The Academy and the 50% Pay Cut

The performance seen that morning may not have been the best one of the year, but it certainly was the most profitable for a select group of people.

It was Bank Day, March 8, 1933. In the wake of the bank failures at the onset of the Great Depression, Roosevelt had closed the banks in order to give the government some breathing space to restructure the financial system. For Louis B. Mayer, the head of MGM Studios, it was a prime opportunity to once again lower the wage bar in the film industry.

Left, Louis B. Mayer, on the right is Irving Thalberg (Academy archives)

The talent contracted to the studio had been asked to assemble in the largest screening room on the lot (now the Cary Grant Theater). Mayer entered, red-eyed, unshaven and looking morose. He proceeded to lay out the current status of the film industry as he saw it. He told the assembly that every studio in town was on the verge of shutting down and that the industry as a whole could come to an end. Mayer said that they needed to institute a 50% pay cut for two months for those making more than $50 a week. Those making less would take a 25% cut. He said he wouldn’t be able to institute the cuts unless the assembled group would agree to it. Mayer said, “I, Louis B. Mayer, will work to see that you get back every penny when this terrible emergency is over.”

One writer stood and said he was confused at how it had come to this considering the number of successful movies the studio had recently released. The actor Lionel Barrymore chastised the man for not being a team player and lead the entire group in eagerly agreeing to the wage cuts.

All over town at the other studios, coincidently, the same scene was taking place as assembled studio employees were told the industry was on the verge of complete collapse if they, too, didn’t take a 50% pay cut. And, as at MGM, the employees were told that the pay-cuts had been recommended and approved by the Academy which gave it, they hoped, the imprimatur of the group that supposedly had the best interests of both the employees and owners.

A young story editor named Samuel Marx followed Mayer and another exec as they walked back to their offices after the meeting. Mayer seemed to not know the story editor could hear him as he turned to the other exec and asked, smiling, “How did I do?” It had been a carefully crafted performance.

The original entrance gates at MGM - Lugo Cerra collection

It had also been no coincidence that all the studios had decided on insisting on a 50% pay cut. Jack Warner would later admit that the studio execs had gotten together and decided among themselves on the pay cuts and only later claimed that it had been voted on by the entire Academy. MGM’s head of production, Irving Thalberg, argued that the cuts would hurt moral. He couldn’t have been more correct. Mayer had pointed out that the executives themselves had taken a 35% pay cut for one year. But this did not include the huge bonuses paid out to a small handful of people. 20 to 25 percent of the net profit on the studio’s pictures was divided annually among them.

The Academy of Motion Picture Arts and Sciences had its’ beginnings on January 1927, when Mayer invited 36 of the most influential players in Hollywood to a dinner at the Ambassador Hotel where he proposed the organization.  The non-profit organization would both create standards for the industry as well as be an advocate for those in the industry, arbitrating contracts between the studios and talent.  And, it would be a good public-relations move for the studios and be a way of increasing public interest in Hollywood.

It was the role of labor-arbitrator which was the most questionable. As an organization which had been started by and heavily influenced by the studio heads, it was ridiculous to think that it could be an impartial body in labor negotiations. In actuality, the organization’s role of supposedly advocating for film industry employees, would help prevent unionization of the studios by the talent for a number of years. Mayer and the other studio heads weren’t as concerned with having to pay the talent more as much as they were concerned with losing complete creative control over their films.

The first Academy Awards banquet in 1929 - Academy archives

The Academy Awards themselves were an afterthought. Mayer himself conceived of the awards as being a way to curry favor with the talent. He later said, “I found the best way to handle [filmmakers] was to hang medals all over them. If I got them cups and awards they’d kill themselves to produce what I wanted. That’s why the Academy Award was created.”

For the studio talent, the 50% cuts the studios now asked for were galling and weren’t made easier by the Academy’s ‘approval’ of them, particularly because this was not the first time it had happened. The Academy had also ‘approved’ cuts in 1927 and 1931, and just the year before, Mayer had asked his employees to take a cut again, which the actors patently refused to do. In the economic crisis of the bank collapse, Mayer saw the opportunity to again roll back wages.

Thalberg’s warnings had been prophetic, and the grumblings about the Academy’s worthlessness as a labor arbitrator were evident to all. The screenwriter Brian Marlow turned to a friend and said, “Okay, then, the obvious conclusion to this crap is our need to have a union.” While many of the studio workers were organized under I.A.T.S.E., the creative talent had no representation. The writers, in particular worked under particularly egregious conditions. With no protections, writers could end up having to either share their credits with another person who had contributed very little to the script, or could end up getting no credit at all and finding that the script was credited to the producer’s relative.

Within a month, many screenwriters and actors decided that the Academy was not truly looking out for their interests and formed what would become the Screen Writer’s Guild, (a precursor of the Writer’s Guild of America), the Screen Actor’s Guild, and in 1937, The Society of Motion Picture Art Directors would be formed. Mayer promptly forgot his promise to return “every penny” of forfeited wages and would see record personal profits in the next few years.

It was later estimated that the cuts saved the studio nearly $800,000, much of which went to executive bonuses. The impact on Mayers’ personal finances was soon evident and he became the first man in America to make one million dollars a year. For nearly a decade he would be the highest paid man in the country.

For further reading:

  • “Lion Of Hollywood –  The life and Legend of Louis B. Mayer” by Scott Eyman
  • “The Inquisition in Hollywood -Politics in the Film Community”  by Larry Ceplair &   Steven Englund
  • “Mayer and Thalberg: The Make-Believe Saints” by Samuel Marx