Lights, Camera, Tax Break

Summary

Cautionary Tales with Tim Harford - Episode: "Lights, Camera, Tax Break"

Introduction

In this gripping episode of Cautionary Tales with Tim Harford, host Tim Harford delves into the intriguing and complex story behind the making of the classic film Marty. Recorded live at the Bristol Festival of Economics, Harford intertwines Hollywood's golden era with the stringent tax laws of the 1950s, illustrating how financial maneuvering can lead to unexpected outcomes. This episode not only highlights the challenges faced by actors like Ernest Borgnine but also exposes the broader economic implications of poorly designed tax systems.

Ernest Borgnine's Early Career

Ernest Borgnine's journey to stardom was anything but straightforward. After serving in the US Navy during World War II, Borgnine struggled to find employment amidst a surge of veterans returning to civilian life. As Harford narrates, "Ernest was running out of time to become a Hollywood leading man" (02:10). His mother, Anna Bornino, an Italian immigrant, encouraged him to pursue acting—a path Borgnine initially doubted.

Borgnine's foray into acting was fraught with challenges. He often found himself typecast as a heavy or bully, a reflection of his rugged appearance. In his screen debut in From Here to Eternity (1953), he portrayed a sadistic military policeman, Fatso Judson. Despite delivering a compelling performance, his character met an untimely demise at the hands of the hero, reinforcing his typecast image. Borgnine himself remarked, “06:27:” “You're absolutely the son of a bitch I wrote about. Keep it up."

Hollywood's Tax Landscape in the 1950s

The 1940s and 1950s were a tumultuous time for Hollywood stars concerning taxation. High earners like Frank Sinatra faced marginal tax rates soaring up to 94% on income exceeding $200,000. This exorbitant taxation led many actors to seek creative tax avoidance strategies. Harford explains, "Stars looked for tax loopholes. Investing in oil exploration was particularly popular" (11:05). This period saw the rise of collapsible corporations—entities set up by stars to funnel their earnings in ways that minimized tax liabilities without venturing into actual business operations like oil drilling.

Production of "Marty": A Tax Dodge Turned Masterpiece

The production of Marty emerged from this environment of financial stratagems. Initially conceived as a tax dodge by producers Hector Lancaster and Harold Hecht, the film was intended to be a low-budget project that could be partially shelved to write off losses. However, the unexpected casting of Ernest Borgnine in the lead role transformed the venture into something far more significant.

Borgnine’s involvement came at a time when Burt Lancaster sought greater creative control, moving away from the constraints of the studio system. When offered the lead in Marty, Borgnine was initially skeptical, recognizing the role as yet another "bit part" heavy. However, his authentic portrayal of Marty Poletti—a humble Bronx butcher searching for love—resonated deeply with audiences.

Filming Challenges and Community Conflict

The filming process was not without its hurdles. Shot on location in the Bronx, Borgnine had to contend with real-life Italian American youths who mistook his aggressive on-screen persona for genuine animosity. At 16:58, Borgnine recalls, “Shouted one Italian American youth. Let's beat him up," reflecting the real-world tensions spilling onto the set.

Despite these conflicts, Borgnine established goodwill within the community, fostering relationships that would prove beneficial during the film’s release. As Harford notes, "Ernest was happy to trade punches with the boys, but he thought he'd first explained that the animosity was merely play acting" (16:58).

Unexpected Oscar Success

Against all odds, Marty defied its initial purpose as a tax avoidance tool and became a critical darling. At the Cannes Film Festival, the film swept the competition, earning the prestigious Palme d'Or. Borgnine's portrayal earned him an Academy Award nomination for Best Actor, which he ultimately won. During the Oscars, amidst skepticism about his chances, host Jerry Lewis assured him, “30:27:” “You're gonna win."

The victory was bittersweet for Borgnine, who reflected on the personal losses that paralleled his professional achievements: "She barely got to see any of wasn't fair, but fair just isn't on life's menu" (36:03), alluding to his late mother’s inability to witness his success.

