Finalist, 2014 Richard Wall Memorial Award, Theatre Library Association
The Triangle Frauds
and the Birth of the Film Library (1910s)
In 1920, William C. McIntire of the Rose Theatre in Fayetteville, North Carolina, wrote a letter to William S. Hart, one of the world's biggest movie stars. "STARS MAKE A MISTAKE NOT HAVING THE YEAR, STAMPED ON EVERY FOOT OF FILM, And include in CONTRACTS AFTER TWO YEARS ALL OLD PRINTS MUST BE DESTROYED NOT RE ISSUED that is the JUNK killing the business. I have a lot of your old RE ISSUED pictures to meet as COMPETITION in my town." Fayetteville had turned into a nest of "snipers"-the industry's term for an exhibitor who cheaply booked one of a star's old pictures to open the same week that the star's expensive new production opened down the street.
Hart did not need McIntire's letter to know that old films were a problem. From 1917 to 1920, he had engaged in a series of legal disputes to exert control over the manner in which his old films circulated. McIntire, in fact, wrote to Hart in response to an advertisement the star had placed in Exhibitor's Trade Review warning that the "bootleggers of the industry are at it again. Let us hit them right between the horns and prove our gratitude to that motion picture public which supports us."The "bootleggers" whom Hart identified were distributors trafficking in retitled old films. Some distributors had legally obtained the films from their owners; other exchanges circulated pirated prints. Hart's struggle resulted in a Federal Trade Commission (FTC) investigation that established an important precedent-boundaries for the exploitation of film libraries. McIntire supported Hart's campaign against reissues, and he wanted the star to push it even further.
The correspondence from McIntire to Hart challenges our common assumptions about the value of old movies in cinema's silent era. We tend to imagine a growth narrative in which old films were once considered worthless, then consistently rose in value due to the emergence of new technologies, such as television and home video, and new standards of critical appreciation. In popular histories and movies, such as Hugo (2011), we witness the destruction of old films. Yes, it is true that most producers took advantage of the roughly twenty cents per pound they could earn by recycling old positive prints that were worn out or no longer needed. Accountants in the 1910s and 1920s also fully depreciated films as assets within twelve months of release. It is also true that some producers considered the underlying negatives of their old films to be worthless, especially if the films lacked stars or production value. However, McIntire's proposal to destroy all star-driven films after two years speaks to a different marketplace reality. He perceived reissued old films as a competitive threat to the new ones. He wanted to destroy old films not because they were worthless but precisely because they still held market value.
Hart's struggles, three FTC cases, and many of the industry's sniping problems of the period emerged because of the Triangle Film Corporation. Triangle and its successors, more than any other producer of the silent era, exploited their library extensively and widely. In the process, Triangle perpetrated both consumer and financial frauds. The FTC investigated the consumer fraud and unfair competition practices of a secretive Triangle enterprise called W.H. Productions, which retitled Hart's old films and sold them to states rights exhibitors. W.H. Productions was simultaneously part of a financial fraud carried out by Triangle's founder, Harry Aitken. Aitken's fraud and self-dealing resulted in a shareholder lawsuit and illustrated the way in which film negatives, as theoretically worthless assets, were ripe for financial manipulation.
In her recent book Saving Cinema, Caroline Frick insightfully warns against assuming that silent-era producers did not value their old films. "Although apocryphal narratives of film preservation depict an easy villain in the studio decisions and policies that purposefully destroyed superfluous reels of film to reclaim silver before 1927," Frick writes, "the full story of how many films remain from cinema's first decades is much more complicated and difficult to piece together." In this chapter, I attempt to piece together one part of the story. It begins before the creation of Triangle, when several forces converged that forever changed the value of a film negative.
Transforming Film's Value: Copyright, the Star System, and the Feature Film
Hart resented Triangle's program of reissues. The same historical developments that had turned him into a rich man, however, enabled the birth of a market for his old movies. Between roughly 1903 and 1915, four major developments fundamentally altered the value of a film negative, the basis for reproducing positive film prints. These were the growth of motion picture copyright law, the rise of the feature film, the dominance of the star system, and the emergence of new distribution infrastructures. In 1916, a Price Waterhouse and Company accountant noted that the previous several years had witnessed a sea change: a shift from the era of a "cheap negative"-in which the cost of making positive prints exceeded the cost of the negative from which they were based-to the era of the "high cost negative," in which creating the film negative cost far more than striking positive prints. By briefly examining each of the four contributing developments, we can better understand the emergence of the "high cost negative," the source of Hart's riches and problems.
An absence of copyright regulations and an abundance of unauthorized copying marked the moving pictures' early years, from 1895 to 1903. "Copying was as much an industry practice as it was an industry problem," the film scholar Jane Gaines writes. Motion picture companies acquired the positive prints of competitors' films and "duped" negatives from them. The "duper," in industry slang, then used the dupe negative to make positive prints, which were distributed to a hungry exhibition market.
Thomas Edison voraciously duped the works of foreign film producers, but he wanted more protection for his own films. The trouble was that no such thing as a motion picture copyright existed. Edison circumvented this legal gap by printing each individual frame of his films to paper and registering the entire chain under one photographic copyright. When the Philadelphia entrepreneur Sigmund Lubin persisted in making dupes of films that Edison had registered, Edison took him to court. Edison lost his case in the lower court, but the Third Circuit Court of Appeals reversed the ruling. Edison v. Lubin (1903) established that films could be copyrighted by registering an entire film as one photograph. The right to make copies from a film negative, in other words, was legally protectable under copyright law. The practice of registering paper prints for copyright protection also left a fortunate by-product: decades later, archivists at the Library of Congress were able to reconstruct films, frame by frame, that had perished in celluloid form but still existed on paper. Much of the body of early American cinema we can view today comes from the paper prints at the Library of Congress.
Over the following decade, U.S. courts and legislatures enacted a series of changes to copyright law that effectively increased the protectability and potential profitability of a motion picture negative. In 1909, the U.S. Congress revised the Copyright Act, granting copyright protection to mechanical reproductions of music but not motion pictures-the result, Peter Decherney suggests, of film industry lobbying to continue to allow case law and self-policing, rather than statutory law, to regulate the industry. Yet despite cinema's omission from the Copyright Act of 1909, the revision included two changes that would prove essential for the future of film libraries. First, Congress doubled the period of protection. Prior to the 1909 act, copyright protection lasted fourteen years and included the option to extend for another fourteen. The 1909 act expanded the duration of copyright to twenty-eight years plus an optional extension of the same length. Second, the revision granted corporations the right to claim authorship of a copyrighted work, enabling greater leverage for companies producing "works made for hire." Congress amended the act in 1912 and formally recognized motion pictures as copyrightable works in their own right, rather than as photographs that moved, but the extended protection and work-for-hire provisions of the 1909 act carried long-term significance for the film industry, allowing studios to claim ownership of the works its employees created and, subsequently, retain the exclusive rights to exploit those works for a potential fifty-six years.
Between the 1909 act and the 1912 amendment, the Supreme Court heard Kalem Company v. Harper Brothers (1911), a case that held enduring significance for film libraries. Copyright law grants the right to create derivative works-those based on a preexisting work. Ideas, however, are not copyrightable; only their expression is. Kalem v. Harper asked: Did a motion picture adapted from a novel infringe the literary author's copyright? Was a motion picture based on a novel a derivative work? Or could filmmakers liberally lift from the ideas of a novel, including characters, plot, and scenes, as long as they used silent pantomime instead of the literal words-the expression-on the page? Film producers around the turn of the century assumed they could freely take whatever portions of a book or play they desired. In 1907, the Kalem Company produced one such unauthorized adaptation-a one-reel film consisting of sixteen shots depicting scenes from General Lew Wallace's enormously popular 1880 novel Ben-Hur. Wallace's heirs, the novel's publisher, and the Broadway producers who had licensed the dramatization rights sued Kalem for copyright infringement. Kalem lost in the lower court but appealed twice, arguing that the film could not be considered a dramatization because motion pictures were mechanically recorded and not produced live. Writing for the Supreme Court's majority, Justice Oliver Wendell Holmes rejected Kalem's logic and established an important precedent. For Holmes, what was important was not the "mechanism employed"-the moving picture technology-"but that we see the event or story lived." An audience experienced a dramatization of Ben-Hur while viewing recorded images at the nickelodeon just as surely as while watching live actors on Broadway. Similarly, movie producers should have to license the rights to create a dramatization, a derivative work of a novel, just as stage producers were required to obtain the rights.
Holmes's decision formed the basis for a motion picture adaptation right in literary works and forever transformed the value of film negatives and film libraries. What film producers lost in licensing fees, they gained in exclusivity; after obtaining the motion picture rights to a novel, a producer could confidently move forward, knowing that none of his competitors could legally produce a film based on the same work. As a result, producers invested more in the production and marketing of movies based on well-known properties. The name recognition of a famous literary work, combined with the right of exclusivity, functioned to distinguish certain films from the rest of the crowd, a form of differentiation that, like the casting of film stars, enhanced the value of certain film negatives. Kalem v. Harper held additional significance for film libraries: beyond the film negatives, a producer's library included all of the underlying rights that had been acquired to make the film. These rights could be used to produce a remake or a sequel or sold off to another producer. Underlying literary rights have repeatedly proved to be one of the greatest assets of film libraries, but ambiguity over which rights were acquired has also jeopardized library exploitation. As we will see, producers and their contract lawyers through the early 1930s failed to anticipate the full range of uses that their libraries might one day enjoy.
