International Pictures. In a very real sense, these
central producers and others had made themselves
almost superfluous.
Second, several actions taken by the federal
government signaled that the studios’ old ways of
doing business would have to change. President
Franklin D. Roosevelt’s plan for the economic revi-
talization of key industries—the 1933 National
Industrial Recovery Act—had a major impact on
Hollywood. On the one hand, it sustained certain
practices that enabled the studios to control the
marketing and distribution of films to their own
advantage; on the other, it fostered the growth of
the labor unions, perennially unpopular with the
studio heads, by mandating more thoroughgoing
division of labor and job specialization than Holly-
wood had yet experienced. In 1938, however, the
federal government began trying to break the ver-
tical structure of the major studios—to separate
their interlocking ownership of production, distri-
bution, and exhibition—an effort that finally suc-
ceeded in 1948.
Third, the studios began to reorganize their
management into the producer-unit system. Each
studio had its own variation on this general model,
each with strengths and weaknesses. Although the
resulting competition among the units increased
the overall quality of Hollywood movies, the rise
of the unit producer served as a transition between
the dying studio system and the emergence of the
independent producer.
Three additional factors further undercut the
studio system. The first was a shift in the relations
between top management and creative personnel
that loosened the studios’ hold on the system. From
the mid-1930s on, actors, directors, and produc-
ers sought better individual contracts with the
studios—contracts that would give them and their
agents higher salaries and more control over
scripts, casting, production schedules, and working
conditions. For example, in the early 1950s actor
James Stewart had an agreement whereby he
would waive his usual salary for appearing in two
films (then $200,000 per picture) in exchange for
50 percent of the net profits. Equally significant,
these profits would extend through the economic
life of the film, whether it was shown on a theater
screen, broadcast on television, or distributed via
other formats.
The second factor was World War II, which
severely restricted the studios’ regular, for-profit
operations (they were also making movies that
supported government initiatives, such as films
instructing people how to cope with food rationing
or encouraging them to buy war bonds). As noted
already, the production of feature films fell precipi-
tously during the war. Because many studio employ-
ees (management and labor alike) were in the armed
services and film stock was being rationed to ensure
the supply needed by armed-services photographers,
there were fewer people and materials to make films.
Thus, even though audiences went to the movies
in record numbers, fewer films were available for
them to see.
The third blow to the studio system was the rise
of television, to which Hollywood reacted slowly.
When the federal government made the studios
divest themselves of their theater holdings, it also
blocked their plans to replicate this dual ownership
of production and distribution facilities by purchas-
ing television stations. At first, the major studios
were not interested in television production, leaving
it to the minors and to such pioneering independ-
ents as Desilu Productions (Desi Arnaz and Lucille
Ball, producers). By 1955, though, the majors were
reorganizing and retooling what remained of their
studios to begin producing films for television.
Some efforts were more successful than others, but
even more profitable was the sale both of their real
estate—on which the studios were built—for devel-
opment and of the valuable films in their vaults for
television broadcasting. Universal Studios had the
best of both worlds, continuing to use part of its vast
property at the head of the San Fernando Valley for
film and television production and devoting the rest
to a lucrative theme park dedicated to showing how
movies are made.The Independent System
Through the 1930s and 1940s, the independent
system of production—sometimes called the package-
unit system—coexisted with the studio system, as itTHE INDEPENDENT SYSTEM 501