DRI-275 for week of 8-24-14: The Movie Law of Inverse Relevance

An Access Advertising EconBrief:

The Movie Law of Inverse Relevance

Beginning in the late 1940s and early 50s, more Hollywood movies were made to push a polemical agenda or send a political message. Prior to that, the major Hollywood studios followed “Mayer’s Maxim.” Metro Goldwyn Mayer’s boss Louis B. Mayer is credited with the dictum: “When I want to send a message, I’ll call Western Union.” Mayer objected to “message movies” because he didn’t think they were good box office.

This space has taken a different tack, objecting to Hollywood message movies a posteriori, doubting not their entertainment value but rather their veracity. The problem is that Hollywood producers, directors and screenwriters cannot keep their thumbs off the scales. Since reality stubbornly refuses to accommodate itself to their warped vision, they film their “true stories” by lying about the facts in order to satisfy the audience and themselves simultaneously. The problem is so endemic that the only safe approach is for viewers to assume that filmmakers are lying until proven otherwise.

This tempts us to the conclusion that truth and movies are mutually exclusive. We’re congenitally suspicious of entertainment-oriented Hollywood films. For example, we know that action movies defy the laws of physics and suspense movies end happily whereas real-life suspense often does not. If movies that advertise “This is a true story” are almost certainly lying to us, where can we hope to find a semblance of reality?

The surprising answer is that some of the most entertaining movies from Hollywood’s Golden Age, movies made with no apparent thought for social relevance, occasionally offer stunningly accurate illustrations of history and economics. This forms the basis for an empirical dictum called the Movie Law of Inverse Relevance: The more entertaining the movie, the greater the likelihood of encountering truth within it; the more socially conscious the movie, the less likely it is to be true.

Boom Town: More Than Just Another Hollywood Potboiler

Oil has been the lifeblood of life on Earth for over a century. You’d never know it from depictions of the oil business on screen, which have tended to treat petroleum as a commodity freighted with tragedy and the oil business as populated by psychotics. Yet it was not ever thus.

The 1940 movie Boom Townwas one of the biggest box-office movies in the year after Hollywood’s legendary year of 1939. It starred Clark Gable, the “King of Hollywood,” and Spencer Tracy, winner to consecutive Best Actor Academy Awards in 1937 and 1938. The female lead, Claudette Colbert, had teamed with Gable in 1934’s It Happened One Night, the first film ever to win Academy Awards in the five major categories – Best Picture, Best Actor, Best Actress, Best Director and Best Screenplay. This was their “reunion” film, long-awaited by movie audiences throughout America. As if this blockbuster combination of stars weren’t enough to assure the film’s success, they were joined by Hedy Lamarr, perhaps the most beautiful woman in the world, and Frank Morgan, a scene-stealing character actor and eventual Oscar nominee in both the Best Actor and Best Supporting Actor categories.

The movie’s formidable assemblage of talent was enough to lure people into the theaters and keep them in their seats. But the script, by Gable’s favorite screenwriter, John Lee Mahin – based on a story by another Gable favorite, James Edward Grant – told more than the usual Hollywood tall tale. It told a true story of the oil business and the men who made it work – and a government that tried to torpedo it.

The Plot

The time is 1912. The place is a dusty Texas town called Burkburnett, which some spring rains have turned into a mudhole. Two men are crossing the muddy street from opposite directions on a narrow, rickety bridge of planks built from two-by-fours. They meet in the middle. The tall one (Gable) addresses the other (Tracy) as “Shorty” and cordially invites him to stand aside, knowing this would entail a side trip into the mud. This meets with a stony refusal. The two trade insults and the impasse is about to escalate into fisticuffs – then gunfire splits the air when a man flees the nearby saloon with a deputy sheriff in hot pursuit. The two men abandon their dignity and leap head-first into the mud rather than risk meeting a stray bullet.

Thus is born a famous friendship between “Big John” McMasters and “Square John” Sand. The two share more than a first name. They are both wildcat oil prospectors, freshly arrived in town thanks to the discovery of oil that has turned a tiny Texas fly-speck into a legendary boom town. They have both staked out a likely looking stretch of ground outside of town. They pool their meager assets and find they lack sufficient funds to purchase drilling equipment and supplies. McMasters allows Sand to choose the precise spot to “sput in” (drill) but promises to produce the necessary materiel. At his urging, the two stage a skit to deceive a local equipment dealer, Luther Aldrich (Frank Morgan) into supplying the necessary stuff in exchange for a small share in their well which, they assure him confidently, is a sure thing to succeed.