Aftermath and Career Implications

The triumph of Marty had profound implications for both Borgnine and the Hollywood tax system. Producers Lancaster and Hecht realized the unintended success of their tax dodge, leading to scrutiny from the Internal Revenue Service. As Harford explains, “In 1954, [the IRS] introduced a new code, cracking down on many of the most egregious abuses by the Hollywood elite” (25:28). This crackdown ensured that companies could no longer simply shelve projects to claim tax losses without delivering substantial work.

For Borgnine, the Oscar win elevated his career, yet he faced contractual and financial tensions with Hecht Lancaster. Desiring more substantial roles, Borgnine eventually broke free from restrictive agreements, allowing him to assert greater control over his career. This move, while financially costly, underscored the personal sacrifices often intertwined with professional success.

Conclusion and Insights

The story of Marty serves as a cautionary tale about the unintended consequences of financial manipulation and the resilience of genuine talent. Harford eloquently ties the narrative back to broader economic principles, illustrating how poorly designed tax systems can lead to perverse outcomes where no party truly benefits. As he concludes, "Badly designed taxes can make life uglier and gloomier, too," reflecting on the historical parallels with England’s window tax and its societal repercussions.

Ernest Borgnine's legacy, as depicted in this episode, is a testament to perseverance and the unpredictable nature of success. Despite the initial intent to exploit tax loopholes, Marty emerged as a beloved film, proving that authenticity and dedication can transcend financial motives.

Notable Quotes

• Ernest Borgnine on Early Acting Struggles:

  • “04:43:” “All the stars were shining like demons.”
  • “08:27:” “Blue suit, gray suit. I'm just a fat little man. Fat, ugly man.”
  • “16:58:” “Why didn't you tell us that from.”

• Tim Harford on Tax Implications:

  • “21:22:” “Tax structures of the type that encourage filmmakers not to make films create what economists call an excess burden when people distort their behavior to avoid attacks. In this way, nobody wins.”

• Oscar Night Reflections:

  • “25:43:” “Why the hell didn't you shoot more?”
  • “31:05:” “Cautionary Tales will return after the break.”

Conclusion

This episode of Cautionary Tales masterfully intertwines personal narratives with economic theory, offering listeners a profound understanding of how individual actions within flawed systems can lead to remarkable yet unintended outcomes. Through Ernest Borgnine's story, Tim Harford illuminates the delicate balance between financial strategies and authentic creativity, reminding us that sometimes, the most genuine endeavors emerge from the least expected places.

For those who haven't listened to the episode, this summary encapsulates the essence of how financial motivations, particularly those driven by tax laws, can have far-reaching and unforeseen impacts on the arts and personal careers.

Timestamps:

• 02:10 - Introduction to Ernest Borgnine and his early career.
• 04:17 - Borgnine's entry into acting classes.
• 08:24 - Borgnine's first major role acceptance.
• 16:58 - Conflict with local Italian American youths.
• 25:28 - IRS crackdown on Hollywood tax evasion.
• 30:27 - Oscar night anticipation and humor.
• 31:05 - Post-break remark before the Oscars.
• 36:03 - Borgnine's emotional Oscar acceptance speech.
• 41:23 - Reflections on tax-induced film success.
• 44:56 - Closing remarks and acknowledgments.

Note: Advertisement segments and non-content sections have been intentionally omitted to focus solely on the episode's narrative and key insights.

Transcript

[Tim Harford]

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[Ernest Borgnine]

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[Tim Harford]

You might have noticed that things are a little different on Cautionary Tales this year. In 2024 we brought you a new episode every fortnight, but this year we are doubling our output. New stories of heart thumping peril, mind blowing mistakes and jaw dropping scandal will now be delivered straight to your ears every week. Here's one for you right now. This episode, which combines Oscar ceremony stardust with the far less glamorous world of taxation, was recorded in front of a live audience at the Bristol Festival of Economics, Ernest Borgnine was getting tired of playing heavies. Nearing 40, thickening around the middle and thinning on top, the actor was running out of time to become a Hollywood leading man. Ernest had joined the US Navy right out of high school, but on leaving in 1945, had struggled to find work amidst the mass of men returning home from war. He'd pack a lunch and stand outside factories in his hometown, just in case they were hiring. They weren't, but life on the production line didn't much appeal anyway after navigating the high seas. To Ernest, the factories of Connecticut looked like jails. It was Ernest's mother, Italian born Anna Bornino, who suggested he enter show business. It didn't seem an obvious career choice to Ernest. Why should he become an actor of all things?