Although motion picture copyright law offered formal protection for film libraries, it was the star system more than any other development that gave producers negatives worth saving and protecting. From the mid-1910s through the late 1960s, the most consistently lucrative films in a library were those featuring stars whose popularity had increased in the years following the pictures' initial release. At first, the film manufacturers (the term producer was later used more) of the nickelodeon era were apprehensive about promoting films based on their stars. Although star systems were present in theater and vaudeville, manufacturers wanted motion picture audiences to stay loyal to the manufacturer's brand rather than to actors, who, if famous, might demand more money or defect to a competitor. Audiences frequenting the nickelodeons, however, formed attachments with the people they watched on-screen. They wrote to the studios seeking to know more about the people they watched. What were their names, backgrounds, loves? By 1909, savvy manufacturers had recognized that centering films on popular actors and supplying the public with information about those actors helped to differentiate their films from the others in the marketplace. In other words, the film negative featuring a star was a more valuable asset than the negative without the distinction of a star.
Several producers in the mid-1910s found themselves in an enviable position, owning negatives that featured actors whose level of stardom (and salary) had skyrocketed since the production of those negatives. Thanks to the work-for-hire doctrine, the producer could capitalize on those old negatives and reissue the films. The Fayetteville exhibitor who proposed stamping dates on every film frame and destroying films after two years resented this practice. A competitor who booked a reissue received the benefit a top star offered-product differentiation-but for a fraction of the price. Destroy old movies, the big exhibitor urged, because they still held market value. For a producer, however, the entire reason to keep old films in the first place was because they might prove to be valuable again. Sure, some filmmakers and stars, including Hart, carried sentimental attachments to their films. But from a business perspective, old movies were worth the storage costs and fire risks only if the producer believed those liabilities were less than the future earning potential of the film assets. Producers knew that some films in their growing libraries would have long-term reissue value. But which films? Which young player whom you hired as an unknown would emerge as tomorrow's star? The answers could not be known at the time of production. Only a handful of films in your library might have future value, but you never could be sure about which handful. Storing many worthless negatives was necessary in order to capitalize on the few that would prove to have remaining market value.
Copyright law gave producers legal control over their libraries, but in practice, pirated prints circulated widely. Producers needed to innovate a new distribution system, one that enabled them to receive a greater share of revenue and exert more control over circulation. The explanation of how this system developed is complex, requiring us to consider the early film business, the rise of the feature film, and especially the rise and decline of the Motion Picture Patents Company (MPPC). Between 1908 and 1915, the MPPC provided stability for the burgeoning film business, expanded the domestic market for films, and innovated several important distribution strategies. It was a monopolistic venture-intended to control the American film industry through the pooling of patents and by demanding that producers and exhibitors acquire the licenses to those patents. Yet this trust ultimately failed, and not merely because the U.S. Supreme Court found that its practices violated the Sherman Antitrust Act. The MPPC's internal conflicts, ineffective campaign of patent litigation, production budget limitations, and distribution structure-based on supplying short films to small exhibitors-made it unable to keep pace with its rivals' booming business of star-driven feature films.
During the nickelodeon boom of 1905 to 1907, the profits for film distributors (known as exchanges) far outpaced those of the films' producers. As Scott Curtis explains, the exchanges operated so profitably because they purchased prints outright from the producers. An exchange might recoup the purchase price after only five rentals; every one beyond that was gravy. To maximize profits, exchanges were known to peddle prints until they literally fell apart, upsetting exhibitors who found themselves with unplayable or "rainy" (the industry jargon for badly scratched) films. Some exchanges did not even bother to purchase new prints: they duped films already in circulation or acquired another exchange's old or duped prints. In this climate, producers had no reason to invest significant money in the production of film negatives. Even for a popular picture, most of the money would line the pockets of the exchanges that owned and rented out the prints. The positive print was king.
To obtain a grater share of the profits, the large American film manufacturers persuaded Edison to call a détente on the patent litigations and enter into a cooperative agreement. From 1908 through early 1909, the shape and structure of the MPPC were ironed out: Edison and his chief rival, Biograph, agreed to pool their patents, which covered technologies essential to nearly every aspect of cinema; several other manufacturers-Kalem, Essanay, Vitagraph, Lubin, Selig, and Pathé Frères-and one importer, George Kleine, joined the pool as licensee members; Eastman Kodak agreed to sell raw film stock exclusively to the MPPC manufacturers; and finally, films were to be rented only to those exchanges and exhibited only by those theater owners that paid a weekly license fee and stayed in the good graces of the MPPC. The word rented is important here-one of the MPPC's greatest innovations was renting films to exchanges rather than selling them outright. The rental model allowed the manufacturers both to obtain a larger chunk of the earnings and to maintain a level of quality control, by removing old, damaged prints from the marketplace.
The MPPC was, to be sure, a cartel designed to monopolize and control the American film industry. However, this trust also provided stability for the burgeoning film business, enabling the rapid expansion of movie theaters from roughly 6,500 screens in 1909 to an estimated 15,183 in 1913. Licensee theaters could count on a dependable supply of one-reel films to fill their variety programs, which they changed daily and which generally consisted of three reels of different genres, interspersed with some song slides and live entertainment. The manufacturers could count on a dependable base of film sales, enabling them to produce more one-reels. Prior to the MPPC, European imports had dominated American screens. The trust changed that balance of power: not only did domestic films now outnumber imports, but American films were increasingly competitive in foreign markets.
One year after its formation, the MPPC changed its distribution model. Exhibitors had continually complained about exchanges renting poor prints and employing discriminatory practices (many exchanges also owned theaters, so they sold themselves the best product and rented the inferior goods to other theaters). In response, the MPPC made the exchanges an offer they couldn't refuse: sell out to the MPPC or lose your license. The MPPC thus acquired fifty-eight exchanges across the country, forming the infrastructure for a national distributor known as the General Film Company (GFC). The GFC codified many of the distribution practices that earlier cooperative arrangements, such as the Film Service Association (FSA), had formulated but could not enforce as effectively. Distributor favoritism was curbed. The GFC removed worn-out prints from circulation and maintained control over playable old prints, which the exchanges had all too often covertly sold or subrented.
For our purposes, though, the GFC's most important innovation was its pricing system, based on release date and flat rental fees. Through this system, we can understand how the MPPC enhanced the value of film negatives yet imposed structural barriers that limited their potential earnings. Like the earlier FSA exchanges, the GFC set prices on a sliding scale based on a film's release date. A brand-new one-reeler in 1914 cost an exhibitor $7.50 per day, but that price quickly fell, bottoming out at as low as fifty cents per day a little over a month after the initial release. Small to midsize exhibitors frequently booked mixed programs-mingling not simply genres (one comedy, one chase, one melodrama) but ages (a new release, a one-week-to-one-month-old reel, and a film in release longer than thirty days). Distributors and exhibitors assumed that audiences wanted novelty in their screen entertainment. Granted, few of the successful films of the 1910s were completely new; they featured familiar genres, stars, and stories, participating in a tradition of entertainment that cultural critics have long identified as balancing "repetition and difference." But the "and difference" part of that equation was important. Although studio libraries in the early twenty-first century represent huge profit centers because of the many markets for exploiting old films, the movie business continues to organize itself around the release of new films, and the price points still cascade as the films age and work their way through a series of release windows.
Standardization was the second component of the GFC's pricing system. Manufacturers were paid by the foot for every print they delivered. The GFC then rented the films to exhibitors at a standard per-reel rate. The GFC had its reasons for instituting this system. It calmed exhibitors, who had complained for years of uncertain supply and discriminatory pricing, and initially helped manufacturers, who could calibrate production volume and budgeting to a market in which they could accurately predict their returns. The business model, however, was shortsighted. Whether a one-reel production cost one hundred or one thousand dollars, the manufacturer received the same set rate-somewhere between eight and eleven cents-per foot of positive film it delivered. Similarly, the exhibitor always paid the same per-reel rate. Manufacturers shared in exhibition revenues only indirectly-successful films sold more prints to the GFC-and had little incentive to invest in more expensive, ambitious productions. More problematically, even if you changed the per-foot payment equation, the overall distribution structure, built around the needs of the small exhibitor, limited the amount that any film could gross. Since exhibitors changed their programs every day, they seldom purchased local advertising for a particular film. Nor could they hold over a popular film for a few extra days, since the print needed to be delivered to another nearby movie house, the real beneficiary if the first exhibitor made the miscalculation of buying a newspaper ad that raised public awareness of the film.
