickford films as a lever, Zukor
persuaded the theatre operators to take a full line of his other
films, even though the rental on Pickford films trebled in 1916
and substantial increases were also made in the rentals of others.
By 1918 Zukor was distributing some 220 features a year, more
than any one company before or since. Exhibitors were alarmed,
not only because of the increased rentals on desirable pictures but
also because they disliked the necessity of buying unwanted pictures
in order to secure the better films; most of all they dreaded the all-
or-none policy that they sensed in Zukor's selling methods.
Like most retailers, exhibitors are notoriously difficult to organ-
ize, but the threat presented by Zukor's growing control of the
supply of film suggested its own remedy. In 1917 the first organi-
zation of exhibitors appeared. First National Exhibitors Circuit
was created to act as purchasing agent for twenty-six of the largest
first-run exhibitors in the country located in the exchange cities.
The formation of First National Exhibitors Circuit was the
second major step in the integration of the industry. Unlike the
" W . M . Seabury, of. cit., p. 1 8 .
 DEVELOPMENT 33

Zukor company, it worked in the opposite direction. Zukor started

from production and went first into distribution, then into exhibi-
tion. First National began in exhibition, working back to distribu-
tion and ultimately into production. T h e end result was substantial-
ly the same, as we shall see; but in 1917 it looked as if Zukor's
power was seriously threatened. First National consolidated the
greatest purchasing power in the industry, combined with a system
of distribution which paralleled the national network of Paramount
exchanges controlled by Zukor. T h e plan of operation was fairly
simple. T h e circuit bought exclusive national rights to a picture
and apportioned the cost among the twenty-six members designated
as franchise holders. Each was to pay the corporation a percentage
of the picture's cost based on the amount to be derived from its
distribution in the particular locale of that member. Market condi-
tions were sufficiently well known by this time so that the per-
centage of total income for a film to be derived from a given terri-
tory could be estimated. Thus if a given franchise holder operated
in an exchange city known as a 2 or 3 per cent territory, he would
be required to pay that proportion of the total cost of a picture
acquired by the parent company. In return he received the exclusive
right to distribute and exhibit that particular picture throughout his
territory. Because the franchise holders were also the owners of
first-run theatres, it followed that first-run theatres had their
choice of products and play dates, thereby immeasurably increasing
their importance and value ; all other theatres in the territory dom-
inated by a franchise holder were dependent on their principal com-
petitor for part of their supply of films ; the profitability of a given
theatre became known to the distributor, with the result that, if
he (the distributor) coveted the theatre, the exhibitor might be
forced to sell out on terms dictated by the distributor or be de-
prived of a supply of film. T h e reality of this threat to the inde-
pendent theatre operators is attested to by the fact that, starting
out in 1917 with 26 members, First National by April 1919 con-
trolled 190 first-run houses and approximately 40 subsequent-run
houses, as well as 366 theatres controlled under subfranchise agree-
ments.37 By January 1920, First National controlled a total of 639

" H o w a r d T . Lewis, of. cit., p. 17.

34 MOTION PICTURE INDUSTRY

theatres; of these, 224 were first-run houses, 49 were subsequent-

run houses, and 366 were theatres operated by subfranchise holders.
Even Zukor's control over stars was threatened by First Na-
tional ; the two major stars, Chaplin and Pickford, had been signed
by them. Chaplin was given a contract under which he became his
own producer, scheduled to make eight two-reel comedies a year
for First National release. The company was to advance $125,000
to make each negative, including the star's salary in this sum. The
cost of distribution was set at 30 per cent of the total rentals; profits,
after all costs had been met, were to be divided equally between
First National and Chaplin. For several years, this system was
standard for First National's contracts with stars and producers.
There was much to be said for it from the stars' point of view:
In the first place, it gave them the authority and power for which
they had always longed in connection with their own productions;
secondly, the profit-sharing feature seemed an eminently fair
device by which they could capitalize on their drawing power with
the public. First National, primarily a theatre business, was then
less concerned with the costs of film production than with the
assurance of a supply of film at rentals not too exorbitant. The first
concern was defense against Zukor.
T o Zukor their defense was an intolerable attack; they, after
all, controlled the first-run houses. Let them become independent
of Zukor's product and his assured markets would be gone.
Two years of watching the operations of First National under-
mine his acknowledged supremacy sufficed for Zukor. The concen-
trated buying power in the hands of First National was the most
powerful force in the industry at that time.
Mr. Zukor decided in 1919 to go into the theatre business. His
decision was not, however, motivated solely by fear of the various
types of exhibitors' combinations. The hearings on the Federal
Trade Commission charges against Famous Players-Lasky contains
a report on the industry made in 1919 by H . D . H . Connick to
Kuhn, Loeb and Company, on the basis of which the financial
firm decided to support Zukor's entry into the business of owning
theatres. The report states:
. . . the largest returns of the industry result from exhibiting pictures
to the public, not from manufacturing them. T h e F a m o u s Players-Lasky
 DEVELOPMENT 35
Corporation Sales Department estimates that the gross annual return
of the 1 5 , 0 0 0 American theatres during 1 9 1 9 will be $ 8 0 0 , 0 0 0 , 0 0 0
and that the total amount the producers will receive in the form of sales
and leases of film and accessories will not be over $90,000,000. It is
apparent to anyone who has had theatrical experience that this is not an
equitable division. Producers claim that even when full consideration is
given to the extra cost of the large orchestra and attractions required
of the picture houses, they should receive from 2 2 to 2 5 % of the gross
theatre income. . . . From an examination of such records of theatre
operation as are available and assuming that the sum required to
amortize the building will not exceed 2 % of its cost, and that the amount
of the ground rental per annum does not exceed $ 3 0 per seat, and with
prices of admission ranging upward to 60 cents, a preliminary guess has
been made that a theatre with 3 , 1 0 0 seats will return at least 2 5 % on
the investment in addition to the usual first run rental charge in their
district for the use of films. T h a t the 2 5 % is conservative is indicated by
the fact that the Grauman Theatre of Los Angeles is now earning profits
of 1 0 0 % a year; the Rialto in N e w Y o r k at the rate of about 8 0 %
a year; the Stillman in Cleveland at the rate of over 1 0 0 % a year.' 8

