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5 Producer and Exhibitor as Co-Creators: 1897-1900
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The Edison Manufacturing Company Reaches its Commercial Nadir

Edison's film business was in dire straits by 1900. Despite White's production of a significant number of commercially attractive films, the Edison Company lacked strong photographic skills. Eberhard Schneider would later claim that White "knew nothing whatever as to the composition of developer and its effects. He made up hypo developer in quantity (fully mixed) for weeks ahead and many good negatives . . . were spoiled in this ink solution."[167]

Biograph, moreover, was vigorously contesting the inventor's patent suit. Tensions between licensees and licensor were high. When the Edison Company failed to turn over the money it owed Vitagraph, the unhappy licensees threat-


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ened to sue for an accounting. They had forgotten who held the trump cards, and William Gilmore obligingly reminded them by cancelling their contractual relationship in January 1900. A series of stormy exchanges followed, which threatened to send Blackton and Smith to jail. Although Gilmore eventually worked out a new arrangement with the Vitagraph group in October 1900, thereby acquiring a fresh influx of films for Edison catalogs, relations remained uneasy and depended on legal coercion. If Edison lost his court case against Biograph, his commercial "allies" would obviously become commercial enemies.

The Edison Manufacturing Company also faced uneasy relations with its selling agents. Although providing a large outlet for Edison goods, Frederick M. Prescott's New York office had begun to sell Lubin films. In June 1899 Edison brought suit against Prescott and forced another American entrepreneur out of the film business.[168] Two individuals, who were to play important roles in the industry and effectively promote Edison products in the years ahead, appeared to sell Edison goods on the exclusive terms Edison demanded. The first of these was George Kleine, whose Kleine Optical Company in Chicago started to purchase Edison films in June 1899.[169] The second was Percival Waters, who had worked with White at the Vitascope Company and was then a small, New York-based jobber of Edison films.

In November 1899 Waters formed a silent partnership with James White and John Schermerhorn, . Gilmore's brother-in-law and assistant general manager of the Edison Manufacturing Company since 1896. [170] Their partnership, called the Kinetograph Company, was to act as an exhibitor and selling agent of Edison films. Waters was to run the business, while White and Schermerhorn promised to arrange several thousand dollars worth of credit, to send customers to the Kinetograph Company whenever possible, and take "such picture subjects as would tend to increase their business to suit their special customers in the various theaters."[171] Although Gilmore was almost certainly aware of the arrangement, it involved obvious conflicts of interest. As Waters' attorney later asked, did White and Schermerhorn act in the best interests of the Kinetograph Department or the Kinetograph Company when these interests diverged? Yet White and Schermerhorn were simply taking advantage of a commercial opportunity in a manner consistent with the business practices then prevalent at the Edison works.[172]

The Kinetograph Company filled a need that had become apparent not only with the demise of Prescott's agency but because the Edison Company needed its own vaudeville exhibition outlet. One of the new company's first actions was to establish a permanent working relationship with Huber's 14th Street Museum. Edison had already sued George Huber earlier in the year for hiring Lubin and others to exhibit non-Edison films in his theater.[173] With rival vaudeville theaters making motion pictures a permanent attraction, Huber's museum contracted for the Kinetograph Company's exhibition services in November


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1899.[174] Increasingly the Kinetograph Company acted as Edison's exhibition arm, acquiring the first copies of completed films and showing them in its programs. Unlike the licensees who took subjects for their own use, Waters arranged with White to provide their company with special films for its exhibitions. Along with Kleine and Peter Bacigalupi in San Francisco, the Kinetograph Company became an Edison selling agent with special discounts. Perhaps because of these compromised origins, Waters' Kinetograph Company developed a complementary relationship with Edison's Kinetograph Department that flourished long into the future, outlasting White's tenure as department manager and the constitution of the company as a silent partnership.

Edison, embattled on various fronts early in 1900, came close to selling his motion picture business. In March the Biograph and Edison companies were close to a "union of interests in the moving picture field."[175] After further meetings, according to Terry Ramsaye, Biograph secured an option to buy Edison's motion picture interests for half a million dollars, paying $2,500 for the option on April 12th.[176] Perhaps this helps to explain the decision to incorporate the Edison Manufacturing Company on May 5, 1900. The new corporation was activated three days later when Thomas Edison turned over "all rights, title and interest in and to the business heretofore conducted by me and known as the 'Edison Manufacturing Company' with the exception of the Projecting Kinetoscope, Kinetograph, Kinetoscope and Film business and everything pertaining thereto."[177] Since the film interests were about to be sold, they were not assigned to the new corporation.

The financing of the Edison-Biograph deal, however, fell through—if it had not, the history of American cinema would undoubtedly be quite different. Although Edison retained his personal control over moving pictures and so continued to pursue patent infringement and to copyright films in his own name, the corporate and privately owned parts of the business were effectively merged. With Biograph's option unexercised, Edison and his associates reassessed their motion picture business and decided to increase their own commitment to the field rather than renew negotiations with Harry Marvin and other Biograph executives. William Gilmore began to shift the Edison Manufacturing Company's commercial strategies in light of the difficulties encountered during the previous few years. Edison had to depend less on his licensees. This meant investing in a new studio and hiring additional personnel. The employment of Edwin Porter was part of this renewed commitment.


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