The trust's structural decisions became fatal flaws as independent producers and distributors undeterred by its litigation became increasingly competitive, by exploiting feature films. Today we generally think of feature films as movies that run an hour or longer, but as Michael Quinn points out, the industry's original definition revolved around not length but product differentiation. A feature was something special, a film distinguished by its production values, source material, or beloved star. Independent producers made one-reel features, such as the 1914 Keystone films starring Charles Chaplin. Once audiences started demanding more Chaplin in 1914 and 1915, Keystone's distributor, Mutual, began selling his films for a premium. Independent producers also made two-reel features, such as the twenty-one westerns that Thomas Ince produced from 1914 through mid-1915 starring his old friend Hart. Soon, though, length became an integral aspect of the feature film; the standard was five reels (around seventy-five minutes), but others were longer. The top-tier features played for days or weeks in opera houses, legitimate theaters, and a growing number of specially-built movie theaters that seated fifteen hundred people or more, several times the number that a small movie house could hold. Features played longer, to bigger crowds, who paid more per ticket; the potential returns on a single film were dizzying. But those returns were possible only if the distribution system permitted them.
Triangle and the Birth of a Library
As the MPPC member companies lost market share to independent producers and distributors and declined in productivity, their distributor, GFC, flooded the market with reissues of one- and two-reel films. In 1915, Kalem reissued single-reel pictures starring Carlyle Blackwell and Alice Joyce. In 1916, fellow MPPC members Essanay and Lubin similarly put old films back into circulation. And in 1917, as Jennifer Horne has pointed out, Edison and George Kleine included a number of four-year-old films shot in exotic foreign locations in their "Conquest Pictures" program, which also included many new films. For years to come, Kleine attempted to market the "Conquest Pictures" based on the films' alleged educational merits. The MPPC member companies established a pattern that numerous other film companies then followed-turning to the library as a last-ditch survival strategy after losing their ability to meaningfully compete as market leaders. Of all the MPPC members, Biograph pursued the most effective reissue strategy. In the summer of 1915, it began weekly reissues of one- and two-reel pictures directed between 1911 and 1913 by a film artist whose reputation had recently rocketed skyward-D. W. Griffith.
No single film represented the ascendance of the feature film, star system, and post-MPPC industry more than Griffith's The Birth of a Nation (1915). Griffith had directed more than four hundred one- and two-reel films for Biograph, but Birth was a project on an altogether different scale. A three-hour epic of the Civil War and Reconstruction, The Birth of a Nation was an immediate sensation, acclaimed for its artistry and emotional sweep, attacked for its vile racism. Audiences rushed to see the lightning rod of controversy for themselves. Griffith road-showed the film across the country; these theatrical engagements featured a large orchestra, reserved seating, and higher ticket prices than were typical for first-run attractions. The film contained stars-Mae Marsh and Lillian Gish, among others-but the real star was the film's director, who received extensive coverage in the press. After months, years, and eventually decades of controversy, The Birth of a Nation grew to be much more than the sum of its parts (Griffith, Marsh, Gish, etc.), and its reputation became its biggest selling point. But even from those first road-show engagements with inflated ticket prices, The Birth of a Nation clearly rebuked the logic of the MPPC. The trust had pretended that all new films were equal, insisting that distributors pay producers and exhibitors pay distributors a standard rate based on feet of film. The positive film print was king. The trust told you what a new, a one-month-old, and a three-month-old foot of positive film was worth; it didn't matter what stars, inputs, or production costs went into creating the film negative. Audiences, however, wanted to see some reels of celluloid more than others, and they would pay more for the privilege. The Birth of a Nation-containing more feet of film and worth more in the marketplace than any American feature before it-marked the triumph of the film negative.
The picture was also a triumph for the film's producer, Harry Aitken. The son of a Wisconsin farmer, Aitken rode the wave of the industry's rapid expansion in the early 1910s. After operating a handful of film exchanges with his younger brother Roy, Aitken branched into production with his Majestic and Reliance Film Corporations and then national distribution with the Mutual Film Corporation. From 1912 to 1915, he served as Mutual's president and managed one of the only four nationwide distribution networks of the time (the other three were Universal, the GFC, and, by the end of 1914, Paramount). In late 1913 he hired Griffith away from Biograph and shortly thereafter pledged forty thousand dollars of Mutual's money to Griffith's ambitious adaptation of Thomas Dixon's novel The Clansman. When Mutual's board of directors balked at this investment, Aitken put his own money into the picture. His forty-thousand-dollar investment in The Birth of a Nation paid enormous dividends-both enriching him personally and bolstering his industry reputation as a producer with exceptional taste and judgment. In May 1915, Mutual's board of directors forced Aitken out of the company. Undeterred, he prepared to launch his most ambitious venture yet: the Triangle Film Corporation.
Triangle was the DreamWorks of its day; the name referred to three of the industry's highest-profile producer-directors: Griffith, Ince, and Mack Sennett. Aitken envisioned it as a company that would deliver high-quality films to customers who were willing to pay premium ticket prices for premium pictures. He personally convinced Griffith, Ince, and Sennett to join him in Triangle. He also won over the backers of Ince and Sennett's productions, the New York Motion Picture Company (NYMP) owners Charlie Bauman and Adam Kessel, who had previously used Mutual to distribute their product. In his most impressive act of salesmanship, Aitken raised five million dollars by issuing one million shares of stock, making Triangle one of the first movie companies to go public. The shareholder equity fundamentally changed Aitken's approach to business; he henceforth took large risks with other people's money while seeking out hidden profit centers for his personal enrichment.
Determined to create a vertically integrated enterprise, Aitken spent heavily on fixed costs: production facilities, theater leases, distribution exchanges, and talent contracts. In theory, the star contracts should have lessened Triangle's risk, not heightened it. Audiences selected films based on the star more than any other factor. The trouble was, Aitken picked the wrong stars and paid them too much. The film historian Richard Koszarski explains: "Aitken's importation of expensive Broadway stars proved ill-timed and ill-advised. It appears to have been modeled on Adolph Zukor's 1912 scheme of 'Famous Players in Famous Plays,' but even Zukor had largely abandoned this policy by 1915; audiences had already indicated they preferred screen stars in their movies. The traditional example here is Aitken's payment of $100,000 to Sir Herbert Beerbohm-Tree for just two films, Macbeth (1916) and Old Folks at Home (1916), both of which were notable box-office failures." Other pieces of Aitken's grand plan similarly crumbled. Keen on charging the same premium ticket prices that had made him a fortune on The Birth of a Nation, he demanded that Triangle's first-run theaters adopt the road-show policy of two shows per day, reserved seating, and two-dollar tickets. Audiences stayed away in droves. Nearly all of Triangle's exhibitors complained, and some revolted outright.
On the production end as well, problems mounted. Sennett and Ince had developed reputations as prolific producers, but Aitken's meddling reduced their efficiency. As Rob King points out, Triangle's highbrow ambitions also disrupted the successful lowbrow formula that Sennett had perfected in his Keystone comedies. The Keystone style changed, and many Keystone fans found themselves geographically displaced from or priced out of the expensive theaters where the comedies now played. Most disappointing of all, the man who should have occupied the highest peak of the triangle, Griffith, contributed no value to the company and even tried to publicly distance himself from it. Griffith was too busy creating Intolerance-his epic answer to the critics of The Birth of a Nation-to bother supplying the Triangle exchanges and theaters with product. Soon there were fewer and fewer Triangle exchanges and theaters to supply. By late 1916, just a little over a year after its founding, Triangle was selling off its distribution exchanges to raise money and slash overhead.
Amid all of Triangle's problems, there was a silver lining-the films of two stars who consistently delivered the goods, Douglas Fairbanks and Hart. Aitken brought Fairbanks from stage to screen, signing the actor, then known primarily for comedy, to Triangle's Fine Arts unit for the high fee of two thousand dollars per week. Unlike Beerbohm-Tree, Fairbanks proved worth every penny-his good looks, buoyant personality, and acrobatic physicality translated well to the screen. In September 1915, Aitken opened the first Triangle program at New York's Knickerbocker Theatre with The Lamb, the first of the thirteen Fairbanks vehicles that Triangle would release. As the company decreased in power and stature the following year, however, Fairbanks became receptive to the overtures of Zukor, who urged the star to release his films through Artcraft, the same distribution arm that handled Mary Pickford's films. Whereas Zukor block-booked most Famous Players Films, he sold the Artcraft pictures independently as specials-allowing these star-driven features to play longer at better houses and earn more for the stars' profit positions. Fairbanks still had obligations to appear in Triangle pictures, but in January 1917 he wrangled out of them through a clever legal maneuver. His contract guaranteed that Griffith would supervise all his pictures. Truthfully, Griffith had little interest in either Triangle productions or Fairbanks; according to legend, he thought that the actor bounced up and down too much and suggested he'd be better suited for Keystone comedies. Nevertheless, Fairbanks successfully argued in court that Griffith's lack of supervision amounted to a breach of contract, nullifying the actor's obligations to Triangle. When Fairbanks joined Artcraft in early 1917, he left behind thirteen feature negatives and a gaping hole in Triangle's star lineup.