On the subject of the size of theatres in relation to their profit-

ability, the report states:

T h e r e is no doubt as to the financial advantage of the theatre with a

large seating capacity over a small one. A n examination of the cost
of operating theatres shows that with the same standard of exhibition,
the only increase in operating cost in the case of the large houses occurs
in the comparatively low-priced items, such as ushers and cleaners. T h e
big items—management, film rental and orchestra—remain the same.
T h e r e are differences of opinion as to the size of theatres that should
be constructed. 89

W i t h facts such as these at his disposal, together with ease in

obtaining capital through the facilities of Kuhn, L o e b and Com-
pany, Zukor decided to become a theatre owner as well as the
producer and distributor of films. A n d on no small scale either.
H i s plan was described as "selling the product direct to the
people."

M r . Zukor, president of the Famous Players-Lasky Corporation, has

** Fedirai Trade Commission v. Famous Players-Lasky, et al. Complaint No.
835. p· 903·
m
Ibid., p. 90j.
Another random document with
no related content on Scribd:
moment, have imagined that he was actually suffering dreadful pain.
Such was the man, that he was even able to jest at his own
condition.
“Well, most worthy Sosilus, thou seest in me now a hitherto
unknown species—a one-eyed General—therefore, thou, as head of
the intelligence department, wilt have to be in future not only ‘the
ears of the army,’ but the unlucky General’s missing eye as well. Ah,
well, what the gods have decreed is just, and I doubt not but that
with thine aid my one remaining eye will be good enough to show me
the way to Rome.
“But now to business. What canst thou tell me about the Consul
Flaminius now at Arretium? I wish to have details as to his personal
character and his history, as well as the numbers of his troops at
present; for it is often from knowing the previous career and
characteristics of one’s foe that one knows best how to combat him.”
“Most rightly said, my lord Hannibal,” replied Sosilus, while
fumbling over his very voluminous notes. “I see that thou art of the
same mind as the cunning Ulysses, who, according to Homer, upon
a very similar occasion at the siege of Troy—but here is Flaminius;
that matter of Ulysses can rest till later on, when, if any here present
hath an hour or so to spare, I will with pleasure relate it.”
Unseen as he thought, but in reality observed by the scribe,
Chœras made a grimace at Hannibal expressive of delight at
escaping the history of Ulysses, at which the General smiled
sympathetically in return. But now, in a business-like manner, Sosilus
read aloud, as though from a dictionary:
“Flaminius-Caius, now Consul for the second time, is of plebeian
origin and much hated by the patricians on account of his ever
supporting the plebeian interests. Hath now with him at Arretium,
30,000 troops of Romans and the allies combined, of whom 6,000
are cavalry. Was tribune ten years ago, and, against the advice and
wishes of the Senate, passed a law, called the Flaminia lex, for the
division of the lands of the conquered Senones, a Gallic tribe in
Umbria, among the poorer Roman citizens. Is founder of the great
Circus called the Circus Flaminius, and likewise builder of the great
military road from Rome to Aquilæa and Ariminum, known as the via
Flaminia or Flaminian way.
 “Six years ago, when Consul for the first time, crossed the River
Padus—the first Roman ever to do so—and made war upon the
Insubrian Gauls, who still detest his memory. On that occasion the
hostile Senate declared that the gods had shown prodigies and
omens against his success, and ordered him by letter to return. But
he left the letter unopened until he had first crossed the Po and
defeated the Gauls. On account of that success he is more hated
than ever by the patrician class, who have lately seen more
prodigies upon the occasion of his recent re-election by the people to
the Consulate. Their object is evidently to represent him to the
people as an unlucky man, or one unblessed by the gods.
“Some of the portents that have been seen are as follows:
“An ox in the cattle market ran into a house, rushed upstairs, and
threw itself out of a third storey window.
“A four months’ old baby in the vegetable market, loudly shouted
‘Triumph!’
“A cat gave birth to twenty-four kittens in the Forum.
“Showers of stones fell in various parts of the city.
“The statues of the gods perspired freely.
“A mouse squeaked during the election, which the Senate
therefore sought to cancel.”
This last of the list of portents against the unlucky Flaminius was
too much for the gravity of Chœras, who burst out laughing loudly.
“Lucky for that mouse,” he exclaimed, “that he did not squeak in
the Forum near the mother of the twenty-four catlings; he would
soon then have understood the meaning of portents better than
apparently doth this thick-headed Flaminius.”
There was general merriment at this sally, when Hannibal
remarked:
“Yea, thou hast said the right word, Chœras. Thick-headed he
evidently is, that is plainly his character if he can thus resist the
Senate and the patricians with their portents, and calmly go on his
own way despite all their evil omens. Many thanks unto thee,
Sosilus, for thine excellent information. From it, I now judge this
Flaminius to be a headstrong man, and one somewhat over self-
reliant. Thus I think it highly probable that we shall be able to draw
him into a pitched battle without his waiting for the other consular
army to come and join him. At any rate we will try. This is my plan.
“Methinks, if we now start to the southward, ravaging and burning
as we go, and pass him by, he will soon be drawn after us, and in
rage at seeing the blazing and devastated country, will rush
headlong to his doom. For we will select such ground as may be
favourable to ourselves for fighting upon, and then, methinks, most
worthy Chœras,” he turned to the wag, “that the thick-headed
general, when pitched against the one-eyed general, will soon find
out to his cost that the mouse did not squeak for nothing.”
“Ay, it will probably rain bullocks and babies about that period!”
retorted Chœras, “a very good omen for Carthage whenever that
happens!”
At this remark even the unhappy Maharbal grimly smiled. Then the
meeting broke up, Chœras repeating a verse aloud to Sosilus as
they rose to go.