[Colgate Palmolive Representative]

You always like to make a damn fool of yourself, making people laugh. Why don't you give it a try?

[Tim Harford]

So try he did. His veteran benefits financed some acting classes. But Ernest, burly and gap toothed, felt self conscious amongst his young and fresh faced classmates. He'd never even read aloud before and it showed.

[Ernest Borgnine]

All the stars were shining like demons.

[Colgate Palmolive Representative]

No, Mr. Borgnine, the word is diamonds.

[Tim Harford]

Said his acting teacher.

[Ernest Borgnine]

Oh, shit.

[Tim Harford]

The class erupted into laughter. But Ernest would need to get used to humiliations. Auditions for budding actors are brutal. It wasn't unusual for Ernest to wait two or three hours to read for a part, only to be dismissed a few lines in. At one casting, he hadn't even opened his mouth before the director bellowed neeext. When he finally began to land minor roles, his round face and stocky build saw him typecast as rowdies, hoodlums and bullies. Playing a cowpoke or gangster, Ernest's brief appearances on film would invariably end with her being knocked flat by the movie's hero. In the 1953 blockbuster From Here to Eternity, Ernest played a sadistic military policeman, Fatso Judson. It was a solid supporting role with pages of dialogue and the chance to off Frank Sinatra's character. But Ernest still ended up dead himself killed by the handsome leading man, Montgomery Clift. Ernest had drawn heavily on his Navy experience to bring the menacing Fatso Judson to life. So much so that James Jones, author of From Here to Eternity, stopped by the set to congratulate the actor.

[Ernest Borgnine]

You're absolutely the son of a bitch I wrote about. Keep it up.

[Tim Harford]

But the quality of Ernest's performance was painting him further into a corner. Hollywood's hottest new production company was Seeking a lead to carry a new project. It was the story of a humble Bronx bachelor searching for love. Ernest's name came up.

[Ernest Borgnine]

Oh, come on. He does nothing but kill people in pictures. This is about a lonely butcher.

[Tim Harford]

This guy can act, the producer was told. So Ernest got the call.

[Ernest Borgnine]

We've heard nice things about you. Were considering you for the lead.

[Tim Harford]

The actor was flabbergasted. No one had ever given him a shot at stardom like this. Were the producers sure he was right for the role?

[Ernest Borgnine]

Of course. Otherwise I wouldn't ask you.

[Tim Harford]

The film's writer and director flew out for a formal audition. Ernest was on location playing yet another heavy. This time the script had him being knocked unconscious by Spencer Tracy. Ernest came to the reading fresh from the set. His cowboy costume was dusty and his chin had a growth of stubble. His first words came out with a western twang. What was he thinking? He was blowing his big chance. Kicking off his cowboy boots and throwing his 10 gallon hat aside. Ernest began again. The scene had lovelorn butcher Marty Poletti parrying his mother's pleas that he go out on the town and meet a nice girl. The Paletti family home wasn't so very different from the Borgno one. So Ernest played the role, imagining his mother, Anna, was reading his cues.

[Colgate Palmolive Representative]

Marty, put on the blue suit.

[Ernest Borgnine]

Blue suit, gray suit. I'm just a fat little man. Fat, ugly man.

[Tim Harford]

You're not ugly.

[Ernest Borgnine]

I'm ugly. I'm ugly. I'm ugly, Marty.

[Amica Insurance Representative]

Ma, leave me alone.