Fortunately, Triangle still controlled Hart's services. A far more unlikely star than Fairbanks, Hart appeared in his first motion picture at the age of forty-nine after a career onstage. He was performing in play in Los Angeles in 1914 when his old friend Ince approached him about appearing in a film. They had grown close over years of performing together in traveling companies, frequently rooming together on the road. Ince never achieved Hart's level of stage success, prompting him in 1910 to look for opportunities in the motion picture business. Over the course of a few short years, Ince vaulted from acting in films to directing them and then to supervising the production of an entire slate of films at the same time. He managed the NYMP's West Coast studio, and there, in Culver City, he innovated a form of unit production that became the Hollywood studio system's dominant mode of production. Hart acted in two two-reel Westerns for Ince; both became immediate hits. Ince signed Hart to perform in more films, paying him a weekly salary of around one hundred dollars in 1914, which rose to seven hundred dollars by mid-1916. This was good money by stage standards-and great by the standards of the average American worker-but meager compared to the four- and five-figure weekly salaries that Fairbanks, Pickford, and Chaplin were receiving. When Hart complained that he was underpaid, Ince always found external forces to blame: the market for Westerns was weak; the NYMP's owners were cheap. Hart trusted Ince, whom he counted as a friend.
After the NYMP joined Aitken's Triangle venture, the lowly paid but highly popular Hart became one of Triangle's greatest assets. He went from performing in two-reelers to starring in and directing five-reel features, which he brought in on remarkably tight budgets. Hart's popularity only grew. Audiences at the time were drawn to his "good bad man" persona, and the moral ambiguity of his Triangle features, such as The Return of Draw Egan (1916) and Hell's Hinges (1916), continues to startle viewers today. In late 1916 and early 1917, Hart became aware that his compensation did not reflect his true star value. "It is known for a fact that you alone are holding the exhibitors on the Triangle program," wrote a Chicago-based manager in pitching his services to Hart. "Once you leave the Triangle program[,] there will be nothing left that the exhibitors care much about." Hart used this and many similar offers to negotiate a tremendous pay hike. In March 1917, Triangle agreed to pay him $432,000 per year for the next two years.
However, just as Hart obtained his first major deal, Ince decided it was time to break away from the financially troubled Triangle. He sold out his interest to Aitken for roughly $250,000, then persuaded Hart to abandon Triangle by exploiting a clause in his contract that required Ince to supervise his productions. Triangle's actor contracts were bad not simply because, as historians have argued, they promised too much compensation. They also opened legal loopholes in promising that specific individuals would supervise star actors rather than binding the actor solely to the firm. Hart, like Fairbanks before him, exploited this loophole and turned to Zukor. Over the spring and summer of 1917, he, Ince, and their representatives negotiated a rich deal with Zukor: the mogul would pay Hart and Ince's production company two hundred thousand dollars per five-reel feature negative they delivered. This money went toward production costs and was treated as a minimum guarantee against the production company's profit participation-a fifty-fifty split once Zukor recouped his payment plus the Artcraft distribution fee and costs.
By the fall of 1917, Triangle had lost its two bona fide stars. It still, however, controlled the negatives of their films, and this is the point where the story gets interesting. Teetering on bankruptcy, Aitken and the other leaders of Triangle displayed a shrewdness largely absent from their earlier management decisions. Aitken loved to make big deals, spend lavishly, see his name in the headlines. But his greatest talent lay in the minutiae, identifying niches and opportunities that others had missed. In the late summer and early fall of 1917, Triangle embarked on the most systematic exploitation campaign of old movies that the industry had seen.
Collateralizing and Monetizing the Library
<GT-ni>Owners of film libraries have repeatedly sought to monetize their assets by generating new revenue from old films. Yet there are financial applications of film libraries that go beyond generating revenue. The most important is the collateralization of debt-enabling the borrower to obtain credit and giving the lender foreclosable assets in the event of default. The contemporary minimajor Lionsgate, for instance, uses its eight-thousand-film library to provide collateral, or a borrowing base, which allows it to obtain revolving credit from lenders and to finance new productions. In 1917, no respectable American bank would have considered accepting a film library as collateral for a loan. Some banks loaned money to producers against unfinished, unreleased, and newly released negatives (though the producers nearly always had to pledge other assets as well). In contrast, old negatives had been declared worthless on the balance sheets, and, unlike depreciated real estate, banks assumed they held no market value. Through a particular juncture of business interests, though, the owners of Triangle reached an arrangement to collateralize their library. They then monetized it through two methods: reissuing Hart and Fairbanks films under the banner "The Good Ones Never Die" and setting up a series of subterfuges to mask the fact that the films had been taken from the library.
Triangle's library collateralization and "Good Ones Never Die" campaign emerged through the efforts of Stephen A. Lynch and not Aitken. Lynch remains a notorious figure in film history. He controlled a chain of theaters and exchanges in the American South. Beginning in the late 1910s, he and his "wrecking crew" at Southern Enterprises used ruthless tactics to establish a dominant position for Paramount in the South. But before the height of the wrecking crew's exploits, in 1916 Lynch bought into William Hodkinson's company Superpictures. Superpictures, in turn, purchased Triangle's national network of exchanges, forming the basis for a separate company called the Triangle Distributing Corporation. When Triangle and Triangle Distributing both appeared to be losing business ventures in the fall of 1917, Lynch made a canny move. In September, he entered into a three-party agreement with the Triangle Film Corporation and Triangle Distributing that converted his equity in Triangle Distributing into debt. As part of the deal, Triangle Distributing obtained the exclusive reissue rights to Triangle's library of Hart, Fairbanks, Frank Keenan, and Norma Talmadge pictures. It licensed the pictures for three years; Lynch was to receive all rental revenues, after costs, until Triangle's debts were completely paid off. The deal valued Lynch's holdings at $1,519,000 in mortgage notes, but on November 19, 1917, he forgave $819,000 of the debt in recognition of the reissue value.
By converting his equity into debt, Lynch had reduced his risk in Triangle and made himself more likely to recoup his investment. In the event of bankruptcy, the shareholders are wiped out and control of the company goes to the senior debtor. Through this conversion process, Lynch also innovated the use of film libraries as collateral. He was a showman, not a banker. He knew that these films still carried market value. In fact, their market value was greater than that of most old star-driven films because Triangle's poor distribution system and inflated ticket prices had reduced the films' circulation in their initial releases. In the fall of 1917, Lynch and Triangle Distributing began the "Good Ones Never Die" program. A few months later, Lynch auctioned off the states rights to these reissues to several different exchanges, keeping the Southern territories for himself.
As a marketing slogan, "The Good Ones Never Die" both celebrated the quality of the films and acknowledged their age. Aitken sought to go one step further. Like Ted Turner decades later, Aitken wanted to take old film negatives and make them new again. But for him, this did not mean colorizing black-and-white images; instead, it meant changing the main titles of old films and marketing them as new productions. As Triangle Distributing handled the Hart and Fairbanks features through the "The Good Ones Never Die" campaign in the fall of 1917, Aitken covertly participated in the retitling and reissue of twenty Hart films produced by the NYMP in 1914 and 1915. Triangle had officially acquired NYMP's assets earlier in 1917, and Aitken was intent to put its library to use.
Aitken was not the first feature producer to try palming off a retitled reissue, but he may have been the first to strategically create a separate entity to perform this function. For both his own protection and his own profit, Aitken instituted multiple buffers between himself and the retitled pictures. First, Triangle sold the old NYMP Hart films-seventeen of which were two-reelers-to the Western Import Company. Though nominally managed by Hyman Winik, Western Import was founded by Harry and Roy Aitken, who continued to own large stakes in the company, which shared the same office space as Triangle. It began as a foreign sales arm-Triangle sold foreign rights to Western Import, which subdivided them across European territories. But the Aitkens found additional uses for this company, as Triangle's stockholders would come to find out.
Western Import erected a second buffer between Triangle and the retitled Hart films by licensing the negatives to Winik's brother-in-law Joseph H. Simmonds. One step removed from Western Import and two steps removed from Triangle, Simmonds went into business as W.H. Productions and licensed the retitled Hart films to states rights distributors. For instance, W.H. Productions took Hart's five-reel features On the Night Stage (1915) and The Darkening Trail (1915) and released them as The Bandit and the Preacher and The Hellhound of Alaska, respectively. The two-reel Scourge of the Desert (1915) became A Reformed Outlaw, and the two-reel Cash Parish's Pal (1915) masqueraded as Double Crossed. W.H. Productions generally changed only the film's main title and supporting lithographic advertisements, but in one case it substantially changed the actual film. After releasing the two-reeler The Conversion of Frosty Blake (1915) under the title The Convert, W.H. Productions collaborated with Triangle to have three new reels of footage shot at Triangle's Culver City studio. By inserting these at the beginning of the film, W.H. Productions turned the two-reel oldie into a five-reel feature that it called Staking His Life.
By all accounts, W.H. Productions sold the retitled Hart films at a brisk pace. More than twenty states rights exchanges throughout the country purchased licenses to rent to the films. Beginning in the fall of 1917 and continuing into 1918, W.H. Productions took out a series of trade press advertisements promoting the retitled Hart films. Exhibitors read Motion Picture News and the Moving Picture World; the ads were the best way to capture their attention. But Hart's lawyers and corporate officers also read these trade papers, and they saw the ads too.
