Gradually, Then Suddenly: The Birth of Show BUSINESS (Part 1)

In Ernest Hemingway’s The Sun Also Rises, a character is asked how he went bankrupt. “Two ways,” he responds. “Gradually, and then suddenly.” He could have been talking about the changes to the American theater in the last quarter of the 19th century. In my February 23 post I described “The Rise of the Combination Company and the Death of the Resident Stock Company.” Today, I want to describe the capture of the American theater by businessmen.

Gradually

You probably remember that the combination company was a single, self-contained production that was cast, rehearsed, and first performed in New York City for a long run, and then toured the country intact via train. In 1870, these companies could be counted on one hand, but by the end of that decade the number had exploded to more than 250. As a result, resident stock companies collapsed, and the theater managers were left to fill their houses with full-scale productions as best they could.

Initially, the booking of combination companies was done very informally: the theater manager would send his assistant to New York City to meet with representatives of the various stars or shows to make arrangements. There were no contracts, just understandings and handshakes. Not surprisingly, there were problems with this system. Theater historian Jack Poggi notes that the actor-manager of a combination company was faced with a difficult problem:

Railroad fares were a major expense, and he had to avoid backtracking and long jumps between engagements. He also had to keep in mind the seating capacity and price scale of the theaters where he was booked (his profits were based on a percentage of the gross receipts), the relative prosperity of the areas he planned to visit, and the type of production that would precede him. In such a complex and changeable situation, both [the combination producer and the local theater manager] tended to look upon their agreements as highly tentative. If an opportunity arose to change a route in such a way as to increase his profits, the producer was quite likely to cancel a contract— perhaps without notifying the other party.

If this happened, it obviously was a disaster for the local theater manager. Poggi goes on:

The local manager might protect himself from such outrages by booking two productions for the same evening, confident that only one of them was likely to show up or that, if both did, he could put one off or (as a last extreme) resort to a double bill. But double bills cut into the profits of both the production and the house, and the local manager was especially disturbed by them if he had nothing scheduled for the following night.

Poggi concludes, laconically, “There was an obvious need for a more centralized system of booking.” Be careful what you wish for.

The first step to solving this problem was the empowerment of booking agents who, for a fee, would negotiate with the actor-manager and the local theater managers to plan a route throughout an area of the country. Booking agents were sort of travel agents for the theater.

But Dear Reader, don’t heave a sigh of relief at what seems a simple solution to this coordination problem without recognizing the ramifications: there now was a middleman standing between local theaters and theater artists, whose power was acquired because, well, it was just easier to hire someone else to handle all those pesky details. After all, the actor-manager had to handle a lot on his plate as far as the production was, and the local theater managers had to handle all the details of advertising, public relations, and building management.

But it was by controlling bookings that the members of what became known as the Theatrical Syndicate monopolized the American theater and brought the actor-managers and the theater owners to their knees.

The Power of Real Estate

Once the production of plays shifted to New York and local theaters no longer were homes to resident stock companies, owning and managing a theater no longer required knowledge of how theater was made. It was a real estate deal, plain and simple, and entrepreneurs moved in to with the sole intent of making a buck. These managers had little interest in the plays that filled their theaters beyond whether they would draw an audience. A play was merely the means for making a profit. In addition, theater owners no longer needed to live in their localities, they just needed to hire someone to do the caretaking.

By the 1890s, six wealthy men owned a large percentage of theaters across the country. The firm of A. L. Erlanger and Marc Klaw owned or leased many theaters in important cities and had exclusive booking rights to about two hundred more, mostly in small towns in the Southeast. Charles Frohman, though more famous as a producer, and his partner Al Hayman, owned several theaters and, more importantly, ran a booking agency that controlled about three hundred theaters in the West. In addition, Samuel F. Nixon and J. F. Zimmerman owned the four most important theaters in Philadelphia, as well many first-class theaters in Pennsylvania, West Virginia, and Ohio.

In 1896, these six men, who together owned or controlled more than 500 theaters across the nation, joined forces to form what came to be known as the Theatrical Syndicate.

