Has Hollywood ever relied on Washington for help? Many Americans would guess no, because compared with the film industries of most other nations, ours has always been privately owned, competitive, and devoted chiefly to profit, with other goals trailing a distant second. Not only that, but for the last half-century Washington and Hollywood have often been at loggerheads, with Washington blaming Hollywood for glorifying social ills such as drug abuse and gun violence, and Hollywood portraying America’s political institutions in a negative light.
Yet when it comes to the rest of the world, Washington and Hollywood are like an old married couple who quarrel at home but are deeply united in public. The fact that America exports more than ten times the number of films it imports is not simply the result of the free market. On the contrary, it is the fruit of a century of cooperation between the two partners that I call the Washington-Hollywood Pact. The Pact was originally based on President Woodrow Wilson’s stated belief that the cinema “speaks a universal language [that] lends itself importantly to the presentation of America’s plans and purposes.”1 But it has changed a lot since then.
The Era of Reciprocity
When America entered World War I in 1917, President Wilson set up the Committee on Public Information (CPI), known as the Creel Committee after its chair, journalist George Creel. One of the first things Creel did was ask the fledgling film studios to help the war effort. They obliged by making anti-German films such as Escaping the Hun and The Kaiser, the Beast of Berlin, that, like the British propaganda at the time, used atrocity stories, including some that were fabricated, to rally isolationist Americans to the cause.
After the war, Washington rewarded Hollywood with the Webb-Pomerene Export Trade Act, which allowed the studios to form a cartel when operating abroad, even though this was illegal at home. Soon that cartel, otherwise known as the Motion Picture Producers and Distributors Association (MPPDA), was strong-arming its way into foreign markets still recovering from the war. Back in 1910, the international market had been dominated by the French studios Pathé Frères and Gaumont. By 1925, America was producing 577 films versus France’s 68.
This is not to suggest that Hollywood forced itself on foreign audiences; its products proved immensely appealing. But without Washington’s help, it would likely have been harder to make the world safe for Mary Pickford and Douglas Fairbanks.
For the next two decades, the MPPDA focused on profit, not politics. For example, the studios continued doing business with Italy and Germany right up until Mussolini and Hitler banned the import of foreign films in 1939. Historians disagree about the studios’ motives for selling movies to fascists. But there is no doubt that the minute America entered World War II, Hollywood began working closely with the Office of War Information (OWI) and other government agencies, including the armed forces and intelligence services. The result was a steady stream of productions ranging from Frank Capra’s army training films, Why We Fight, to hundreds of features that, more often than not, managed to support the war aims without sacrificing entertainment value.
With victory came unprecedented power for both Washington and Hollywood. The MPPDA became the Motion Picture Association of America (MPAA) and formed an overseas arm, the Motion Picture Export Association (MPEA), dubbed “the little State Department.” The MPEA’s first priority was to distribute the industry’s wartime backlog of over 2,000 films into as many foreign markets as possible. This took a bit of doing, because foreign governments had other priorities.
For example, when the financially hard-pressed British government realized that 80 percent of the films on British screens were American, and that $70 million of the revenue from those films was flowing back to Hollywood, it imposed a 75 percent customs duty. The MPEA responded with an embargo, forcing British theaters to either go dark or repeat the same (American) films for weeks at a time. The public outcry was such that the government had little choice but to lift the duty.
In France, the Vichy ban on foreign films had whetted the appetite of audiences (and theater owners) for U.S. films. But like the British, the French were financially strapped and unwilling to see Hollywood take advantage. In addition, French elites considered American movies an assault on French culture. (It didn’t help that the films were being physically transported by vehicles belonging to the U.S. Army’s Division of Psychological Warfare.) So Paris imposed a quota, only to be reminded by Washington that the United States was at the time France’s sole source of debt relief and cash. This situation was resolved by the Blum-Byrnes Agreement of 1946, which relieved France of its war debt and provided $650 million in U.S. aid—in exchange for Paris yielding to the wishes of Hollywood. Within a year, French film production declined by 50 percent.
If this was America’s policy toward its allies, how did it treat its vanquished enemies? Not that differently. At war’s end Washington was preparing to engage in new battles, not just for markets but also for hearts and minds. In Britain and France, the battle was expected to be against the encroaching power and influence of the Soviet Union. In Japan and Germany, it was against both communist influence and the specter of resurgent fascism. In a memo sent to the MPAA in 1944, the State Department made clear its hope that the dream factory would remain on board:
In the post-war period, the Department desires to co-operate fully in the protection of American motion pictures abroad. It expects in return that the industry will co-operate wholeheartedly with the government with a view to ensuring that the pictures distributed abroad will reflect credit on the good name and reputation of this country and its institutions. (emphasis added)2
Translation: Washington agrees to help Hollywood pry open foreign markets, on the condition that the films flowing into those markets would serve to remind audiences of America’s many virtues and good intentions in their part of the world. Rarely had the terms of the Pact been spelled out so clearly.