“With bullocks raining over head,

While babies strew the soil;
No matter then how thick his head,
’Twill squash like olive oil.

“There! learned man! I make thee a present of that verse for thy
history of the war, which contains, I fear me, far too much of bald
prose. A verse or two of such singular merit will far increase the
value of thy work. Therefore take it gratis; ’tis a present, I say.”
“With many thanks, I gladly accept the gift,” replied the sage with a
merry twinkle in his eye. “And now I in return will make thee also a
present, oh Chœras, and one which will greatly increase the value of
thy brains, no less a present, indeed, than the relation of that story
about Ulysses that I began just now. It will not take me much more
than an hour and a half to give it thee from end to end, with all the
references.”
“Oh, but I have business with the horses,” exclaimed Chœras, with
a look of horror, and gathering up his sword and buckler, he made for
the door of the tent. But the sage was not to be defrauded of his
revenge this time. He seized the escaping poet by his armour
cuirass at the back of the neck, and held him firmly.
“I too will come and see the horses, and can tell thee the history
as we go; but of one thing be assured. I leave thee not until thou
hast heard it all—ay, until the very last word. Thinkest thou that I am
so mean as to accept a valuable present from thee for nothing? Nay,
indeed, on the contrary. For as Achilles, when disguised as a woman
at the Court of Lycomedes, remarked one day to the fair Deidamia
—”
What Achilles said to Deidamia none of the laughing onlookers
present ever knew, for at this moment the struggling Chœras broke
out of the tent, the pedant, who was a small man, still clinging to the
back of his neck with all the tenacity of a weasel clinging to a rabbit.
He was determined to be fairly revenged upon the poet at last, and
he had got his opportunity, and did not intend to relinquish his victim!
Next day the Carthaginian army commenced to march southward
through Etruria, and, just as in Hannibal’s dream, the monster of the
devastation of Italy followed in their wake. Every person they met
was slaughtered, every building put to the flames.
Making a detour, Flaminius and his army were avoided, but the
Roman Consul was soon aware of his adversary’s passage from the
thick clouds of smoke with which the whole countryside was filled.
Furious at this, he, as Hannibal had anticipated, without waiting for
any aid to come to him from Ariminum, hurried blindly in pursuit. And
Hannibal, laughing in his sleeve, quietly lay in wait for him in the
mountain passes by the northern shores of Lake Thrasymene.
Never in the course of history has there been such an example of
a complete surprise of the whole of a large army as at this battle. For
over-night, aided by the configuration of the ground, which was
admirably adapted to his purpose, the Carthaginian general
arranged his various forces in ambush in several places, by the side
of the lake and the pass leading to the valley through which the
Roman force had to march in their fancied pursuit. Behind the hill on
one side, near the entrance to the pass, were hidden all the Balearic
slingers and the light-armed troops. On the other side, facing them,
were the Numidian cavalry and the Gallic infantry; while upon a
steep hill, which almost entirely closed the end of the valley, only
leaving, indeed, a very narrow and precipitous roadway near the
lake, stood Hannibal himself, with the whole of the Spanish and
Libyan heavy infantry.
At early dawn, when a thick mist enveloped everything down to the
water’s edge, Flaminius and his army, like flies into a trap, plunged
recklessly into the pass and the valley, which were so soon to be
whitened with their bones. The Carthaginians on the heights could
plainly hear through the mist the tramp of the 30,000 enemies
marching below them.
In the meantime, concealed by the mist, they gradually, in their
impatience, edged further and further towards the slopes, down
which they but awaited the command to charge. They could plainly—
the white heavy mist having now settled upon the lower ground—see
their own comrades similarly preparing on every surrounding hill-top.
When Hannibal, who was himself waiting in a fever of expectation,
judged by the ear that the head of the Roman columns had reached
the foot of the hill whereon he stood, he gave in a loud tone the order
to charge. According to preconceived arrangement, the cry was
instantly taken up and repeated by every general, captain, prefect,
tribune, or other officer of any and every kind stationed around the
amphitheatre of hills. In a second, the whole army was in motion,
and then with a roar like thunder, from the combined frantic shouting,
the clattering of the rocks and the clanging of the armour, thousands
of men poured down on every side at once to charge the unseen and
unsuspecting foe below. Never, indeed, in the history of the world
has there been planned and executed such a terrible surprise! The
Romans had, many of them, not even time to draw their swords, but
were slain where they stood. In three hours’ time the whole of the
Roman army, with the exception of six thousand men of the van,
who, in the mist, managed to force their way through to a hillock,
where they stood bewildered, were cut down, or driven into the lake.
Here, while standing up to their necks in the water, they were
charged by the Carthaginian cavalry, who despatched them with
their spears, the Consul Flaminius himself being one of the killed.
When at length the mist cleared, and the six thousand Romans
who had taken refuge on the hill saw the awful scene of carnage
below, they retreated to a neighbouring Etruscan village. But
Hannibal, thinking that in his present unhappy condition of mind the
more fighting that Maharbal could get the better it would be for him,
sent him the next day with all the light-armed troops and the Iberians
to besiege the village, which he did so successfully that the whole of
the six thousand surrendered to him on his promising to them their
lives. Altogether, the appalling number of fifteen thousand Romans
were actually slain in this battle, and, including the six thousand who
surrendered to Maharbal, fifteen thousand were taken prisoners,
more than half of whom were wounded. Hannibal, on his side, lost
fifteen hundred men, but they were chiefly Gauls, whom he could
best afford to lose.
Nor was this the end of the Roman disasters, for no sooner had
the news of this terrible defeat reached Rome than it was followed by
the tidings of a battle gained by Maharbal alone. For Cnœus
Servilius, having heard that Hannibal had entered Etruria and was
near Flaminius, started at once with the intention of joining him. But
his excellent intentions had been frustrated completely by the
diplomatic move made by Hannibal in setting fire to all the houses
and devastating the whole country of Etruria before the very eyes of
Flaminius. The result had been, to quote the flippant Chœras, that it
had rained, if not exactly bullocks and babies, at all events blows
and butchery at Thrasymene. Servilius, however, like a good
general, anxious to help his fellow consul, had sent on a body of four
thousand cavalry in advance, thinking that even if he could not
himself arrive in time with the infantry, these horsemen would. They
were all gallant troops, well mounted, and under the command of a
certain Caius Centenius. Had these troops arrived in time for the
battle of Lake Thrasymene they would probably have been