Hart's longtime lawyer and the vice-president of his company, Bill Grossman, turned livid on seeing the ads. He wrote a letter to W.H. Productions demanding a meeting. As a lawyer based in New York, Grossman was ideally situated to deal with the problem while Hart remained producing films in Southern California. In February 1918, Grossman obtained his meeting, not with Simmonds but with an attorney named J. Schechter, who represented W.H. Productions. Grossman confronted the attorney, telling him that W.H. Productions "had pursued a course of conduct that had every earmark of deliberate fraud, in that they had gone into business with old Hart pictures and adopted the name of W.H. Productions, Inc., in order to mislead those who were called upon to see the pictures or requested or invited to see them."
Schechter denied any and all allegations of fraud. Here is Grossman's account of their conversation:
SCHECHTER: You don't own any part of those pictures, do you? Mr. Hart does not claim to own the negatives or positives?
GROSSMAN: No, so far as we know, they belong to the New York Motion Picture Company. Perhaps the Triangle Film Corporation has an interest in them.
SCHECHTER: Well, as a matter of law, whoever owns them has a right to call them what he pleases.
GROSSMAN: Yes, that would be true, if nobody is hurt by making the change, but even though you own this property yourself, you can not change the title for the purpose of perpetrating a fraud upon the public, nor change it in such a manner as will tend to create a fraud or perpetrate a fraud upon the public. Perhaps Mr. Hart cannot complain personally as to the use of this property, nor perhaps our company, but don't you think that the court might interfere in your doing anything, even with your own property, that might result in fraud upon the public?
Now I want to tell you something, Schechter: we are getting a large number of letters from fans all over the country, who are complaining about the practice which your company has initiated. They are asked to go into theatres to see a picture of Hart. Hart produces very few a year, and his fans, like the fans of all stars, follow up every picture. They have seen "The Conversion of Frosty Blake," or whatever old titles there were of the pictures that were then out. . . . When they see a new title of a Hart picture, they spend their dimes or their quarters to enter the theatre to see a new picture of Hart, only to find that there is exhibited to them a picture that they have seen some time before, under a new title.
Now, the theatre gets in bad, Hart gets in bad. By the use of the name W.H. Productions Company, they think Hart is connected with this thing, and want to know from him whether he is a party to this deception upon the public, that ought to be stopped.
Grossman recalled this conversation nearly eighteen months after it occurred, enough time for his memory of the exact words to grow hazy. The essence of the conversation, though, boiled down to a disagreement over the limits of exploiting a film library. In controlling the copyrights and negatives, W.H. Productions argued, it could exploit the films in any way it chose. Grossman conceded that Hart did not own the negatives, but he insisted that there were limitations in exploiting a film library. At this point, he wasn't sure to what extent W.H. Productions had changed the old Hart films. His legal papers reveal that his firm tried to build a case for an injunction and dispatched operatives to collect intelligence on how the old two-reel films had been recut, spliced together, and otherwise modified. Only later did Grossman realize that, barring one exception, just the titles of the films had been changed. Hart and Grossman's fundamental objection was with the name of the operation-one calculated to sound like Hart's own William S. Hart Productions.
Meanwhile, W.H. Productions encountered a problem that it considered far more threatening than Hart's potential lawsuit. Pirates were duping and distributing its productions. The copyright reforms of a decade earlier had made duping illegal, but the practice continued. Far more decentralized than national distribution, the states rights model was particularly vulnerable to both duping and the circulation of "outlaw" films (prints that circulated after the subdistributors' rights had expired). It didn't help that W.H. Productions made money by dealing with exchanges and exhibitors known for being deceptive. Within weeks, someone in this loose affiliation-an exchange or an exhibitor-broke ranks and either copied or enabled the copying of the retitled Hart films. The first step was using the positive prints from W.H. Productions to strike dupe negatives that could reproduce many more prints. The second step was channeling these prints to subdistributors, who rented or sold them to exhibitors. One pair of notorious dupers copied the Hart films in New York, then sold them to states rights exchanges, which offered them to exhibitors. The network they created shadowed the practices of W.H. Productions at nearly every step.
The pirate market for old Chaplin shorts topped even that for the Hart films. In 1917, Triangle sold dozens of old Keystone negatives, including several starring Chaplin, to W.H. Productions. Pirated Chaplin shorts, along with the competition from Essanay's Chaplin reissues, caused W.H. Productions to sell its Chaplin prints outright rather than lease them. In this way, W.H. Productions acknowledged that the value had shifted back to the positive print. Simultaneously, this decision expanded the pirate market, flooding the market with even more prints that could be used to make dupes.
W.H. Productions learned a lesson that all custodians of film libraries eventually learn: the more you exploit a film library, the less control you maintain over it. Piracy was and remains one of the biggest challenges for the business of film libraries. However, library exploitation-and the piracy that accompanied it-also had significant unintended consequences for the preservation of American cinema, particularly American silent films. "Many of these films exist today only because of the W.H. Productions reissue," Kalton Lahue explains about the Hart and Keystone films. "The original Mutual release prints had worn out long before Triangle expired and had the subjects not been rereleased, only a slender record of the Ince and Sennett productions of the 1912-15 period would still remain on film." In the business of film libraries, piracy and preservation are externalities-the term that economists use to describe the unintentional outputs resulting from business decisions.
W.H. Productions initiated an all-out publicity campaign against the "parasites" duping the retitled Harts. "Hart Officials Complain of Film Pirates," headlined a story in Motion Picture News. The story came not from any official of Hart's company but a press release cooked up by Simmonds that the paper reprinted nearly verbatim. Toward the end of the press release, W.H. Productions warned that "the industry is waking up and really going after these parasites and the time is not far off when we shall be entirely free of them." What the industry actually woke up to was W.H. Productions. Hart took out trade ads explaining that W.H. Productions was using his initials and old films without his permission.
In the summer of 1918, numerous trade papers and industry spokespeople weighed in on the matter of retitled reissues. All agreed that reissuing old films under new titles was both unethical and bad for business. "Do the exhibitors of this country want to be classed with quack doctors, patent medicine fakirs and bunco men?" the Moving Picture World asked. "The exhibitor who lends himself to frauds of this sort discredits his house in the eyes of his patrons." Nevertheless, the paper made it clear that reissues of great films, main titles left intact, occupied a legitimate place in the market. The other trade papers walked a similar line. Wid's warned against "crooks" and "cheats" in the industry but considered reissues of good productions "one of the surest sources of real revenue for the fair-minded, square-shootin' showman." Exhibitor's Trade Review questioned the very logic of changing a film's title: "Royalty may travel incognito, but a good picture should be known for all it's worth. Its name is one of its assets. . . . If a picture is worth re-issuing at all, it is as good under its original title as the day it was released." Motion Picture News warned, "Misleading the public will serve to destroy its valuable confidence in the motion picture and the industry back of it. . . . Furthermore, and of great importance, it is obvious that new pictures of famous stars cannot profitably be produced if old pictures are allowed to compete with them under what the public construes as a new name and therefore a new picture. This, it is equally obvious, is destructive of the industry's normal and necessary development. Secondly and with equal emphasis, we point out that this controversy does not apply whatsoever to pictures properly re-issued." Why did Motion Picture News and the other trades excoriate retitled reissues but carefully pull their punches when it came to reissues on the whole? Quite simply, they had to appeal to their constituencies-the producers and small exhibitors who wanted to exploit old films, the large exhibitors that wanted to stop them, and the reissue distributors who purchased advertising.
By identifying the practice of retitling reissues as a problem and calling out the names of its worst perpetrators, the trade press acted as a form of industry self-regulation-establishing the boundaries for acceptable behavior and publicly shaming those who crossed the line. The industry needed to self-regulate the matter since the law, at that moment, provided no clarity. W.H. Productions legally controlled the negatives. "As a matter of law," its attorney had said, "whoever owns them has a right to call them what he pleases." Could a copyright owner create any derivative work he pleased? The FTC was about to have the final word.
The Federal Trade Commission Cases
The FTC was still in its infancy when it began investigating retitled reissues. Congress established the FTC in 1914 to investigate and prosecute business monopolies, but only a small percentage of the FTC's docket over its first decade involved trust-busting. Instead, most of the early FTC cases involved investigating and enjoining business practices that the commission considered "unfair competition." When Hart's lawyer brought W.H. Productions to the FTC's attention, the commission immediately recognized its scheme as the most basic form of unfair competition: "palming off." To palm off is to deceptively imply that your product is the product of a competitor. The law against unfair competition is meant to protect both consumers and businesses from this behavior, since the reputation of a business suffers if it is unfairly linked to a bad product that hurts consumers.
On October 30, 1918, the FTC issued two complaints against distributors trafficking in retitled reissues. Its proceedings against W.H. Productions became the important test case, but the second complaint filed that day also merits discussion, for it revealed that world events, not just stars, could be harnessed to monetize old celluloid. The big world event in 1918 was, of course, World War I. Although the fighting erupted between European powers in the summer of 1914, the United States abstained from entering the war until spring 1917. In the roughly eighteen months between the United States' declaration of war against Germany and the war's conclusion, the American motion picture industry promoted the war: distributing shorts and features to training camps; using stars, such as Pickford and Hart, to sell war bonds; and producing gung ho, anti-German features-like Rupert Julian's now lost production The Kaiser (1918)-which could support the American cause and clean up at the box office.
