Though often viewed as irrelevant fluff, the film industry actually rested close to the heart of the U.S. economy. As the lockout of 1946 got under way, Communist screenwriter John Howard Lawson filed away information that the Chase Bank was the largest shareholder in 20th-Century Fox. The Rockefeller interests had holdings in Metro-Goldwyn-Mayer (MGM). Radio-Keith-Orpheum (RKO) was owned by Irving Bank and Atlas Corporation at various periods. The other studios, including Columbia and Warner Bros., all had strong ties with major banks. The iconoclastic pundit George Seldes concluded that “all movie companies are dependent upon the House of Morgan.”

The industry was dominated by eight companies: the aforementioned plus Paramount, Universal, and United Artists. The industry was integrated vertically with the studios also controlling theaters that garnered 75 percent of box office revenues.

Because of Hollywood’s involvement with major financial interests, the strike and lockout assumed dramatic importance. Filmmaking was notoriously labor intensive, but it also involved substantial financial outlays; the studios spent $50 million to build sound stages in 1929, while production cost per film averaged about $300,000 at Warner Bros. and $500,000 at MGM during the Depression. Banks particularly had been active investors; though much has been made—understandably—about directors as “auteurs” of films and the different film styles of various studios, banks with their ability to “review … scripts and production projects” had an “awesome potential for control” of the industry. Their “lending policies” could “validate or disapprove a company’s plan for future operation.” The California-based Bank of America was known as the “movie bank”: its board membership over the years even included, e.g., Will Rogers, Wallace Beery, Harry Cohn of Columbia, Jack Warner, Daryl Zanuck, et al.

By the late 1940s, bankers became intensely concerned with “audience decline” and a related “unexpected phenomenon, the failure of a number of films produced with bank loans to return sufficient funds sufficient to repay those debts.” The “eight studios released 388 films in 1939, but only 252 in 1946.” This fall in production inevitably stalled hiring, further undermining CSU; employment in craft unions fell from 22,100 in 1946 to 13,500 in 1949. This drop influenced the kinds of films that could be made; “for a while certain kinds of film were eschewed—such as epics requiring large crowds, massive and costly sets, and intricate costumes. Films which emphasized contemporary realism were favored, and many of them were shot on location.”23 The ubiquitous market forces proved to be a potent auteur. More than this, the fall in craft union employment made CSU even more nervous about what was taking place in the industry and helped to spawn the feeling that this radical decline in numbers had to be met with a radical response.

The end of the war may have brought ecstasy to some, but it seemed to bring only gloom to the movie moguls. After the war, the studios faced several challenges: foreign quotas limiting markets for U.S. exports; competition from the nascent television industry; the unfavorable conclusion of an antitrust lawsuit seeking to disrupt the vertical integration of the industry; and a proliferation of independent producers as a partial result of new capital gains tax advantages for individuals forming their own companies. In fact, the antitrust litigation that had forced studios to divest themselves of theaters reduced their need to supply “product” for themselves, which in turn opened the door for more nonstudio film productions. Janet Wasko reports that “between 1939 and 1947,” there was intense “competition among banks to provide funds for film production,” but this ended abruptly by 1948. Allegations about Red labor leaders in the industry repelled capital, for there were many other less “tainted” areas in which to invest.27 Moreover, this decline was detectable by 1946, helping to feed the months’-long lockout.

“The Big Eight,” note historians Clayton Koppes and Gregory Black, “reaped 95 percent of all motion picture rentals in the United States in the late 1930s” and controlled “80 percent of the metropolitan first-run houses, and all exhibitions in cities of more than 1,000,000 population.” However, as time passed, the independents began to nip at the heels of Paramount, Fox, MGM, RKO, Warner Bros., Columbia, Universal, and United Artists.30 The latter three, which were less integrated vertically than the “Big Five,” faced even greater jeopardy.

In 1945 there “were about 40 independent producers, 70 the following year, 90 in 1947 and about 165 a decade later.” Hollywood had, in effect, anticipated a widespread business trend of the 1990s: the sacking of needed employees and the rehiring of them as independent contractors, but sans benefits. This massive shift in Hollywood employment patterns had the side effect of eroding the distinctive signature and “look” that had helped to distinguish the work of one studio from another.31

Despite film’s lucrativeness, however, the situation for Hollywood workers worsened with the war’s end. A labor surplus developed as the defense industry began laying off workers and as veterans returned from the war in search of jobs. Management thus had created a ready-made pool of scabs eager to violate CSU picket lines in order to gain a foothold in this glamorous industry.48 By the time of the 1946 lockout wily studio executives had stashed away 130 unreleased films and “with a minimum number of pictures in production, the studios apparently were not caught napping” by CSU’s decision to reject management’s final, draconian offer.49

The Hollywood figure Faith Hubley has maintained that the mob, anticommunist unions, and right-wing Republicans were linked in a corrupt triangle: to continue working, the blacklisted artists could provide payoffs that ultimately made their way into the pockets of each side of this triangle.110 She has a point. The central—though tacit—metaphor for the postwar United States was the simultaneous rise of organized crime and decline of the organized left, and the fulcrum of this seesaw was the film industry and the crushing of CSU.