slaughtered there and then. But they were three or four days too
late. The delay, however, made but little difference in the result. For
old Sosilus got timely warning from his spies of their approach, and
informed Hannibal upon the very day that Maharbal took the six
thousand prisoners. Again, with the object of keeping Maharbal at
constant hard campaigning work, so as not to give him time for
thinking, Hannibal deputed to him a separate and large command,
which should by rights of seniority more fitly have been entrusted to
Mago or to General Hanno. He sent him off with all the light-armed
troops and a considerable body of Iberian cavalry to seek for and
attack Centenius when found. Maharbal came up with the Romans in
a day or two, and he and his men, both horse and foot, being full of
confidence and valour after Thrasymene, charged at sight.
They charged with such impetuosity, the light-armed footmen by
Maharbal’s directions clinging to the stirrups of the horsemen, that at
the first shock half of the Romans were unhorsed. The footmen had
let go the stirrups just before the shock of the two bodies of cavalry
meeting, but now they bounded upon the dismounted Romans and
slew them to a man, while the horsemen pursued the remainder to a
hill, not far distant, where they defended themselves right valiantly
for the night. But the following morning, charging gallantly up the hill,
the young Numidian leader defeated them utterly. The fury of his
charge was so great that the enemy, intimidated, broke without
waiting for him to come to close quarters, and would have fled, but
that they found confronting them a large party of Balearic slingers
and archers, and some of the cavalry which Maharbal had sent
round behind the hill, to their rear. Finding themselves thus taken
between two fires, they threw down their arms, and although before
Maharbal was able to stay the carnage a good many of the Romans
were killed by the slingers and archers, most of them fell alive into
his hands. Thus, with a large number of prisoners, and with an
immense booty of fine horses and beautiful armour, Maharbal
marched back to the headquarters near the Thrasymene, covered
with glory and honour. And after this week of perpetual fighting and
carnage he ceased to be haunted by the spirit of Eugenia, whose
image now soon faded from his mind, although he never forgot her
completely so long as he lived.
Great were the rejoicings in the Carthaginian ranks after these
tremendous successes, but for all that, Hannibal did not feel himself
strong enough to attack Rome for the present.
Dividing the prisoners who were actual Romans among his troops,
and releasing all the prisoners of the allies, telling them that he made
war for Italy herself against the Romans only, he started once more.
Gathering together all the spoils and the captured horses, of which
he had an immense number, and taking his wounded with him, he
now indulged himself in what may be described as a kind of military
promenade. Entirely unopposed, but plundering and killing all the
male inhabitants whom he met, just to indulge in his hatred for the
Romans, he leisurely marched across Central Italy to the province of
Umbria, and passing through Umbria, travelled on slowly to the
southward through Picenum, where he arrived with all his army upon
the shores of the Adriatic. Here he established a fortified camp in the
midst of a most fertile country.
Right glad, indeed, were he and his army to behold the sea once
more; for they had not seen salt water now for many months. Right
glad also were the troops to rest, for they had become wearied of
carrying along all the wealth that they had amassed. Moreover, from
the hardships of the campaign, many of the men were suffering from
scurvy, and the horses were covered with scab. Fortunately, the
Carthaginians had captured among other things great quantities of
old wine, and by continuous bathing of their wounds with this, both
horses and men were soon restored to health and strength.
Meanwhile, the state of despair to which the proud Romans had
been reduced can be better imagined than described. The whole of
the inhabitants of the city of Rome, who had hitherto been ever
accustomed to hear of nought but the victories of their troops, were
now reduced to a condition of abject terror, and it is probable that
had Rome but been attacked it would have fallen.
From this camp in this fertile country, Hannibal was able to send
messengers by sea to Carthage, and on from Carthage to his
daughter in New Carthage, with tidings of his wonderful career of
success.
Again he now offered to Maharbal the opportunity not only of
returning to New Carthage to join his beloved Elissa, but of also
proceeding first of all, as his envoy, to carry the good news and a
great portion of the Roman spoils to Carthage itself, thus giving him
an opportunity of revisiting his own native land in Libya. But as he
had refused before, so now did Maharbal sturdily refuse again to
leave his general’s side.
“Nay, nay, Hannibal,” he replied. “I am not one of those who
change their minds. I have sworn to remain with thee, and remain
with thee I will. I shall doubtless, if I be spared, have plenty of time to
pass with Elissa after the war is over. And,” he continued, laughing,
“as for seeing my native country, my native country is the back of a
war-horse.”
“Then wouldst thou probably see plenty of thy native country in
Spain,” replied Hannibal; “for, from all accounts, my brother
Hasdrubal is likely to be hard pushed to it there shortly. For not only
is Cnœus Scipio there, but Publius Scipio, he whom thou didst
wound at the Ticinus, hath proceeded thither also, and doubtless
many of those discontented Iberians, especially the tribes north of
the Ebro, will desert to their standard. Fighting there will be in Iberia,
and plenty of it, as well as here, and thy strong right arm may, for all I
know, be needed some day even to defend the honour of her whom
thou lovest so much in New Carthage. So think of it, lad, before
definitely refusing. ’Twill be thy last chance.”
Maharbal’s bronzed face turned a shade paler, and he started at
the idea of harm happening to Elissa. For a second, and a second
only, he hesitated, then made up his mind once for all.
“Tush!” he said resolutely, “Elissa will be safe enough in New
Carthage. Not all the Scipios in the world could take that city.
Hannibal, my place is, as I have said, here by thy side. I remain with
thee.”
“Thank ye, lad!” said Hannibal warmly; and, moved by so much
devotion, he stretched forth his hand, and warmly clasped that of his
faithful adherent.
“And, now,” he said, “as that is settled, come with me across the
camp, and let us seek Mago, for I must send him in thy stead to
Carthage, and on, after a while, into Spain. Perhaps, after all, it
would be as well if one of the sons of Hamilcar Barca should be seen
just now for a while in Carthage, to tell of his brother’s successes,
and to ask for the reinforcements of men and money that we now
sorely need. Especially, they should send us men, for the waste of
life hath been terrible indeed since we marched out of Saguntum.
Yet both thou and I will miss Mago, lad; and who knows if we shall
ever either of us see him again.”
“Ay, Hannibal, I shall indeed miss Mago, for I love him truly like a
brother. But yonder he is, standing by the guard tent; I will step
across and call him to thee.”
 “Nay, let us go together, lad, for I am anxious to take a glance
round the camp, and we can talk to him as we go.”
So together they went, and joined Mago.
 CHAPTER X.
FRIENDS MUST PART.