The Royal Cinema Corporation wanted to release a timely feature about the war without investing in a costly production. So it acquired the negative of The Ordeal (1914), a five-reeler produced by the Life Photo Film Corporation and set during the Franco-Prussian War of 1870-71. To update the film for the current conflict, Royal shot a new beginning and ending. The new version began with a young American man who refuses, against his family's wishes, to enlist in the Great War, then cracks open a book about the Franco-Prussian War (cue transition into The Ordeal). After he reads the book-and the audience watches The Ordeal with a few cuts-the film returns to the present day as the young American, horrified by the barbarity of the Prussians, decides to enlist after all.
Royal retitled the film, now six reels, as The Mothers of Liberty and distributed it on a states rights basis. The promotional materials failed to acknowledge the film's source material, but this particular scheme in reediting and retitling might have escaped the FTC's notice were it not for one overly aggressive salesman at Monopole Pictures, the exchange handling the picture in New York City and eastern New Jersey. In the summer of 1918, Monopole's salesman screened a print of The Mothers of Liberty for the Hoboken exhibitor Henry Bishop. By the second reel, Bishop recognized that the film he was watching was The Ordeal. Even he was surprised that he could remember the title, he later admitted, considering that he "ran a picture every day, and change every day." Bishop turned to the salesman and accused him of trying to sell used goods. "I would not think of running anything like that in my house," Bishop told him. "I have a reputation to maintain and I have worked hard to get it, and want to hold it." Bishop told the salesman that he should "go further down the street, down to the City Theatre. They have a different clientele, and may be [he could] do business there." The salesman refused to budge. "No, it will run in a big house in this City," he responded. "It will run in this house." The salesman proceeded to march over to the local newspaper, then to the closest chapter of the American Defense Society. He invited them to follow him to the Bishop Theatre so they could see firsthand the anti-American coward living in their midst: only a German sympathizer would refuse to book The Mothers of Liberty! The FTC complained that Royal Cinema and Monopole's actions had the tendency "to deceive the trade and motion-picture theatre going public," defame motion picture exhibitors, and hinder interstate trade. The interstate aspect of the case was important; the FTC's authority over trade, like that of the U.S. Congress, was limited to interstate commerce.
The case against Royal Cinema concerned only one film, and the defendants chose not to invest the time or money on an elaborate defense. They begrudgingly participated in a brief public hearing, agreed to cease and desist, and moved on. The FTC's complaint against W.H. Productions, however, concerned a much larger operation. W.H. Productions had entered into more than twenty different contracts with exchanges across the country to carry the retitled Hart films. Additionally, it had sold prints outright for dozens of Keystone one-reelers. A cease-and-desist order from the FTC could expose W.H. to contract termination, repayment demands, and litigation from the states rights exchanges. Moreover, W.H. Productions was a piece of a larger fraudulent enterprise that would prove disastrous to the Aitkens if brought to light. For the sake of their money and reputations, W.H. Productions decided to fight the case.
In early 1919, the FTC attorney Gaylord Hawkins presented the commission's case to the examiner (the FTC's equivalent of a judge). Simmonds was on the witness stand for most of the proceedings. He denied that he had misled any exchanges or exhibitors. They all knew that these films were reissues, he claimed, even if his trade advertisements did not acknowledge them as such. Hawkins clearly did not believe Simmonds on this point, and as the examination wore on, Simmonds appeared ridiculous to other spectators as well. Variety reported, with a hint of irony, that "Hyman Winick [sic], one of the officers of the Western Import Co., is the brother-in-law of Simmonds, and the latter gave that as his reason for doing business under the W.H. title, stating that he had taken the initials of his brother-in-law and transposed them." Simmonds's actual statement sounded only slightly less preposterous: "[I] could just as well call it A.B.C. Company." But, he added, "I thought it would be a happy combination to use the name W.H., because they were [Winik's] initials, and I was selling Hart." Although some of his answers made Simmonds look foolish, he carefully guarded the information that he disclosed. When the FTC's Hawkins asked a question about the Western Import Company, Simmonds's attorney objected: "There is a charge here that Joseph Simmonds, trading as W.H. Production Company, did certain things. The Western Import Company is not mentioned in the complaint and has nothing to do with the case." Simmonds's attorney, Walter Selisberg, successfully masked the involvement of Western Import's two architects-and, we should note, longtime Selisberg clients-Harry and Roy Aitken.
Selisberg mounted an elaborate defense against the unfair competition charges. He argued that the FTC's problems stemmed not from W.H. Productions but instead from the pirates who duped its films. He subpoenaed and brought to court two dupers whom he knew had peddled the retitled Hart films: Joseph M. Goldstein and Jacob Weinberg. Selisberg had become acquainted with Goldstein and Weinberg back in 1915, when he traced a glut of Keystone dupes to the duo's New York operation. The FTC issued a complaint against Goldstein and Weinberg's Lasso Pictures Corp., and the dupers agreed to the terms of a cease-and-desist order rather than mounting a defense that might prove costly and self-incriminating.
W.H. Productions still lost the case. The FTC examiner ultimately ruled "the entire line of defense, as being immaterial, not relevant. In other words, that you cannot, by proving that someone else has also, perhaps, competed unfairly with the W.S. Hart Productions Company, justify or excuse your competition." Selisberg had used a classic criminal defense tactic-calling a shady witness to the stand, trying to catch him in a lie, and creating doubt about the defendant's guilt. But the FTC did not operate like a criminal court. Whether it was W.H. Productions or Lasso that created marketplace confusion was beside the point. In fact, the FTC was not required to prove that a single exhibitor or consumer had been harmed. All that mattered was that the defendant had engaged in practices that had a "capacity or tendency" to result in deception and harm. FTC v. Joseph Simmonds, along with FTC v. Royal Cinema Corp. and FTC v. Lasso Pictures Corp., established the precedent that retitled old films needed to be advertised as such. The cases established that there were legal limits to how a copyright owner could exploit a film library.
The FTC prevailed by identifying practices with a capacity to harm competitors and purchasers. It never had to document any actual harms that W.H. Productions caused. As a result, the case leaves unanswered many of the questions most interesting to historians of film and media. We know the identities of W.H. Productions' competitors-they were other film distributors, especially Artcraft, which controlled Hart's new films and lost leverage over exhibitors because the marketplace was flooded with his old pictures. But what about the purchasers? Were they deceived?
Answering this question requires reaching beyond the FTC transcript and triangulating numerous historical sources. Equally important, it requires us to broaden our understanding of the business of film libraries. The discourse surrounding studio libraries tends to focus on supply-side factors-the motivation of copyright owners to monetize their assets. Yet the demand from business buyers and audiences is just as important. By mapping out the context of film exhibition in the late 1910s, we can better understand this demand and insert real exhibitors and audiences into the placeholders of the FTC's hypothetical purchasers.
Film exhibitors in the mid-to-late 1910s participated in a rapidly changing marketplace. The business had never been better for those exhibitors who invested in large theaters. Large theaters sat more than one thousand patrons; lavish "movie palaces" sat more than two thousand. These capacities enabled theater owners to harness economies of scale. Large theaters offered the best pictures, best music, best amenities. They charged more per ticket, but they didn't have to charge much more, since they had more seats they could fill and more tickets to sell.
For small exhibitors, however, the business had never been worse. In his analysis of "the crisis of the small exhibitor," Ben Singer describes the "painful transition for many rank-and-file exhibitors" in the mid-to-late 1910s. "With their small capacities, low admissions, humble trappings, and modest socioeconomic demographics, many small theaters had great difficulty affording the expensive feature services." He identifies five options that were available to them: continue to play one- and two-reel variety programs, even though the public clearly showed a preference for feature films; upgrade certain theater amenities but still show variety programs; "try to put together feature programs culled from cheap state rights suppliers or discount national distributors and undercut the bigger theaters on price"; show feature films in their subsequent runs; or simply throw in the towel and go out of business. Faced with this limited range of choices, some small exhibitors employed a variation on numbers one, three, and four-they showed a star's old short or feature-length films and undercut the large theaters on price but promoted the old films as if they were new.
Small exhibitors were the industry's snipers and the primary buyers of the W.H. Productions. Simmonds was not lying when he told the FTC examiner that exhibitors knew the films were old. Although a few small exhibitors may have been deluded into believing they were booking new films, most knew what they were getting. The trade press covered which stars were affiliated with which producers and distributors; the dispute between Triangle and Artcraft over Hart's services, in particular, received considerable publicity. Only an exhibitor ignorant about his own business could not know that the W.H. Productions were reissues-especially when they were being sold by corner-cutting states rights outfits, some peddling the licensed prints, others the outlaw dupes. Additionally, seventeen of the twenty-one retitled Hart films on the market were two-reelers. This was quite odd, really, considering that Hart had acted exclusively in five-reel features since late 1915. Small exhibitors knew this fact only too well-they had pleaded with producers to cast stars in more shorts that they could plug into their variety programs. But the big stars valued the higher paychecks and artistic status that came with features running five reels or longer, and by 1917, comedians were the only stars consistently turning out two-reelers. Most small exhibitors, therefore, quickly recognized that the W.H. Productions pictures were old films. But they also recognized that W.H. Productions offered them something they needed: feature films and two-reelers that they could afford starring one of the world's biggest movie stars.
