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MONKY nKMINI) Till: SCKKEN i\U
Loow l)()ar<l. Sliiclds tV Co and S. W. Straus & Co., wcnr tin* hankers of Univ(THal, whiles tlu'San I'Vaiicisco l»aiik(T, A. H. («iannini still an important li^'iirn in ni()vi(! linancf, hml cIohi' n^latiouH with W. (1. McAdoo, .1. Schcnck and other I'nitrd Artist executives, as well as with ('. I)e Mille, Coiundiia and several smaller companieH. Other liiianeiers prominent in the industry durinj^ this phas** were : J. Kennedy, a Boston I)anker, allied with one (jf the coneeniH later inerj^ed in R.K.O. ; .1. Millhank, a wealthy capitalist allied with the Chase National Bank, lilair & Co., Southern Railway and similar concerns, who su|)p(>rte(i th<^ independent activiti<s of W. W. H()d«^kins()n after the hitter's departure from Paramount ; and F. J. Codsol, who at one time hrought tlu; support of the Dupont interests to S. (jloldwyn's enterprises.
The entry of Randolph Hearst into the film industry also dates from this phase. He ostahlished his news reel service soon after the ecHpse of the Patents Trust and owned various j)roduction units for shorts and feature films which were in course of time consolidated in his " Cosmopolitan Pi(;tures " company. While the films of the latter miit were distributed first through Paramount and later through Metro-Goldwyn-Mayer, the Hearst news service was at various times associated with Metro-Goldwyn-Mayer, Fox and Universal. Hearst also acquired control of a few picture houses.
We may summarise the financial developments of this phase by stating that after an initial move towards decentralisation, when the industry emerged from the clutches of the patents trust, the foundations were laid for its concentration on a much higher plane. After releasing the undreamed of possibilities for the development of the film as a popular form of entertainment, the eight major companies slowly emerged as powerful groups controUing the most important positions in all the three spheres of the industry and intimately linked with prominent Wall Street banking interests. It is important to note, moreover, that towards the end of our period all the pioneer film executives, except W. Fox and C. Laemmle, had allowed the financial control of their enterprises to slip out of their hands into those of their backers. As yet, however, the latter were in the main recruited from the leading investment and merchant banking houses and did not include, except indirectly, the peak figures in the American financial oligarchy.
The Third Phase, Since About 1929.
The present and third phase of American film finance was heralded b}^ two consecutive and closely related events of the first magnitude. It opened with the general adoption of sound, a technical revolution that not merely transformed the whole nature of film production but also proved to have so unexpectedly stimulating an effect on the box office that for a considerable time it was