United Artists, Volume 1, 1919–1950: The Company Built by the Stars

3. Joe Schenck's Reorganization: 1925-1931

3 Joe Schenck's Reorganization [1925-1931] JOSEPH SCHENCK TAKES THE HELM Joseph Schenck, producer and entrepreneur, was known throughout the industry for his business acumen, fair play, and generosity. His rise to prominence had been swift. He began by working in an amusement park with his brother Nicholas in the Washington Heights section of New York City. In 1910, they joined the fledgling Marcus Loew Theatrical Enterprises, Joe as head of film and vaudeville bookings and Nick as secretary. While working to build the Loew theater empire, the brothers developed the Palisades Amusement Park in New Jersey, a venture that made them both wealthy men. Joe resigned from the Loew organization in 1917 to promote the career of his new wife, Norma Talmadge. With the help ofthe best directors, writers, and designers that money could buy, he turned her into a highly successful star. Her career reached its peak in the twenties when she was releasing through First National. For that company she made some of her best-remembered pictures-Yes or No?, Smiling Through, Ashes o/Vengeance, Secrets, and Camille, among others. Schenck, in the meantime, purchased a controlling interest in the United Studios in Hollywood and a large block of stock in West Coast Theaters. He also expanded his production activities by taking on Fatty Arbuckle and then members of the talented Talmadge family-Norma's sister Constance and their brother-in-law, Buster Keaton, husband of Natalie, the youngest of the three sisters. Bank of Italy head A. P. Giannini was quick to recognize Schenck's grasp of the entertainment business, so when his bank decided to go into production financing, Joe was made a member of the board with the responsibility of advising the bank on all matters relating to the movie industry. UA had first approached Schenck in 1920 in an attempt to lure the Talmadge sisters from First National. His explanation for not budging indicated the kind of competition the company faced in acquiring product: [ 52 1 Schenck's Reorganization: 1925-1931 [ S3 Norma Talmadge After listening to the arguments and proposition of the First National people ... I am strongly inclined to renew my contract with them for both Norma and Constance pictures. They have a strong claim on my consideration, and I intend to fulfill it. In my first deal with the First National Exhibitors' I have sold them my pictures outright. Later on when I represented to them that conditions in the picture business had changed and my contract with them would not permit me to 54 ] UNITED ARTISTS make any money, they changed my contract and let me have the amount of money that I sold my pictures for outright as an advance, and distributed my pictures on a percentage basis, thereby really making me a present of about a million and a quarter. This has all been pointed out to me clearly, and I feel that I am bound to give them first consideration. 1 The second attempt to capture Schenck succeeded, but it took five days of conferences at Doug and Mary's studio in Hollywood to thrash out a deal. Chaplin was there, of course, as well as Abrams and Dennis O'Brien. VA's past, present, and future were discussed in detail, the meetings sometimes lasted for ten hours. An agreement was reached on November 22, 1924. Schenck was brought in as a partner and elected chairman of the board with the authority to reorganize the corporation. In return for his thousand shares of common stock, Schenck agreed to deliver six Norma Talmadge features. He had the right to release six other movies each year on the condition that he allowed his VA partners to invest equally with him in financing them. The board of directors was reorganized to give the partners equal representation. The directors and corporate officers then were Schenck as chairman; Hiram Abrams, president; Dennis O'Brien, first vice president representing Pickford and Fairbanks; Arthur Kelly, second vice president , representing Chaplin; and Albert Grey, representing Griffith. Griffith was made a party to the agreement even though he did not participate in the discussions. The matters of organization were disposed of during the conferences. Later, when it came to drafting new distribution contracts and formulating a financing scheme, however, the negotiations hit snags. It was Chaplin and not Schenck who created the problems. To enable the company to generate more revenue, Chaplin...