Irving Thalberg
Confrontation with Erich von Stroheim

He quickly established his tenacity as he battled with well-known director Erich von Stroheim over the length of Foolish Wives (1922). Biographer Roland Flamini notes that the film was Universal's most expensive "jewel" ever in production, and its director and star, von Stroheim, was taking the film far over budget. Thalberg, now Universal's general manager, was forced to have the director quickly finalize production before the studio's working capital was used up. Flamini describes the situation:

The cost of that set alone had staggered Thalberg when he learned of it, but it was von Stroheim's obsessive spending on unnecessary detail that finally led to Thalberg's confrontation with the formidable director.

Thalberg had von Stroheim come to his office, which he did still wearing his film costume as a Russian Imperial Guard and escorted by members of his production team. Thalberg calmly told him, "I have seen all the film and you have all you need for the picture. I want you to stop shooting", to which von Stroheim replied, "But I have not finished as yet." "Yes, you have", said Thalberg. "You have spent all the money this company can afford. I cannot allow you to spend any more."

Thalberg quietly explained that the director worked under the producer, and it was his responsibility to control costs. Von Stroheim, surrounded by his assistants, then confronted Thalberg: "If you were not my superior, I would smash you in the face." Thalberg, unflinching, said "Don't let that stop you." The result was that Thalberg soon afterward removed the cameras from von Stroheim's studio and took over editing. The uncut footage was pared down from five-and-a-half hours to three hours, to von Stroheim's deep dissatisfaction.

A similar problem developed with von Stroheim's next film, Merry-Go-Round (1923). Although he had promised Thalberg to remain within budget this time, he continued production until it went to twice the agreed length and was not yet near completion. Flamini speculates why this happened:

Given his earlier problems with Thalberg, the director's behavior seemed suicidal. It's possible, however, that the idea of dismissal was simply unthinkable to him or that that he felt he could go over Thalberg's head to Laemmle, and the studio boss would surely want to keep his most prestigious director happy.

Thalberg again called von Stroheim to his office, handed him a long letter written and signed by himself, describing the problems, and summarily fired von Stroheim as of that moment. Thalberg's letter stated among the reasons,

totally inexcusable and repeated acts of insubordination... extravagant ideas which you have been unwilling to sacrifice... unnecessary delays... and your apparent idea that you are greater and more powerful than the organization that employs you.

His dismissal of von Stroheim was considered an "earthquake in movie circles", notes Flamini. Producer David O. Selznick said that "it was the first time a director had been fired. It took great guts and courage... Von Stroheim was utterly indifferent over money and could have gone on and spent millions, with nobody to stop him". The opinion was shared by director Rouben Mamoulian, who said that the "little fellow at Universal", in one bold stroke, had "asserted the primacy of the studio over the director" and forever altered the balance of power in the movie industry.
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