It was upon a beautiful summer’s morning that Mago embarked for

Carthage. The country all around the Carthaginian camp was, after a
shower on the previous night, looking its very best. The green leaves
of the vines, all bedewed with the raindrops, glistening in their little
hollows, dispensed a sweet odour in the clear, refreshing air. The
verdant cornfields, waving before the gentle sea-breeze, softly
rustled with a soothing sound, displaying, as they moved, the large
red poppies previously hidden beneath their bending stems. In the
dim distance, the peaks of the Apennines stood up purple and sharp
to the azure sky, while here and there a fleecy white cloud softly
rested upon some mountain crest, nestling around the hill-top, and
embracing it lovingly, as a pure maiden softly enfolding her lover in
the embrace of her snowy arms. Upon the groves of chestnut trees
the morning sun, striking upon one side and lighting them up vividly,
made all the more remarkable the contrast with the gloomy shades
which hovered in long, dark streaks along the branches where the
sunbeams had not yet fallen. Here and there from a belt of sweet-
scented pine trees could be heard the soft, trilling notes of Philomel,
the sad-voiced nightingale; while closer at hand, flowing past the
fallen tree trunk, upon which two warriors were seated, there rippled
merrily by a little streamlet, sparkling like silver in the morning rays.
At some distance in the foreground, as if to show that all in this
world is not peace, there stood line upon line of snow-white tents,
denoting the presence of an enormous camp, while behind the camp
the blue and scarcely ruffled waters of the Adriatic faded away in the
far distance into the blue of the sky, with which it seemed to merge
its waters. It was a morning made for love, for all that should be
sweet and delightful, a morning fit for heaven itself. But it was a morn
that was witness of a great sorrow—the parting of two lifelong friends
—who felt, they knew not why, that they were communing with each
other for the last time on earth.
 Mago and Maharbal, each, although quite young, the hero of a
hundred bloody fights, sat upon the fallen tree, hand clasped in hand
as though they were but two young children. For long they sat in
silence, drinking in all the beauties of nature around, yet their hearts
too full to speak. So great was the sorrow they felt, that a kind of
awkwardness had fallen upon them both. They did not know what to
say to each other now that the time had come for parting. These two,
who, with bared sword and gleaming eye, so often had charged
together side by side into the very jaws of death, to issue on the
other side of some hostile squadron, with the warm blood dripping
from their deadly blades, were now speechless. At length Mago
spoke, while gripping his friend’s hand closer.
“I shall never forget it, Maharbal. I shall remember it all my life.”
“What?” said Maharbal, suddenly starting from his reverie,
“remember what, Mago?”
“How thou didst save me from that most blood-thirsty Gaul, at
whose mercy I was in that awful night of our second engagement on
the Alps. I can see thee now, in my mind’s eye, casting him and his
horse together over the precipice. By Moloch! but thou didst display
a terrible strength with this right hand of thine, snapping his hand at
the wrist like a carrot even as he was striking at me.”
“Tush, man! hold thy peace. I did not do one half for thee what
thou thyself didst for me before Saguntum—ay, and once again at
the Trebia, when three Romans had, owing to the slippery ground,
unhorsed me, and would have slain me but for thy killing two of them
and putting the third to flight. But him, thou wilt doubtless remember,
I pursued and slew myself. He was a terrible black-looking
scoundrel, but a very coward at heart, or he would not have fled
when thou wast but one to three, standing over my prostrate body. I
killed him easily.”
“Yea, I mind well the circumstance. But what shall we both do now
when we can do no more slaying together? I loved thee always as
thine elder brother, Maharbal, and feel inclined—laugh not at me, I
pray—to weep when I think that no longer thou and I shall be with
the thundering squadron in the thick of the same combat, oft times