The well fails. Sand reluctantly admits that McMasters’ choice of drilling location would have been better. Now the pair must raise their roll again – after first fleeing town one jump ahead of that same sheriff’s deputy whose bullets they had earlier dodged, one Harmony Jones (character actor Chill Wills). The film skillfully uses montage to concisely depict the succession of odd jobs and travails that eventually takes them back to Burkburnett. They have enough money to pay for tools and equipment now, but not enough to pay off the debt for their previous dry hole.

Undaunted, the two bluff their way past Luther Aldrich a second time. They’d be crazy to try the same routine on him again, wouldn’t they? This time they’ve really got a sure thing, and they’ll increase his stake as an incentive to agree to an ownership share against what they owe. Luther is imprudent enough to agree, but not completely crazy; he dispatches Harmony as a security guard over their claim to make sure they don’t run out on him a second time. McMasters gives Sand the naming rights over their claim and Sand chooses “Beautiful Betsy” in honor of the girl he left behind back East.

As the drilling progresses, the restless McMasters leaves Sand on duty at the rig one Saturday night and goes into town to relieve the monotony. He bumps into a proper Eastern girl (Claudette Colbert) who has journeyed to Burkburnett to meet a friend. She and McMasters experience the classic Hollywood “love at first sight” evening. By morning, they are married. Sand returns to their boarding house to break the news that their gusher has come in and the time-honored plot device of unknown identity unfolds – Colbert is Betsy Bartlett, the woman Sand is expecting to marry, while Sand is Betsy’s best-friend-who-she-doesn’t-feel-that-way-about. McMasters, in true Gable fashion, steps forward and invites Sand to take a poke at him. But Sand quietly asks Betsy if McMasters is the man she really wants. Upon verifying the truth, he calmly leaves the scene, implicitly giving the two his blessing. “Honey,” McMasters concludes admiringly, “that is a man.”

The movie’s next few minutes set the scene for the rest of the film. The audience learns that McMasters’ love for Betsy is true but equaled by his love of the chase and conquest. Betsy’s real rival is not other women but oil; women only tempt McMasters when he is tied down and prevented from exercising his talent for serial exploration and exploitation of oil. And Sand remains faithful to Betsy, his romantic ardor now sublimated into friendship. The movie resolves into the kind of romantic triangle that only Hollywood could dream up. McMasters and Sand make and lose a succession of fortunes and their friendship is broken and mended repeatedly. The cause of these episodes is Betsy; Sand will not allow McMasters to abuse Betsy’s love.

When McMasters meets the illegally lovely Karen Vanmeer (Hedy Lamarr), the two are drawn to each other. Vanmeer is a skilled business analyst who wants to acquire McMasters in a hostile takeover from his wife. Sand won’t permit it. He proposes marriage to Vanmeer and offers her lavish financial terms including a draconian divorce settlement that would enrich her. Astonished, she mutters, “I see. Greater love hath no man than…”

Eventually, the long-delayed fisticuffs between McMasters and Sand explode. The movie culminates in a battle over control of the oil business.

The plot summary highlights the entertainment value of Boom Town. It says nothing about the movie’s contributions to our understanding of history and economics.

Boom Townas History

There is no narrative or visual prelude assuring us that “this is a true story.” Nevertheless, there is no movie that tells the story of wildcat oil exploration and drilling in the early 20th century as vividly and truthfully as Boom Town. Burkburnett was a real Texas boom town where oil was discovered in 1912. The discovery turned the town upside down in just the manner portrayed in the movie.

How many movies shown today are as relevant to life today? The Burkburnett of 1912 is uncannily like parts of Texas and North Dakota today – scruffy, muddy, starved of infrastructure, crowded with roughnecks, troubled with petty crime but bursting at the seams with opportunity and unbridled vitality. Both today and a century ago, this was a frontier region – not in the geographic sense but in an economic sense. This was entrepreneurship at its most raw and visceral, not something out of business school.

Perhaps the most neglected feature of Boom Townis the role played by this scenic backdrop. The movie is so dominated by its multiple stars and impeccable supporting cast that the audience is unconscious of the background. We feel it acutely nonetheless. The critic James Shelley Hamilton wrote long ago of the elements that make up “the feet a movie walks on.” Boom Town owes its jaunty strut to its brilliantly observed picture of the life of an oil town, whether in Texas, Oklahoma, Pennsylvania, California or Central America.