[Tim Harford]

Ernest looked up from the script. Across from him, the director and the writer were in tears. The part was his. Ernest Borgnine would play the eponymous lead in Marty, a film backed by Hector Lancaster, the production company founded by Burt Lancaster that was pumping out box office smashes. This was it. Once Marty hit cinema screens, Ernest Borgnine would be a star. No more bit parts for him. Only problem was, the people making Marty didn't want it reaching cinema screens. They didn't even want to finish filming it. I'm Tim Harford and you're listening to Cautionary Tales live from the Bristol Festival of economics. In the 1940s and 50s, the super rich were the entertainers. The head of US Steel could expect to be paid $300,000 a year. But Frank Sinatra grossed closer to 4 million. But with great riches come great taxes. At about the time, Ernest Borgnine was mooching around factories desperate for work. Any megastar's income over $200,000 could be taxed at a whopping 94%. Some in Hollywood didn't Mind, of course. Patriotic bombshell Anne Sheridan was amongst the most sanguine.

[Colgate Palmolive Representative]

I regret that I only have one salary to give for my country.

[Tim Harford]

But others weren't quite so sure. B movie star and future president Ronald Reagan worked only part of the year completing a couple of features and then loafed until the end of the tax year rolled around.

[Ernest Borgnine]

Why should I have done a third picture? Even if it was Gone with the Wind, what good would it have done me?

[Tim Harford]

But plenty of other Hollywood stars churned out more than two films a year. So were they working for mere cents on the dollar? Of course not. They looked for tax loopholes. Investing in oil exploration was particularly popular. Financing a drilling operation attracted generous tax breaks and allowances. It became so prevalent that one insider joked, when you see a group of.

[Colgate Palmolive Representative]

Movie people talking on a set, you don't know whether they're discussing a film or an oil well.

[Tim Harford]

But stars didn't have to go wildcatting in the wilderness. They could exploit corporate tax breaks without venturing beyond Beverly Hills. If a Bing Crosby or a Gary Cooper agreed to star in a movie, they'd set up a company to take the fee or sell that company's shares to the studio making the film. They could continue to take dividends from these firms at a much lower rate than income tax until the money ran out. Then the firm would simply disappear. When the film Marty was entering production, almost half of all Hollywood films were made using these collapsible corporations to dodge sky high taxes. Independent production companies. These vehicles for tax evasion did offer actors other benefits, though many had felt constrained by the studio system, where capricious movie moguls like Louis B. Mayer, Jack Warner or William Fox called all the shots. Stars wanted more of the profits, true, but some also yearned for more creative control over their careers. In this, Burt Lancaster was a pioneer. The charismatic and acrobatic star had initially run away to join the circus during the Great Depression. But his physicality soon found its true home on the silver screen. He was an Adonis, and audiences lapped him up. Whether he played a prize fighter or a pirate, Burt's name on the cinema marquee was estimated to bring in an extra million dollars in ticket sales. An obsessive autodidact, Burt Lancaster wasn't just going to loaf around like Ronald Reagan. If he was going to be in hit movies, damn it, he was going to learn how they were made. Teaming up with his diminutive agent, Harold Hecht, Lancaster began to produce his own films, doubling up as a hustling Film exec and the swashbuckling leading man was exhausting but rewarding. His films made millions. These profits were a highlight at an otherwise gloomy time for Hollywood. TV was taking off. Televisions were monochrome, the picture quality was poor and the scenery was wobbly. But many Americans would rather stay in to watch television rather than traipse out to a cinema. The movie makers fought back by releasing lavish, colorful epics with stories and characters far too big to ever fit on the small screen. Burt Lancaster's pirate picks and Westerns fell firmly into this category. So when Hecht Lancaster announced their next project, Marty, it was met with bafflement. Even the scriptwriter was mystified.

[Ernest Borgnine]

I don't know why they put up the money. The venture had a hopelessly uncommercial smell.