Let's go beyond the hypothetical small exhibitors and consider one specific sniper. The Empress Theatre in Toledo, Ohio, exemplified the type of small theater that, beset by competition from big houses, booked W.H. Productions films. The Empress was one of four Toledo theaters managed by the Gardner Amusement Company, all seating fewer than four hundred patrons. The Empress offered seating for 367, to be exact, a good size in the nickelodeon era, when cheap, hourlong variety programs ran continuously and audiences turned over rapidly. It suffered, however, in the feature era. Features cost more to rent, and their audiences turned over more slowly. The Empress could sell fewer tickets in a given day but had to pay higher rental costs (that is, if it could obtain the desirable feature films at all). By 1918, it was geographically doomed, sandwiched between the 750-seat Alhambra Theatre and the 772-seat Colonial Theatre on Summit Street in downtown Toledo. Worse yet, just blocks away were the 1,413-seat Valentine and the 1,166-seat Temple.
These large theaters sold enough tickets to afford top-grade pictures and the amenities-orchestral music, large foyer, ushers-that audiences came to expect from the downtown movie house. Meanwhile, the Empress carried on with variety programs. One week in 1918, it offered a variety program consisting of the W.H. Productions two-reeler The Fugitive (originally Hart's 1915 The Taking of Luke McVane) and The Scholar (1918), a two-reel comedy starring the Chaplin imitator Billy West. Other small theaters across the country, from New Haven to San Diego, booked the W.H. Productions two-reelers for their variety programs. In hindsight, we can easily see that this strategy was unsustainable. By 1918, variety programs were already antiquated, and no number of Hart reissues or Chaplin knock-offs could change this perception. The Empress went out of business just a few months later. Exhibitors who booked the retitled Hart five-reelers and promoted them as new features similarly embarked on an unsustainable path. The short-term surge of ticket sales came at the expense of the theater's long-term reputation. Audiences who left your theater today feeling cheated were unlikely to return tomorrow.
Showing old star-driven movies under new titles may have been shortsighted, but it was a survival strategy for small theaters nonetheless. The bigger houses-with double, triple, or quadruple the seating capacity of small theaters-could afford to pay more for feature films without charging more for tickets. The big houses outbid the smaller ones for the best features with the biggest stars. By booking a cheap reissue and emphasizing the star rather than the film's age, small exhibitors gained competitive strength-offering the same star value as the big theaters for lower ticket prices. The trade press and large theaters labeled the practice "sniping," but to the small exhibitor, the term sniper was more properly applied to the big theaters. After all, the small exhibitors were the incumbents. Now the large theaters were chipping away at their business, destroying an entire exhibition model that had previously served them well. The FTC never acknowledged that the plight of small theaters drove buyer demand for retitled reissues. If it had, though, the commission would have seen their plight as the price of progress. The commissioners believed that creating greater efficiencies was the essence of fair competition. Middle-class audiences liked the big theaters and the posh amenities they offered. Finding ways to deliver this experience and keep down consumer prices was the basis of fair competition. The competition became unfair when competitors resorted to means other than greater efficiencies to succeed.
Film exhibitors were not deceived by the retitled reissues. Ultimately, though, the FTC's rhetoric about the dangers of retitled reissues hinged on W.H. Productions' deception of the public. Can we replace the FTC's hypothetical stand-ins with real spectators? Who attended the screenings? Did they feel deceived? Excavating the experience of historical moviegoers is one of film and media studies' most challenging tasks. Their voices seldom appear in studio corporate files, trade papers, lawsuits, or the other places where a historian of the media industries usually looks. Despite these challenges, it is important to take stock of the historical audience of film reissues, for two reasons. First, audiences represented the final stage in cinema's business cycle; they were the "end users" in economic terms. The needs of buyers-exhibitors-generated demand for reissues, but the buyers still needed to appeal to the end users. Second, throughout the history of film libraries, the government, producers, and film artists have rhetorically invoked "the public." The need to protect it generally means advancing one group's particular agenda over another's. To both better understand end-user demand and test the validity of consumer protectionist arguments, we must take stock of the historical audiences who attended new films and reissues.
We can begin reconstructing the audience experience by calling Grossman, Hart's attorney, on his bluff. He told the W.H. Productions representative, "We are getting a large number of letters from fans all over the country, who are complaining about the practice which your company has initiated." The documentary evidence simply does not support this claim. Hart supplied trade clippings, contracts, and correspondence to the FTC, but he did not turn over a single angry fan letter. Moreover, my search through hundreds of Hart fan letters preserved at the Seaver Center at the Los Angeles County Museum of Natural History did not produce a single one that complained about retitled reissues. On the contrary, several fans expressed their willingness to watch Hart's films over and over. Elizabeth Chadwick of New York City wrote that she watched his Triangle feature The Desert Man twice-first when it opened in New York, then again when it reached her neighborhood theater. Birdie De Veer of Columbus, Ohio, did not like to wait weeks between viewings of a Hart film. She confessed that she frequently bought one ticket, then stayed in the theater for back-to-back screenings of the same picture. How many more fans like Chadwick and De Veer were out there? How many more saw films as renewable rather than distinguishable goods, worthy of making a second visit to the theater or slouching down in your seat between shows to avoid the usher's gaze?
Other fans rewatched their favorite star's pictures with even greater devotion. Consider the following fan letter written in August 1919 by Gaylord Davidson, an insurance agent in Roanoke, Virginia:
I stopped before one of the local moviehouses this afternoon where "The Return of Draw Egan" was featured. I have seen it several times. I go to all of them, over and over again. I had not intended to go until this evening, but a little wistful face looked up into mine, and I saw a ragged, sore toed little chap standing before me.
"Mister, ef I had six cents I could see Bill Hart."
"Bill Hart," I replied, "who is he?"
"WHAT, haint you ever heard of Bill Hart."
"YES, I've heard of him, but who is he?'
"Ge mister, he's great. He kin draw a gun quicker 'n you can say it. He's got a horse that jest loves him like a boy. He kin ride right straight down a mountain runnin'. Say, mister, I've got 5c. and if you have got 11c and six cents we kin see him."
Did we see him?
The little urchin took me right down into the third row where dozens of other little chaps, happy to the portals of paradise, were seated.
Then the play opened.
Charles Dickens, if he'd survived long enough to go the movies, might have scripted this scene. The street urchin, colloquial speech, and paternal kindness all smell like the stuff of fiction or, at the very least, embellishment. Looking past whatever artistic liberties the writer may have taken in describing his afternoon at the movies, the letter still tells us a great deal. Let's consider a detail that might not jump out to us as quickly as the "sore toed little chap": the simple fact that a local theater was showing The Return of Draw Egan. Hart made this film for Triangle in 1916. The insurance agent wrote his letter on August 12, 1919. Three years had passed, but the film was still in circulation, where it had been long enough for the writer "to have seen it several times." And the title had not been changed-The Return of Draw Egan was a Triangle "Good Ones Never Die" picture, not an NYMP two-reeler retitled as a W.H. Production. Triangle's extensive reissue campaigns gave this fan the opportunity to watch his favorite movies "over and over again."
In today's home-entertainment culture, it's easy to take for granted our ability to repeatedly view our favorite films-we own them on disc, watch them on television, stream them online. But for Davidson, living in 1919 in Roanoke, a series of industry transactions had to occur for him to gain this opportunity. On a macro level, film negatives had to increase in value through the emergence of new laws, the star system, the feature film, and a new distribution system. On a micro level, Triangle had to lose its competitive edge; Lynch had to collateralize his debt in the troubled Triangle Distributing Corporation and auction the states rights to subdistributors, one of which-Super-Film Attractions-purchased a three-year license to distribute the Hart films in Delaware, Maryland, Virginia, and the District of Columbia; and Super-Film Attractions finally had to rent The Return of Draw Egan to a theater in Davidson's hometown. This was the industrial process necessary for Davidson to pass by a theater showing The Return of Draw Egan in 1919, regardless of whether he indeed purchased a ticket for his street urchin companion.
Davidson actively chose to rewatch the film. He was neither deceived nor bored in watching the same picture again. On the contrary, it touched him on a deep emotional level. "Why is it that whenever I see your pictures, the tears run down my face?" he asked. "I ain't a talkin' about women an' girls. It's natural for them to cry over your stuff-but men. Well, why do we?" The writer went to see the same Hart films repeatedly because of an emotional bond to his favorite star, but the letter also tells us about another audience for reissues: young people who experienced an old film as new. Exhibitors liked reissues because they were cheap and gave them access to the biggest stars-that much is true. However, they also clearly recognized that there were audiences for reissues, and if they did their job well, the audience left feeling satisfied, even moved, not cheated.