Boom Town as Economic Theory and Logic

Boom Townshould be shown in university courses on economic history and theory. We could leaf diligently through reference sources like Halliwell’s Film and Video Guide or Leonard Maltin’s Movie Guide without encountering another movie so rich in economic meaning.

The physical, geologic circumstances of petroleum evolution and extraction create an age-old problem of economic investment and consumption. In the movie’s final third, McMasters discovers that the refining of oil offers even more scope for entrepreneurial skill and profit than does exploration and production. Characteristically, he charges into the market full-bore, determined to risk going down in flames in order to become a leader. He forms a partnership with wily veteran Harry Compton (character actor Lionel Atwill). But when Sand and McMasters feud over the latter’s treatment of Betsy, Sand enlists Compton in an effort to break McMasters by double-crossing him. In retaliation, McMasters calls on his countless contacts among the country’s small wildcatters, persuading them to forsake the partnership of Compton and Sand and sell their oil to him instead.

McMasters uses an argument that must have seemed obscure to most movie audiences – and probably still does. But knowledgeable industry observers and economists will recognize within it a time-honored conundrum. “Sand will make you force-pump your wells,” he insists to the wildcatters. “Pretty soon you’ll be looking at dry holes. Go with me and I’ll keep you pumping years longer.” Hollywood was – and still is – famous for dishing out all manner of baloney in the service of its plots. But this wasn’t the usual nonsense.

According to orthodox geological theory, petroleum is created by fossilized deposits that crystallize in the ground over many millennia. These deposits eventually liquefy and congregate in underground reservoirs called “traps.” That term is particularly apt when the liquid is literally trapped within rocks like the shale or sandstone that now supplies much of the oil being produced in the northern United States and Canada. Oil exploration has traditionally consisted of the location, identification and confirmation of these traps.

But just locating oil isn’t enough; that’s just the beginning of the process. Getting the oil out of the ground was no picnic in the early 20th century. Drilling holes in the ground using percussive methods – e.g.; knocking holes with heavy machines – enables the oil to be reached and exhumed. Raising it to the surface isn’t like dropping a dipper in a pail of water lifting it to your lips. It takes great physical persuasion to accomplish. McMasters’ use of the term “force-pumping” referred to the practice of pumping compressed air down the drilling shaft to force the oil to the surface. This term involved a certain amount of time, trouble and danger. But the worst thing about it was the tradeoff it implied. Its use eventually made the trap unproductive – not because the oil was fully extracted but instead because the remaining oil could no longer be withdrawn from the ground. Given the technology currently in use, it was stuck there. We know it was there, or at least those in the know did. But it didn’t count as “reserves,” because “proven reserves” only consisted of oil that was actually extractable. Depending on particular circumstances, this might be anywhere from 30% to 60% of the original petroleum deposit in the trap.

These facts of geologic and economic life are particularly germane today. The U.S. economy today is getting a shot in the arm from oil exploration and production in Texas and North Dakota, not to mention the oil coming from our longtime leading supplier to the north, Canada. Strictly speaking, this oil comes not from “new” discoveries but from long-existing fields and rigs that only recently became economically useful. New techniques of “enhanced recovery” like horizontal drilling (over fifty years old but newly profitable) and “fracking” have given these sources a new lease on life – which aptly describes the effect the oil has had on the America economy.

The wildcatters McMasters and Sand fought over faced a classic economic dilemma. They could pump more oil now and a lot less later or pump somewhat less now and somewhat more in the future. Sand himself alludes to this in courtroom testimony by calling McMasters a “conservationist… although he didn’t know it.” We are taught – conditioned is a better word – to view “conservation” as a good thing, as the antonym of “waste.” That is simply not true, though. There is no inherent, technological logic of efficiency that allows us to prefer consumption in the future to consumption now; only human preferences and purposes can resolve this issue.

That is where the interest rate enters the picture. Interest rates balance the supply of saving funds and the demand for investment funds – that is, the desires of those who want to consume more in the future and those who want to produce things to be consumed in the future. In pure theory, there is an optimal rate of extraction for natural resources such as petroleum that depends on the level of interest rates. Relatively low interest rates suggest that people want to consume lots in the future and that we should economize on consumption now and concentrate on production for the future. High interest rates encourage current consumption and discourage saving and investment geared toward the future.

