The Film Credit Bank
The National-Socialists went further than institutional and legal conditions in their circumscription and exertion of state control over the film industry. They took hold of its economy as well, founding the Film Credit Bank (FKB) in June 1933 as a funding source for film projects.
"For production companies, the chronic lack of capital and consequent dependence on foreign capital were defining factors for the period following World War I (with the exception of the inflation years). Creditors had little reason to believe that their investments would be returned in view of the profit risk of any given film.(1) Credit institutions founded especially for financing the film industry generally went under due to poorly budgeted capital reserves.(2) Here, too, the Umbrella Organization of the German Film Industry (SPIO) was seen as leading the way conceptually with its idea for a film bank that would represent other investors (both private investors and banks) on trust and bear their risk in return.(3)
The new government was interested in the plan because the treasury would remain unencumbered. Participating banks of the FKB initially promised 10 million Reich marks(4); and the allocation of loans was linked to certain conditions: Presentation of a 'shootable' film script, casting list, clearance of any copyright issues, exact budget, contract for distribution, and proof of membership of all involved parties in the SPIO and/or the Reich Chamber of Film. In the person of the Reich Film Dramaturg, who evaluated the screenplay, the state held a key political and ideological function between funding and production: Financial security was coupled with political control.(5) Up to 70% of a film's budget could be covered by the bank. The remaining 30% plus one third of print costs and a reserve budget comprising 15% of the total would have to be raised by the producer himself and demonstrated in cash. […]
The Film Credit Bank's offer was unanimously approved by the film industry: In 1933 alone, 22 feature-length and short films were financed with assistance from the FKB; in 1934, with a credit volume of 7.6 million Reich marks, this number rose to 49 films (40% of total production); and in 1935, with the credit volume already at 15.7 million Reich marks, it was 65 (70% of the total).(6) The FKB thus covered two thirds of all funding for the film industry; and it was the large corporations in particular that made use of it as they could thereby keep their own capital reserves free."
(Excerpt from Daniel Otto, "Der Bürgermeister und der Filmkonzern. Gleichschaltung und Verstaatlichung der deutschen Filmindustrie am Beispiel der Tobis AG" in Tonfilmfrieden/Tonfilmkrieg. Die Geschichte der Tobis vom Technik-Syndikat zum Staatskonzern, ed. Jan Distelmeyer [München; edition text + kritik, 2003], pp. 107-125).
(1) The banks' distrust found expression in, among other things, the practice of discounting film bills, which were redeemed at up to a 50% reduction. See Kurt Wolf, "Entwicklung und Neugestaltung der deutschen Filmwirtschaft seit 1933," (Ph.D. diss., Heidelberg University, 1938), cited in Bredow and Zureck, 161.
(2) For example the International Film AG in 1920 with 15 million in capital, the Bank für Handel und Filmindustrie in 1923, and the Kino-Kredit-AG in 1928. See Wolfgang Becker, Film und Herrschaft (Berlin [West]: Spiess, 1973), 35. (3) See Jürgen Spiker, Film und Kapital (Berlin [West]: Spiess, 1975), 96f. (4) The startup capital came to 200,000 RM and was made up of, respectively, 25,000 RM (Deutsche Bank, Dresdner Bank), 10,000 RM (Commerz- und Privatbank), 20,000 RM (Reichskreditgesellschaft AG), and 120,000 RM (Ludwig Klitzsch on behalf of Ufa). The advisory board included the participating banks, Klitzsch, and representatives of the Reich Ministry for Popular Enlightenment and Propaganda, and of Agfa and Tobis. See Max Kullmann, "Die Entwicklung des deutschen Lichtspieltheaters," (Ph.D. diss, University of Nürnberg, 1935), 78. (5) In August 1933 the bank's shares were taken over by the Reich Chamber of Film and along with them control of the Film Credit Bank. Beginning in 1935, the Film Credit Bank shares changed owners several times until in early 1942 they were absorbed into the Ufa-Film-GmbH and remained until 1945 in both direct and indirect possession of the Reich. See Becker 1975, 38f. (6) See Becker 1975, 40.