[Tim Harford]

Marty had been a well received TV play, praised for its naturalistic dialogue and a strong main performance from Rod Steiger. But the sentimental script seemed far too experimental for a Hollywood hit, and it was too short to boot. Could the downbeat storyline be given a Hollywood polish, then? Well, no. Hecht Lancaster had given the TV show's writer and director total creative control, and they wanted Marty to remain true to its roots. Bert wouldn't feature on screen either, and nor would Steiger, who'd passed on the chance to reprise his role. And in the absence of star power, the dowdy central part had gone to Ernest Borgnine. A bit part fatso. What was Bert Lancaster doing? Thought Hollywood. Some observers, though, had their theories. Location shooting began in the Bronx. The director had never made a feature film before and didn't know you could record multiple takes of each scene. You only ever got one try on live tv once. This and other details of film craft were explained to him. All went smoothly, and it had to, for the crew had been set an impossibly horrid schedule. Ernest delivered his dialogue against the rumble of L trains, the honking of taxis and the babble of real Bronx natives going about their business. Some local toughs, though, took exception to this invasion of film folk in general, and to Ernest Borgnine in particular.

[Ernest Borgnine]

Battiamo l Inferno da lui.

[Tim Harford]

Shouted one Italian American youth. Let's beat him up. The gang, it turns out, believed that Ernest really had it in for Frank Sinatra. In From Here to Eternity. Ernest was happy to trade punches with the boys, but he thought he'd first explained that the animosity was merely play acting and that he and Frank were in fact good friends, bonded by their shared Italian American heritage.

[Ernest Borgnine]

Why didn't you tell us that from.

[Tim Harford]

Then on, the man born Hermes Bonino was lavished with gifts of pizza and gallons of red wine. His money was no good in any of the local trattoria. Ernest felt confident as he flew to Hollywood for the interior shots. They'd all been meticulously worked out in New York. These TV guys certainly knew how to shoot on a small studio set. Only there weren't any sets. They hadn't been built. There was no need for them, for the film wasn't going to be completed. Turns out, said the crushed leading man.

[Ernest Borgnine]

There was some financial shenanigans attached to the picture.

[Tim Harford]

Cautionary tales will be back in a moment.

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[Tim Harford]

Those who'd thought it odd that Burt Lancaster was making a starless, low key black and white melodrama seem to have been proved right. Burt Lancaster wasn't going to make Marty, at least not all of it.

[Ernest Borgnine]

Heck, Lancaster wanted to lose money because they were making so much money from.

[Tim Harford]

Their other pictures, said a disappointed Ernest Borgnine.

[Ernest Borgnine]

They wanted to shoot half of it and then put it on the shelf and take a tax loss. That way the producers could pay themselves a salary and yet not have to show a corporate profit.

[Tim Harford]

Tax structures of the type that encourage filmmakers not to make films create what economists call an excess burden when people distort their behavior to avoid attacks. In this way, nobody wins. The tax avoider is worse off because the avoidance is costly. The tax authorities are worse off because the tax isn't paid. Badly designed taxes can make life uglier and gloomier, too. In the late 1690s, England's finances were in disarray. The kingdom's sterling silver coinage had been fatally compromised, with people clipping bits off old coins to keep the valuable slivers of silver. Newer coins with engravings and milled edges to defeat the clippers instead attracted forgers on top of denuded coins and fake coins. The rising value of silver meant there was a healthy export trade in small change. A silver sixpence was worth far more melted down in Paris than it was as a coin in London. To shore up the royal finances, King William III sought to introduce fair and progressive taxes. To raise revenue, he alighted on a window tax. Those with grand houses boasting many windows paid the highest rate per glazed opening, while more modest buildings paid less duty for each window. It was an easy levy to administer, too. A tax inspector could simply count each window from the street. Over time, the tax rates rose and then rocketed, so property owners bricked up existing windows and planned new buildings to reduce their taxable apertures. The poorest, unsurprisingly, suffered most. Unscrupulous landlords blocked off windows, leaving tenants in dark, unventilated rooms. The window tax finally died 150 years after its introduction, and only once. Campaigners had convinced the treasury of the obvious that a lack of light and fresh air was taking an appalling toll on people's health. It was a classic excess burden. When a tax system consigns people to a wretched life in a dark airless dwellings and doesn't even raise revenue, then that tax system has gone wrong. And it went wrong when singers like Bing Crosby turned down paying gigs to become oil prospectors, when Ronald Reagan loafed for most of the financial year, and of course, when Gap toothed and hefty Ernest Borgnine was denied his shot at a starring role. But lucky for Ernest, the Internal Revenue Service, to its credit, knew something was up too. In 1954, it introduced a new code, cracking down on many of the most egregious abuses by the Hollywood elite. So could Hech Lancaster just shelve Marty halfway through and draw their producer salaries and write the rest of the budget off? The answer pleased Ernest.