Suddenly

That August, they met for lunch at the newly constructed Holland House, a hotel on Fifth Avenue in Manhattan. They were frustrated. They believed, not unreasonably, that the “making of routes for theatrical attractions in the United States was in a most disorganized and economically unsound condition.” Sometimes a touring company would arrive in a town only to find another theater offering the same play they had brought; sometimes they had to discontinue a successful run because another production had booked the theater. Worse still, as theater owners, they felt they were at the mercy of the actor-managers who had the power to force them to pay more for a production than they wanted to.

Something needed to change.

They decided, according to Daniel Frohman, Charles’s brother, who wrote an admiring account of the formation of the Syndicate in his biography Charles Frohman: Manager and Man, that the “only economic hope was in the centralization of booking interests… Within a few weeks they had organized all the theaters they controlled or represented into one national chain. It now became possible,” Daniel crowed, “for the manager of a traveling company to book a consecutive tour at the least possible expense. In a word, booking suddenly became standardized.” And centralized.

To put it in business terms, their solution was to create a nationwide monopoly. They had drawn up and signed a contract that would run for five years from its signing on August 31, 1896, and at the risk of testing your patience, allow me to quote from it extensively so you can get a sense of the scope and exactitude of their intentions:

CONTRACT

That during the continuance of this agreement all of the following named theatres and places of amusement, to wit.

• Columbia and Hooley’s Theatres, Chicago;
• Columbia and Montauk Theatres, Brooklyn;
• Museum, Boston;
• California and Baldwin Theatres, San Francisco;
• New Century Theatre, St. Louis;
• Tabor Grand Opera House, Denver;
• Walnut Street Theatre, Philadelphia;
• Coates’ Opera House, Kansas City;
• Euclid Avenue Opera House, Cleveland;
• Alvin Theatre, Pittsburgh;
• New Creighton Theatre, Omaha;
• Talma Theatre, Providence;
• New Southern and Grand Opera House, Columbus;
• Valentine Theatre; Toledo;
• Lyceum Theatre, Cleveland;
• and Davidson’s Theatre, Milwaukee,

all of which are controlled by the parties of the first part [i.e., Charles Frohman and Al Hayman] or in which they are in receipt of income for services rendered; also:

• the Broad Street Theatre, Chestnut Street Theatre, and Chestnut Street Opera House, Philadelphia;
• Academy of Music, Baltimore;
• Lyceum Theatre, Baltimore;
• Lafayette Square Opera House and Columbia Theatre, Washington. D.C.;
• and Park Theatre, Philadelphia,

all of which are controlled by the parties of the second part [i.e., Samuel F. Nixon and J. F. Zimmerman] or in which they are interested or from which they are in receipt of income for services rendered: and also

• the New Masonic Theatre, Nashville;
• Grand Opera House, Memphis;
• Staub’s Theatre, Knoxville;
• St. Charles Theatre and Academy of Music, New Orleans;
• Walnut Street Theatre, Philadelphia;
• Coates’ Opera House, Kansas City;
• Euclid Avenue Opera House, Cleveland;
• Alvin Theatre, Pittsburgh;
• New Southern and Grand Opera House, Columbus;
• Valentine Theatre, Toledo;
• Lyceum Theatre, Cleveland;
• and Davidsons Theatre, Milwaukee,

all of which are controlled by the parties of the third part [i.e., A. L. Erlanger and Marc Klaw] or in which they are interested or from which they are in receipt of income for services rendered: and all other theatres or places of amusement which may be hereafter (during the continuance of this agreement) acquired by either of the parties of the first, second, or third parts hereto, shall be booked with attractions in conjunction with each other; that is to say, no attraction shall be booked in any of the said theatres or places of amusement (or in any which may be hereafter acquired as aforesaid) which will insist on playing on opposition theatre or place of amusement in any of the cities above named. [emphasis added]

Those theaters mentioned above were not the only theaters they owned–oh no. They also owned many, many more theaters across the country in the small towns between the cities, which they also agreed to only book with Syndicate productions. And so according to the contract, if a touring production refused play in a single Syndicate-owned theater in any of the cities listed above, they were prohibited from performing in any Syndicate-owned theater including in the small towns where individual Syndicate members owned theaters. If a production wanted to perform in a Syndicate theater, they were locked in to the whole shebang.

