The origins of the film exchange

Film distributors frequently speak of 'selling' film to theaters even though films are actually rented on a limited basis. This term is certainly a holdout from the late 19th century when most film subjects were indeed sold outright, sight unseen, to theater owners, or 'exhibitors'. The sold films were not returnable or refundable. Around the turn of the century, a 15-metre reel of film could cost an exhibitor $25.00 to purchase.¹ If the print was properly maintained, it could be projected at least 300 times.² In the event the exhibitor wished to change the bill at his or her nickelodeon, a new film needed to be purchased, and this resulted in scores of exhibitors accumulating large collections of old film reels. Vita-graph's William T. 'Pop' Rock, for example, needed to buy 600 films from the Edison Manufacturing Company to supply his Vitascope Hall in New Orleans between July and October of 1896. At the time of his New Orleans departure in the fall of 1897, Rock sold half his film collection to a group of Texans in exchange for diamonds.³

The notion of renting rather than selling old reels of motion pictures was thought a practical solution by some members of the business as early as the 1890s. In 1896, Norman C. Raff and Frank R. Gammon began renting used Edison films for $10.00 apiece after they took control of Kinetoscope's New York office.⁴ Percy L. Waters also opened his film rental office (Kinetograph) in New York at this time and became one of the first to rent or lease reels direct to theaters without also providing a projectionist to operate the film equipment.⁵ Others began imitating this procedure, renting or trading their film inventories with other dealerships or exhibitors. Many exhibitors seemed to prefer trading with one another because to trade with dealerships did not always guarantee high quality pictures in return.⁶

In any event, these agencies engaging in the practice of renting or trading motion pictures were soon known as film 'exchanges'. In 1900, Nicholas Power, a motion picture projector manufacturer, opened one of the first film businesses in which the word 'exchange' was applied: The New York Film Exchange in the Woods Building at 117 Nassau Street, Manhattan. Although the principal inventory was projection equipment, Powers' business also rented films until it became strictly an equipment outlet in 1905 under the name of The Nicholas Power Company.⁷

Numerous distribution pioneers established their businesses around the dawn of the 20th century. Two important Chicago film agencies opened in 1898 under the management of William H. Swanson and George Kleine. Swanson's agency specialized in renting motion picture films while the Kleine Optical Company started as a dealership for stereopticon slide projectors, magic lanterns, lenses, and 35mm 'Magniscope' films. In 1901, Kleine Optical began renting films to exhibitors and within two years became the main 'selling agent' (middleman between producer and exhibitor) for both Edison and Biograph.⁸

Frank J. Howard was credited with introducing motion pictures to the New England territory and opening that region's first film exchange. A former shooting gallery owner, Howard started an Edison dealership with Charles W. Sheafe in Boston during the winter of 1894–95, eventually selling Kinetoscope projectors, Edison films, and various film supplies. Upon Sheafe's retirement in 1902–03, Howard reorganized the operation as the Howard Film Exchange.⁹