The movie presents conservation in a whole new lightas governed by economics. Boom Towndoesn’t present this relatively sophisticated analysis explicitly; it just treats McMasters as a hero for promoting “conservation.” The implications of this, however, are unprecedented.

For one thing, Sand suggests that McMasters is acting entirely in pursuit of his own profit, yet his actions promote the general interest. That is, he is providing an operational definition of Adam Smith’s famous invisible hand at work. Celebrations of Adam Smith in Hollywood movies occur roughly as often as Halley’s Comet visits our solar system. For another, conservation in the movies is practiced by environmentalists or mavericks or nut jobs that are portrayed as really smarter than successful people – but never by successful businessmen. In 1940 as today, businessmen weren’t allowed to act nobly or altruistically within the framework of a movie unless they were portrayed as deliberately scorning profit.

Compton matter-of-factly uses the antitrust laws as a tool to harm his competitor, McMasters, thus serving his own business advantage. When Compton (Atwill) muses, “I wonder what the federal government would say about McMasters’ activities…,” and we then witness McMasters’ trial for violating the provisions of the Sherman Antitrust Act, it is a seminal movie moment. It would be over twenty years before radical historian Gabriel Kolko would advance his famous theory of “regulatory capture,” which was eventually co-opted by the right wing as a key plank in its opposition to the regulatory state. Kolko’s research showed that the first great regulatory initiative, the Interstate Commerce Commission (ICC) in 1887, was ushered in by the corporate railroad interests it ostensibly was created to regulate. The railroad business was beset by the age-old bugbear of industries with high fixed costs and low variable costs: price wars among competitors. The ICC cartelized the industry by raising prices and ending the price wars. Subsequent research has shown that antitrust enforcement has specialized in suppressing competition by concentrating on protecting competitors from competitive damage rather than safeguarding the competitive process itself.

McMasters successfully persuades wildcatters to forsake Compton and Sand in his favor. Yet his actions are criminalized as “monopolization.” It is true that orthodox economic theory describes a monopolist as one who “restricts” output in his own interest. But his ability to do that derives from restrictions on entry into the industry. The oil business is legendary for the absence of just those restrictions; indeed, that is what Boom Town is all about. Even the smallest wildcatter, whose fraction of total oil output is so tiny as to foreclose any influence on the market price of oil, still faces a problem of optimizing the time structure of oil extraction and sale. This problem is absent from orthodox theory only because that theory is timeless; it foolishly treats production and consumption as though occurring simultaneously in a single timeless instant.

In the event, the movie and the jury both vindicate McMasters by finding him innocent of monopolization. Unfortunately, he has spent so much money in his legal defense that he is now broke again, for what seems the umpteenth time. And this is yet another sophisticated economics lesson: somebody can be right and win in court, yet still be defeated by the magnitude of legal expenses.

Entertainment Wins Out in the End – as Usual

We are seemingly set up for a downbeat ending. But not in 1940, not when Clark Gable, Spencer Tracy and Claudette Colbert are heading the cast. At the fadeout, we find ourselves on a California hillside, overlooking a valley. McMasters, Betsy and Harmony and broke but happy, living out of a trailer and working the one small section of oil property that McMasters has left after his devastating brush with antitrust law. Who should come wandering over the hill but Luther Aldrich and John Sand? Aldrich has persuaded Sand to invest in the property as a devious scheme to reunite the old partners. Grudging at first, they spar over where the oil structure is located and where the rig will sput in. They turn their aggressive humor on their old target; Aldrich will naturally float them the tools and equipment in exchange for an ownership share in the property, in lieu of cash payment. “Oh, no!” Aldrich exclaims. “You two go broke on your own this time. There’s a dry hole in every foot of this place.”

As the background music score swells, the four principals stroll arm in arm toward the camera, grinning happily. “What’s the name of this sucker’s paradise?” demands Aldrich. “They named it after some old guy called Kettelman,” McMasters explains nonchalantly. “They call it ‘Kettleman Hills.'”

“Kettleman Hills?” Aldrich scoffs. “Doesn’t even sound like oil.”

The 1940 movie audience knew what today’s audience, for whom American history is a lost pastime, never learned. The gigantic Kettleman Hills discovery was one of the greatest oil booms of its day. McMasters, Sand, Aldrich and Betsy will soon be richer than ever. It’s happy-ending time for the cast of Boom Town.

