14. Peons By the Pool: Standard Hollywood Contract

Olivia de Havilland as Maid Marian in the Adventures of Robin Hood, (1938) Public Domain Wikimedia Commons

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by Norman B. Schwartz

In the old days of the studio system, now long gone, the Big Five, as they were then called – MetroGoldwyn-Mayer, Fox (one day to unite with Twentieth Century Pictures), Warner Brothers, Paramount Pictures, and RKO – sent armies of talent scouts around the United States and Europe looking for fresh faces, new talent.

One could find these future stars anywhere, Broadway or the West End stage, in college shows and smalltown Vaudeville or music halls. The usual studio procedure was to start with a screen test. If the discovered person could act a bit and proved photogenic, the studio offered a standard four-to-seven-year contract that gave the employer (the studio) the option to drop the signee every six months should the studio discover that the ticket-buying public did not fancy their employee.

The studio heads gave their discoverees free acting and voice lessons and often provided them with new names. The publicists replaced humble origins and mundane lives with more glamorous biographies.

If the employees’ features proved less than flawless, the studio could change their looks with hair dye, makeup, even plastic surgery. Many a brunette starlet willingly became a platinum blonde. Spangler Arlington Brugh became Robert Taylor; Frances Ethel Gumm, Judy Garland; Lucille Fay LeSueur Joan Crawford.

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Although there was nothing in the standard contract that forced any of these signees to go under the knife, most employees agreed because the studio paid. Beauty no longer in the eyes of the beholder but in the hands of its owner.

All understood the rules of the game. Once the employee (the actor) signed, he or she could not work for anyone else without permission, but the studio (the owner) could “loan out” the signee. The loanee continued to be paid the weekly salary specified in his or her contract, but the studio could ask and did ask any price they wished. This proved especially advantageous when an unknown became a star.

Thus, it was not unusual for the owners to charge their competitors many thousands of dollars to borrow young actors who were still earning a lowly weekly wage of 100 to $150. In the rare instance when the ungrateful discoveree objected, the studio, by law, could suspend him or her without payment, their “lost time” added to the time owed. Consequently, a seven-year contract might extend into many more years of servitude.

The first long-term studio contract player brave enough to contest these accepted rules of employment was that pesky New Englander, Ruth Elizabeth “Bette” Davis, who had been under contract to many studios until she won her first Oscar for Warner Brothers for her role in the 1935 film Dangerous. Knowing that her award increased her value, she refused all the mediocre scripts the studio handed her and demanded much more than her sixteen-hundred-dollar weekly salary.

As to be expected, Warner Brothers retaliated by putting her on suspension. No work. No pay. But that did not deter Bette. When a British film company offered her $50,000 to make a film with Maurice Chevalier, she readily accepted, bade Hollywood adieu, and set off for London to make it. In return, her boss, Jack Warner, filed a legal injunction in the United Kingdom that forbade their rebellious ingenue

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53 from appearing. Warner hired the barrister Sir Patrick Hastings, who argued in the High Court that her studio had built her up almost from oblivion and accused Miss Davis of being “a very naughty young lady.” Davis – no shrinking violet, she – disagreed. In court, she defined herself as an “underpaid slave, held under a life sentence.” In October 1936, after much consideration, the High Court judge, Mr Justice Branson, ruled that the American visitor was in breach of contract with her legal employer, Warner Brothers of the United States, “for no discoverable reason except that she wanted more money.”

Branson’s decision left her with a $30,000 legal bill. Jack Warner, hoping to induce her – a most valuable property – to return to her home studio, agreed to pay in part – a rare act of managerial generosity atypical of the brothers. Once back on the lot, Warner increased her salary to $2,250 a week and agreed to find her better roles. Bette won her second Oscar on the Warner Brothers production of Jezebel in 1938. The film cost $1.25 million to make and grossed a small profit of $1.43 million worldwide. In Hollywood, where all’s well that ends in the black, Warner and Davis both thought themselves vindicated.

It took many more years after that before another discontent was brave enough to take the mighty brothers to court. This time it was the Tokyo-born English actress Olivia de Havilland, Robin Hood’s Maid Marian and Gone with the Wind’s Melanie. What exasperated de Havilland most was not her salary, but that her less talented although very beautiful younger sister, Joan Fontaine (who had won an Oscar in 1941 for Alfred Hitchcock’s Suspicion), was getting much better scripts at David Selznick’s boutique studio in Culver City. Selznick, unlike her employers, hand-crafted every script he made, thinking them all masterpieces that would last forever. The brothers Warner – Harry, Albert, Sam and Jack – her employers, had another view. They were in the film-manufacturing business, one with a limited shelf life.