[Ernest Borgnine]

The taxman said no. They had to finish the picture, show it once and then take a loss.

[Tim Harford]

So the interior sets were built and cameras rolled once again on Marty.

[Ernest Borgnine]

I'm not sure that was good news.

[Tim Harford]

Said Ernest of his partial reprieve.

[Ernest Borgnine]

But it was better news.

[Tim Harford]

Bert Lancaster hadn't been around much for the making of Marty. He'd been directing himself in the adventure flick the Kentuckian. He'd left Marty to his business partner, Harold Hecht, who in turn had surrendered most of the creative control to the writer and director. If you're not planning to finish a film, why sweat over it? Bert did turn up for Marty's first screening, though. Ernest brought along his wife and mother in law. After all, it might be their only chance to see him carry a motion picture. Ninety minutes later, as the end credits rolled, Ernest watched Bert Lancaster beckon to Harold Hecht. More than a head shorter than the star, he trotted after Bert into a corner, whereupon Bert grasped his co producer by the lapels and hoisted him into the air.

[Ernest Borgnine]

This is the movie you weren't going to finish. Why the hell didn't you shoot more?

[Tim Harford]

Bert clearly loved Marty and from that moment on became very invested in it. The distributors suggested releasing Marty as a B movie, shortish hors d'oeuvre served up in cinemas before a more commercial main offering. But Lancaster had other plans. Marty was going to be an A movie, albeit with a limited release. They'd screen it at a single New York cinema. From that tiny base, word of mouth would sell their film. Special screenings were arranged for an invited audience of barbers, manicurists and shoe shines, ordinary workers who might identify with the characters on the screen and recommend Marty to their clients. The New York Yankees were treated to a viewing. Anything to create buzz. And it worked to an extent. Audiences lined up around the block night after Night, week after week to see Marty, but still only at a single cinema seating fewer than 600. Patron. Eventually, someone had the bright idea to enter Marty for the main prize at the Cannes Film Festival, the Palme d'or. It wasn't so unlike the neorealist European films that usually picked up gongs at Cannes. And any praise from the judges could be flammed up in press releases as international acclaim. Hollywood films rarely triumphed at the Festival Internationale du Film, so expectations were low. Betsy Blair, who played Marty's demure love interest, was coincidentally going to be in Cannes with her husband, Gene Kelly. But no one else from the cast or crew bothered to book a ticket. It was a scrabble then, when Marty swept the board and their presence was required urgently at the award ceremony. Marty had cost just a few hundred thousand dollars to make a miniscule budget, made worse by Burt Lancaster's habit of dipping into it to pay bills for the other films he had in production. But after the Palme d'or, the cash began to flow. Hecht Lancaster spent $150,000 on ads alone, 30 times the $5,000 they'd paid their leading man. And as Oscar season approached, Hecht Lancaster sent a print of the film to the homes of the voting Academy members, along with a projectionist and food at the British BAFTAs, the New York Film Critics Circle, the Writers Guild. Marty was picking up awards. But an Academy Award would seal Marty's success. At a rehearsal for the Oscars ceremony, Ernest Borgnine decided the wisest course of action would be to enjoy his Best Actor nomination as much as possible. He was up against friends and former co stars Frank Sinatra and Spencer Tracy. James Cagney was in the running, and so too was James Dean, who died the previous year in a car wreck. Ernest was resigned. He didn't stand a chance. But Oscar host Jerry Lewis was more encouraging.

[Ernest Borgnine]

You're gonna win. You're gonna win.