The Moral

Metro Goldwyn Mayer never set out to make Boom Town a “relevant” movie, slake an executive’s social conscience or satisfy a star’s altruistic longings. If anybody associated with the project sensed its historical or economic uniqueness, it was a well-guarded secret. Its singular goal was entertainment, one that it fulfilled admirably.

The bleached bones of failed socially conscious and message movies litter the pages of Variety and other trade publications. The lies told by the numerous “true stories” and exposes await exposure by an investigator with the intestinal and anatomical fortitude for the job. Buried within the boundless entertainment of gems like Boom Town are the real lessons Hollywood can teach us about economic history and theory, freedom and free enterprise.

The relationship between socially relevant pretension and truth in movies is inverse. The more relevance, the less value; the less relevance and the more entertainment, the more truth.

DRI-190 for week of 12-30-12: Stereotypes Overturned: Race, Hollywood and the Jody Call

An Access Advertising EconBrief:

Stereotypes Overturned: Race, Hollywood and the Jody Call

The doctrine often referred to as “political correctness” ostensibly aims to overturn reigning stereotypes governing matters such as race. Yet all too often it results in the substitution of new stereotypes for old. Economics relies on reason and motivation rather than political programming to provide answers to human choices. Nothing could be more subversive of stereotypes than that.

What follows is a tale of Hollywood, race and the American military. At the time, each of these elements was viewed through a stylized, stereotypical lens – as they still are to some extent. But in no case did this tale unfold according to type. The reasons for that were economic.

The Movie Battleground (1949)

In 1949, Metro Goldwyn Mayer produced one of the year’s biggest boxoffice-hit movies, Battleground. It told the story of World War II’s Battle of the Bulge as seen through the eyes of a single rifle squad in the 101st Airborne Division of the U.S. Army. In late 1944, Germany teetered on the edge of defeat. Her supreme commanders conceived the idea of a desperate mid-winter offensive to grab the initiative and rock the Allies back on their heels. The key geographic objective was the town of Bastogne, Belgium, located at the confluence of seven major roads serving the Ardennes region and Antwerp harbor. Germany launched an attack that drove such as conspicuous salient into the Allied line that the engagement acquired the title of the “Battle of the Bulge.”

The Screaming Eagles of the 101st Airborne were the chief defenders of Bastogne. This put them somewhat out of their element, since their normal role was that of attack paratroopers. Despite this, they put up an unforgettable fight even though outnumbered ten to one by the German advance. The film’s scriptwriter and associate producer, Robert Pirosh, was among those serving with the 101st and trapped at Bastogne.

Battleground accurately recounted the Battle of the Bulge, including an enlisted man’s view of the legendary German surrender demand and U.S. General McAuliffe’s immortal response: “Nuts.” But the key to the film’s huge box-office success – it was the second-leading film of the year in ticket receipts – was its continual focus on the battle as experienced by the combat soldier.

The men display the range of normal human emotions, heightened and intensified out of proportion by the context. Courage and fear struggle for supremacy. Boredom and the Germans vie for the role of chief nemesis. The film’s director, William Wellman, had flown in the Lafayette Escadrille in World War I and was one of Hollywood’s leading directors of war films, including the first film to win a Best Picture Oscar, Wings.

Some of MGM’s leading players headed up the cast, including Van Johnson, George Murphy, John Hodiak, and Ricardo Montalban. The film was nominated for six Academy Awards and won two, for Pirosh’s story and screenplay and Paul Vogel’s stark black-and-white cinematography. In his motion-picture debut, James Whitmore was nominated for Best Supporting Actor and won a Golden Globe Award as the tobacco-chewing sergeant, Kinnie.

Whitmore provides the dramatic highlight of the film. Starving and perilously low on ammunition, the men of the 101st grimly hold out. They are waiting for relief forces led by General George Patton. Overwhelming U.S. air superiority over the Germans is of no use because fog and overcast have Bastogne completely socked in, grounding U.S. planes. Whitmore’s squad is cut off, surrounded and nearly out of bullets. Advised by Whitmore to save their remaining ammo for the impending German assault, the men silently fix bayonets to their rifles and await their death. Hobbling back to his foxhole on frozen feet, Whitmore notices something odd that stops him in his tracks. Momentarily puzzled, he soon realizes what stopped him. He has seen his shadow. The sun has broken through the clouds – and right behind it come American planes to blast the attacking German troops and drop supplies to the 101st. The shadow of doom has been lifted from “the battered bastards of Bastogne.”