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In 1944, Olivia, who refused the sixth script offered to her, was put on suspension. Unlike most of her beaten-down fellow actors who eventually surrendered, Olivia was clever enough to look for a Hollywood lawyer who had studied contract law.

Attorney Martin Gang informed her he thought the standard contract, which all actors signed, violated an old California law against peonage. Her agent, Lew Wasserman, agreed; he informed his client there was a reason why Hollywood contracts were never for more than seven years; adding suspension time onto it was involuntary servitude banned by California’s first constitution in 1849. “Anything beyond seven becomes slavery.”

Olivia and the Warners met in court. Jack Warner informed his competitors at the Big Six (Columbia Pictures had ascended) that until the litigation was settled, his unhappy star was still under exclusive contract. In effect, blacklisted.

In March 1944, a lower court in California ruled in her favor. By then, Olivia’s legal bills had risen to $12,000. The California Supreme Court upheld the lower court decision, ruling that de Havilland was free of her contract and did not have to give her former employers time to make up for her suspensions. Olivia left Warner Brothers and signed a two-picture deal with Paramount. The court’s decision, now known as the “de Havilland law,” the worker’s Emancipation Proclamation, applies to this day.

Four years later, in 1948, the Hollywood studios suffered another blow to their absolute power, more damaging than their minor setback with an actress. The United States Supreme Court, the highest court in the land, ruled that Hollywood’s ownership of movie theaters that showed films as well as studios that made them was by definition a monopoly and ordered the Big Six to divest themselves of their theater chains.

Lou Wasserman, the agent who compared the actor’s contract to indentured slavery, smelling the demise of the old hierarchical studio system, took this opening of the windows as an occasion to counsel his clients to take in a deep breath and refuse to sign long-term contracts. He encouraged his actors to form corporations. Under California law, any studio wishing to hire them would have to negotiate with a business entity rather than an individual. By law, the corporation could ask payment based on how much money the star’s pictures made at the box office. The more profitable, the higher the price. Overnight, the days of the contract player were over.

David Niven, who had been a roaming whiskey sales agent before his British pals in Hollywood encouraged him to have a go at acting, was one of the first to see the obvious advantage of being a freelancer. After many years of voluntary servitude to producer Sam Goldwyn, he offered to buy back his contract. Goldwyn refused, ripped up his contract, immediately releasing the actor by firing him in 1949. Despite what some saw as an unnecessary means of termination, Niven, the officer and gentleman who had attended the Royal Military Academy at Sandhurst, was now as unrestricted as Olivia. He and his corporation could charge what they thought was fair market price for his services.

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Niven, who had come to America as a sales representative for an English whiskey company, became a very rich man. Many years later, after he had become one of the highest-paid leading men in the world, an old friend asked David why, unlike so many of his Hollywood contemporaries, he bore no resentment whatsoever to those who had so long exploited him. In that charming insouciant manner the world so loved in his films, Niven replied that any producer foolish enough to think he could turn a salesman into an actor deserved all the money he could get.

Following his Oscar win for MGM’s Separate Tables (1959) – a role that paid him far more for only twenty-three minutes of screentime than his entire year’s salary with Goldwyn – his former employer invited Niven to his Beverly Hills home. There, to Niven’s great surprise, he saw a framed photo of himself in uniform that he had sent Sam Goldwyn during the Second World War, when Niven was serving as an officer in the British armed forces.

It was still there, atop the piano, as it had been during the years when David was under servitude. Goldwyn’s wife told him that despite her husband’s gruff dismissal, Sam had never taken it down. Producer meets Noblesse Oblige or Noblesse Oblige meets Producer?

In Hollywood, it didn’t matter.

Both parties had profited.

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Norman B. Schwartz is the author of the comic novels ‘ALL THINGS small‘, Paradise Now, Don Juan in Space, True (Cinema) Confessions, Hollywood: Below and Beyond, and the DIY guide, The Art Of The Schnoorr. He spent over forty years working on films in Hollywood and Rome. Norman was the first ADR sound editor / post-production dialogue director to be admitted to Academy of Motion Picture Arts and Sciences in Los Angeles.

Norman B. Schwartz’s essays will appear in sequence monthly in each issue of Ars Notoria Magazine. In October of 2025, a paperback edition of the complete collection of his essays titled: HOLLYOOD  Actors & Politicos/ a Shared Profession will  be available for purchase from Centre House Press.