side by side. How oft have I watched thy gigantic form from afar,
cutting and slaying, when thou knewest not that I was even
observing thee.”
“And I too, Mago! How often have not I watched thy crimson and
white plume floating from thy silver helmet. To my dying day I never
shall forget the anxiety I felt on thy behalf that day of the fight on the
Ticinus, when, myself left behind in the oak trees, I saw thee a dozen
times in the clash of battle, surrounded by the enemy, but thank the
gods, invariably issuing the victor. Ay, we have had grand times
together! but now what shall I do without thee?”
“Hast thou not got Chœras?” asked Mago tentatively.
“Ay, I have Chœras,” answered Maharbal drily, “but is Chœras the
Mago whom I have loved from boyhood?”
There was a silence again after this, for the last remark was one
that admitted of no reply. Then Mago spoke again.
“Thou wilt succeed to the command of all the cavalry when I am
gone, Maharbal; be careful of the Gallic horsemen; their chief,
Vridomarchus, is not to be relied on—watch thou him well.”
“Ay, I will watch him, and slay him too, for thy sake, if he hath
offended thee in aught.”
“Nay, slay him not, at least not yet, but rule him with a hand of iron;
make him fear thee, and all will go well. Treat him ever like a dog, for
kindness he doth not understand, and he is verily like the dog that
biteth the hand that feeds him.”
“I thank thee, Mago, but I think I will slay him; he will be far less
trouble that way.”
Another pause ensued, and then, looking his comrade straight in
the face, the young General Mago asked the question that Maharbal
had been expecting.
“And what about my niece Elissa? shall I tell her or no that
Hannibal offered unto thee the chance of going to Carthage and then
to Spain instead of me, or rather before me?”
“Ay, tell her, Mago—she may as well know me as I am. I love her
deeply, ’tis true, but I love my duty to my country and to Hannibal
more than all else.”
“And what about Eugenia? shall I mention that circumstance? I
think, for mine own sake, ’twere wiser not, but ’twould vastly raise
thee in Elissa’s esteem to know how thou hadst scorned another for
her love’s sake.”
Maharbal sprung to his feet and covered his eyes with his hands
as the remembrance of the dreadful tragedy with Eugenia flashed
vividly across his mind. He turned and faced Mago.
“I would rather, oh my friend, my more than brother, that thou
shouldst say nought of that matter. It is not that I fear that she should
know that I have slain a woman, but I would not have her think that I
seek or have sought to glorify myself by assuming for her sake a
virtue that I have not felt. For, by the holy gods, Mago, it was, I truly
believe, chiefly for thine own sake that I acted as I did. But thine
honour and mine honour were at stake, Eugenia’s honour likewise.
In truth I know not rightly whether I thought of Elissa or no, the whole
affair hath been so horrible unto me. Therefore, Mago, while in no
wise binding thee, I think that I would rather that that matter
remained secret.”
“Ay, secret it shall be, but now tell me this; hast thou not a letter for
Elissa? if so, let me have it now. I shall see her within the year.”
“Yea, I have a letter ready, and here it is. But stay a moment, I see
a wild rose climbing yonder, I would enclose a blossom or two and a
few leaves of the sweet briar within the folds. Tell her that I have
pressed them to my lips, and send them to her with all my love. I
have no other message to send; but I may never see her again,
therefore tell her simply this, that I am faithful still.”
Maharbal plucked the wild roses and enclosed them within his
scroll, which he gave to Mago. Then the two warriors and friends,
who had seen so many bloody fields together, clasped each other in
their brawny arms, all armour-clad as they were, even as they had
been two weak, foolish girls. After this they descended the hill almost
in silence to the camp.
Here there was great pomp and parade, and the great General
Mago was escorted to his ship with much ceremony by a large guard
of honour composed of men who had served under him in many a
sanguinary conflict.
And now, with the departure of Mago, it is time that we turned our
attention for awhile to what had been going on elsewhere.
 CHAPTER XI.
ELISSA AS A WARRIOR.

