The great stock market crash of 1893 happened on this day exactly 120 years ago and it led to a series of events that would permanently turn the professional American entertainment industry toward a highly structured corporate model that placed profit above art while appealing to the largest audience possible. Like the panic twenty years earlier, this one began with the collapse of the railroad and banking systems–both of which relied on the other and both of which had become artificially supported by rampant investment speculation. And like the panic twenty years earlier, the theatre innovated its way out of this mess in entirely unexpected ways. Key among these innovations was the realization that the only sure way to protect against the unexpected vagaries of the financial markets was to grow so big that any ups and downs would be insulated by the sheer size of the industry. And thus the Theatrical Syndicate was born three years later–a virtual monopoly of the American theatre that was created when six partners, all in the booking end of things, decided to coordinate their efforts and become a single cartel controlling almost all of the American theatre business from coast to coast. They realized that by restricting their product and strictly controlling its distribution, they could easily manipulate costs and profits. They began by setting up tours of profitable shows that they would book into circuits around various parts of the country. Through their sheer size they could negotiate very favorable terms for shipping, transportation, and theatre spaces (not to mention actors, designers, playwrights, etc., who were desperate for work). By restricting access through carefully constructed tours, they could create demand and thus higher ticket prices. The formula worked for a time, until a new technology came along that out-performed the Theatrical Syndicate at their own game–cinema.
Cinema’s advantage (apart from the technological novelty) was its relatively low overhead and extraordinarily high distribution potential. Within a few years, cinema’s profitability was evident and by the 1920s, it had surpassed live stage as the most profitable and popular form of commercial entertainment. More importantly, cinema used the Theatrical Syndicate’s corporate model to build its own industry that far surpassed anything the Syndicate could have achieved. And it’s from this model that the modern entertainment industry owes its existence–one that relies on high distribution potential, low overhead costs, and a direct appeal to the lowest common denominator.