The members agreed that they would combine all the net proceeds from the theaters listed above and split them evenly, but each were not required to include the proceeds from the smaller theaters they each owned or controlled. The success of the Syndicate, however, was based on their control of the small-town theaters. As theater historian Landis K. Magnuson writes in Circle Stock Theater: Touring American Small Towns, 1900-1960:

“The image of the “circuit” is misleading when called upon to describe the true strength and backbone of the Syndicate, however. Rather, the image of a passage through a narrow corridor is somewhat more helpful in reconstructing the Syndicate’s methods, because the Syndicate put to use its holdings in theater property in a way unlike any other management organization of the period. Although the Syndicate controlled the bulk of first-class theaters in the major metropolitan centers, the fact that it controlled the theaters in communities located between such theater centers provided its true source of power. Without access to these smaller towns, non-Syndicate companies simply could not afford the long jumps from one chief city to another. Thus, the Syndicate actually needed to own or manage only a small percentage of this nation’s theaters in order to effectively dominate the business of touring theatrical productions–to monopolize ‘the road.'”

Let me put this plainly: if you were the manager of a combination company, you were screwed.

If you wanted to keep control of your company and remain independent, and thus refused to sign with the Syndicate, you were reduced to playing in second-class theaters, lodge rooms, dance halls, even skating rinks. The famed French actress Sarah Bernhardt famously refused to sign with the Syndicate and instead toured the country performing in an enormous tent! On the other hand, if you did sign with the Syndicate, they frequently demanded a percentage of the combination company’s share as a “gratuity” for arranging a “good route.” This gratuity could be as much as 50% of the producer’s share!

The Theatrical Syndicate positioned themselves between the artists and the audience by owning the platform that each group used. Thus, they were both a monopoly and a monopsony.

Monopoly

The Syndicate’s monopolistic power derived from its control over theater bookings. By 1903, it controlled all but a few first-class theaters in major cities like New York, Boston, and Chicago, as well as numerous one-night stands across the country. This led to

• Control over Actor-Managers (which we would now call “producers”): The Syndicate’s extensive network of theaters allowed it to dictate terms to producers, effectively creating a sellers’ market for theatrical bookings. Producers who wanted to reach a large audience had to comply with the Syndicate’s demands, which often included giving the Syndicate partial ownership of their productions. Producers who refused faced boycotts, unfavorable routes, or complete exclusion from Syndicate theaters.

• Control over Playwrights: While the sources don’t explicitly mention the Syndicate’s direct control over playwrights, their control over producers indirectly impacted playwrights. The Syndicate’s focus on commercially successful plays pressured producers to choose plays that would appeal to a broad audience. This, in turn, may have influenced playwrights to write for mass appeal rather than artistic merit, as producers held the power to determine which plays were produced.

Monopsony

The Syndicate also acted as a **monopsonist **by controlling access to a vast network of theaters, which constituted the primary market for theatrical productions.

• Control over Theater Owners: The Syndicate’s exclusive booking contracts with numerous theaters effectively created a buyers' market for theatrical productions. Theater owners who signed with the Syndicate could not book productions from other sources, limiting their options and bargaining power.

• Control over Audiences: By controlling which productions played in which theaters, the Syndicate also exerted considerable influence over what audiences could see. This control limited audience choice and potentially stifled artistic innovation and diversity in theatrical offerings.

The Syndicate’s dual role as both a monopolist and a monopsonist solidified its control over the American theater industry for over a decade. This dominance allowed it to prioritize profits, leading to the commercialization of the theater and a decline in artistic experimentation. This system ultimately benefited the Syndicate members at the expense of playwrights, producers, theater owners, and audiences alike.

Coming next: Criticism of and Resistance to the Syndicate, and the Connection to Today’s Theater