After the departure of the army with her father and her lover from
Spain, a great blank had fallen upon the life of the young girl Elissa.
For the dull days had succeeded to the dull days, and still no news
came to relieve the anxious heart of the ardent girl.
Her uncle Hasdrubal was away with the army that Hannibal had
left in Northern Iberia. Melania, at whose memory her pretty teeth
met tightly, was dead. Cleandra had left her. There was absolutely
no one to whom she could mention in confidential talk even the
name of Maharbal, save the foolish Princess Cœcilia. To mention
him to her was, so Elissa soon found, to expose herself to many a
jarring note, for so thoughtless was the buxom lady, so absolutely
tactless, that she contrived to say ever the wrong thing when
referring to the absent lover. It was not done intentionally, or from ill-
nature, but that only made matters all the worse when she blurted
out some such remark as this:
“Oh! doubtless he hath half-a-dozen other sweethearts by this
time, those soldiers are all alike, my niece, never faithful when once
their backs are turned, and very often not even when at home. Oh!
thou needst not look at me like that, Elissa, ’tis absolutely true, I
assure thee, and about all of them. Think on my late husband
Hasdrubal, how disgracefully he behaved. But that is what they are; I
tell thee the truth; ay, verily all soldiers are like that. ’Tis no use thy
pining for Maharbal, nor waiting for him either. Therefore, if he come
not back very shortly, thou shouldst take another lover. As for
Hannibal, thy father, him thou canst never hope to see again, after
his starting off on such a madcap errand as this invasion of Italia by
land.”
This kind of speech was not very consoling. But it was what Elissa
had to expect, and to put up with if she ever mentioned her lover’s
name. Therefore she at length learned to hold her peace where he
was concerned.
 “Let us talk about some other matter,” she said testily, one day
after some such conversation. “As for me, Princess Cœcilia, thanks
be to the gods! I do not share thy opinion of men, nor deem that all
can be so bad. Maybe ’tis fortunate for me that I have not had thine
experience. Therefore, I will continue to put my faith in Maharbal. But
I have now other and weightier matters to discuss with thee. I have
this very day received a lengthy despatch from mine uncle
Hasdrubal, and ’tis most serious. It seemeth that the war hath not by
any means gone well with him for some time past.
“Firstly, by means of the base treason of one Abilyx, an Iberian
whom he trusted, General Bostar, who commandeth at Saguntum,
hath, being deceived by Abilyx, most foolishly delivered over unto
the two Roman generals all the hostages of the Northern Iberian
tribes. The Romans in turn have given up these hostages to the
Iberians, and thereby secured important alliances. Secondly,
General Hanno, the son of Gisco, hath been severely defeated, and
both he and the king Andobales have fallen into the hands of the
Romans. Thirdly, Hasdrubal’s own fleet hath been defeated close by
the land, and in sight of mine uncle’s army drawn up on the beach.
The cowardly sailors fled to the shore, and, beaching their vessels,
which they abandoned, sought the protection of Hasdrubal’s force.
The only bright spot in the cloudy sky is that Hasdrubal, with a flying
column of eight thousand infantry and one thousand horse, hath
himself surprised a great number of the sailors of the Roman fleet on
shore, scattered about the country, and killed them. With reference
to this last affair, Hasdrubal writeth that Cnœus Scipio hath since
then joined his fleet, and punished the authors of the disaster
according to the Roman custom! I wonder what that may be? ’tis no
doubt something terrible.”
“Ay, doubtless something horrid, probably crucifying them head
downward, or else impaling them, or maybe breaking them on the
wheel,” replied the princess. “I trust,” she added consolingly, “that
neither Hannibal nor Maharbal have yet been similarly served. But
’tis more than likely.”
“With all this,” continued Elissa, ignoring the pleasant suggestion
conveyed in the latter part of Cœcilia’s remark, “thou wilt easily see
that it behoveth us ourselves to be more careful than ever in our
defences here of New Carthage. For strong though we be, what is
there to guarantee us, like Bostar, against treachery from within,
when, should the Romans make a sudden descent in our
neighbourhood, we may all fall into their hands? May the sacred
gods protect us from such a fate! But as one never knows who may
prove a traitor, nor what may chance in war, I intend myself
henceforward in my capacity of Regent and Governor to devote far
more time personally than heretofore to the troops of the garrison,
such as to seeing to their efficiency and readiness. For it shall never
be said of a daughter of Hannibal that, from sheer idleness, she
neglected her trust to her country. As for treachery, should I ever
suspect any human soul within these walls, whether man or woman,
Iberian or Carthaginian, of either deliberately or by foolishness
committing such an action as should endanger the safety of the city,
I should speedily make use of mine authority to punish such an one
according to the Carthaginian custom in such cases, which, as
witness the sacrifices to Moloch, can upon occasion be made quite
as terrible as any Roman custom. Therefore let such a one be
careful.”
During the latter part of her speech, Elissa looked very pointedly at
the little princess, in whom, owing to her light character, she had no
great faith, and who trembled before her in consequence of the
pointed remark.
“By all the gods!” replied the usually merry lady, with blanching
cheek, “wherefore dost thee look at me like that, Elissa? Surely thou
wouldst never suspect me of turning traitor? Only think of it, what on
earth should I do myself,” she continued, “were I to be captured and
fall into the hands of the Roman officers? I am sure I should die of
fright,” and she gave a little giggle.
Elissa had now shot her bolt intended to convey a warning, and
that it had struck home she knew. She now therefore said,
banteringly:
“Thou die of fright! by no means, my dear aunt; methinks that on
the contrary thou wouldst be quite happy under such circumstances.
I have frequently heard that some of those Romans are very
handsome men, and how could they fail to be at once struck by thine
attractions and charms?”
 “Ah, yes, that is true, certainly,” replied the vain little lady, beaming
at the compliment. “But for all that I fancy I am better off here. I
believe that the Romans object to their ladies wearing veils even out
in the sun. Think, my niece, how terribly trying to the complexion.
Never could I survive such a trial as that; ’twould be worse even than
