Alrighty then. The answer to yesterday's big question about when the quoted letter was written:
It wasn't Disney. Or Warner. Or Darryl Zanuck. It didn't happen on The Black Cauldron...
When it happened was in 1912. At one of the large movie studios of the day, a company called The Kalem Company. Kalem made over a thousand motion pictures during its run, and its star employee was a film director named Sidney Olcott.
During the summer of 1912, Olcott was overseas making a series of films based in Ireland. But he was soon to travel to Palestine to make a feature film about the life of Christ. A company exec wrote Sid the following:
As the "Jesus of Nazareth" production will be put out as a special it will be necessary to have from you at an early date an estimate of its cost. This should be just as high as you can possibly make it and every item that you can possibly think of which can reasonably be charged to this negative should be added, as under the new system governing such releases by the General Film Company, we are paid our negative expenses, whatever they may be, and we supply the prints at cost. The profit, if any, comes out of a division of the percentage earned by the General Film Company.
In other words, since the distributor was paying negative costs, make those costs as high as possible. Kalem took its cut from the money that came back from exhibitors to the General Film Co.
It's a system that, with some variations, remains in place to this day.
Oh. And that "Jesus of Nazareth" project? The one with the padded expenses? There's this from Wikipedia:
Sidney Olcott took a crew to Palestine in 1912 to make the first five-reel film ever, titled "From the Manger To the Cross", the life story of Jesus.
The film concept was at first the subject of much skepticism but when it appeared on screen, it was lauded by the public and the critics. Costing $35,000 to produce, "From the Manger to the Cross" earned the Kalem Company profits of almost $1 million, a staggering amount in 1912. The motion picture industry acclaimed him as it greatest director and the film influenced the direction many great filmmakers would take such as D.W. Griffith and Cecil B. DeMille. "From the Manger to the Cross" is still shown today to film societies and students studying early film making techniques. In 1998 the film was selected for the National Film Registry of the United States Library of Congress.
The letter above comes from the collection of the estimable Robert S. Birchard