In Japan, the Pact was upheld by Washington when the U.S. occupation authority oversaw the distribution of over 500 Hollywood films, which all parties assumed would help to create a market. And the studios cooperated by making sure that the films they donated did not contain “imperial” themes such as feudal loyalty and military honor, but rather emphasized individual rights, freedom of speech, free enterprise, and other democratic values.
Germany was a special case, due to the sheer clout of that nation’s film industry under National Socialism and the eagerness of the MPEA to establish its dominance in that market. Initially, the U.S. occupation authority went along, discouraging any attempt by the German studios to revive and asking the MPEA to donate films that, as in Japan, would promote democratic values. But rather than donate films that had the potential to make money in Germany, the MPEA donated films that did not have that potential, such as war films showing the Allies beating Germany, and pre-war comedies that, according to one U.S. intelligence officer, only “irritated” the Germans with their “superficial escapism.”
Concerned less with Hollywood’s profits than with a possible resurgence of Nazism, the U.S. occupation authority took seriously the same intelligence officer’s insistence that “Germans faced with bitter realities” preferred to “hear their own language” and “see “backgrounds and themes as well as actors” that were “familiar.”3 So it decided—against the expressed wishes of the MPEA—to hire out-of-work German filmmakers to make films that would placate the German audience.
Hence the Heimatfilme, a series of sentimental musicals set in Alpine villages untouched by war or Nazism, which (in a nod to the future interests of the MPEA) showed how traditional German values could be reconciled with American-style consumerism. Scorned as reactionary kitsch by Germans born after the war, the Heimatfilme were eventually displaced by the New German Cinema, whose attempts to reckon with the recent past were too bleak to attract a mass audience.
Yet even if the New German filmmakers had been Disneys and Spielbergs, the deck would have been stacked against them, because U.S. dominance of European film markets was built into the Marshall Plan. To most Americans, the Marshall Plan was a generous aid package launched in 1948 to help war-ravaged European nations, including Germany, get back on their feet. To Europeans, however, it was also the leading edge of “U.S. cultural imperialism.” As noted by historian Thomas H. Guback, the Plan’s ideological justification was not only “to strengthen faltering economies against risings from the Left,” but also to serve “to open and maintain markets for American films, . . . seen as propaganda vehicles for strengthening western European minds against pleas from the left.”
Today this analysis sounds either nefarious or necessary, depending on your political perspective. In 1948 it was unremarkable, because it dovetailed nicely with the Washington-Hollywood Pact. What no one foresaw at the time was how quickly the terms of the Pact would change. By 1969, when Guback published his analysis, a covenant based on patriotism and profit had been transformed into a contract based solely on profit.
Estrangement, Loyalty, and the End of Reciprocity
The process began with the House Un-American Activities Committee (HUAC) hearings of 1947-1951. These were not the first such hearings: a decade earlier, the predecessor, the House Committee on Un-American Activities, spent three years probing the political loyalties of the film industry. But because those earlier hearings were focused on Nazism, they did not damage the Washington-Hollywood Pact. The same cannot be said of the anti-Communist rounds.
One thing is clear: from the 1930s through the 1940s, there were a significant number of Party sympathizers in Hollywood, just as in other walks of American life. What is not clear is how dangerous they were. Herein lurks an irony: during the war, the filmmakers most willing to take direction from Washington were Party members committed to Stalin’s Popular Front, which urged cooperation with all forms of anti-fascist cultural production.
The clunky pro-Soviet films produced by these filmmakers—The North Star, Song of Russia, Three Russian Girls—were box-office flops. (Even the movie buff Stalin disliked Mission to Moscow.) But once the war was over, the actual impact of these films mattered less to HUAC (and the studio heads) than the ideological predispositions of the men and women who had made them. And many of these people were fired and/or blacklisted.
These events left a bitter legacy of distrust between the nation’s government and its dream factory. And the two partners dealt very differently with that legacy. Hollywood cultivated its bitterness, never letting the world forget how certain writers and directors suffered under the blacklist. And when the United States went to war again in Asia, there were only a handful of films supporting the anti-communist cause in Korea and even fewer in Vietnam (I can think of only two, both pretty bad).