[Tim Harford]

Ernest thought the comedian was just being polite. You wanna bet I'll win?

[Ernest Borgnine]

I'll bet you buck 98 you're gonna win.

[Tim Harford]

Back home, Ernest counted out 198 pennies, just in case, and took a nap.

[Colgate Palmolive Representative]

How can you fall asleep?

[Tim Harford]

The shrieks of Ernest's wife Rhoda awakened him.

[Ernest Borgnine]

How can you sleep when you're up.

[Colgate Palmolive Representative]

For an Academy Award?

[Tim Harford]

Ernest looked up sleepily at his apoplectic partner.

[Ernest Borgnine]

Well, I'm not gonna win.

[Tim Harford]

Cautionary Tales will return after the break.

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[Tim Harford]

The Borg Nines drove to the Oscars in their new Cadillac. New to them, at any rate, it was secondhand. Ernest fidgeted in his coat tails. It was the last formal suit at the rental store, and the coat was too small and a little threadbare. The get up was constrictive and hot, and sweat beaded on Ernest's expanse of forehead as the couple awkwardly settled in their places. Bert Lancaster, a few seats away, smiled over and exchanged pleasantries. Ernest thought the greeting was warm enough, but something in it suggested that Bert was none too sure of a win, either. Hecht Lancaster was setting up a lavish post awards party, but Harold Hecht was already fretting about the expensive food they'd waste. If not, if Marty flopped, he'd have roast beef to feed his family for years. The thought prompted him to start knocking back the drinks.

[Ernest Borgnine]

And now, Best Cinematography in black and white.

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The Oscar for best scoring of a dramatic or comedy picture.

[Ernest Borgnine]

Best Best Song. Oscar goes to.

[Tim Harford]

Oscar ceremonies can be interminably long.

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Next Best Live Action. Short subject. Too real.

[Ernest Borgnine]

The nominations for best Art Direction in color.

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They called your name.

[Tim Harford]

Rhoda Borgnine was punching her husband in the side.

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Get up, Ernie.

[Tim Harford]

Ernest's attention had drifted during the ceremony.

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They called your name.

[Tim Harford]

You won. On stage, Jerry Lewis folded with laughter as Ernest pressed $1.98 into his hand. Afterwards, Ernest couldn't recall what he said as he clutched the Oscar statue to his chest. The speech was short. He thanked Rhoda and his dad, but spoke most movingly about his mother. Anna Borgnine, the one who'd inspired him to act in the first place, had sickened and died before Ernest's star had risen.

[Ernest Borgnine]

She barely got to see any of wasn't fair, but fair just isn't on life's menu.

[Tim Harford]

The cast and crew of Marty cut a swathe up and down the carpet at those 28th Academy Awards. Best Screenplay, Best Director, Best Picture. Variety said the former circus acrobat, Burt Lancaster, nearly did a full flip each time a Marty winner was announced. And Harold Hecht wouldn't have to eat all that roast beef after all. The after party was a raging success. If there'd been an Oscar for best bash, said the trade papers, it would have won hands down. Not only could Ernest act, they reported, he could dance a mean rumba, too. Marty, the film its makers supposedly saw only as a tax loss, turned an outrageous profit. It didn't gross as much as a Burt Lancaster Western, but given its minuscule budget, its returns on investment were remarkable. Its clutch of Oscars was estimated to have added many zeros to its box office receipts. Hollywood watched on drooling as Marty filled cinema seats everywhere. Perhaps they didn't need expensive herds of cavalry horses, armadas of pirate ships or armies of extras to compete with tv. Smaller films might be the answer. They could even cherry pick scripts that had already been hits on the small screen. Studio executives now vied for the rights to film popular teleplays like the claustrophobic jury room drama Twelve Angry Men. And if the sets could be smaller, so could the characters. A love story needn't chronicle Anthony and Cleopatra floating down the Nile Butcher. Marty Poletti, wooing a spinster schoolmistress in the Bronx, played just fine, too.

[Ernest Borgnine]

The success of Marty proved that moviegoers are interested in people like themselves, said.