being crucified according to Roman custom upside down, a very
unbecoming posture that.” And she gave a little shudder.
“And one,” replied Elissa, smiling in spite of herself, “that I trust
neither thou nor I, mine aunt, may ever be seen in, and it behoveth
us therefore to be more than extra careful. Thus, by letting all in the
city know that we are constantly on the alert, we shall have less to
fear from treason. Moreover, the enemy themselves, even if they
have spies among us, learning that we are ever prepared, will be
less likely to dare to attack us, seeing how strong is our position.”
One of Elissa’s amusements latterly had been in learning warlike
exercises, such as the use of spear and broadsword, and throwing
the javeline, and from this time forth she, who had hitherto not had
much to occupy herself, became in very sooth the ruling military
spirit in New Carthage. For she was now not only the Civil Governor
but the active general as well, and not a guard was mounted, nor a
man moved without her orders. Clad in a helmet and a light cuirass,
both of steel inlaid with gold scroll work, and with a jewel-hilted
sword by her side, she now frequently mounted a war-horse, for she
was a splendid rider, and reviewed the troops in person. Not content
with merely looking carefully and watchfully after the troops of the
garrison, she also constantly made fresh levies among the Iberians,
whom she caused to be trained and then forwarded to her uncle
Hasdrubal at the seat of war. In constantly employing herself in this
way the days hung less wearily on her hands. Thus first the months
and then the years rolled by, and from the cares of government and
the active part that she took in the management of the troops, the
pain of the separation became gradually less, and the self-reliant
young woman began in time to cease to think about her lover so
exclusively.
When Elissa took to live with her a charming young maiden to
whom she was much attached, Sophonisba, the daughter of a
certain General Hasdrubal, the son of the Gisco slaughtered so
basely by the mercenaries in the truceless war, the void in the young
girl’s life became partly filled. Sophonisba was a remarkably
handsome girl of some fifteen summers. Educated in Carthage, she
was quick-witted and sharp beyond her years, and made a most
excellent companion. With her society, life was not for Elissa quite so
dreary as heretofore.
At last, after two and a half years had elapsed, a large fleet of
Carthaginian ships, full of reinforcements for Hasdrubal, were one
day sighted off the harbour mouth. When they had entered the
roadstead and anchored, Elissa’s young and favourite uncle Mago
came ashore, bearing to her the letters of her father and her lover,
the latter containing the wild roses now long since plucked on the
Adriatic shore.
At sight of the dear one’s handwriting and the withered roses, the
whole of love’s young dream came back with a gush of feeling. Nor
did Mago forget to praise his friend in every way, and speak of his
bravery and constancy to his niece, whose heart thrilled with pride to
hear her lover thus praised. When, however, Mago informed Elissa
that, had he so willed it, Maharbal might have returned to New
Carthage in his stead, the impression which he made upon the
young girl’s mind was quite contrary to what the warrior had hoped.
For he, looking from a soldier’s point of view, had imagined that she
would be pleased at finding that her lover was of such a noble
character, able to prefer duty to self; whereas, on the contrary, she
was only angered, for with a woman’s feelings, she could not
understand how anybody, or anything in the world, be it honour, duty,
or anything else, could have been preferred by her lover to herself
upon such an opportunity. Mago, perceiving this evil impression, was
sorry that he had mentioned the circumstance at all.
“Surely!” Elissa exclaimed passionately, “he hath had enough of
fighting; surely he hath already done enough for Hannibal, for
honour, and for his country to have been able to spare a little time for
me who have, all lonely, been eating out my heart for him so long.
And he is mine! Before the gods I have a right to him; yet am I
neglected thus! Surely I was worth more than this! But since he
would not come to me himself, I will have none of his letters, nay, nor
of his miserable roses either!”
 Stamping on the floor, with anger in her eyes, she tore twice in
twain the scroll that Mago had brought her from Maharbal, and
dashed it to the ground. Then casting the withered roses to the floor
beside the fluttering pieces of papyrus, Elissa spurned them with her
foot. How glorious the outraged girl looked in her righteous anger!
But then, a revulsion of feeling setting in, she suddenly cast herself
upon her sympathetic uncle’s breast in a flood of tears, while he
vainly sought to console her. After this, she broke from him again,
picked up the scattered fragments, tenderly picked up also the
crushed and shrivelled rose leaves, and clutching them to her
beating bosom, fled from the apartment. Poor Elissa! accustomed as
she was to have her own way in everything, her pride had indeed
been sadly hurt; but love was after all still the lord of all.
It must be owned that hers was a terrible and trying position. Maid
but no maid, wife but no wife, ruling over New Carthage and all the
surrounding territory in Southern Spain with princely powers, with all
the might of Carthage to support her in her authority, yet she was
powerless to have her will. Working, too, as she ever was, for the
good of her country, she was yet condemned by an adverse fate to
gain no good herself, the one thing that she desired in this world to
make life worth living being denied to her.
First it had been her father who had, for his own reasons, torn her
lover from her arms just as she had learned to know what love was;
and now it was that noble young soldier, the flower of the army,
Maharbal himself, who had preferred, or so it seemed, the undying
fame of military glory, which he was earning in Italy, to her loving
arms. It has been said by one, herself a loving woman, in an analysis
of the sexes, that absence makes man but not woman indifferent,
the beloved object gradually fading from the former’s mind. “For,”
she writes, “men are not made like women, and in time they do
forget, although they do not think at the first that they will, ever. But I
have closely studied them, and have discovered that, in their
relations to each other, women can live on a past, but men always
need an immediate future to look forward to, or else everything is
lost in a mist of oblivion. To women ‘have beens’ are enough for
ever, whilst men require to have their five senses constantly
occupied on the people they love, or else soon grow cooler, and in