Yet while Hollywood made a point of distancing itself from America’s geopolitical priorities and concerns, Washington behaved like a loyal spouse who will do anything to save a bad marriage. Most significantly, U.S. political leaders gradually ceased to care whether Hollywood reflects credit or discredit “on the good name and reputation of this country and its institutions.”4 On a more mundane level, Washington has labored mightily to devise legislative remedies to every significant threat, not only to the survival of the American film industry, but also to its global hegemony.
The first such remedy was the Informational Media Guaranty (IMG) of 1948, under which Washington promised to redeem in dollars the overseas earnings of U.S. companies, including film studios, selling “informational media” in countries with non-convertible currencies. As noted by former studio chief David Puttnam in a widely read history of this period, the IMG was based on the still operative assumption that the films being distributed by the MPEA would present “a favorable picture of American life.”
By the 1970s, that assumption was kaput, but that did not stop Washington from riding to Hollywood’s rescue yet again. In 1969, the major studios were hemorrhaging money on lavish musicals and other conventional films that, to say the least, failed to resonate with domestic audiences deeply divided over the Vietnam war, campus protests, urban riots, and political assassinations. With the support of the Nixon administration, Congress enacted tax reforms allowing up to 10 percent of production investment to be deducted from the studios’ overall corporate tax. As Puttnam observes wryly, most of the “bold and adventurous” films of the countercultural 1970s, such as Five Easy Pieces, One Flew over the Cuckoo’s Nest, and Taxi Driver, “were financed using tax shelter money.”
Since the 1980s and 1990s, Hollywood has sought Washington’s help around two major issues: piracy—or “movie theft,” to use the preferred term of an industry that has made billions of dollars on a franchise called Pirates of the Caribbean; and attempts by foreign governments to protect their cultural heritage—and domestic film industries—by restricting the import of U.S. films and other media.
The first issue, piracy, is relatively straightforward. Ever since the invention of tape recording, the U.S. entertainment industry has been concerned about the illegal sale of its products. These concerns intensified in the era of the DVD, and today they are part of an ongoing campaign against the theft of intellectual property broadly conceived. Indeed, in April of last year the Office of the US Trade Representative issued its latest report on the topic, which won kudos from Charles Rivkin, currently the head of the MPAA. Noting that “America’s film and television industry is one of the most highly competitive global industries, generating a positive trade surplus of $12.2 billion and supporting 2.1 million U.S. jobs here at home,” Rivkin reiterated the need “to protect creators’ rights and promote our nation’s creative economy.”
Less straightforward is the second issue. On several occasions between the 1980s and the 2000s, France and whatever allies it could enlist lobbied the World Trade Organization to carve out a “cultural exception” to the free-trade ethos of the post-Cold War liberal order. The American response was always the same: to deny the legitimacy of such claims, on the ground that there is no meaningful distinction between trade in commodities and trade in cultural expression. And in recent years, as the Chinese Communist Party under Xi Jinping has asserted ever more control over the production, content, and distribution of U.S. films in China, the response by both Hollywood and Washington has been equally supine with regard to the protected nature of film as free expression.
There is a rich irony here. In 1915, when the new medium was in its infancy, the Supreme Court decision Mutual Film Corporation v. Industrial Commission of Ohio defined film as “a business, pure and simple.” This exposed film to government censorship at the local, state, and federal level, so over the next several years the MPPDA developed the Production Code, which regulated the content of movies from 1934 to 1968. This being America, the studios also pursued a legal strategy that by mid-century resulted in film being judged a constitutionally protected form of artistic expression. In 1968 this new status led to the elimination of the Production Code and the adoption of the ratings system still in place today. In sum, American filmmakers now have more creative freedom than any of their predecessors, to say nothing of their peers in the rest of the world.
Yet when it comes to penetrating overseas markets, both Hollywood and Washington behave as though it were still 1915. While their shared stance that film is “a business, pure and simple” may work as pushback against the protectionism and diktats of foreign governments, it fosters a troubling disconnect between profit and patriotism. In the short term, it may be good business to treat American movies as widgets with no cultural significance. But in the long term, it is lousy diplomacy.
1. Quoted in Victoria de Grazia, Irresistible Empire (Harvard University Press, 2005), 299.
2. Quoted in David Puttnam, The Undeclared War (Harper Collins, London, 1997), 212.
3. Confidential report from Robert Schmid, ODIC, Intelligence Branch (1946), quoted in Heide Fehrenbach, Cinema in Democratizing Germany (University of North Carolina Press, 1995), n275.
4. This argument, which favors neither censorship nor propaganda, is set forth in my book, Through a Screen Darkly (Yale 2014).