When the Paramount Decrees came down from on high in 1948, movie studios enjoyed immense control over their product and were faced with a decision of divorcement between one of the three major industry arms – production, distribution and exhibition. What came to be law in 1948 was initiated over a decade earlier in 1936, when William Benham of the Attorney General’s office began sniffing around Hollywood.
With the effects of the Great Depression still lingering in 1938, President Roosevelt leaned into an antimonopoly mindset. FDR appointed Thurmond Arnold, former mayor of Laramie, Wyoming, and professor of law at Yale, to head the Department of Justice antitrust division. After conferring with the President, the Paramount case was submitted to the Southern District Court of New York in July.
Harry Warner wrote to trusted FDR administrator Harry Hopkins in 1939, arguing that forcing studios to divest theater chains would hurt export trade and add risk for investing in larger budget, quality films. billed Hollywood as “The Unhappy Land of Make-Believe” as industry insiders noted a growing concern that the antitrust movement was gaining momentum.
However unlikely, the studios continued to fight with countersuits. In 1947 alone, the major studios paid out $1,378,634 in legal fees to fight the antitrust cases. The carefree attitude towards the U.S. Government’s interest in Hollywood trade practices waned as other issues reared up. For example, weekly movie attendance in 1940 was 80 million, but was slipping towards 60 million in 1950.
Federal judge William Hawley Atwell spoke up on antitrust issues in a statement published in the March 11, 1948, issue of, contending that “the monopoly statues were originally intended for the good of the people, not the amusement of the people sitting in picture shows.” Atwell, a federal judge since 1923, also pointed to a target beyond the top producers – the stars themselves who reap “the major profits.” “When the government needs money,” mused Atwell, “we can call upon them for taxes.