1949 audiences were captivated by two scenes that bookended Battleground. After the opening credits and scene-setting explanation, soldiers are seen performing close-order drill led by Whitmore. These men were not actors or extras but were actual members of the 101st Airborne. They executed Whitmore’s drill commands with precise skill and timing while vocalizing a cadence count in tandem with Whitmore. This count would eventually attain worldwide fame and universal acceptance throughout the U.S. military. It began:

You had a good home but you left

You’re right!

You had a good home but you left

You’re right!

Jody was there when you left

You’re right!

Your baby was there when you left

You’re right!

Sound Off – 1,2

Sound Off – 3,4

Cadence Count – 1,2,3,4

1,2 – 3-4!

At the end of the movie, surviving members of Whitmore’s squad lie exhausted beside a roadway. Upon being officially relieved and ordered to withdraw, they struggle to their feet and head toward the rear, looking as worn out and numb as they feel. They meet the relief column marching towards them, heading to the front. Not wishing for the men to seem demoralized and defeated, Van Johnson suggests that Whitmore invoke the cadence count to bring them to life. As the movie ends, the squad marches smartly off while adding two more verses to the cadence count, supported by the movie’s music score:

Your baby was lonely as lonely could be

Until he provided company

Ain’t it great to have a pal

who works so hard to keep up morale?

Sound Off – 1,2

Sound Off – 3,4

Cadence Count – 1,2,3,4

1,2 – 3-4!

You ain’t got nothing to worry about

He’ll keep her happy ’till I get out

And I won’t get out ’till the end of the war

In Nineteen Hundred and Seventy-four

Sound Off – 1,2

Sound Off – 3,4

Cadence Count – 1,2,3,4

1,2 – 3-4!

The story of this cadence count, its inclusion in Battleground, its rise to fame and the fate of its inventor and his mentor are the story-within-the-story of the movie Battleground. This inside story speaks to the power of economics to overturn stereotypes.

The Duckworth Chant

In early 1944, a black Army private named Willie Lee Duckworth, Sr., was returning to Fort Slocum, NJ, from a long, tiresome training hike with his company. To pick up the spirits of his comrades and improve their coordination, he improvised a rhythmic chant. According to Michael and Elizabeth Cavanaugh in their blog, “The Duckworth Chant, Sound Off and the Jody Call,” this was the birth of what later came to be called the Jody (or Jodie) Call.

Duckworth’s commanding officer learned of popularity of Duckworth’s chant. He encouraged Duckworth to compose additional verses for training purposes. Soldiers vocalized the words of the chant along with training commands as a means of learning and coordinating close-order drill. Duckworth’s duties exceeded those of composer – he also taught the chant to white troops at Fort Slocum. It does not seem overly imaginative to envision episodes like this as forerunners to the growth of rap music, although it would be just a logical to attribute both phenomena to a different common ancestor.

Who is Jody (or Jodie)? The likely derivation is from a character in black folklore, Joe de Grinder, whose name would have been shortened first to Jody Grinder, then simply to Jody. The word “grind” has a sexual connotation and Jody’s role in the cadence count was indeed been to symbolize the proverbial man back home and out of uniform, who threatens to take the soldier’s place with his wife or girlfriend.

Already our story has turned certain deeply ingrained racial stereotypes upside down. In 1944, America was a segregated nation, not just in the South but North, East and West as well. This was also true of our armed forces. Conventional thinking (as distinct from conventional wisdom) holds that a black Army private had no power to influence his fate and was little more than a pawn under the thumb of larger forces.

Yet against all seeming odds and expectations, a black draftee from the Georgia countryside spontaneously introduced his own refinement into military procedure – and that refinement was not only accepted but wholeheartedly embraced. The black private was even employed to train white troops – at a point when racial segregation was the status quo.

Pvt. Duckworth’s CO was not just any commanding officer. He was Col. Bernard Lentz, the senior colonel in the U.S. Army at that time. Col. Lentz was a veteran of World War I, when he had developed the Cadence System of Teaching Close-Order Drill – his own personal system of drill instruction using student vocalization of drill commands. When Lentz heard of Duckworth’s chant, he immediately recognized its close kinship with his own methods and incorporated it into Fort Slocum’s routine.

The public-choice school of economics believes that government bureaucrats do not serve the “public interest.” Partly, this is because there is no unambiguous notion of the public interest for them to follow. Consequently, bureaucrats can scarcely resist pursuing their own ends since it is easy to fill the object-function vacuum with their own personal agenda. This is a case in which the public interest was served by a bureaucrat pursuing his own interests.