Reissues also had the potential to create Hart fans. Consider the following letter, sent that same year from Liverpool by Thomas Coppell, an ex-private of the British Army:
Dear "Big Bill Hart,"
Excuse me for encroaching upon your valuable moments to offer you just a humble tribute from one of the vast army of admirers of your unequaled prowess upon the "silver screen."
Following are the three pictures which gave me the great admiration for your rough and ready, unconventional work: "The Apostle of Vengeance" (which I witnessed in a peculiar sort of cinema hall planted in a little camp, while with the British troops in France since the armistice actually upon the battle line itself), "Branding Broadway" (which is perhaps the best) and "The Breed of Men." These two latter I have seen since being demobilized.
Triangle released the five-reel The Apostle of Vengeance in the summer of 1916; Coppell viewed it sometime after the signing of the World War I armistice on November 11, 1918. He became a Hart fan through viewing a reissue. Rather than competing against Hart's new pictures, this nontheatrical screening opened up new business for Hart. The Triangle reissue created a fan on the Western Front who later purchased tickets to two of Hart's Artcraft pictures, Branding Broadway (1918) and The Breed of Men (1919)-in both of which the star enjoyed a percentage of the profits.
These letters offer a small sample of fan perspectives on reissues and repeat movie viewings. They should not be mistaken for a universal attitude toward old films. Audience members who take the time to write a letter to their favorite star are a self-selecting group, not representative of all moviegoers. Moreover, as I explore in chapter 2, there were already movie fans in the late 1910s and early 1920s who watched old films with an ironic sensibility-finding pleasure in the outdated fashions, filmmaking, and performance styles. It is certainly possible that there were audience members who attended retitled pictures, felt cheated, and lost their affection for Hart as a result. But if some audience members felt cheated, they did not write to Hart about it. He and his legal team imagined an audience of embittered, letter-writing ex-fans. The FTC did not need to listen to any actual members of the public, read their letters, or call them to the witness stand; the commission routinely issued cease-and-desist orders based on the capacity of a particular enterprise to deceive an imagined public. The FTC's rhetorical appeals about the public interest and Grossman's spurious claims about bundles of angry fan mail washed the official record of the voices of actual fans. We can never excavate all of the lost voices, but those that we can, using Hart's own collection of fan mail, tell us a different story-the story of audience members whose affection for Hart grew, rather than diminished, through repeat viewings and reissue circulations of his films.
The FTC cases against W.H. Productions, Royal Cinema Corp., and Lasso are important because of the legal boundaries they established for the promotion and distribution of old films. Studying the cases in context, however, reveals that the situation was more complex than mere deception on the part of the suppliers of retitled films. A thorough reconstruction of the cases shows the importance of the demand side for the circulation of old movies on American screens. Small exhibitors were a class of business buyer desperate for inexpensive, star-powered films. They provided W.H. Productions' chief source of demand, and most small exhibitors that rented retitled Hart films knew they were getting older fare. Audiences occupied a different position in the entertainment ecosystem and expressed a different form and level of demand. Some audience members were probably fooled into the unpleasant experience of recognizing an old movie onscreen after assuming that they were in store for something new. As the archival evidence makes clear, though, other movie fans sought out the experience of revisiting films they had watched before. In the decades that followed, fans continued to demand certain old movies. As they did so, they lobbied for the ability to access movies on their terms, notthose of a film's owner or exhibitor, who might change the title or, in the case of television, drastically alter the film itself.
Financial Fraud and the Triangle Legacy
Two years after the FTC enjoined W.H. Productions from selling the retitled reissues, news emerged about a Triangle fraud of a very different order. In early 1921, Triangle filed suit against Harry Aitken, Roy Aitken, Winik, and Simmonds, alleging that a conspiracy among the four men had defrauded the corporation of three million dollars. For years, Harry and Roy had been transferring assets owned by Triangle, a publicly traded corporation, to their private company, Western Import. Harry sold fifteen Hart two-reel negatives that Triangle owned to his personal company for a mere sixteen thousand dollars. These became the backbone of W.H. Productions, a scheme that yielded at least three hundred thousand dollars and possibly far more. There were additional instances of self-dealing and fraud: Triangle's four-hundred-thousand-dollar acquisition of Western Import; Triangle's payment of forty thousand dollars for no apparent reason to the Lothbury Syndicate, another company that the Aitkens owned; the selling of Triangle stock to Lothbury at a small fraction of the security's market value.
The Aitkens ultimately settled the lawsuit for $1,375,000 ($100,000 in cash, the rest in stock). While they admitted no guilt, primary sources at the New York County Supreme Court's Record Center and the Aitken Collection at the Wisconsin Historical Society offer conclusive evidence of self-dealing. The Aitkens' fraud necessarily changes our understanding of the Triangle Film Corporation. As Kalton Lahue argues, the explanations of Triangle's failure that place the blame on Harry's mismanagement and bad talent deals are insufficient. The one hundred thousand dollars that Triangle spent on Sir Herbert Beerbohm-Tree's acting services pales in comparison to the millions that Harry and Roy pilfered. Moreover, Harry's management decisions take on a different color once we consider the fraud. Would he have made the same expensive talent deals if he had been spending the funds of a privately owned firm, such as Western Import, rather than those of a publicly traded firm, such as Triangle? Harry took ambitious risks with Triangle because they were risks with other people's money. He offset his risks to the public company and kept the rewards for his private company. As a business executive of his time, he was hardly alone in this practice. Following the stock market crash of 1929, the U.S. government created new regulations, such as the Securities Act of 1933, the Glass-Steagal Act of 1933, and the Securities and Exchange Act of 1934, that restricted fiduciaries from self-dealing, insider trading, and other conflicts of interest.
For the purposes of this study, though, the most significant aspect of the Aitkens' fraud was that it hinged on exploiting the uncertainty about the value of a film negative. The shareholders claimed that more than half of the three million dollars in damages arose through selling negatives to Western Import at below-market prices. The Hart and Keystone negatives that became W.H. Productions' fodder were, the shareholders alleged, worth at least five hundred thousand dollars, compared to the roughly one hundred thousand that Western Import had paid. There was always uncertainty about the market value of negatives. Conservative accounting practices demanded that a producer capitalize the film's negative cost as an asset depreciating rapidly from the moment of release rather than guess out of thin air what the film would earn. If Harry Aitken could have listed the negatives as assets whose worth was more than their costs but diminished in slight increments over a ten-year period, then he very well might have done so. By inflating the assets on a balance sheet, a manager could pull off a different form of fraud, convincing investors that a corporation was worth far more than its actual value. America's great bubble of overvalued stocks burst on October 29, 1929, when the stock market crashed and countless investors who had traded cash for the paper of worthless companies lost their shirts.
The Aitkens' fraud exploited a different loophole, the flip side of this accounting rule. All the old Hart and Keystone pictures had already been fully depreciated from the NYMP's books when Triangle acquired the company in early 1917. From an accounting standpoint, these films were worthless. Harry could easily sell brother Roy ten Hart negatives for ten thousand dollars because, on the books, they were worth zero dollars. Triangle's shareholders later claimed that the negatives carried a fair market value of five hundred thousand dollars, but no major financial institution in 1917 would have loaned this sum against those assets. Old film negatives were the perfect assets for the Aitkens to steal without notice. If they had limited their fraud to W.H. Productions, they probably would have gotten away with it. But their decision to reach beyond a clever library con into more common forms of embezzlement and securities fraud ultimately called too much attention to itself.
Triangle's frauds are important to study because they highlight many of the major tensions and trends that continue to surround the exploitation of film libraries. Hart died in 1946, but Hollywood workers still fight for an equitable revenue share when their work is reissued. The Aitkens and Lynch pioneered financial applications for film libraries-debt collateralization, for example-that continue to make collections of old content financially significant beyond the cash they generate. Additionally, Triangle succeeded in exploiting its library not through simple deception or supply-side actions but because it satisfied the demand of film fans and small exhibitors. The demand of audiences and business buyers, which today includes subscription video-on-demand services such as Netflix and Amazon Instant Video, continues to enable a marketplace for old media content.
The continuities with the present day, however, should not make us lose our sense of historical context. Triangle's reissue campaign needs to be understood in relation to other historical developments of American cinema's transitional era. The growth of motion picture copyright law, the rise of the feature film, and the emergence of new distribution infrastructures increased the value of film negatives. The development of the star system was especially important in making certain old film negatives worth more than others. In the eyes of most audiences and exhibitors, the star was the film's most important distinguishing feature. The Aitkens fully capitalized on the stardom of Hart, Fairbanks, and Chaplin and on their ownership of these stars' old films.
The rest of the movie industry paid attention to Triangle's model. As the motion picture industry entered the 1920s, trade press editorialists argued about whether reissues represented a boost or a threat to the industry's well-being. Few could have known, though, that vertical integration and technological innovation would transform both the value of film libraries and the industry as a whole. The next chapter explores how the business of film libraries changed alongside broader transformations in industry structure, taste culture, and technology.