Anyone who has attempted to follow the financial markets lately has
to admit that it has been an "interesting" couple of months. One of
the reasons that I find Olive fascinating has to do with what passed
for business acumen in her early American film. It is dominated by
miscalculations, arrogance and just plain dumb luck.

As pointed out by Anthony Slide in his book "Aspects of American Film
Prior to 1920", only one firm failed after 1920. World, Mutual,
Triangle, Thanhouser, and even Kalem ceased before 1920. Only one
producer-distributor had to be liquidated. Others such as Vitagraph,
Cole-Robertson and Goldwyn were sold, merged and had their names
changed but only one, Selznick, went down like the Titanic. Its
collapse is often seen as a direct result of the incident that took
place in Paris. It may be more of an indirect result due to a
discredited accounting practice.

Selznick's financial papers are available at the Harry Ransom
Research Center on the grounds of the University of Texas. In 1919,
Ollie signed a personal service contract with Mother Selznick for 2
years with an option for two more. Her initial salary was $1000.00
per week but in the papers, her value to the company as an asset was
listed from $2000-3000 per week based upon the added value the
contract would gain, if sold.

This would tend to lend credence to the story attributed to David O.
Selznick. In "Memo from David O. Selznick", Olive offered to sign
with Myron if he could match half of what was her highest offer.
Selznick states that that was exactly what Ollie did. While I have
doubts about the number of offers Ollie recieved (Many of the
available companies were rapidly failing in the fall of 1918 and the
number of companies capable of making offers signed other people. One
curious example was Hearst's Cosmopolitan signing her Triangle
colleague, Alma Reubens, rather than Ollie who had known and worked
for Hearst previously.) or where Ollie came up with the figure
presented, it seems she got exactly what she wanted as an example of
dumb luck working out for all involved.

However, when Ollie died (for whatever reason), the value of Selznick
deflated till it was flatter than a pancake. Selznick had lost their
most consistent draw under contract and the inflation of her value
worked against them. When the elder Selznick created the company, one
of his biggest investors was Famous Players! Famous Players used
Lewis J Selznick's plan of selling films individually, especially to
the independent Loew's theatre chain, as a hedge against it own plan
of "block booking". Once Ollie signed with Selznick, Famous Players
negoiated an expensive buyout of its interest. Without Ollie, this
drain on capital would destroy Selznick. Bad luck or bad management
came back to haunt them and serves as an explanation for Louis B.
Mayer's loud complaints about how things were haphazardly planned and
early exit from Selznick as sales manager.

Isn't interesting how a failing marriage could tear down a company
overstating its worth? It just shows that Enron was not the only
company that couldn't manage its money.

Your partner in limburger