Col. Lentz had a psychological property interest in the training system that he personally developed. He had a vocational property interest in that system since its success would advance his military career. And in this case, there seems to be little doubt that the Duckworth Chant improved the productivity of troop training. Its use spread quickly throughout the army. According to the Cavanaugh’s, it was being used in the European Theater of Operations (ERO) by V-E Day. Eventually, Duckworth’s name recognition faded, to be replaced by that of his chant’s eponymous character, Jody. But the Jody Call itself remains to this day as a universally recognized part of the military experience.

Thus, the stereotypes of racial segregation and bureaucratic inertia were overcome by the economic logic of property rights. And the morale of American troops has benefitted ever since.

Hollywood as User and Abuser – Another Myth Exploded

The name of Pvt. Willie Lee Duckworth, Sr. does not exit the pages of history with the military’s adoption of his chant as a cadence count. Far from it. To paraphrase the late Paul Harvey, we have yet to hear the best of the rest of the story.

As noted above, the Duckworth chant spread to the ETO by early 1945. It was probably there that screenwriter Robert Pirosh encountered it and germinated the idea of planting it in his retelling of the Battle of the Bulge. When Battleground went into production, MGM representative Lily Hyland wrote to Col. Lentz asking if the cadence count was copyrighted and requesting permission to use it in the film.

Col. Lentz replied, truthfully, that the cadence count was not under copyright. But he sincerely requested compensation for Pvt. Duckworth and for a half-dozen soldiers who were most responsible for conducting training exercises at Fort Slocum. The colonel suggested monetary compensation for Duckworth and free passes to the movie for the other six. MGM came through with the passes and sent Pvt. Duckworth a check for $200.

As the Cavanaugh’s point out, $200 sounds like a taken payment today. But in 1949, $200 was approximately the monthly salary of a master sergeant in the Army, so it was hardly trivial compensation. This is still another stereotype shot to pieces.

Hollywood has long been famed in song and story – and in its own movies – as a user and abuser of talent. In this case, the casual expectation would have been that a lowly black soldier with no copyright on a rhyming chant he had first made up on the spur of the moment, with no commercial intent or potential, could expect to be stiffed by the most powerful movie studio on earth. If nothing else, we would have expected that Duckworth’s employer, the Army, would have asserted a proprietary claim for any monies due for the use of the chant.

That didn’t happen because the economic interests of the respective parties favored compensating Duckworth rather than stiffing him. Col. Lentz wanted the Army represented in the best possible light in the film, but he particularly wanted the cadence count shown to best advantage. If Pvt. Duckworth came forward with a public claim against the film, that would hurt his psychological and vocational property interests. The last thing MGM wanted was a lawsuit by a soldier whose claim would inevitably resonate with the public, making him seem to be an exploited underdog and the studio look like a bunch of chiseling cheapskates – particularly when they could avoid it with a payment of significant size to him but infinitesimal as a fraction of a million-dollar movie budget.

A Hollywood Ending – Living Happily Ever After

We have still not reached the fadeout in our story of Col. Lentz and Pvt. Duckworth. Carefully observing the runaway success of Battleground, Col. Lentz engaged the firm of Shapiro, Bernstein & Co. to copyright an extended version of the Duckworth chant in 1950 under the title of “Sound Off.” Both he and Willie Lee Duckworth, Sr. were listed as copyright holders. In 1951, this was recorded commercially for the first of many versions by Vaughn Monroe. In 1952, a film titled Sound Off was released. All these commercial exploitations of “Sound Off” resulted in payments to the two men.

How much money did Pvt. Duckworth receive as compensation for the rights to his chant, you may ask? By 1952, Duckworth was apparently receiving about $1,800 per month. In current dollars, that would amount to an income well in excess of $100,000 per year. Of course, like most popular creations, the popularity of “Sound Off” rose, peaked and then fell off to a whisper. But the money was enough to enable Duckworth to buy a truck and his own small pulpwood business. That business supported him, his wife and their six children. It is fair to say that the benefits of Duckworth’s work continued for the rest of his life, which ended in 2004.

If still dubious about the value of what MGM gave Duckworth, consider this. The showcase MGM provided for Duckworth’s chant amounted to advertising worth many thousands of dollars. Without it, the subsequent success of “Sound Off” would have been highly problematic, to put it mildly. It seems unlikely that Col. Lentz would have been inspired to copyright the cadence count and any benefits received by the two would have been miniscule in comparison.