[Tim Harford]

No less an expert than Elia Kazan, director of Brando's on the Waterfront and A Streetcar Named Desire. But for Oscar winning Ernest, things wouldn't be as smooth as he might have expected. Burt Lancaster wasn't so sure about making more art movies. He was obsessed with filming Trapeze, a garish star studded epic taking him back to his circus roots. It was being filmed abroad, partly to shield any profits from the US tax collectors. And perhaps Burt Lancaster wasn't so sure about Ernest Borgnine as a leading man either. He'd signed a seven picture deal with Hecht Lancaster, but all they offered him were bit parts roles. Not becoming a celebrated Oscar winner, counseled Ernest's agent, he should be playing the main roles. So Ernest turned each and every offer down flat. Hecht Lancaster finally declared that these constant rejections were a breach of contract, and Ernest was placed on suspension to kick his heels at home. Finally, the inactivity got to him and.

[Ernest Borgnine]

He snapped, Christmas is around the corner. I want to go to the Five and Dime and get a job selling things.

[Tim Harford]

Rhoda Borgnine talked her husband out of working in a store. And after sacking his agent, Ernest rebuilt his career by letting Hecht Lancaster loan him out to other filmmakers for $100,000 a time, a quarter of which Ernest could keep. Eventually he'd saved enough to buy his freedom from the men who'd made him a star and for whom he had made a fortune. It left him half a million dollars out of pocket. Though the actor often laughed when revealing this figure to interviewers, some said Ernest's financial falling out with the producers prompted him to concoct or at least inflate the story that Marty was conceived solely as a tax dodge. But it's not easy to see why Ernest would lie. And it makes sense that the producers wouldn't publicly admit to the scheme. What would they say? We wanted a tax loss but won a clutch of Oscars by mistake. The 1967 Mel Brooks comedy the Producers plays a similar scenario for laughs. In it, a Broadway musical celebrating the rise of the Third Reich is staged as a sure fire flop to allow for the embezzling of the production budget. Only audiences love numbers such as Springtime for Hitler, making it a runaway success.

[Ernest Borgnine]

How could this happen?

[Tim Harford]

Wails one of the fraudsters.

[Ernest Borgnine]

I picked the wrong play, the wrong director, the wrong cast. Where did I go right?

[Tim Harford]

If we accept Ernest's version of events, then Marty is a rare positive twist on the many tales of taxes causing perverse outcomes. Instead of bricking up windows or prompting entertainers to stop entertaining, the tax rules here might unintentionally have created a movie masterpiece by encouraging Hecht Lancaster to give the bold makers of Marty a free creative hand. Harold Hecht himself said that such freedom was rare because producers were usually under such pressure to play it safe. Given that even modest films were still a big financial gamble. Seeking a tax dodge took that gamble away once he had ditched his agent. Ernest Borgnine's career spanned decades. He was in some of the biggest films of the 1960s, 70s and 80s, but resigned himself to supporting roles and, yes, usually playing heavies. He was still working right up to his death in 2012 at the age of 95. In his final years, he took time to write a breezy autobiography explaining why he saw the funny side of his career ups and downs. Ernest wrote that plots, plans and other such shenanigans were a waste of time as an actor. His attempts to land more leading roles after the success of Marty had come to nothing. And that was okay. He adopted as his personal motto something he read on a sign above a hot chestnut stand as he walked home from another failed audition. I don't want to set the world on fire, read the sign. I just want to keep my nuts warm. The key sources for this episode of Cautional Tales were Ernest Borgnine's memoir, My Autobiography and Kate Burford's book, Burt Lancaster, An American Life. Caution Tales is written by me, Tim Harford with Andrew. This live edition of the show is written with Ryan Dilley and produced by Alice Fiennes. Tonight you heard the voice talents of Oliver Hembrough and Sarah Jupp. The sound design and original music is the work of Pascal Wise. Sarah Nix edited the script. Our recording engineer was Doug Fletcher. Thank you to Ashley Late and the Bristol Festival of Economics.

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