The traditional Hollywood movie ending is a fadeout following a successful resolution of the conflict between protagonist and antagonist, after which each viewer inserts an individual conception of perpetual bliss as the afterlife of the main characters. In reality, as Ernest Hemingway reminds us, all true stories end in death. But Willie Lee Duckworth, Sr.’s story surely qualifies as a reasonable facsimile of “happily ever after.”

This story is not the anomaly it might seem. Although Hollywood itself was not a powerful engine of black economic progress until much later, free markets were the engine that pulled the train to a better life for 20th century black Americans. Research by economists like Thomas Sowell has established that black economic progress long preceded black political progress in the courts (through Brown vs. Topeka Board of Education) and the U.S. Congress (through legislation like the Civil Rights Act of 1964).

The Movie that Toppled a Mogul

There were larger economic implications of Battleground. These gave the film the sobriquet of “the movie that toppled a mogul.” As Chief Operating Officer of MGM, Louis B. Mayer had long been the highest-paid salaried employee in the U.S. The size of MGM’s payroll made it the largest contributor on the tax rolls of Southern California. Legend had endowed Mayer with the power to bribe police and influence politicians. Seemingly, this should have secured his job tenure completely.

Battleground was a project developed by writer and executive Dore Schary while he worked at rival studio RKO. Schary was unable to get the movie produced at RKO because his bosses there believed the public’s appetite for war movies had been surfeited by the wave of propaganda-oriented pictures released during the war. When Schary defected to MGM, he brought the project with him and worked ceaselessly to get it made.

Mayer initially opposed Battleground for the same reasons as most of his colleagues in the industry. He called it “Schary’s Folly.” Yet the movie was made over his objections. And when it became a blockbuster hit, the fallout caused Mayer to be removed as head of the studio that bore his name. To add insult to this grievous injury, Schary replaced Mayer as COO.

For roughly two decades, economists had supported the hypothesis of Adolf Berle and Gardiner Means that American corporations suffered from a separation of ownership and control. Ostensibly, corporate executives were not controlled by boards of directors who safeguarded the interests of shareholders. Instead, the executives colluded with boards to serve their joint interests. If ever there was an industry to test this hypothesis, it was the motion-picture business, dominated by a tightly knit group of large studios run by strong-willed moguls. MGM and Louis B. Mayer were the locus classicus of this arrangement.

Yet the production, success and epilogue of Battleground made it abundantly clear that it was MGM board chairman Nicholas Schenck, not Mayer, who was calling the shots. And Schenck had his eye fixed on the bottom line. Appearances to the contrary notwithstanding, Louis B. Mayer was not the King of Hollywood after all. Market logic, not market failure, reigned. Economics, not power relationships, ruled.

Thanks to Battleground, stereotypes were dropping like soldiers of the 47th Panzer Corps on the arrival of Patton’sThird Army in Bastogne.

No Happy Ending for Hollywood

Battleground came at the apex of American movies. Average weekly cinema attendance exceeded the population of the nation. The studio system was a smoothly functional, vertically integrated machine for firing the popular imagination. It employed master craftsman at every stage of the process, from script to screen.

Although it would have seemed incredible at the time, we know now that it was all downhill from that point. Two antitrust decisions in the late 1940s put an end to the Hollywood studio system. One particular abomination forbade studios from owning chains of movie theaters; another ended up transferring creative control of movies away from the studios.

The resulting deterioration of motion pictures took place in slow motion because the demand for movies was still strong and the studio system left us with a long-lived supply of people who still preserved the standards of yore. But the vertically integrated studio system has been gone for over half a century. Today, Hollywood is a pale shadow of its former self. Most movies released by major studios do not cover their costs through ticket sales. Studio profits result from sales of ancillary merchandise and rights. Theater profits are generated via concession sales. Motion-picture production is geared toward those realities and targeted predominantly toward the very young. Subsidies by local, state and national governments are propping up the industry throughout the world. And those subsidies must disappear sooner or later – probably sooner.

This has proved to be the ultimate vindication of our thesis that economics, not stereotypical power relationships, governed the movie business in Hollywood’s Golden Age. Free markets put consumers and shareholders in the driver’s seat. The result created the unique American art form of the 20th century. We still enjoy its fruits today on cable TV, VHS, DVD and the Internet. Misguided government attempts to regulate the movie business ended up killing the golden goose or, more precisely, reducing it to an enfeebled endangered species.